FOR IMMEDIATE RELEASE                                          AT
THURSDAY, APRIL 24, 1997                           (202) 616-2771
                                               TDD (202) 514-1888

   JUSTICE DEPARTMENT URGES FCC TO ADOPT REFORMS OF ITS ACCESS
               CHARGE RULES TO INCREASE COMPETITION


Reforms Will Bring Lower Prices, Enhanced Services, More Options,
     to Local and Long Distance Telephone Services Consumers


     WASHINGTON, D.C. -- The Department of Justice today urged
the Federal Communications Commission to reform its rules
involving fees paid by consumers and long distance companies to
local telephone companies for the use of local telephone
networks, in order to facilitate the transition to competitive
markets.  The Department's Antitrust Division said that reform of
the access charge rules will promote competition in telephone
markets, bringing lower prices, enhanced services, and additional
service options to local and long distance telephone services
consumers.  

     The Department's recommendations were contained in a letter
filed with the FCC in connection with its rulemaking to reform
federal access charges.

     "Getting access reform right and implementing it in the
proper manner is crucial to ensuring that consumers receive the
benefits of competition in local and long distance telephone
markets as envisioned by the 1996 Telecom Act," said Joel I.
Klein, Acting Assistant Attorney General in charge of
Department's Antitrust Division.

     Klein explained that the Department's extensive experience
in the telecommunications industry demonstrates that a
competitive marketplace will bring telecommunications consumers
significant benefits, including lower prices, enhanced services,
and additional service options.  

     The reforms affect the part of the current system that
authorizes local telephone carriers to assess access charges on
consumers as well as long distance carriers.  Consumers pay
access charges directly in the form of a monthly fee on their
local telephone bill known as a "Subscriber Line Charge."  In
addition, access fees imposed on long distance companies are
typically passed on to consumers in the rates charged for long
distance telephone calls.

     The Department urged the FCC to adopt reforms that would
provide explicit subsidies to promote universal service, rather
than the implicit subsidies currently provided by access charges. 

     The Department also recommended a restructuring of access
charges that would create a more efficient rate structure, in
which local telephone companies would charge usage sensitive--per
minute--prices for services when costs depend on the amount of
usage, and non-usage-sensitive charges when costs do not depend
on the amount of usage.

     The Department also recommended principles for the
transition to the new access charge rules that would protect
residential and low-volume customers.  The Department suggested
that the FCC should:

          Immediately conduct further proceedings to determine if
          access charges should be reduced in the near term,
          under the FCC's price cap rules;

          Implement rate restructuring at the same time as it
          makes these adjustments to rate levels under the price
          cap rules;

          Rely on market forces for now to produce pressure for
          lower access rates, but consider a prescriptive
          approach to reduce rates in the future, if competition
          doesn't develop quickly enough;

          Prepare for potential claims that the Commission's
          reforms will leave the incumbent local exchange
          carriers with "stranded costs" which they should be
          entitled to recover in the event that such costs even
          exist.

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97-169