Companies Propose Comprehensive Telecom Settlement to PUC

Companies Propose Comprehensive Telecom Settlement to PUC

Conectiv, Bell Atlantic, Network Access Solutions, Rural
Company Coalition Reach Historic Agreement on Major
Telecommunications Issues; Accelerated Competitive
Marketplace Will Benefit Consumers

March 18, 1999

EDITORS NOTE: Bell Atlantic-Pennsylvania President and CEO
Daniel J. Whelan will hold a news conference at 2 p.m. EST on March
18 at the Bell Atlantic offices, Fourth Floor, Strawberry Square,
Harrisburg, Pa. Reporters unable to attend the event may join the
news conference by dialing 1-800-524-3479. Reporters are advised to
dial in no later than 1:45 p.m. The news conference will be replayed
continuously between the hours of 3 p.m. and 6 p.m. EST. Reporters
may listen to the replay of the news conference by dialing 1-888-566-

HARRISBURG, Pa. -- In an historic agreement that will transform the
markets for local and long distance telephone services in Pennsylvania, a
group of diverse, competing telecommunications providers today proposed
a settlement that will further open up these markets to greater competition
and bring additional savings to residential and business customers.

The parties asked the Pennsylvania Public Utility Commission (PUC) to
consider this wide-ranging proposal, which addresses a host of issues in
the Commission's Global Settlement Process, a five-month negotiation
that ended March 1.

The joint petition proposes several immediate, direct benefits for the
Commonwealth's homes and businesses. For example, the agreement calls
for the creation of a state universal service fund aimed at keeping the price
of basic service low. The plan also reduces local toll rates to make them
more competitive.

Homes and businesses also would see reductions in long distance charges
through an estimated $300 million cut in the fees long distance companies
pay Bell Atlantic and other local phone providers to complete calls. The
five-year agreement requires that long distance companies reduce the price
of toll services to reflect the impact of the access charge reductions.

Low-income customers benefit from the proposal as well. It increases the
eligibility for Lifeline service from 100% of the poverty level to 150% of
the poverty level. Under this program, customers who qualify can obtain
local phone service at rates ranging from $1.68 per month to $7.93 a
month in the Bell Atlantic territory, depending on where the customer
lives and the local usage package he or she chooses. Customers served by
other local phone companies will see comparable prices.

The agreement also jump starts local competition across the
Commonwealth by proposing a 16-percent reduction in the price
competing companies pay Bell Atlantic to lease the basic customer loop
connection part of its network.

Some of the reductions would take place as soon as the agreement receives
the PUC's approval. Additional price savings would occur after the
Federal Communications Commission (FCC) approves Bell Atlantic-
Pennsylvania's entry into the long distance market. A timeline included in
the agreement notes that the company will submit that application to the
FCC as early as Sept. 1.

The parties to the settlement are Conectiv, Bell Atlantic-Pennsylvania,
Network Access Solutions (NAS), and the members of the small
incumbent local exchange carrier coalition (small ILECs). * The parties
represent the Commonwealth's largest local telephone company, active
local competitors for both business and residential customers, and 32 rural
ILECs serving customers in rural Pennsylvania.

"Today's bold action shows that our companies -- though we have very
different views of competition in Pennsylvania -- are serious about
breaking the logjam to bring competition for communications services to
the state's consumers sooner, rather than later," said Daniel J. Whelan,
president and CEO of Bell Atlantic - Pennsylvania. "The negotiations
were extremely complex, and all parties moved far off their original
positions to reach this settlement.

"We applaud the leadership of Chairman Quain and Commissioner Rolka,
whose efforts in the Global Settlement set the stage for this achievement -
a proposal for competition drawn up by a diverse group whose
overarching interest is moving forward."

"This plan is a realistic blueprint for local competition in Pennsylvania,
and we are eager to see it work," said John Citrolo, manager of external
affairs - Conectiv. "It enhances our aggressive strategy to deliver
integrated packages of local, long distance and data services to residential
and business customers throughout the Commonwealth."

"This agreement is a win-win for customers and competitors," said Roger
Poole, director of project management -- NAS. "It is a breakthrough
strategy for delivering advanced data services to homes and small
businesses - and they won't have to be located only in our major cities.
This plan truly lives up to the spirit and intent of the Telecommunications

"The proposal provides a transition period for rural telephone companies
to reduce access and toll charges while ensuring that dialtone rates remain
affordable," said Janet Tuzinski, manager - regulatory relations for D&E
Telephone Company. "The terms and conditions in this settlement are a
critical first step in bringing a robust competitive marketplace to our rural

Highlights of the Settlement

  • A state Universal Service Fund will be established to help keep local
    phone rates affordable. Bell Atlantic-Pennsylvania will contribute
    $50 million to the fund, which will be used to keep basic local rates
    low and to reduce toll rates and access charges. Bell Atlantic-
    Pennsylvania will not make withdrawals from this fund.

    • Bell Atlantic-Pennsylvania will cap rates for basic residential
      and business local service through the year 2003.

    • There will be an estimated $300 million reduction in intrastate
      "access charges" or fees paid to the local exchange carriers by
      long distance companies. Companies that realize savings from
      the reductions over the course of this five-year agreement must
      share them with customers.

    • Competitors will be able to purchase high-speed data lines,
      known as ADSL (Asymmetric Digital Subscriber Line), from
      Bell Atlantic on an unbundled basis at a discounted price. The
      company also will give competing companies access to a
      database it uses to electronically determine whether a customer
      is able to obtain such services.

    • Competitors will see a 13.6-percent decrease in the lease prices
      for the basic customer loop part of Bell Atlantic's
      telecommunications network. The price for these unbundled
      local loops will decrease a further 2.4 percent once Bell
      Atlantic is able to provide long distance service, for a total
      reduction of over 16 percent.

    • Competitors will be able to lease a bundle of Bell Atlantic's
      network parts to provide basic local phone service or single-
      line ISDN (Integrated Services Digital Network) to all
      residential customers. They also will be able to lease the
      bundle to compete for small business customers in those Bell
      Atlantic switching offices that have fewer than two
      competitors' equipment already located in that office.

    • An independent third party will test Bell Atlantic's computer
      systems to ensure they can handle a large volume of competing
      companies' orders for installation, billing and repair of local

Parties Request Public Comments

The companies have asked the commission to seek public comments by
interested parties on the proposed settlement.

"We hope the Commission adopts this proposal in its entirety and puts an
end to the litigation that has surrounded this debate," the parties said.
"The 35 companies here are eager to get about the business of competing.
We encourage other industry players and the public to examine this
settlement and join those of us who have decided to leave the haggling


Below is a list of the members of the small incumbent local exchange coalition
(small ILECs) who have joined in supporting this agreement:

ALLTEL PennsylvaniaDeposit Telephone Co.Lackawaxen Telephone Co.Pymatuning Independent Telephone Co.
Armstrong Telephone Co. PAFrontier Communications of Breezewood, Inc.Laurel Highland Telephone Co.South Canaan Telephone Co.
Armstrong Telephone Co. NorthFrontier Communications of Canton, Inc.Mahanoy & Mahantango Telephone Co.Sugar Valley Telephone Co.
The Bentleyville Telephone Co.Frontier Communications of Lakewood, Inc.Marianna & Scenery Hill Telephone Co.Venus Telephone Co.
Buffalo Valley Telephone Co.Frontier Communications of Oswayo Rover, Inc.The North-Eastern PA Telephone Co.Yukon Waltz Telephone Co.
Citizens Telephone Co. of KecksburgFrontier Communications of Pennsylvania, Inc.North Penn Telephone Co. 
Citizens Communications Services Co.
The Hancock Telephone Co.

North Pittsburgh Telephone Co.
Conestoga Telephone and Telegraph Co.Hickory Telephone Co.Palmerton Telephone Co. 
D&E Telephone Co.Ironton Telephone Co.Pennsylvania Telephone Co. 


John Citrolo, 302-224-6013


Roger Poole, 703-995-1698

Small ILECs:

Janet Tuzinski, 717-738-8511

Bell Atlantic:

Sharon Shaffer, 215-963-6200 or 412-633-5574