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Bureau Provides Requested Data used in Represcription Staff Report

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Released: June 7, 2013

PUBLIC NOTICE

News Media Information 202 / 418-0500

Federal Communications Commission

Fax-On-Demand 202 / 418-2830
445 12th St., S.W.
TTY 202 / 418-2555

Washington, D.C. 20554

Internet: http://www.fcc.gov
ftp.fcc.gov

DA 13-1320

Released: June 7, 2013

WIRELINE COMPETITION BUREAU PROVIDES REQUESTED DATA

USED IN RATE OF RETURN REPRESCRIPTION STAFF REPORT

WC Docket No. 10-90


On May 16, 2013, the Wireline Competition Bureau (Bureau) released a staff report entitled
"Prescribing the Authorized Rate of Return: Analysis of Methods for Establishing Just and Reasonable
Rates for Local Exchange Carriers" setting forth the data and procedures it recommends the Commission
use to represcribe the authorized rate of return.1 Based upon the staff analysis of 16 publicly-traded
incumbent LECs, using various analytical methods and sources of publicly-available data, the staff report
identifies a zone of reasonable estimates of the weighted average cost of capital (WACC) ranging from
7.39 percent to 8.72 percent.2 This zone of reasonable estimates reflects, among other things, different
estimates of the cost of equity produced using the Capital Asset Pricing Model and the Discounted Cash
Flow Model. The Bureau sought comment on data, analysis and recommendations contained in the staff
report.3
On May 21, 2013, a consultant representing the National Association of State Utility Consumer
Advocates (NASUCA) contacted the Bureau to request access to the underlying data used in the staff
report to estimate the cost of equity using the Discounted Cash Flow model, i.e., the stock prices,
dividends, and earnings growth forecasts. Although the underlying data are publicly available, the
earnings growth forecasts are frequently updated, which could make it more difficult for interested parties
to replicate the Bureau's calculations.
In the interest of assisting interested parties and maintaining an open and transparent process, the
table below provides the underlying data used in the staff report to estimate the cost of equity using the
Discounted Cash Flow model. To the best of our knowledge, all of the data we relied on and report below
was accurately transcribed, but any party that wishes to rely on this data without checking with the
original source must explicitly acknowledge they are using the data as reported by the Bureau, rather than

1 Prescribing the Authorized Rate of Return: Analysis of Methods for Establishing Just and Reasonable Rates for
Local Exchange Carriers
, WC Docket No. 10-90, Staff Report, DA 13-1111 (Wireline Comp. Bur. rel. May. 16,
2013) (Staff Report).
2 Staff Report at 50, para. 143.
3 See Wireline Competition Bureau Seeks Comment on Rate of Return Represcription Staff Report, WC Docket Nos.
10-90, 07-135, 05-337, and 03-109, GN Docket No. 09-51, CC Docket Nos. 96-45 and 01-92, and WT Docket No.
10-208, Public Notice, DA 13-1110 (Wireline Comp. Bur. rel. May 16, 2013).

directly citing to the underlying data source.

Discounted Cash Flow Model Data4

Carrier

P0

D0

Yahoo! Finance CNNMoney

Reuters

Zacks

Long-Term

5-Year
5-Year "g"
5-Year "g"
"g"
"g"
Consolidated
17.79 1.55
0.0200
0.0200
0.0200
0.0200
Shenandoah
15.36 0.33
0.1500
0.1300
NA
NA
Hickory Tech
10.24 0.58
0.0380
0.1200
NA
NA
TDS
21.12 0.51
0.0400
0.0400
NA
0.0400
Lumos
13.01 0.56
0.0300
0.0300
NA
0.0300
Windstream
8.14
1.00
-0.1125
-0.0200
-0.0683
0.0100
Alaska
1.62
0.20
-0.1000
-0.1000
NA
NA
Frontier
3.93
0.40
0.0600
0.0150
0.0233
0.0450
AT&T
36.74 1.80
0.0550
0.0594
0.0580
0.0580
Verizon
49.48 2.06
0.0633
0.1000
0.0575
0.0730
Century Link
35.20 2.16
0.0055
0.0060
0.0137
0.0370
Notes:
Current price (P0) and current dividend (D0) for each carrier
obtained from:
http://finance.yahoo.com (last visited March 27, 2013). P0 is the March 26, 2013 closing price.
D0 is the annualized value of the most recent dividend payment on or before March 26, 2013.
Growth rate ("g") for each
carrier obtained from:
http://finance.yahoo.com (last visited March 27, 2013);
http://money.cnn.com (last visited Mar. 27, 2013);
http://www.reuters.com/finance (last visited Mar. 27, 2013); and
http://www.zacks.com (last visited Mar. 27, 2013).
NA means that "g" is not available for the carrier from the source noted at the top of the table.

For further information regarding this proceeding, contact Victoria Goldberg, Pricing Policy
Division, Wireline Competition Bureau, 202-418-1520 or victoria.goldberg@fcc.gov.
- FCC -

4 An Excel version of this data is available at http://www.fcc.gov/encyclopedia/rate-return-public-notice-and-dcf-
model-data-spreadsheet.
2

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