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                                               FEDERAL COMMUNICATIONS COMMISSION
                     WASHINGTON, D.C. 20554
                        January 25, 1988
                                
                                             IN REPLY REFER TO:
                                                  RAO Letter 11
                                                               
Responsible Accounting Officers

     Parts 31 and 32 - Rescission of July 19, 1985 Interpretation Relating to Account 232, 
               Station connections-inside wiring

     In a July 19, 1985 letter, which was addressed jointly to the Public Utility Commissioner
of Oregon (Oregon) and the Vice President and Comptroller of Pacific Northwest Bell Telephone
Company (PNB), the Chief, Accounting and Audits Division issued an interpretation regarding
reclassification of house cable from Account 242.1, Aerial cable (and to some extent from
Accounts 242.2, Underground cable and 242.3, Buried cable) to Account 232, Station
connections-inside wiring.

     The joint petition was prompted by Oregon's intention to relocate the point separating the
telephone network from customer premises wiring (demarcation point) on existing installations
to the building entrance terminal. The effect of this relocation was to place house cable on the
customer's side of the demarcation point. Consistent with this relocation of the demarcation point,
Oregon and PNB wanted to treat house cable as inside wiring. PNB wanted to reclassify the
embedded house cable to Account 232 and amortize it over the remaining amortization period
specified in CC Docket 79-105, Expensing of Inside Wiring (85 FCC 2d 818 (1981)). Upon
completion of the amortization period, ownership of the house cable would vest with the then
current property owner.

     Oregon's relocation of the demarcation point did not appear to be inconsistent with the
Commission's rules and the policies established in CC Docket 81-216 (49 F. R. 21719, May 23,
1984). In that proceeding, the concept of the demarcation point was intended to be flexible enough
to allow the demarcation point to be established near the building protector or inside each
individual unit of multi-unit buildings in accordance with the local telephone company's
reasonable and nondiscriminatory standard operating procedures, and as required by state
regulatory bodies; and under that concept, Oregon appeared merely to be acting within the scope
of its authority.

     Accordingly, when the new demarcation point was established, as proposed in the petition,
the Chief, Accounting and Audits Division concluded that the house cable located on the
customer's side of the demarcation point became inside wiring and should be reclassified to
Account 232, and amortized on the same basis as other inside wiring.






     Since the issuance of the July 19, 1985 interpretation, the installation and maintenance of
inside wiring have been preemptively detariffed by the FCC (CC Docket 79-105, Second Report
and Order, Detariffing the Installation and Maintenance of Inside Wiring, 51 F. R. 8498, March
12, 1986). This changed environment has necessitated that we rescind our July 19, 1985
interpretation letter, effective immediately.


                                   Sincerely,


                                   Kenneth P. Moran
                                   Chief, Accounting and Audits Division