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Economics and Technology, Inc. (ETI) prepared a total factor productivity (TFP) study for the Ad Hoc Telecommunications Users Committee in the prior rounds of comments in this proceeding.(1) That study examined economy and Bell Operating Company (BOC) data through 2004, and found the average X factor for interstate special access service in 2000 through 2004 to be 11.01 percent. Data are now available from the BOCs through 2006. In addition, the ETI Study uses data from the Bureau of Labor Statistics and the Bureau of Economic Analysis on economy wide productivity and inputs, which have now been updated through 2006. Using this additional data, we have updated the ETI Study and find that the BOCs' interstate special access productivity continues to outstrip productivity gains in the economy as whole, resulting in an average X factor for interstate special access services in 2000 through 2006 of 16.95 percent.
The attached tables provide the updated data and computations that yield this result. In addition to updating the previous study with data through 2006, this study made the following changes from the original ETI Study.
Table 1 displays the results from 1993 through 2006. The X factor used in the price cap formula is the sum of the differentials in TFP between the BOCs and the economy as a whole and in the input prices for the BOCs and the economy. The results evidence some year over year variation in the X factor. However, in the fourteen years covered by this study, only three years had an X factor of less than 10 percent. Clearly, the BOCs' productivity has consistently and substantially outstripped the economy-wide productivity.
1. Economics and Technology Incorporated, Competition in Access Markets: Reality or Illusion, Table 2.1 (August 2004) (ETI Competition in Access Markets), filed as Attachment A to Comments of the Ad Hoc Telecommunications Users Committee, WC Docket No. 05-25 (June13, 2005) (2005 Ad Hoc Comments), amended by Declaration of Susan M. Gately, filed as Attachment B of the 2005 Ad Hoc Comments ("ETI Study").