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                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554

In the Matter of                )
Price Cap Performance Review    )       
for Local Exchange Carriers;    )       CC Docket No. 94-1  
Treatment of Video Dialtone Services )       
Under Price Cap Regulation      )


                             ORDER

Adopted:  August 14, 1997               Released:  August 22, 1997

By the Commission:

     1.  In 1992, the Commission modified its rules to allow a local exchange carrier (LEC) to
participate in the video marketplace within its service area, consistent with the then-applicable
statutory telephone company-cable television cross-ownership restrictions, by offering video dialtone
service.  The Commission subsequently decided to apply existing price cap rules to the rates
charged for basic video dialtone service provided by a LEC.  In 1995, the Commission created a
separate price cap basket for video dialtone service and sought comment on certain implementation
issues. 

     2. On February 8, 1996, the Telecommunications Act of 1996 (1996 Act) repealed the
telephone-cable cross-ownership restriction, repealed the Commission's video dialtone rules and 
policies, and established the open video system as a new means for entry into the multichannel
video programming distribution market.  On March 11, 1996, the Commission terminated  the video
dialtone rulemaking proceeding in CC Docket No. 87-266, eliminated the video dialtone regulations
and policies, and revoked the Common Carrier Bureau's order that had adopted subsidiary
accounting and reporting requirements for video dialtone services.  Certain LECs already providing
video dialtone service were "grandfathered," with one LEC given until March 1, 1997 to convert to
another means of multichannel video distribution.

     3. In view of the recent termination of the last authorized provision of video dialtone service, 
we hereby terminate as moot our consideration in this proceeding of price cap rules for video
dialtone service and remove the separate basket for video dialtone services from our price cap rules. 
Open video system pricing issues are being addressed in a separate proceeding.  
 
     4.  Accordingly, IT IS ORDERED that the portion of CC Docket No. 94-1 entitled Treatment
of Video Dialtone Services Under Price Cap Regulation, including the Third Further Notice of
Proposed Rulemaking, IS TERMINATED.  


     5.  IT IS FURTHER ORDERED that in light of the 1996 Act's repeal of the Commission's
rules and policies concerning video dialtone service, WE FIND FOR GOOD CAUSE that notice and
comment on the action taken in this order would be impracticable, unnecessary, and contrary to the
public interest.  Because the rules being removed in this order no longer serve any purpose, there
is no reason to seek public comment on such removal.  

     6.  IT IS FURTHER ORDERED that the Commission's regulations ARE HEREBY
AMENDED as set forth in Appendix A.

                              FEDERAL COMMUNICATIONS COMMISSION



                              William F. Caton 
                              Acting Secretary                           APPENDIX A

     Part 61 of title 47 of the Code of Federal Regulations is amended as follows:

PART 61 -- TARIFFS

     1.  The authority citation for Part 61 continues to read as follows:

Authority: Secs. 1, 4(i), 4(j), 201-205, and 403 of the Communications Act of 1934, as amended;
47 U.S.C.  151, 154(i), 154(j), 201-205, and 403, unless otherwise noted.

     2.  Section 61.42 is amended by removing and reserving paragraph (d)(5).

     3.  Section 61.45 is amended by removing and reserving paragraph (b)(3) and by revising the
introductory text of  paragraph (b) to read as follows:

      61.45  Adjustments to the PCI for Local Exchange Carriers

     *    *    *    *    *

               (b) Adjustments to local exchange carrier PCIs for the baskets designated in
      61.42(d)(2), (3), (4) and (6) shall be made pursuant to the formula set forth in 
     61.44(b), and as further explained in  61.44(e), (f), (g), and (h).

     *    *    *    *    *

     4.  Section 61.47 is amended by removing and reserving paragraph (g)(6).

     5.  Section 61.48 is amended by removing and reserving paragraph (j).