Tri-State Telephone Case Study

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John Godwin, chief executive of Tri-state Telephone, leaned back in his chair and looked at the ceilings. How was he ever going to get out of this mess? At last night’s public hearing, 150 angry customers had marched in to protest Tri-State’s latest rate request. After the rancorous shouting was over and the acrimonious signs put away, the protesters had presented state regulators with some sophisticated economic analyses in support of their case. Additionally, there were a number of emotional appeals from elderly customers who regarded phone service as their lifeline to the outside world. …show more content…
During the last five years, the company had experienced a tremendous amount of change. In 1984, the AT&T divestiture sent shock waves throughout the industry, and Tri-State Telephone had felt the effects, as pricing for long distance telephone service changed dramatically. The Federal Communication Commission instituted a charge to the effect that customers should have “access” to long distance companies whether or not they were in the habit of making long distance calls. Consumer groups, including the Consumer Federation of America and the Congress of Consumer Organizations, had joined the protest, increasing their attention on the industry and intervening in regulatory proceedings wherever possible. The FCC was considering deregulating as much of the industry as possible and Congress was looking over the commissioner’s shoulder. Meanwhile, the Department of Justice and Judge Harold Greene (both of whom were responsible for monitoring the AT&T divestiture) continued to argue about what business companies like Tri-state should be engaged

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