<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                             ---------------------
                                   FORM 10-Q
                             ---------------------


(Mark one)
   [X]          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
               For the quarterly period ended September 30, 1996

                                      OR

   [ ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                    For the transition period from      to


                         Commission File Number 1-6875


                        BELL ATLANTIC - MARYLAND, INC.


 A Maryland Corporation           I.R.S. Employer Identification No. 52-0270070


               One East Pratt Street, Baltimore, Maryland 21202


                        Telephone Number (410) 539-9900

                           -------------------------


THE REGISTRANT, A WHOLLY OWNED SUBSIDIARY OF BELL ATLANTIC CORPORATION, MEETS
THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND
IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL
INSTRUCTION H(2).


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes   X    No 
                                        -----     -----     
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

                        PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements


                STATEMENTS OF OPERATIONS AND REINVESTED EARNINGS
                                  (Unaudited)
                            (Dollars in Thousands)
<TABLE>
<CAPTION>


                                                              Three months ended        Nine months ended
                                                                 September 30,            September 30,
                                                             ---------------------  --------------------------
                                                               1996        1995         1996          1995
                                                             ---------  ----------  ------------  ------------
<S>                                                          <C>        <C>         <C>           <C>
OPERATING REVENUES (including $12,541, $7,029,
  $24,036 and $22,921 from affiliates)..................      $549,306   $517,161    $1,607,311    $1,522,806
                                                              --------   --------    ----------    ----------

OPERATING EXPENSES
  Employee costs, including benefits and taxes..........       101,031    105,190       292,010       308,262
  Depreciation and amortization.........................       107,416    103,766       319,903       311,226
  Other (including $131,954, $106,132, $378,850
    and $305,595 to affiliates).........................       195,453    175,561       570,136       500,270
                                                              --------   --------    ----------    ----------
                                                               403,900    384,517     1,182,049     1,119,758
                                                              --------   --------    ----------    ----------

OPERATING INCOME........................................       145,406    132,644       425,262       403,048

OTHER INCOME (EXPENSE), NET (including $155, $19,
  $474 and $20 from affiliate)..........................           945     (1,192)         (700)       (3,479)

INTEREST EXPENSE (including $191, $754, $864
  and $2,442 to affiliate)..............................        16,032     15,498        47,707        48,242
                                                              --------   --------    ----------    ----------

INCOME BEFORE PROVISION FOR INCOME TAXES................       130,319    115,954       376,855       351,327
PROVISION FOR INCOME TAXES..............................        46,985     41,940       134,092       126,909
                                                              --------   --------    ----------    ----------

NET INCOME..............................................      $ 83,334   $ 74,014    $  242,763    $  224,418
                                                              ========   ========    ==========    ==========


REINVESTED EARNINGS
  At beginning of period................................      $137,006   $150,763    $  130,732    $  124,391
  Add:  net income......................................        83,334     74,014       242,763       224,418
                                                              --------   --------    ----------    ----------
                                                               220,340    224,777       373,495       348,809
  Deduct:  dividends....................................        74,800     77,750       227,767       201,780
           other changes................................            51         14           239            16
                                                              --------   --------    ----------    ----------
  At end of period......................................      $145,489   $147,013    $  145,489    $  147,013
                                                              ========   ========    ==========    ==========
</TABLE>

                       See Notes to Financial Statements.

                                       1
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

                                 BALANCE SHEETS
                                  (Unaudited)
                             (Dollars in Thousands)


                                     ASSETS
                                     ------
<TABLE>
<CAPTION>
 
                                                   September 30,  December 31,
                                                       1996           1995
                                                   -------------  ------------
<S>                                                <C>            <C>
 
CURRENT ASSETS
Short-term investments...........................     $    3,973    $      ---
Note receivable from affiliate...................         13,820           ---
Accounts receivable:
     Trade and other, net of allowances for
          uncollectibles of $27,223 and $23,934..        371,792       355,392
     Affiliates..................................         39,210        41,365
Material and supplies............................         10,974         6,836
Prepaid expenses.................................        131,385       115,574
Deferred income taxes............................         13,167        16,362
                                                      ----------    ----------
                                                         584,321       535,529
                                                      ----------    ----------
 
PLANT, PROPERTY AND EQUIPMENT....................      5,489,843     5,420,240
Less accumulated depreciation....................      2,908,280     2,748,921
                                                      ----------    ----------
                                                       2,581,563     2,671,319
                                                      ----------    ----------
 
OTHER ASSETS.....................................         22,208        42,886
                                                      ----------    ----------
 
TOTAL ASSETS.....................................     $3,188,092    $3,249,734
                                                      ==========    ==========
</TABLE>

                       See Notes to Financial Statements.

                                       2
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

                                 BALANCE SHEETS
                                  (Unaudited)
                             (Dollars in Thousands)


                    LIABILITIES AND SHAREOWNER'S INVESTMENT
                    ---------------------------------------
<TABLE>
<CAPTION>
 
                                                   September 30,    December 31,
                                                        1996            1995
                                                   -------------    ------------
<S>                                                <C>              <C>
 
CURRENT LIABILITIES
Debt maturing within one year:
     Note payable to affiliate..................      $      ---      $   78,729
     Other......................................           7,684           7,357
Accounts payable and accrued liabilities:                         
     Affiliates.................................         203,400         168,598
     Other......................................         314,149         315,338
Advance billings and customer deposits..........          64,810          72,333
                                                      ----------      ----------
                                                         590,043         642,355
                                                      ----------      ----------
                                                                  
LONG-TERM DEBT..................................         964,800         970,356
                                                      ----------      ----------
                                                                  
EMPLOYEE BENEFIT OBLIGATIONS....................         470,387         463,586
                                                      ----------      ----------
                                                                  
DEFERRED CREDITS AND OTHER LIABILITIES                            
Deferred income taxes...........................          80,175         105,644
Unamortized investment tax credits..............          18,162          20,918
Other...........................................          93,616          90,723
                                                      ----------      ----------
                                                         191,953         217,285
                                                      ----------      ----------
SHAREOWNER'S INVESTMENT                                           
Common stock - one share, without par value,                      
     owned by parent............................         825,420         825,420
Reinvested earnings.............................         145,489         130,732
                                                      ----------      ----------
                                                         970,909         956,152
                                                      ----------      ----------
                                                                  
TOTAL LIABILITIES AND SHAREOWNER'S INVESTMENT...      $3,188,092      $3,249,734
                                                      ==========      ==========
</TABLE>

                       See Notes to Financial Statements.

                                       3
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

                            STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                             (Dollars in Thousands)
<TABLE> 
<CAPTION> 

                                                       Nine months ended
                                                          September 30, 
                                                     -----------------------
                                                       1996           1995
                                                     --------       --------
<S>                                                  <C>            <C> 
NET CASH PROVIDED BY OPERATING ACTIVITIES.......     $551,322       $453,074
                                                     --------       --------
 

CASH FLOWS FROM INVESTING ACTIVITIES
Net change in short-term investments............       (3,973)        (6,093)
Additions to plant, property and equipment......     (265,546)      (312,735)
Net change in note receivable from affiliate....      (13,820)           ---
Other, net......................................       34,998         16,801
                                                     --------       --------
Net cash used in investing activities...........     (248,341)      (302,027)
                                                     --------       --------
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayments of borrowings and capital
     lease obligations..........................       (5,236)       (29,914)
Net change in note payable to affiliate.........      (78,729)        65,724
Dividends paid..................................     (227,767)      (201,780)
Net change in outstanding checks drawn                        
     on controlled disbursement accounts........        8,751         14,923
                                                     --------       --------
Net cash used in financing activities...........     (302,981)      (151,047)
                                                     --------       --------


NET CHANGE IN CASH..............................          ---            ---


CASH, BEGINNING OF PERIOD.......................          ---            ---
                                                     --------       --------


CASH, END OF PERIOD.............................     $    ---       $    ---
                                                     ========       ========
</TABLE> 

                       See Notes to Financial Statements.

                                       4
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

                         NOTES TO FINANCIAL STATEMENTS
                                  (Unaudited)

1.   Basis of Presentation

     The accompanying financial statements are unaudited and have been prepared
by Bell Atlantic - Maryland, Inc. (the Company) pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC). The December 31,
1995 balance sheet was derived from audited financial statements, but does not
include all disclosures required by generally accepted accounting principles. In
the opinion of management, these financial statements include all adjustments
(consisting of only normal recurring adjustments) necessary to present fairly
the results of operations, financial position and cash flows. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such SEC rules and regulations. The Company
believes that the disclosures made are adequate to make the information
presented not misleading. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1995.

2.   Dividend

     On November 1, 1996, the Company declared and paid a dividend in the amount
of $93,100,000 to Bell Atlantic Corporation (Bell Atlantic).

3.   Reclassifications

     Certain reclassifications of the prior year's data have been made to
conform to 1996 classifications.

4.   Proposed Bell Atlantic - NYNEX Merger

     Bell Atlantic and NYNEX Corporation have announced a proposed merger of
equals under a definitive merger agreement entered into on April 21, 1996, and
amended on July 2, 1996. Under the terms of the amended agreement, a newly-
formed subsidiary will merge with NYNEX, with NYNEX becoming a subsidiary of
Bell Atlantic. As a result of the merger, NYNEX stockholders will receive 0.768
of a share of Bell Atlantic common stock for each share of NYNEX common stock
that they own. Bell Atlantic stockholders will continue to own their existing
shares after the merger.

     The merger is expected to qualify as a "pooling of interests," which means
for accounting and financial reporting purposes, the companies will be treated
as if they had always been combined. The completion of the merger is subject to
a number of conditions, including regulatory approvals, receipt of opinions that
the merger will be tax free, and the approval of the shareholders of both Bell
Atlantic and NYNEX. The companies expect to close the merger in the first
quarter of 1997.

                                       5
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

Item 2. Management's Discussion and Analysis of Results of Operations
        (Abbreviated pursuant to General Instruction H(2).)

     This discussion should be read in conjunction with the Financial Statements
and Notes to Financial Statements.

RESULTS OF OPERATIONS
---------------------

     The Company reported net income for the first nine months of 1996 of
$242,763,000, compared to net income of $224,418,000 for the same period in 
1995.

     Items affecting the comparison of operating results between the nine month
periods ended September 30, 1996 and 1995 are discussed in the following
sections.
<TABLE>
<CAPTION>
 
 
OPERATING REVENUES
------------------
(Dollars in Thousands)

 
For the Nine Month Period Ended September 30               1996          1995
------------------------------------------------------------------------------
                                           
<S>                                                   <C>           <C>
Transport Services                                 
    Local service.........................            $  730,499    $  697,436
    Network access........................               424,449       408,937
    Toll service..........................                74,920        81,929
Ancillary Services                                 
    Directory publishing..................               126,678       121,003
    Other.................................                70,010        58,356
Value-added Services......................               180,755       155,145
                                                      ----------    ----------
Total.....................................            $1,607,311    $1,522,806
                                                      ==========    ==========
 
<CAPTION>  
TRANSPORT SERVICES OPERATING STATISTICS
---------------------------------------
                                                                    Percentage
                                                 1996       1995      Increase
------------------------------------------------------------------------------
<S>                                           <C>      <C>          <C> 
At September 30
---------------
  Access Lines in Service (In thousands)
     Residence............................      2,160      2,095           3.1%
     Business.............................      1,165      1,111           4.9
     Public...............................         40         40           ---
                                              -------    -------
                                                3,365      3,246           3.7
                                              =======    =======
 
<CAPTION>  
For the Nine Month Period Ended September 30
-------------------------------------------- 
<S>                                           <C>      <C>          <C> 
  Access Minutes of Use (In millions)
     Interstate...........................      7,903      7,217*          9.5
     Intrastate...........................      2,425      2,162*         12.2
                                              -------    -------
                                               10,328      9,379*         10.1
                                              =======    =======
                                                    
  Toll Messages (In thousands)                      
     Intrastate...........................     95,042     83,611          13.7
     Interstate...........................     17,449     15,497*         12.6
                                              -------    -------
                                              112,491     99,108*         13.5
                                              =======    =======
</TABLE>
*Revised from previously reported amounts

                                       6
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

LOCAL SERVICE REVENUES

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months              $33,063          4.7%
--------------------------------------------------------------------------------

     Local service revenues are earned by the Company from the provision of
local exchange, local private line and public telephone services.

     Higher network usage by both business and residence customers increased
local service revenues during 1996. Access lines in service grew by 3.7% from
September 30, 1995. Revenues in 1996 were also higher as a result of price
increases associated with the Company's revenue neutral rate change filing,
which became effective in the first quarter of 1996. This filing provided for
increases in directory assistance service rates with corresponding reductions in
toll service and value-added services revenues.

     For a discussion of the Telecommunications Act of 1996, which opens the
local exchange market to competition, see "Factors That May Impact Future
Results" beginning on page 10.


NETWORK ACCESS REVENUES

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months              $15,512          3.8%
--------------------------------------------------------------------------------


     Network access revenues are received from interexchange carriers (IXCs) for
their use of the Company's local exchange facilities in providing long distance
services to IXCs' customers and from end-user subscribers.  Switched access
service revenues are derived from usage-based charges paid by IXCs for access to
the Company's network.  Special access revenues arise from access charges paid
by IXCs and end-users who have private networks.  End-user access revenues are
earned from local exchange carrier customers who pay for access to the network.

     Network access revenues increased principally due to higher customer demand
for access services, as reflected by growth in access minutes of use of 10.1%
over the same period in 1995.  Revenue growth was partially offset by the effect
of price reductions under the Federal Communications Commission's (FCC) Interim
Price Cap Plan implemented in 1995.  On July 20, 1996, the Company implemented
price increases as part of Bell Atlantic's annual price cap filing with the FCC.
These price increases did not have a significant impact on network access
revenues in the third quarter of 1996.

     Continued strong growth in network usage and the FCC rate increases
effective on July 20, 1996 are expected to positively impact network access
revenues for the remainder of 1996, relative to the same period last year. See
also "Factors That May Impact Future Results - FCC Interim Price Cap Plan" on
page 12 for a discussion of Bell Atlantic's FCC price cap filing.


TOLL SERVICE REVENUES

     1996-1995                      (Decrease)
--------------------------------------------------------------------------------
     Nine Months              $(7,009)        (8.6)%
--------------------------------------------------------------------------------

     Toll service revenues are earned from calls made outside a customer's local
calling area, but within the same service area of the Company, commonly referred
to as Local Access and Transport Areas (LATAs).  Other toll services include 800
services and Wide Area Telephone Service (WATS).

     The decrease in toll service revenues was caused by company-initiated price
reductions and a discount offering on certain toll services in response to
competition.  The price reductions and the discount offering, which reduced toll
service revenues by approximately $8 million through the first nine months of
1996, as compared to the same period in 1995, were implemented as a result of
several revenue neutral rate change filings.  These filings, which became
effective in the third quarter of 1995 and the first quarter of 1996, provided
for increases in local service and other ancillary services revenues and
corresponding decreases in toll service and value-added services revenues.

                                       7
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

     Higher toll service revenues caused by increased network usage partially
offset these decreases.  Toll message volumes in 1996 increased by 13.5% over
the same period in 1995.

     The Company expects that toll service revenues will be negatively impacted
for the remainder of 1996 by the effect of its revenue neutral rate change
filings. See "Factors That May Impact Future Results" beginning on page 10 for a
further discussion of toll service revenue issues.


DIRECTORY PUBLISHING REVENUES

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months              $5,675          4.7%
--------------------------------------------------------------------------------

     Directory publishing revenues are earned primarily from local advertising
and marketing services provided to businesses in White and Yellow Pages
directories. Other directory publishing services include database and foreign
directory marketing.

     Growth in directory publishing revenues was principally due to higher rates
charged for these services.


OTHER ANCILLARY SERVICES REVENUES

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months              $11,654        20.0%
--------------------------------------------------------------------------------

     Other ancillary services include billing and collection services provided
to IXCs, facilities rental services provided to affiliates and non-affiliates,
and sales of materials and supplies to affiliates.

     Higher other ancillary services revenues in 1996 were principally due to
increased revenues from customer late payment charges.  The Company began
assessing business and residential late payment charges in the third quarter of
1995 and first quarter of 1996, respectively, pursuant to the aforementioned
revenue neutral rate change filings.  Higher facilities rental revenues from
affiliates also contributed to the increase in other ancillary services revenues
in 1996.


VALUE-ADDED SERVICES REVENUES

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months              $25,610        16.5%
--------------------------------------------------------------------------------

     Value-added services represent a family of services which expand the
utilization of the network.  These services include recent products such as
voice messaging services, Caller ID and Return Call as well as more mature
products such as Centrex, Touch-Tone, and other customer premises wiring and
maintenance services.

     The increase in value-added services revenues during 1996 was primarily
attributable to continued growth in the network customer base and higher demand
for certain central office and voice messaging services.  These increases were
partially offset by rate decreases on certain value-added services, which became
effective in the first quarter of 1996, pursuant to the aforementioned revenue
neutral rate change filing.

                                       8
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

 
OPERATING EXPENSES
------------------
(Dollars in Thousands)

<TABLE>
<CAPTION>
 
For the Nine Month Period Ended September 30            1996              1995
--------------------------------------------------------------------------------
<S>                                                <C>               <C>
Employee costs, including benefits and taxes.....  $  292,010        $  308,262
Depreciation and amortization....................     319,903           311,226
Other operating expenses.........................     570,136           500,270
                                                   ----------        ----------
Total............................................  $1,182,049        $1,119,758
                                                   ==========        ==========
</TABLE>

EMPLOYEE COSTS

     1996-1995                      (Decrease)
--------------------------------------------------------------------------------
     Nine Months             $(16,252)        (5.3)%
--------------------------------------------------------------------------------

     Employee costs consist of salaries, wages and other employee compensation,
employee benefits and payroll taxes paid directly by the Company.  Similar costs
incurred by employees of Bell Atlantic Network Services, Inc. (NSI), who provide
centralized services on a contract basis, are allocated to the Company and are
included in other operating expenses.

     The decrease in employee costs was attributable to savings associated with
lower work force levels in 1996.  The effect of employees transferred from the
Company to NSI in December 1995 also contributed to the decrease in employee
costs.  These cost reductions were partially offset by annual salary and wage
increases, as well as increased overtime pay for repair and maintenance
activity, principally as a result of higher business volumes.


DEPRECIATION AND AMORTIZATION

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months             $  8,677          2.8%
--------------------------------------------------------------------------------

     Depreciation and amortization increased principally due to growth in
depreciable telephone plant.  The composite depreciation rate at September 30,
1996 was 8.0%, which was unchanged from the same period in 1995.


OTHER OPERATING EXPENSES

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months             $ 69,866         14.0%
--------------------------------------------------------------------------------

     Other operating expenses consist primarily of contract services including
centralized services expenses allocated from NSI, rent, network software costs,
operating taxes other than income, provision for uncollectible accounts
receivable and other costs.

     The increase in other operating expenses was largely attributable to higher
centralized services expenses allocated from NSI. This increase was due, in
part, to higher employee costs incurred in that organization as a result of
annual salary and wage increases, as well as the transfer of employees from
certain network operations subsidiaries to NSI in December 1995.  Additional
operating costs incurred to enhance billing and operating systems and market
value-added services also contributed to the increase in centralized services
expenses in 1996.

                                       9
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

OTHER INCOME (EXPENSE), NET

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months                      $2,779
--------------------------------------------------------------------------------

     The change in other income (expense), net was mainly attributable to a gain
on the disposition of certain property in September of 1996.


INTEREST EXPENSE

     1996-1995                      (Decrease)
--------------------------------------------------------------------------------
     Nine Months              $ (535)         (1.1)%
--------------------------------------------------------------------------------

     Interest expense decreased due to lower levels of average short-term debt
in 1996 and the effect of additional expense in 1995 related to the settlement
of federal income tax matters associated with prior years and for capitalized
leases. These decreases were substantially offset by a reduction in capitalized
interest costs.


PROVISION FOR INCOME TAXES

     1996-1995                       Increase
--------------------------------------------------------------------------------
     Nine Months              $7,183           5.7%
--------------------------------------------------------------------------------


EFFECTIVE INCOME TAX RATES

     For the Nine Months Ended September 30
--------------------------------------------------------------------------------
     1996                      35.6%
--------------------------------------------------------------------------------
     1995                      36.1%
--------------------------------------------------------------------------------

     The Company's effective income tax rate was lower as a result of
adjustments to tax liabilities recorded in 1996.


FACTORS THAT MAY IMPACT FUTURE RESULTS
--------------------------------------

Federal Legislation

     The Telecommunications Act of 1996 (the Act) became law on February 8, 1996
and takes the place of the Modification of Final Judgment (MFJ).  In general,
the Act includes provisions that open the local exchange market to competition
and permit Bell Atlantic to provide interLATA services (long distance) and to
engage in manufacturing.  However, the ability of Bell Atlantic to engage in
businesses previously prohibited by the MFJ is largely dependent on satisfying
certain conditions contained in the Act. The following is a brief discussion
regarding certain provisions of the Act.

     With regard to the rules governing competition in the long distance market,
the Act takes a two-fold approach. Effective February 8, 1996, Bell Atlantic's
operating telephone subsidiaries, such as the Company, and affiliates were
permitted to offer long distance services outside of the geographic region in
which they currently operate as a local exchange carrier.  On July 31, 1996, a
subsidiary of Bell Atlantic began marketing such services in three states
outside its region and plans to offer such services in several other states.  In
addition, Bell Atlantic's wireless businesses are now permitted to offer long
distance services without having to comply with the conditions imposed in
waivers granted under the MFJ.

     Within Bell Atlantic's geographic region, each of the operating telephone
subsidiaries, including the Company, must demonstrate to the FCC that it has
satisfied certain requirements in order for Bell Atlantic to offer new long
distance services. Among the requirements with which the Company must comply is
a 14-point "competitive checklist" which will enable competitors to offer
competitive local service, either through resale, through the purchase of
unbundled network elements, or 

                                       10
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

through their own networks. The Company must also demonstrate to the FCC that
its entry into the long distance market would be in the public interest.

     The Act also imposes specific requirements that are intended to promote
competition in the local exchange markets.  These requirements (collectively
known as interconnection requirements) include the duty to: (i) provide
interconnection to any other carrier for the transmission and routing of
telephone exchange service at any technically feasible point; (ii) provide
unbundled access to network elements at any technically feasible point; (iii)
provide retail services at wholesale prices for resale; (iv) establish
reciprocal compensation arrangements for the origination and termination of
telecommunications; and (v) provide physical collocation.  The specific terms
under which the carriers interconnect are to be negotiated with those carriers,
or determined through state arbitrations when negotiations fail.

     On August 1, 1996, the FCC adopted an order establishing rules for
implementation of the interconnection requirements set forth in the Act.  The
FCC's order establishes rules to govern interconnection agreements that are
reached through state arbitrations, when negotiations fail.  The FCC stated that
it plans to issue regulations regarding universal service obligations and access
charges in subsequent orders.

     Bell Atlantic and others appealed the interconnection order to the U.S.
Court of Appeals. That case is currently pending. On October 14, 1996, the Court
issued a partial stay of the FCC's interconnection order. The Court's order
stays the effectiveness of the uniform national pricing rules adopted by the
FCC. The order also stays the FCC rule that permitted competitors to "pick and
choose" isolated terms out of negotiated interconnection agreements. Private
negotiations and state arbitrations will continue while the stay is in effect,
pending the Court's final determinations of the issues raised by the pending
petitions for review.

     No definitive prediction can be made as to the specific impact of the Act
on the business or financial condition of the Company. The financial impact on
the Company will depend on several factors, including the timing, extent and
success of competition in the Company's markets, as well as the timing, extent
and success of the Company's pursuit of new business opportunities resulting
from the Act, the provisions of the FCC's regulations that survive judicial
review, and the outcome of state interconnection proceedings.

Competition

     IntraLATA Toll Services

     IntraLATA toll services are calls that both originate and terminate within
the same LATA (Local Access and Transport Area), but cover a greater distance
than a local call. These revenues are generally regulated by the Public Service
Commission of Maryland (PSC) rather than federal authorities. Competition to
offer intrastate intraLATA toll services is currently permitted in the Company's
jurisdiction.

     Currently, intraLATA toll calls are completed by the Company unless the
customer dials an access code. This dialing method would be changed by
"presubscription".  Presubscription would enable customers to make intraLATA
toll calls using another carrier without having to dial the access code.

     The recent telecommunications legislation addressed the issue of
presubscription by prohibiting a state from requiring presubscription or
"dialing parity" until the earlier of such time as an operating telephone
company in the state is authorized to provide long distance services within the
state or three years from the effective date of the Act.  This prohibition does
not apply to a final order requiring presubscription that was issued on or prior
to December 19, 1995.

     Local Exchange Services

     Local exchange services have historically been subject to regulation by the
PSC.  Since 1994, applications from competitors to provide and resell local
exchange services have been approved by the PSC.  Additional applications from
competitors are currently pending.

     The Act is expected to significantly increase the level of competition in
the Company's local exchange market.

                                       11
<PAGE>
 
                        Bell Atlantic - Maryland, Inc.

FCC Interim Price Cap Plan

     The FCC regulates the rates that the Company can charge IXCs and end-user
subscribers for interstate access services.  Each year, new access rates are
required to be filed with the FCC under the rules of their Interim Price Cap
Plan.  In June of 1996, Bell Atlantic filed its Annual Access Tariff plan with
the FCC, which contained new access services rates for the period from July 1996
through June 1997.  The rates included in the filing resulted in price increases
for the Company totaling approximately $3,200,000 on an annual basis.  The new
rates became effective on July 20, 1996.

     The FCC is expected to adopt a revised price cap plan effective with the
1997 Annual Access Tariff Filing.

Other State Regulatory Matters

     The communications services of the Company are subject to regulation by the
PSC with respect to intrastate rates and services and certain other matters.

     In December 1995, the Company filed a proposed price cap plan with the PSC.
Under the plan, services would be divided into six categories: Access, Basic-
Residential, Basic-Other, Discretionary, Competitive and Co-Carrier.  Rates for
Access and Basic-Residential Services would be capped for a period of two years,
and rates for Basic-Other Services would be capped for one year.  After the cap
period, rates for services in these three categories could then be increased or
decreased annually under a formula that is based on changes in the rate of
inflation (GDP-PI).

     MCI Telecommunications, the PSC Staff and the Office of People's Counsel
have also filed proposed price cap plans for regulating the Company and have
argued that the Company's rates should be reduced by $85 million, over $100
million and over $200 million, respectively. The Company has responded that its
existing rates are reasonable and there is no basis to reduce them. All of these
issues are being considered in a single evidentiary proceeding, which is
expected to conclude later in 1996.


OTHER MATTERS
-------------

     Environmental Issues

     The Company is subject to a number of environmental proceedings as a result
of its operations and the shared liability provisions in the Plan of
Reorganization related to the MFJ. The Company is also responsible for the
remediation of sites with underground fuel storage tanks and other expenses
associated with environmental compliance.

     The Company continually monitors its operations with respect to potential
environmental issues, including changes in legally mandated standards and
remediation technologies.  The Company's recorded liabilities reflect those
specific situations where remediation activities are currently deemed to be
probable and where the cost of remediation is estimable.  Management believes
that the aggregate amount of any additional potential liability would not have a
material effect on the Company's results of operations or financial condition.

     Proposed Bell Atlantic - NYNEX Merger

     Bell Atlantic and NYNEX Corporation have announced a proposed merger of
equals under a definitive merger agreement entered into on April 21, 1996, and
amended on July 2, 1996. Under the terms of the amended agreement, a newly-
formed subsidiary will merge with NYNEX, with NYNEX becoming a subsidiary of
Bell Atlantic. As a result of the merger, NYNEX stockholders will receive 0.768
of a share of Bell Atlantic common stock for each share of NYNEX common stock
that they own. Bell Atlantic stockholders will continue to own their existing
shares after the merger.

     The merger is expected to qualify as a "pooling of interests," which means
for accounting and financial reporting purposes, the companies will be treated
as if they had always been combined. The completion of the merger is subject to
a number of conditions, including regulatory approvals, receipt of opinions that
the merger will be tax free, and the approval of the shareholders of both Bell
Atlantic and NYNEX. The companies expect to close the merger in the first
quarter of 1997.

     As a result of the merger, Bell Atlantic expects to record a one-time
charge for employee severance costs in the quarter in which the merger is
completed. Such pretax charge is currently estimated to be in the range of $200
million to $300 million. The 

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                        Bell Atlantic - Maryland, Inc.

amount of the charge will vary depending on a number of factors including: (i)
the number of employees that will be terminated under severance arrangements,
(ii) the timing of employee terminations, and (iii) changes, if any, to
severance plan provisions. The Company expects to incur a portion of the charge
for these costs.

     During the remainder of 1997, 1998 and 1999, Bell Atlantic expects to incur
an additional $300 million to $400 million of merger-related transition costs, a
portion of which may be borne by the Company.


FINANCIAL CONDITION
-------------------

     The Company uses the net cash generated from operations and external
financing to fund capital expenditures for network expansion and modernization,
and pay dividends. While current liabilities exceeded current assets at both
September 30, 1996 and December 31, 1995, the Company's sources of funds,
primarily from operations and to the extent necessary, from readily available
financing arrangements with an affiliate, are sufficient to meet ongoing
operating requirements. Management expects that presently foreseeable capital
requirements will continue to be financed primarily through internally generated
funds. Additional long-term debt may be needed to fund development activities
and to maintain the Company's capital structure within management's guidelines.

     As of September 30, 1996, the Company had $248,200,000 of an unused line of
credit with an affiliate, Bell Atlantic Network Funding Corporation.  In
addition, the Company had $50,000,000 remaining under a shelf registration
statement filed with the Securities and Exchange Commission for the issuance of
unsecured debt securities.

     The Company's debt ratio was 50.0% at September 30, 1996, compared to 52.5%
at December 31, 1995.

     On November 1, 1996, the Company declared and paid a dividend in the amount
of $93,100,000 to Bell Atlantic Corporation.

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                        Bell Atlantic - Maryland, Inc.

                          PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         For background concerning the Company's contingent liabilities under
         the Plan of Reorganization governing the divestiture by AT&T Corp.
         (formerly American Telephone and Telegraph Company) of certain assets
         of the former Bell System Operating Companies with respect to private
         actions relating to pre-divestiture events, including pending antitrust
         cases, see Item 3 of the Company's Annual Report on Form 10-K for the
         year ended December 31, 1995.


Item 6.  Exhibits and Reports on Form 8-K


         (a)  Exhibits:

              Exhibit Number

              27 Financial Data Schedule.


         (b)  Report on Form 8-K filed during the quarter ended September 30,
              1996:

              A Current Report on Form 8-K, dated July 2, 1996, was filed
              regarding the Amended and Restated Agreement and Plan of Merger,
              dated as of April 21, 1996, as amended and restated on July 2,
              1996, by and between Bell Atlantic Corporation and NYNEX
              Corporation.

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                        Bell Atlantic - Maryland, Inc.

                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



                                           BELL ATLANTIC - MARYLAND, INC.



Date:  November 7, 1996                    By  /s/ William M. English
                                              ----------------------------------
                                                   William M. English
                                                   Controller



     UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF NOVEMBER 4, 1996.

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