Kennard Warns RBOCs on Building Nets

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Washington -- Federal Communications Commission chairman
William Kennard issued a mild warning last week to phone companies that may perhaps be
thinking about jumping the gun on entering long-distance markets -- including the sending
of data -- without the appropriate approvals.

Kennard, asked by reporters about Bell Atlantic
Corp.'s plans to spend $200 million to install long-distance equipment, said it would
not be wise to start construction before gaining FCC approval.

However, FCC sources said, Kennard was not attempting to
dissuade Bell Atlantic from building facilities.

"He was referring more to the provision of
service," an FCC source said.

The source said not to read a lot into Kennard's
statement.

"He was more in his lawyerly role, saying, 'You
know, you take a risk if you build facilities that you may not have permission to use and
may not get permission to use,'" the source said.

Two weeks ago, Bell Atlantic said it would begin
construction in July on a state-of-the-art, long-distance data network, connecting hubs
from Boston to Washington, D.C.

Bell Atlantic expects the data-services market in its
region to reach at least $80 billion annually over the next four years -- a revenue stream
that cable operators want to share with their high-speed cable modems.

Bell Atlantic spokesman Larry Plumb said his company has no
plans to offer long-distance service -- voice or data -- without prior approval.

"The bottom line here is that we know that we need
permission, and that's why we are pursuing the permission so vigorously on all
options," Plumb said.

In January, Bell Atlantic asked the FCC to waive the ban on
long distance for the provision of high-speed-data services. The company said it wanted
authority to deny competitors the right to interconnect and resell these advanced
services.

Were the FCC to grant Bell Atlantic's request, it
would not apply to voice services. AT&T Corp., which is opposing Bell Atlantic, said
the ban on voice services could be circumvented by Internet-telephony services.

Bell Atlantic has not applied to offer voice long distance,
although it is expected to seek FCC permission to do so in New York state. The FCC has
rejected every Baby Bell long-distance application so far.

"We believe that we'll probably be the first ones
to get [long-distance] relief," Plumb said.

In July or August, the FCC is planning an open hearing on
whether it should relax its rules to stimulate the deployment of advanced-broadband
services. U S West and Ameritech Corp. have also filed for relief.

Action on Bell Atlantic's petition to offer
long-distance data in states where its has not gained permission to offer voice long
distance is expected to occur before Labor Day.

"We're building in anticipation that we are going
to get the approval," Plumb said.

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