NEWSReport No. CC 97-38   COMMON CARRIER ACTION                July 31, 1997

                  FCC DENIES PETITIONS FOR RECONSIDERATION
                      OF RATE INTEGRATION REQUIREMENTS
                            (CC Docket No. 96-61)
                                      
          The Commission has denied petitions for reconsideration of its August 7,
1996 Report and Order implementing the rate integration requirements of
Section 254(g) of the Communications Act. Section 254(g) was added to the
Communications Act by the Telecommunications Act of 1996 and requires that
a provider of interstate interexchange services charge subscribers in a state no
more than it charges subscribers for such services in any other state. Section
254(g) is intended to ensure that consumers in rural and high cost areas
throughout the Nation are able to receive interstate interexchange services at
rates no higher than those paid by consumers living in urban areas.

          The Commission denied requests by the GTE Service Corporation that rate
integration requirements should not be applied across affiliated companies. The
Commission determined that Congress had not intended Section 254(g) to
permit affiliated carriers to charge separate non-integrated rates. In doing so, the
Commission explained that providers of interstate, interexchange services could
eviscerate rate integration policies and Section 254(g) if permitted to establish
separate affiliates to offer services to a state (or several states) at rates different
from those charged in other states.

          The Commission also clarified that Section 254(g) does not require
carriers to integrate a commercial mobile radio service (CMRS), to the extent the
CMRS service constitutes an interstate interexchange service subject to the
statute, with other interstate interexchange service offerings.  The Commission
explained that Congress intended Section 254(g) to codify the Commission's
previous rate integration policies, and that previous policy did not require
integration across services.  The Commission also clarified that rate integration
applies to all interexchange carriers, including resellers and facilities-based service
providers, because the Act does not limit the application of rate integration to
certain carriers.

          The Commission also determined that the mobile satellite services provided
by the AMSC Subsidiary Corporation are interstate interexchange services and,
therefore, are subject to the rate integration requirements of Section 254(g). The
Commission noted that AMSC is not required to integrate rates for its service
pending consideration by the Common Carrier Bureau of AMSC's request for an
extension of time to comply. 

          Finally, the Commission denied a request filed by IT&E Overseas, Inc.
requesting forbearance from rate integration requirements for provision of
interexchange services from Guam and the Commonwealth of Northern Mariana
Islands (CNMI).  The Commission found that the alleged cost differential of
providing service to Guam and CNMI does not provide a sufficient basis for
granting forbearance in light of the purposes of section 254(g).

          Action by the Commission July 30, 1997 by Report and Order (FCC 97-
269).  Chairman Hundt, Commissioners Quello and Ness and Chong.

                                     -FCC-

          News media contact: Rochelle Cohen at (202) 418-0253.
          Common Carrier Bureau contact:  Bill Bailey at (202) 418-7285.