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                            Before the
                FEDERAL COMMUNICATIONS COMMISSION
                      Washington, D.C. 20554

In the Matter of                )
                                )
The Southern New England Telephone Company's  )        File No. AAD 93-124
Permanent Cost Allocation Manual)
Waiver of Section 32.27         )
of the Commission's Rules       )
                                )


                             ORDER


     Adopted:  December 22, 1998        Released:  December 22, 1998

By the Chief, Accounting Safeguards Division:

     1.   On September 30, 1993, Southern New England Telephone Company ("SNET") filed a
petition for waiver of the Commission's affiliate transactions rules, as codified in Section 32.27.  In its
petition, SNET requests permission to record at "less than fully distributed cost" in its cost allocation
manual ("CAM") the costs for services provided by three nonregulated affiliates to the incumbent local
exchange carrier ("ILEC").  In its petition, SNET contends that recording the transaction at "less than
fully distributed cost" would benefit ratepayers by enabling the ILEC to obtain services at less than cost.  
     
     2.  Waiver of the Commission's rules is appropriate only if special circumstances warrant a
deviation from the general rule and such deviation will serve the public interest.  In addition, a waiver
request must be consistent with the principles underlying the rule for which a waiver is requested.  To show
special circumstances, SNET demonstrated that the nonregulated affiliates would provide these services,
which consisted of loans of employees and office space, for only a limited duration.  We agree with SNET
that recording the transaction at "less than fully distributed cost" would benefit ratepayers by enabling the
carrier to obtain services in a cost-effective manner.  Because SNET's proposed treatment appears to
benefit ratepayer interests, and because of the limited duration of the transactions, we grant its waiver
request at this time.  We emphasize, however, that this waiver grant applies only to those services specified
in SNET's waiver request.  

     3.  Accordingly, IT IS ORDERED, pursuant to Sections 1, 4(i), 4(j), 201-205, and 218-220 of the
Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 154(j), 201-205, and 218-220, and
Sections 0.91, 0.291, 1.3, 1.106, and 32.27 of the Commission's rules, 47 C.F.R.  0.91, 0.291, 1.3,
1.106, and 32.27, that the Petition for Waiver filed by Southern New England Telephone Company IS
HEREBY GRANTED.

     
                              FEDERAL COMMUNICATIONS COMMISSION
                    


                              Kenneth P. Moran
                                                            Chief, Accounting Safeguards Division