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GTE and SNET file motion for a stay of the FCC Interconnection Order; GTE will appeal ruling in Federal Court of Appeals.

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WASHINGTON -- Saying the Federal Communications Commission's (FCC) Interconnection Order violates the intention of the Telecommunications Act of 1996, GTE and SNET today plan to file a motion at the FCC to halt the implementation of the order, pending judicial review of that order. GTE will file a Petition for Review in the U.S. Court of Appeals challenging the FCC order immediately after the order is placed on public notice. If the FCC fails to halt implementation of the order, GTE said it will request a stay of the rules from the Court.

In February, Congress passed the Telecommunications Act of 1996, rewriting a 62-year-old communications act. The FCC's order comes in the wake of Congressional removal of competitive barriers in the telecommunications industry. "Congress passed the Act to deregulate the industry, foster competition and spur investment, innovation and job creation. The FCC's order thwarts these objectives," said William P. Barr, GTE senior vice president and general counsel.

"Congress explicitly rejected centralized rulemaking and instead established a framework for deregulation that relied first on marketplace negotiations and then left unresolved issues to be decided by the states. In issuing a 668-page order dictating national prices and regulating virtually every aspect of the local market for telecommunications, the FCC has overridden both the marketplace's and the states' role."

Under the order, local phone companies that have built and operated the local network would be required to wholesale both their services and parts of their network to resellers at prices substantially below cost. "Requiring local companies to subsidize resellers -- some of whom will be among the nation's largest companies -- would not create true competition, would not encourage investment in facilities or innovation, and would not create any new jobs. Where is the incentive to invest in new innovative services or facilities if companies making the investment are forced to turn around and sell at prices below cost?" Barr said.