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The Baby Bells' Path To A Level Playing Field (Int'l Edition)

International -- Readers Report


Robert Kuttner's point was well taken in describing the implementation of the Telecommunications Act of 1996 as complex ("Don't let the Baby Bells stall competition," Economic Viewpoint, Mar. 31). In order to ease the transition process to a competitive local marketplace, Congress included in the act a 14-point competition checklist that dictates the specific requirements the Bell companies must comply with to establish a level playing field for competing companies.

The checklist outlines the essential elements needed for competitors to provide local telephone service in a manner that will improve quality of service, expand customer options, and drive down prices. Once the Bell companies have taken the steps mandated by Congress, the doors will be opened, allowing more options for residential and business consumers in local telephone service throughout the U.S.

While the road to competition may not be a straight course, the checklist provides a simple path to follow, and a place from which to start. The process does not need to be complex; the onus is on the Baby Bells to comply with the checklist that Congress has so clearly laid out.

Mark Phigler


Americans for Competitive Telecommunications

Walnut Creek, Calif.Return to top


Warnings about the limits of global free markets and the widening gap between rich and poor paradoxically reflect the success of free-market capitalism where property rights are protected and prices are set without government intervention ("A helping hand, not just an invisible hand" Economics, Mar. 24). As most of us know, fairness lies in the eye of the beholder. Income spreads for the most part reflect how rich the opportunities are.

Capitalism is fulfilling its social function in supplying consumers with more, better, and cheaper goods. It has raised the standard of living to a level our ancestors could not have imagined. Although capitalism doesn't address income inequality, the disparities between rich and poor are much worse in Third World countries where capitalism hasn't taken root. And a society with a wide range of incomes--where even the poorest have enough to eat--is preferable to one in which all starve equally.

William E. Boney

St. LouisReturn to top


In Paul Craig Roberts' article "Why big government should stop picking on big oil" (Economic Viewpoint, Mar. 10), the "new regulations" he writes about are proposed regulations on oil valuation, and they will likely be amended based on public input.

The proposed rule would not change the longstanding policy to base royalty valuation on the wellhead price. Any new rule would apply only to oil produced after the effective date of the final rule. It would not be retroactive and would not "stick the companies for more than $1 billion" in back royalties. The proposed rules are meant to ensure that royalties are paid on fair-market value. The Interior Dept. has a responsibility to collect fair market value for public resources.

We also have a responsibility to oversee offshore mineral resources. America's offshore oil and gas industry is thriving. Recent lease sales in the Gulf of Mexico have been record-breakers. Utilization rates for offshore drilling rigs are the highest they've been in a decade, and rates paid for using rigs have risen 128%, on average, in the past five years. Offshore production of oil has been increasing and could increase at least 70% by the year 2000.

The department appreciates the risks and capital investments needed to find and produce oil and natural gas. With industry participation, we've developed a program to encourage oil and gas exploration in deep water regions of the Gulf of Mexico by reducing the standard royalty percentage. We also have implemented programs that reduce the federal royalty percentage for oil and gas leases with declining production and in marginal economic situations. But that doesn't mean we will accept less than the fair market value on the royalty that remains.

By designing a regulatory approach that will facilitate the development of offshore energy, we "bureaucrats" at the U.S. Interior Dept.'s Minerals Management Service have made a solid contribution to the resurgence in the Gulf of Mexico's production of offshore oil and gas.

Picking on Big Oil? I don't think so.

Cynthia Quarterman


Interior Dept.


Paul Craig Roberts' piece is short on facts. Mr. Roberts asserts that Big Oil's critics have pushed the government to change the rules in order to "squeeze more tax revenue out of the oil companies." In fact, the changes close a loophole in the federal regulations so that oil companies pay what they owe for the right to produce and profit from crude oil owned by the public. Crude oil producers have been underpaying the royalties they owe by making payments based on an artificially low price for crude oil.

Mr. Roberts says that the difference between the commodity market price and the wellhead price reflects transportation costs. The government intends to adjust the commodity market price by subtracting transportation costs, and it will make other adjustments to reach the true wellhead value.

Mr. Roberts suggests that the public would be better served by leaving the future additional $100 million in royalty revenue in the hands of the oil industry. But a major portion of this money will be earmarked for state public school systems, instead of increasing the already bloated profit margins of the oil companies. Given the choice, I'd rather the money go to educate children rather than to line the silk pockets of oil company executives.

Danielle Brian

Executive Director

Project on Government Oversight

WashingtonReturn to top

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