MCI Urges Defiance Of Bell Scare Tactics

ARLINGTON, VA, October 17, 2002 - State regulators should see recent Bell complaints about "burdensome" regulation for what they are - a cynical attempt to kill competition in local phone markets, MCI said. In a letter sent to utility commissions in all 50 states, Wayne E. Huyard, president of MCI Mass Markets, urged them to stand firm in the face of an aggressive lobbying and public relations campaign mounted by the Bell operating companies to undermine local competition.

The Bells have taken particular aim at the pricing and availability of network piece-parts, which the federal Telecommunications Act of 1996 mandates the monopolies provide to competitors at cost-based rates in a package called the "Unbundled Network Element Platform" or "UNE-P," Huyard noted in the letter. The Bells have argued that the Federal Communications Commission should phase out UNE-P in favor of a "facilities-based" approach - an action that would destroy local competition just as it is beginning to take hold, he said.

"The Bell operating companies, pressured by a multitude of market forces, are engaged in an unprecedented anti-UNE-P advocacy campaign characterized by threats, distortion and political manipulation," Huyard said in the letter. "Their ultimate objective is to kill competition."

Huyard noted that there are two reasons the Bells are attacking UNE-P. The first is that the FCC is conducting a review of its UNE rules and the Bells want to eliminate the availability of certain UNEs and change the ground rules for pricing them. The second reason is that only now -- six years after Congress approved the Telecom Act - are the Bells feeling the first signs of meaningful local competition.

Efforts by the Bells to eliminate the only vehicle for consumer and small business local competition just as they push into long distance are "classic monopolistic maneuvering," Huyard said. The Bells are blaming UNE-P for "financial woes" driven by entirely different issues such as wireless substitution and a depressed economy. They fail to tell regulators of the double-digit long distance market share they typically capture in the first few months of market entry, at gross margins twice the level of UNEP-based local, he said.

MCI's experience as the largest competitive local carrier demonstrates both the vitality of the market and the business model that supports it, Huyard said.

"The Act has finally begun to work and UNE-P has finally evolved to a workable economic model on which a future of vibrant communications competition can be built," Huyard said. "The FCC should allow UNEP-based competition to develop beyond its nascent stage, and let market forces and technology drive the transition to facilities wherever it is economically possible, without artificial triggering mechanisms."

Huyard urged state regulators to stay the course on UNE availability and cost-based pricing, even in the face of intense lobbying by desperate monopolies. They must also make their voices heard in the national debate, to help strengthen the FCC's resolve, he added.

About MCI

MCI group (NASDAQ: MCWEQ), an operating unit of WorldCom, Inc., is a leading provider of residential voice, advanced messaging and commercial communications services. MCI group offers a robust portfolio of products, including local, international and long-distance voice services, advanced messaging, and wholesale voice, dial-up Internet and data services. In April 2002, MCI launched a revolutionary new service - The Neighborhood - the industry's first truly any-distance, all-inclusive local and long-distance offering to consumers for one fixed monthly price. For more information about MCI and The Neighborhood, go to http://www.mci.com.