WorldCom Urges KCC to Foster Local Phone Competition in Kansas

Company Disagrees With Staff View; Says Testing Computer Links Vital To Competitive Market

TOPEKA, Kan. -- August 31, 2000 -- WorldCom today told the Kansas Corporation Commission that it disagrees with the staff's assessment that Southwestern Bell has opened its monopoly local phone market to competitors and urged the KCC to take steps to break open the state's residential local phone market before it endorses Bell's bid to sell long-distance in Kansas.

In comments filed today WorldCom asked the KCC to require third-party testing of Bell's Operations Support Systems (OSS), the electronic ordering systems and interfaces crucial to establishing a truly competitive local phone market. The very same kind of testing and third-party validation led to the opening of the residential local phone markets in Texas and New York, and in Pennsylvania earlier this month.

"It is imperative that the KCC not rush to judgment on the critical issue of telecommunications competition when so much work needs to be done," said Neal Larsen, WorldCom regional director of Public Policy. "The KCC has the opportunity and the duty to use Southwestern Bell's burning desire to get into the long distance business as an incentive to force Southwestern Bell to relinquish its monopoly grip on the local phone market and bring true customer choice to Kansas."

Under the Federal Telecommunications Act of 1996, all regional Bell companies are required to prove to state and federal regulators that their local phone markets are open to competition before they can be allowed to provide long distance services in their own monopoly markets. So far, Bell companies in only two states have received long distance authorization -- Verizon (formerly Bell Atlantic) in New York, and Southwestern Bell in Texas.

"Southwestern Bell maintains that Kansas market is opened just like Texas, but nothing is further from the truth. Unlike Texas, there is no meaningful local phone competition in Kansas," Larsen said. "We're asking the KCC to remedy that by preventing Southwestern Bell from receiving long distance approval before it has irreversibly opened its local monopoly market in Kansas."

Before the KCC endorses Bell's long distance application, it must certify that competitors have fully functional access to the OSS that Bell uses to serve its customers. The FCC has said that intensive OSS testing or actual commercial experience - neither of which has occurred in Kansas - is critical in determining whether it ultimately will approve a Bell company long distance application.

Southwestern Bell claims that its OSS in Kansas are identical to the Texas systems, which have passed muster with the FCC. The KCC should not accept this claim without verifying it.

"The burden of proof is on Southwestern Bell," Larsen said. "Southwestern Bell has admitted that the computer processors that were tested in Texas are not the same ones that will handle orders in Kansas. In fact, the processors are located in different states. Texas orders are processed in Dallas, while Kansas orders are processed in St. Louis. Because the computer systems for Kansas were not included in the Texas OSS test, the KCC needs to conduct a thorough, third-party test to determine conclusively whether these two different systems are in fact 'identical,' as Southwestern Bell now claims.

"Strong action by the KCC now will ensure the framework is in place to allow local phone competition to take root and give Kansans the same benefits that Texans, New Yorkers and Pennsylvanians are enjoying today - lower prices, improved customer service and new innovative products," Larsen said.

WorldCom (NASDAQ: WCOM) is a global leader in "all-distance" communications services with operations in more than 65 countries. Revenues in 1999 were $37 billion, with more than $15 billion from high-growth data, Internet and international services. WorldCom provides facilities-based and fully integrated services to facilitate e-business and e-commerce in the digital generation. For more information go to http://www.worldcom.com/index.phtml.

Download WorldCom's reply comments to the Kansas Corporation Commission on Southwestern Bell's pending Section 271 application.