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                 Before the
      Federal Communications Commission
           Washington, D.C. 20554


In the Matter of                        )
                                   )
Access Charge Reform                    )    CC
Docket No. 96-262
                                   )
Price Cap Performance Review            )    CC
Docket No. 94-1
for Local Exchange Carriers                  )
                                   )
Transport Rate Structure                )    CC
Docket No. 91-213
and Pricing                             )
                                   )
End User Common Line Charges            )    CC
Docket No. 95-72



                    ORDER

     Adopted:  June 17, 1997            Released: 
June 18, 1997

By the Commission:

                         I.   INTRODUCTION


     1.  On May 7, 1997, the Commission adopted two orders
making revisions to its rules governing the interstate access
service rate levels and rate structure of incumbent local exchange
carriers (LECs) subject to price cap regulation.  On June 3,
1997, Pacific Bell, Nevada Bell, and Southwestern Bell
Telephone Company (petitioners) jointly petitioned the
Commission partially to stay the Access Reform Order and the
X-Factor Order pending judicial review of those orders.  On
June 9, 1997, nine parties filed oppositions to the petition for
stay, and three parties filed pleadings in support of the petition. 
We find that the petitioners have failed to show that they are
entitled to the relief they have requested.  We therefore deny
their motion for stay.


                         II.  PLEADINGS
     
     2.  The petitioners seek a stay of the Access Reform
Order and the X-Factor Order in four respects.  First, they ask
the Commission to stay that portion of the Access Reform Orderin which we decline to expand the application of the access
charge regime set out in Part 69 of our rules (47 C.F.R. Part 69)
to the unbundled network elements (UNEs) that incumbent
LECs must make available to telecommunications carriers
pursuant to Sections 251 and 252 of the Communications Act,
47 U.S.C.  251, 252.  Second, the petitioners ask the
Commission to stay the Access Reform Order insofar as it
requires incumbent LECs subject to price cap regulation to make
an exogenous cost adjustment to their price cap indices (PCIs) to
reflect the completion of the amortization of certain equal access
costs that commenced before the advent of price caps and that
was reflected in the baseline rates used to initiate price cap
regulation.  Third, the petitioners ask the Commission to stay
the X-Factor Order insofar as it raises the productivity offset (or
"X-Factor") by which price cap carriers must lower their rates
each year (relative to cost changes in the general economy) from
a maximum of 5.3% under the preexisting price cap formula to
6.5%.   Finally, the petitioners seek a stay of the X-Factor
Order insofar as it requires carriers to reset their PCIs -- which
will constrain future access rate levels -- as if the 6.5% X-Factor
had been incorporated into the PCI formula in 1996.     

     3.  The petitioners and their supporters contend that they
are entitled to a stay under prevailing standards because they are
likely to prevail on the merits of legal challenges to each of these
portions of orders and the balance of equities favors a stay. 
Opponents challenge these contentions and argue that a stay
would disserve other parties and the public interest.  

                    III. DISCUSSION

     4.  In determining whether to stay the effectiveness of
one of its orders, the Commission uses the four-factor test
established in Virginia Petroleum Jobbers Ass'n v. FPC, 259 F.2d
921, 925 (D.C. Cir. 1958), as modified in Washington
Metropolitan Area Transit Comm'n v. Holiday Tours, Inc., 559
F.2d 841, 843 (D.C. Cir. 1977).  Under that test, petitioners
must demonstrate that: (1) they are likely to succeed on the
merits on review; (2) they would suffer irreparable injury
absent a stay; (3) a stay would not substantially harm other
interested parties; and (4) a stay would serve the public interest. 
We find that the petitioners have not satisfied any of the four
factors for granting a stay.

     A.  The Merits

          (1) The Application of Interstate Access
Charges

     5.  In the Access Reform Order, the Commission
concluded that incumbent LECs should not be permitted to
include within their interstate access tariffs, filed pursuant to 47
U.S.C.  201-205, and 47 C.F.R. Parts 61 & 69, charges that
are imposed on the purchase of unbundled network elements that
are leased pursuant to Sections 251 and 252 of the
Communications Act, 47 U.S.C.  251 & 252.  The
petitioners contend (Jt. Pet. at 6-7) that this refusal to expand
the scope of our interstate access charge regime violates an
order of the United States Court of Appeals for the Eighth
Circuit that stayed (pending review on the merits) certain
unbundled network element pricing rules that we previously had
adopted in the Section 251 Order.  The petitioners also
contend that this action by the Commission arbitrarily imposes
the costs of universal service on incumbents in a manner that is
not competitively neutral and unlawfully discriminates between
purchasers of allegedly "like" offerings.  These claims are
without merit.  

               (a) Consistency with Eighth Circuit
Stay

     6.  As an initial matter, we do not take lightly the charge
that we violated the court's stay order.  This Commission would
not knowingly take any action that violated a court order.  If
there were any question whether an action we contemplated was
contrary to a stay order such as that issued by the Eighth Circuit,
we would seek clarification from the court that issued the order
before taking action, and we would, of course, abide by the
court's decision.  But there is no such question here.  The Eighth
Circuit stayed the pricing rules we issued to implement sections
251 and 252 of the Act, and it did so because it concluded that
"petitioners have demonstrated that they will likely succeed on
the merits of their appeals based on their argument that, under
the Act, the FCC is without jurisdiction to establish pricing
regulations regarding intrastate telephone service."  The rules
at issue here implement a different section of the Act -- section
201-- and they concern interstate charges only.  The rule at
issue merely provides that incumbent LECs may not charge
customers for interstate access service when the LECs do not in
fact provide interstate access service.

     7.  It may be helpful to place this issue in context. 
Incumbent LECs such as petitioners offer local exchange service
to end-users and exchange access service to interexchange
carriers (IXCs).  Thus, LECs such as Pacific Bell provide local
exchange service (for example, completing calls within San
Francisco) to consumers and charge state-regulated rates for that
service.  A LEC also provides access service to IXCs such as
AT&T and MCI by connecting long-distance calls carried by the
IXCs from the IXCs' facilities to end-users' telephones.  When
the calling party and the called party involved in such long
distance calls are located in different states, the Act classifies
such calls as interstate telecommunications, which are under the
exclusive jurisdiction of the FCC.  Pursuant to section 201, the
Commission regulates the prices charged for interstate access
service under Part 69 of our rules, and no one has questioned (or
plausibly could question) our authority over interstate access
charges.

     8.  The issues pending before the Eighth Circuit do not
involve interstate access charges.  Rather, as relevant here, they
involve a new type of rate resulting from the introduction of
competition to the local exchange and exchange access markets. 
In the 1996 Telecommunications Act, Congress in the new
section 253 of the Communications Act barred states from
prohibiting competition in the local exchange or exchange access
markets.  New competitors -- competitive local exchange
carriers (CLECs) -- may now provide local exchange service and
exchange access service in competition with incumbent LECs
(ILECs).  Congress gave CLECs a number of rights, including
the rights to interconnect with ILECs, to lease ILECs' facilities
(or "unbundled network elements"), and to resell ILECs' retail
services.  With respect to leasing network elements, Congress
provided that ILECs must charge CLECs "just, reasonable, and
nondiscriminatory" rates that are "based on the cost ... of
providing the ... network element."

     9.  Last August, this Commission issued rules
implementing the new statutory provisions governing the rates
ILECs may charge CLECs that lease network elements.  The
Commission's view was that UNEs were themselves neither
interstate nor intrastate within the structure of separate and
exclusive federal and state regulatory jurisdictions established by
the 1934 statute.  Rather, the FCC could specify pricing
principles for UNEs under Section 251 and the States were to
establish specific prices pursuant to Section 252.  Among the
Commission's implementing rules -- issued in Part 51 of our
regulations -- was 47 C.F.R.  51.515(a), cited by petitioners,
which was stayed.  Pending before the Eighth Circuit, among
other issues, is the question whether Congress gave the
Commission authority to issue rules regarding the rates ILECs
may charge CLECs to lease network elements.  While the stay
has been in effect, state commissions have been issuing
arbitration decisions setting the rates ILECs may charge CLECs
to lease network elements without regard to those Commission
rules, including section 51.515(a), that have been stayed.

     10.  The access charge order at issue does not involve
the rates ILECs may charge CLECs to lease network elements. 
As just stated, those rates currently are being established by state
commissions without regard to our stayed rules, including
section 51.515(a), and those rates are not affected by the Order
at issue.  Thus, although petitioners complain that the Order at
issue "does not refer to or even note the existing rule (51.515)
nor the stay of that rule," that is because the stayed rule relates
to the rates ILECs may charge CLECs to lease network
elements, not the different question of  whether the ILEC or the
CLEC may charge IXCs for providing interstate access when the
CLEC uses network elements to originate and terminate
interstate long distance calls.  In the Access Reform Order, the
Commission provided the straightforward answer that the IXC
pays the CLEC that actually provides the service and that an
ILEC that does not provide exchange access service cannot
charge for it.  In other words, all the disputed provision of the
Order at issue tells ILECs such as petitioners is "do not charge
for a service you are not providing."  

     11.  That the Access Reform Order is completely
separate from the Interconnection Order also is illustrated by the
fact that the Commission's interstate access rule does not vary
depending on how the relevant state commission calculated the
rate the CLEC must pay the ILEC to lease network elements.  A
state commission may decide to set the price for leasing network
elements at forward-looking economic cost, including a
reasonable profit, as we would prefer (and as the vast majority of
state commissions have done).  Or, under the stay of our pricing
rules interpreting sections 251 and 252, a state commission may
choose some other approach.  But regardless of how the state
commission established the rate for leasing network elements,
under the different rule at issue here IXCs pay CLECs for
providing interstate access service when the CLEC leases
network elements to provide interstate access.  Accordingly,
there is no basis for the claim that the Commission's ruling
interpreting section 201 violated the Eighth Circuit's order
staying the pricing rules we issued to implement sections 251
and 252.

     12.  In addition, as noted above, the interstate access
rates at issue in the Access Reform Order do not involve any
"jurisdictional" issue such as that pending before the Eighth
Circuit.  Traditionally, the states have regulated intrastate rates
and the Commission has regulated interstate rates.  Network
elements leased by CLECs may be used to provide intrastate
services (such as typical local exchange service) and interstate
services (such as interstate access service), and the provisions in
sections 251 and 252 governing the prices charged for network
elements therefore raise a question involving the division of state
and federal authority.  In contrast, the Commission's section 201
authority over interstate access charges is unquestioned, and
nothing in the 1996 Act even arguably changes the rule that the
Commission has authority over the rates charged for interstate
access services.

     13.  A different case would be presented if we were "to
establish pricing regulations regarding intrastate telephone
service," but we have not established any intrastate pricing
regulations in the Access Reform Order.  Rather, we merely
have exercised our unquestioned jurisdiction over interstate
access charges and concluded that an ILEC that does not
provide interstate access service, but leases facilities to a CLEC
that provides interstate access service, is not entitled to charge
for a service provided by the CLEC.

               (b)  Reasonableness of the
Commission's Action

     14.  The petitioners also contend that access charges
currently include some implicit subsidies that support universal
service while UNEs (under our currently-stayed UNE pricing
rules) do not.  They further contend that UNEs may provide
CLECs with the opportunity to provide access service that is
substitutable for the access service ILECs provide.  Therefore,
they assert, CLECs that obtain the ability to provide access
service by leasing UNEs will be able to undercut their access
prices, compete away their access customers, and thereby erode
the subsidy-laden revenue stream that currently allows them to
provide telephone service universally in their territories.  They
contend that this result will irreparably harm their ability to
provide universal service and means that the costs of universal
service will not be recovered in a competitively neutral manner
as required by 47 U.S.C.  254.  They argue, further, that our
rules impose access charges in a discriminatory manner in
violation of 47 U.S.C.  202(a) insofar as they apply where an
interexchange carrier (IXC) carries the long distance call of an
end user served by a local exchange service reseller, but do not
apply where the IXC carries the call of an end user served by a
carrier that provides local exchange service through unbundled
network elements.  We disagree with these assertions.

     15.  Impact on Universal Service Funding.  There is no
merit to the petitioners' claims that the Access Reform Orderunlawfully undermines incumbents' ability to provide universal
service.  As an initial matter, we note that this claim is premised
upon assumptions that are, at this time, entirely hypothetical.  In
particular, although potential new entrants around the country
have been attempting to invoke their rights under sections 251
and 252 to obtain interconnection agreements that include
provisions for the leasing of UNEs, we understand that new
entrants currently are providing no more than a de minimis share
of industry-wide access service through the use of unbundled
elements; and the petitioners provide no information in their
petition or their accompanying affidavits to rebut this
understanding.  Moreover, the Commission (as well as the
states) will have many additional opportunities to address
universal service funding issues in the future should we be
presented with evidence that any real threat to universal service
actually is developing.  In any event, contrary to the petitioners'
contentions, the Access Reform Order itself actually lessens the
threat -- negligible in the short term, in any event -- that the
requirements of the 1996 Telecommunications Act pose to
existing universal service support mechanisms.  

     16.  Under our existing interstate access charge regime,
the rates incumbent LECs may charge interexchange carriers for
originating and terminating long distance traffic include a number
of component costs:  they include the historical cost of network
investment employed in providing access; they include expenses
related to the provision of access; and they include implicit
subsidies of other services.  These subsidies have existed both
among different interstate access elements (e.g., when the access
charge rate structure prevents the costs of providing a particular
access service from being recovered in the manner in which they
are incurred) and between interstate access services and
intrastate telecommunications services (where the jurisdictional
separations rules provide for an overassignment of shared costs
to the interstate jurisdiction).  These various implicit subsidies
have never been precisely quantified, but it is generally agreed
that some of them operate to support universal service.

     17.  Over the long run, it is clear that such a system of
implicit subsidies is sustainable only in a monopoly environment
in which the incumbent LEC is guaranteed an opportunity to
earn returns from low cost services that are sufficient to support
the high costs of other services, and we recognize that the new
competitive environment contemplated by the 1996
Telecommunications Act will tend to undermine this subsidy
structure over time.  The 1996 Act threatens this system of
implicit universal subsidies in the long run, because Sections
251(c)(3) and 252(d)(1) require incumbent LECs to make UNEs
available to new competitors at rates that exclude the cost of
universal service subsidies, and the new competitors can, in
turn, use those UNEs to offer their own access services in
competition with the incumbent LEC offerings.  Congress
directed us to adopt rules that implement these requirements by
August 1996, and we complied with that directive in the
Section 251 Order.  

     18.  The 1996 Act also provides a framework for a
substitute system of universal service support that will be
sustainable in the contemplated competitive environment.  In 47
U.S.C.  254, Congress required the Commission, by May 1997,
to adopt rules that establish a "specific timetable" for
implementation of revised federal universal service support
mechanisms that are explicit, predictable and competitively
neutral.  In the Universal Service Order, we complied, on
schedule, with that statutory directive, by establishing a multi-
year schedule for the implementation of such a mechanism.  That
plan contemplates  that current implicit subsidies will be
squeezed out of access charges as competition develops over the
course of the multi-year timetable.  But the Universal Service
Order itself leaves the access charge subsidies in place, and
concludes that, because competition will not immediately erode
access charge revenues to any significant degree, "[a]t present,
the existing system ... can continue to serve its [universal
service] purpose."  The petitioners' stay request does not assert
that we lacked authority in the Universal Service Order to create
such a plan.

     19.  The FCC having complied with the staggered
statutory rulemaking timetable for implementing access to
unbundled network elements under Sections 251 and 252 and
adopting a "specific schedule" for implementing universal service
revisions under Section 254, the Access Reform Order that the
petitioners here ask us to stay certainly does not exacerbate any
threat to universal service.  To the contrary, the order lessens the
chance that incumbents will suffer significant short-term losses
of access charge-generated universal service subsidy revenues. 
In particular, by converting carrier common line charge (CCLC)
recovery from a per-minute charge to a flat rate charge, the
Access Reform Order reduces the chance that new entrants that
compete through the use of UNEs can pick off a
disproportionate share of access revenues by winning just a few
high volume users.  The petitioners do not dispute this
consequence of the rate structure changes adopted in the order.  
     20.  Moreover, we specifically found in the Access
Reform Order, as we had in the Universal Service Order, the
availability of UNEs at rates that exclude subsidies was unlikely
to have dramatic short-term impact on the ability of price cap
LECs to fulfill their universal service obligations.  That is a
predictive judgment within our area of expertise and, as stated
above, the petitioners have presented no evidence to suggest that
it is an unreasonable assessment.  Congress has presented to
this Commission a long list of assignments in the 1996 Act,
which we are attempting to implement in compliance with
ambitious timetables.  We believe it is entirely reasonable, in
carrying out Congress's directions, to confine our attention
initially to problems that are real and not hypothetical.

     21.  Alleged Discrimination.  There also is no merit to the
petitioners' claims that our decision not to apply access charges
to unbundled network elements unreasonably discriminates
against local service resellers, whose offerings are subject to
access charges.  UNEs and resale are, both as a practical matter
and by statutory definition, distinct offerings.  Under Section
251(c)(3), carriers that lease UNEs thereby obtain the capability
to provide access service themselves and do not need to
purchase access additionally and separately from the incumbent. 
Resale, however, is governed by Section 251(c)(4) and applies
only to telecommunications services that the incumbent LEC
"provides at retail to subscribers who are not
telecommunications carriers."  Since access service is not
provided "at retail" to end users, but rather is provided to
interexchange carriers seeking to carry end users' long distance
traffic, a purchaser of service for resale under Section 251(c)(4)
does not thereby purchase the ability to provide access.  Thus, if
access is to be provided, it necessarily must be purchased
separately from the incumbent.  There is no discrimination in
imposing access charges on customers that in fact take access
service because they lack the ability to provide access
themselves, and in not imposing access charges on customers
that neither need, nor in fact purchase, access service.

          (2)  Other Challenges

     22.  The petitioners' remaining challenges -- to the
Commission's requirement that price cap LECs make PCI
adjustments reflecting the expiration of previously ordered equal
access cost amortization and the adoption of a revised 6.5% X-
Factor -- are insubstantial and are, in any event, fully addressed
in the Access Reform Order and the X-Factor Order.  They
require only brief response here.  

     23.  Adjustments for the Expiration of Equal Access Cost
Amortization.  We acknowledged in the Access Reform Orderthat our decision to require price cap LECs to adjust their PCIs
to reflect the expiration of the equal access cost amortization
constituted a change from the treatment of such amortization
that was provided in orders originally adopting and subsequently
applying price cap regulation.  We fully explained, however,
that such an adjustment was required to ensure that ratepayers
are not forced to continue paying indefinitely for extraordinary
costs that were reflected in the baseline (rate of return
regulation-derived) rates used to initiate price cap regulation in
1991, that have now been fully recovered, and that would
already have been removed from rates had rate of return
regulation continued.  The petitioners offer no substantive
rebuttal to our analysis, which fully complies with general
administrative law requirements that agencies acknowledge and
explain decisions to change course.  

     24.  The Adoption of a 6.5% X-Factor.  There is no
merit to the petitioners' claim that we arbitrarily and selectively
considered the record in revising the X-Factor upward from
5.3% to 6.5%.  The petitioners base this claim primarily on the
false premise that the Commission "reject[ed]" the average LEC
productivity results for the five most recent years for which we
had data, despite past statements that actual performance under
price cap regulation would provide the best estimate of future
productivity performance.  In fact, the Commission considered
each of the following averages of LEC productivity
performance: years 1986 through 1995; years 1987 through
1995; years 1988 through 1995; years 1989 through 1995; years
1990 through 1995; and years 1991 through 1995.  Since pre-
price cap performance makes a declining contribution to each
successive average, our consideration of all of those averages
clearly accords more weight to productivity performance under
price caps than to productivity performance in prior periods.  We
have never suggested, however, that data from particular years
must be employed uncritically to yield the proper X-Factor under
price caps, and we reasonably decided to give "less weight" to
the most recent average (years 1991-1995) because that average
accorded the most weight to the apparently aberrational results
of one year -- 1992.  The petitioners offer no reason to
question our skepticism regarding the 1992 results.  Moreover,
even if we were to give the most weight to the 1991 through
1995 average, the AT&T productivity study, upon which we
relied in part, yielded an X-Factor productivity component of
6.3% for that period, a figure above the 6.0% productivity
component that we actually adopted.

     25.  The Commission also continued its practice --
consistently applied since the inception of price cap regulation --
of adding a .5% consumer productivity dividend (CPD) to the
productivity component of the X-Factor, this time yielding a
total X-Factor of 6.5%.  Contrary to the petitioners' assertion,
we do not believe that retention of the CPD was arbitrary.  We
explained that a .5% CPD would continue to act as a mechanism
to encourage LECs to improve further their productivity
performance over historical levels and to flow through a
reasonable portion of that anticipated improvement to
consumers.  We found in this regard that LECs could be
expected to continue to improve their productivity performance
over past levels in light of our concurrent decision in the X-
Factor Order to eliminate "sharing" and our decision in the
Access Reform Order to make access charge rate structure
changes that would likely stimulate usage.  And we stressed
that we were retaining the low end adjustment mechanism --
which allows price cap LECs with rates of return below 10.25
percent to raise their PCIs to a level that would enable them to
earn 10.25 percent -- to protect against the possibility that the
new X-Factor might, in some cases, be too challenging.  The
petitioners have not shown that this justification for the
continued imposition of a CPD is unreasonable, nor have they
suggested a basis to change the level of the CPD that we have
historically applied (with judicial approval) to price cap
carriers.  

     26.  Resetting PCIs as if the Revised X-Factor Had Been
Adopted in 1996.   Finally, there is no merit to the petitioners'
claim that we acted unlawfully in requiring LECs -- beginning
with access tariff filings scheduled to take effect in July 1997 and
applying prospectively only -- to reset their PCIs to the levels
that would have resulted if the 6.5% X-Factor had been
incorporated into the PCI formula in 1996.  That adjustment,
which we fully justified in the X-Factor Order (at paras. 177-
181), is in all pertinent respects identical to the type of
adjustment we made in the 1995 interim performance review
order upon concluding that the pre-existing X-Factor at that time
was too low.  The Court of Appeals rejected claims that that
adjustment constituted unlawful retroactive rulemaking, and
upheld the adjustment as a reasonable measure designed to
ensure that future high earnings would result from actual
improvements in productivity and not from an X-Factor that was
too low.            
     B.   Balance of Equities 
     
     27.  We generally will stay the effectiveness of one of our
orders only if the party seeking such relief has shown that a
balance of the relevant equities favors a retention of the status
quo pending further consideration or judicial review.   See, e.g.,
Expanded Interconnection, 8 FCC Rcd at 124.  See also Cuomo
v. NRC, 772 F.2d 972, 978 (D.C. Cir. 1985).  In a case such as
this one, which involves significant and much needed reforms of
access charge and price caps regulation, the burden of showing
equitable entitlement to a stay is particularly heavy because of
the strong public interest in implementing those reforms.  SeeExpanded Interconnection, 8 FCC Rcd at 125 (denying stay,
where delay would thwart "important public policy objective"). 
We conclude that the petitioners here have not justified interim
relief, and, indeed, that prompt implementation of our order is
essential.

     28.  One significant aspect of the request for stay does
not seek a retention of the "status quo" at all but, in effect, asks
the Commission to extend  the application of its Part 69 access
charge rules to purchasers of unbundled network elements,
which never have been subject to the Part 69 rules.   Unbundled
network elements were not offered to competing LECs before
the adoption of the 1996 Act, and the preexisting Part 69 rules
did not automatically apply to those who took that offering.  The
question regarding unbundled elements in this proceeding was
whether the Commission should extend access charges to such
elements for the first time -- not whether the Commission should
eliminate the application of access charges.  See NPRM, para.
54.  The Commission decided not to allow ILECs to impose
interstate access charges on purchasers of network elements
because those purchasers do not obtain access from the ILECs. 
Insofar as this part of the stay petition asks us as an interim
matter to change our rules affirmatively to cover something they
never have covered, it is a request for mandatory relief rather
than injunctive relief and thus is inappropriate for consideration
in a stay context.   In any event, as we find below, the equities
do not support any part of the stay request.
     
          (1)  Irreparable Harm

     29.  The petitioners argue primarily that a stay is
necessary to avoid an irreparable loss of revenues and customers. 
Jt. Pet. at 21-24.  But the argument ultimately comes down to a
bare claim that the company will suffer an economic loss
(because access revenues may be smaller) and a complaint about
unwanted competition.  Neither aspect of the argument
establishes "irreparable harm" sufficient to justify interim relief.

     30.  The courts have made clear that, in the context of
stay requests, "economic loss does not, in and of itself,
constitute irreparable harm."   Moreover, because competitive
harm is simply a particular kind of economic loss, "revenues and
customers lost to competition which can be regained through
competition are not irreparable."  Both of these propositions
rest on the assumption that the losses are recoverable, however,
and the threat of unrecoverable economic loss "does qualify as
irreparable harm."  Iowa Utilities Board v. FCC, 109 F.3d 418,
426 (8th Cir. 1996).  We believe that neither the claimed
decrease in access revenues nor the potential loss of customers
to competition in this case, even if they were certain to occur,would constitute "irreparable" harm under the applicable
standards.

     31.  As to the claimed loss of access revenues (primarily
as a result of the change in the X factor),  there can be no
question but that the increase in the productivity factor either
will limit the amounts by which price cap companies can increase
their rates or will raise the amounts by which they must decrease
them in the future.  But the change in the X factor itself was
based on data showing that price cap companies in fact had
higher productivity than the older factor presupposed.  And the
record in the access charge proceeding indicated that their
earnings on interstate access services were well above the rate of
return of 11.25% that the Commission had prescribed.  SeeAccess Reform Order, para. 293.  The petitioners have not
shown and cannot show that their future earnings on access after
application of the new X-Factor will be depressed to a level that
justifies interim relief.  It is far more likely that their earnings
will continue to be at least at the level of the prescribed rate of
return.

     32.  Any such losses, moreover, would be recoverable if
the Commission's decision should be overturned on review.  The
petitioners acknowledge that the Commission has "substantial
latitude" to adjust future rates to make up for any losses where
the Commission's decision occasioning those losses is reversed
on appeal.  The parties seeking a stay argue, however, that
adjustments to future rates will not work in this case because
competition will make it "unlikely" that the telephone companies
will be able to raise their rates in the future to recoup any
losses.  But the incumbent telephone companies almost
certainly will not face substantial competition for all services in
all geographic areas in the near future and thus will be able to
take full advantage of any Commission order permitting them to
make up for  lost revenues.   And, as AT&T points out, even
SWB's own declarant has not supported the claim that
competitive pressures make it "unlikely" that rates could be
raised, asserting only that recoupment is "uncertain."  In these
circumstances, we find that any decreases in access revenues,
even if they were certain and substantial, would not be
irreparable and thus do not justify a stay.
     
     33.  The claims of losses to competition are inadequate
for some of the same reasons.  First, within the time frame
necessary for a court to review the Commission's decision, the
level of competition will not be sufficient to make substantial
inroads on the incumbent telephone companies' customer bases. 
Neither the petitioners nor GTE submits any factual information
demonstrating that competition is advancing rapidly in its service
territories.  In fact, neither they nor their supporting commenters
have submitted any documentation showing that the petitioners
can provide either unbundled network elements or services for
resale in quantities that would remotely constitute a competitive
threat in the short term. Moreover, there is no reason to believe
that the incumbents will be unable to compete effectively to
retain their customers.   Their pricing of services, after all, is
within their own control; and their levels of earning in recent
years suggest that they can reduce their access charges below
price cap ceilings if that is necessary to retain business.  We
conclude that significant losses to competition are unlikely in the
short term, and that any customers lost to competition by the
incumbent carriers "can be regained through competition."  
Thus, any such loss is not irreparable.  Indeed, a primary
objective of the 1996 Act and our efforts to implement it is to
encourage precisely this kind of competition, in which
newcomers and incumbents alike vie for customers on the basis
of price and service improvements.

          (2)       Harm to Others; The Public Interest  

     34.  The petitioners devote but a single paragraph to the
issues of harm to other parties and the public interest.  They do
not argue that a stay will not affect other parties and the public. 
They contend instead that interexchange carriers (who are the
customers of access services) and their customers can be
protected adequately, during the period of the stay they request,
by the imposition of an accounting order and the possibility of
refunds.  But, in the analysis of stay requests, the interests of
other parties and the public interest are at least as important as
the claims of irreparable harm to the moving party in the absence
of a stay.  Our analysis concludes that a stay would be harmful
to other parties and adverse to the public interest.

     35.  The petitioners have proposed, as the price of a stay,
that they and other incumbent telephone companies keep an
accounting of access customers and what they pay under the
stay, to be compared later with what they would have paid if a
stay had not been granted.  If the Commission's order ultimately
is affirmed, the petitioners suggest, the telephone companies
could readily calculate the difference between the two payments
and make refunds to their access customers with interest.

     36.  The principal difficulty with this proposal is that it
would avoid the immediate benefits to ratepayers that the
Commission sought to provide in its orders.  The Commission's
price cap decision was driven in major part by its judgment that
increasing the X-factor to reflect incumbent price cap LECs'
demonstrated productivity gains would provide immediate
benefits to consumers when long-distance carriers flowed the
reductions in access charges through to their customers.  A stay
of our order at the very least would delay, among other things,
the reductions in long-distance prices that reflect the reduced
access charges.  The petitioners do not even acknowledge this
harm to the public and thus do not defend it in any way.

     37.  Moreover, an accounting order would not guarantee
that the delayed refunds to IXCs ever would reach end users. 
Even if there were a flow through of refunds by IXCs, it likely
would take the form of prospective rate decreases for current
and future customers and thus would not necessarily reach the
same customers who paid the inflated prices preserved by the
stay.  More important, for the duration of the stay, IXCs and
their customers would continue to pay charges for services that
virtually everybody agrees have been higher than necessary, with
all the economic distortions and disincentives such charges for
vital services entail.  In particular, we have found that the
reductions in long-distance rates that will result from our orders
will stimulate demand for long-distance service, which will
benefit both the long-distance carriers and the individual business
and residential customers they serve.  After-the-fact payments
cannot undo the adverse effects on these interests of a stay.

     38.  In addition, a "stay" order that extended interstate
access charges to purchasers of unbundled network elements for
the first time (even subject to refunds) would needlessly and
seriously delay the development of local competition  -- in direct
contravention of the goals Congress sought to achieve in the
1996 Telecommunications Act.  Such charges would create
additional disincentives for potential local competitors to use
unbundled network elements as a means of entering that already
difficult market.  (The incumbents in that market are precisely
the same parties who would be collecting this additional charge -
- further extending the advantage of their incumbency.)  If new
entrants were required to pay interstate access charges to ILECs
for access that the ILECs do not provide, on top of cost-based
rates for unbundled elements, many entry decisions that were
predicated on the use of unbundled elements almost certainly
would be discouraged or at least delayed.  The prospect of
possible refunds would be little comfort for a potential entrant
already confronting daunting economic entry barriers.  And
refund payments down the road would not undo the damage
done to entry plans distorted by the effects of a stay.

     39.  We conclude, in evaluating the relevant equities, that
the correct approach here is to allow the immediate realization of
the benefits of our orders, subject to the availability of corrective
price adjustments in the future if that should become necessary. 
We are influenced in this decision both by the importance we
perceive in the immediate availability of access charge reform
and by our conviction that we will be affirmed ultimately on the
merits.       
            
                    IV.  ORDERING CLAUSE

     40.  Accordingly, IT IS ORDERED that the joint petition
for partial stay and for imposition of an accounting mechanism
filed by Pacific Bell, Nevada Bell, and Southwestern Bell
Telephone Company is DENIED, and that the separate stay
request filed by GTE is DENIED.

                         FEDERAL
COMMUNICATIONS COMMISSION



                         William F. Caton
                         Acting Secretary