NEWSReport No. DC 96-67    ACTION IN DOCKET CASE              July 18, 1996

                                    
                      FCC BEGINS IMPLEMENTATION OF 
                 1996 TELECOMMUNICATIONS ACT SAFEGUARDS 
           FOR BOC PROVISION OF IN-REGION INTERLATA SERVICES;
           Commission Seeks Comment on Separate Affiliate and 
               Nondiscrimination Requirements of 1996 Act 
                          (CC DOCKET NO. 96-149)

 The Commission today initiated a proceeding to implement the separate affiliate and
nondiscrimination requirements that would apply to Bell Operating Companies' (BOCs) provision
of interLATA long distance services in areas where they offer local telephone service and certain
other services designated by the 1996 Telecommunications Act.  Congress enacted these
safeguards to help prevent BOCs from improperly using their market power in the local telephone
market to gain an unfair advantage over their rivals in the in-region interLATA service markets
and certain other businesses, such as the manufacturing of telecommunications equipment.  These
safeguards are intended to encourage the development of robust competition in all
telecommunications markets.  In a Notice of Proposed Rulemaking (NPRM) released today, the
Commission seeks comment on the rules that should be adopted to implement provisions of
Section 272 of the 1996 Act.

 Section 271 of the 1996 Act permits BOCs to engage in certain new activities when they
have satisfied specific statutory requirements.  In particular, the new law permits BOCs to
provide in-region long distance telecommunications and information services and to engage in
manufacturing activities, subject to certain conditions, including compliance with Section 272. 
Section 272 establishes separate affiliate and nondiscrimination requirements that apply to BOC
manufacturing of telecommunications and customer premises equipment and BOC provision of
interLATA telecommunications and information services.

 In the NPRM, the Commission also seeks comment on whether it should relax its current
rules that would regulate a BOC's provision of in-region, interstate, domestic, interLATA services
as dominant carrier service offerings.  The Commission invites parties to comment on whether
it should modify its existing rules for regulating independent LECs' provision of interstate,
interexchange services, in areas where those LECs provide local telephone service.  Finally, the
Commission considers whether to apply the same regulatory classification to BOC and
independent LEC provision of in-region, international services as the Commission adopts for their
provision of in-region, interstate, domestic, interLATA services and in-region, interstate,
domestic, interexchange services, respectively.

 This proceeding is one of a series of interrelated rulemakings that collectively will
implement the 1996 Act.  In this NPRM, the Commission seeks to adopt non-accounting
safeguards to govern BOC entry into certain new markets.  In another related proceeding, the
Commission will adopt accounting safeguards that would govern BOC entry into these markets. 
Together, these non-accounting and accounting safeguards are intended to protect subscribers of
BOC monopoly services, such as local telephony, against the risk of being forced to pay costs
incurred by the BOCs to provide competitive services, such as in-region interLATA services and
equipment manufacturing, and to protect competition in those markets from the BOCs' ability to
use their existing market power in local exchange services to obtain an anticompetitive advantage
in those new markets the BOCs seek to enter.  In this NPRM, the Commission tentatively
concludes that the non-accounting safeguards adopted in this proceeding will apply to both
interstate and intrastate telecommunications and information services provided by the BOCs and
their affiliates.

 In a separate, related order, the Commission dismissed a petition for declaratory ruling
filed by Southern New England Telecommunications Corporation seeking permission to offer
interstate, interexchange services directly, rather than through a separate affiliate.  The
Commission concluded that the issues raised by the petition will be addressed in the context of
this and another ongoing rulemaking that concerns the Commission's regulation of interexchange
services provided by independent LECs.

 Action by the Commission July 17, 1996, by Notice of Proposed Rulemaking (FCC 96-
308) and Order (FCC 96-307).  Chairman Hundt, Commissioners Quello, Ness, and Chong.

-FCC-
                                    
 News Media contact: Mindy Ginsburg at (202) 418-1500.
 Common Carrier Bureau contacts: Carol E. Mattey, Melissa Waksman, and 
 Donald Stockdale at (202) 418-1580.