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Communications Satellite Corporation - Judgment The following judgment on the appropriate economic regulations of the Communications Satellite Corporation Comsat has been arrived at after considering the due deliberations presented before the Commissioners by the two parties namely Comsat and FCC Central to this judgment is the premise that the return to the equity owner should be commensurate with returns on investments in other enterprises having corresponding risks Also the fair rate of return should be actually that required or expected by a firms investors The Commissioners are also of the view that the interests of the ratepayers should be safeguarded The ratepayers should not be penalized for any change in circumstances eg excess liquid cash due to change of technological needs resulting in inefficiency at Comsat Such risk should be borne by the Shareholders alone The judgment covers the fair rate of return awarded to Comsat commensurate to its risks the rate base and the price structure to be followed by Comsat At the onset we concur with Comsats argument that their risk profile cannot be compared to that of ATT due to the following 1Even though ATT is in the same business of providing communication channels yet the equipment used is vastly different ie satellites versus data cables 2ATT is a well-established utility while Comsat is a new venture Their risk profiles are not similar 3Considering the testimony of Dr Myers the beta found for ATT and Comsat are different thus implying that the investors view the inherent risk of the companies differently Next we look into the various risk factors discussed before us in order to reasonably estimate the risk inherent in Comsat Operating Risks 1Technological Risk The trial staff established low technological risk by considering in hindsight the fact that Comsats evolution was relatively trouble-free In our opinion this is unjustifiable as when the company was started there was no way of knowing this and the
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