
Selected Consolidated Financial Data

The selected data presented below for and as of the end of each of the five
years ended December 31, 1996, 1995, 1994, 1993,and 1992 are derived from
the consolidated financial statements of the company, which statements have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports thereon.  This data should be read in conjunction with the
related consolidated financial statements and notes appearing in this report.

<TABLE>
CONSOLIDATED INCOME STATEMENT DATA
For the Years Ended December 31,              1996        1995 (1)        1994          1993          1992
(Amounts in 000s except per share data)
<CAPTION>


<S>                                        <C>           <C>           <C>           <C>            <C>
Revenue                                    $308,767      $188,866      $126,444      $105,946       $81,680
Operating expenses before asset write-down
     and equal access costs                 294,543       188,648       132,598       104,925        75,892
Equal access costs                          -             -               2,160       -                   -
Asset write-down                            -             -             -              12,807             -


Income (loss) from continuing operations before
     taxes and minority interest             10,859        (4,825)      (10,244)       (3,751)        5,867
Provision for (benefit from) income taxes     2,185           396         3,456        (3,743)        2,267
Minority interest in (earnings) loss of
     consolidated subsidiary                   (909)         (133)        2,371         1,661       -

Income (loss) from continuing operations      7,765        (5,354)      (11,329)        1,653         3,600
Discontinued operations, net of tax         -             -             -              10,222        (1,660)

     Net income (loss)                       $7,765       ($5,354)     ($11,329)      $11,875        $1,940

Net income(loss) per common
and common equivalent share:
  Continuing operations                        0.34         (0.50)        (1.07)         0.16          0.35
  Discontinued operations                      0.00          0.00          0.00          0.97         (0.16)
     Net income (loss)                         0.34         (0.50)        (1.07)         1.13          0.19

Weighted average number of common shares 15,641,119    11,684,829    10,602,722    10,537,388    10,323,050

CONSOLIDATED BALANCE SHEET DATA (2)           1996        1995 (1)        1994          1993          1992
as of December 31,
(Amounts in 000s except per share data)



Current assets                              $61,933       $45,726       $28,045       $22,476       $16,251
Current liabilities                          77,394        56,074        32,016        23,191        27,889
Net working capital (deficit)               (15,461)      (10,348)       (3,971)         (715)      (11,638)
Accounts receivable, net                     51,474        38,978        20,499        16,005        14,104
Property and equipment, net                  80,452        56,691        44,081        27,077        21,951
Total assets                                204,031       123,984        84,448        61,718        45,450
Short-term debt                               4,251         4,885         1,613         2,424        11,525
Long-term debt                                6,007        28,050        29,914         1,795        12,747
Redeemable preferred stock                        -         9,448             -             -             -
Shareholders' equity                        117,863        26,407        19,086        31,506        22,711


OTHER FINANCIAL DATA                          1996        1995 (1)        1994          1993          1992
as of December 31,
(Amounts in 000s except per share data)

Class A Common Stock cash dividends declared      -          $243          $831        $4,233          $735
Cash dividends declared per share of
      Class A Common Stock                        -         $0.02         $0.08         $0.41         $0.07

 (1) Includes the results of operations of Metrowide Communications from August 1, 1995, the date of acquisition.
 (2) Balance sheet data from discontinued operations is excluded
</TABLE>
Item 7.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF   FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS.

      The  following  discussion includes certain forward-looking
statements.  For a discussion of important factors including, but
not  limited to, continued development of the Company's  markets,
actions of regulatory authorities and competitors, and dependence
on  management  information systems,  which  could  cause  actual
results to differ materially from the forward-looking statements,
see  the discussion of the following "Risk Factors" in Item 1  of
the Company's Report on Form 10-K for its year ended December 31,
1996  as  filed  with  the  Securities  and  Exchange  Commission
("SEC"):  "Recent  Losses;  Potential Fluctuations  in  Operating
Results;"   "Substantial  Indebtedness;   Need   for   Additional
Capital;"  "Dependence on Transmission Facilities-Based  Carriers
and   Suppliers;"  "Potential  Adverse  Effects  of  Regulation;"
"Increasing  Domestic and International Competition;"  "Risks  of
Growth  and  Expansion;"  "Risks  Associated  with  International
Operations;"  "Dependence  on  Effective  Information   Systems;"
"Risks  Associated with Acquisitions, Investments, and  Strategic
Alliances;"   "Technological   Changes   May   Adversely   Affect
Competitiveness  and  Financial  Results;"  "Dependence  on   Key
Personnel;"   "Risks  Associated  With  Financing   Arrangements;
Dividend  Restrictions;" "Holding Company Structure; Reliance  on
Subsidiaries  for  Dividends;"  "Potential  Volatility  of  Stock
Price;"   and   "Risks   Associated  with  Derivative   Financial
Instruments;"  as  well as the Company's periodic  reports  filed
with the SEC.

General

      The  Company's  revenue is comprised of toll  revenue  (per
minute charges for long distance services) and local service  and
other  revenue.   Toll revenue consists of revenue  derived  from
ACC's   long  distance  and  operator-assisted  services.   Local
service  and other revenue consists of revenue derived  from  the
provision of local exchange services, including local dial  tone,
direct access lines, Internet fees and monthly subscription fees,
and  also  from data services.  Network costs consist of expenses
associated  with  the  leasing  of  transmission  lines,   access
charges, and certain variable costs associated with the Company's
network.   The  following table shows the total revenue  (net  of
intercompany revenue) and billable minutes of use attributable to
the  Company's  US, Canadian, and UK operations  during  each  of
1996, 1995, and 1994:

                                Year Ended December 31,
                         1996             1995           1994
                   Amount  Percent  Amount   Percent Amount  Percent
Total Revenue:
United States      $99,461   32.2%   $65,975  34.9%  $54,599  43.2%
Canada             117,168   38.0     84,421  44.7    67,728  53.6
United Kingdom      92,138   29.8     38,470  20.4     4,117   3.2
  Total           $308,767  100.0%  $188,866 100.0% $126,444 100.0%

Billable Minutes of Use:
United States      590,341   32.8%   486,618  41.2%  445,619  50.5%
Canada             681,200   37.9    522,764  44.2   422,149  47.8
United Kingdom     527,905   29.3    172,281  14.6    15,225   1.7
  Total          1,799,446  100.0% 1,181,663 100.0%  882,993 100.0%

The  following table presents certain information concerning toll
revenue per billable minute and network cost per billable  minute
attributable  to  the Company's US, Canadian, and  UK  operations
during each of 1996, 1995, and 1994:

                                         1996     1995     1994
Toll Revenue Per Billable Minute:
United States                            $.150   $.126    $.115
Canada                                    .150    .146     .149
United Kingdom                            .174    .220     .268

Network Cost Per Billable Minute:
United States                            $.104   $.075    $.070
Canada                                    .106    .100     .108
United Kingdom                            .114    .149     .177

     The Company believes that its historic revenue growth as
well as its historic network costs and results of operations for
its Canadian and UK operations generally reflect the state of
development of the Company's operations, the Company's customer
mix, and the competitive and regulatory environment in those
markets. The Company entered the US, Canadian, and UK
telecommunications markets in 1982, 1985, and 1993, respectively.
For US operations, 1996 revenue and network cost per minute
include the effect of $9.0 million of non-recurring, lower margin
international carrier sales in the second quarter.  The Company
believes that toll revenue per billable minute and network cost
per billable minute will be lower in future periods, due to
competitive pressures and due to the decreased focus on lower
margin international carrier sales.

     Deregulatory influences have affected the telecommunications
industry in the US since 1984, and the US market has experienced
considerable competition for a number of years. The competitive
influences on the pricing of ACC US's services and network costs
have been stabilizing during the past few years.  This may change
in the future as a result of recent US legislation that further
opens the market to competition, particularly from the regional
operating companies ("RBOCs").  The Company expects competition
based on price and service offerings to increase.

     The deregulatory trend in Canada, which commenced in 1989,
has increased competition.  ACC Canada experienced significant
downward pressure on the pricing of its services during 1994.
Although revenue per minute has increased from 1995 to 1996 due
to changes in customer and product mix, the Company expects such
downward pressure to return.  However, it is expected that the
pricing pressure may abate over time as the market matures.  The
impact of this pricing pressure on revenues of ACC Canada is
being offset by an increase in the Canadian residential and
student billable minutes of usage as a percentage of total
Canadian billable minutes of usage, and introduction of new
products and services including 800 service, local exchange
resale, internet services, and, beginning in February 1997,
paging services. Toll revenue per billable minute attributable to
residential and student customers in Canada generally exceeds the
toll revenue per billable minute attributable to commercial
customers. The Company believes that its network costs per
billable minute in Canada may decrease during periods after 1996
if there is an anticipated increase in long distance transmission
facilities available for lease from Canadian transmission
facilities-based carriers as a result of expected growth in the
number and capacity of transmission networks in that market.  The
foregoing forward-looking statements are based upon expectations
of actions that may be taken by third parties, including Canadian
regulatory authorities and transmission facilities-based
carriers.  If such third parties do not act as expected, the
Company's actual results may differ materially from the foregoing
discussion.

     The Company believes that, because deregulatory influences
have only fairly recently begun to impact the UK
telecommunications industry, the Company will continue to
experience increases in total revenue from that market during the
next several quarters.  The foregoing belief is based upon
expectations of actions that may be taken by UK regulatory
authorities and the Company's competitors; if such third parties
do not act as expected, the Company's revenues in the UK might
not increase.  If ACC UK were to experience increased revenues,
the Company believes it should be able to enhance its economies
of scale and scope in the use of the fixed cost elements of its
network.  Nevertheless, the deregulatory trend in that market is
expected to result in competitive pricing pressure on the
Company's UK operations, which could adversely affect revenues
and margins. Since the UK market for transmission facilities is
dominated by British Telecommunications PLC ("British Telecom")
and Mercury Communications Ltd. ("Mercury"), the downward
pressure on prices for services offered by ACC UK may not be
accompanied by a corresponding reduction in ACC UK's network
costs in the short term and, consequently, could adversely affect
the Company's business, results of operations and financial
condition, particularly in the event revenue derived from the
Company's UK operations accounts for an increasing percentage of
the Company's total revenue.  Moreover, the Company's UK
operations are highly dependent upon the transmission lines
leased from British Telecom. As each of the telecommunications
markets in which it operates continues to mature, the rate of
growth in its revenue and customer base in each such market is
likely to decrease over time.

      Since  the  commencement of the Company's  operations,  the
Company has undertaken a program of developing and expanding  its
service  offerings, geographic focus, and network.  In connection
with  this  development  and  expansion,  the  Company  has  made
significant investments in telecommunications circuits, switches,
equipment,  and software.  These investments generally  are  made
significantly  in  advance  of anticipated  customer  growth  and
resulting revenue.  The Company also has increased its sales  and
marketing,  customer  support,  network  operations,  and   field
services  commitments  in anticipation of the  expansion  of  its
customer  base  and  targeted geographic  markets.   The  Company
expects  to  continue  to expand the breadth  and  scale  of  its
network  and  related sales and marketing, customer support,  and
operations  activities.  These expansion efforts  are  likely  to
cause the Company to incur significant increases in expenses from
time  to time, in anticipation of potential future growth in  the
Company's   customer   base  and  targeted  geographic   markets.
Subsequent to year-end, the Company announced the creation of two
continental operating divisions in North America and Europe.   In
conjunction with this new structure, the Company plans to further
expand its European operations by preparing to enter the emerging
German  telecommunications marketplace when regulatory and market
conditions  warrant.   While the Company  has  had  a  successful
history of entering into newly deregulated markets, there can  be
no  assurances that the same successes will be experienced in the
new German operation.

     The Company's operating results have fluctuated in the past
and they may continue to fluctuate significantly in the future as
a result of a variety of factors, some of which are beyond the
Company's control.  The Company expects to focus in the near term
on building and increasing its customer base, service offerings,
and targeted geographic markets, which will require it to
increase significantly its expenses for marketing and development
of its network and new services, and may adversely impact
operating results from time to time.  The Company's sales to
other long distance carriers have been increasing due to the
Company's marketing efforts to promote its lower international
network costs.  Revenues from other resellers accounted for
approximately 42%, 12%, and 24% of the revenues of ACC US, ACC
Canada, and ACC UK, respectively, in 1996.  With respect to these
customers, the Company competes almost exclusively on price, does
not have long term contracts, and generates lower gross margins
as a percentage of revenue. The Company's primary interest in
carrier revenue is to utilize excess capacity on its network.
Management believes that carrier revenue will represent less than
20% of consolidated total revenue as the core businesses continue
to grow.  The foregoing forward-looking statement is based upon
expectations with respect to growth in the Company's customer
base and total revenues.  If such expectations are not realized,
the Company's actual results may differ materially from the
foregoing discussion.

Results of Operations

      The  following  table presents, for the three  years  ended
December 31, 1996, certain statement of operations data expressed
as a percentage of total revenue:

                                       Year Ended December 31,
                                      1996      1995(1)   1994
Revenue:
   Toll revenue                        91.5%     92.8%    93.6%
   Local service and other              8.5       7.2      6.4
       Total revenue                  100.0     100.0    100.0
Network costs                          62.7      60.8     62.8
Gross profit                           37.3      39.2     37.2
Other operating expenses:
   Depreciation and amortization        5.3       6.1      7.1
   Selling expenses                    11.0      11.4     11.5
   General and administrative          16.4      20.8     23.5
   Management restructuring             ---       0.7       --
   Equal access charges                 --       --        1.7
       Total other operating expenses  32.7      39.0     43.8
Income (loss) from operations           4.6       0.2     (6.6)
Total other income (expense)           (1.1)     (2.7)    (1.5)
Loss from operations before provision
   for (benefit from) income taxes and
   minority interest                    3.5      (2.5)    (8.1)
Provision for income taxes              0.7       0.2      2.7
Minority interest in (earnings)
 loss of consolidated subsidiary       (0.3)     (0.1)     1.9
Income (loss) from   operations         2.5%     (2.8)%   (8.9)%

(1)Includes    the    results   of   operations   of    Metrowide
   Communications from August 1, 1995, the date of acquisition.


1996 Compared  With 1995
      Revenue.   Total  revenue for 1996 increased  by  63.5%  to
$308.8 million from $188.9 million in 1995, reflecting growth  in
both  toll  revenue  and local service and other  revenue.   Toll
revenue for 1996 increased by 61.3% to $282.5 million from $175.2
million  in  1995.  In the United States, toll revenue  increased
44.8% as a result of a 21.3% increase in billable minutes of use,
primarily  due  to  increased international  sales  to  carriers.
These  international sales have a higher rate  per  minute,  also
contributing  to the revenue increase.  The 1996 results  include
$9.0  million  in non-recurring carrier revenue.  Excluding  this
non-recurring revenue, US toll revenue increased 30.1% over 1995.
In  Canada, toll revenue increased 34.1%, as a result of a  30.3%
increase  in billable minutes, and an increase in prices  due  to
additional  residential customers which typically have  a  higher
revenue   per  minute.   In  the  United  Kingdom,  toll  revenue
increased  142.0%, due to significant volume increases offset  by
lower  prices  that  resulted from entering  the  commercial  and
residential markets and from competitive pricing pressure.  Since
the  end  of  1994, ACC's revenues per minute on  a  consolidated
basis have been increasing slightly as a result of the increasing
percentage   of   UK   revenues  and  the  Company's   successful
introduction  of  higher  price per  minute  products,  including
international  carrier revenue.  Exchange rates did  not  have  a
material impact on the Company's consolidated revenue.
     For 1996, local service and other revenue increased by 93.4%
to  $26.3 million from $13.6 million in 1995.  This increase  was
primarily due to the Metrowide Communications acquisition  as  of
August  1,  1995  (approximately  $5.2  million),  local  service
revenue  generated  through  the university  program  in  the  US
(approximately $0.4 million), and the competitive local  exchange
company  ("CLEC")  operations in upstate New York  (approximately
$5.6  million).  The Company is anticipating that  a  significant
portion  of  its growth in the US operations in the  future  will
come  from  CLEC operations, and is in the process of  installing
five  new  local  exchange switching centers in the  northeastern
United States.

     Gross Profit.  Gross profit (defined as revenue less network
costs) for 1996 increased to $115.2 million from $74.0 million in
1995,  primarily due to the increases in revenue discussed above.
Expressed  as a percentage of revenue, gross profit decreased  to
37.3%  for 1996 from 39.2% for 1995, due to an increase in  lower
margin  carrier traffic in the US, offset partially  by  improved
margins  in  Canada  and the UK due to network  efficiencies  and
reductions in fixed charges from suppliers.

      Other  Operating  Expenses.  Depreciation and  amortization
expense increased to $16.4 million for 1996 from $11.6 million in
1995.    Expressed  as  a  percentage  of  revenue,  these  costs
decreased  to  5.3%  in  1996 from 6.1% in 1995,  reflecting  the
increases  in  revenue realized during 1996.   The  $4.8  million
increase  in depreciation and amortization expense was  primarily
attributable  to  assets  placed  in  service  throughout   1996.
Amortization  of approximately $1.1 million associated  with  the
customer   base   and   goodwill  recorded   in   the   Metrowide
Communications  and  Internet  Canada  asset  acquisitions   also
contributed to the increase.

       Selling   expenses  for  1996  increased   by   57.9%   to
$34.1 million compared with $21.6 million in 1995.  Expressed  as
a  percentage  of revenue, selling expenses were 11.0%  for  1996
compared  to  11.4%  for  1995.  The $12.5  million  increase  in
selling   expenses  was  primarily  attributable   to   increased
marketing  costs and sales commissions associated with supporting
the Company's 63% growth in revenue for 1996, particularly in the
UK.    General   and  administrative  expenses  for   1996   were
$50.4 million compared with $39.2 million in 1995.  Expressed  as
a percentage of revenue, general and administrative expenses were
16.4%  for  1996,  compared to 20.8% in 1995.   The  increase  in
general and administrative expenses was primarily attributable to
the  Canadian  ($4.3 million increase) and the UK  ($4.4  million
increase)  subsidiaries.   In  the UK,  costs  were  incurred  to
develop  an infrastructure to support the sizable revenue  growth
experienced in 1996, with headcount increasing 56% over  previous
year  levels.  In Canada, headcount increased approximately  52%,
partially as a result of the acquisition of Internet Canada,  and
partially  to develop an infrastructure to support the increasing
product  lines  and services being offered.    Also  included  in
general  and  administrative expenses for 1996 was  approximately
$4.4 million related to the Company's local service market sector
in New York State, compared to $1.8 million in 1995.

      Other  Income (Expense).  Interest expense remained  fairly
constant  at  $5.0 million for 1996 compared to $5.1  million  in
1995.   The  1996 expense includes the accrual of a $2.1  million
contingent  interest  payment  due  to  the  lenders  under   the
Company's  credit  facility.  The 1995  amount  includes  expense
associated  with  the subordinated debt which  was  converted  to
Series  A  Preferred Stock in September 1995, as well as  expense
associated  with  line of credit borrowings  to  finance  working
capital and capital expenditure needs.  Interest income increased
to  $1.2  million in 1996 from $0.2 million in 1995, due  to  the
invested proceeds from the Class A Common Stock offering  in  May
1996.

      Foreign  exchange gains and losses reflect changes  in  the
value  of  the  Canadian  dollar and the British  pound  sterling
relative   to  the  US  dollar  for  amounts  lent   to   foreign
subsidiaries.  Foreign exchange rate changes resulted  in  a  net
gain  of $0.5 million for 1996,  compared to a $0.1 million  loss
in 1995, which was primarily due to a one-time gain related to  a
transaction which occurred on October 21, 1996 and was hedged  28
days later.  The Canadian dollar moved favorably relative to  the
US dollar during that period.  The Company continues to hedge all
foreign  currency  transactions in an  attempt  to  minimize  the
impact  of  transaction gains and losses on the income statement.
The  Company's  policy  is to not engage in  speculative  foreign
currency transactions.

      Provision for income taxes reflects the anticipated  income
tax  liability of the Company's US operations based on its pretax
income for the year.  The provision for income taxes increased in
1996  due  to  increased profitability in the US  business.   The
Company does not provide for income taxes nor recognize a benefit
related  to  income in foreign subsidiaries due to net  operating
loss  carryforwards  generated by  those  subsidiaries  in  prior
years.

       Minority  interest  in  loss  of  consolidated  subsidiary
reflects  the  portion  of  the Company's  Canadian  subsidiary's
income   or   loss  attributable  to  the  percentage   of   that
subsidiary's  common stock that was publicly  traded  in  Canada.
Prior  to  October 1996, approximately 30% of ACC Canada's  stock
was  publicly traded.  Prior to December 31, 1996,   the  Company
repurchased approximately 24% of the outstanding shares, and  the
remaining  6%  was  repurchased  subsequent  to  year-end.    The
purchase  of the remaining shares was approved prior to year-end.
For  1996,  minority  interest in earnings  of  the  consolidated
subsidiary  was  a loss of $0.9 million compared  to  a  loss  of
$0.1 million in 1995.

     The Company's net income for 1996 was $7.8 million, compared
to  a  net  loss  of $5.4 million in 1995.  The 1996  net  income
resulted  from  the Company's operations in Canada (approximately
$2.6   million);  in  the  United  Kingdom  (approximately   $0.7
million);  and in the United States (approximately $4.5 million).
The  1995  net  loss  resulted primarily from  the  expansion  of
operations in the UK (approximately $6.8 million); increased  net
interest    expense   associated   with   additional   borrowings
(approximately   $4.9   million);  increased   depreciation   and
amortization from the addition of equipment and costs  associated
with   the   expansion  of  local  service  in  New  York   State
(approximately $1.6 million); and management restructuring  costs
(approximately $1.3 million), offset by positive operating income
from   the   US  and  Canadian  long  distance  subsidiaries   of
approximately $9.0 million.

1995 Compared  With 1994

      Revenue.   Total  revenue for 1995 increased  by  49.4%  to
$188.9 million from $126.4 million in 1994, reflecting growth  in
both  toll  revenue  and local service and other  revenue.   Toll
revenue for 1995 increased by 48.1% to $175.2 million from $118.3
million  in  1994.  In the United States, toll revenue  increased
19.3%  as a result of a 9.2% increase in billable minutes of  use
and  a  more  favorable  mix  of toll services  provided,  offset
slightly  by  a  decrease  in  prices  per  minute.   The  volume
increases   are   primarily  a  result   of   increased   revenue
attributable  to other US carriers (approximately $5.8  million);
and   commercial   (approximately  $33.8  million);   residential
(approximately   $3.6 million); and student (approximately  $10.5
million)  customers in the Company's service region.  In  Canada,
toll  revenue increased 20.9%, primarily as a result of  a  23.8%
increase  in  billable minutes, offset by  a  slight  decline  in
prices.  The price declines are a result of the price competition
in  1994 which decreased rates in the middle of that year.  Since
the  end  of  1994, ACC's revenues per minute on  a  consolidated
basis have been increasing slightly as a result of the increasing
percentage   of   UK   revenues  and  the  Company's   successful
introduction of higher price per minute products.  In the  United
Kingdom, toll revenue increased 830.7% due to significant  volume
increases, offset by lower prices that resulted from entering the
commercial and residential markets, and from competitive  pricing
pressure.  Exchange rates did not have a material impact  on  the
Company's consolidated revenue.

     For 1995, local service and other revenue increased by 67.6%
to  $13.6  million from $8.1 million in 1994.  This increase  was
due  to the Metrowide Communications acquisition as of August  1,
1995  (approximately  $2.9 million from the date  of  acquisition
through   year-end),   local   service   revenue   (approximately
$1.5 million) generated through the university program in the US,
and  the  local  exchange operations in upstate New  York,  which
generated nominal revenues in 1994.

      Network  Costs.  Network costs increased to $114.8  million
for  1995,  from  $79.4 million in 1994, due to the  increase  in
billable   long   distance  minutes.   However,  network   costs,
expressed as a percentage of revenue, decreased to 60.8% for 1995
from  62.8% in 1994 due to reduced contribution charges in Canada
and  increased  volume  efficiencies  in  the  UK.   Contribution
charges represented 5.2% of revenue in 1995 as compared to  10.1%
in  1994.   These efficiencies were partially offset  by  reduced
margins in the US due to increased carrier traffic.

      Other  Operating  Expenses.  Depreciation and  amortization
expense increased to $11.6 million for 1995 from $8.9 million  in
1994.    Expressed  as  a  percentage  of  revenue,  these  costs
decreased  to  6.1%  in  1995 from 7.1% in 1994,  reflecting  the
increases  in  revenue realized during 1995.   The  $2.7  million
increase  in depreciation and amortization expense was  primarily
attributable to assets placed in service in the fourth quarter of
1994  and  during 1995, particularly equipment at  US  university
sites, switching centers in London and Manchester in the UK,  and
switch  upgrades in Rochester, Syracuse, Vancouver, and  Toronto.
Amortization  of approximately $0.4 million associated  with  the
customer   base   and   goodwill  recorded   in   the   Metrowide
Communications acquisition also contributed to the increase.

       Selling   expenses  for  1995  increased   by   49.1%   to
$21.6 million compared with $14.5 million in 1994.  Expressed  as
a  percentage  of revenue, selling expenses were 11.4%  for  1995
compared to 11.5% for 1994.  The $7.1 million increase in selling
expenses was primarily attributable to increased marketing  costs
and  sales  commissions associated with the rapid growth  of  the
Company's  operations in Canada (approximately $1.7 million)  and
the  UK (approximately $5.6 million).  General and administrative
expenses for 1995 were $39.2 million compared with $29.7  million
in  1994.   Expressed  as a percentage of  revenue,  general  and
administrative expenses were 20.8% for 1995, compared to 23.5% in
1994.   The  increase in general and administrative expenses  was
primarily  attributable to a $9.5 million increase  in  personnel
and  customer  service costs associated with the  growth  of  the
Company's  customer  bases  and  geographic  expansion  in   each
country.   Also  included in general and administrative  expenses
for  1995 was approximately $1.8 million related to the Company's
local service market sector in New York State.

      The  Company also incurred in 1995 non-recurring  costs  of
$1.3  million related to management restructuring.   These  costs
consisted  of a $0.8 million payment in consideration of  a  non-
compete  agreement  with  the chairman of  the  board  which  was
negotiated  and  agreed to in connection with his resignation  as
chief  executive officer.  The remaining $0.5 million related  to
severance  expenses relating to three other members of  executive
management, the terms of which were negotiated at the time of the
executives'  departures based on their existing  agreements  with
the  Company.  In connection with the departure of one executive,
the  vesting  schedule for options to purchase 16,150  shares  of
Class  A Common Stock (out of the options to purchase a total  of
33,600  shares  which  had been granted to  the  executive)  were
accelerated to allow him to exercise the options.

      During the third quarter of 1994, the Company initiated the
process of enhancing its network to prepare for equal access  for
its Canadian customers.  Equal access allows customers to place a
call  over the Company's network simply by dialing "1"  plus  the
area  code  and  telephone  number.   Before  equal  access   was
available,  the  Company  needed  to  install  a  dialer  on  its
customers'  premises or require the customer to  dial  an  access
code  before placing a long distance call.  Costs associated with
this  process  included maintaining duplicate network  facilities
during transition, recontacting customers, and the administrative
expenses  associated  with accumulating  the  data  necessary  to
convert  the  Company's  customer base  to  equal  access.   This
process  was  completed during the fourth quarter of  1994  at  a
total  cost of $2.2 million, which has been reflected as a charge
to  income  from operations for 1994.  This network  enhancement,
the costs of which are non-recurring, will enable the Company  to
offer  a  broader  range  of services to Canadian  customers  and
increase    customer   convenience   in   using   the   Company's
telecommunications services.

      Other Income (Expense).  Net interest expense increased  to
$4.9  million  for  1995 compared to $1.9 million  in  1994,  due
primarily  to the Company's increased weighted average borrowings
on  revolving lines of credit related to financing of  university
projects in the US, expansion of the UK and  the  local service
businesses during 1995 (approximately $3.1 million); write-off  of
deferred financing costs related to the Company's lines of credit
which  were refinanced in July 1995 (approximately $0.3 million);
debt  service costs associated with 12% subordinated notes issued
in May 1995 (approximately $0.4 million); and contingent interest
associated with the Credit Facility (approximately $0.3 million).
On  September 1, 1995, the subordinated notes were exchanged  for
Series  A  Preferred Stock and, consequently, there  will  be  no
further  interest  expense associated with the  12%  subordinated
notes.   The  Series A Preferred Stock accrues dividends  at  the
rate of 12% per annum.  Upon any conversion of Series A Preferred
Stock,   the  accrued  and  unpaid  dividends  thereon  will   be
extinguished and no longer deemed payable.

      Foreign  exchange gains and losses reflect changes  in  the
value  of  the  Canadian  dollar and the British  pound  sterling
relative   to  the  US  dollar  for  amounts  lent   to   foreign
subsidiaries.  Foreign exchange rate changes resulted  in  a  net
loss of $0.1 million for 1995, compared to a $0.2 million gain in
1994.   The  Company  continues to  hedge  all  foreign  currency
transactions in an attempt to minimize the impact of  transaction
gains  and losses on the income statement.  The Company does  not
engage in speculative foreign currency transactions.

      During 1994, the Company increased its income tax provision
to  provide for a valuation allowance equal to 100% of the amount
of  the Company's foreign tax benefits which had been recorded at
December 31, 1993.  No income tax benefits have been recorded for
the  1995  operating  losses in Canada  or  the  UK  due  to  the
uncertainty of recognizing the income tax benefit of those losses
in the future.

       Minority  interest  in  loss  of  consolidated  subsidiary
reflects  the  portion  of  the Company's  Canadian  subsidiary's
income  or  loss attributable to the approximately  30%  of  that
subsidiary's  common stock that was publicly  traded  in  Canada.
For  1995,  minority  interest in earnings  of  the  consolidated
subsidiary  was  a loss of $0.1 million compared  to  a  gain  of
$2.4 million in 1994.

      The  Company's net loss for 1995 was $5.4 million, compared
to   $11.3 million in 1994.  The 1995 net loss resulted primarily
from  the  expansion  of  operations  in  the  UK  (approximately
$6.8  million);  increased net interest expense  associated  with
additional  borrowings  (approximately $4.9  million);  increased
depreciation and amortization from the addition of equipment  and
costs associated with the expansion of local service in New  York
State  (approximately $1.6 million); and management restructuring
costs  (approximately $1.3 million), offset by positive operating
income  from  the  US and Canadian long distance subsidiaries  of
approximately $9.0 million.


Liquidity and Capital Resources

     In May 1996, the Company raised net proceeds of $63.1
million through the issuance of 3,018,750 shares of its Class A
Common Stock.  The proceeds from this offering were used to
reduce all indebtedness under the Company's credit facility, for
working capital needs, and capital expenditures. The Company also
expended resources in 1996 to repurchase the minority interest in
ACC Canada.  Historically, the Company has satisfied its working
capital requirements through cash flow from operations, through
borrowings and financings from financial institutions, vendors
and other third parties, and through the issuance of securities.
The Company also received net proceeds of approximately $1.9
million from the exercise of options and warrants associated with
the Class A Common Stock offering on behalf of selling
shareholders in October 1996 and an additional $4.9 million from
the exercise of employee stock options at various times
throughout the year.

     Net cash flows provided by operations were $24.2 million for
the year ended December 31, 1996 compared to $4.0 million for
1995.  The increase of $20.2 million primarily resulted from
improved profitability in all subsidiaries.  During the year, the
Company had a carrier customer which accumulated a significant
accounts receivable balance.  The Company has entered into a
traffic exchange agreement with the customer, under which the
Company terminates traffic over the customer's network as payment
in kind for the accumulated receivable balance.  The receivable
balance was approximately $8.3 million at the beginning of the
arrangement, but has been reduced to approximately $1.9 million
as of  December 31, 1996.  Although the Company expects to have
fully received the balance by the end of the first quarter of
1997, there are no assurances that the customer will be
financially viable until that time.  If the customer were to
declare bankruptcy, a portion of the amount settled under the
traffic exchange agreement may have to be repaid by the Company,
and any remaining amounts receivable from the customer may not be
collected.

     Net cash flows used in investing activities were $67.7
million and $15.3 million for the years ended December 31, 1996
and 1995, respectively.  The increase of approximately $52.4
million in net cash flow used in investing activities during 1996
as compared to 1995 was primarily attributable to the repurchase
of the Canadian minority interest (approximately $32.1 million),
as well as an increase in capital expenditures incurred by the UK
operation for a long distance switch (approximately $4.9
million); the US operation for local service switching equipment
(approximately $6.9 million); the Canadian operation for a new
billing system (approximately $2.7 million); and for the purchase
of assets and customer base from Internet Canada.

     Accounts receivable increased by 32.1% at December 31, 1996
as compared to December 31, 1995 as a result of expansion of the
Company's customer base due to sales and marketing efforts.
Accounts payable at December 31, 1996 increased by $8.0 million
over December 31, 1995 due to the inclusion of previously accrued
network bills.  In 1995, the principal vendor in the UK
experienced delays in billing.  These problems were corrected in
1996.  Accrued expenses at December 31, 1996 increased by $19.2
million compared to December 31, 1995 due to the accrual of the
remaining $6.5 million payment for the repurchase of the ACC
Canada minority interest, a $2.1 million contingent interest
payment, a $1.0 million payment due to the former chairman of the
board, an increase in the bonus accrual, and the general increase
in the size and operations of the Company during 1996.

     The Company's principal need for working capital is to meet
its selling, general, and administrative expenses, network costs
and capital expenditures as its business expands.  The Company is
anticipating significant growth in its CLEC business, which is
capital-intensive.  In addition, the Company's capital resources
have been used for the repurchase of the minority interest in ACC
Canada.  During 1996, the Company paid approximately $32.0
million to acquire approximately 81.5% of the minority-held
shares of ACC Canada.  The remaining shares were acquired in
January 1997 for approximately $6.5 million.  Resources have also
been used for the Metrowide Communications and Internet Canada
acquisitions, and for capital expenditures.  The Company made the
required contingent interest payment of $2.1 million to the
lenders of the credit facility in January 1997, in conjunction
with the amendment to that facility which increased the borrowing
availability to $100 million.  This payment was fully accrued at
December 31, 1996.  The Company had a working capital deficit of
$15.5 million at December 31, 1996 compared to a working capital
deficit of approximately $10.3 million at December 31, 1995, due
primarily to the repurchase of the minority interest in ACC
Canada.

     The Company anticipates that during 1997, its capital
expenditures will be approximately $44.0 million for the
expansion of its network; the acquisition, upgrading, and
development of switches and other telecommunications equipment as
conditions warrant; the development, licensing, and integration
of its management information system and other software; the
development and expansion of its service offerings and customer
programs; and other capital expenditures. ACC expects that it
will continue to make significant capital expenditures during
future periods, particularly for the installation and related
expenses of switching equipment for the UK (located in Bristol)
and local exchange switches in New York, New York; Albany, New
York; Buffalo, New York;  Boston, Massachusetts; and Springfield,
Massachusetts.  The Company's actual capital expenditures and
cash requirements will depend on numerous factors, including the
nature of future expansion and acquisition opportunities,
economic conditions, competition, regulatory developments, the
availability of capital, and the ability to incur debt and make
capital expenditures under the terms of the Company's financing
arrangements.  The Company has also announced that it has formed
a German subsidiary in anticipation of deregulation in that
marketplace, and anticipates that the initial capital and
operating expenditures related to this operation will approximate
$5.0 million.

     As of December 31, 1996, the Company had approximately $2.0
million of cash and cash equivalents and maintained the $35.0
million credit facility, subject to availability under a
borrowing base formula and certain other conditions (including
borrowing limits based on the Company's operating cash flow, as
defined in the agreement), under which no borrowings were
outstanding and $2.6 million was reserved for letters of credit.
On January 15, 1997, the Company secured an amended $100 million
credit facility.  The facility provides additional working
capital, capital for acquisitions and market expansion, and
contains generally more favorable terms and conditions than the
prior credit facility. The maximum aggregate principal amount of
the new facility is required to be reduced by $8.0 million per
quarter commencing on March 31, 1999 until December 31, 2000, and
by $9.0 million per quarter commencing on March 31, 2001 until
maturity of the loan in January 2002.

     In addition, the Company has $9.5 million of capital lease
obligations which mature at various times from 1997 through 2000.
Subsequent to December 31,1996, the Company prepaid a $4.0
million capitalized lease obligation using funds borrowed under
the new credit facility.  The Company's financing arrangements,
which are secured by substantially all of the Company's assets
and the stock of certain subsidiaries, require the Company to
maintain certain financial ratios and prohibit the payment of
dividends.

     In the normal course of business, the Company uses various
financial instruments, including derivative financial
instruments, for purposes other than trading.  These instruments
include letters of credit, guarantees of debt, interest rate swap
agreements, and foreign currency exchange contracts relating to
intercompany payables of foreign subsidiaries.  The Company does
not use derivative financial instruments for speculative
purposes.  Foreign currency exchange contracts are used to
mitigate foreign currency exposure and are intended to protect
the US dollar value of certain currency positions and future
foreign currency transactions.  The aggregate fair value, based
on published market exchange rates, of the Company's foreign
currency contracts at December 31, 1996 was $52.8 million.  When
applicable, interest rate swap agreements are used to reduce the
Company's exposure to risks associated with interest rate
fluctuations. As is customary for these types of instruments,
collateral is generally not required to support these financial
instruments.

     By their nature, all such instruments involve risk,
including the risk of nonperformance by counterparties, and the
Company's maximum potential loss may exceed the amount recognized
on the Company's balance sheet.  However, at December 31, 1996,
in management's opinion there was no significant risk of loss in
the event of nonperformance of the counterparties to these
financial instruments.  The Company controls its exposure to
counterparty credit risk through monitoring procedures and by
entering into multiple contracts, and management believes that
reserves for losses are adequate.  Based upon the Company's
knowledge of the financial position of the counterparties to its
existing derivative instruments, the Company believes that it
does not have any significant exposure to any individual
counterparty or any major concentration of credit risk related to
any such financial instruments.

     The Company believes that, under its present business plan,
cash from operations, together with borrowing availability under
the amended credit facility, will be sufficient to meet
anticipated working capital and capital expenditure requirements
of its existing operations.  The forward-looking information
contained in the previous sentence may be affected by a number of
factors, including the matters described in this paragraph. The
Company may need to raise additional capital from public or
private equity or debt sources in order to finance its
operations, capital expenditures, and growth for future periods.
Moreover, the Company believes that continued growth and
expansion through acquisitions, investments, and strategic
alliances is important to maintain a competitive position in the
market.  Consequently, a principal element of the Company's
business strategy is to develop relationships with strategic
partners and to acquire assets or make investments in businesses
that are complementary to its current operations.  The Company
may need to raise additional funds in order to take advantage of
opportunities for acquisitions, investments, and strategic
alliances or more rapid international expansion, to develop new
products, or to respond to competitive pressures.  If additional
funds are raised through the issuance of equity securities, the
percentage ownership of the Company's then-current shareholders
may be reduced and such equity securities may have rights,
preferences, or privileges senior to those of holders of Class A
Common Stock.  There can be no assurance that the Company will be
able to raise such capital on acceptable terms or at all.  In the
event that the Company is unable to obtain additional capital or
is unable to obtain additional capital on acceptable terms, the
Company may be required to reduce the scope of its presently
anticipated expansion opportunities and capital expenditures,
which could have a material adverse effect on its business,
results of operations, and financial condition and could
adversely impact its ability to compete.

     The Company may seek to develop relationships with strategic
partners both domestically and internationally and to acquire
assets or make investments in businesses that are complementary
to its current operations.  Such acquisitions, strategic
alliances, or investments may require that the Company obtain
additional financing and, in some cases, the approval of the
holders of debt of the Company.  The Company's ability to effect
acquisitions, strategic alliances, or investments may be
dependent upon its ability to obtain such financing and, to the
extent applicable, consents from its lenders.
<TABLE>
ACC CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN 000s, EXCEPT PER SHARE DATA)




For the Years Ended December 31,                              1996        1995        1994


<CAPTION>
REVENUE:
<S>    <C>                                                  <C>         <C>         <C>
 Toll revenue                                               $282,497    $175,269    $118,331
 Local service and other                                      26,270      13,597       8,113

Total revenue                                                308,767     188,866     126,444

Network costs                                                193,599     114,841      79,438

Gross profit                                                 115,168      74,025      47,006

OTHER OPERATING EXPENSES:
  Depreciation and amortization                               16,433      11,614       8,932
  Selling expenses                                            34,072      21,617      14,497
  General and administrative                                  50,439      39,248      29,731
  Management restructuring                                         0       1,328           0
  Equal access costs                                               0           0       2,160
Total other operating expenses                               100,944      73,807      55,320

 Income (loss) from operations                                14,224         218      (8,314)

OTHER INCOME (EXPENSE):
  Interest income                                              1,151         198         124
  Interest expense                                            (5,025)     (5,131)     (2,023)
  Terminated merger costs                                          0           0        (200)
  Foreign exchange gain (loss)                                   509        (110)        169

Total other income (expense)                                  (3,365)     (5,043)     (1,930)

 Income (loss) from operations before provision
  for income taxes
  and minority interest                                       10,859      (4,825)    (10,244)

Provision for income taxes                                     2,185         396       3,456

 Minority interest in (earnings) loss of
  consolidated subsidiary                                       (909)       (133)      2,371


 NET INCOME (LOSS)                                             7,765      (5,354)    (11,329)
 Less Series A Preferred Stock dividend                         (972)       (401)          -
 Less Series A Preferred Stock accretion                      (1,509)       (139)          -

Net income (loss) applicable to Common Stock                  $5,284     ($5,894)   ($11,329)


Net income (loss) per common and common equivalent share       $0.34      ($0.50)     ($1.07)

The accompanying notes to consolidated financial statements
are an integral part of these statements

</TABLE>
<TABLE>
ACC CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)


                                                                            December 31,      December 31,
                                                                                 1996              1995

<CAPTION>
CURRENT ASSETS:
 <S>                                                                             <C>                 <C>
 Cash and cash equivalents                                                       $2,035              $518
 Accounts receivable, net of allowance
  for doubtful accounts of $3,795 in
  1996 and $2,085 in 1995                                                        51,474            38,978
 Other receivables                                                                3,792             3,965
 Prepaid expenses and other assets                                                4,632             2,265
  TOTAL CURRENT ASSETS                                                           61,933            45,726


PROPERTY, PLANT, AND EQUIPMENT:
 At cost                                                                        119,398            83,623
 Less-accumulated depreciation and
  amortization                                                                  (38,946)          (26,932)
  TOTAL PROPERTY, PLANT, AND EQUIPMENT                                           80,452            56,691

OTHER ASSETS:
 Goodwill and customer base, net                                                 50,629            14,072
 Deferred installation costs, net                                                 4,312             3,310
 Other                                                                            6,705             4,185
  TOTAL OTHER ASSETS                                                             61,646            21,567

   TOTAL ASSETS                                                                 204,031           123,984

CURRENT LIABILITIES:
 Notes payable                                                                     $730            $1,966
 Current maturities of
  long-term debt                                                                  3,521             2,919
 Accounts payable                                                                15,351             7,340
 Accrued network costs                                                           22,908            28,192
 Other accrued expenses                                                          34,884            15,657
   TOTAL CURRENT LIABILITIES                                                     77,394            56,074

Deferred income taxes                                                             2,767             2,577

Long-term debt                                                                    6,007            28,050

Redeemable Series A Preferred Stock, $1.00
par value, $1,000 liquidation value,
cumulative, convertible, Authorized- 10,000 shares;
Issued - no shares in 1996 and 10,000 shares in 1995                                  0             9,448

Minority interest                                                                     0             1,428

SHAREHOLDERS' EQUITY:
 Preferred Stock, $1.00 par value, Authorized -
  1,990,000 shares; Issued - no shares                                                0                 0
 Class A Common Stock, $.015 par value
  Authorized - 50,000,000 shares;
  Issued - 17,684,361 in 1996 and
  12,925,889  in 1995                                                               265               194
 Class B Common Stock, $.015 par value,
  Authorized - 25,000,000 shares;
  Issued - no shares                                                                  0                 0
 Capital in excess of par value                                                 116,878            32,846
 Cumulative translation adjustment                                               (1,362)             (950)
 Retained earnings (deficit)                                                      3,692            (4,073)
                                                                                119,473            28,017
 Less-
 Treasury stock, at cost (1,089,884
   shares)                                                                       (1,610)           (1,610)
    TOTAL SHAREHOLDERS' EQUITY                                                  117,863            26,407

    TOTAL LIABILITIES AND
    SHAREHOLDERS' EQUITY                                                        204,031           123,984

The accompanying notes to consolidated financial statements are
an integral part of these balance sheets
</TABLE>
<TABLE>

ACC CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(Amounts in 000s, except share and per share data)
<CAPTION>
                                                                          Capital in Cumulative  Retained
                                                      Class A Common StockExcess of Translation  Earnings Treasury
                                                        Shares    Amount  Par Value  Adjustment (Deficit)   Stock    Total

<S>                                                   <C>            <C>    <C>           <C>     <C>      <C>      <C>
Balance, December 31, 1993                            11,306,208     $170   $19,500       ($565)  $13,684  ($1,283) $31,506

Stock options exercised                                  153,563        2       363         -          -        -       365
Employee stock purchase plan shares issued                19,131                150         -          -        -       150
Repurchase of shares to exercise options                   -                  -             -          -      (327)    (327)
Dividends ($.08 per common share)                          -                  -             -        (831)      -      (831)
Cumulative translation adjustment                          -                  -            (448)       -        -      (448)
   Net loss                                                -                  -             -     (11,329)      -   (11,329)

Balance, December 31, 1994                            11,478,902     $172   $20,013     ($1,013)   $1,524  ($1,610) $19,086

Stock options exercised                                   50,287        1       479         -       -           -       480
Sale of stock                                          1,237,500       18    11,078         -       -           -    11,096
Employee stock purchase plan shares issued                35,450        1       296         -       -           -       297
Stock warrants exercised                                 123,750        2     1,186         -       -           -     1,188
Stock warrants issued                                      -                    200         -       -           -       200
Accretion of Series A Preferred Stock                      -                   (139)        -       -           -      (139)
Series A Preferred Stock dividends                         -                   (401)        -       -           -      (401)
Acceleration of stock option vesting due to termination    -                    134         -       -           -       134
Dividends ($.02 per common share)                          -                  -             -        (243)      -      (243)
Cumulative translation adjustment                          -                  -              63     -           -        63
   Net loss                                                -                  -             -      (5,354)      -    (5,354)

Balance, December 31, 1995                            12,925,889     $194   $32,846       ($950)  ($4,073) ($1,610) $26,407

Stock options exercised                                  587,881        9     4,712         -       -           -     4,721
Class A Common Stock offerings                         3,018,750       45    62,849         -       -           -    62,894
Conversion of Series A Preferred Stock                   937,500       14    11,915         -       -           -    11,929
Employee stock purchase plan shares issued                19,341                343         -       -           -       343
Stock warrants exercised                                 195,000        3     2,077         -       -           -     2,080
Increase in investment in Canadian subsidiary              -                  1,254         -       -           -     1,254
Disqualifying dispositions                                 -                  3,000         -       -           -     3,000
Accretion of Series A Preferred Stock                      -                 (1,509)        -       -           -    (1,509)
Series A Preferred Stock dividends                         -                   (972)        -       -           -      (972)
Acceleration of stock option vesting due to termination    -                    206         -       -           -       206
Stock incentive rights issued                              -                    157         -       -           -       157
Cumulative translation adjustment                          -                  -            (412)    -           -      (412)
   Net income                                              -                  -             -       7,765       -     7,765

Balance, December 31, 1996                            17,684,361     $265  $116,878     ($1,362)   $3,692  ($1,610)$117,863


The accompanying notes to consolidated financial statements are an integral part of these statements.
</TABLE>
<TABLE>
ACC CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<CAPTION>
                                                                             FOR THE YEARS ENDED DECEMBER 31,
                                                                              1996          1995        1994
CASH FLOWS FROM OPERATING ACTIVITIES:
 <S>                                                                         <C>         <C>        <C>
 Net income (loss)                                                           $7,765      ($5,354)   ($11,329)

 Adjustments to reconcile net income (loss)
  to net cash provided by operating activities:
   Depreciation and amortization                                             16,433       11,614       8,932
   Deferred income taxes                                                      3,110          609       3,906
   Minority interest in earnings (loss) of consolidated subsidiary              909          133      (2,371)
   Unrealized foreign exchange (gain) loss                                     (758)         180         150
   Amortization of deferred financing costs                                     425          263           0
   (INCREASE) DECREASE IN ASSETS:
      Accounts receivable, net                                              (11,212)     (17,437)     (5,019)
      Other receivables                                                       1,955        1,782      (3,621)
      Prepaid expenses and other assets                                      (2,282)      (1,057)      1,030
      Deferred installation costs                                            (2,631)      (2,983)     (1,147)
      Other                                                                    (148)         846      (2,206)
   INCREASE (DECREASE) IN LIABILITIES:
      Accounts payable                                                        7,511       (7,013)      7,784
      Accrued network costs                                                  (5,837)      17,824       1,754
      Other accrued expenses                                                  9,008        4,560       3,230


        Net cash provided by operating activities                            24,248        3,967       1,093

CASH FLOWS FROM INVESTING ACTIVITIES:
  Cash received from sale of discontinued operations                              0            0       2,538
  Capital expenditures, net                                                 (33,030)     (12,424)    (20,682)
  Repurchase of minority interest                                           (32,092)       -            (226)
  Payment for purchase of subsidiary, net of cash acquired                    -           (2,313)      -
  Acquisition of customer base                                               (2,620)        (557)     (2,861)

        Net cash used in investing activities                               (67,742)     (15,294)    (21,231)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings under lines of credit                                           26,375      113,602      72,156
  Repayments under lines of credit                                          (46,680)    (119,204)    (47,054)
  Repayment of notes payable                                                 (1,996)       -           -
  Repayment of long-term debt, other than lines of credit                    (3,704)      (3,078)     (1,591)
  Proceeds from issuance of common stock                                     72,669       13,261         189
  Proceeds from issuance of convertible debt                                  -           10,000       -
  Financing costs                                                              (495)      (2,876)      -
  Dividends paid                                                              -             (451)     (4,241)

        Net cash provided by financing activities                            46,169       11,254      19,459

Effect of exchange rate changes on cash                                      (1,158)        (430)        233

Net increase (decrease) in cash                                               1,517         (503)       (446)

Cash and cash equivalents at beginning of year                                  518        1,021       1,467

Cash and cash equivalents at end of year                                     $2,035         $518      $1,021

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
  Interest                                                                   $2,840       $4,146      $1,656

  Income taxes                                                               $1,808         $203        $280

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

  Equipment purchased through capital leases                                  -           $7,389      $3,077

  Fair value of assets acquired                                             $5,136       $10,800       -
    Less -  cash paid at acquisition date                                   (3,001)       (1,500)      -
    Less  - short term notes payable                                          -           (2,966)      -
  Liabilities assumed                                                       $2,135        $6,334       -

  Other assets purchased with long-term debt                                $2,775          -           $540

  Conversion of convertible debt to Series A Preferred Stock                  -          $10,000       -

  Conversion of Series A Preferred Stock to Class A Common
  Stock, including cumulative dividends and accretion                      $11,929        -           -

The accompanying notes to consolidated financial statements are an integral part of these statements.
</TABLE>
<TABLE>
Selected Quarterly Financial Data    (unaudited)

The following table sets forth certain unaudited quarterly financial data for the preceding eight quarters through the quarter
ended December 31, 1996.  In the opinion of management, the unaudited information set forth below has been prepared on the same
basis as the audited information set forth elsewhere herein and includes all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the information set forth herein.  The operating results for any quarter are not
necessarily indicative of results for any future period.
<CAPTION>
(Amounts in 000s except per share data)        1995                             1996

                                 March 31 June 30  Sept. 30 Dec. 31  March 31 June 30 Sept. 30  Dec. 31


<S>                              <C>      <C>      <C>      <C>      <C>      <C>      <C>       <C>
Revenue                          $39,708  $41,633  $45,911  $61,607  $66,855  $80,089  $77,285   $84,538

Gross profit                      14,963   15,319   17,806   25,929   25,247   26,709   28,470    34,742

Depreciation and
    amortization                   2,532    2,863    3,011    3,212    3,619    4,176    4,266     4,372

Income (loss) from
     operations                     (446)    (855)    (364)   1,876    2,991    3,179    3,209     4,845

Total other income
      (expense)                     (948)  (1,473)  (1,354)  (1,265)  (1,512)    (896)    (164)    (793)

Net income (loss)                ($1,654)( $2,250) ($1,849)    $395     $856   $1,458   $2,199    $3,252

Net  income (loss) per common
     and common equivalent share  ($0.16) ($0.19) ($0.15)  $0.00    $0.03   $0.05   $0.06    $0.18

The Company's quarterly operating results have fluctuated and will continue to
fluctuate from period to period depending upon factors such as the success of
the Company's efforts to expand its geographic and customer base; changes in,
and the timing of, expenses relating to, the expansion of the Company's
network; regulatory and competitive factors; the development of new services
and sales and marketing; and changes in pricing policies by the Company or its
competitors.  In view of the significant historic growth of the Company's
operations, the Company believes that period-to-period comparisons of its
financial results should not be relied upon as an indication of future
performance and that the Company may experience significant period-to-period
fluctuations in operating results in the future. 

Historically, a significant percentage of the Company's revenue has been
derived from university and college administrators and students, which caused
its business to be subject to seasonal variation.  To the extent that the
Company continues to derive a significant percentage of its revenues from
university and college customers, the Company's results of operations could
remain susceptible to seasonal variation.

The acquisition of Metrowide Communications and the management restructuring
charges in 1995, and the $9.0 million of non-recurring carrier revenue in the
second quarter of 1996 affect the comparability of the quarterly financial data
set forth above. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations.
</TABLE>
ACC CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Summary of Significant Accounting Policies

     A.   Principles of Consolidation:

      The  consolidated financial statements include all accounts
of ACC Corp. (a Delaware corporation) and its direct and indirect
subsidiaries  ("the  Company"  or  "ACC").   Principal  operating
subsidiaries  include:  ACC Long Distance Corp. and ACC  National
Telecom   Corp.  ("ACC  US"),   ACC  TelEnterprises  Ltd.   ("ACC
Canada"),  and  ACC  Long  Distance  UK  Ltd.  ("ACC  UK").   All
operating  subsidiaries are wholly-owned, with the  exception  of
ACC   TelEnterprises  Ltd.  (See  B  below).    All   significant
intercompany accounts and transactions have been eliminated.

      The  accompanying consolidated financial statements reflect
the  results  of  operations of acquired  companies  since  their
respective acquisition dates.

     B.   Minority Interest:

      On  July  6, 1993, the Company's then wholly-owned Canadian
subsidiary, ACC TelEnterprises Ltd., completed an initial  public
offering  of 2 million common shares for Cdn. $11.00  per  share.
The   Company   received  net  proceeds  of  approximately   Cdn.
$20.7  million after underwriters' fees and before  other  direct
costs  of the offering of Cdn. $1.3 million.  As a result of  the
offering, ACC Corp.'s ownership was reduced to approximately 70%.

     Minority interest represents the non-Company owned
shareholder interest in ACC TelEnterprises Ltd.'s equity
primarily resulting from the 1993 public offering. In the third
quarter of 1996, the Company made a cash tender offer of Cdn.
$21.50 per share for the repurchase of the minority-held shares.
In September 1996, the tender offer was approved by the Boards of
Directors of both companies and, in the fourth quarter,
approximately 1.9 million of the outstanding shares, representing
approximately 81.5% of the minority interest, were tendered and
purchased by the Company for Cdn. $40.4 million (US $29.5
million), increasing the Company's ownership in ACC Canada to
93.9% as of December 31, 1996. As fewer than 90% of the publicly
held shares were deposited under the tender offer, the Company
formed a subsidiary for the purpose of acquiring the remaining
minority interest of ACC Canada. Prior to December 31, 1996, the
shareholders of ACC Canada approved the amalgamation of ACC
Canada and the new subsidiary.  The amalgamation was effective
January 1, 1997 and the remaining minority interest shares of ACC
Canada were replaced with shares of the new subsidiary.
Subsequent to December 31, these shares were purchased by the new
subsidiary at a price of Cdn. $21.50 per share (see G below).

     C.    Revenue:

     The Company records as long distance toll revenue the amount
of  communications services rendered, as measured by the  related
minutes  of toll traffic processed or flat-rate services  billed,
after deducting an estimate of the traffic or services which will
neither be billed nor collected.  Local service and other revenue
represents  revenue derived from the provision of local  exchange
services,  including local dial tone, direct  access  lines,  and
monthly  subscription  fees, as well as  data  services,  and  is
recorded as the services are provided and billed.

     D.   Other Receivables:

       Other   receivables  at  December  31,  1996  consist   of
receivables  primarily related to taxes receivable (approximately
$1.8    million),   the   financing   of   university    projects
(approximately   $0.5   million),   officer   notes    receivable
(approximately  $0.4  million), and other  individually  nominal,
miscellaneous  receivables (approximately $1.1  million).   Other
receivables at December 31, 1995 consisted of receivables related
to financing of university projects (approximately $3.0 million),
taxes   receivable  (approximately  $0.7  million),   and   other
individually  nominal,  miscellaneous receivables  (approximately
$0.3 million).

     E.   Property, Plant, and Equipment:

      The  Company's property, plant, and equipment consisted  of
the  following  at  December  31,  1996  and  1995  (dollars   in
thousands):

                                                    1996       1995

     Equipment                                    $90,257   $69,174
     Computer software and software licenses       12,682     6,869
     Other                                         16,459     7,580
     Total                                       $119,398   $83,623

      Depreciation  and  amortization  of  property,  plant,  and
equipment  is  computed using the straight-line method  over  the
following estimated useful lives:

     Leasehold improvements                        Life of lease
     Equipment,  including assets under capital
     leases                                        2 to 15 years
     Computer software and software licenses       5 to 7 years
     Office equipment and fixtures                 3 to 10 years
     Vehicles                                      3 years

      Equipment  and  computer software include  assets  financed
under  capital lease obligations.   A summary of these assets  at
December 31, 1996 and 1995 is as follows (dollars in thousands):
                                                   1996      1995

     Cost                                        $14,336  $13,935
     Less - accumulated amortization              (6,194)  (4,538)
     Total, net                                   $8,142   $9,397

     Betterments, renewals, and extraordinary repairs that extend
the  life  of  the  asset  are  capitalized;  other  repairs  and
maintenance  are expensed.  The cost and accumulated depreciation
applicable  to assets retired are removed from the  accounts  and
the gain or loss on disposition is recognized in income.

      During  1995,  the Company adopted Statement  of  Financial
Accounting  Standards  (SFAS)  No.  121,  "Accounting   for   the
Impairment of Long-Lived Assets and for Long-Lived Assets  to  be
Disposed Of."  The effect of adopting SFAS No. 121 was immaterial
to  the  consolidated financial statements.  The Company  reviews
long-lived  assets  to  be  held  and  used,  including   related
goodwill,  for  possible impairment when  events  or  changes  in
circumstances  indicate that their carrying amounts  may  not  be
recoverable.   If  such  events or changes in  circumstances  are
present, a loss is recognized to the extent the carrying value of
the  asset is in excess of the sum of the undiscounted cash flows
expected  to  result from the use of the asset and  its  eventual
disposition.

     F.   Deferred Costs:

      Costs incurred for the installation of direct access  lines
are  amortized on a straight-line basis over the estimated useful
life of three to ten years.  Accumulated amortization of deferred
installation  costs  totaled  approximately  $6.4   million   and
$4.5 million at December 31, 1996 and 1995, respectively.

     G.   Goodwill and Customer Base:

      Each of the Company's acquisitions have been accounted  for
as purchases and, accordingly, the purchase prices were allocated
to  the assets and liabilities of the acquired companies based on
their fair values at the acquisition date.

      As  of  August  1, 1995, ACC TelEnterprises  Ltd.  acquired
Metrowide  Communications  ("Metrowide").   Metrowide,  based  in
Toronto,  Canada,  provides local and long distance  services  to
customers  based in Ontario and Quebec, Canada.  The  results  of
operations   of  Metrowide  are  included  in  the   accompanying
financial  statements since the date of acquisition.   The  total
cost of the acquisition was Cdn. $15.1 million (US $11.0 million)
including  Cdn.  $9.1  million (US $6.6 million)  of  liabilities
assumed.   All  payments  related to the purchase  price  of  the
acquisition have been made as of December 31, 1996.

     In May 1996, ACC Canada purchased certain assets and assumed
certain liabilities of Internet Canada Corp., a company based  in
Toronto,  Canada, which is engaged in the business  of  providing
Internet  access and website design and development. The purchase
price  was  Cdn.  $5.2  million.  All  payments  related  to  the
purchase  price of the acquisition have been made as of  December
31, 1996.

      Goodwill of Cdn. $11.1 million (US $8.1 million) associated
with  the  ACC  TelEnterprises  Ltd.  asset  purchases  is  being
amortized over 20 years.

      Also in 1996, as described above, the Company repurchased a
significant   portion   of   the   minority   interest   in   ACC
TelEnterprises Ltd.  The minority-held shares were purchased  for
Cdn.  $21.50 per share, which represented a premium over the book
value  of  the  shares. The total amount paid in  1996  for  this
acquisition was Cdn. $43.7 million (US $32.0 million).  In  1997,
the  remaining 6.1% interest was acquired for Cdn.  $9.0  million
(US  $6.6  million).  The resulting goodwill, approximately  Cdn.
$48.0  million (US $35.0 million), will be amortized  over  a  40
year life.

      The  following unaudited pro forma summary gives effect  to
the  acquisition of Internet Canada Corp. and the acquisition  of
the  minority interest of ACC Canada as if they had  occurred  at
the  beginning of 1995, after giving effect to certain pro  forma
adjustments,  including elimination of the minority  interest  in
earnings of ACC Canada, amortization of the goodwill and customer
base  acquired  in  the  acquisitions, interest  expense  on  the
acquisition  financing,  and related income  tax  effects.   This
unaudited  pro  forma  financial  information  is  presented  for
informational  purposes only and may not  be  indicative  of  the
results of operations as they would have been if the acquisitions
had  occurred  at  the beginning of 1995, nor is  it  necessarily
indicative  of the results of operations which may occur  in  the
future.    Anticipated  efficiencies  from  the  combination   of
Internet  Canada  and ACC Canada are not fully  determinable  and
therefore have been excluded from the amounts included in the pro
forma summary below (in thousands, except per share data).
                                             (Unaudited)
                                        Years ended December 31,
                                            1996         1995

Total revenue                             $308,767     $188,866
Income (loss) from    operations            13,175       (1,066)
Net income(loss)                             5,372       (8,659)
Share data:
Net income (loss)                            $0.34       $(0.74)
Net   income   (loss)   applicable
to   common   stock                          $0.18       $(0.79)
Weighted    average   shares
outstanding                                 15,641       11,685

      Accumulated  amortization of all goodwill  approximated  US
$0.5  million  and $0.1 million at December 31,  1996  and  1995,
respectively.  The Company amortizes acquired customer bases on a
straight-line  basis  over  five  to  seven  years.   Accumulated
amortization of customer base totaled approximately $5.5  million
and $3.1 million at December 31, 1996 and 1995, respectively.
     H.   Common and Common Equivalent Shares:

      Primary earnings per common share are based on the weighted
average  number of common shares outstanding during the year  and
the assumed exercise of dilutive stock options and warrants, less
the  number of treasury shares assumed to be purchased  from  the
proceeds using the average market prices of the Company's Class A
Common Stock.

     The weighted average number of common shares outstanding for
the  fiscal  years ended December 31, 1996, 1995, and  1994  were
approximately 15.641 million shares, 11.685 million  shares,  and
10.603 million shares, respectively.

      Primary  earnings per share were computed by adjusting  net
income (loss) for dividends and accretion applicable to Series  A
Preferred  Stock, prior to its conversion into common  shares  in
October 1996.

      Fully diluted earnings per share are not presented for  the
years  ended December 31, 1996, 1995, or 1994 because the  effect
on earnings per share of common stock equivalents and potentially
dilutive securities would be anti-dilutive.

      All  references to common and common equivalent shares have
been  retroactively restated to reflect an August 8, 1996  three-
for-two stock dividend.

     I.   Foreign Currency Translation:

      Assets  and liabilities of ACC TelEnterprises Ltd. and  ACC
Long  Distance  UK  Ltd.,  operating in  Canada  and  the  United
Kingdom,  respectively, are translated into US dollars using  the
exchange  rates in effect at the balance sheet date.  Results  of
operations are translated using the exchange rate at the date  of
the  transaction.  The effects of exchange rate  fluctuations  on
translating  foreign  currency assets  and  liabilities  into  US
dollars  are  included  as  part of  the  cumulative  translation
adjustment  component of shareholders' equity,  while  gains  and
losses  resulting from foreign currency transactions are included
in net income.

     J.   Income Taxes:

      The  Company  accounts for income taxes in accordance  with
Statement  of  Financial  Accounting Standards  (SFAS)  No.  109,
"Accounting for Income Taxes."  Deferred income taxes reflect the
future  tax consequences of differences between the tax bases  of
assets  and liabilities and their financial reporting amounts  at
each year-end.

     K.   Cash Equivalents:

      The  Company considers investments with a maturity of  less
than three months to be cash equivalents.

     L.   Derivative Financial Instruments:

      The Company uses derivative financial instruments to reduce
its  exposure  to  market risks from changes in foreign  exchange
rates  and  interest rates.  The Company does not hold  or  issue
financial  instruments  for speculative  trading  purposes.   The
derivative  instruments used are currency forward  contracts  and
interest  rate  swap  agreements.   These  derivatives  are  non-
leveraged and involve little complexity.

     The Company monitors and controls its risk in the derivative
transactions referred to above by periodically assessing the cost
of  replacing, at market rates, those contracts in the  event  of
default  by the counterparty.  The Company believes such risk  to
be   remote.    In  addition,  before  entering  into  derivative
contracts, and periodically during the life of the contracts, the
Company reviews the counterparty's financial condition.

      The  Company enters into contracts to buy and sell  foreign
currencies in the future in order to protect the US dollar  value
of   certain  currency  positions  and  future  foreign  currency
transactions.   The  gains  and losses  on  these  contracts  are
included  in  income  in the period in which the  exchange  rates
change.  The discounts and premiums on the forward contracts  are
amortized over the life of the contracts.

      At  December  31,  1996, the Company had  foreign  currency
contracts outstanding to sell forward the US dollar equivalent of
Cdn.  $38.4  million  and  14.5 million pounds  sterling.   These
contracts mature throughout 1997.

      At  December  31,  1995, the Company had  foreign  currency
contracts outstanding to sell forward the US dollar equivalent of
Cdn.  $37.9  million and 5.3 million pounds sterling and  to  buy
forward  the  US  dollar  equivalent of Cdn.  $10.0  million  and
2.7 million pounds sterling.

      The  Company  has entered into a cross-currency  rate  swap
transaction with a financial institution which hedges  a  portion
of  intercompany  debt  from  the Canadian  subsidiary  and  also
converts  the  variable rate of interest to a  fixed  rate.   The
agreement,  which commenced on December 31, 1996, has a  two-year
term.   Under  the agreement, the Company pays a  fixed  rate  of
interest  on a Canadian dollar note and receives a variable  rate
of  interest on a US dollar receivable.  The Company's obligation
is  Cdn. $33.5 million, and quarterly interest payments at a rate
of  6.98%  are due, commencing on March 31, 1997.  The  Company's
receivable under this agreement is $25.0 million, and interest is
due  quarterly  at a rate of US prime, commencing  on  March  31,
1997.   The net of the receivable and the payable is reflected on
the balance sheet at December 31, 1996.

      The  Company  may  use interest rate swaps  to  effectively
convert  variable rate obligations to a fixed  rate  basis.   The
differentials  to be received or paid under these agreements  are
recognized  as an adjustment to interest expense related  to  the
debt.   Gains and losses on terminations of interest  rate  swaps
are recognized when terminated in conjunction with the retirement
of  the  associated debt.  The fair value of interest  rate  swap
agreements is estimated based on quotes from the market makers of
these  instruments and represents the estimated amounts that  the
Company  would  expect  to  receive or  pay  to  terminate  these
agreements.   The  Company's exposure related to  these  interest
rate  swap agreements is limited to fluctuations in the  interest
rate.   At December 31, 1996, the Company was not a party to  any
interest rate swap agreements.

     M.   Financial Instruments:

      The  carrying  amounts of cash and cash equivalents,  trade
receivables, other current assets, accounts payable, and  amounts
included  in  accruals  meeting the  definition  of  a  financial
instrument  approximate  fair value  because  of  the  short-term
maturity  of  these instruments.  The carrying value and  related
estimated  fair  values  for  the Company's  remaining  financial
instruments are as follows:
<TABLE>
                                                December 31, 1996           December 31,1995
(in 000s)                                     Carrying    Estimated      Carrying     Estimated
                                               Amount     Fair Value     Amount      Fair Value
<S>                                            <C>          <C>           <C>        <C>   

Off balance sheet financial instruments:
Foreign   exchange   forward   contracts          -        $52,800      $   -        $24,500

Foreign  currency  swap  agreement receivable    25,000     25,000          -            -
Foreign   currency   swap  agreement  payable    24,516     24,516          -            -
Lines    of   credit                                730        730         20,973     20,973
Long  term  debt,  including current portion      9,528      9,528         11,962     11,962
Series A Preferred Stock                            -         -             9,448     10,400
</TABLE>
      Based on borrowing rates currently available to the Company
for  loans  and lease agreements with similar terms  and  average
maturities, the fair value of its debt approximates its  recorded
value.   Foreign currency contract obligations are  estimated  by
obtaining  quotes from brokers.  Letters of credit  and  line  of
credit  amounts are based on fees currently charged  for  similar
arrangements.

          N.   Stock-Based Compensation:
          
      In  1995,  the Financial Accounting Standards Board  issued
SFAS  No.  123, "Accounting for Stock-Based Compensation,"  which
permits  either  recording the estimated   value  of  stock-based
compensation over the applicable vesting period or disclosing the
unrecorded cost and the related effect on earnings per  share  in
the  notes to the financial statements.  In the current year, the
Company  has elected to comply with the disclosure provisions  of
the  statement.   The  effects of  SFAS  123  in  the  pro  forma
disclosures are not indicative of future amounts.  The  statement
does not apply to awards prior to 1995, and additional awards are
anticipated.

          O.   Use of Estimates:

      The  preparation of financial statements in conformity with
generally  accepted accounting principles requires management  to
make  estimates and assumptions that affect the reported  amounts
of assets and liabilities and disclosure of contingent assets and
liabilities  at  the  date of the financial  statements  and  the
reported  amounts of revenues and expenses during  the  reporting
period.  Actual results could differ from those estimates.

     P.   Reclassifications:

      Certain  reclassifications have  been  made  to  previously
reported  balances  for  1995 and 1994 to  conform  to  the  1996
presentation.

2.   Operating Information

     A.  Description of Business

       ACC  is  a  switch-based  provider  of  telecommunications
services  in  the United States, Canada, and the United  Kingdom.
The  Company  primarily  offers long distance  telecommunications
services   to   a   diversified  customer  base  of   businesses,
residential  customers, and educational institutions.   ACC  also
provides  local telephone service as a switch-based  provider  of
local exchange services in upstate New York and as a reseller  of
local  exchange  Centrex services in Ontario and Quebec,  Canada.
ACC  primarily targets business customers with both local service
and  long  distance  needs, selected residential  customers,  and
colleges and universities.  For the year ended December 31, 1996,
long  distance revenues accounted for approximately 91% of  total
Company  revenues,  while local exchange revenues  and  data-line
sales were 4% and 2%, respectively, of total Company revenues.

      ACC  operates  a telecommunications network  consisting  of
seven  long distance international and domestic switches  located
in the United States, Canada, and the United Kingdom; three local
exchange  switches  in  the  United States;  leased  transmission
lines;  and  network  management  systems  designed  to  optimize
traffic  routing.   The Company also has plans to  install  three
additional  long distance switches in Canada, the US and  the  UK
and  three additional local exchange switches in the northeastern
US.

      At  December 31, 1996, approximately $15.5 million  of  the
Company's    telecommunications   equipment   was   located    on
55  university, college, and preparatory school campuses  in  the
northeastern  United States and in the United Kingdom.   Each  of
these  institutions  has signed agreements, with  original  terms
ranging  from  three  to eleven years, for  the  provision  of  a
variety of services by the Company.

      In  the  United States, the Federal Communications Commission
("FCC") and relevant state Public Service Commissions ("PSCs") have
the   authority  to  regulate  interstate  and  intrastate   rates,
respectively, ownership of transmission facilities, and  the  terms
and  conditions  under which the Company's services  are  provided.
Legislation that substantially revises the US Communications Act of
1934  (the  "US  Communications  Act")  was  signed  into  law   on
February  8,  1996.   The legislation provides specific  guidelines
under  which the regional operating companies ("RBOCs") can provide
long distance services, which will permit the RBOCs to compete with
the  Company  in  the provision of domestic and international  long
distance  services.  Further, the legislation, among other  things,
opens   local  service  markets  to  competition  from  any  entity
(including  long  distance carriers such as AT&T, cable  television
companies, and utilities).

      Because  the  legislation opens the Company's US  markets  to
additional competition, particularly from the RBOCs, the  Company's
ability  to  compete could be adversely affected.  Moreover,  as  a
result  of  and to implement the legislation, certain  federal  and
other governmental regulations will be amended or modified, and any
such amendment or modification could have a material adverse effect
on  the  Company's business, results of operations,  and  financial
condition.

      In Canada, services provided by ACC TelEnterprises Ltd. are
subject  to  or affected by certain regulations of  the  Canadian
Radio-television and Telecommunications Commission (the  "CRTC").
The  CRTC  is  in  the  process  of  examining  the  barriers  to
competition  in the local telephone market and plans to  announce
rules  for local competition in 1997 for implementation in  1998.
These rules will enable ACC Canada to bundle services and provide
customers with local as well as long distance services  in  areas
that  are  not  presently  open to competition.   The  CRTC  also
mandated  in 1996 that local phone companies provide  pay  phones
with swipe access for competitors' calling cards.  Implementation
of  these rules will enable ACC Canada to improve its competitive
position in the calling card market.

       The  telecommunications  services  provided  by  ACC  Long
Distance  UK  Ltd.  are  subject to and affected  by  regulations
introduced   by   The  Office  of  Telecommunications,   the   UK
telecommunications regulatory authority ("Oftel").  In  1997,  it
is  expected  that  Oftel  will  address  the  issues  of  number
portability for 800 numbers and equal access in the UK.

     In addition to regulation, the Company is subject to various
risks  in  connection with the operation of its business.   These
risks   include,   among  others,  dependence   on   transmission
facilities-based  carriers and suppliers, price competition,  and
competition from larger industry participants.

       Concentrations  with  respect  to  trade  receivables  are
limited,  except  with respect to resellers,  due  to  the  large
number  of customers comprising the Company's customer  base  and
their  dispersion across many different industries and geographic
regions.   At  December  31,  1996,  approximately  31%  of   the
Company's  billed  accounts  receivable  balance  was  due   from
resellers.

     B.   Equal Access Costs:

     During 1994, the Company initiated the process of converting
its  network  to equal access for its Canadian customers.   Costs
associated with this process were approximately  $2.2 million and
included   maintaining   duplicate  network   facilities   during
transition,   recontacting  customers,  and  the   administrative
expenses  associated  with accumulating  the  data  necessary  to
convert the Company's customer base to equal access.

3.   Debt, Lines of Credit, and Financing Arrangements

     A.   Debt:
<TABLE>
      The  Company  had  the  following debt  outstanding  as  of
December 31, 1996 and 1995 (dollars in thousands):
<CAPTION>
                                                                 1996       1995

     <S>                                                        <C>      <C>
     Senior credit facility                                     $  -     $20,973
     Working capital lines of credit                              730        -
     Capitalized lease obligations payable in total monthly
          installments of $369 including interest, with rates
          ranging from 7.0% to 28.0%, maturing through
          2000, collateralized by related equipment             9,528      9,996
     Notes payable to previous Metrowide owners,
          interest rates ranging from 7.5% to 9.0%                -        1,966
                                                              $10,258    $32,935
     Less current maturities                                   (4,251)    (4,885)
                                                               $6,007    $28,050


                                                                 Year   Amount
                                                              (dollars in thousands)

     Maturities of debt, including capital lease obligations,
          are as follows at December 31, 1996:                   1997   $ 4,251
                                                                 1998     3,216
                                                                 1999     1,976
                                                                 2000       815
                                                           Thereafter         -
                                                                        $10,258
</TABLE>
      Subsequent to December 31, 1996, the Company made an  early
repayment,   using  funds  borrowed  under  the  amended   credit
facility,  of  a  capitalized lease obligation  which  had  total
future payments, included in the above schedule, of approximately
$4.0 million.

     B.   Senior Credit Facility and Lines of Credit:

      On July 21, 1995, the Company entered into an agreement for
a  $35.0 million five year senior revolving credit facility  with
two  financial institutions.  Borrowings are limited individually
to  $5.0  million for ACC Long Distance UK Ltd. and $2.0  million
for  ACC  National Telecom Corp., with total borrowings  for  the
Company  limited to $35.0 million.  Initial borrowings under  the
agreement  were  used  to  pay down and terminate  the  Company's
previously  existing lines of credit and to pay fees  related  to
the  transaction.  Subsequent borrowings have been, and will  be,
used  to  finance  capital expenditures and  to  provide  working
capital.  Fees associated with obtaining the financing are  being
amortized over the term of the agreement.

      In  conjunction with the closing, the Company issued  to  a
financial  advisor  warrants to purchase  45,000  shares  of  the
Company's Class A Common Stock at an exercise price of $10.67 per
share.  The warrants were exercised in October 1996.

     The agreement limits the amount that may be borrowed against
this  facility based on the Company's operating cash  flow.   The
agreement  also contains certain covenants including restrictions
on  the  payment of dividends, maintenance of a maximum  leverage
ratio,  minimum debt service coverage ratio, maximum fixed charge
coverage  ratio, and minimum net worth, all as defined under  the
agreement  and subjective covenants.  At December 31,  1996,  the
Company   had  available  $32.4  million  under  this   facility.
Borrowings  under  the facility are secured  by  certain  of  the
Company's assets and will bear interest at either the LIBOR  rate
or  the  base  rate  (base rate being the greater  of  the  prime
interest rate or the federal funds rate plus .5%), with additional
percentage  points  added based on a ratio of debt  to  operating
cash  flow,  as  defined in the agreement.  The weighted  average
interest rate for borrowings during 1996 was 7.8%.

      Under  the agreement, the Company is obligated to  pay  the
financial  institution an aggregate contingent  interest  payment
based on the minimum of $750,000 or the appreciation in value  of
140,000 shares of the Company's Class A Common Stock over the 18-
month   period  ending  January  21,  1997,  but  not  to  exceed
$2.1 million.  A payment of $2.1 million was made on January  15,
1997  in  conjunction with the amendment to the credit  facility,
and  was  reflected  as an accrued expense  on  the  accompanying
balance sheet at December 31, 1996.

      In  connection with the agreement, the Company  must  enter
into  hedging agreements with respect to interest rate  exposure.
The  agreements  have certain conditions regarding  the  interest
rates,   are   subject   to   minimum   aggregate   balances   of
$10.0  million,  and must have durations of at least  two  years.
The  Company entered into three interest rate swap agreements  in
1995   to   convert  the  variable  interest  rate   charged   on
$11.5 million of the outstanding credit facility to a fixed rate.
Under  these agreements, the Company was required to pay a  fixed
rate of interest on a notional principal balance.  In return, the
Company  receives a payment of an amount equal  to  the  variable
rate  calculated as of the beginning of the month.   These  three
interest  rate swap agreements outstanding at December  31,  1995
were  cancelled during 1996 when the outstanding balance  on  the
line  of credit was repaid using proceeds from the Class A Common
Stock offering (see Note 6A).   There were no interest rate  swap
agreements in place at December 31, 1996.

      At  December  31, 1996, the Company had issued  letters  of
credit  totaling $2.6 million which reduce the available  balance
of   the  credit  facility.   The  letters  of  credit  guarantee
performance  to  third parties.  Management does not  expect  any
material   losses   to  result  from  these   off-balance   sheet
instruments because the Company will meet its obligations to  the
third parties.

      On  January 14, 1997, the Company signed an agreement  with
the same financial institution to provide a $100.0 million credit
facility to the Company which will amend and restate the  current
$35.0  million  facility  discussed  above.  The  amended  credit
facility   is   syndicated  among  five  financial  institutions.
Borrowings  can  be  made in US dollars,  Canadian  dollars,  and
British pounds, and are limited individually to $30.0 million for
ACC  Canada, $20.0 million for ACC UK, and $15.0 million for  the
local   exchange  business  of  the  US  operation,  with   total
borrowings for the Company limited to $100.0 million. The amended
facility  will  be used to finance capital expenditures,  provide
working  capital,  and to provide capital for  acquisitions.  The
amended facility provides for financial covenants which are  less
restrictive  than  the existing facility. The  maximum  aggregate
principal  amount  of  the amended facility  is  required  to  be
reduced by $8.0 million per quarter commencing on March 31,  1999
until  December  31,  2000,  and  by  $9.0  million  per  quarter
commencing  on  March  31, 2001 until maturity  of  the  loan  in
January 2002.

     C.     Working Capital Lines of Credit:

      The  Company  has two working capital lines of  credit  for
daily  cash management.  The first is a US $1.0 million facility,
due  on  demand,  with  an  interest  rate  equal  to  US  prime.
Outstanding borrowings on this line at December 31, 1996  totaled
$730,000  and the weighted average interest expense for the  year
ended  December 31, 1996 was 8.25%.  The second line  is  a  Cdn.
$1.0 million facility, due on demand, with an interest rate equal
to  Canadian prime plus .5%.  There were no outstanding borrowings
on this line at December 31, 1996.

4.   Income Taxes

      The  following  is  a summary of the US and  non-US  income
(loss) from operations before provision for (benefit from) income
taxes and minority interest, the components of the provision  for
(benefit  from)  income taxes and deferred income  taxes,  and  a
reconciliation  of  the  US statutory  income  tax  rate  to  the
effective income tax rate.

      Income (loss) from operations before provision for (benefit
from) income taxes and minority interest (dollars in thousands):

                                          1996      1995      1994

     US                                 $  6,675  $ 1,510    $ 1,301
     Non-US                                4,184   (6,335)   (11,545)
                                        $ 10,859  $(4,825)  $(10,244)

     Provision  for  (benefit  from)  income  taxes
      (dollars  in thousands):

                                          1996       1995     1994

     Current:
       US                                 $2,689     $581      $(867)
       Non-US                                 -        -          -
                                          $2,689     $581      $(867)

     Deferred:
       US                                   (504)    (185)     1,298
       Non-US                                  -        -      3,025
                                            (504)    (185)     4,323
                                          $2,185     $396     $3,456

      Provision for (benefit from) deferred income taxes
       (dollars in thousands):

                                          1996       1995     1994

     Difference between tax and book
      depreciation and amortization       $526      $772     $2,178
     Valuation allowance                    98     2,223      6,851
     Contingent interest                  (459)       -         -
     Severance costs                      (568)         -         -
     Software development costs               -     (502)       502
     Other temporary differences          (101)     (103)       171
     Net operating loss                     -     (2,575)    (5,379)
                                         ($504)    ($185)    $4,323

      Reconciliation of US statutory income tax rate to  effective
      income tax rate:

                                          1996       1995      1994

US statutory income tax rate              34.0%     (34.0% )  (34.0%)
Non-deductible goodwill and customer base  2.6        2.7       1.2
Foreign income taxes, including
     valuation allowance                 (13.1)      44.6      66.6
State tax benefit                           -        (2.4)      -
Other                                     (3.4)      (2.7)      -
Effective income tax rate                 20.1%       8.2%     33.8%

      Deferred income tax assets and liabilities reflect  the  net
tax  effects of temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the
amounts  used for income tax purposes.  At December 31, 1996,  the
Company  had  unused  tax benefits of approximately  $6.7  million
related  to  non-US  net  operating  loss  carryforwards  totaling
$16.5 million for income tax purposes, of which $7.2 million  have
an  unlimited  life,  $2.8 million expire in  2000,  $5.0  million
expire  in  2001,  $0.9 million expire in 2002, and  $0.5  million
expire  in  2003.   In addition, the Company had $1.0  million  of
deferred tax assets related to non-US temporary differences.   The
valuation allowance was decreased by $3.3 million to approximately
$7.7 million to reflect tax benefits recognized during 1996.   The
remaining   valuation  allowance  reflects  the   uncertainty   of
realizing the benefit of the non-US loss carryforwards.

      The following is a summary of the significant components  of
the  Company's deferred tax assets and liabilities as of  December
31, 1996 and 1995 (dollars in thousands):

                                                     1996      1995

     Deferred tax assets:
       Depreciation and amortization - non-US        $967    $1,122
       Contingent interest                            459         -
       Severance costs                                568         -
       Other non-deductible reserves and accruals     528       647
       Non-US operating loss carryforwards          6,702     9,816
       Less - valuation allowance for non-US
        deferred tax assets                        (7,669)  (10,938)
       Net deferred tax assets                      1,555       647
     Deferred tax liabilities:
       Depreciation and amortization               (2,767)   (2,577)
                                                  $(1,212)  $(1,930)

5.   Redeemable Preferred Stock

      On  May  22,  1995, the Company completed  a  $10.0  million
private placement of 12% subordinated convertible debt to a  group
of  investors.   The notes were converted into  10,000  shares  of
cumulative,  convertible Series A Preferred Stock on September  1,
1995.  The  Series  A Preferred Stock had a liquidation  value  of
$1,000 per share, and accrued cumulative dividends, compounded  on
the  accumulated and unpaid balance, as defined, at a rate of  12%
annually.  The  Series  A  Preferred Shares  were  converted  into
937,500  shares of Class A Common Stock at a conversion  price  of
$10.67  per share in October 1996.  Pursuant to the terms  of  the
Series A Preferred Stock, the cumulative dividends were forfeited,
due to conversion by the investors.

      The  Series  A Preferred Stock contained terms of  mandatory
redemption,  on the seventh anniversary of the private  placement,
at  a  price per share equal to the greater of (i) the liquidation
value  of  $1,000 per share plus all accrued and unpaid dividends;
or  (ii)  the fair market value of the underlying Class  A  Common
Stock into which the Series A Preferred Stock was convertible.

      Concurrent with the private placement, warrants to  purchase
150,000  shares of the Company's Class A Common Stock were  issued
at  an initial exercise price of $10.67 per share.  These warrants
were  exercised in October, 1996.  In addition, the Company issued
warrants  to  purchase Class A Common Stock that  were  to  become
exercisable upon one or more optional repayments of the  Series  A
Preferred Stock at an exercise price of $10.67 per share,  subject
to  adjustments, as defined, and permitted each holder to  acquire
initially  the same number of shares of Class A Common Stock  into
which  the  Series  A Preferred Stock was convertible  as  of  the
relevant  repayment  date.  These warrants  were  extinguished  in
October  1996,  as  a result of the conversion  of  the  Series  A
Preferred shares.

      The Series A Preferred Stock outstanding as of December  31,
1995  is reflected on the accompanying balance sheet as redeemable
preferred  stock,  and  is shown inclusive  of  cumulative  unpaid
dividends  and  accretion  to  liquidation  value,  and   net   of
unamortized  issuance costs of approximately $1.1  million.   Upon
conversion in October 1996, these costs were reclassified into the
appropriate equity accounts.

6.   Equity

     During 1995, the Company's shareholders approved an amendment
to  the Company's Certificate of Incorporation that authorized the
creation  of  2,000,000 shares of Series A  Preferred  Stock,  par
value  $1.00  per  share;  authorized the creation  of  25,000,000
shares  of  Class B non-voting Common Stock, par value  $.015  per
share; and redesignated the 50,000,000 shares of Common Stock, par
value  $.015  per  share,  that were  previously  authorized,  for
issuance as 50,000,000 shares of Class A Common Stock.

     On June 14, 1996, the Company's Board of Directors
authorized a three-for-two stock split, in the form of a stock
dividend issued on August 8, 1996 of the Company's Class A Common
Stock to shareholders of record as of July 3, 1996.  Share and
per share amounts in the accompanying financial statements and
footnotes have been adjusted for the split.


     A.   Public Offerings:
     
     In May 1996, the Company completed a public offering of
3,018,750 shares of its Class A Common Stock at a price of $22.50
per share. The offering raised net proceeds of $63.1 million,
after deduction of fees and expenses of approximately $4.8
million.  The net proceeds were used to reduce all indebtedness
under the Company's credit facility, for working capital needs,
and for capital expenditures.

     In October 1996, the Company completed a public offering of
1,194,722 shares of its Class A Common Stock, on behalf of
selling shareholders, at a price of $45.00 per share.  937,500 of
the shares resulted from the conversion to Class A Common Stock
of all of the outstanding Series A Preferred Stock (see Note 5).
Additionally, outstanding warrants and options to purchase the
Company's Class A Common Stock were exercised by the holders and
the underlying shares of Class A Common Stock were sold. The
Company received the exercise price of the warrants and options,
approximately $2.1 million, and incurred fees and expenses of
approximately $270,000.

     B.   Private Placement:

      During  1995, the Company made an offshore sale of 1,237,000
shares  of its Class A Common Stock at an average price  of  $9.69
per  share.   The sale raised net proceeds of $11.1 million  after
deduction  of  fees and expenses of $0.9 million.  In  conjunction
with  this  transaction, warrants to purchase  123,750  shares  of
Class A Common Stock at an exercise price of $9.60 per share  were
issued.  These warrants were exercised in 1995.
     
     C.   Stock-Based Compensation:

      The  Company has four stock-based compensation plans,  which
are  described below.  The Company accounts for these plans  under
APB  Opinion No. 25.  Accordingly, no compensation cost  has  been
recognized   for  incentive  stock  options,  nonqualified   stock
options,  and  the employee stock purchase plan.  Had compensation
cost   for  the  Company's  stock-based  compensation  plans  been
determined  based on the fair value at the grant dates for  awards
under those plans consistent with the method of FASB Statement No.
123,  the  Company's net income and earnings per share would  have
been  reduced  to  the  pro forma amounts  indicated  below  (  in
thousands, except per share data):

                                                  1996            1995
Net income (loss)                 As reported    $7,765         $(5,354)
                                  Pro forma      $4,869         $(6,251)

Net income (loss) per common and  As reported     $0.34          $(0.50)
 common equivalent share          Pro   forma     $0.15          $(0.58)

Fully  diluted earnings per share are not presented  because
the effect is anti-dilutive.

      Compensation  cost  for  stock  incentive  right  agreements
recognized  in  the  statement of operations for  the  year  ended
December 31, 1996 was approximately $0.1 million.  There  were  no
stock  incentive  right agreements issued in 1995  or  1994.   The
Statement 123 method of accounting has not been applied to options
granted  prior  to  January 1, 1995, so the  resulting  pro  forma
compensation cost may not be representative of that to be expected
in future years.

          Employee Long-Term Incentive Plan:

      The  Company has an Employee Long-Term Incentive  Plan  (the
"Plan"),  whereby  options to purchase shares of  Class  A  Common
Stock may be granted to officers and key employees of the Company.
In  October 1994, the Company's shareholders approved an amendment
to  the  Plan  which  increased shares reserved  for  issuance  to
3,000,000  shares  of  Class  A  Common  Stock.   In  July   1995,
shareholders of the Company approved an additional 750,000  shares
of  Class  A  Common Stock to be reserved for issuance under  this
Plan,  and  authorized  the  issuance of  stock  incentive  rights
("SIRs")  thereunder.   In June 1996, the  Company's  shareholders
approved an additional 750,000 shares for issuance under the Plan,
bringing the total shares reserved for issuance to 4,500,000.  The
exercise  price  of the stock options must not be  less  than  the
market value per share at the date of grant, and no options  shall
be exercisable after ten years and one day from the date of grant.
Options  generally become exercisable on a pro-rata basis  over  a
four-year period beginning on the date of grant and 25% on each of
the  three anniversary dates thereafter.  SIRs represent the right
to  receive  shares of the Company's Class A Common Stock  without
any  cash  payment to the Company, conditioned only  on  continued
employment  with the Company through a specified incentive  period
of  at  least three years.  At December 31, 1996,  SIRs for 30,000
shares had been awarded.  50% of the shares vest over a three-year
period  which began on February 5, 1996, 25% vest over  the  four-
year  period  beginning February 5,  1996, and the  remaining  25%
vest over the five-year period beginning February 5, 1996.

      For  purposes  of the pro forma disclosure above,  the  fair
value  of each option grant is estimated on the date of the  grant
using  the  Black-Scholes option-pricing model with the  following
weighted-average assumptions used for grants in 1996 and 1995:

                                       1996      1995

Dividend yield                          0%        0%
Expected volatility                     43%       44%
Risk-free interest rate                 5.6%      7.26%
Expected life                             3 years    3 years
<TABLE>
       Changes  in the status of the Plan during 1996,  1995,  and
1994 are summarized as follows:
<CAPTION>
                                         1996              1995              1994
                                   Shares  Wtd. Avg   Shares Wtd. Avg   Shares  Wtd.Avg.
                                   (000s) Ex.Price    (000s) Ex.Price   (000s)  Ex. Price
<S>                                <C>    <C>         <C>    <C> <C>      <C>  <C>
Outstanding  at  beg. of year      1,606  $  8.81     1,178  $   9.02     696  $ 6.56
Granted                              681    14.95       512     10.23     983   11.09
Exercised                           (588)    7.99       (50)     9.53    (154)   2.37
Forfeited                           (101)    8.72       (34)    10.42    (347)  12.73
Outstanding  at  end  of  year     1,598    13.97     1,606      8.81   1,178    9.02
Number of options at end of year:
Exercisable                          637    12.65       608      7.94     290    5.89
Available for grant                  895                725               453
Weighted average fair
value of options granted           $7.09               $3.69             N/A
</TABLE>
      The  following  table  summarizes  information  about  stock
options outstanding at December 31, 1996 (shares in thousands):
                  Options  Outstanding        Options Exercisable
                   Number        Wgt-Avg.                Number
Range    of      Outstanding    Remaining   Wgt. Avg.   Exercisable Wgt- Avg.
Exer.  Prices    at 12/31/96   Cont. Life  Exer. Price  at 12/31/96 Exe. Price

$0 to 9.50           282        6.9 years    $ 8.30         128      $ 9.18
$9.83 to 12.50       724        7.7           10.72         390       10.94
$15.37               435        9.0           15.37          80       15.37
$28.83               102        9.5           28.83          25       28.83
$45.00 to 48.19       55        9.7           47.16          14       47.16
$0 to 48.19        1,598        8.1           13.97         637       12.65

     Employee Stock Purchase Plan:

      In  October  1994,  the Company's shareholders  approved  an
employee  stock purchase plan which allows eligible  employees  to
purchase  shares of the Company's Class A Common Stock at  85%  of
market  value  on  the  date on which the annual  offering  period
begins, or the last business day of each calendar quarter in which
shares  are  purchased  during the offering period,  whichever  is
lower.    Class  A  Common  Stock  reserved  for  future  employee
purchases  aggregated 676,087 shares at December 31, 1996.   There
were 19,131 shares issued at an average price of $7.93 during  the
year  ended December 31, 1994; 35,450 shares issued at an  average
price  of $8.37 per share during the year ended December 31, 1995;
and  19,341 shares issued at an average price of $17.69 per  share
during  the  year  ended December 31, 1996.  There  have  been  no
charges  to  income  in  connection  with  this  plan  other  than
incidental  expenses  related  to the  issuance  of  shares.   The
weighted  average fair value of shares offered in  1996  and  1995
were $3.80 and $1.86, respectively.

      For  purposes  of the pro forma disclosure above,  the  fair
value  of each option grant is estimated on the date of the  grant
using  the  Black-Scholes option-pricing model with the  following
weighted-average assumptions used for grants in 1996 and 1995:

                                         1996           1995

Dividend yield                          0%                  0%
Expected volatility                     19%                 18%
Risk-free interest rate                 5.77%               7.66%
Expected  life                          3  months           3 months


          Non-Employee Directors' Stock Option Plan:
     
      In  June  1996,  the Company's shareholders approved  a  Non-
Employee Directors' Stock Option Plan (the Directors' Stock  Option
Plan).   The  Directors' Stock Option Plan provides for  grants  of
options  to  purchase 7,500 shares of Class A Common  Stock  at  an
exercise price of 100% of the fair market value of the stock on the
date  of grant, which options vest at the first anniversary of  the
date  of grant.  The maximum number of shares with respect to which
options  may be granted under the Directors' Stock Option  Plan  is
375,000  shares,  subject  to adjustment for  stock  splits,  stock
dividends, and the like.

      Each  option shall be exercisable for ten years and  one  day
after  its date of grant.  Any vested option is exercisable  during
the  holder's  term as a director (in accordance with the  option's
terms)  and remains exercisable for one year following the date  of
termination  as  a  director (unless the director  is  removed  for
cause).   Exercise  of the options would involve payment  in  cash,
securities, or a combination of cash and securities.

For purposes of the pro forma disclosure above, the fair value  of
each option grant is estimated on the date of the grant using  the
Black-Scholes  option-pricing model with the following   weighted-
average assumptions used for grants in 1996 and 1995:

                                   1996           1995

Dividend yield                     0%                -
Expected volatility               44%                -
Risk-free interest rate         5.39%                -
Expected life                      3 years           -

Changes  in  the status of the Directors' Stock Option Plan  during
1996 are summarized as follows:

                                 Shares   Weighted Average
                                 (000s)   Exercise Price

Outstanding at beginning of year    -     -
Granted                            60    $22.08
Exercised                          -         -
Forfeited                          -          -
Outstanding at end of year         60    $22.08
Number of options at end of year:
Exercisable                        60    $22.08
Available for grant               315
Range of prices:
Granted during the year          $15.33 - 28.83
Outstanding at end of year       $15.33 - 28.83
Exercised during the year        $  -
Weighted average fair
 value of options granted        $5.41

The table summarizing information about stock options outstanding,
required  by  SFAS  123, is not included, as  the  impact  of  the
application of this statement would not be material.

     United Kingdom Sharesave Scheme:

      In  August 1996, the Executive Compensation Committee of the
Board  of  Directors approved the United Kingdom Sharesave  Scheme
whereby  eligible  employees of ACC UK  are entitled  to  purchase
shares of the Company's Class A Common Stock at an exercise  price
equal  to 85% of market value on the date that the purchase period
begins.   Employees contribute the purchase price through  monthly
payroll  deduction of a predetermined amount, not  to  exceed  250
pounds sterling, over a three year period, at the end of which the
shares are purchased.  A total of 150,000 shares are reserved  for
issuance under this plan, of which options for 17,160 shares at an
exercise  price  of  $32.08 were granted in  1996.   The  weighted
average fair value of options offered in 1996 was $14.29.

      For  purposes  of the pro forma disclosure above,  the  fair
value  of each option grant is estimated on the date of the  grant
using  the  Black-Scholes option-pricing model with the  following
weighted-average assumptions used for grants in 1996 and 1995:

                                     1996           1995

Dividend yield                          0%           -
Expected volatility                  40.8%           -
Risk-free interest rate              6.45%           -
Expected life                           3 years      -

7.   Treasury Stock

      In  January 1994, an officer of the Company exercised  stock
options to acquire 148,500 shares of the Company's Class A  Common
Stock  at  $2.20  per  share by delivering to the  Company  24,813
common  shares  at  the then current market price  of  $13.17  per
share.

      The average cost of all treasury stock currently held by the
Company is $1.48 per share.

8.   Commitments and Contingencies

     A.   Operating Leases:

     The Company leases office space and other items under various
agreements  expiring  through 2004.  At  December  31,  1996,  the
minimum  aggregate payments under non-cancelable operating  leases
are summarized as follows (dollars in thousands):




         Year                          Amount
         1997                         $ 3,927
         1998                           4,089
         1999                           3,970
         2000                           3,455
         2001                           3,294
     Thereafter                         7,970
                                      $26,705

      Rent  expense for the years ending December 31, 1996,  1995,
and 1994 was approximately $4,006,000, $1,965,000, and $1,640,000,
respectively.

     B.   Employment and Other Agreements:

      The  Company  has an agreement with its chairman  and  chief
executive  officer, which has a two year term expiring in  October
1997  and  which provides for continuation of salary and  benefits
for the term of the agreement, in the event of a change in control
of  the  Company.   At  December 31, 1996, the  Company's  maximum
potential   liability  under  this  agreement  was   approximately
$300,000.

      The  Company  had a contract with the former chairman  which
provided for an annual base salary, including an annual bonus  and
other  benefits during his employment term, and also for a payment
of $1.0 million, payable over a three year term, in the event that
he  resigned  or  was terminated without cause. During  1996,  the
chairman  of  the board resigned his position as chairman  of  the
Company.  At December 31, 1996, under this agreement, the  Company
has accrued the entire $1.0 million, and a payment of $0.3 million
was  made  in  January 1997.  In consideration for  a  non-compete
agreement  which has a three year term beginning in January  1997,
the  former  chairman  received a payment of $750,000,  which  was
expensed in 1995.

      The Company has entered into employee continuation incentive
agreements  with  certain other key management  personnel.   These
agreements  provide  for  continued  compensation  and   continued
vesting of options previously granted under the Company's Employee
Long  Term  Incentive Plan for a period of up to one year  in  the
event  of termination without cause or in the event of termination
after  a change in control of the Company.  At December 31,  1996,
the  Company's estimated maximum potential liability under these 
agreements totaled approximately $3.0 million.

     C.   Purchase Commitments:

      At  December 31, 1996, the Company had outstanding  purchase
commitments  totaling approximately $4.6 million  related  to  the
purchase  of local exchange switches for the US business  and  the
purchase of a long distance switch for the UK operation.

      In  1993,  ACC  Long  Distance Ltd.,  a  subsidiary  of  ACC
TelEnterprises  Ltd., entered into an agreement with  one  of  its
vendors  to  lease long distance facilities totaling a minimum  of
Cdn.  $1.0  million  per  month  for  seven  years.   The  Company
currently  leases more than Cdn. $1.0 million per  month  of  such
facilities  from this vendor.  This commitment allows the  Company
to  receive  up to a 60% discount on certain monthly charges  from
this vendor.

     D.   Defined Contribution Plans:

      The  Company provides a defined contribution 401(k) plan  to
substantially all US employees.  Amounts contributed to this  plan
by the Company were approximately $240,000, $183,000, and $167,000
in  1996,  1995,  and 1994, respectively.  The Company's  Canadian
subsidiary  provides  a  registered  retirement  savings  plan  to
substantially all Canadian employees.  Amounts contributed to this
plan  by  the Company were Cdn. $186,000, Cdn. $106,000, and  Cdn.
$62,000 in 1996, 1995, and 1994, respectively.

     E.   Annual Incentive Plan:

      During  1996  and  1995, the Company's  Board  of  Directors
authorized incentive bonuses based upon the Company's sales, gross
margin, operating expenses, and operating income.  Prior to  1995,
incentive  bonuses  were  discretionary  as  determined   by   the
Company's management and approved by the Board of Directors.   The
amounts  included in operations for these incentive  bonuses  were
approximately  $2.6 million, $1.4 million, and  $0.6  million  for
the years ended December 31, 1996, 1995, and 1994, respectively.

     F.   Legal Matters:

     The Company is subject to litigation from time to time in the
ordinary course of business.  Although the amount of any liability
with  respect  to  such litigation cannot be  determined,  in  the
opinion of management, such liability as of December 31, 1996 will
not  have  a  material  adverse effect on the Company's  financial
condition or results of operations.

9.   Geographic Area Information (dollars in thousands)
<TABLE>
Year ended December 31, 1996:
<CAPTION>
                                     United            United
                                     States   Canada   Kingdom  Eliminations Consolidated

<S>                                  <C>      <C>       <C>       <C>          <C>
Revenue from unaffiliated customers  $99,461  $117,168  $92,138   $   -        $308,767
Intercompany   revenue                35,060     2,917    3,519    (41,496)          -
Total revenue                       $134,521  $120,085  $95,657   $(41,496)    $308,767
Income from operations
  before income taxes                $ 6,676    $3,452     $731   $   -         $10,859
Identifiable assets at
 December 31,  1996                 $182,435   $94,165  $49,667  $(122,236)    $204,031


Year ended December 31, 1995:

                                     United            United
                                     States   Canada   Kingdom  Eliminations Consolidated

Revenue from unaffiliated customers $65,975   $84,421  $38,470    $    -       $188,866
Intercompany  revenue                15,256     4,071    1,143     (20,470)       -
Total revenue                       $81,231   $88,492  $39,613    $(20,470)    $188,866
Income (loss) from operations
  before income taxes              $  1,512     $ 456  $(6,793)   $    -        $(4,825)
Identifiable assets
 at December 31, 1995              $105,995   $43,775  $31,593   $ (57,379)    $123,984

Year ended December 31, 1994:

                                     United            United
                                     States   Canada   Kingdom  Eliminations Consolidated

Revenue from unaffiliated customers $54,599   $67,728  $ 4,117   $    -        $126,444
Intercompany revenue                  6,698     2,175    1,004      (9,877)          -
Total revenue                      $ 61,297   $69,903   $5,121   $  (9,877)    $126,444
Income (loss) from operations
  before income taxes            $   1,300   $ (5,742) $(5,802)  $     -       $(10,244)
Identifiable assets
 at December 31, 1994             $119,021    $30,073  $10,422   $ (75,068)    $ 84,448
</TABLE>

      Intercompany revenue is recognized when calls are  originated
in one country and terminated in another country over the Company's
leased  network.   This revenue is recognized at rates  similar  to
those  charged  by unaffiliated companies.  Income from  operations
before  income taxes of the Canadian and United Kingdom  operations
includes  corporate  charges  for general  corporate  expenses  and
interest.

     Corporate general and administrative expenses are allocated to
subsidiaries based on  time dedicated to each subsidiary by members
of corporate management and staff.

10.  Related Party Transactions

      The  Company's  headquarters is in  a  building  owned  by  a
partnership in which the Company's former chairman of the board has
a  50%  ownership interest.  A Special Committee of  the  Company's
Board of Directors reviewed the lease to ensure that the terms  and
conditions  were commercially reasonable and fair  to  the  Company
prior  to  approval of the plan in February 1994.  Minimum  monthly
lease  payments for this space range from $44,000 to  $60,000  over
the  ten-year term of the lease, which began on May 1,  1994.   The
Company  also  pays a pro-rata share of maintenance  costs.   Total
rent  and  maintenance payments under this lease were approximately
$0.8 million, $0.6 million, and $0.2 million during 1996, 1995, and
1994, respectively.

      During 1994 and early 1995, the Company initiated efforts  to
obtain  new  telecommunications software programs from  a  software
development  company.  The Company's former chairman of  the  board
and  chief executive officer was a controlling shareholder  of  the
software  development  company during such period.   In  May  1995,
anticipating  material  agreements with  the  software  development
company,  all  of  the common shares owned by the Company's  former
chairman of the board were placed in escrow under the direction  of
a  Special  Committee  of the Company's Board  of  Directors.   The
Special  Committee,  its  outside consultants,  and  the  Company's
management  then  proceeded  to review and  evaluate  the  software
technology   and   the  terms  and  conditions  of   the   proposed
transactions.

      In  1996,  the Special Committee approved a software  license
agreement  between  the  Company and a newly  formed  company  (the
purchaser   of  the  software  development  company's  intellectual
property  and  other  assets  and an affiliate  of  such  company).
Immediately prior to entering into the agreement, the shares of the
software development company held in escrow were returned  to  such
company  and the related party nature of the Company's relationship
with  the  software  development company was thereby  extinguished.
Total amounts accrued at December 31, 1996, 1995, and 1994 relating
to  this  vendor  were $0, $44,000, and $0, respectively.   For  an
aggregate consideration of $1.8 million, paid in 1996, the  Company
received  a perpetual right to use the telecommunications  software
programs.   Approximately $0.2 million was paid to  the  vendor  in
1996 and was expensed prior to entering into the agreement.  During
1995,   the   Company   paid  the  software   development   company
$1.2  million,  of  which $772,000, relating  to  the  purchase  of
certain hardware and acquisition of certain software licenses,  was
capitalized  and recorded on the balance sheet as  a  component  of
property,  plant, and equipment and $500,000 relating  to  software
development  was  expensed.   During 1994,  the  Company  paid  the
software  development company $132,000, all  of  which  related  to
software development, which was expensed.

      The  Company has notes receivable from two officers which  total
$370,000.  These notes bear interest at a rate of 6.625% and are to be
repaid in full on demand, no later than March 31, 1997.





