FACT SHEET 
INTERNET ASSETS SPIN-OFF


? Bell Atlantic cannot acquire GTE’s Internet assets, now known as Genuity, with its 
merger with GTE.
? Section 271 of the Telecommunications Act forbids an incumbent local exchange 
carrier (LEC), such as Bell Atlantic, from providing long distance services (voice or 
data services) before its local telecommunications markets are open to competition.

? To date, Bell Atlantic has only received authorization to offer long distance services 
in New York state.

? The merged company provides local phone service in the following 13 states: 
Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New 
Jersey, New York, Pennsylvania, Rhode Island, Virginia, Vermont, and West 
Virginia, and the District of Columbia.

? The spin-off of Genuity complies with the prohibition of an incumbent local phone 
company from providing long distance services.
? Because GTE will transfer its Internet backbone and related assets to a separate 
public corporation (Genuity) prior to merger closing, the proposed transaction 
will not result in a violation of section 271 of the Act.  The merged firm will 
retain shares of Genuity stock that will comprise less than 10 percent of Genuity’s 
voting, dividend and distribution rights.  These Class B shares will contain a 
contingent right that enables the merged firm to convert the shares into additional 
shares of up to 80 percent of Genuity only if it obtains section 271 authority with 
respect to 95 percent of Bell Atlantic’s in-region access lines within five years of 
the merger’s closing.  
1. The merged firm will be able to exercise its conversion right only if it obtains 
section 271 authority with respect to 95 percent of Bell Atlantic’s in-region 
access lines within five years.  It also must be in a position to operate 
Genuity’s business consistent with section 271 in all Bell Atlantic in-region 
states prior to actual conversion. 
2. The interest furthers the purposes of section 271 by increasing the merged 
firm’s incentive to achieve section 271 compliance quickly throughout the 
Bell Atlantic region.  This is reinforced by the requirement that the merged 
firm forgo any appreciation that is attributable to the period of time prior to 
section 271 authorization in any state.
3. The interest will not increase the likelihood that the merged firm will 
discriminate against Genuity’s rivals because any discriminatory behavior 
would be readily detectable by an independent auditor, through the section 
271 approval process or through appropriate enforcement action.

? Bell Atlantic/GTE cannot receive any economic benefit from the long distance 
services of Genuity before Bell Atlantic/GTE is legally authorized to provide these 
services.
? The merged company will give up to Genuity shareholders any gain in Genuity’s 
value that is attributable to Genuity’s operations in states where the merged 
company is restricted from offering interLATA, or long distance services.

1. 50% Threshold.  If Bell Atlantic fails to meet this 50% threshold within five 
years from the closing of the merger, it will never have the right to convert the 
Class B shares into more than a 10% interest, and the public shareholders will 
retain ownership of at least 90% of the company.

2. 95% Threshold for Bell Atlantic/GTE Conversion.  Bell Atlantic can exercise 
the conversion right only if it eliminates section 271 restrictions in at least 
95% of Bell Atlantic in-region lines within five years from the closing of the 
merger.  If it satisfies this 95% threshold, Bell Atlantic can exercise the Class 
B conversion right for the purpose of immediately bringing Genuity’s 
business into compliance with section 271.

3. Options between 50% and 95%.  If Bell Atlantic meets the 50% threshold but 
not the 95% threshold, it can dispose of all or a portion of its Class B shares, 
but it can only retain sale proceeds equal to the value of its original investment 
in Genuity plus a normal return.  Moreover, if Bell Atlantic intends to dispose 
all or a portion of its shares, it must first offer to sell the shares to Genuity at a 
price equal to the value of its original investment plus a normal return.