                  United States Court of Appeals

               FOR THE DISTRICT OF COLUMBIA CIRCUIT

        Argued April 4, 2000       Decided July 14, 2000 

                           No. 97-1538

                   GTE Service Corporation and 
           Micronesian Telecommunications Corporation, 
                           Petitioners

                                v.

              Federal Communications Commission and 
                    United States of America, 
                           Respondents

             MCI Communications Corporation, et al., 
                           Intervenors

                        Consolidated with 
                         99-1045, 99-1046

           On Petitions for Review of an Order of the 
                Federal Communications Commission

     Daniel E. Troy and Howard J. Symons argued the cause 
for petitioners.  With them on the briefs were Gail L. Polivy, 

R. Michael Senkowski, Michael F. Altschul, Michelle M. 
Mundt.  David A. Gross, James D. Ellis, Robert M. Lynch, 
Michael J. Zpevak, William B. Barfield, M. Robert Suther-
land, L. Andrew Tollin, Michael Deuel Sullivan, Luisa L. 
Lancetti, S. Mark Tuller an Matthew B. Pachman.  M. 
Edward Whelan and Theodore C. Whitehouse entered ap-
pearances.

     John Edward Ingle, Deputy Associate General Counsel, 
Federal Communications Commission, argued the cause for 
respondents.  With him on the brief were Christopher J. 
Wright, General Counsel, Laurel R. Bergold, Counsel, Joel I. 
Klein, Assistant Attorney General, U.S. Department of Jus-
tice, Robert B. Nicholson, and Robert J. Wiggers, Attorneys.  
Adam D. Hirsh, Attorney, entered an appearance.

     John W. Katz, Veronica M. Ahern, Herbert E. Marks and 
Thomas K. Crowe were on the brief for intervenors.

     Before:  Williams, Ginsburg, and Sentelle, Circuit Judges.

     Opinion for the Court by Circuit Judge Ginsburg.

     Ginsburg, Circuit Judge:  Several parties petition for re-
view of four orders by the Federal Communications Commis-
sion implementing the rate integration requirement of 
s 254(g) of the Communications Act of 1934, as amended by 
the Telecommunications Act of 1996, 47 U.S.C. s 254(g).  The 
petitioners challenge two determinations made by the Com-
mission:  (1) That a telecommunications provider is required 
to integrate its rates across all commonly owned or controlled 
affiliates that provide interstate interexchange services;  and 
(2) that the requirement of rate integration applies to provid-
ers of Commercial Mobile Radio Service (CMRS), that is, 
wireless technologies such as cellular and PCS.

     We hold first that the Commission's interpretation of 
s 254(g) as requiring rate integration across affiliates is 
reasonable and second that the Commission erred in conclud-
ing the plain text of s 254(g) required it to apply the rate 
integration requirement to providers of CMRS.  We there-

fore vacate the order in relevant part and remand this matter 
to the Commission for further consideration whether, as an 
exercise of its delegated authority, s 254(g) should be applied 
to providers of CMRS.

                          I. Background

     Prior to 1972 rates for interstate long distance telecommu-
nications services to and from non-contiguous domestic loca-
tions such as Alaska, Hawaii, and Puerto Rico were much 
higher than rates for the same services within the contiguous 
48 states.  In effect, providers of long distance services 
treated those locations as foreign for the purpose of setting 
long distance rates.  See Establishment of Domestic 
Communications-Satellite Facilities by Non-Governmental 
Entities, 35 F.C.C.2d 844, 856 p 35 (1972) (Domsat II Order).  
The Commission became concerned that this disparate treat-
ment "inhibited the free flow of communications between the 
contiguous states and [non-contiguous domestic] points to the 
disadvantage of all of our citizens."  Id.  The Commission 
also recognized that the use of satellites, the cost of which is 
insensitive to distance, was making it economically feasible to 
serve non-contiguous locations at rates comparable to those 
offered in the contiguous 48 states.  See id.

     In 1972, therefore, the Commission initiated a policy of 
"rate integration":  Telecommunications carriers serving Alas-
ka, Hawaii, and Puerto Rico (and later the U.S. Virgin 
Islands) were required, as a condition of their licenses to use 
new domestic satellites, to submit a plan that would "give 
maximum effect to the elimination of overall distance as a 
major cost factor and ... integrate these three United States 
points into the uniform mileage rate pattern that now obtains 
for the contiguous states."  Id. at 857 p 37.  Thus AT&T was 
required to develop a tariff that would integrate the rates it 
charged for interstate long distance service to Alaska, Hawaii, 
and Puerto Rico into the domestic rate pattern applicable in 
the contiguous 48 states.  See Integration of Rates, 61 
F.C.C.2d 380, 392 (1976) (1976 Rate Integration Order).  
Rate integration would thus ensure "service between the 

contiguous states and ... noncontiguous points[ ] at rates 
that are equivalent to those prevailing for comparable dis-
tances in the contiguous 48 states."  Integration of Rates, 9 
F.C.C.R. 2197, 2198 n.2 (1993).

     A.   Rate Integration under the Telecommunications Act 
          of 1996
          
     The Commission adopted its policy of rate integration as an 
exercise of its broad authority under the Communications Act 
to regulate carriers for the public convenience and necessity.  
See 47 U.S.C. s 214;  Domsat II Order, 35 F.C.C.2d at 856 
p 35.  In the Telecommunications Act of 1996, Pub. L. No. 
104-104, 110 Stat. 56 (1996), the Congress put rate inte-
gration upon a statutory footing by adding s 254(g) to the 
Communications Act of 1934:

     Within 6 months after February 8, 1996, the Commission 
     shall adopt rules to require ... that a provider of 
     interstate interexchange telecommunications services 
     shall provide such services to its subscribers in each 
     State at rates no higher than the rates charged to its 
     subscribers in any other State.
     
Although perhaps not obvious on its face, the parties agree 
that s 254(g) means what the Conference Report says it 
means:

     New section 254(g) is intended to incorporate the polic[y] 
     of ... rate integration of interexchange services....  
     The conferees intend the Commission's rules ... to 
     incorporate the policies contained in the Commission's 
     proceeding entitled "Integration of Rates and Services 
     for the Provision of Communications by Authorized Com-
     mon Carriers between the United States Mainland and 
     the Offshore Points of Hawaii, Alaska and Puerto 
     Rico/Virgin Islands" (61 FCC2d 380 (1976)).
     
H.R. Conf. Rep. No. 104-458, at 132 (1996).

     B. The Commission's Orders

     The Commission promulgated rules requiring rate inte-
gration under s 254(g) in a series of four orders:  (1) Imple-

mentation of Section 254(g) of the Communications Act of 
1934, as Amended, Report & Order, 11 F.C.C.R. 9564 (1996) 
(Integration Order);  (2) First Memorandum Opinion and 
Order on Reconsideration, 12 F.C.C.R. 11812 (1997) (First 
Reconsideration Order);  (3) Order, 12 F.C.C.R. 15739 (1997) 
(Stay Order);  and (4) Memorandum Opinion & Order, 14 
F.C.C.R. 391 (1998) (Second Reconsideration Order).  The 
petitioners now challenge two determinations made in the 
course of those orders.

     1.   Rate Integration Across Affiliates
          
     In the Integration Order the Commission announced with-
out elaboration that it read the term "provider of interstate 
interexchange telecommunications services" in s 254(g) to 
include "parent companies that, through affiliates, provide 
service in more than one state."  11 F.C.C.R. at 9598 p 69.  
Upon reconsideration at the instance of GTE and U.S. 
West, Inc., the Commission explained that the statute was 
ambiguous on the specific issue whether for purposes of 
rate integration a "provider of interstate interexchange tele-
communications services" includes commonly owned or con-
trolled affiliates of the provider.  First Reconsideration Or-
der, 12 F.C.C.R. at 11819 p 14.  Because an interexchange 
carrier could circumvent rate integration by providing inter-
state long distance service to each non-contiguous location 
through a separate subsidiary, the Commission concluded 
that requiring rate integration among affiliates was most 
consonant with the purpose of the statute.  See id. p 15.  
Under the resulting rule, for example, the GTE affiliate that 
provides long distance service only in the Commonwealth of 
the Northern Mariana Islands is required to integrate its 
rates with those of all other GTE affiliates providing long 
distance service anywhere in the contiguous 48 states or in 
other non-contiguous domestic locations.

     2.   Rate Integration by CMRS Providers
          
     Prior to enactment of the 1996 Telecommunications Act, 
the Commission had required only wireline carriers, and not 
providers of CMRS, to integrate their rates.  In the Inte-

gration Order the agency gave no indication that it believed 
s 254(g) either required or authorized a change in this state 
of affairs.  In the First Reconsideration Order, however, the 
Commission stated, again without elaborating, that CMRS 
providers were required by s 254(g) to integrate the rates for 
their interstate interexchange services.  12 F.C.C.R. at 11821 
p 18.  Several parties petitioned the Commission to reconsid-
er and stay enforcement of that determination.*  In the 
Second Reconsideration Order the Commission explained its 
rationale for requiring CMRS providers to integrate their 
rates:  Section 254(g) by its terms applies to providers of 
interstate interexchange service without making an exception 
for CMRS.  14 F.C.C.R. at 396 p 10.

     Because CMRS does not use wireline exchanges, its cover-
age by s 254(g) raised the following question for the Commis-
sion:  Which interstate CMRS are "interexchange" services?  
Noting that the Communications Act defines "telephone ex-
change service" as "service within a telephone exchange, or 
... comparable service provided through a system of 
switches, transmission equipment, or other facilities," 47 
U.S.C. s 153(47), the Commission determined that CMRS 
within a "major trading area" (MTA) was "comparable" to 
wireline "service within a telephone exchange," 14 F.C.C.R. at 
401 p 23;  therefore, CMRS between MTAs was comparable 
to "interexchange" wireline service, and interstate, inter-MTA 
CMRS was subject to rate integration.

                           II. Analysis

     The petitioners seek review of the rules requiring rate 
integration among affiliates and the application of rate inte-
gration to providers of CMRS.  Both challenges turn upon 

__________
     * The Commission, without expressing any doubt that s 254(g) 
applies to CMRS providers, stayed application of the rule requiring 
CMRS providers to integrate their rates across affiliates pending 
further consideration whether such integration would produce anti-
competitive effects owing to the prevalence of cross-ownership and 
joint ventures in the CMRS industry.  See Stay Order, 12 F.C.C.R. 
at 15746 p 14.

the Commission's interpretation of the phrase "provider of 
interstate interexchange telecommunications services" in 
s 254(g).  Because the Congress committed administration of 
the Communications Act to the Commission, we review the 
petitioners' challenges to the Commission's interpretation of 
s 254(g) using the two-step analysis of Chevron U.S.A., Inc. 
v. NRDC, 467 U.S. 837 (1984).  Under Chevron step one, we 
ask "whether Congress has directly spoken to the precise 
question at issue."  If so, then we "must give effect to the 
unambiguously expressed intent of Congress."  If not, then 
under Chevron step two we will defer to the agency's inter-
pretation of the Act if it is reasonable in light of the text, the 
structure, and the purpose of the Act.  See id. at 842-43.

     A.   Rate Integration Across Affiliates
          
     The petitioners make two arguments for the proposition 
that the Congress in s 254(g) unambiguously directed the 
Commission to prescribe rate integration only with respect to 
each individual provider of telecommunications services and 
not with respect to all commonly owned or controlled affili-
ates.  They first argue that because "provider" means simply 
"one that provides," the Congress could not have meant the 
phrase "provider of interstate interexchange telecommunica-
tions services" to include parent companies, which are not 
licensed to and do not provide telecommunications services.  
Further, because holding companies are not "providers," they 
"may not be used as conduits through which rate integration 
requirements are imposed on commonly owned affiliates."

     Both parts of petitioners' argument miss the mark.  First, 
the Commission no longer interprets "provider of interstate 
interexchange telecommunications services" to include parent 
companies that are not themselves carriers:  In the First 
Reconsideration Order the Commission, responding to this 
very argument, narrowed its cross-affiliate rule to apply only 
to "affiliated carriers"--thereby excluding any parent compa-
ny that is not itself a carrier.  12 F.C.C.R. at 11819 p 16.  
And as to the petitioners' derivative claim that the Commis-
sion cannot regulate commonly owned affiliates except by 
impermissibly regulating parent companies as "conduits," the 

petitioners provide no legal support for this ipse dixit.  Nor 
does the Commission either purport or need to regulate the 
parent--as a conduit or otherwise--when it requires two or 
more carriers under common control to coordinate their 
activities.

     The petitioners' second argument turns upon the Congress 
having expressly extended regulatory obligations to the "affil-
iates" of a carrier in other sections of the Act;  by not 
similarly including the word "affiliates" in s 254(g), we are 
told, the Congress unambiguously (albeit implicitly) limited 
the scope of the integration requirement to the rates charged 
by individual providers of telecommunications services.  The 
petitioners make a substantial point:  In 1996 the Congress 
added "affiliate" as a defined term in the Communications 
Act, see 47 U.S.C. s 153(1), and then used that term in 15 
sections of the Act, see 47 U.S.C. ss 222, 224, 228, 251, 260, 
271-275, 541, 543, 548, 572, and 573.  In many of those 
sections the Congress specifically extended a regulatory pro-
hibition or obligation from the individual carrier to the carri-
er's affiliates.  See, e.g., 47 U.S.C. s 572 ("No local exchange 
carrier or any affiliate of such carrier ... [may acquire] more 
than a 10 percent financial interest, or any management 
interest, in any cable operator providing cable service within 
the [LEC's] telephone service area").

     If the Congress had written s 254(g) upon a blank slate, 
announcing an entirely new requirement that rates to non-
contiguous points be integrated, then the absence of "affili-
ates" from the text of s 254(g), coupled with its inclusion in 
so many other sections, might be strong textual evidence that 
the Congress spoke directly to this issue.  See, e.g., Alabama 
Power Co. v. FERC, 160 F.3d 7, 14 (D.C. Cir. 1998).  Section 
254(g) does not, however, announce a new policy;  the legisla-
tive history makes clear that the Congress intended s 254(g) 
to carry forward by regulation the Commission's preexisting 
policy requiring rate integration.  See H.R. Conf. Rep. No. 
104-458, at 132 (1996).  An undisputed aspect of that policy is 
that AT & T was required to integrate its rates across all its 
affiliated providers.  The parties dispute whether other carri-
ers were required to integrate rates across affiliates but, 

regardless of the answer to that question, it is clear that the 
Commission under its preexisting policy could and in the case 
of AT&T did mandate integration across affiliates.  Against 
that backdrop, the omission of the word "affiliates" in a 
statute intended to perpetuate existing Commission policy 
cannot be read to preclude for the first time integration 
across affiliates;  the most the omission tells us is that the 
Congress did not specifically require the Commission to order 
rate integration across affiliates.  We agree with the Commis-
sion, therefore, that s 254(g) is ambiguous on the precise 
issue whether affiliates may be included within the phrase 
"provider of interstate interexchange telecommunications ser-
vices."

     Turning to Chevron step two, the petitioners argue that the 
Commission's interpretation is unreasonable because it con-
flicts with two of the purposes of the 1996 Act, namely, "to 
promote competition and reduce regulation."  Pub. L. No. 
104-104, 110 Stat. 56, 56 (1996) (preamble), and with one of 
the goals of rate integration, namely, the expansion of tele-
communications services offered to non-contiguous domestic 
locations, see Domsat II Order, 35 F.C.C.2d at 856 p 35.  The 
petitioners illustrate their point with the following (not very) 
hypothetical situation:  A carrier provides interstate interex-
change service through separate affiliates in the highly com-
petitive mainland market and in a high-cost domestic over-
seas market (such as Guam, which cannot be served by 
domestic satellites because of its distance from the continen-
tal United States).  If rates must be integrated across those 
affiliates then, according to the petitioners, the carrier must 
either charge above-market rates on the mainland, and there-
fore become noncompetitive, or charge below-market rates in 
the overseas location, and therefore lose money on every call.  
Faced with this Hobson's choice, the carrier will want to sell 
its overseas affiliate, presumably to a new owner with no 
other operations subject to the rate integration requirement.

     The problem with the petitioners' argument--passing over 
the Commission's factual rejoinder that the carrier would not 
lose money on every call--is that the central purpose of rate 
integration, namely, ensuring "service between the contiguous 

states and ... noncontiguous points[ ] at rates that are 
equivalent to those prevailing for comparable distances in the 
contiguous 48 states," Integration of Rates, 9 F.C.C.R. 2197, 
2198 n.2 (1993), by its nature does nothing to reduce regula-
tion or to promote competition.  The real question raised by 
this argument, therefore, is not whether integration across 
affiliates is regulatory and anti-competitive but whether it is 
unreasonable in light of the underlying goal of rate inte-
gration (pace the preamble to the 1996 Act), namely, equal-
ized rates to non-contiguous locations.  Viewed thus at the 
margin, the petitioners' hypothetical scenario actually demon-
strates the reasonableness of the Commission's interpreta-
tion:  If the Commission did not read affiliates into the term 
"provider" in s 254(g), then the petitioners' hypothetical car-
rier would charge higher rates in the non-contiguous market 
(through one affiliate) than it charges on the mainland 
(through the other affiliate), and there would be no rate 
integration of non-contiguous markets at all.  We therefore 
agree with the Commission that interpreting "provider of 
interstate interexchange telecommunications services" to en-
compass commonly owned or controlled affiliates is reason-
able in light of the text and the regulatory purpose of 
s 254(g).

     Finally, the petitioners challenge the Commission's decision 
as inconsistent and therefore arbitrary and capricious.  Even 
if interpreting "provider" to include affiliates is permissible, 
the petitioners claim, the Commission has interpreted "pro-
vider" in three inconsistent ways:  (1) for wireline carriers, 
"provider" means a provider and all commonly owned or 
controlled affiliates;  (2) for providers of CMRS, as to which 
the Commission has stayed the requirement of affiliate inte-
gration, "provider" will likely be interpreted to mean a pro-
vider and all affiliates not jointly owned by competing provid-
ers;  and (3) for the purpose of "geographic rate averaging"--
another policy prescribed in s 254(g)--the Commission has 
"implicitly" excluded affiliates from the scope of the term 
"provider."

     We reject this challenge for two reasons.  First, as the 
Commission notes, it has to date given but a single interpre-

tation to the term "provider" in s 254(g).  For the purpose of 
rate integration, "provider" includes affiliates of both wireline 
and CMRS providers;  the Stay Order did not alter this 
interpretation, and the Commission may yet adhere to it.  
And in a separate order not under review here, the Commis-
sion gave the same interpretation for the purpose of geo-
graphic rate averaging.  See Motion of AT&T Corp. to be 
Reclassified as a Non-Dominant Carrier, 12 F.C.C.R. 20787, 
20804 p 31 (1997).  Second, even if the Commission ultimately 
does interpret "provider" differently with respect to wireline 
service and CMRS, that would not necessarily be arbitrary 
and capricious.  The Commission might reasonably conclude 
that requiring integration among affiliates better advances 
the purposes of the Congress with respect to wireline service 
than it does with respect to CMRS, depending upon the 
competitive structure of the markets in which the two ser-
vices are offered.  On the record presently before us, there-
fore, we see no infirmity in the Commission's actions, and we 
deny the petition to review the requirement of integration 
across affiliates.

     B.   Rate Integration by CMRS Providers
          
     The Commission held that the phrase "provider of inter-
state interexchange telecommunications services" in s 254(g) 
"unambiguously applies to the interstate, interexchange ser-
vices offered by CMRS providers.  If Congress had intended 
to exempt CMRS providers, it presumably would have done 
so expressly as it did in other sections of the Act."  Second 
Reconsideration Order, 14 F.C.C.R. at 396 p 10.  In an 
unusually direct confrontation under Chevron step one, the 
petitioners maintain not that the statute is ambiguous but 
that it unambiguously means the opposite of what the Com-
mission says it means.  For our part, we cannot agree with 
either the Commission or the petitioners that the Congress 
spoke unambiguously on the precise issue that divides them.

     The Commission's secondary assertion that the Congress 
would have expressly exempted CMRS from s 254(g) had it 
so intended is undermined by the Conference Report indicat-
ing that the Congress meant s 254(g) to incorporate the 

Commission's preexisting rate integration policy, see H.R. 
Conf. Rep. No. 104-458, at 132 (1996), which the Commission 
had never before applied to CMRS.  As Commissioner Powell 
wrote in dissent, "when it is undisputed that CMRS providers 
were not subject to the Commission's pre-1996 Act rate 
integration policy, and where Congress seems to say it is 
merely incorporating that policy, why would we expect to find 
an explicit and unambiguous indication to exclude them?"  
Dissenting Statement of Commissioner Michael K. Powell, 
1999 WL 38420 (Jan. 28, 1999).

     This leaves the Commission's primary assertion that the 
term "interexchange telecommunications service," which is 
not defined in the Communications Act, "on its face unambig-
uously" makes CMRS subject to rate integration under 
s 254(g).  The Commission starts out in the hole:  Because 
CMRS does not use exchanges, it is by no means obvious that 
the Congress, when it used a phrase in which the word 
"interexchange" is an essential term, was referring to CMRS.  
True, the Congress provided a functional definition of "tele-
phone exchange service," including not just "service within a 
telephone exchange" but also "comparable service provided 
through ... other facilities," 47 U.S.C. s 153(47);  therefore, 
the Commission may characterize as "exchange service" even 
services that, like CMRS, do not use exchanges.  That the 
Congress may have extended to providers of CMRS various 
statutory obligations attaching to "exchange service" does 
not, however, demonstrate that the Congress, in using the 
word "interexchange," must have extended the requirement 
of rate integration to providers of CMRS.  The Commission 
might decide, as an exercise of its delegated authority to 
interpret ambiguities in the Act, that the phrase "interex-
change telecommunications service" in s 254(g) is best read 
in a manner analogous to the express definition of "exchange 
service," that is, as applying not only to wireline interex-
change service but also to CMRS that the Commission deter-
mines is "comparable";  but that interpretation is certainly 
not compelled by the "unambiguous" text of the statute.

     As for the petitioners' Chevron step one arguments, they 
first claim that the Congress's use of the word "interex-

change"--which they say has no relevance to CMRS--demon-
strates that s 254(g) must apply only to wireline providers.  
As we just explained, however, the functional definition of 
"telephone exchange service" in 47 U.S.C. s 153(47) demon-
strates that the Congress has authorized the Commission to 
characterize as "exchange service" even services that do not 
use exchanges.  Therefore it is not clear that the Congress 
was referring only to wireline service when it used the word 
"interexchange."  The petitioners' second claim is that by 
stating in the legislative history that s 254(g) was intended to 
codify the Commission's preexisting policy, which did not 
apply to providers of CMRS, the Congress clearly and unam-
biguously excluded providers of CMRS from the coverage of 
s 254(g).  We think this reads too much into both the Com-
mission's policy and the legislative history.  The Commission 
had never either applied or declined to apply the policy to 
providers of CMRS.  There is no reason to believe that prior 
to the 1996 Act the Commission was in any way precluded 
from extending its policy to providers of CMRS, and the 
Congress, in stating that it was incorporating the Commis-
sion's preexisting policy into s 254(g), gave no indication that 
it meant to freeze rate integration as it then was and to 
prohibit any further development or extension of the policy.

     The petitioners further argue that application of s 254(g) to 
providers of CMRS "would be inconsistent with the deregula-
tory intent" of 47 U.S.C. s 332(c) (authorizing Commission to 
exempt CMRS from some regulations), the definition of "tele-
phone toll service" in 47 U.S.C. s 153(48), and the pro-
consumer purpose of the 1996 Telecommunications Act over-
all.  However probative these arguments may be in determin-
ing whether the Commission's interpretation of s 254(g) is 
reasonable, they do not rise to the level of demonstrating that 
the Congress has spoken directly to this precise issue.

     In light of the text and legislative history of s 254(g), then, 
it is unclear whether CMRS is included in the phrase "inter-
exchange telecommunications service":  the Congress may 
have been referring only to wireline interexchange service, or 
it may also have meant to include "comparable" CMRS.  At 
this juncture we would ordinarily proceed to step two and 

consider whether the Commission's interpretation of the stat-
ute is reasonable.  In this case, however, the Commission 
never exercised its discretionary authority to interpret the 
statute, as the Second Reconsideration Order makes clear;  
because it believed that the plain text of s 254(g) subjected 
providers of CMRS to the requirement of rate integration, 
the Commission did not go on to show why, even if it is not 
the only possible interpretation of the statute, it is nonethe-
less a reasonable interpretation of the statute.  14 F.C.C.R. 
at 396 p p 10, 11, 18.

     Thus the Commission "act[ed] pursuant to an erroneous 
view of law and, as a consequence, fail[ed] to exercise the 
discretion delegated to it by Congress."  Prill v. NLRB, 755 
F.2d 941, 942 (D.C. Cir. 1985);  see also FCC v. RCA Commu-
nications Inc., 346 U.S. 86, 95-96 (1953).  Because the Com-
mission might well exclude CMRS from coverage under 
s 254(g) as an exercise of its discretion, we must remand this 
matter for the Commission to make that determination in the 
first instance.  See SEC v. Chenery Corp., 318 U.S. 80, 88 
(1943);  Prill, 755 F.2d at 956-57.*

                         III. Conclusion

     The petition for review is denied insofar as it challenges the 
Commission's requirement that carriers integrate their inter-
state long distance rates with those of all commonly owned or 
controlled affiliates in both contiguous and non-contiguous 
domestic locations.  The petition is granted insofar as it 
challenges the Commission's requirement that providers of 
CMRS likewise integrate their rates.  The orders under 
review are vacated in relevant part and this matter is re-
manded to the Commission for further consideration.

                                                       So ordered.

__________
     * In view of this disposition, we do not address the petitioners' 
alternative claim that if s 254(g) applies to providers of CMRS then 
the Commission is required by 47 U.S.C. s 160 to forbear from 
enforcement of the requirement.

   