Having Received Approval from the Justice Department and the Federal

question 73

Essay

Having received approval from the Justice Department and the Federal Trade Commission,
Ameritech and SBC Communications received permission from the Federal Communications Commission to form the nation's largest local telephone company. The FCC gave its approval of the $74 billion transaction, subject to conditions requiring that the companies open their markets to rivals and enter new markets to compete with established local phone companies. SBC had considerable difficulty in complying with its agreement with the FCC. Between December 2000 and July 2001, SBC paid the U.S. government $38.5 million for failing to provide adequately rivals with access to its network. The government noted that SBC failed repeatedly to make available its network in a timely manner, to meet installation deadlines, and to notify competitors when their orders were filled. Comment on the fairness and effectiveness of using the imposition of heavy fines to promote government-imposed outcomes, rather than free market outcomes..

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Definitions:

Leverage

Describes the use of borrowed capital or debt to increase the potential return of an investment or project.

Asset Management

The process of developing, operating, maintaining, and selling assets in a cost-effective manner, commonly used in finance to refer to managing investments.

Profitability

The state or condition of yielding financial profit or gain, often measured as a ratio of net profits to total assets.

Breakeven Point

The point where revenues just equal costs.