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TELECOM COMPETITIVE BARRIERS FALLING AT STATE LEVEL, FITCH SAYS -- FITCH FINANCIAL WIRE --

NEW YORK, Jan. 24 /PRNewswire/ -- Regulatory and technical barriers that have long separated local and long distance telephone companies, as well as cable television firms, are gradually being lowered on a state-by-state basis with or without federal legislation, a new report by Fitch shows. In an increasingly competitive environment, companies that can finance new business opportunities from internally generated cash are much more likely to retain their credit profile than companies that must rely on the capital markets.

While increased competition is clearly on the horizon, it will be measured and phased in on a market-by-market basis. Companies are likely to avoid sizable investments in unproven technology and large-scale capital projects without first gathering sufficient marketing data to support business plans for broadening their service offerings and launching large-scale head-to-head competition.

The phasing in of competition will be guided by both federal and state regulators, following the likely signing of federal legislation later this year. There would be an implementation period of one to three years, during which state public service commissions and federal agencies, such as the Federal Communications Commission and U.S. Department of Justice, would hold protracted negotiations over regulatory jurisdictions. Each regulatory agency will maneuver for authority over who will regulate the opening of local telephone networks to competition and how universal service and other social priorities will be subsidized in the coming competitive information era.

The overhaul of the existing regulatory framework is in response to technological advances that have, in large measure, undermined the historical economic assumption that adequate service could only be provided by the granting of monopoly status. In response to the new regulatory environment, companies in the communications industry are preparing strategies to take advantage of the expected convergence of the $90 billion local telephone, $70 billion long distance, and $25 billion cable television markets, as well as the rapidly growing wireless segment of the telecommunications industry.
 -0- 1/24/96


/CONTACT: Stuart M. Rossmiller, 212-908-0639, Stephanie Babich, 212-908-0524, or Michael Plancey, 212-908-0520, all of Fitch/

CO: Fitch Financial Wire ST: New York IN: TLS SU: LEG ECO

PS -- NYW075 -- 4705 01/24/96 12:22 EST
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Publication:PR Newswire
Date:Jan 24, 1996
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