Report No.  CC 95-17                     COMMON CARRIER ACTION March 7, 1995


          ROCHESTER TELEPHONE CORPORATION GRANTED RULE WAIVERS 
                    TO IMPLEMENT ITS OPEN MARKET PLAN

     Expressing strong support for the efforts of individual local telephone companies and
state commissions to begin the transition to full competition in the local exchange, the
Commission today granted Rochester Telephone Corporation the federal regulatory
modifications it sought to facilitate competition in the provision of local telephone service in
the Rochester, New York area.  Rochester is one of the first areas in the country that will
have competition at the local level with respect to both business and residential service
offerings.

     In 1993, Rochester filed a petition with the New York State Public Service
Commission proposing an "Open Market Plan" for unbundling network services.  It proposed
to restructure the provision of services to end users and other carriers in a manner that it
expects will permit vigorous competition to develop for local exchange services.  Rochester
implemented the plan on January 1, 1995.

     Under the Open Market Plan, Rochester restructured itself into a basic network
services company, which retains the Rochester name, and a competitive company, Frontier
Communications of Rochester, which the New York PSC will regulate as a non-dominant
carrier.  Rochester provides basic network services, such as interstate access.  It also
provides, on an unbundled, non-discriminatory basis, the local loop, switching, and transport
functions that reseller carriers need to provide local exchange telephone service.  It offers
these intrastate services as a wholesaler, at discounted prices lower than its standard retail
rates.

     Rochester requested waivers of Part 69 of the Commission's rules so that the
company could change the way it recovers three types of interstate access charges when
another carrier is reselling Rochester's lines to end users.  The access charges involved are
the subscriber line charge (SLC) and a charge for changing presubscribed long distance
carriers, both paid by end users, and the carrier common line (CCL)  charge, paid by long
distance carriers.  Initially, Rochester will continue to offer local exchange telephone service
to most customers as a retailer.  Rochester requested these waivers because a number of
competing companies are expected to provide intrastate "retail" service to end users, using
Rochester's "wholesale" facilities, while the current federal access charge structure is
premised on local facilities-based companies like Rochester having an exclusive, direct
relationship with the end-user.

     Under the waivers approved by the Commission today, Rochester will recover SLC
and pre-subscription change charges from carriers that purchase and resell its subscriber
lines.  For competing local service providers that purchase Rochester's subscriber lines, but 

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not its local switching services, Rochester will assess a flat-rated CCL charge based on the
average level of interstate traffic on its own subscriber lines.  The Commission directed
Rochester to calculate changes in the CCL in a manner that reasonably estimates the growth
rates of competitive providers of local retail service that use Rochester's subscriber lines.

     The Commission denied Rochester's proposal to impose a pricing restriction on
resellers, that is, requiring purchasers of its subscriber lines to impose a federal SLC no
more than the SLC charged by Rochester.

     In the Order adopted today, the Commission called the actions of Rochester and the
New York State Public Service Commission "an encouraging experiment," and observed that
"the possibility of fundamental reform in the future may be facilitated by granting a waiver
in this instance."  The Commission concluded that "experimentation in this area may produce
useful data about the effect of alternative rate structures on the development of competition."

     Action by the Commission March 7, 1995, by Order (FCC 95- 96).  Chairman
Hundt, Commissioners Quello, Barrett, Ness and Chong with Commissioner Barrett issuing a
separate statement. 


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     News Media contact: Susan Lewis Sallet at (202) 418-1500.
     Common Carrier Bureau contacts: Mark Nadel at (202) 418-1594; David Sieradzki at
(202) 418-1576