Telecommunications Competition Alive and Growing in Pennsylvania

Telecommunications Competition Alive and Growing in Pennsylvania

Many Companies Compete in Market; A Few Compete Only in Hearing Room

March 30, 1998

HARRISBURG, Pa. -- Companies of all sizes are competing for
Pennsylvanians' local telephone service, and yet several of the largest
potential competitors continue to complain about rates in an attempt to
mask their own intentions to stay out of the local telephone market.

"The facts show that local exchange competition has taken root and is
growing throughout Bell Atlantic's serving area, with a multitude of
service offerings to residential and business customers," said Bell
Atlantic-Pennsylvania President and CEO Daniel J. Whelan today.
Whelan testified at a technical conference convened by the
Pennsylvania Public Utility Commission (PUC) to examine the status of
local competition.

"If local competition has not progressed as far as it could, it has
nothing to do with the rates set by the PUC. Rather, it is because
Pennsylvania's new telephone companies fall into two categories: those
that compete in the marketplace and those that compete in the hearing
room," he said.

Last summer, the PUC set the rates competitors pay Bell
Atlantic-Pennsylvania when they resell Bell Atlantic's service at a
discounted rate or lease parts of Bell Atlantic's network.
Competitors also have the option of building their own
telecommunications networks in Pennsylvania.

Whelan said one year ago 30 companies had applied to provide competing
local exchange telephone services in Bell Atlantic's Pennsylvania
service area. That figure has almost tripled today.

Competing companies now are reselling over 42,000 lines of Bell
Atlantic-Pennsylvania's local exchange service, about 20,000 of which
serve residential customers. "The fact that competitors are
reselling our local services at an average of 6,000 new lines per
month refutes AT&T's claims that reselling at the discount set by the
PUC is not an 'economically viable' option," Whelan said.

"One year ago, Bell Atlantic-Pennsylvania had leased 405 lines to its
competitors. Today, that number has grown to 13,800 lines. And Bell
Atlantic's rates in urban areas are lower than in 40 other states," he
added.

In addition to competitors who are reselling Bell Atlantic services or
leasing the company's unbundled lines, a number of companies are
building their own fiber-optic infrastructures in Pennsylvania. In
many cases, these companies' networks are becoming the backbone
networks for competing local exchange providers.

Whelan also pointed to other indicators that significant competitive
inroads are being made in Pennsylvania:

• In 1997, Bell Atlantic and competing companies exchanged 1.3
  billion minutes of conversation, data and faxes over their
  interconnected networks. This equals the average volume for
  approximately 216,000 residence customers in one year.

• Almost 40,000 trunks currently connect Bell Atlantic's and
  competing companies' networks, a figure that is growing.

"The facts simply don't support the continued claims by a few
companies - most notably AT&T and MCI - that the prices set by the PUC
are too high and as a result have prevented competition from
developing in Pennsylvania," said Whelan. "Marketplace competitors
use Bell Atlantic's wholesale discount and unbundled rates to provide
choices to customers. Those competing in the hearing room bash the
rates approved by the PUC to excuse their own inefficiency or
unwillingness to compete."

Whelan said AT&T and others are creating a smoke screen to cover their
true intentions to enter the more lucrative local service market for
businesses while ignoring residential customers and keeping companies
such as Bell Atlantic from competing for more-profitable long distance
services.

However, AT&T's strategy has become clear with the purchase of TCG.
AT&T intends to bypass Bell Atlantic-Pennsylvania's services by
acquiring existing facilities of other competitors. This merger gives
AT&T an opportunity to grab a foothold in the most profitable segments
of local exchange-business customers in dense metropolitan areas.

AT&T's delay in entering the residential market is not driven by
rates, but only by the desire to keep companies like Bell Atlantic out
of long distance, a market with a profit margin that far exceeds the
margins for local service.

Bell Atlantic - formed through the merger of Bell Atlantic and NYNEX -
is at the forefront of the new communications, information and
entertainment industry. With 40.5 million telephone access lines and
six 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 21 countries.