Investing for the Future: Assessing Shareholder Value of the Regional Bell Operating Companies

Regional Bell Operating Companies' earnings in constant dollars have remained essentially flat since divestiture, but stock prices have risen on average more than 125 percent. To meet this investor confidence, the RBOCs must aggressively follow new strategies. Demand for new capital will require aggressive marketing, de-averaged pricing, and innovative financial re-engineering. Operational processes need to be redesigned to meet competition in cost and quality. Regulatory changes are needed to adopt incentive-based reforms, putting ceilings on prices rather than profits. Capital dollars must be targeted on profitable pockets of demand. Finally, the re-engineering of networks and management processes will require new ways of allocating both capital and human resources.