NEWSReport No. DC 95-144   ACTION IN DOCKET CASE          December 12, 1995
     
COMMISSION EXTENDS CAP ON UNIVERSAL SERVICE FUND
           Adopts Recommendation of Federal-State Joint Board
                            (CC DOCKET 80-286)

     The Commission  adopted the recommendation of the Federal-State Joint Board to
extend to July 1, 1996, the interim indexed cap on the size of the Universal Service Fund
(USF).  The Joint Board and the Commission found that the six-month extension is necessary
in order to moderate the growth of the USF pending completion of the USF jurisdictional
separations rulemaking.  The USF promotes universally available telephone service at
reasonable rates by providing funding that enables telephone companies and state regulators
to establish local exchange rates that do not greatly exceed nationwide average levels in areas
with high operational costs.  The USF jurisdictional rulemaking is examining whether
changes are needed to better tailor the USF to its goals.     

     In recommending a six-month extension, the Joint Board noted that if, as some have
argued, the size of the 1996 USF were to be less than the cap, the cap would not cause USF
assistance to drop.  The Joint Board found, however, that if the interim cap were not
extended and the actual USF total, after adjustments, was greater than the amount initially
calculated, as has happened in prior years, significant disruptions could result depending
upon the outcome of the rulemaking.  The Joint Board noted that when it initially
recommended an interim cap, it had been concerned with erratic growth in the USF.

     The Commission reiterated its commitment to provision of universal service in a
manner that is fair, effective, efficient and consistent with changes in the technological and
market environment of the telecommunications industry.  The Commission stated that it
agreed with the Board's recommendation of a six-month extension and found that this time
should be adequate to complete the USF rulemaking.

     Action by the Commission, December 11, 1995, by Report and Order (FCC 95-494).
Chairman Hundt, Commissioners Quello, Barrett, Ness and Chong.

  -FCC-

     News media contact:  Susan Lewis Sallet at (202) 418-1500.
     Common Carrier Bureau contacts  Jeanine Poltronieri at (202) 418-0866 and
Clara Kuehn at (202) 418-0844.