TCG-BellSouth Interconnection agreement to open multi-billion dollar switched access market to competition.

NEW YORK--(BUSINESS WIRE)--July 16, 1996--Teleport Communications Group (TCG) announced today that it had reached an interconnection agreement with BellSouth that permits TCG to compete with BellSouth for all local telephone services as well as for the estimated $2.8 billion in fees that long distance telephone companies now pay BellSouth for switched access services in the regional phone company's nine-state serving area.

"This agreement is unique," said Bob Annunziata, Chairman, President and CEO of TCG. "No other interconnection is like it because it opens up significant revenue opportunities for TCG in the BellSouth serving area and introduces competition for the first time into the area of switched access rates paid by long distance companies. Finally, it marks the only agreement between a Regional Bell Operating Company and a true' Competitive Local Exchange Carrier whose primary focus is competing for local telecommunications services."

The terms of the agreement signed yesterday allow TCG to act as a tandem or intermediate switch to terminate and originate calls between long distance carriers and their customers, as well as to offer local switched services in competition with BellSouth.

"TCG's competitive entry into tandem switched access services should lead to restructuring and reforming switched access rates just as TCG's entry into dedicated service offering in the mid 1980s helped reform special access rates charged long distance carriers," said Mr. Annunziata. "As a result of Meet-Point Billing arrangements included in the agreement with BellSouth, TCG will share in the revenue for each portion of the service it provides the long distance carrier."

This agreement was arrived at through negotiations required by the new federal Telecommunications Act of 1996 that was signed into law in February 1996.In addition to the unique Meet-Point Billing arrangement, the three-year agreement stipulates the terms for a number of technical, financial and administrative elements that allow TCG to interconnect its network with BellSouth, including:

- Reciprocal compensation for terminating local exchange calls

- Interconnection at each local or access tandem switch

- Network Interconnection and transport options

- Access to local transport facilities, unbundled links and ports,

cross connections, multiplexing capabilities and access to

databases and associated signaling

- Access to poles, ducts, conduits and rights of ways

- Interim Number Portability.

- Resale of BellSouth retail services

- Physical Collocation 

- 911 and E911 Emergency Network

Charlie Coe, Group President of Customer Operations for BellSouth said: "We've consistently sought to be seen as leaders in bringing about competition in both local exchange and long distance, and this agreement with TCG is further evidence of this."

Robert Mercier, TCG's Vice President for Carrier Relations, said that while the same usage-sensitive local exchange termination rates have been obtained from BellSouth in Florida, though on an interim basis, "the rates are capped, in effect providing TCG with the economic equivalent of Bill and Keep, a method of compensation that allows TCG to maximize its margins on local telephone calls."

Graham Taylor, TCG's Regional Vice President-Southern Region, said: "We're very pleased with the responsiveness of BellSouth during this entire process," he said. "This agreement is a model of how to achieve a mutually satisfactory arrangement and the first serious demonstration by a Regional Bell Operating Company of support and encouragement for local competition."

TCG is the nation's largest and most experienced Competitive Local Exchange Carrier serving the business community in 48 major markets, including 17 of the nation's top 20 markets.

CONTACT: For TCG Investor Relations:

Nancy Huson at 718 355 2154;

or

For TCG media:

Roger Cawley at 718 355 2122.