KPMG Final Report

Bellsouth Corp
20 March 2001



          BellSouth Hails Milestone in Long Distance Entry Effort 


   ATLANTA -- A major milestone in BellSouth's efforts to gain permission to
offer long-distance service in Georgia was reached Tuesday when a consulting
firm delivered to regulators its final report on BellSouth's (NYSE: BLS)
operational support systems used by competitors across BellSouth's nine-state
region. 
   KPMG Consulting, Inc. presented the report to the Georgia Public Service
Commission, which will assess BellSouth's compliance with federal rules
governing its systems. Such compliance is necessary before BellSouth is allowed
to offer long-distance service to consumers in Georgia. 

   In a process lasting almost two years, KPMG evaluated over 1170 criteria in
testing BellSouth's operational support systems, including systems that are used
both by BellSouth and its competitors for pre-ordering service, ordering and
providing service, billing, maintenance and repair. KPMG also evaluated the
management of changes to BellSouth's systems as well as the data that reflect
how well such systems perform. 

   In its multi-volume report, KPMG told the commission it found BellSouth had
satisfied over 98 percent of the test criteria. While KPMG used sample orders to
test the systems, orders from competitors are flowing through BellSouth's
systems at an even better rate than the test orders. 

   'Completion of this extensive and vigorous test is an important step in our
effort to get authority to offer long-distance service in Georgia, and we are
pleased with the results. Our network is open to competition, and we're ready to
move ahead with this process. We expect that at the appropriate time the Georgia
Public Service Commission will endorse our entry into long distance in Georgia.
We will then formally ask the Federal Communications Commission in Washington
for long-distance approval,' said Jere Drummond, BellSouth's vice chairman. The
FCC has 90 days from the time of the application to render a decision. Local
Bell telephone companies in New York, Texas, Oklahoma and Kansas have already
been allowed to enter the long distance business, and customers in those states
have seen immediate benefits. 

   'Our counterparts have obtained significant market share in long-distance and
we believe our Georgia customers will choose the convenience of buying their
long-distance service from BellSouth in similar numbers,' Drummond said.
'Experience has demonstrated that in those states where Bell companies have been
authorized to provide long-distance service, competition has increased both in
the local market and for long-distance service,' Drummond said. 'Such
competition benefits consumers and is what Congress intended when it passed the
Telecommunications Act of 1996. We expect consumers in Georgia to experience
similar benefits.' 

   KPMG told the commission it would continue to evaluate the 'metrics' portion
of the testing. The metrics test evaluates BellSouth's ability to accurately
gather and calculate performance data. KPMG said inaccuracies in that category
'would not in and of themselves have a materially adverse impact on
competition.' 

   While finding that a small number of test criteria that had not been
satisfied could potentially have a materially adverse impact on competition,
KPMG also noted that the Georgia commission has in place a mechanism to monitor
BellSouth's ongoing performance in these areas. Furthermore, the KPMG test
represents only a snapshot in time, and BellSouth's more recent performance for
competing carriers in Georgia is significantly improved. For example, KPMG
tested BellSouth's systems to determine whether BellSouth gets back to a
competitor within an hour if there is a problem with an order submitted
electronically through a computer linkup. The benchmark for this part of the
test was 97 percent compliance, which the KPMG report found BellSouth had
missed. However, for competitors reselling BellSouth's service to residence and
business customers, BellSouth met the one-hour deadline 97.68% of the time for
residence customers and 96.86% of the time for business customers in January
2001. 

   During the course of this two-year test, a series of interim reports has
shown steady improvement in the various measures as employees of BellSouth and
its competitors' employees build their skills in using the systems. As
shortcomings have been identified in BellSouth's test performance, BellSouth has
taken corrective measures. 

   'We've invested $1 billion dollars and assigned over a 1,000 people to work
with our competitors to give them access to our network and our systems. We're
going to continue to improve our performance,' Drummond pledged. 'But at the end
of the testing, our competitors have been able to provide service to roughly
three-quarters of a million phone lines in Georgia. It is clear that BellSouth
systems work and the market in Georgia is fully open to competition.' 

   About BellSouth Corporation
   BellSouth Corporation is a Fortune 100 communications services company
headquartered in Atlanta, GA, serving more than 44 million customers in the
United States and 16 other countries. 

   Consistently recognized for customer satisfaction, BellSouth provides a full
array of broadband data and e-commerce solutions to business customers,
including Web hosting and other Internet services. In the residential market,
BellSouth offers DSL high-speed Internet access, advanced voice features and
other services. BellSouth also provides online and directory advertising
services, including BellSouth(R) RealPagesSM.com. 

   BellSouth owns 40 percent of Cingular Wireless, the nation's second largest
wireless company, which provides innovative wireless data and voice services.