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FCC DECISION MOVES LOCAL PHONE SERVICES CLOSER TO FULL COMPETITION; ACTION FOLLOWS FROM MFS TELECOM'S LOCAL EQUAL ACCESS INITIATIVE

 OAKBROOK TERRACE, Ill., Aug. 3 /PRNewswire/ -- An historic order issued today by the Federal Communications Commission (FCC) further weakens the grip of monopoly-based telephone companies on the local exchange marketplace. Expanding on its landmark special access interconnection order of Sept. 17, 1992, the FCC has opened the estimated $4.2 billion interstate switched transport portion of local exchange services to competition. This is the portion of the local exchange network that carries interstate calls between the local telephone company switch and long distance carriers.
 The FCC's interconnection ruling is in response to the Local Equal Access Initiative filed by MFS Telecom, Inc., a subsidiary of MFS Communications Company, Inc. ("MFS") (NASDAQ-NMS: MFST), in November 1989. "We are pleased that the FCC has taken this important next step in a continuing process that will ultimately put an end to the one-horse race in the local telephone service arena," said Royce J. Holland, MFS' president. "The FCC's earlier decision opened the starting gate allowing MFS and others to enter the race. Today's order means we're now rounding the first turn.
 "However, while we are off to a good start, we're still a long way from the finish line," Holland said. "What is clear at this point is that as we get closer to a real horse race, the big winner is the customer -- who is just beginning to enjoy the advantages of increased competitive choice including improved network security and service quality; lower costs; greater network efficiencies; and technological advances."
 Holland noted that the history of the U.S. telecommunications industry reflects continued efforts of federal and state government, on behalf of the public, to open monopoly markets to competition. In the long distance marketplace, for example, businesses and consumers have benefitted tremendously from a robust competitive environment initiated by the Execunet Decisions in 1978 and spurred by equal access in the mid-1980s. Similarly, the recent decisions by the FCC, and bellwether states such as New York and Illinois, are providing a foundation for the same type of fundamental change and customer advantages in the local telecommunications market.
 "Today's decision represents another historic step forward in an ongoing transition from monopoly to competitive local telephone markets," Holland said. "However, a number of significant issues still remain to be addressed by the FCC and state commissions before this last remaining monopoly bastion is fully open to competition."
 Phone Companies to Get Nearly 80 Percent
 of Competitors' Revenues
 In theory, the FCC decision opens up the $4.2 billion local switched transport market to competition. However, in practice, only approximately 20 percent of the market is open, because now customers must pay over 80 percent of any switched transport revenues back to the phone companies. These charges are called residual interconnection charges (RIC) and are reimbursed to the telephone companies for costs associated with overhead and losses in revenues resulting from the increased competition. "This unfair treatment is similar to forcing customers of the Delta Shuttle to compensate AMTRAK for lost market share," said Holland. "To ensure meaningful competition, the RIC must be promptly reduced, covering no more than the actual subsidy, and be administered by a neutral third party."
 Other issues requiring attention at the FCC include monopoly telephone company volume and term discount pricing practices, administration of local telephone numbers, and local telephone number portability.
 MFS Also Active at State Commissions
 Holland noted that while MFS has been working to achieve its initiative nationally, it also has taken a leadership role in removing regulatory barriers to competition at the state level. Most recently, MFS petitioned the Maryland Public Service Commission to open up that state's local telecommunications services to competition by authorizing MFS and others to provide local exchange and intrastate interexchange services. This follows on the heels of a landmark decision in New York in 1992, opening most local services to competition, and similar ongoing regulatory processes in other states, including California, Illinois, Massachusetts and Texas.
 -0- 8/3/93
 /CONTACT: Steve Ingish, 708-218-7316, or Claire Fennell, 708-218-7232, both of MFS/
 (MFST)


CO: MFS Communications Company, Inc. ST: Illinois IN: TLS SU: LEG

GK -- NY069 -- 8952 08/03/93 13:50 EDT
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Publication:PR Newswire
Date:Aug 3, 1993
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