FOR IMMEDIATE RELEASE:                  NEWS MEDIA CONTACT:
May 7, 1999                                  Emily Hoffnar, (202) 418-0253

Report No. CC 99-14                

         COMMISSION STAYS GEOGRAPHIC DEAVERAGING REQUIREMENT
    Allows States Time to Comply Following Supreme Court Decision
       Reaffirming Commission's Section 251 Pricing Authority
   The Commission released an Order today staying, on its own motion, the effectiveness of section
51.507(f) of the Commission's rules.  Section 51.507(f) requires each state commission to establish
at least three geographic rate zones for unbundled network elements and interconnection.  Under
the rule, state prices for UNEs and interconnection must be deaveraged across the geographic
zones so that the rates better reflect cost differences in each area.  The stay shall remain in effect
until six months after the Commission issues its order in CC Docket No. 96-45 finalizing high-cost
universal service support under section 254 for non-rural local exchange carriers.  Any petitions
for reconsideration or appeals of that order shall have no bearing on the length of the stay.
   The Commission promulgated the deaveraging requirement as part of its implementation of the
local competition provisions of the Telecommunications Act of 1996.  The U.S. Court of Appeals
for the Eighth Circuit stayed the effectiveness of the section 251 pricing rules in September 1996,
however, pending an appeal of the Commission's pricing authority under section 251.  The Eighth
Circuit vacated the Commission's section 251 pricing rules in July 1997, including the rule on
geographic deaveraging, on the grounds that the Commission lacked jurisdiction.  On January 25,
1999, 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.
   Not all states established at least three deaveraged rate zones during the approximately two-and-a-half years that the pricing rules were stayed.  The
Commission's temporary stay will afford the states an opportunity to bring their rules into compliance with section 51.507(f) in a manner coordinated with reform
of universal service.
   The Commission recognized in the stay order that the three-zone minimum may not be appropriate in all states.  The Commission stated that states may raise
such issues on a case-by-case basis in waiver petitions.
   Action by the Commission April 28, 1999, by Stay Order (FCC 99-86).  Chairman Kennard, Commissioners Powell, Tristani, and Furchtgott-Roth, with
Commissioner Ness concurring and issuing a statement
                               - FCC -
Common Carrier Bureau contact: Neil Fried at (202) 418-1530.