PUC Decision Puts Pennsylvania on Hold

PUC Decision Puts Pennsylvania on Hold

Pennsylvanians Hoping for Local Telecom Competition at
Are Chief Victims

August 26, 1999


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

Pager: 800-467-3700 PIN 6063075

Harry Mitchell,
Office: 304-344-7562

Pager: 800-946-4646 PIN 1460309

HARRISBURG, Pa. -- Bell Atlantic condemned today's Pennsylvania
Public Utility Commission (PUC) decision on a host of
telecommunications issues.

"Pennsylvania consumers and businesses are the chief victims of
today's decision," said Daniel J. Whelan, president and CEO of Bell
Atlantic - Pennsylvania. "The commission's short-sighted action
will delay the start of true competition for Pennsylvania consumers,
perhaps for years.

"The evidence from around the country is clear. The big long-
distance companies, potentially the strongest local competitors, have no
interest in entering the local market, and they will do so only when their
long-distance core business is threatened by Bell Atlantic," said

In a split decision, the PUC voted to accept a decision in a months-long
"global settlement" proceeding. The commission weighed two
proposals: one from Bell Atlantic, its competitors Conectiv and NAS, and
32 other local telephone companies; and another from a group of
competitors led by long-distance/cable giant AT&T and MCI WorldCom.

"The commission's draconian, punitive rules and rates impede true
competition, jeopardize incentives for continued network investment,
hamstring economic development and seriously undermine the Ridge
administration's progressive deregulatory agenda," said Whelan.

"This decision runs counter to the movement of public policy in
telecommunications across the country," said Ivan Seidenberg, Bell
Atlantic chairman and CEO. "With the PUC's action, Pennsylvania
stands out as a state where telecommunications is intensely regulated, a
state that is hostile to business, and a state that is unconcerned about
moving into the next century.

"The PUC's decision in effect destroys the forward-looking image of
deregulation that the Ridge administration and General Assembly have
worked together to create," said Seidenberg.

A number of aspects of the decision are unprecedented. For example, the
PUC requires the company to split into two separate subsidiaries to
operate in Pennsylvania. No other company among the more than 150
firms authorized to provide local phone service in the state faces this
requirement. "To require two separate subsidiaries is totally
unjustified. It's neither legal nor necessary," said Whelan.
"Structural separation of Bell Atlantic will drag out full competition
and more choice in the Commonwealth indefinitely. It hands companies
such as AT&T and MCI WorldCom an unfair advantage by placing a new
set of obstacles in Bell Atlantic's path toward long-distance entry."

Decision Plays into Long-Distance Giants' Delay Strategy

In making its decision, the commission largely accepted the proposal
backed by the two long-distance giants. "Don't think for a minute
today's decision is a victory for competition and Pennsylvanians,"
said Whelan. "It's not. It's a clear victory for AT&T, MCI
WorldCom and others who want to endlessly delay the benefits of true
competition in the Commonwealth.

"This comes at a time when these two giants have shown a growing
disregard for consumers with their confusing long-distance plans and
minimum usage charges," said Whelan. "In addition, AT&T
began hiking cable TV rates within a few weeks of closing its acquisition
of TCI. And it has relentlessly fought off demands to open its cable
systems to competitors' Internet access services -- this while it
hypocritically demands Bell Atlantic's network be wide open to all

"It's abundantly clear the long-distance giants won't compete in the
local residential marketplace until their long-distance profits are
threatened," said Whelan. "Just look at New York, where both
AT&T and MCI WorldCom began competing for local home phone
service as Bell Atlantic began to get closer to offering long-distance
service in that state."

The commission's goal to jump-start local competition isn't needed for the
business market; competition is heated for business customers throughout
Pennsylvania. "AT&T and MCI WorldCom admit in financial
documents that they have more than 32 million local lines in the U.S., and
they don't deny that at least a million of these lines are in
Pennsylvania," said Whelan. "And 100-plus other competitors
in this state provide businesses with tens of thousands of additional

The same rules and rates apply to residential phone service. "The
only obstacle to companies competing in the residential market is self-
imposed," said Whelan. "They simply want to make more
money in the business market.

"With its action today, the commission did its best to build
competitors' businesses on the backs of Bell Atlantic's customers and our
19,000 Pennsylvania employees, with callous disregard of Bell Atlantic's
rights and the PUC's own obligation to Pennsylvania consumers,"
said Whelan. "That's not right.

"We will take any and all steps to correct this anti-consumer, anti-
business and anti-economic development decision."

Bell Atlantic is at the forefront of the new communications and information
industry. With more than 43 million telephone access lines and nearly 10
million wireless customers worldwide, Bell Atlantic companies are premier
providers of advanced wireline voice and data services, market leaders in
wireless services and the world's largest publishers of directory information.
Bell Atlantic companies are also among the world's largest investors in high-
growth global communications markets, with operations and investments in 23