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To: S. HYDER who wrote (3833)	1/25/1999 7:55:00 PM
From: Anthony Wong	Read Replies (4) \| Respond to of 11568

01/25 18:21 ANALYSIS-Bells, GTE dodge bullet in US high court By Aaron Pressman WASHINGTON, Jan 25 (Reuters) - When GTE Corp. <GTE.N> general counsel William Barr appeared before the Supreme Court last year to argue against federal telecommunications rules, the former U.S. attorney general stunned onlookers by concentrating on a slender legalism instead of broader policy concerns. But Barr's unexpected argument, focused on a single sentence of the 1996 Telecommunications Act, played well with the high court. In a decision released Monday that went against GTE and the regional Bell companies on every other point, the court by 7-1 agreed with Barr that the Federal Communications Commission had ignored that key sentence of the 1996 law. Analysts said that part of the court's decision, which required the FCC to rewrite a section of its rules, prevented an all-out disaster for GTE and the regional Bell companies. "Overall, it's a big victory for the FCC, but the Bells won their must-have victory," said Scott Cleland, industry analyst at the Legg Mason Precursor Group. "They aren't happy with the majority but explicitly on their greatest concern and their greatest vulnerability, they prevailed." If GTE and the Bells had also lost that point, concerning limits on which parts of their networks they were required to lease to competitors, they might have faced disaster in the market, Cleland said. The ruling prompted Barr to call Monday's decision a "smashing victory," despite the many defeats GTE and the Bells also suffered in the ruling. The FCC's original rules were intended to promote competition in the $100 billion market for local phone service by requiring GTE and the Bells to lease parts of their networks to competitors at deeply discounted prices. That would allow new competitors to compete quickly as they built their own infrastructure by leasing pieces of the existing network to fill in their gaps. But the rules also allowed a new competitor, including even a large long distance company, without any of its own local network facilities to lease all of the parts of a Bell company's network at a deep discount and combine the elements to offer service. Such a competitor would almost always be able to offer its customers a lower price than GTE or the Bells could offer. So the Bells and GTE quickly filed suit and in 1997 a U.S. Court of Appeals in St. Louis struck down most of the leasing rules. The appeals court specifically attacked the FCC for allowing leasing and combining of all the network components. On Monday, however, the Supreme Court rejected the appeals court's conclusion and reinstated the FCC's rule, known as 315(b). Justice Antonin Scalia wrote that the major local carriers could be required to lease all of the pieces of their networks without receiving any additional fees, even if that would allow companies to compete without building their own facilities. "It is true that Rule 315(b) could allow entrants access to an entire preassembled network," Scalia wrote. "In the absence of Rule 315(b), however, incumbents could impose wasteful costs on even those carriers who requested less than the whole network." With that rule reinstated, the court revived the specter of unbeatable competition. But, by also adopting Barr's argument, the court made such competition much less likely. In oral arguments last October, Barr noted that although the 1996 Telecom Act required major carriers to lease parts of their networks, it required leasing only of those elements "necessary" to a competitor and whose absence would "impair" the competitor's ability to compete. Scalia said the FCC had ignored the necessary and impairment standards and needed to rewrite its rules with new limits on which elements had to be leased. The FCC must "determine on a rational basis which network elements must be made available, taking into account the objectives of the Act and giving some substance to the 'necessary' and 'impair' requirements," Scalia wrote. GTE and some other Bell companies on Monday said they would press the FCC to establish tough new standards that would vary geographically and based on the type of competitor GTE and the Bells suffered setbacks in other parts of Monday's decision. The Supreme Court upheld the authority of the FCC to establish a single nationwide pricing formula for state regulators setting the price of leased network components. The FCC's formula almost guarantees leasing prices will be substantially below retail prices. The court also revived the ability of a competing local carrier to include in an interconnection contract almost any provision previously agreed to by the major local carrier in other interconnection agreements.

To: S. HYDER who wrote (3833)	1/29/1999 8:04:00 AM
From: Anthony Wong	Respond to of 11568

MCI WorldCom Inc. Raised to 'Buy' at Davenport & Co., target $100 Bloomberg News January 28, 1999, 4:11 p.m. ET Princeton, New Jersey, Jan. 28 (Bloomberg Data) -- MCI WorldCom Inc. (WCOM US) was raised to ''buy'' from ''accumulate'' by analyst F. Drake Johnstone at Davenport & Co.. The 12-month target price is $100.00 per share. -- Andrew Bekoff in Princeton, New Jersey, (609)279-3652