AT&T Proposed Deal Hits Local Phone Customers

AT&T Proposed Deal Hits Local Phone Customers

Long Distance Rate Cuts on the Backs of Local Phone Subscribers

May 5, 1997

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Eric Rabe



Shannon Fioravanti



ARLINGTON, Va. -- Bell Atlantic today criticized AT&T's
sweetheart deal with the Federal Communications Commission (FCC) on
access charges and universal service, calling it a last minute ploy by
AT&T to cut rates for its long distance customers while Bell Atlantic
and local phone customers pick up the tab.

"Under this proposal, AT&T gets to give its customers a small break
their long-distance bill, but the local phone companies and our
customers get stuck paying for it," said HREF="http://www.ba.com/speeches/profiles/eyoung.html">Edward D.
Young III, Bell
Atlantic vice president-external affairs and associate general

"Federal rules already require significant access rate reductions in
addition to the $9 billion in cuts over the last five years, much of
which AT&T has pocketed. Rather than pass these previous cost savings
on to its customers now, AT&T is going for a new and completely
unlawful retroactive rate cut," Young said.

According to news reports (New York Times, 5/4/97), AT&T is trying to
negotiate a plan that would allow AT&T to cut long-distance rates as a
result of lower access charges. Access charges are what the
long-distance companies pay to complete calls on the local phone
network. Historically, access charge revenues have permitted local
companies like Bell Atlantic to keep local phone service prices low.
The FCC is expected to rule on access charges and universal service on
May 7.

"It now appears that AT&T is urging the FCC to slash local carrier
access rates unlawfully by $1.7 billion in order to give AT&T cost
savings which it can pass on to its long distance customers," Young

"There is no justification for slashing access rates by raising the
current 5.3 per cent price cap adjustment that is used to regulate
access charges. Cutting our access rates in the way AT&T suggests
would be arbitrary and capricious under the law," he said.

Bell Atlantic Corp. (NYSE: BEL) is
at the forefront of the new
communications, entertainment and information industry. In the
mid-Atlantic region, Bell Atlantic's telephone companies are the
premier providers of local telecommunications and advanced services.
Globally, it is one of the largest investors in the high-growth
wireless communication marketplace. Bell Atlantic also owns a
substantial interest in Telecom Corporation of New Zealand and is
actively developing high-growth national and international business
opportunities in all phases of the industry.