News Release

June 27, 2005

KCC Finds Not Enough Competition To Price Deregulate SBC In Kansas City, Topeka And Wichita

The Kansas Corporation Commission (KCC) issued an order today denying price deregulation of basic telephone service for residential, single-line business and multi-line business in the Kansas City, Topeka and Wichita exchanges, with one exception. The Commission granted price deregulation of basic service for multi-line business customers in the Wichita exchange, after finding sufficient competition existed for customers to enjoy the benefits of competition.

The Commission further found SBC must continue to make available call management services, such as Caller ID, Call Waiting and 3-Way Calling on an individual basis under existing price cap regulation in all three customer classes; residential, single-line business and multi-line business.

Bundles, offerings that include a basic access line and one or more call management services, will continue to be price regulated in the Topeka exchange; however, the Commission granted price deregulation of bundles in the Kansas City and Wichita exchanges. In its order, the Commission found that while the level of competition is not sufficient to grant price deregulation of the underlying basic access line – especially given the lack of comparable alternatives for SBC stand-alone service – the Commission found that sufficient competition existed in the Kansas City and Wichita exchanges to permit price deregulation of bundled service. The stand-alone access line and call management services will remain available under price cap acting as a constraint on SBC’s pricing of bundles where competition is limited.

For those services that SBC has been granted price deregulation, SBC remains under the legal obligation to price in such a way as to avoid "unjust or unreasonably discriminatory or unduly preferential" rates. In this case, this means differing rates within an exchange for which the difference can only reasonably be explained by the presence or lack of presence of a competitive alternative provider to SBC.

On May 6, 2005, SBC refiled its application with the KCC requesting permission to price telephone products and services for residential and business customers the same way its competitors do now, without KCC oversight or regulation in the Kansas City, Topeka and Wichita exchanges.

Kansas law (K.S.A. 66-2005(q)) provides for SBC's request and establishes the parameters and extremely tight time-frame in which the Commission was required to render a decision to grant or deny SBC's application, either in whole or in part.

Commissioner Michael C. Moffet filed a Statement of Dissent stating his view that the Commission could have better promoted the policy of encouraging competition in the Kansas telecommunications markets by increasing reliance on market forces. Commissioner Moffet said he would have approved more of SBC’s request.