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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

P = price of the stock;

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);

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

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.

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.

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