October 29, 1996

            Separate Statement of 

        Commissioner Rachelle B. Chong

Re:  In the Matter of  Policy and Rules Concerning the Interstate,
     Interexchange Marketplace, CC Docket No. 96-61;
     Implementation of Section 254(g) of the Communications
     Act of 1934, as amended.

     By this action, the Commission exercises its new
forbearance authority to implement a mandatory detariffing
policy for interstate, domestic, non-dominant interexchange
carriers.  I support eliminating the tariff filings of interexchange
carriers because I believe that we ought to treat the long distance
market like any other competitive business.  I am confident that
consumers will be the ultimate beneficiaries of the many
benefits, such as lower prices and more choices, that will flow
from our new forbearance policy.  

     I write separately, however, to express my disagreement
with the Commission's decision that in essence continues to
restrict nondominant interexchange carriers from bundling
customer premises equipment ("CPE") with interstate,
interexchange services.  I would have preferred that we follow
the path set forth in our Notice that nondominant,
interexchange carriers would be allowed to bundle CPE with
interstate, interexchange services.  The CPE bundling restriction
was adopted during the era of the Bell System.  At that time,
this restriction made sense.  It promoted consumer choice by
protecting an emerging CPE industry from potential
anticompetitive activity by a carrier that could leverage its
monopoly market power in transmission services into its
provision of CPE. 

     During the past decade and a half, we have witnessed a
transformation in both the CPE and long distance markets. 
Vigorous competition now exists in the CPE market and the
Commission has already determined that no domestic
interexchange carrier has market power in the provision of 
long distance service.  Moreover, no interexchange carrier
currently provides long distance service and CPE on a vertically
integrated basis.  In sum, I believe that the competitive nature of
both of these markets has eroded the basic premise for the
existence of the CPE bundling restriction established in the
1980's.

     Finally, I question the wisdom of today's decision with
respect to raising issues relating to our rule prohibiting bundling
of enhanced services with interstate, interexchange services.  I
remain unconvinced that the enhanced service/interstate,
interexchange service bundling issue should prevent us from
moving forward to eliminate the CPE/interstate, interexchange
services bundling restriction.  I view the question of whether we
should eliminate the prohibitions against bundling CPE and
long distance services as separate and distinct from issues related
to the bundling of enhanced services and long distance services. 
Unfortunately, today's decision may create an unnecessary and
artificial linkage between these issues.