NOTICE


*************************************************************************
             

                         NOTICE


*************************************************************************

This document was originally prepared in Word Perfect.  

If the original document contained--

                    *  Footnotes
                    *  Boldface & Italics

--this information  is missing in this version

The document format (spacing, margins, tabs, etc.) is changed too.

If you need the complete document, download the Word Perfect
version.

For information about downloading documents (FTP) see file
pnmc5021.

File  pnmc5021 (.txt & .wp) is in directory
\pub\Public_Notices\Miscellaneous.

*************************************************************************
                                                                  DA 96-960
                                Before the
                     FEDERAL COMMUNICATIONS COMMISSION
                          Washington, D.C.  20554


In the Matter of                
           
Inquiry into Policies and
Programs to Assure Universal
Telephone Service in a
Competitive Market
Environment      

AT&T's Request for a Permanent
Replacement of the Current
Method of Funding the Universal
Service Fund and for Adopting a
Temporary Revenue-Based
Method for Allocating USF Costs
Among Interexchange Carriers
)
)
)     RM-8388
)
)
)
)     RM-8408
)
)
)
)


                                   ORDER

     Adopted:  June 17, 1996                 Released:  June 19,
1996

By the Bureau:

     1.   MFS Communications Company, Inc. (MFS) and AT&T have
both petitioned the Commission requesting modifications in the
mechanism used to fund universal telephone service.  In 1993, MFS
requested that the Commission initiate a Notice of Inquiry and en banc
hearing to determine future policies for assuring the continued
availability of universal telephone service as certain parts of the
telecommunications market become increasingly competitive.  MFS
contended that existing universal support mechanisms are not
consistent with encouraging efficient, effective competition in the local
exchange.  MFS  proposed in its petition a new scheme that MFS
claimed would continue to ensure that universal service goals would be
met in a competitive environment.  Thirty-five parties filed comments
on the petition.
 
     2.   In 1993, AT&T filed a petition for rulemaking requesting
that the Commission establish a permanent replacement for the current
method of funding the Universal Service Fund (USF) and adopt a
temporary revenue-based method for allocating USF costs among
interexchange carriers (IXCs).   AT&T asserted that recovering support
on a per-line basis discriminates against AT&T, since it forces AT&T to
pay 75 percent of USF costs.  AT&T's  share of interexchange service
revenues is approximately 60 percent.  Fifty parties filed comments on
AT&T's petition.

     3.   Before any action was taken by the Commission in these two
proceedings, the Telecommunications Act of 1996 (the 1996 Act)
became law.    The 1996 Act states that "[e]very telecommunications
carrier that provides interstate telecommunications services shall
contribute, on an equitable and nondiscriminatory basis, to the specific,
predictable, and sufficient mechanisms established by the Commission
to preserve and advance universal service."

     4.   Section 254(a)(1) of the 1996 Act also mandates the
establishment of a Federal-State Joint Board and the initiation of a
rulemaking proceeding to recommend changes to any of that Board's
regulations.  On March 8, 1996, the Commission released a Notice of
Proposed Rulemaking and Order Establishing Joint Board, which,
among other matters, seeks to adopt mechanisms to support universal
service consistent with the 1996 Act.  The 1996 Act requires the
Commission to complete any proceeding to implement Joint Board
recommendations by May 1997.  

     5.   As the Universal Service Notice issued in March deals
directly with the issues raised in both the MFS and AT&T petitions, we
dismiss both these petitions as moot.


                         FEDERAL COMMUNICATIONS
COMMISSION



                         Regina M. Keeney
                         Chief, Common Carrier Bureau