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



In the Matter of                   )
                              )
Federal State Joint Board               )
on Universal Service                    )         CC Docket No. 96-45
                              )
Forward-Looking Mechanism          )
for High Cost Support for               )         CC Docket No. 97-160
Non-Rural LECs                )


                             ORDER

Adopted:  December 3, 1997            Released:  December 3, 1997

By the Chief, Common Carrier Bureau:

     I.   INTRODUCTION

     1.   In the Universal Service Order (Order), the Commission concluded that high cost
support for non-rural carriers should be based on forward-looking economic costs beginning
January 1, 1999, and adopted criteria for the economic cost models and studies that will be used
to calculate these forward-looking costs.  The Commission currently is developing a federal
mechanism for determining non-rural carriers' forward-looking cost of providing the supported
services.  Pursuant to the Order, the Commission will complete work on the federal mechanism,
including all inputs, by August 31, 1998.  The Order also
 permitted state regulatory commissions to develop their own state-specific cost studies that they
wish to use to determine the forward-looking cost of providing the supported services within their
respective jurisdictions.  The Commission concluded in the Order that the state cost studies
would be subject to public comment and that the Commission would determine whether such cost
studies meet the Order's criteria before they could be used to calculate federal universal service
support.  The Order required state commissions that elect to submit cost studies to do so on or
before February 6, 1998.  In this Order, the Common Carrier Bureau extends until April 24,
1998, the deadline by which states that choose to submit cost studies must file such studies.  

II.  POSITIONS OF THE PARTIES

     2.   The National Association of Regulatory Utility Commissioners (NARUC), on
behalf of its members, and the state commissions of Minnesota, Nebraska, Nevada, Tennessee,
Maine, and New Mexico have filed petitions for extensions of time to file these state cost studies. 
NARUC requests a general extension for all state commissions until September 1, 1998. 
NARUC asserts that state commissions require additional time because the final versions of the
models under consideration in the federal proceeding will not be available until November 1997 at
the earliest and because petitions for reconsideration of the Order are still pending before the
Commission.  NARUC also argues that the Commission's experience in the federal proceeding to
select a model suggests that the states' proceedings to develop cost models will take a significant
amount of time.  

     3.   The state commissions request extensions of the deadline based on the status of
their state proceedings, staffing constraints, and the amount of work required to complete their
cost studies.  The Minnesota Commission states that it has already begun a proceeding to develop
a cost model, but that additional time is needed to develop a complete and accurate study.  The
Nebraska and the Nevada Commissions state that they have begun to coordinate the development
of cost studies for pricing unbundled network elements, and the Nebraska Commission has
contracted with an economist to assist with reviewing the cost studies.  They state that they may
not complete their studies by February 6, 1998 and therefore request a three month extension.
The Tennessee Commission states that it is currently considering cost studies in three dockets. 
The Tennessee Commission asserts that, although it is working diligently on its universal service
forward-looking cost study, constraints on staff time and available resources make it highly
unlikely that it will complete the necessary work by February 6, 1998.  The Maine Commission
reports that it opened a docket on August 4, 1997, to examine forward-looking cost studies. 
The Maine Commission explains that, due to the complexity of the issues raised in this
proceeding, the docket is not expected to be complete until April 15, 1998, and therefore requests
an extension until May 6, 1998.  The New Mexico Commission requests an extension until June
6, 1997.  It notes that it has opened several dockets to consider pricing of unbundled network
elements and universal service issues in New Mexico.  The New Mexico Commission states that
it has consolidated these dockets to comply with the Commission's direction that universal service
cost studies be coordinated with the cost studies used to price unbundled network elements. 
The New Mexico Commission also maintains that it requires additional time to fully consider the
platform that will be adopted by the Commission for the federal forward-looking cost
mechanism.

     4.   On November 5, 1997, the Commission requested comment on these extension
requests.  Commenters generally supported states' need for additional time to complete their
cost studies.  Some commenters argued, however, that extensions should not be granted beyond
a date that would permit the Commission to implement support for non-rural carriers based on
forward-looking economic costs on January 1, 1999.

     III. DISCUSSION

     5.   As a matter of Commission policy, requests for extension of time are not routinely
granted.  NARUC and the state commissions have argued convincingly, however, that the
February 6, 1998 deadline does not provide states with sufficient time to complete the
proceedings necessary, many of which are underway, to develop reasonably accurate cost studies. 
Given the importance and complexity of these proceedings, we conclude  that the public interest
would be served by extending the deadline for filing state cost studies. 

     6.   The length of the extension, however, must not impede the Commission's ability to
meet its January 1, 1999, deadline for implementing high cost support for non-rural carriers based
on forward-looking costs.  After state cost studies have been submitted, a significant amount of
work for the Commission and carriers will remain to be completed before January 1, 1999.  The
Commission must seek and receive public comment on the cost studies.  The Commission must
then evaluate the cost studies to determine whether they are consistent with the criteria specified
in the Order.  Once the mechanism for determining the forward-looking cost of providing the
supported services has been determined for each state, incumbent local exchange carriers and
other carriers must have sufficient time to make any necessary changes to their tariffs.  The
Commission must then review any changes to incumbent local exchange carriers' interstate access
tariffs so that they can go into effect on January 1, 1999.  

     7.   In light of these considerations, we extend the deadline for state commissions to
submit their cost studies to and including April 24, 1998.  We believe that this eleven-week
extension will provide state commissions with substantially more time to complete their cost
studies while still ensuring that a forward-looking mechanism for determining high cost support
can be implemented by January 1, 1999.  Because NARUC sought an extension on behalf of all
state commissions and because the public interest will best be served by a general extension of the
deadline, this extension applies to all state commissions.  To facilitate our review of state cost
studies, however, we strongly encourage state commissions to file their cost studies as soon as
possible.

     IV.  ORDERING CLAUSES

     8.   Accordingly, IT IS ORDERED, pursuant to the authority contained in section 4(i)
of the Communications Act of 1934, as amended, 47 U.S.C. section 154(i), and sections 0.91,
0.291, and 1.46 of the Commission's Rules, 47 C.F.R. sections 0.91, 0.291, and 1.46, that the
deadline for states to file cost studies for determining the forward-looking cost of providing the
services supported by federal universal service support mechanism IS EXTENDED to and
including April 24, 1998. 

     9.   IT IS FURTHER ORDERED, pursuant to the authority contained in section 4(i)
of the Communications Act of 1934, as amended, 47 U.S.C. section 154(i), and sections 0.91,
0.291, and 1.46 of the Commission's Rules, 47 C.F.R. sections 0.91, 0.291, and 1.46, that the
requests for extension filed by NARUC and the state commissions of Minnesota, Nebraska,
Tennessee, Nevada, and Maine ARE GRANTED to the extent indicated herein and otherwise
ARE DENIED.  


                              FEDERAL COMMUNICATIONS COMMISSION



                              A. Richard Metzger, Jr.
                              Chief, Common Carrier Bureau