_______________________________________
					)
In the Matter of			)
					)
 					)
Federal-State Joint Board 		)	CC Docket No. 96-45
on Universal Service			)
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_______________________________________	)

REPLY COMMENTS
OF
GUAM TELEPHONE AUTHORITY

Guam Telephone Authority ("GTA"), by its attorneys, hereby submits its Reply Comments in the above-captioned proceeding instituted by the Federal Communications Commission ("FCC" or "Commission") on March 8, 1996.[1] The NPRM is intended to implement Section 254 of the Communications Act of 1934 as amended by the Telecommunications Act of 1996.[2]

In its Comments, GTA pointed out that there is an interrelationship between this NPRM and the Interexchange NPRM released in Docket 96-61, dealing with nationwide rate averaging and rate integration.[3] This proceeding focuses on Section 254(a) through (f) of the Telecommunications Act of 1996, which includes Universal Service principles and implementation. The Interexchange NPRM considers Section 254(g) which mandates geographic rate averaging and rate integration for all states.[4] Nevertheless, the relationship between the two proceedings is very close. The Commission should not treat Universal Service and rate integration as separate matters.[5] Indeed, the Commission may ultimately determine that Universal Service mechanisms should be used to support the provision of nationwide averaged rates to insular areas such as Guam.

In its initial Comments in this proceeding, GTA alluded to this possibility.[6] In reviewing the Comments filed by others, GTA noted that AT&T made a similar proposal:

Although AT&T believes interexchange services should not be included in the definition of core services entitled to Universal Service Support, to the extent that telecommunications carriers, as a result of rate averaging and integration rules, provide interexchange services that are below cost either to low-income consumers or for calls to or from high cost areas, they should be permitted to recover from the [New Universal Service Fund] the difference between the price charged to the end user and the [Total Service Long Run Incremental Cost].[7]

GTA suggests that the AT&T proposal is worthy of consideration as the Commission explores both Universal Service mechanisms and rate integration mechanisms.

A second, but related, issue stems from the Comments made in this proceeding by Comsat. Comsat maintains that, absent FCC authority to provide domestic U.S. services, Comsat does not fall within the scope of interstate Universal Service contribution requirements.[8]

Comsat does, of course, provide domestic U.S. services between Guam and the Mainland and Hawaii. GTA does not take a position on whether Comsat should make a Universal Service contribution because of its provision of service to Guam. We do, however, wonder whether Comsat should receive Universal Service support if it were to provide space segment service at below cost to Guam. For example, the Comments filed in response to the Interexchange NPRM by GTE point out that the space segment rate, based on Comsat's tariff, for a 1.544 Mbps half circuit is $35,880.[9] If it were decided that, to satisfy rate integration requirements, Comsat should provide service below cost, then a variation of the AT&T proposal may be applied. The difference between the price charged to the interexchange carriers and the Total Service Long Run Incremental Cost (TSLRIC) would be recovered from Universal Service support mechanisms.

This concept may be very attractive to those commenters in the Interexchange NPRM who maintain that rate integration depends upon the existence of domestic satellites.[10] By pegging the price charged to interexchange carriers at approximate domestic satellite rates (which GTE estimates at $9,920 a month for a 1.544 Mbps circuit), the functional equivalent of domestic satellite pricing can be achieved.

This concept needs to be explored further. For example, what impact would reduced Comsat rates to Guam have on the alternative facilities, submarine fiber optic cables? Would intermodal price competition result? Would facility providers other than Comsat also claim eligibility for Universal Service support? Would Comsat be required to be designated an "eligible telecommunications carrier" pursuant to Section 214(e) of the Communications Act? These questions and others must be answered before the Commission could apply the AT&T proposal to Comsat's provision of service to Guam.

Fortunately, the Governor of Guam has offered to convene a Working Group to assist the Commission in developing mechanisms for implementing rate integration.[11] We expect that the Governor will ask the Working Group to consider whether and how Universal Service support mechanisms can be used to promote rate integration for Guam.

CONCLUSION

GTA, in its initial Comments, welcomed the applicability of Universal Service to Guam. We now ask the Commission to be attentive to the relationship between Universal Service and rate integration. We intend, in connection with the Governor's Working Group on rate integration, to explore ways in which Universal Service support mechanisms can help to accomplish all the goals of the 1996 Act.

Respectfully submitted,

GUAM TELEPHONE AUTHORITY

By:__________________________

Veronica M. Ahern
Nixon, Hargrave, Devans & Doyle LLP
One Thomas Circle, N.W.
Suite 700
Washington, DC 20005
(202) 457-5321

Its Attorney

May 7, 1996

CERTIFICATE OF SERVICE

I, Gail M. Mullen, do hereby certify that a copy of the foregoing Reply Comments of the Guam Telephone Authority, was sent by first class United States mail, postage prepaid, or by hand delivery or facsimile where indicated by an asterisk (*), this 7th day of May, 1996, to the following:

[Service list deleted from online version.]

________________________________

Gail M. Mullen