Bell Atlantic, GTE Outline Merger Benefits In Agreement with Pennsylvania Attorney General

Bell Atlantic, GTE Outline Merger Benefits
In Agreement with Pennsylvania Attorney

Pennsylvanians to Receive Lower Prices,
Accelerated Availability of New Services

July 29, 1999


Harry Mitchell,
Bell Atlantic


Sharon Shaffer,
Bell Atlantic

215-963-6200 or 412-633-5574

Sara Vuick,

740-383-0191 on July 29-30

717-771-5444 after July 30

HARRISBURG, Pa. -- Bell Atlantic - Pennsylvania and GTE North today
announced that they have reached an agreement with Pennsylvania
Attorney General D. Michael Fisher under which the two companies
would provide a number of financial and service benefits to Pennsylvania
customers upon consummation of the merger of their parent companies.

In return for these commitments, the attorney general agreed the merger of
Bell Atlantic and GTE is in the public interest. The agreement is subject
to review by a Pennsylvania Public Utility Commission (PUC)
administrative law judge and ultimate approval by the PUC.

In the agreement, the companies commit to:

  • Lower local service prices for some GTE customers.
  • Cap both companies' prices for residential local phone service
    through the end of 2003.
  • Eliminate the Touch-Calling charge for GTE customers.
  • Accelerate the availability of popular calling features to GTE
  • Continue their high levels of network investment in
  • Decrease the fees long distance carriers pay the two local
    phone companies for access to their networks.

"Attorney General Fisher has taken a leadership role in forging an
agreement that will pay off for Pennsylvanians for years to come,"
said Daniel J. Whelan, Bell Atlantic - Pennsylvania president and CEO.
"We appreciate his personal involvement in the process, and we will
translate this agreement into tangible actions that will benefit consumers
and further advance competition."

"This is a winning proposition for Pennsylvania and its citizens, as
well as our employees and our companies," said John O. Dudley,
assistant vice president-regulatory and government affairs for GTE North.
"Our merged company will be stronger and better able to compete
for customers in Pennsylvania, the rest of the U.S. and

Highlights of the Agreement

The agreement includes the following highlights:

  • Bell Atlantic - Pennsylvania will extend through 2003 a cap on
    basic service rates for its customers. This cap means that Bell
    Atlantic business and residential customers' basic local service
    rates, which have not increased since 1985, will remain the
    same for nearly 20 years. GTE North residential customers'
    basic local service prices also would be capped through 2003.

  • GTE North will reduce prices for basic local service in certain
    rural portions of its service area to Bell Atlantic's level in
    comparable areas within two years of the merger's completion
    -- an annual reduction of approximately $5 million.

  • GTE North will file a tariff to eliminate its Touch-Calling
    service charge within three months of merger completion,
    saving its customers nearly $10 million a year.

  • GTE North will accelerate deployment of calling features such
    as Caller ID, Call Trace and Return Call to its customers. Such
    services will be rolled out to all GTE North customers who do
    not yet have access to them within 30 months of the merger's

  • Both companies will continue to invest in their Pennsylvania
    networks at pre-merger levels from the years 2000 through
    2002. Bell Atlantic - Pennsylvania will invest approximately
    $2.3 billion during this time, and GTE North will spend
    approximately $210 million.

  • Upon approval of a proposal pending at the PUC, Bell Atlantic
    - Pennsylvania will begin to reduce intrastate "access
    charges," or fees long distance companies pay to link to
    Bell Atlantic's local network, by an estimated $250 million
    over the next five years. These access fee reductions will mean
    millions of dollars in savings to Pennsylvanians if they're
    passed along by long distance companies. In addition, within
    30 months of the merger's completion, Bell Atlantic -
    Pennsylvania and GTE North will begin a process to determine
    statewide rates for access charges, based on consolidated cost

  • Competitors who want to lease "loops," or the part
    of Bell Atlantic's network from a call switching office to a
    home or business, will see an immediate decrease of nearly 14
    percent in those prices upon approval of a proposal pending at
    the PUC. This discount will increase to a total of 16 percent
    when Bell Atlantic is allowed to provide long distance service.
    In addition, within 30 months of the merger's completion, the
    two companies will begin a process to determine uniform,
    statewide rates for these loops, based on consolidated cost
    studies. During the time these statewide rates are being
    determined, GTE North will offer interim loop prices at lower
    levels than its current rates.

  • Upon approval of a proposal pending at the PUC, customers
    with incomes up to 150 percent of the poverty level will be
    eligible for Lifeline service. Under this program, customers
    who qualify can obtain local phone service at deeply
    discounted rates, depending on where they live and the local
    usage package they choose.

  • Both companies will inform customers about how the merger
    will impact them, how the services they receive and prices they
    pay will change, and how they will remain the same.

To date, both companies' shareholders, 28 state regulatory commissions
and the U.S. Department of Justice have either approved the merger or
declined to assert jurisdiction over it. The merger also has won the
support of the AFL-CIO, the Communications Workers of America, the
International Brotherhood of Electrical Workers, the League of United
Latin American Citizens, Rainbow/PUSH Coalition, the Organization of
Chinese-Americans, and dozens of business and community leaders from
areas served by GTE and Bell Atlantic.

Bell Atlantic - Pennsylvania serves 6.5 million telephone access lines in
roughly 40 percent of the Commonwealth's geography. GTE North serves
more than 650,000 access lines in Pennsylvania.

Bell Atlantic and GTE announced in July 1998 that they planned a merger
of equals. More information is available at Bell Atlantic's News Center on
the World Wide Web (http://www.ba.com) or at GTE's homepage