Bell Atlantic and Level 3 Communications
Landmark Internet Agreements in Eight
States and District of Columbia
Model Agreements Resolve Reciprocal Compensation
and Integrate Companies' Networks More Completely
Oct. 21, 1999
NEW YORK -- Bell Atlantic (NYSE:BEL) and Level 3
Communications today announced breakthrough agreements on
connections between their telecommunications networks in eight East
Coast states and the District of Columbia. The agreements strike a long-
sought compromise on payments known as reciprocal compensation paid
between telephone companies for calls their customers make, including
calls to dial up and surf the Internet.
The three-year agreements apply in Massachusetts, New York, New
Jersey, Pennsylvania, Maryland, Virginia, New Hampshire, Rhode Island
and the District of Columbia.
The agreements reduce rates paid by one company to the other that were
as high as eight-tenths of a cent for each calling minute to three-tenths of
a cent for 1999, and to just above one-tenth of a cent after 2000. The
agreements apply retroactively to February, 1999, settling previously
disputed charges between the companies.
Bell Atlantic and Level 3 also agreed to build additional trunks over the
next nine months to increase the capacity of their networks to pass calls
to each other. In addition, the companies will increase the number of
points at which their networks connect by establishing interconnection
points in each of the geographic areas served by Level 3.
"We've cut the Gordian knot," said Paul Lacouture, Bell
Atlantic group president for network services. "Instead of
continuing to argue over whether these fees apply at all, we've agreed to
include Internet calls in the calls we pay for, but at a substantially reduced
rate that more closely reflects the cost of handling this kind of traffic. We
want to put this dispute behind us and cooperate with Level 3 and others
in building the most efficient Internet connections in the country -- on
financial terms that benefit us both."
"The spirit of compromise that brought our two companies together
is a model for the industry," said Lacouture. "We believe
others will see that we have finally found the middle ground."
Until this agreement, incumbent telephone companies like Bell Atlantic
have argued that calls to the World Wide Web are not local calls covered
by reciprocal compensation fees paid when one telephone company
completes a local call originating on another company's network.
At the same time, new entrant telephone companies like Level 3, who
often serve Internet companies, have argued that these fees do apply to
Internet calls. State utility commissions and the Federal Communications
Commission have come down on both sides.
"We expect the regulatory commissions and the rest of the industry
to see the value in encouraging telecom companies to apply their
creativity to resolving problems like this, instead of litigating
them," Lacouture said.
Bell Atlantic is at the forefront of the new communications and
information industry. With more than 43 million telephone access lines
and more than 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