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CONTACT: Kyle DeVine             December 9, 1996   CPUC - 564
         213-897-4225                             (A.96-08-040)

             AT&T TO ENTER LOCAL PHONE COMPETITION

    The California Public Utilities Commission (CPUC) today
approved an interconnection agreement - and modified it to
resolve some contested issues - that permits AT&T
Communications of California (AT&T) to begin competing against
Pacific Bell, and all the other companies providing local phone
service in Pacific's territory.
    Local phone service includes exchange services like the
ability to make and receive calls, and local toll calls.
    The agreement involves the two largest telecommunications
providers in California, namely AT&T and Pacific Bell.  The
companies estimate they will be competing for $200 million in
local service revenues.
    The agreement resolves the first contested interconnection
case through the Commission's streamlined arbitration process.
That process was designed to foster competition by quickly
resolving issues that hinder it.
    The major issue resolved today was AT&T's request to be
given volume discounts based on the total amount of toll
minutes it will sell to all its customers.  The Commission
turned down this request because the cost of the toll service
and the appropriate discount are based on the individual
customer who buys service.  The wholesale service AT&T buys
from Pacific Bell will be at a 17 percent discount off retail
service prices.
    Today's order gives AT&T the go ahead, but it is up to AT&T
to decide when and where in California to enter the market.
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