SBC Communications Moves To Clear State Regulatory Impediments To Additional Commercial Wholesale Agreements

Business Wire, May 4, 2004

Business Editors/High-Tech Writers

SAN ANTONIO--(BUSINESS WIRE)--May 4, 2004

Company files amendments to Sage interconnection agreements with

states, asks FCC to exempt negotiated commercial deals from state

filing and approval requirements

SBC Communications Inc. (NYSE:SBC) today will begin filing with state regulators amendments to interconnection agreements related to its commercially negotiated wholesale agreement with Sage Telecom that are called for by the federal Telecommunications Act of 1996. Separately, the company has asked the Federal Communications Commission to create the environment for more such deals by requiring state regulatory review or approval of only the parts of these agreements that relate to obligations imposed by law.

SBC was the first Bell company to reach commercially viable terms and conditions with a competitor following the FCC's request for such company-to-company negotiations. However, SBC warned that the industry's ability to negotiate other such agreements is threatened by certain states that want to approve and regulate the commercial deals - possibly imposing a patchwork of conflicting regulations and exposing sensitive proprietary business information.

"The FCC has made clear that consumers will be served best if we engage in good-faith negotiations with local competitors to reach commercially acceptable wholesale agreements," said Paul K. Mancini, SBC senior vice president and assistant general counsel. "We were the first to do that, and are actively negotiating with other wholesale customers. But we can't fulfill the commission's goal of having negotiated commercial agreements if these regionwide agreements are subject to different and possibly conflicting requirements imposed by state regulators or if proprietary information about a company's business plans will be publicly disclosed."

SBC took the lead in calling for wholesale commercial agreements to be negotiated between incumbent providers and competitive local exchange carriers just days after a federal court struck down wholesale rules imposed by the FCC. The FCC then requested companies to negotiate commercial arrangements in place of the wholesale rules that the court overturned. Because the courts have ruled three times that regulators have misread the law, SBC is concerned that some states now will interfere with commercial negotiations conducted in good faith.

As a result, SBC filed an emergency petition with the FCC asking the commission for an immediate ruling clarifying that the Telecom Act does not require terms of voluntary, commercial agreements to be filed with state commissions in their entirety. It also asked the commission to pre-empt any state filing requests beyond what is required by the Act and to halt any existing requests to do so.

"Only in the bizarre world of telecom regulation would companies be expected to negotiate commercially sensitive business issues in public and then have the results put into jeopardy by state regulatory interference. And only those competitors intent on sabotaging the process would make such a demand," Mancini said. "Immediate FCC action is necessary to remove any disincentive for telecommunications companies to negotiate and mutually resolve business issues."

SBC sees such commercial agreements as the best way to end years of litigation and regulatory battles to set wholesale rates - the rates other companies pay to access SBC's network and provide competitive local phone service. Mutually acceptable commercial agreements will provide companies the certainty they need to invest in facilities, create jobs and improve innovation and choice for consumers.

SBC Communications Inc. (NYSE:SBC) is a Fortune 50 company whose subsidiaries, operating under the SBC brand, provide a full range of voice, data, networking, e-business, directory publishing and advertising, and related services to businesses, consumers and other telecommunications providers. SBC holds a 60 percent ownership interest in Cingular Wireless, which serves more than 24 million wireless customers. SBC companies provide high-speed DSL Internet access lines to more American consumers than any other provider and are among the nation's leading providers of Internet services. SBC companies also now offer satellite TV service. Additional information about SBC and SBC products and services is available at www.sbc.com.

SOURCE: SBC Communications Inc.