MCI WORLDCOM SAYS PACBELL'S "271" APPLICATION IS PREMATURE

97% Control of 17.4 Million California Phone Lines is Not Competition

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

SAN FRANCISCO, July 16, 1999 -- MCI WorldCom is calling Pacific Bell's second application to offer long distance service in California extremely premature.

Under Section 271 of the Federal Telecommunications Act of 1996, Pacific Bell must completely satisfy a "competitive checklist" of 14 requirements before it can be authorized to provide long distance in California. The law requires the local phone market to be competitive first, before Pacific Bell can be eligible for long distance entry. The ability to sell long distance is the only incentive for Pacific Bell to end its monopoly control of local phone service in the state. Allowing it to offer long distance before competition takes hold would close the door on the future of competition.

In December, the California Public Utilities Commission (CPUC) denied the local phone monopoly's first bid to offer in-state long distance service after an exhaustive nine-month investigation by commission staff experts and a CPUC administrative law judge found that Pacific Bell fell well short of meeting the checklist requirements.

"One would have to assume that something has changed in the past seven months to justify this sequel," said Richard Severy, director, MCI WorldCom Public Policy. "But the fact is nothing significant has changed. Local phone competition hasn't advanced at all since last year. Consumers still do not have a meaningful choice for their local service."

Chief among the competitive barriers that Pacific Bell has yet to satisfy are:

· Improving its operations support systems (OSS) in order to efficiently and accurately confirm customer account data, place orders, provision service, provide billing or initiate repairs. Pacific Bell's OSS have not been proven to be fully capable of quickly and reliably allowing customers to change carriers.

· Reducing the prices of network facilities needed by competitors. Today, many of Pacific Bell's rates are among the highest in the nation and have discouraged competitive entry by firms seeking to serve California residents. Although the CPUC is considering lowering prices for some network elements, that hasn't happened yet, and reasonable prices for collocation arrangements and other network capabilities needed to provide advanced digital subscriber line (DSL) services have yet to be set.

· Failing to offer competitors efficient and nondiscriminatory opportunities to provide California consumers with innovative DSL services, and

· Improving its ability to "port" a customer's telephone number from Pacific Bell's network to the competitor serving the customer. Too often, Pacific Bell fails to timely and accurately transfer the customers' phone numbers, resulting in service disruptions and customer inconvenience.

"Despite Pacific Bell's exaggerated claims of robust competition, it has still not met the legal requirements and opened its market to competition. Nor will it, unless the CPUC forces it to do so," Severy said.

After first supporting the Telecommunications Act, then filing a lawsuit to declare it unconstitutional, Pacific Bell is now disingenuously claiming again that it has met its legal obligations and opened its local telephone monopoly to competition. Despite the best efforts of the CPUC and new entrants to foster local competition, Pacific Bell still controls around 97% of its local market, and is doing all in its power to keep it that way.

MCI WorldCom urges the CPUC to closely scrutinize Pacific Bell's latest application, and encourages it to "stay the course" by insisting on open, robust local competition before it considers Pacific Bell's premature plea for long distance entry.

"We're committed to providing local service for all Californians," Severy said. "We've invested millions of dollars to provide facilities-based service, and we've found a big demand from customers for choice. Unfortunately, at this point, we are forced to limit our facilities-based local offerings to business customers. Create an environment for competition, and you'll see real competition, which includes offering all customers access to more choices, innovative new products, improved customer service and competitive prices."

MCI WorldCom offers facilities-based local service to California businesses in San Francisco, Los Angeles, San Diego, Sacramento, Oakland, San Jose, Bakersfield, Fresno, Orange County, Santa Rosa, Stockton and Vallejo-Fairfield-Napa.

MCI WorldCom is a global leader in communications services with 1998 revenues of more than $30 billion and established operations in over 65 countries encompassing the Americas, Europe and the Asia-Pacific regions. MCI WorldCom is a premier provider of facilities-based and fully integrated local, long distance, international and Internet services. MCI WorldCom's global networks, including its state-of-the-art pan-European network and transoceanic cable systems, provide end-to-end high-capacity connectivity to more than 40,000 buildings worldwide. MCI WorldCom is traded on NASDAQ under WCOM. For more information on MCI WorldCom, visit the World Wide Web at http://www.wcom.com.

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