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BELL COMPANIES TELL GORE GOVERNMENT POLICY CHANGES WOULD ALLOW $100 BILLION INCREASE IN 'INFOSTRUCTURE' SPENDING

 WASHINGTON, April 15 /PRNewswire/ -- The seven Bell telephone companies today reinforced their support for the Clinton-Gore high- performance infrastructure initiative and told Vice President Gore they would increase their planned "infostructure network" spending by a massive $100 billion -- if they were allowed to earn back the investment by creating and selling new products and services.
 The Bell companies' proposed spending plan is in response to President Clinton's proposal for greater private investment to increase jobs, productivity and the American standard of living.
 Company executives told Gore they share the Clinton administration's vision of "a door-to-door information network to link every home, business, lab, classroom and library by the year 2015," and the telephone executives said they are willing to help pay for it.
 Properly directed public spending outlined in the Clinton-Gore information plan makes sense, the company executives agreed.
 "However, additional massive public spending is not required" in order to meet these goals, said Ray Smith, chairman of the board and CEO of Bell Atlantic Corp., who spoke for executives of the seven companies meeting with Gore. "Neither," he said, "should upgrading the nation's telecommunications network threaten basic telephone service rates."
 U.S. Telephone Association President John Sodolski added: "The entire telephone industry will increase investment for a comprehensive upgrade of telecommunications infrastructure and welcomes initiatives to ensure universal access and universal service. All telephone companies are interdependent and interconnected, and the health and growth of the entire industry is vital to America's future."
 "Because the United States has become so information intensive, the Clinton-Gore plan also recognizes that investment in the telecommunications infrastructure will be an important engine of economic growth," Smith added.
 "Workers for America's telephone companies and their families will benefit from good jobs and from the competitive benefits this improved network can bt?o every home," said Morton Bahr, president of the 600,000-member Communications Workers of America, who also met with the vice president.
 Studies by The WEFA Group, an econometric forecasting firm, estimate 1.68 million jobs would be created by relief from the restrictions.
 According to recent studies by Arthur D. Little, a national business consulting firm, in addition to creating jobs by building the network, the investment proposed by the Bell companies could also save Americans more than $60 billion each year. The savings will come from providing more efficient access to health care, education and job training and offering telecommuting opportunities that would cut down on transportation costs and pollution.
 The proposed Bell company investment would be directed toward high- capacity wireless telephone systems, high-speed digital switches, digital compression and other state-of-the-art technologies including broadband fiber optics.
 According to Bellcore President and CEO George Heilmeier, "These technologies could enable the United States to create a more educated, scientifically literate and globally competitive society -- equipped with the knowledge it needs to succeed in the world of the future."
 Because independent telephone companies participate with the Bells in a nationwide network, customers of independent companies would also benefit from network development.
 Representatives of the Bell companies who met with Gore said their total infrastructure investment could reach $125 billion in seven years and grow to $450 billion in the subsequent 15 years -- an investment of $100 billion more than currently envisioned.
 Also attending today's meeting with the vice president were: John L. Clendenin, chairman and chief executive officer, BellSouth; Richard D. McCormick, chairman and chief executive officer, U S WEST; Richard Brown, vice chairman of Ameritech and president, Illinois Bell; Ivan Seidenberg, vice chairman-Telecommunications Group, NYNEX; Philip J. Quigley, group president-Bell Companies, Pacific Telesis Group; and Robert G. Pope, vice chairman and chief financial officer, Southwestern Bell Corp.
 Building high-performance, advanced intelligent networks "will require the Bell companies and others to invest considerably larger amounts of capital in their local networks than is currently planned or can be justified in the current regulatory and legal environment," Smith said.
 The Bell company executives said the added investment would be called for only if they could offer services now prohibited by federal restrictions that limit the lines of business of the Bell companies.
 These restrictions prevent the Bell companies from providing long- distance service, conducting most research and development, manufacturing equipment or providing video programming in their local service areas. "These restrictions discourage competition and prevent full use of existing networks by our customers," Smith said.
 The telephone executives also sought a new regulatory framework to protect customers by ensuring that all companies offering telephone service, including newly created alternative carriers, have the same obligation to support low-cost phone service for Americans who otherwise might not be able to afford it. "Subsidies must be narrowly targeted to low-income households and others in need," Smith said.
 In a proposal presented to Gore, the executives also asked for more rational tax treatment of investment in telephone plant, equipment and R&D, and less restrictive depreciation policies.
 They also endorsed the administration plan to provide seed money for pilot projects in telecommunications.
 Smith noted a recent study by DRI-McGraw Hill estimating that a $500 million annual increase in the telecommunications infrastructure of California alone between now and 2010 would create 161,000 new jobs, add $9.9 billion to personal income and generate an additional $1.2 billion in new state and local tax revenues.
 "Our proposal today is a blueprint for financing the investment that will launch that growth," Smith said.
 "The Bell companies share the Computer Systems Policy Project's interest in using the national telecommunications infrastructure to revitalize the U.S. economy and strengthen the competitiveness of the nation's computer industry," Smith said.
 These leading American computer manufacturers recently released a report concluding that existing capabilities of private and public networks are key to creating markets for new technologies. The computer companies recommended that the Clinton administration dismantle government-imposed barriers that discourage "deployment by the private sector of a national communications network of interoperable, interworking networks.
 "By lifting the restrictions and regulating prices rather than telephone company costs and earnings, government can ensure that


shareholders and those who use new services bear the investment risk of upgrading the telecommunications infrastructure," he concluded.
 An executive summary follows:
 "AN INFOSTRUCTURE" FOR ALL AMERICANS:
 Creating Economic Growth in the 21st Century
 President Clinton has proposed a bold economic strategy for taking the country in a new direction. It calls for greater public and private investment to increase jobs, productivity and the American standard of living. Because the U.S. economy has become so information intensive, the president's plan also recognizes that investment in the telecommunications infrastructure will be an important engine of economic growth.
 Telecommunications' role in improving national economic performance is not disputed. An advanced information and communications infrastructure will create jobs and promote economic growth throughout the economy. An advanced telecommunications infrastructure also provides substantial social benefits, such as:
 -- Health care: communications links could reduce administrative
 costs by as much as $36 billion per year, enhance diagnostic and
 research capabilities and provide in-home medical monitoring and
 care.
 -- Education: interactive multimedia services could expand access
 to libraries and data bases and enable distance-learning and
 video-teaching.
 -- Welfare reform: communications can enhance job training and
 provide opportunities for home-based work.
 -- Environment: telecommuting could significantly reduce pollution,
 energy consumption and transportation costs and save almost $22
 billion annually.
 The Bell companies can help the President lead America into the Information Age and are prepared to:
 -- Commit to universal access to the next generation of
 communications services and applications throughout their service
 territories.
 -- Upgrade the public network by spending $125 billion to deploy
 high performance advanced intelligent networks by the year 2000
 and $450 billion by 2015.
 -- Commit to providing the network interconnection that residential
 and business customers need to utilize new services and that
 competitive service vendors need to compete.
 Meeting these commitments will depend on important policy changes that encourage all communications firms to invest in the telecommunications infrastructure. The government should:
 -- Remove the restrictions that prevent the Bell companies from
 providing long-distance service, manufacturing equipment,
 conducting R&D and providing video programming.
 -- Limit regulation to non-competitive services and then regulate
 prices not earnings.
 -- Support universal access by implementing new mechanisms that are
 consistent with a competitive market to achieve the goal of
 universal access to new communications and information services.
 -- Provide tax incentives for investment in plant, equipment and
 R&D, reform restrictive depreciation policies, and provide seed-
 money for pilot projects.
 -0- 4/15/93
 /CONTACT: Mike Brand, 202-955-3050, or Peter Lincoln, 202-955-3058, of Ameritech; Eric Rabe of Bell Atlantic, 215-466-4540; Sydney Shaw of


BellSouth, 202-463-4183; Bob Jasinski, 202-416-0125, or Kelly Davis, 202-416-0155, of NYNEX; Ron Stowe of Pacific Telesis Group, 202-383-6433; Joyce Taylor of Southwestern Bell Corp., 202-293-8553; or Mary Hisley of U S WEST, 202-429-3105/

CO: ST: District of Columbia IN: TLS SU: EXE

TW-MH -- DC024 -- 6437 04/15/93 16:25 EDT
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