to 1996-97 levels, their estimated betas are now about 1.0 on average. The uncertainty over the FCC's unbundling rules, the loss of lines to competitors, and the more competitive era unleashed by Bell company entry into interLATA long-distance markets has made the Bell stocks more risky to hold. ¹0 In response, the equity markets did not raise AT&T's beta very much, which is surprising. The overall effect of the new regulatory order on the Bell companies has thus been rather mixed. On the one hand, the companies were kept out of interLATA markets until recently and have been required to provide Effect of the 1996 Act on Incumbent Local Companies wholesale facilities to their rivals, thereby having less incentive to invest. On the other hand, they saw their equity prices track the entire stock mar- ket with betas of 0.3 to 0.7 for several years. As a result, the market value of the Bells' wireline assets has grown modestly since 1996, whereas the value of their enterprises per access line has not changed very much. At the end of 1996, the Bell company nonwireless assets were valued at about $1,940 per switched access line; by the end of 2003, they were valued at about $2,170 per line, an increase of 12 percent during a period in which the overall stock market grew by 50 percent.11 Given the surge in capital expenditures by these companies in 1998-2001, as they modernized their facilities to deploy broadband DSL services, this modest growth could hardly be reassuring to the Bell companies, even if one interprets the impact of the 1996 act on the incumbents as relatively benign. Threats to Bell Company Revenues Despite very little change in local rates since 1996 and little growth in retail access lines, the incumbent local exchange carriers (ILECs) recorded wireline revenue growth of approximately 20 percent between 1996 and 2001.¹² A large share of this growth came from second lines required for dial-up Internet services. The slow, steady growth of the incumbent Bell companies' wireline operations has been threate