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1988–94 with the Federal Communications Commission's
technology deployment data, which is currently available for the
1989–93 period only.
9. The discounted dividend model holds
that P = E(D)/(k - g) where
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P = price of the stock;
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E(D) = expected dividend to be paid in the next
year (which is a function of earnings multiplied by the percentage
of net income that the firm pays out as dividends);
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k = the firm's cost of equity capital, which
includes interest rates on risk-free Treasury bonds plus a risk
premium that compensates investors for risk incurred by holding
that companies stock; and
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g = growth in dividends, which is a function of
the firm's return on equity multiplied by the percentage of future
net income that the firm is expected to retain and reinvest.
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See Bodie, Zvi, Alex Kane, and Alan J. Marcus. 1989.
Investments. Irwin, Homewood, Ill., pp. 473–480.
10. See Yanis, Steven R., and Thomas J.
Lee. 1995. "The Regional Holding Companies Are More Than Plain Old
Telephone Companies," Telecommunications Services,
Oppenheimer & Company Inc., January 26, p. 8.
11. Increased earnings volatility adds to
the risk of owning a share of stock, because it raises the
probability that the company in question may not be able to pay
future dividends or, for that matter, sustain day-to-day business
operations. See Bodie, Zvi, Alex Kane, and Alan J. Marcus. 1989.
Investments. Irwin, Homewood, Ill., pp. 130–143.
12. WEFA Group. 1995. Economic Impact
of Deregulating U.S. Communications Industries. WEFA Group,
Burlington, Mass., February, p. 29.
13. Anderson, Christopher. 1995. "The
Internet Survey," The Economist, July 1, p. 18.
14. See Egan, Bruce L. 1994. "Building
Value Through Telecommunications: Regulatory Roadblocks on the
Information Superhighway," Telecommunications Policy
18(8):580–583.
15. See Governali, Frank. 1995. Weekly
Industry and Valuation Report, First Boston, June 16.
