WASHINGTON -- BACKGROUND: The Federal Communications Commission today sought comment on a proposal to change the formula for determining the government-mandated price that Bell companies charge competitors who lease Bell lines to serve customers.

The calculation of the FCC-invented "total element long-run incremental cost" (TELRIC) pricing formula has resulted in new entrant local telephone companies being able to enter the business without any requirement or incentive to invest in their own networks. They do this by leasing, at below cost rates, lines and other equipment that the Bell companies must install and maintain. They do this without justly compensating the Bell companies.

The following statement may be attributed to Herschel Abbott, BellSouth vice president governmental affairs:

"The opening of this proceeding has the promise of leading, finally, to an economically rational pricing structure for the competitive telephone industry.

"For the telecom sector to provide any fuel for the languishing economy, the FCC-mandated wholesale rates for telephone lines must be at least compensatory -- that is our costs must be covered. Indeed the Act mandates that the price be set to include a profit margin.

"Three weeks ago the FCC announced that Bell companies were going to continue to be forced, for the foreseeable future, to make our entire telecommunications platform available to our competitors at rates below our actual cost. As we said then, we have no objection to sharing our infrastructure -- although that does run counter to a national desire for redundancy -- we only ask for fair compensation.

"We hope this effort by the FCC to re-write the pricing formula leads -- quickly -- to a sensible pricing standard that allows investment to once again flow into the telecom sector."

BellSouth Corp.