January 15, 2002 -- At an address to telecom industry regulators and business leaders, BellSouth (NYSE: BLS) Chairman and CEO Duane Ackerman called for a new regulatory approach for the telecommunications industry. Speaking at the Emerging Issues Policy Forum at Amelia Island, Florida, Ackerman noted that today's telecom marketplace is no longer just about wireline services. Instead it is about "telecommunications," including wireline, wireless, cable and the Internet, and it does not fit within the mold of current regulatory policy.

"The reigning model of regulation was not designed for today's competitive marketplace nor is it designed for the emerging world of digital communications," stated Ackerman. "Advances in technology and changes in the marketplace -- how we communicate -- have rendered the reigning regulatory model ineffective," he noted.

In his remarks, Ackerman summarized the significant changes that have occurred in the industry since the Telecom Act, noting, "first, data has exploded. Of all the traffic on BellSouth's network, 66 percent is now data. Today there are more than 120-million wireless customers compared with 38- million in 1995," he stated. "And perhaps the most startling fact, while the Telecom Act didn't anticipate the Internet, today hundreds of millions of people worldwide are linked to the Net making Email the biggest personal communications breakthrough since the phone itself," he noted.

Ackerman pointed to four basic observations that exist with today's telecom regulatory model noting that in total these tend to constrain innovation in the marketplace, distort the investment of participants in the industry making it difficult to invest in new technologies, particularly in rural areas, and serve to slow the delivery of new services to all customers.

"For example, BellSouth is regulated in broadband, our competitors aren't," noted Ackerman. "We're aren't asking that cable be regulated -- even behemoths like AOL - Time Warner and AT&T-Comcast. Instead we ask that we not be regulated in Digital Subscriber Line (DSL) services."

In his remarks, Ackerman called for a change in policy. He suggested that the new approach should be "minimalist," and deregulatory in focus, reflecting the realities of changing technology and the marketplace. "The new model should recognize that the telecom industry has strong competition, using at least three different technologies, resulting in the fact that today in many areas there is little if any need for regulation at the retail level," stated Ackerman.

"The industry needs a new regulatory model, regulators need a new regulatory model and consumers need a new regulatory model," noted Ackerman.

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