New Millennium Certain to Bring Continued Change in the Communications Arena; Expect to See Increased Competition and a Sustained Focus On Customer Issues in All Industry Segments.

Business Editors

ATLANTA--(BUSINESS WIRE)--Dec. 21, 1999

The turn of the century is sure to bring continued global change in the communications industry. While much of this change will be a result of 1999 U.S. legislation, new policy will continue into 2000 both in the United States and overseas.

"As we approach the fourth anniversary of the U.S. Telecom Act, the regulatory scene remains unsettled and dynamic," says Melinda Mullet, Arthur Andersen's director of regulatory analysis, "This activity will continue to have significant impact on business strategy and has the power to determine whether a company succeeds or fails."

WHO TO WATCH / WHAT TO WATCH FOR IN 2000

Local service

As regulatory pressure continues to be put on the BOCS, CLECs can expect to see increasing access to the local network infrastructures and increasingly viable access to the local service market. Either new competitors or incumbents are likely to see an additional competitive boost late in 2000 when the FCC determines how to classify advanced data networks and the services provided over them.

Long distance service

-- In 2000, the "old guard" long distance service providers will

finally see competition from the Baby Bells first in the

northeast corridor and California, followed by the south central

and midwestern regions. The new competition is likely to spur

increasingly aggressive marketing programs.

-- The anticipated aggressive marketing campaigns of long distance

providers around the world is sure to spawn a variety of

customer-centric issues such as slamming, cramming and the use of

customers' personal information for marketing purposes. Although

these issues have been the focus of much attention in Congress

and the regulatory community in the past, additional activity is

expected on all fronts. On a global basis, regulators,

particularly in Europe and Asia, will intervene as needed.

Cable

-- Following the "eleventh hour" legislation adopted just this

month, cable companies will see additional competition from

satellite-based service providers who are finally allowed to

include local programming in their service offerings. Cable

companies are expected to respond by offering high speed Internet

access and interactive services that their satellite competitors

are technologically unable to match at this time.

-- Cable providers also are avidly watching litigation that

ultimately will determine whether local franchising authorities

can require them to unbundle their cable platforms for other

ISPs. Cable carriers are aggressively pushing to ensure that this

cannot be mandated at a local level.

Internet

-- ISPs are also watching the cable platform dispute. They are

expected to retain their exemption from access charge payments

through 2000, but should be wary of the FCC's next round of

reforms. As ISPs try to maintain their largely unregulated status

while attempting to leverage existing regulatory constraints to

their advantage, they most certainly will be significantly

impacted by the possible FCC determination that advanced services

are to be regulated as traditional telephony services rather than

as a new hybrid service.

-- The issue of global non-regulation of the Internet will continue

to receive significant attention. An extension of the current

moratorium on Internet tariffs is expected early in 2000, but the

debate over broader oversight, enforcement and taxation issues

will last well into 2001.

Wireless

Wireless service issues will be hot over the next 12 18 months. The FCC soon will complete its guidelines to support calling-party-pays (CPP) services which will generate numerous customer-facing complications including billing and customer notification issues. Those not addressed by the FCC's order will be the subject of significant industry debate.

WTO 

Friction is expected to increase over the implementation of the WTO agreement on basic telecommunications services. As WTO member nations continue to bicker amongst themselves over broader trade issues, disputes over the pace of compliance with telecom market opening commitments are sure to bubble to the surface.

China

Progress continues to be made on the controversial issue of Chinas accession to the WTO. However, it is probable that talks will drag on well into 2001 as U.S. political machinations are likely to slow the adoption of agreements designed to pave the way for the sleeping giant to enter the world trade arena.

KEY: =positive; =negative; =neutral

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