BellSouth Statement.
Re: BellSouth Withdrawal from Suit Challenging E-Rate.
Date: November 24, 1998.
Source: BellSouth.

BellSouth Withdraws Universal Service Appeal

For Immediate Release:

November 24, 1998

ATLANTA -- BACKGROUND: On May 8, 1997 the Federal Communications Commission issued an order establishing the Universal Service Fund as directed by the Telecommunications Act of 1996. The Order defined the parameters of the fund, set up a process for incorporating input from state public service commissions, and set guidelines for the delivery of Internet access and wiring to the nation's schools, libraries and rural health-care providers.

On August 15, 1997, BellSouth appealed the FCC's Order in the Universal Service docket. On February 20, BellSouth filed a joint opening brief with GTE and SBC in the United States Court of Appeals for the Fifth Circuit (New Orleans). The petitioners asked the Court to declare unlawful the FCC's decision not to implement universal service reform prior to 1999 and the FCC's allowance of competition to eliminate funding that comes from implicit subsidies before the establishment of an explicit support mechanism.

As of today, BellSouth has withdrawn its appeal of the FCC Order because it believes that most major issues of the Order will be resolved through the regulatory process in place today. The company also believes that, based on extensive research and audit analysis on the education sector business opportunities, and our long tradition of supporting education, it is in the best interest of BellSouth and its customers in the education sector, to withdraw this appeal.

The following statement can be attributed to Bill Barfield, BellSouth's associate general counsel:

"The plan to withdraw from this appeal is a business decision for BellSouth. While we feel that the reasons we filed our appeal were sound, we believe that the landscape has changed since then.

"Universal service represents a changing tableau. The FCC recently adopted a cost model which is a first step in circumscribing the new universal service fund. The Joint-Board acted yesterday to respond to the most recent issues that the Commission referred to their consideration. The results of this recommendation will be another important piece to the universal service puzzle. At the same time, the FCC has taken steps to bring greater administrative efficiency to the schools and library fund and prioritize the fund's purposes. Because of these recent events, BellSouth has decided not to proceed with the appeal of the original universal service order. We will continue to evaluate the new determinations made by the Commission and take such steps as may be appropriate in the future.

"Based on these factors, we think that it is in the best interest of our business and our customers to withdraw this appeal."

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For more information, contact:

Joe Chandler
BellSouth
(404) 927-7420

John Schneidawind
BellSouth
(202) 463-4183

NOTE: For more information about BellSouth, visit the BellSouth Web page at http://www.bellsouth.com. Also, BellSouth news releases dating back one year are available by fax at no charge by calling 1-800-758-5804, ext. 095650.