November 7, 2001 -- US LEC Corp. (Nasdaq: CLEC), a telecommunications carrier providing voice, data and Internet services, offered testimony before the North Carolina Utilities Commission on Monday, November 5, 2001, that BellSouth (NYSE: BLS) should not be approved to provide long distance service in North Carolina. US LEC's testimony included evidence of BellSouth's poor provisioning and maintenance record in North Carolina and the failure by BellSouth to provide reliable service to competitive local providers. BellSouth did not challenge US LEC's testimony.

Wanda Montano, US LEC's vice president of regulatory and industry affairs, commented saying, "What is at stake in the Commission hearing is not the addition of yet another long distance carrier to the North Carolina market. There are hundreds of companies competing to offer long distance service to North Carolina consumers. The real issue is whether North Carolinians will have a choice when it comes to local telephone service. BellSouth's poor provisioning and maintenance record with US LEC indicates that BellSouth has not opened its local market to competition."

"The overall small market share achieved by the competitive carriers today is in no way an indicator that healthy competition exists in local phone service," Montano continued. "From a policy perspective, competition in long distance phone service is already robust, while competition in local service is still in its early stages. Granting BellSouth's request now would remove the only 'carrot' currently enticing BellSouth to cooperate with competitors and it would not help the development of competition in the local phone service market."

Incumbents may apply to provide long distance service once they believe they have met all 14 points listed in "Section 271" of the Telecommunications Act of 1996. This "carrot," the 14 point checklist, is designed to ensure that the incumbents open their markets to local competition. Competitive telecom carriers see the checklist as a mechanism for ensuring that the ILECs comply with the rules and laws that promote competition, and it is regarded as one of the only remaining tools the competitors have to leverage in the fight for fair competition.

Montano continued, "BellSouth purports to favor fines and penalties to assure fair competition. We believe that fines and penalties are ineffective if they are neither adequately enforced nor obeyed. Recent history has proven both to be true. In at least one instance, BellSouth refused to pay a fine to US LEC in Georgia, electing instead to deposit the payments into their own escrow account. In August of this year, MCI asked the Tennessee Regulatory Authority (TRA) to impose sanctions against BellSouth for refusal to comply with a previous TRA decision ordering BellSouth to pay MCI reciprocal compensation fees due. We remain hopeful that the North Carolina Utilities Commission will recognize instances such as these and preserve competition by denying BellSouth's long distance application. The goal should be to develop a level playing field and fair treatment."