AT&T Proposes UNE-P Alternative

Suggests migration from competition based on UNE-P to facilities-based competition using standalone unbundled loops

April 29, 2004

3 Min Read

WASHINGTON -- AT&T (NYSE: T) today proposed a groundbreaking offer to each of the four Bell companies -- Verizon Communications Inc., SBC Communication Inc., BellSouth Corporation and Qwest Communications International Inc. -- that would provide a smooth, equitable transition to facilities-based competition and protect millions of customers who have chosen AT&T as their local service provider. This is a comprehensive proposal that moves away from previously drawn battle lines, and is intended to advance the private negotiations urged by the Federal Communications Commission (FCC).

AT&T is proposing the framework to foster a genuine migration from competition based on UNE-P to facilities-based competition using standalone unbundled loops -- the actual wires from the customer's premises to the Bell company central office.

"If the Bell companies accept this offer, the industry's leaders can turn confrontation into conciliation by solving one of the most significant controversies since the inception of the Telecommunications Act of 1996," said AT&T Chairman and Chief Executive Officer David W. Dorman. "This is a giant step forward that will relieve the Bell companies of the leasing obligations to which they most object and allow AT&T to expand the use of its own facilities to serve local customers."

More specifically, the proposal provides for increases in the price of UNE-P by at least $3 in phases over the next 2 1/2 years so as to impose a financial penalty on competitors that continue to rely on UNE-P. In exchange, however, competitors would be able to obtain operational and economic access to "last-mile" loop facilities on terms that are reasonable and fair.

In effect, the offer to the Bell companies is UNE-P price increases in exchange for reasonable reductions in the costs and necessary improvements in the provisioning required to support facilities-based competition. The framework also provides incentives for AT&T to accelerate deployment of its own facilities -- an objective of the FCC.

If the agreement is accepted, AT&T would enter into long-term commercial wholesale agreements with the Bell companies that will accelerate facilities deployment by addressing operational barriers associated with the provisioning of unbundled loops, increasing prices for UNE-P facilities, and reducing costs associated with the use of unbundled loops.

"This proposal provides the right incentives for both the Bell companies and for AT&T," said Dorman. "This is a huge paradigm shift away from business as usual."

"This proposal gives certainty to the millions of consumers and small businesses served by AT&T today," Dorman noted, "and provides the opportunity for the benefits of competition to reach even more consumers and small business owners. In the interest of arriving at negotiated solutions in the spirit of that which the FCC urged, AT&T is willing to discuss and negotiate the terms of a facilities-based transition. We are hopeful that the Bell companies are also willing."

"At bottom, the current negotiations cannot be about the terms of ending competition. We owe more to our customers, our employees, and our Nation," Dorman concluded.

AT&T Corp.

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