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       Report No. CC 98-21COMMON CARRIER ACTION     July 17, 1998
   
  FCC ASKS FEDERAL-STATE JOINT BOARD FOR RECOMMENDATIONS
    REGARDING UNIVERSAL SERVICE SUPPORT FOR NON-RURAL
           CARRIERS THAT SERVE HIGH COST AREAS
                    (CC Docket 96-45)
                             
       In an Order released today, the FCC asked the Federal-State Joint Board on
   Universal Service for recommendations related to the amount of universal service
   support that non-rural telephone companies should receive for serving high cost areas. 
   This Commission noted that further coordination with state regulators should provide
   valuable input that will enhance the development of universal service and competition
   policies.
   
       Today's Order refers to the Joint Board issues that the state members of the
   Board had asked to review, and it requests that the Board issue a recommended decision
   on the designated issues by November 23, 1998.  The Commission will then consider the
   Joint Board's recommendations before adopting a new mechanism for determining high
   cost support for non-rural carriers.  In order to allow sufficient time for the Joint Board's
   deliberations and for the Commission to receive public comment on the Joint Board's
   recommendations, the Commission extended to July 1, 1999, the implementation date for
   the revised mechanism.  In so doing, the Commission noted that the benefits of getting
   further input from the Joint Board justify the six-month extension.  The Commission also
   emphasized that, during the extension period, there will be no change to the mechanism
   for determining universal service support for  non-rural carriers (as well as rural carriers)
   that serve high cost areas; thus, existing levels of high cost support will be maintained,
   and consumers in high cost areas will continue to enjoy access to affordable telephone
   service.
   
   
   
   
   
   
   
   
                              (over)
   
                              - 2 -
   
       The issues referred to the Joint Board include the following:
       
       o   An appropriate methodology for determining the amount of high cost support for
       non-rural carriers, including a method for distributing support among the states
       and, if applicable, the share of total support to be provided by federal
       mechanisms.  The Commission asked, if the current "25/75" approach is
       maintained, under what circumstances a state or carrier should qualify to receive
       more than 25 percent of its total high cost support from federal support
       mechanisms.
   
       o   The extent to which federal universal service support should be applied to the
       intrastate jurisdiction.  Along these lines, the Commission asked (a) whether and
       how interstate access charges should be reduced to reflect the extent to which
       federal universal service support removes subsidies that are currently implicit in
       interstate access charges, (b) whether and to what extent federal universal service
       policy should support state efforts to make intrastate support mechanisms
       explicit, and (c) questions concerning the relationship between the jurisdiction to
       which universal service funds are applied and the appropriate revenue base upon
       which contributions should be assessed.
   
       o   To what extent, and in what manner, is it reasonable for providers to recover
       universal service contributions through rates, surcharges, or other means.
       
       Action by the Commission, July 13, 1998, by Order and Order on
   Reconsideration (FCC 98-160).  Chairman Kennard, Commissioners Ness, Powell, and
   Tristani, with Commissioner Furchtgott-Roth concurring and issuing a separate
   statement.    
   
                              -FCC-
   
       News Media contact:  Rochelle Cohen at  (202) 418-0253.
       Common Carrier Bureau contact:  Chuck Keller at (202) 418-7380.