New Jersey BPU Wrongly Rubber Stamps Bell Atlantic Alternative Regulation Extension

MCI WorldCom Says Ruling Squanders Golden Opportunity to Spur
Local Phone Competition

Background: The New Jersey Board of Public Utilities (BPU)
today approved Bell Atlantic's new alternative regulation plan
without allowing MCI WorldCom and others an opportunity to testify
before the Board on whether the new plan is in the public interest. MCI
WorldCom believes extending the plan without requiring local phone
competition goes against the public interest because alternative
regulation cannot deliver consumers and businesses the competitive
rates and improved services that competition promises. Alternative
regulation, first approved in 1993, sets a limit, known as a
"price cap," on the rates Bell Atlantic can charge its retail
customers. In exchange, Bell Atlantic's revenues are less strictly
regulated. The idea behind the plan is that reduced regulation would
allow Bell Atlantic to invest in its local network and lower its retail
rates. However, New Jersey customers have not benefited in this way
from this arrangement. Although the cost of providing phone service has
decreased, customer rates have remained at the capped levels and Bell
Atlantic has kept the profits. MCI WorldCom planned to testify during
the hearings that without the vital component of local competition,
Bell Atlantic does not have the incentive to reduce its rates or invest
in its network. In addition, without linking approval of the plan to
full and effective local competition, Bell Atlantic will continue to
delay opening its local monopoly. MCI WorldCom supports pending
legislation (A-2944 and S-1796) that explicitly requires the
development of competitive local phone markets before the BPU can
approve Bell Atlantic's alternative regulation plan.

(Please attribute the following statement to Carl Giesy, MCI
WorldCom regional director for public policy.)

NEWARK, NJ, April 28, 1999 -- "The BPU lost a golden
opportunity today to finally bring local phone competition to all of
New Jersey. By wrongly rubber-stamping Bell Atlantic's extension
request, regulators are squandering an effective incentive that finally
could have compelled Bell Atlantic to allow competitors to use its
network and enter its local market. The BPU also has denied MCI
WorldCom and others the right to express their concerns in a hearing
before the board.

"Requiring competition before extending Bell Atlantic's
alternative regulation plan would have been a huge step toward bringing
New Jersey customers the competitive rates, improved service and
state-of-the-art network and customer choice they deserve -- the same
benefits of competition their New York neighbors are beginning to see
today.

"New Jersey residents should be outraged that Bell Atlantic
will be allowed to continue to make windfall profits and at the same
time stall local competition into the new millenium. We encourage
captive Bell Atlantic customers to voice their support for pending
legislation that would make Bell Atlantic surrender its local phone
monopoly before being handed a free ticket to ever-increasing profits
at the expense of the state's consumers and businesses."