Bell Atlantic: Bad Telecom Legislation Harms Pennsylvanians

Bell Atlantic: Bad Telecom Legislation
Harms Pennsylvanians

Trio of Bills Sends Chilling Signal for State's Business
Development

April 28, 1999

HARRISBURG, Pa. -- Pennsylvanians hoping for more jobs and
economic development will be among the losers if three State Senate bills
are enacted, the head of one of Pennsylvania's largest private employers
told a Senate panel today.

"Senate Bills 667, 668 and 669 are bad bills that will harm two
companies, Bell Atlantic and GTE, to the benefit of their
competitors," said Daniel J. Whelan, president and CEO of Bell
Atlantic - Pennsylvania, at a hearing of the Senate Consumer Protection
and Professional Licensure Committee. "Pennsylvania and its
citizens will be harmed, investment and real jobs will be forfeited, and
competition and economic development will be impeded if theses bills are
enacted."

"It's clear that the theme of these bills is anti-Bell Atlantic and anti-
GTE," Whelan said.

Proponents of the bills typically cite concerns about the companies' size,
and whether Bell Atlantic is dealing fairly with its competitors and
meeting its network modernization commitments.

However, the facts dispel those concerns. "In the current
environment of accelerated competition and consolidation among the
major (industry) players, there is no need for additional legislation,"
said Whelan. Bell Atlantic and GTE already are two of the most heavily
regulated companies operating in the commonwealth. (EDITORS: See
accompanying fact sheet for the latest figures on the rapidly growing
competition for local phone service in Pennsylvania.)

In his testimony, Whelan outlined the reasons the bills should be killed:

S.B. 667 would establish an antitrust standard for the Pennsylvania Public
Utility Commission to apply in considering any merger involving Bell
Atlantic or GTE. In doing so, S.B. 667 would send an ominous signal to
any company that it, too, could become the target of similar legislation.
"Businesses will be less likely to risk expanding or locating in a
state where the regulatory climate can be changed at random to
significantly jeopardize their financial investment," Whelan said.

"Senate Bill 667 is designed to further the interests of our
competitors, not the interest of the competitive process," he added.
"Legislation should not determine winners and losers. Legislation
should allow the competitive process to work."

The Bell Atlantic-GTE merger is undergoing significant review by
authorities in Pennsylvania and more than 35 other states, along with the
Department of Justice and the Federal Communications Commission.
"There is no rational basis for creating a process duplicative of that
at the federal level -- a process that will only drain the resources of the
state and its taxpayers while impeding the economic development
activities so vital to the commonwealth's interests," Whelan said.

S.B. 668 would require just one company -- Bell Atlantic -- to become two
separate subsidiaries, one for marketing and sales and the other to provide
wholesale services to Bell Atlantic's sales arm and other companies. This
bill allegedly will assure evenhanded treatment by Bell Atlantic for
competitors who choose to use the company's telecommunications
facilities.

Tough state and federal standards already guarantee such evenhanded
treatment, Whelan noted. "Bell Atlantic has dealt with competitors
who use, in whole or in part, our facilities to provide their services since
the mid-1980s," he said. In addition, the PUC has established a
number of competitive safeguards that address such concerns.

S.B. 668 also is inconsistent with the federal Telecommunications Act of
1996, which contains no such separate subsidiary requirement for
providing local service. "Obviously, such a requirement is not
needed for any reason other than to place an undue burden on Bell Atlantic
and severely hobble its ability to effectively and fairly compete,"
Whelan said.

Lastly, the bill ignores the fact that competitors do not have to use Bell
Atlantic's network at all. Many companies, including AT&T and MCI
WorldCom, have built their own networks and call switching equipment
around the state. "This bill would place Bell Atlantic at a cost
disadvantage because these competitors would be able to provide full
services to their customers over their own facilities, while only Bell
Atlantic would not," Whelan said.

S.B. 669 would change Chapter 30 of the state's Public Utility Code to
impose time limits of five years for alternative regulatory and network
modernization plans for only Bell Atlantic and GTE. This legislation also
would free competitive local phone companies from any network
modernization requirements.

"This bill can be grouped in the 'If it's not broke, don't fix it'
category," said Whelan. "Chapter 30 provides the PUC with
the existing authority to protect basic local exchange rates, which has
happened. And, due to low inflation, Bell Atlantic has actually reduced
rates every year since the plan's inception. Those rate reductions will
return a cumulative total of more than $120 million to Bell Atlantic's
Pennsylvania customers by the end of this year."

Through Chapter 30, the commission also can ensure that Pennsylvania's
telecommunications infrastructure remains state-of-the-art. And that's
exactly what is happening, Whelan stressed. In 1996 and 1998, Bell
Atlantic filed updates that show its progress toward meeting a series of
commitments made in the company's original network modernization plan.

"Bell Atlantic is building the network we have promised, and we
have met our commitments," he said.

Newer, competing local phone companies also should be held to the same
standard, Whelan stressed. "All telecommunications carriers should
have the same requirements as they build their own networks. To do
otherwise is not just bad public policy, it's flatly discriminatory."

Bell Atlantic is at the forefront of the new communications and
information industry. With 43 million telephone access lines and nine
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 countries.

Competition for Local Phone Service Continues to
Flourish in Pennsylvania

Competition in Pennsylvanias local telephone market is real and
growing rapidly, as the figures below demonstrate: