MCLD - McLeod USA, Inc. (MCLD)

[jmhollen]

FCC's Powell meets with upstart local phone carriers

WASHINGTON, July 10 — Federal Communications Commission Chairman Michael Powell met on Tuesday with heads of smaller local telephone companies, many of whom are struggling financially, to discuss the problems and challenges facing the industry.

Chief executives from WinStar Communications (NASDAQ:WCII), XO Communications (NASDAQ:XOXO), McLeodUSA (NASDAQ:MCLD), Covad Communications (NASDAQ:COVD), Allegiance Telecom (NASDAQ:ALGX) were among the dozen who attended the meeting, the FCC said.

"This was an outstanding opportunity for a frank dialogue on various issues surrounding the central question of what needs to be done for CLECs to fulfill the goal of the Telecommunications Act of 1996 and bring effective competition to local phone markets," Powell said in a statement.

Many competitive local carriers have struggled to survive against dominant local telephone companies like Verizon Communications (NYSE:VZ), BellSouth Corp. (NYSE:BLS), Qwest Communications International (NYSE:Q) and SBC Communications Inc. (NYSE:SBC)

WinStar and Teligent are two examples of startup local telephone companies that tried to enter the market but ended up in bankruptcy protection though McLeod and Allegiance have had more success penetrating the market.

McLeod earlier on Tuesday said it had enough money to fund its operations until it produces free cash-flow in 2003 and had tapped another $175 million from its $1.3 billion credit facility.

The FCC chairman and executives discussed what has and has not worked for the upstarts when entering the market, access to capital markets, the impact regulatory policy on them and what is needed for the new competitors to survive.

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