Bell Companies' Claims of Financial Troubles ``Mere Theatrics,'' Z-Tel Tells FCC and State Utility Commissioners Today.

Business Editors

TAMPA, Fla.--(BUSINESS WIRE)--Sept. 23, 2002

Company Analysis Shows Bell Companies' Wholesale

Margins Average 56 Percent

In a letter to the Federal Communications Commission and the National Association of Regulatory Utility Commissioners today, Z-Tel Technologies, Inc. (Nasdaq:ZTEL), a leading provider of local, long distance and enhanced telecommunications services, challenged recent analyst conclusions and Bell company claims that Bell company profits are suffering as a result of the Unbundled Network Element-Platform (UNE-P). Companies like Z-Tel use UNE-P to enter local markets and compete with the Bell companies for local customers. In its letter, Z-Tel asserts that the shift from retail to wholesale margins is a predictable consequence of competition.

The FCC is in the process of conducting its UNE Triennial Review, a proceeding that evaluates the configuration and pricing of elements that competitors lease from incumbent providers to offer local telephone service to mass-market end-users.

Robert A. Curtis, senior vice president of strategic planning for Z-Tel, commented, "With the Triennial Review on the table, the Bell companies have turned up their PR machines to speak out against UNE-P, clear evidence that they're feeling the sting of competition. They fail to acknowledge, however, that the Telecommunications Act of 1996 was implemented to foster a truly competitive atmosphere, not to preserve Bell company profits."

Mr. Curtis added, "As one of the earliest adopters of the UNE-Platform and with customers in 46 states, Z-Tel is in a unique position to know what new entrants really pay for UNE-P access. By our analysis, the Bell companies are realizing a very healthy EBITDA margin - 56 percent on average - from UNE-P. Not a bad rate of return for companies that are allegedly on the verge of going out of business. Their harsh rhetoric against UNE-P in recent weeks constitutes mere theatrics and does not detract from the fact that they still have about 95 percent market share in most areas."

The availability of the UNE-Platform has made possible consumer products like The Neighborhood(SM) from MCI, which offers unlimited local and long distance calling and enhanced services. In six months, Z-Tel has attracted approximately 800,000 customers to its enhanced services platform through its partnership with MCI. Such alliances and innovative services would not be possible without UNE-P.

Mr. Curtis concluded, "As we see in areas where UNE-P is widely available, such as New York, Texas, Illinois, Michigan and Georgia, consumers realize lower prices and better services. The evidence is undeniable - UNE-P is good for consumers, for the U.S. economy and for the financial welfare of the overall telecommunications industry. Congress established sound procedures for setting UNE rates and fostering competition. We urge the FCC to endorse those procedures and recognize the recent Bell company attacks on UNE-P for what they are - a distraction motivated by the Bells' desire to hold on to their monopoly at any cost. UNE-P is the only market entry method that makes sense for both consumers and competition."

About Z-Tel

Z-Tel was founded in the wake of the Telecommunications Act of 1996. With the establishment of the Unbundled Network Element-Platform (UNE-P), competitive telecommunications companies became able to provide telephone service to end-users over the incumbent local telephone providers' network. Z-Tel was formed around UNE-P with the vision of developing technology that would imbue the telephone with "Intelligent Dial Tone," wherein telephone service can be personalized to meet consumers' and businesses' diverse communications needs in an intelligent, intuitive way. Z-Tel offers residential and business customers in 46 states value-added bundled local and long distance phone service with proprietary Internet-accessible calling and messaging features. Z-Tel also makes these services available on a wholesale basis. For more information about Z-Tel's innovative services or about Z-Tel, please visit the Company's Web site at www.ztel.com.