Bell Atlantic, GTE executives tell Ohio Public Utilities Commission that merger will create a stronger competitor

Bell Atlantic, GTE executives tell Ohio Public Utilities Commission
that merger will create a stronger competitor

Executives from Bell Atlantic and GTE today appeared
before the Ohio Public Utilities Commission concerning the merger of the two
companies and its anticipated impact in Ohio and across the nation

November 4, 1998


Bob Bishop,

Bob Varettoni,
Bell Atlantic

COLUMBUS, Ohio -- Executives from Bell Atlantic and GTE today
appeared before the Ohio Public Utilities Commission concerning the
merger of the two companies and its anticipated impact in Ohio and across
the nation.

The following quotes are extracted from statements made at the meeting
by Mark J. Mathis, senior vice president of regulatory for Bell Atlantic,
and Geoffrey Gould, vice president of government and regulatory affairs
for GTE:

Mathis- We recognize that in today's competitive world we must provide
high quality telephone service in each of our states, and we are strongly
committed to the economic development and welfare of the communities
we serve, whether we are connecting schools in Maine and West Virginia
to the Internet or providing distance learning in Maryland and Virginia.

Like the merger between Bell Atlantic and NYNEX, the merger between
Bell Atlantic and GTE is a merger of equals. From a technical standpoint,
Bell Atlantic is acquiring GTE, just as it did NYNEX, with
GTEshareholders receiving 1.22 shares of Bell Atlantic stock for every
share of GTE stock. Unlike other acquisitions, however, in a merger of
equals there is a genuine sharing of the best talent and best practices from
each company.

The Bell Atlantic-GTE merger, however, is much more than best
practices. Whether we like it or not, we are operating a world where
AT&T has purchased TCG and is in the process of acquiring TCI and
aligning with British Telecom. WorldCom acquired MCI after it had
acquired MFS and Uunet. Sprint is aligned with Deutsche Telekom and
France Telecom. And of course, SBC has acquired Pacific Telesis,
recently received approval to acquire SNET and is seeking approval to
acquire Ameritech.

Customers today have one company for local, another for long distance, a
third for wireless, and a fourth for Internet access. The future, however,
will be different. Customers want one company to do it all. Already, MCI
Worldcom has announced a flat rate business service without any distance
distinctions and including data and paging. Given this state of play, we
really have no choice if we want to remain competitive with these global

What really sets this merger apart, however, is the significantly increased
ability it offers us to aggressively enter into competition with other
incumbent regional Bell companies across the country, including here in
Ohio against Ameritech in Cleveland, as well as against Cincinnati Bell in
its home territory.

Gould- The Bell-Atlantic-GTE merger creates a new company that will
accelerate the availability of real customer choice in Ohio and across the

On a national basis, we believe this merger is enormously pro-competitive
in a least six separate ways:

First -- this merger will finally break down the barriers between RBOCs
and finally bring about significant big-LEC-to-big-LEC competition in
local telephony across the country.

Second -- from a broad perspective, this merger is an essential step in
establishing a competitive national market for packaged
telecommunications services.

Third -- this merger is just about the single most pro-competitive
development that one can imagine for the Internet.

Fourth -- this merger is an important step in establishing a fourth national
facilities-based competitor in the long distance market.

Fifth -- this merger will combine complementary cellular properties and
create a wireless provider that is able to compete on a national basis-
something that is increasingly becoming a tablestake in the telecom

And finally -- this merger combines complementary international assets.

The merger gives the combined company the resources and scale
necessary to support the high costs of building service and delivery
platforms, to develop a much more economical and attractive package of
telecom services for customers, and to invest in a much stronger national

GTE covers a significant amount of territory in Ohio and has significant
facilities. So it's logical to project that, in due time, the combined company
will have the wherewithal to launch competitive attacks in places beyond
greater Cleveland and Cincinnati-when sufficient market demand exists
and a reasonable business case can be made for entry.

One of the most compelling reasons why this merger is pro-competitive is
rooted in the provision of Internet and data services.

Without minimizing one bit the importance of traditional telephony, GTE
and Bell Atlantic believe the Internet is the future of telecommunications.
It's important to continue nurturing competition among Internet providers,
especially ones that are actually building networks.

In that regard, the merger is enormously beneficial for the Internet in two
separate ways.

First, it will allow GTE to introduce a host of new Internet services and a
broader range of advanced data services.

Again, the key lies in Bell Atlantic's customer base. As I've stated, GTE's
current profile is primarily rural and suburban serving territories-territories
that are disbursed across wide geographic areas. This customer base is just
not sufficiently concentrated to support the rapid introduction of new
Internet services that require substantial up-front investments in equipment
and facilities.

The merger, however, will give GTE access to Bell Atlantic's much more
concentrated customer base in the Northeast. The opportunity to market to
this base utilizing Bell Atlantic's sales network will provide the
newcompany with the scope and heft to introduce new services to all
customers, including those in Ohio.

The second reason the merger is enormously beneficial for the Internet is
because it insures the continued competitiveness of the national market for
Internet backbone services.

While GTE is the fourth-largest Internet backbone provider in size, we are
significantly smaller than the three largest-Cable & Wireless, MCI-
WorldCom, and Sprint. Bell Atlantic, on the other hand, is not an Internet
backbone provider. It is only an Internet Service Provider (ISP) reselling
connectivity from other backbone providers. By combining with Bell
Atlantic, GTE is able to enhance its own Internet business by competing
for and winning more customers.

Bell Atlantic's customer base and GTE's operating marketing platforms
and experience will allow for large-scale, facilities-based deployment of a
long distance network to compete with the major long distance carriers.
This is a particularly important pro-competitive benefit of this merger
considering that the four major facilities-based carriers recently became
three with the approval of the MCI-WorldCom merger.

# # #

Complete copies of prepared remarks given by Mathis and Gould may be
obtained by calling the media contacts listed at the beginning of this