PUBLIC NOTICE
FEDERAL COMMUNICATIONS COMMISSION
1919 M STREET, N.W.
WASHINGTON, D.C. 20554                                                                             DA 98-559

News media information 202/418-0500     Fax-On-Demand  202/418-2830     Internet:  http://www.fcc.gov    ftp.fcc.gov


                                         Released: March 23, 1998


Southwestern Bell Petitions Commission for Waiver of Application of Productivity Factor 
             to Universal Service Funds Contributions


                    Pleading Cycle Established


COMMENTS:  April 2, 1998

REPLY COMMENTS:  April 9, 1998

     
     On March 18, 1998, Southwestern Bell Telephone Company, Pacific Bell, and Nevada Bell
(collectively SBC) filed a petition for waiver of sections 61.44-45 of the Commissions rules, 47 C.F.R. 
61.44 and 61.45.  SBC requests a waiver of these rules because it does not wish to apply the productivity factor
of 6.5% to universal service fund contributions in its 1998 annual Access Tariff Filing.

     In its Fourth Report and Order in CC Docket No. 94-1, the Commission imposed a 6.5% productivity
factor on local exchange carriers.  The Commission permits recovery of universal service fund (USF)
contributions through exogenous changes in the price cap indices for the Common Line, Trunking and
Interexchange baskets, in proportion to the end-user revenues contained in each basket.  SBC claims that
application of the 6.5% productivity factor to its USF contribution in its upcoming 1998 Annual Access Tariff
Filing is not in the public interest.  SBC also alleges that its has already commenced work on its 1998 annual
Access Tariff Filing, and if the Commission does not act promptly, SBC will have to forego the recover of
approximately $7.3 million of Commission-imposed USF contributions.  

     SBC reiterates the arguments made by the United States Telephone Association (USTA) in a petition
for reconsideration of the Fourth Report and Order.  In its Petition, USTA asserts that application of the
productivity offset to USF contributions will reduce any exogenous increase and will result in the inefficient
recovery of USF contributions.  USTA recommends that, rather than imposing a 6.5% productivity factor on
USF contributions, the Commission increase the price cap indices for each basket by an amount sufficient to
eliminate the impact of the productivity factor on USF contributions.  USTA asserts that this can be
accomplished by reducing the revenues used to calculate price cap indices by the amount paid for USF and
treating the USF contribution as a new exogenous change.  

     SBC requests that the Commission implement USTA's proposed rule modification in time to allow it
to make changes to its 1998 Annual Access Tariff Filing.  In the alternative, SBC requests a waiver of the
application of the productivity factor to its USF contribution for its 1998 filing, and a rule modification
implementing USTA's proposed change as soon thereafter as possible.

     Interested parties may file comments on the SBC petition for waiver no later than April 2, 1998. 
Replies must be filed by April 7, 1998.  When filing comments and/or replies, please reference the internal file
number:  CCB/CPD 98-19.

     An original and four copies of all comments and replies must be filed in accordance with Section
1.51(c) of the Commission's rules, 47 C.F.R.  1.51(c).  In addition, one copy of each pleading must be filed
with International Transcription Services (ITS), the Commission's duplicating contractor, at its office at 1231
20th Street, N.W., Washington, D.C. 20036, and one copy with the Chief, Competitive Pricing Division, 1919
M Street, N.W., Room 518, Washington, D.C. 20554.

     For further information, contact Yvonne Hawkins, Competitive Pricing Division, Common Carrier
Bureau, (202) 418-1530.



                             - FCC -