ALTS Contends Bell Atlantic-GTE Merger Proposal Would Violate Telecom Act; FCC Must Reject this 'Sham Spin Off'.

Business Editors/Hi-Tech Writers

WASHINGTON--(BUSINESS WIRE)--May 5, 2000

The Association for Local Telecommunications Services (ALTS) today called on the Federal Communications Commission (FCC) to ensure that Bell Atlantic adheres to the Section 271 requirements of the Telecom Act in its proposed merger with GTE.

In comments to the FCC, ALTS called upon the Commission to reject the Bell Atlantic-GTE proposal and require the companies to fully divest GTE's long distance assets prior to any merger approval.

Bell Atlantic and GTE have planned a merger that should result in a new company called Verizon. According to the merger arrangement, GTE's Internet backbone and related assets will be used in creating another company called Genuity, in which the merged companies would retain significant equity interests and control. Genuity will offer in-region interLATA services. According to ALTS, this arrangement is illegal because Verizon has not received permission to offer interLATA services in all markets where Genuity will do business.

"Bell Atlantic and GTE are playing a shell game," said John D. Windhausen, Jr., President of ALTS, the leading national trade association representing facilities-based competitive local exchange carriers (CLECs). "Although Bell Atlantic and GTE purport to spin off all but 10% of Genuity, the proposal would allow the merged company to retain de facto control over Genuity. Thus, Bell Atlantic would have strong incentives to favor Genuity, and Genuity would be unlikely to compete against Bell Atlantic. The employees of each company would risk professional suicide if they harmed the affiliate."

"Bell Atlantic and GTE's proposal is an obvious attempt to evade the application of Section 271," said Jonathan Askin, ALTS' General Counsel. "Bell Atlantic and GTE would effectively be providing in-region interLATA services before satisfying Section 271. This result would thwart the delicate balance that Congress struck when crafting Section 271 and would undermine Bell Atlantic's incentives to open its local market to competition."

ALTS is the leading national industry association whose mission is to promote facilities-based local telecommunications competition. Created in 1987, ALTS has offices in Washington, D.C. and Irvine, California and now represents more than 200 companies that build, own, and operate competitive local networks. For more information on ALTS, contact Crawford Public Relations at 703-318-5460, or visit the ALTS Web site at www.alts.org.