Report No. DC 96-106       ACTION IN DOCKET CASE          December 11, 1996

     
        COMMISSION INITIATES PROCEEDING TO DETERMINE POLICIES FOR 
           BELL COMPANY MANUFACTURING OF TELECOMMUNICATIONS AND
                       CUSTOMER PREMISES EQUIPMENT 
                          (CC DOCKET NO. 96-254)       

     The Commission today took another step in its continuing
implementation of the Telecommunications Act of 1996.  Today, the
Commission initiated a proceeding to permit the Bell Operating
Companies (BOCs) to manufacture telecommunications and customer
premises equipment (CPE) on a competitive basis, pursuant to
section 273 of the Act.  

     Section 273 of the Communications Act establishes the rules
under which BOCs engage in equipment manufacturing.  The AT&T
Consent Decree established, in 1982, a prohibition on BOC
equipment manufacturing.  Under the Consent Decree, the BOCs were
only permitted to market or provide CPE.  Under section 273, once
the Commission authorizes a BOC to provide in-region, interLATA
services pursuant to section 271 of the Act, the BOC may also
provide telecommunications equipment and may manufacture both
telecommunications equipment and CPE through a separate
affiliate.

     Since divestiture, the telecommunications equipment and CPE
manufacturing markets have become increasingly robust.  With its
action today, the Commission seeks comment on the necessary steps
it must take both to safeguard competition in equipment
manufacturing and to facilitate BOC entry into the equipment
manufacturing industry.  The Commission seeks comment on
procedures governing collaboration, research and royalty
agreements, reporting of protocols and technical information, and
disclosure of other information on network planning and design.

     To safeguard competition in equipment manufacturing, in
section 273 of the Act, Congress limited the manufacturing
activities of Bellcore and other entities that develop standards
and generic requirements, and conduct certification activities. 
Section 273 also provides additional procedural requirements to 

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ensure that the standards-setting process followed by
unaccredited standards-setting entities remains fair, even-
handed, and open to the public.  The Commission seeks comment on
rules needed to implement and enforce these safeguards
effectively.  In addition, the Commission seeks comment on the
effects of the BOCs' proposed sale of Bellcore on its
implementation of section 273.

     Action by the Commission December 10, 1996, by Notice of
Proposed Rule Making (FCC 96-472).  Chairman Hundt, Commissioners
Quello, Ness, and Chong.

                                  - FCC -

     News Media contact: Mindy Ginsburg at (202) 418-1500.
     Common Carrier Bureau contacts: Kent Nilsson at (202) 418-
2320 or Richard Cameron at (202) 418-2326.