NEWSReport No. DC- 95-12   ACTION IN DOCKET CASE           January 12, 1995

              COMMISSION VOTES TO STREAMLINE REGULATION OF
                        AT&T COMMERCIAL SERVICES 
                            (CC DOCKET 93-197)

     The Commission voted today to move AT&T's commercial long distance services
from price cap to streamlined regulation, a decision that will foster more vigorous
competition for customers of these services.  The Commission based its action on its finding
that there are alternative providers of these services, and that facilities-based competitors of
AT&T have ample capacity to service additional customers and have shown a willingness to
do so.  The Commission further found that customers are aware and make use of competing
providers of commercial long distance services, as evidenced by the fluctuation in AT&T's
market share.  The Commission made clear that AT&T may not restrict resale and shared
use of these services. 
 
     Commercial services are those used by AT&T's customers that are classified as 
commercial, as opposed to residential, customers by local telephone companies.  Customers
of commercial long distance services offered by AT&T and other carriers are typically
smaller businesses than those that subscribe to long distance services already removed from
price cap regulation.  Under streamlined regulation, a tariff filing is presumed lawful and
may take effect on 14 days' notice without extensive cost support data.  Under price caps,
AT&T's commercial long distance tariffs were filed on at least 45 days' notice, with
substantial cost support data.

     The Commission declined to revise the price cap treatment of AT&T's 800 directory
assistance and analog private line services.  It found that at the present time, 800 directory
service remains essentially an AT&T monopoly and, therefore, elimination of price cap
restraints could lead to unreasonable prices for this service.  The Commission said that 800
directory assistance service would remain subject to price cap regulation until the service
becomes competitive.

     The Commission found that analog services are gradually being eliminated, as
customers migrate to digital and virtual private line services.  While many customers would
likely respond to higher prices for analog services by switching to digital service, adequate
substitutes are not currently available to all users of analog private line services. 
Accordingly, the Commission concluded that these services will remain under price cap
regulation.  

 (over)


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     The Commission deferred a decision on how to treat optional calling plans (OCPs)
under price caps to further proceedings in this docket and a related docket on promotions
(CC Docket 87-313).  

     The Commission also found that AT&T has met its obligation regarding the reporting
of its service quality and network reliability functions in its Commission-mandated
Equipment Blockage and Failure (EB&F) Reports, which measure call blockages and
network equipment failures. The Commission found that the semi-annual EB&F reports
provide an accurate measure of AT&T's service quality and network reliability trends and
performance and accordingly, the Commission said revisions to the reports do not appear
necessary at this time. 

BACKGROUND

In 1989 the Commission eliminated traditional rate of return regulation for AT&T and
implemented a system of price cap regulation.  The price cap system creates incentives for
AT&T to improve its efficiency and introduce innovative services, while reducing AT&T's
incentive to shift costs form more to less competitive service offerings.  Under this system
prices are capped rather than profits.  The plan gives AT&T the incentive to earn higher
profits by operating more efficiently, for example by reducing its costs. 

An integral part of the price cap plan is a periodic review to determine whether the plan is
functioning as the Commission intended.  The Commission undertook the first performance
review of AT&T in 1992.  On July 23, 1993, the Commission issued a report in which it
concluded that while the overall price cap plan for AT&T is achieving the goals it was
designed to meet, some adjustments were in order.  Accordingly, the Commission initiated
this proceeding to determine whether the price cap plan should be revised in the following
areas: commercial services, 800 directory services, analog private line services and OCPs. 
The Commission also sought additional information from AT&T concerning its EB&F
Reports.

     Action by the Commission January 12, 1995, by Report and Order (FCC 95-18). 
Chairman Hundt, Commissioners Quello, Barrett, Ness and Chong.

  -FCC-


     News Media contact: Susan Lewis Sallet at (202) 418-0500.
     Common Carrier Bureau contacts: Suzan Friedman at (202) 418-1530 and Geri Matise
at (202) 418-1520.