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USTA Chairman: Industry Survival at Stake

Boca Raton, Fla. -- Local telephone companies are facing extinction unless
federal regulators change rules that allegedly favor their competitors, the new
chairman of the United States Telecommunications Association said Wednesday.

Margaret Greene, president of regulatory and external affairs for BellSouth
Corp. and the USTA's newly inaugurated chairman, blasted Federal Communications
Commission policies that she said require her company to lease its facilities to
rivals at below-cost rates.

Abolishing those rules, she added, was her chief mission over the next

'The survival of our industry is at stake. Without question, it's time to
stand our ground and fight,' Greene said.

FCC policies 'cannot continue to defy basic laws of economics without
ultimately destroying those it regulates,' she added.

As an example, she said, BellSouth's average line cost is $44 per month, but
state regulators require the company to lease that line for $20. 'You do the
math,' Greene said.

Regarding broadband regulation, Greene said her company is saddled with
network-sharing rules while the cable industry -- with an industry-leading 10
million paying data subscribers -- copes with none of those rules.

'It's like a horse race in which you give the first horse a 100-yard lead and
make the second horse pull a chuck wagon,' she added.

The FCC is reviewing its rules, and many leading analysts expect the agency
to appease the Baby Bells by changing its network-pricing rules for voice
elements and shielding new broadband-facilities investment from legacy

'I've been advising our clients for a fair amount of time that the incumbent
local phone companies are going to make considerable progress . particularly on
[unbundling] and broadband deregulation,' Legg Mason telecommunications and
media analyst Blair Levin said.

When he was FCC chief of staff under chairman Reed Hundt, Levin had a role in
crafting rules now under assault from the Baby Bells.

Many new entrants in the local phone business argued that the FCC should not
give up on policies that have given them a chance to compete against BellSouth
and other established phone market participants.