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    Before the
             Federal Communications Commission
                  Washington, D.C.  20554
  In the Matter of              )
                                )
  Deaveraged Rate Zones for     )  CC Docket No. 96-98
  Unbundled Network Elements    )
                  Order on Reconsideration
  Adopted:  April 4, 2000                       Released:  April 6, 2000
  By the Commission:
                         I.Summary
  1.   In this order we reject the request of GTE Florida that we reconsider lifting on
  May 1, 2000, our sua sponte stay of 47 C.F.R.  51.507(f).  Section 51.507(f) requires
  state commissions to establish at least three deaveraged rate zones for the pricing of
  interconnection and unbundled network elements (UNEs).  Section 51.507(f) will take
  effect May 1, 2000, as previously contemplated.
                       II.Background
  3.   The Commission promulgated certain rules in the August 1996 Local Competition
  Order to implement section 251 of the Communications Act of 1934, as amended.  One
  such rule, section 51.507(f), requires each state commission to "establish different rates
  for [interconnection and UNEs] in at least three defined geographic areas within the state
  to reflect geographic cost differences."  Numerous parties, including incumbent local
  exchange carriers and state commissions, appealed the Local Competition Order, and the
  U.S. Court of Appeals for the Eighth Circuit stayed the Commission's section 251 pricing
  rules in September 1996 pending its consideration of the appeal.  In July 1997, the
  Eighth Circuit vacated the deaveraging rule, among others, on the grounds that the
  Commission lacked jurisdiction.  On January 25, 1999, however, the U.S. Supreme
  Court reversed the Eighth Circuit's decision with regard to the Commission's section 251
  pricing authority, and remanded the case to the Eighth Circuit for proceedings consistent
  with the Supreme Court's opinion.
  4.   Because the section 251 pricing rules had not been in force for more than two
  years, and because not all states established at least three deaveraged rate zones, the
  Commission stayed the effectiveness of section 51.507(f) on May 7, 1999, to allow the
  states to bring their rules into compliance.  The Commission stated that the stay would
  remain in effect until six months after the Commission released its order in CC Docket
  No. 96-45 finalizing and ordering implementation of high-cost universal service support
  for non-rural local exchange carriers.  The Commission did so to allow the states to
  coordinate their consideration of deaveraged rate zones with issues raised in the Universal
  Service proceeding.  On November 2, 1999, the Commission adopted its order in CC
  Docket No. 96-45.  In that order, the Commission announced that section 51.507(f)
  would become effective six months later, on May 1, 2000, as planned.
                        V.Discussion
  6.   We deny GTE's request that we reconsider lifting our stay of section 51.507(f) of
  our rules.  Consequently, by May 1, 2000, each state commission is obligated to
  establish at least three rate zones for the pricing of interconnection and UNEs.  GTE
  asks that we extend the duration of the stay until at least May 2001.  According to GTE,
  states must remove implicit subsidies from local rates and establish explicit, portable,
  intrastate universal service mechanisms simultaneously with deaveraging to avoid
  creating arbitrage opportunities and undermining investment incentives.  GTE argues
  that state commissions will not be able to accomplish this by May 1, 2000.  We agree
  with AT&T that it is inappropriate at this time to extend the stay.  State commissions
  have been aware of our deaveraging policy since August 1996 and were certainly aware
  of the FCC's reinstated pricing authority when the Supreme Court ruled in January 1999. 
  The states have also been on notice since May 1999 that the deaveraging rule would be
  reinstated, and since November 1999 that it would take effect on May 1, 2000.  Many
  states have already created at least three deaveraged rate zones, some even while they
  were not obligated to do so under our rule.  Further delaying the effectiveness of our
  deaveraging rule would impede the ability of competitive local exchange carriers to
  obtain interconnection and UNEs at cost-based rates, and to compete in the local market.
                    VII.Ordering Clause
  8.   Accordingly, IT IS ORDERED, pursuant to sections 4(i), 4(j), 201, 251, 303(r),
  and 405 of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 154(j),
  201, 251, 303(r), and 405, and Sections 1.106 and 1.429 of the Commission's rules, 47
  C.F.R.  1.106 and 1.429, that the petition for reconsideration filed by GTE Florida is
  DENIED.
  
                                Federal Communications Commission
                                Magalie Roman Salas
                                Secretary