NEWSReport No. DC 95-76    ACTION IN DOCKET CASE               May 30, 1995

                          COMMISSION CONSIDERS
                 CHANGES TO SUBSCRIBER LINE CHARGE RULES
               FOR ISDN AND OTHER DERIVED CHANNEL SERVICES 
                            (CC DOCKET 95-72)

     The Commission is considering changes to its Subscriber Line Charge rules as they
apply to Integrated Services Digital Network (ISDN) and other derived channel services.  
Derived channel services provide customers with multiple voice-grade-equivalent channnels
over a single facility.  The Commission described several basic principles that should guide
this process.  The Commission stated that it must be careful to avoid creating regulatory
barriers to the development of beneficial new technologies, particularly when those services
and technologies can facilitate access to the benefits of the National Information
Infrastructure.   At the same time, the Commission added that it should not favor one
technology or service over others.  

     The Commission today released a Notice of Proposed Rulemaking seeking comment
on the application of Subscriber Line Charges (SLCs) to ISDN and other derived channel
services.  This proceeding will consider changes in the existing rules, which provide for
application of a SLC to each derived channel in the case of such services. 

     In a Public Notice, also released today, the Common Carrier Bureau announced
suspension of its enforcement authority against local exchange carriers (LECs) that do not
apply a SLC to each derived channel for services such as ISDN pending further action in the
rulemaking proceeding.  This suspension of enforcement was subject to LEC compliance
with certain conditions to ensure that interstate toll rates would not increase.  

     In the Notice of Proposed Rulemaking, the Commission proposed several alternatives
for applying SLCs to derived channel technologies in addition to the current rule.  These
options include, among others:  

     o    Apply one SLC per facility.  For example, a subscriber to either Basic Rate
          Interface or Primary Rate Interface ISDN service would pay one SLC for each
          ISDN facility.

     o    Charge SLCs based on a ratio of the average LEC cost of providing a derived
          channel service to the average LEC cost of providing an ordinary local loop or
          T-1 facility.
                                  (over)
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     o    Permit local exchange carriers some flexibility in setting SLC rates for derived
          channel services, but modify the price cap rules so that any reduction in SLC
          flat rate recovery does not increase the Carrier Common Line (CCL) rates and
          potentially increase interstate toll rates.
 
     The Commission also expressed concern about measures that could reduce SLC
revenues, and potentially increase interstate toll rates.  The Commission stated that the
implementation of SLCs to recover a portion of the cost of local loops (that connect a
subscriber's home or business with the local telephone company central office) has produced
significant benefits, including reduced interstate toll rates.  (A reduction in SLC revenues
would permit LECs to increase CCL charges, which affect the level of interstate toll rates.)

     The Commission stated that policies that appear to reduce dramatically SLC charges
to large business customers, but not to residential customers, would need to be carefully
examined.  The Commission also noted that resolution of these issues should take into
account competitive developments in the interstate access market.

     ISDN permits digital transmission over ordinary local loops and T-1 facilities through
the use of advanced central office equipment and customer premises equipment.  Currently,
carriers offer two basic types of ISDN service.  Basic Rate Interface service allows a
subscriber to obtain two voice-grade-equivalent channels and a data/signalling  channel over
an ordinary local loop.  Primary Rate Interface service allows subscribers to obtain 23 voice-
grade-equivalent channels and one data/signalling channel over a T-1 facility.    

     The costs of the local loop portion of the telephone network are recovered through
charges levied at both state and federal levels, with approximately 25 percent of those costs
collected through interstate charges.  Since 1984, those charges have been collected through
SLCs,  a flat fee on every subscriber's monthly telephone bill, as well as a usage-sensitive
charge called the Carrier Common Line charge.  For residential and single line customers,
the SLC is capped at $3.50 per line.  For multiline business users, the charge is capped at $6
per line.   That portion of the interstate costs not collected through the SLC is collected
through the CCL charge, a per minute charge reflected in interstate long distance rates.

     Action by the Commission May 24, 1995, by Notice of Proposed Rulemaking (FCC
95-212).  Chairman Hundt, Commissioners Quello, Barrett, Ness and Chong.
     
  -FCC-

     News Media contact: Susan Lewis Sallet at (202) 418-1500.
     Common Carrier Bureau contact: Claudia Pabo at (202) 418-1595.