Path: utzoo!telecom-request Date: Sat, 1 Jun 91 00:40:08 PDT From: Linc Madison Newsgroups: comp.dcom.telecom Subject: Re: Are Telco Profits Too Large? Message-ID: Organization: TELECOM Digest Sender: Telecom@eecs.nwu.edu Approved: Telecom@eecs.nwu.edu X-Submissions-To: telecom@eecs.nwu.edu X-Administrivia-To: telecom-request@eecs.nwu.edu X-Telecom-Digest: Volume 11, Issue 416, Message 5 of 8 Lines: 30 Martin Baines said in 11.409.7 that British Telecom made profits of #95/second or #3000 billion. Much discussion has ensued regarding the fact that the latter figure is more than 50 years U.S. GNP, etc. The answer to the dilemma is rather simple: the two figures do not equate to one another. #95/sec = #3000 MILLION/year = #3 billion/yr = US $5 billion/yr. For comparison, AT&T last year earned about US $2.7 billion. However, in 1981, 1982, and 1983, AT&T earned close to or more than US $7 billion per year. [Source: Value Line Investment Survey] The total profits of the "Baby Bells" for 1990, though, was in excess of US $9 billion. Add another $1.5 billion for GTE, and about a billion for MCI and Sprint combined, and a fraction of a billion for Centel, Cincinnati Bell, etc. So, all in all, US telephone companies reaped profits in the neighborhood of $12 billion for 1990. However, the US is more than 2.4 times the size of Britain, so BT's profits were about double the scale of US telephone companies. That gives you a little bit of a yardstick for comparing "excessive" profits. (BTW, 1990 profits for the Baby Bells ranged from a low of $1.13 billion for Pacific Telesis to a high of $1.695 billion for Bell South. Southern New England Telephone earned about $150 million, and I'm not sure whether or not that is included in NYNEX, but it doesn't materially affect my figures either way.) Linc Madison = linc@tongue1.berkeley.edu