Z-Tel Responds to FCC Decision

Business Wire, Dec 15, 2004

TAMPA, Fla. -- Z-Tel Technologies, Inc. (NASDAQ/SC: ZTLDC), parent company of Z-Tel Communications, Inc., a leading provider of enhanced wireline and broadband telecommunications services, today responded with both disappointment and optimism to the decision announced earlier today by the Federal Communications Commission ("FCC") in association with WC Dockets No. 04-313 and CC Docket No. 01-338 (Unbundled Access to Network Elements and Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers ("ILECs"). In these proceedings the FCC adopted an Order on Remand concerning incumbent local exchange carriers' obligations to make elements of their networks available on an unbundled basis to competitive telecommunications service providers.

"Z-Tel is disappointed with today's decision by the FCC; however, we are not surprised," stated Don Davis, Z-Tel's senior vice president - corporate matters. He continued, "Over the past year Chairman Powell has repeatedly expressed his desire to scale back the RBOCs (regional Bell operating companies') obligation to offer unbundled network elements, as required by the 1996 Telecom Act. Today's FCC action reverses the intended direction of Congress to provide competitors with multiple methods to provide consumers with the benefits of competition."

While expressing disappointment in today's FCC action, Frank Grillo, Z-Tel's chief operating officer, asserted that Z-Tel has worked hard over the past few months to prepare for the course of action driven by the FCC's regulatory directive. Grillo stated, "We believe Z-Tel has well positioned itself to move forward and continue providing innovative products and superior service to consumers and small business even with the limitations placed today on access to certain network elements of the ILECs. As Z-Tel has recently announced, we have successfully deployed and are continuing to deploy cutting-edge network technology that brings advanced cost effective voice and data solutions to its residential and small business customers. This will allow Z-Tel to expand its 'Cisco Powered' IP based network to reach a broader market while ensuring compliance with the FCC's modified rules."

Grillo continued, "Z-Tel also intends to effectively utilize the transition period adopted by the FCC to continue serving the residential mass market. As announced earlier this week, Z-Tel continues to expand its retail line base and to believe that this line of business will continue to provide reasonable margins through 2005. With its established customer base, Z-Tel is well positioned to migrate substantial portions of these customers to its IP network in an economical and efficient manner."

Z-Tel also referenced its recently announced commercial agreement with Qwest Corporation. "The Qwest agreement allows Z-Tel to continue providing its enhanced wire line and broadband telecommunication services throughout Qwest's 14-state territory regardless of regulatory decisions such as the one by the FCC today," noted Davis. In addition, Z-Tel has presented other RBOCs similar proposals recognizing the value in establishing long-term wholesale arrangements that are beneficial to both sides.

About Z-Tel

Z-Tel offers consumers and businesses nationwide enhanced wire line and broadband telecommunications services. All Z-Tel products include proprietary services, such as Web-accessible, voice-activated calling and messaging features that are designed to meet customers' communications needs intelligently and intuitively. Z-Tel is a member of the Cisco Powered Network Program and makes its services available on a wholesale basis to other communications and utility companies, including Sprint. Z-Tel has previously announced its intention to change its name to Trinsic, Inc. effective as of the close of business on January 3, 2005. Its new NASDAQ trading symbol will be TRIN. For more information about Z-Tel and its innovative services, please visit www.ztel.com.

This press release contains forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "estimate," "expect," and "projects" signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various risks and uncertainties. Some of these risks and uncertainties are identified in our periodic filings with the Securities and Exchange Commission. Should any risks or uncertainties develop into actual events, these developments could have material adverse effects on Z-Tel's business, financial condition, and results of operations. We assume no obligation to update these forward-looking statements.