FOR IMMEDIATE RELEASE: NEWS MEDIA CONTACT:

June 16, 2000 Mike Balmoris at (202) 418-0253

Email: <mbalmori@fcc.gov>

**FEDERAL COMMUNICATIONS COMMISSION APPROVES**

**BELL ATLANTIC-GTE MERGER WITH CONDITIONS**

***Required Spin-Off of GTE's Internet Assets Increases Incentives for
Bell Atlantic to Swiftly Open its Local Phone Territory to
Competitors***

Washington, D.C. -- Today, the Federal Communications Commission (FCC)
approved applications to transfer control of FCC licenses and lines from
GTE Corp. (GTE) to Bell Atlantic Corp. (Bell Atlantic), subject to
enforceable merger conditions and spinning off substantially all of
GTE's nationwide Internet business into a separate public corporation.
The 25 merger conditions are designed to enhance local phone competition
in the markets in which Bell Atlantic or GTE is the incumbent local
exchange carrier (incumbent LEC), strengthen the merged company's
incentives to enter local phone markets outside of its territories, and
promote equitable and efficient advanced services deployment.

To ensure that the transaction does not violate the Telecommunications
Act prohibition on providing long distance services without the
necessary authorization, Bell Atlantic and GTE voluntarily proposed to
spin-off GTE's Internet assets and offered a set of pro-competitive
conditions.

**[Internet Assets Spin-Off]{.underline}**

To comply with section 271 of the Telecommunications Act, the merged
company will transfer substantially all of GTE's Internet business into
a separate public corporation to be known as Genuity (formerly GTE
Internetworking). This section of the Act forbids a Bell Operating
Company, such as Bell Atlantic, from providing long distance voice or
data services to customers in its service territory before it
demonstrates that its local phone market is open to competitors. To
date, Bell Atlantic has only received authorization to offer long
distance services in New York state.

Under the ruling adopted today, Bell Atlantic cannot convert its
permissible 10% interest in Genuity into a greater equity ownership
unless it receives long distance approvals covering 95% of its region
where Genuity operates within five years.

\-- more \--

Additionally, the merged company will not receive any economic benefit
from the long distance services of Genuity for those states in which
Bell Atlantic is restricted from providing long distance services.
Specifically, the merged company will give to Genuity shareholders any
gain in Genuity's value that is attributable to Genuity's operations in
states during the period of time in which the combined company is
restricted from offering long distance services. This provides a
powerful incentive for Bell Atlantic to accelerate its efforts to open
its local phone markets to competitors (see attached fact sheet for
additional details of the Internet spin-off).

**[Merger Conditions]{.underline}**

The merger conditions are designed to accomplish the following five
public interest goals:

1)  promote advanced services deployment;

2)  enhance the openness of the merged company's in-region local
    telecommunications markets;

3)  foster out-of-region local competition;

4)  improve residential phone service; and,

5)  provide for enforcement of the merger.

Absent the merger conditions, the merger would likely lead to the
following public interest harms:

1)  The merger would remove one of the most significant potential
    participants in local telecommunications mass markets within Bell
    Atlantic's existing territory.

2)  The merger would reduce the Commission's ability to implement the
    market-opening requirements of the 1996 Act through comparative
    practice oversight (benchmarking) methods.

3)  The merger would increase the incentive and ability of the merged
    entity to discriminate against its rivals, particularly with respect
    to the provision of advanced telecommunications services.

**[Wireless Issues]{.underline}**

The FCC's Order finds that the merger of the companies' wireless
operations would be pro-competitive and grants the companies'
applications to transfer control of GTE's wireless licenses to Bell
Atlantic on the condition that they comply with the Commission's
cellular cross-ownership and CMRS spectrum cap rules. Absent
divestiture, the merger of Bell Atlantic and GTE would create nearly 100
overlaps under these rules. A number of these overlaps will be resolved
by the recently approved sale of properties to ALLTEL. The companies
have informed the Commission that negotiations to sell the remaining
properties are proceeding, and that additional filings are imminent.
Certain properties, however, will be placed in trust for purposes of
divestiture to third parties, and applications to place properties in
trust are on file with the Commission.

\-- more \--

**[International Issues]{.underline}**

The FCC's Order also finds that the public interest will be served by
transferring control of GTE's international section 214 authorizations
to Bell Atlantic, subject to the condition that the merged company's
subsidiaries be classified as dominant international carriers in their
provision of service on the U.S.-Gibralter, U.S.-Dominican Republic, and
U.S.-Venezuela routes.

Action by the Commission June 16, 2000, by Memorandum Opinion and Order
(FCC 00-221). Chairman Kennard, Commissioners Ness, and Tristani with
Commissioner Furchtgott-Roth and Powell concurring in part and
dissenting in part. Commissioners Ness, Furchtgott-Roth, Powell and
Tristani issuing statements.

CC Docket No. 98-184

-FCC-

Common Carrier Bureau contacts:

Johanna Mikes at (202) 418-1535 or Julie Patterson at (202) 418-1381.

News about the Federal Communications Commission can also be found

on the Commission's web site [www.fcc.gov](http://www.fcc.gov/).