Florida at the Crossroads of Competition

Competitive Carriers Ask Florida PSC for a Fair, Open Local Phone Market

News Bureau Media Relations 800-644-NEWS Investors Scott Hamilton 601-460-4981

TALLAHASSEE, Fla. September 18, 2000 - A coalition of seven large and small competitive local phone companies is calling on the Florida Public Service Commission (PSC) this week to seize the opportunity to finally open BellSouth's monopoly local phone market to competition and customer choice. Competitors, including AT&T, BTI, Intermedia Communications, Mpower Communications, Network Telephone, NewSouth Communications and WorldCom, are urging the PSC to adopt fair economic conditions that will allow them to offer widespread business and residential service to compete with the BellSouth monopoly.

Tomorrow, the PSC begins a weeklong hearing that will help determine the potential for widespread competition in Florida's local phone market. Specifically, the PSC will be reconsidering the exorbitant wholesale rates competitors must currently pay BellSouth to lease critical pieces of the existing public phone network to provide customers with an alternative to their local phone monopoly.

Despite Congress' clear intention under the federal Telecommunications Act of 1996 to eliminate barriers to competition and to allow competing carriers fair access to the facilities of incumbent Bell operating companies, BellSouth has consistently requested wholesale rates that preclude other companies from entering the market.

"It is imperative to create competition by making available the monopoly's infrastructure based on the true costs for BellSouth to build and maintain the network," said Tony Copeland, executive vice president and general counsel for BTI.

Not surprisingly, the wholesale rates BellSouth recently proposed are again too high. These rates would prolong BellSouth's monopoly in a large part of the state. Competitors are asking the Commission to adopt reasonable rates, which would allow many companies to expand their offerings to residential and business customers on a widespread basis and for the first time go head to head with BellSouth.

"Florida is at a crossroads, and the PSC will use the information it gathers this week to determine whether or not Florida consumers in BellSouth territory will ever enjoy the full benefits of local phone competition," said C.K. "Chip" Casteel Jr., WorldCom vice president of law and public policy. "WorldCom is already serving hundreds of thousands of residential customers for local phone service in New York, Texas and Pennsylvania and is ready to enter Florida if the PSC forces BellSouth to open its market with reasonable wholesale rates."

For competition to take root and prosper in Florida's local phone market, new entrants must be able to lease pieces of the BellSouth-controlled public phone network at reasonable wholesale rates, as federal law requires. The current rates, which were set years ago, are too high and protect BellSouth's monopoly stranglehold on the market.

"Florida's current wholesale rates will never allow the kind of vibrant competition the federal Telecommunications Act of 1996 envisioned," said John Kerkorian, regional vice president of legal and regulatory affairs for Mpower Communications. "We want to provide more choices to Florida consumers at lower prices. Unfortunately, we can't today because BellSouth has priced its wholesale network elements above their costs. Unless these prices are lowered substantially, the BellSouth monopoly will win, and Florida consumers will lose."

The outcome of this week's hearings will impact the ability of the full range of competitive local phone and data providers to effectively serve business and residential customers alike.

"As the nation's largest independent competitive local exchange carrier (CLEC), we are directly impacted by BellSouth's monopolistic tactics," said Heather Gold, Intermedia Communications' vice president of industry policy. "Until BellSouth is forced to offer fair wholesale pricing, the people and businesses of Florida will have limited choices for their communications needs."

"Keeping competitor costs prohibitively high also prevents competitors from fully leveraging new technologies to bring customers innovative services that BellSouth doesn't even offer," said Brent McMahan, vice president-regulatory and governmental affairs for Network Telephone. "For example, Network Telephone links critical pieces of the existing network to our own cutting edge technologies to offer products such as voice over DSL. But if the cost of entering the market was lower, customers across Florida would have more providers to choose from."

The competitive carriers are asking the PSC to support a competitive local phone market and stand against BellSouth's pleas to protect its monopoly grip that it has held for decades.

"We fully expect the Florida PSC will make the right decision for Florida consumers," said Claudia Davant-DeLoach, AT&T president of legislative and regulatory affairs for Florida. "The only way that true and fair competition can be guaranteed for Florida telephone consumers is when the intent of the 1996 Telecom Act is honored as it is written."

"NewSouth Communications plays by the rules of the federal Telecommunications Act of 1996. BellSouth does not," said Lori Reese, NewSouth Communications director of governmental affairs. "We need the strength and swiftness of the Commission to make BellSouth accountable."

The unique situation of competitive carriers working together as a single voice represents the importance this issue holds in opening the local phone market to widespread competition.

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