1. The Federal Communications Commission ("Commission" or "FCC") and SBC Communications Inc. ("SBC") hereby enter this Consent Decree for the purpose of terminating an investigation by the Commission into: (1) potential violations of sections 271 and 272 of the Communications Act of 1934, as amended ("Act"), 47 U.S.C. §§ 271, 272 ("section 271" and "section 272"), and the Commission’s rules and regulations implementing these provisions; (2) potential violations of section 1.65 of the Commission’s rules, 47 C.F.R. § 1.65; and (3) possibly inaccurate statements made to the Commission by SBC employees.

2. On January 4, 1998, SBC and Southern New England Telecommunications Corporation ("SNET") agreed to a plan of merger under which SNET would become a wholly owned, first-tier subsidiary of SBC. On February 20, 1998, SBC and SNET filed applications seeking Commission approval to transfer SNET authorizations to SBC. Those applications were granted with conditions by the Commission on October 23, 1998. The merger was consummated on October 26, 1998.

3. While the merger was pending, SBC and SNET representatives met periodically with the FCC staff to discuss regulatory issues associated with the merger. During two of these meetings, SBC and SNET attendees were asked whether SNET would be in compliance with section 272 once the merger was completed. In both meetings, an SBC spokesperson responded that the merger transaction would occur consistent with the structural separation requirements of section 272. This representation was based on the SBC representative’s understanding of section 272 requirements and on his understanding that SNET would still be operating as a separate, stand-alone company at the time the merger closed. The SBC spokesperson generally understood the structural separation requirements of section 272, but had not specifically researched the section 272 regulatory requirements prior to the meetings, and he took no steps to confirm or update his representations after the meetings.

4. Independent of and subsequent to these meetings with Commission staff, subject matter and legal experts within SBC were discussing the legal requirements of section 272 and began investigating whether SNET provided interLATA information services that would implicate section 272 after the merger. They discovered that SNET offered five interLATA information services that potentially implicated section 272’s separation requirements. They discussed whether creation of a specific section 272 subsidiary was therefore required under the Act, or whether SNET, in its existing corporate structure, met those requirements. They also discussed how to ensure that the post-merger integration of the SNET local exchange carrier subsidiary ("SNET Telco") and SBC’s Bell operating company subsidiaries would not violate the section 272 rules. Before the FCC’s approval of the SNET merger, at least some of these SBC employees may have held concerns that, as of the date of the merger, SBC might not comply with section 272’s requirements. However, based on the belief that SNET would remain structurally separate at the time the merger was closed and therefore would be compliant with section 272, the decision was made not to establish a separate, section 272 affiliate for SNET prior to the consummation of the merger. The decision was also made to file with the Commission, after the consummation of the merger, a forbearance petition, including a request for interim relief. Prior to the merger closing, SBC employees did not discuss with the FCC staff the section 272 issues or legal interpretations that had been discussed internally or the decision to pursue forbearance relief from the Act.

5. Shortly following the merger, twice in November and once in mid-December 1998, SBC and SNET representatives met with Commission staff to discuss the proposed request for forbearance and interim relief. In the course of these meetings with the FCC staff, SBC and SNET representatives made or may have made statements to the Commission, including: that SBC needed forbearance relief to come into compliance with section 272; that only after the SNET merger did SBC discover the interLATA information services that were to be the subject of the forbearance petition; and that the compliance problems were due to SNET’s lack of familiarity with the Commission’s orders interpreting section 272. These statements, if they were made, did not accurately reflect the circumstances supporting the proposed request for forbearance and interim relief.

6. Based on a discussion with the FCC staff in the second November meeting, SBC representatives believed that it was the FCC staff’s view that, in the absence of forbearance relief, a new section 272 affiliate would need to be created in order for SNET to continue to provide interLATA information services.

7. In the December meeting, the Commission staff indicated that it would not recommend approval of the forbearance petition and that SBC needed to be in compliance with section 272. In order to eliminate any possible section 272 issues, SBC took swift and decisive action to remove the interLATA links of four of the five information services in question, although its representatives may still have had questions about its 272 obligations. SBC created a separate affiliate pursuant to section 272 for the provision of the final interLATA information service. Ultimately, SBC did not file a forbearance petition. Also in December 1998, SBC identified a section 271 violation with respect to SNET’s conference calling service, which was corrected immediately.

8. Following the December 1998 meeting described in paragraph 7, based on concerns about what it believed was SBC’s lack of discovery of potential section 272 violations prior to the merger, the Bureau initiated an investigation, which included a formal document request. SBC fully cooperated with this investigation. SBC caused an internal inquiry to be undertaken by a legal review team which was subsequently expanded to include an outside law firm. That team examined thousands of documents and interviewed 17 current and former employees of SBC and SNET. While the legal review team’s inquiry was ongoing, SBC simultaneously provided the Bureau staff with numerous, relevant, non-privileged documents responsive to the document request.

9. On May 3, 1999, the legal review team completed its "Report to SBC Communications Inc. Regarding Compliance with Provisions of the Telecommunications Act of 1996 Related to the Acquisition of Southern New England Telecommunications Corporation" ("Report"). The Report was immediately provided to the Bureau staff. At the same time, based on a prior agreement with the Bureau staff, SBC partially waived the attorney-client and attorney work product privileges, for the limited purposes of conducting this investigation. This allowed the Bureau staff access to numerous relevant documents, created through the date of the December 1998 meeting between SBC and FCC staff, which were responsive to the document request and which would otherwise have been subject, in SBC’s view, to claims of legal privilege.

10. The Report set forth the factual findings of the legal review team, which were based on the available evidence. It concluded that, because of the combination of SNET Telco’s provision of operation, installation and maintenance services to the SNET information services affiliates and the placement of two Pacific Bell board members on the SNET and SNET Telco boards, SBC had not been in compliance with section 272. The Report also acknowledged that the company’s internal processes and procedures for identifying and resolving section 272 issues relating to the SNET merger caused some compliance problems and mistakes.

11. The Report included a formalized six-point compliance plan to ensure that merger-related compliance problems would not occur in the future. This plan included the creation of an expanded section 272 oversight team; the early involvement of the oversight team in any future merger; comprehensive early review of services provided by any acquisition target company; and ongoing, comprehensive training of SBC employees on section 272 issues. That compliance plan has been implemented by SBC.

12. In addition, contemporaneous with its execution of this Consent Decree, SBC is expanding the compliance plan described in the Report to: (a) incorporate section 271 and section 272 compliance into its corporate-wide legal SBC Compliance Program which involves annual certifications and an annual report to the SBC Board of Directors; (b) include a new training program for personnel involved in regulatory contacts; and (c) include an extensive section 271 and 272 training program for SBC employees generally and training on the obligations of SBC employees when they are meeting with the FCC.

13. The Bureau staff fully examined the documents provided by SBC and, with the cooperation of SBC, deposed seven employees of SBC under oath on May 21, 24, and 25, 1999. Additionally, SBC has submitted to the Commission sworn declarations from senior corporate officers indicating that, during the relevant time periods, they had no knowledge of any specific statements, representations or conduct of SBC employees, with respect to the Commission staff, that formed the subject of the Commission’s investigation in this matter.

14. For the purposes of this Consent Decree, the following definitions shall apply:

(a) "Commission" means the Federal Communications Commission.

(b) "Bureau" means the Commission’s Common Carrier Bureau.

(c) "SBC" means SBC Communications Inc. and all of its subsidiaries and affiliates.

(d) "SNET" means Southern New England Telecommunications Corporation and all of and affiliates.

(e) "Order" means an order of the Commission adopting this Consent Decree.

(f) "Final Order" means an Order that is no longer subject to administrative or judicial reconsideration, review, appeal, or stay.

15. SBC and the Commission agree that this Consent Decree does not constitute an adjudication of the merits, or any finding on the facts or law regarding any violations committed by SBC arising out of SBC’s acquisition of SNET.

16. SBC agrees to implement the compliance plan outlined in the Report, as well as the additional compliance measures mentioned above. These are attached hereto in consolidated form.

17. SBC agrees to make a voluntary contribution to the United States Treasury in the amount of One Million Three Hundred Thousand Dollars ($1,300,000) within 10 calendar days after the Commission Order adopting this Consent Decree becomes a Final Order. The Commission finds this amount to be appropriate in light of the following mitigating factors that it has taken into consideration in this matter: (1) SBC’s history of compliance; (2) SBC’s adoption of a comprehensive compliance plan designed to ensure future compliance with section 271 and section 272; (3) SBC’s cooperation in investigating and disclosing the facts and circumstances surrounding this matter; (4) SBC’s cooperation in providing access to its employees and to documents subject to SBC’s claims of privilege; (5) submission of declarations of SBC senior corporate officers indicating that, during the relevant time periods, they had no knowledge of any specific statements, representations or conduct of SBC employees, with respect to the Commission staff, that formed the subject of the Commission’s investigation in this matter; and (6) SBC’s creation of a training program for all employees dealing with the FCC.

18. The Commission agrees that, based on the facts developed in its investigation and in the absence of material new evidence related to this matter, it will not use the facts developed in this investigation or the existence of this Consent Decree to institute any new proceeding, formal or informal, or take any action against SBC concerning possible violations of section 271 and section 272, or the rules and regulations implementing those provisions, or concerning possible violations of section 1.65 of the Commission’s rules. The Commission also agrees that, based on the facts developed in its investigation, and in the absence of material new evidence related to this matter, it will not use the facts developed in this investigation or the existence of this Consent Decree to institute any proceeding, formal or informal, or take any action against SBC with respect to its basic qualifications, including its character qualifications, to be a Commission licensee or with respect to compliance with the Commission’s rules and policies.

19. In express reliance upon the covenants and representations contained herein, the Commission agrees to terminate the instant enforcement proceeding upon the Order adopting this Consent Decree becoming a Final Order.

20. In consideration for the termination of these proceedings in accordance with the terms of this Consent Decree, SBC agrees to the terms, conditions and procedures contained herein.

21. In the event that SBC is found by the Commission or its delegated authority to have engaged in conduct the same or similar to that described above, SBC and the Commission agree that the conduct above may be used only to fashion an appropriate sanction, provided that SBC shall not be precluded or estopped from litigating de novo any and all of the issues arising from the facts and allegations in the investigation record as necessary to defend, in any forum, its interest from challenge by any person or entity not a party to this Consent Decree.

22. SBC admits the jurisdiction of the Commission to adopt this Consent Decree.

23. SBC waives any and all rights it may have to seek administrative or judicial reconsideration, review, appeal or stay, or to otherwise challenge or contest the validity of this Consent Decree and the Order adopting this Consent Decree, provided the Order adopts the Consent Decree without change, addition, or modification.

24. SBC and the Commission agree that the effectiveness of this Consent Decree is expressly contingent upon issuance of the Order, provided the Order adopts the Consent Decree without change, addition, or modification and provided the Order is consistent with the Consent Decree.

25. SBC and the Commission recognize that in the event that this Consent Decree is rendered invalid by any court of competent jurisdiction, it shall become null and void and may not be used in any manner in any legal proceeding.

26. SBC and the Commission agree that if the Commission, or the United States on behalf of the Commission, brings a judicial action to enforce the terms of the Order adopting this Consent Decree, neither SBC nor the Commission shall contest the validity of the Consent Decree or Order, and SBC and the Commission shall waive any statutory right to a trial de novo with respect to any matter upon which the Order is based, and shall consent to a judgment incorporating the terms of this Consent Decree.

27. SBC agrees to waive any claims it may otherwise have under the Equal Access to Justice Act, Title 5 U.S.C. § 504 and 47 C.F.R. § 1.1501, et seq.

28. SBC agrees that any violation of the Consent Decree or the Order adopting this Consent Decree shall constitute a separate violation of a Commission order, entitling the Commission to exercise any rights and remedies attendant to the enforcement of a Commission order.

29. This Consent Decree may be signed in counterparts.

FEDERAL COMMUNICATIONS COMMISSION

By: /s/

SBC COMMUNICATIONS INC.

By: /s/