January 10, 2002 -- Qwest Communications International Inc. (NYSE: Q), the broadband communications company, strongly criticized AT&T and the two other big long-distance companies for increasing long-distance rates while waging an aggressive campaign to delay Qwest's long-distance re-entry in its 14 Western states. AT&T, WorldCom and Sprint recently announced increases of 10 to 20 percent on their basic rate plans.

"AT&T's agenda is clear -- spend millions of dollars to keep Qwest out of the long-distance business while skimming billions of dollars from unsuspecting customers through price hikes," said Steve Davis, Qwest senior vice president for policy & law.

According to Qwest, AT&T's latest price increase continues a trend. In July 2001, AT&T increased basic rates by as much as 11 percent. AT&T will now increase these same rates by more than 16 percent -- to as much as 35 cents a minute -- affecting more than 23 million consumers. Consumer activists have criticized AT&T for targeting its basic service customers because many are unaware of long-distance price plan options. In 2001 AT&T also raised monthly fees for its cable customers more than 10 percent.

Yesterday, House Commerce Committee ranking Democrat John Dingell accused AT&T of price gouging and called on the Federal Communications Commission (FCC) to launch an investigation into AT&T's recent hike in the universal service fund line-item fee for residential customers.

"AT&T will continue to increase long-distance prices until they have to compete with Qwest. It's that simple," said Davis. "We expect the big long-distance companies to continue to make up nuisance objections to delay our long-distance re-entry so they can continue to exploit customers who don't have a real alternative. When customers do have a choice, like in Texas and New York, rates go down and customers ditch their big long-distance company to save money."

Qwest claims that its long-distance re-entry will save customers throughout its local service territory more than $1 billion annually, or approximately $70 to $113 per residential customer, according to a study by Professor Jerry A. Hausman, director of the Massachusetts Institute of Technology (MIT) Telecommunications Economics Research Program. After Qwest is approved to re-enter the long-distance business, the company says it will provide customers with a real competitive choice for long-distance service, as well as offer bundled services and the convenience of a single bill.

Qwest says that customers in New York and Texas saved similar amounts when the local telephone company in those states got approval to compete against the big long-distance companies. A recent study concluded that the increased long-distance competition saved New York consumers more than $200 million. In the 12 months after Verizon received long-distance approval in New York, approximately 20 percent of customers switched to a Verizon long-distance plan. In Texas, more than 20 percent of local customers switched to an SBC long-distance calling plan in the first nine months the company was authorized to provide service.

The company cites a report by Consumer Action, an independent consumer non-profit organization, found that long-distance rates are increasing everywhere except in states where the local telephone provider has been approved to offer competitive long-distance services, such as Texas and New York. The study found that consumers in these states were offered rates for basic service plans that were up to 66 percent lower than the big long-distance companies' plans.

Qwest expects to offer long-distance services in its 14 states by mid-2002. The company is making significant progress toward receiving federal approval to re-enter the long-distance market. On December 21, 2001 Qwest completed a critical and comprehensive systems test in Arizona. Qwest is also nearing completion of a systems test covering 13 other local service states. The company plans to file for long-distance approval with the FCC for several states in March and to file applications for the remaining states late in the spring of 2002. Qwest expects to receive approval for each application within 90 days of filing with the FCC.

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