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             California Public Utilities Commission
505 Van Ness Avenue, Room 5301            San Francisco, CA 94102
CONTACT: Dianne Dienstein          September 27, 1996  CPUC - 80
         415-703-2423

  CPUC JOINS IN LEGAL CHALLENGE OF FCC LOCAL COMPETITION ORDER/
  COURT TEMPORARILY STAYS FCC ORDER PENDING A HEARING NEXT WEEK

    The California Public Utilities Commission (CPUC) has joined
the National Association of Regulatory Utility Commissioners
(NARUC), and five state public utilities commissions in a legal
challenge of the recent Federal Communications Commission (FCC)
order regarding implementation of local phone competition.  The
consolidated appeal is before the Eighth Circuit Court of Appeals
in St. Louis, Missouri.
    Today, the Court issued a temporary stay of the FCC's order
pending a hearing on stay motions scheduled for next Thursday.
    The appeal seeks an expedited ruling reaffirming states'
authority to regulate in-state telecommunications.  The stay was
sought by two states, Iowa and Florida, and several local phone
companies.
    In its appeal, the CPUC claims the landmark 1996
Telecommunications Act intended the federal government to
cooperate with states in facilitating transition to a fully
competitive telecommunications industry, but left in place state
authority to regulate in-state telecommunications.
    In its August order, the FCC sought to preempt state
authority by establishing rules for pricing of network elements,
interconnection, and resale for local competition.
                            - more -
    Hundreds of millions of dollars are at stake as competition
is introduced throughout the telecommunications industry, and the
Court's ruling is likely to have significant precedential impact
as competition unfolds.


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