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Judge Suggests More Hearings on PacTel Plan


The administrative judge overseeing Pacific Telesis' plan to spin off its cellular phone business says more time is needed to determine how the complex proposal would affect California telephone subscribers--raising the possibility of regulatory delays that could kill the plan.

But the judge's opinion, intended only to advise the state Public Utilities Commission, does not have the force of law.

In a rare departure from procedure, Commissioner Norman Shumway issued a simultaneous statement calling any additional delays "tantamount to a denial" of the proposed split and asking his colleagues to proceed quickly to a decision.

In an opinion scheduled for release today, Judge Gregg Wheatland determined that 14 million California telephone subscribers are owed compensation for their contributions to the cellular operation that Telesis hopes to spin off to its shareholders later this year. The opinion also suggests the split will cause financial strain on the surviving Pacific Bell operations that could trigger future phone rate increases.

Wheatland calls on the PUC to conduct extensive additional hearings into the issues before allowing the spinoff to proceed.

By contrast, Shumway's comments reflect concerns, rekindled by the recession, that the PUC and outside groups have hampered business growth and job creation by what is often viewed as an anti-business and pro-consumer stance.

Behind the scenes in Sacramento, the Wilson Administration has lobbied for approval of the plan because it would instantly carve out a new billion-dollar corporation from the existing phone company at a time when businesses have been fleeing the state.

Pacific Telesis said it was still drafting its response late Tuesday night and had no immediate comment.

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