Barriers to BellSouth Long Distance Costing Florida Customers as Much as $1.2 Billion Annually; Study Concludes Customers Still Paying ''Inflated Prices'' for Long Distance.

Business & News Editors/Technology Writers

MIAMI--(BUSINESS WIRE)--June 7, 2001

Barriers keeping BellSouth (NYSE:BLS) out of the long-distance market in Florida may be costing customers up to $1.2 billion annually, a study released today concludes.

The study concludes that telephone customers are paying inflated long distance rates without "true competition" in the market.

In total, customers throughout the Southeast "are losing as much as $4.6 billion in potential benefits from competition because of long distance regulatory barriers in the states served by BellSouth. Ending regulatory barriers to BellSouth's entry into the long-distance market could remedy this situation and lead to competitive pricing," concludes study author Stephen B. Pociask. Pociask is an economist and longtime analyst of the telecommunications and high-tech industries based in the Washington, D.C., area. He has authored numerous studies using applied economics to gauge the effects of telecommunications pricing and regulation on customers.

His new study, entitled "Competition and Consumer Benefits: A Quantitative Assessment of In-region BellSouth Long-Distance Market," uses analysis of long-distance pricing and the empirical results of competition in states such as New York and Texas where the long-distance market has been opened to full competition. Customers there are already enjoying reductions in their long-distance bills of as much as 32 percent, the study notes. The lack of full competition in the Southeast means that most customers in the nine states served by BellSouth are still paying "substantially above costs," Pociask says.

He concludes that customers will win three ways if BellSouth is allowed to enter the long distance business.

-- BellSouth's entry into the long-distance market will introduce true
competition in a market currently dominated by three companies. Based on
projections and results already seen elsewhere, Pociask estimates the new
competition may lower long-distance prices between 20 and 32 percent.

-- BellSouth's entry will also stimulate local competition.

-- Lower local and long-distance prices will stimulate demand for both, and
customers will enjoy additional savings as usage increases.

BellSouth has filed applications for permission to provide long-distance service before state regulatory commissions in Alabama, Kentucky, Louisiana, Mississippi, North Carolina and South Carolina. In addition, BellSouth's wholesale service systems - the systems that allow competitors to resell local telephone service using the BellSouth network - have been subject to extensive testing in Georgia and Florida.

BellSouth filed documents with the Florida Public Service Commission on May

31st, asking that it be allowed to offer long distance service to its customers throughout the state.

Conclusions reached by the study include:

-- The long-distance market in the Southeast is still heavily

concentrated among the top three long-distance companies.

-- Barriers to BellSouth's entry into the long-distance market reduce

competition and "permit long-distance service providers to price

significantly above cost."

-- Local competition will likely intensify when BellSouth is allowed

into the long-distance markets because long-distance companies

will be encouraged to compete for local service. In fact, the

study estimates, increased local competition might yield an

additional $1 billion in region-wide savings.

-- Data indicates local competition is growing rapidly. In fact, the

study estimates the local competition is growing 1.7 times faster

than the competition for long-distance services grew when that

market was first opened to competition.

Stephen B. Pociask has worked in and consulted for high-tech and telecommunications companies for more than 20 years. His numerous studies have been filed with federal and state regulatory commissions and he has testified before Congress on Internet and broadband legislation. He served as chief economist and executive vice president for Joel Popkin and Co., an economic consulting firm in Washington, D.C., before starting his own consultancy, TeleNomic Research. Pociask, who lives and works in the Washington area, has an M.A. in economics from George Mason University.

BellSouth Corporation is a Fortune 100 communications services company headquartered in Atlanta, serving more than 45 million customers in the United States and 16 other countries.

Consistently recognized for customer satisfaction, BellSouth provides a full array of broadband data and e-commerce solutions to business customers, including Web hosting and other Internet services. In the residential market, BellSouth offers DSL high-speed Internet access, advanced voice features and other services. BellSouth also provides online and directory advertising services, including BellSouth(R) RealPages(SM).com.

BellSouth owns 40 percent of Cingular Wireless, the nation's second largest wireless company, which provides innovative wireless data and voice services.

Copies of the study may be found on the TeleNomic and BellSouth Web sites, telenomic.com or bellsouthcorp.policy.net/policy/relief.pdf.