TCG Pacific Bell reach first comprehensive interconnection agreement that opens California's multi-billion dollar telecom market to competition.

SAN FRANCISCO--(BUSINESS WIRE)--July 17, 1996--Teleport Communications Group (TCG) announced today it is the first competitive phone company to reach an interconnection agreement with Pacific Bell under the federal Telecommunications Act of 1996. This agreement will greatly improve TCG's ability to compete in all aspects of Pacific Bell's $8 billion local telephone/telecommunications market.

"This agreement is significant for TCG because California is the nation's largest local telecommunications market," said Bob Annunziata, Chairman, President and CEO of TCG. "We now have in place the economic and operational foundation to allow TCG to compete effectively in the state and meet growing customer demands for better local exchange service, switched access service and private line service."

Competition to provide local exchange service - what people traditionally think of as "dialtone" - will be enhanced by a provision in the agreement that adopts a "bill and keep" approach to compensation. This arrangement, in which neither company pays the other to hand off calls that must be transferred between networks for termination, remains in effect until one year after permanent number portability is implemented at the end of 1998.

"The agreement not only allows TCG to provide tandem, or intermediate, switching between long distance companies and Pacific Bell's customers, but also greatly improves the economic and operational conditions for TCG to offer such services," said Jim Washington, TCG's Regional Vice President. Prior to this agreement, Pacific Bell was guaranteed most of the revenues from intermediate switched service, even if the service was provided by a Pacific Bell competitor. "Finally, switched access service competition has arrived here in California."

The agreement also significantly reduces the cost for TCG to "collocate" its equipment in Pacific Bell's switching centers, and creates a new, more efficient type of collocation.

"The changes we've negotiated in collocation rates and methods open up much more of the local telecommunications market to competition, because they reduce the cost for TCG to expand its own network and reach a greater percentage of consumers," Washington said.

"Both companies have devoted thousands of hours to this process of negotiating this agreement," said Michael Morris, TCG's Regional Vice President of Regulatory & External Affairs. "We expect that substantial investment to benefit all consumers in California, as well as TCG and Pacific Bell. We look forward to speedy approval of the agreement by the California Public Utilities Commission."

Other provisions in the agreement include:

- Access to network elements, including unbundled local loops

- Access to poles, conduit and other Rights-of-Way

- Interim number portability provided by Pac Bell until a permanent

call forwarding solution is feasible, with a sharing of switched

access revenues

- E911 Emergency Services 

- Resale of Pacific Bell retail services

Teleport Communications Group (TCG) is the nation's largest and most experienced Competitive Local Exchange Carrier (CLEC) serving the business community in 48 major markets in the U.S., including 17 of the nation's top 20 markets. In California, TCG operates three fiber-optic networks in the metropolitan areas of San Francisco, Los Angeles and San Diego, which collectively extend more than 1,000 route miles. TCG is listed on the NASDAQ National Market under the symbol TCGI.

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