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Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
)
In the Matter of ) File No.
EB-03-IH-0013
)
) Acct. No.
200332080019
)
SBC Communications Inc. ) FRN No.
0004333571
)
ORDER
Adopted: September 25, 2003 Released:
October 1, 2003
By the Commission:
1. The Commission has been conducting an
investigation into possible violations by SBC Communications
Inc. (``SBC'') of section 271 of the Communications Act of
1934, as amended, in connection with the provisioning of in-
region interLATA services in states where SBC had not
received authorization to provide such services pursuant to
section 271 of the Act.1
2. The Commission and SBC have negotiated the terms
of a Consent Decree that would terminate the Commission's
investigation. A copy of the Consent Decree is attached
hereto and is incorporated by reference.
3. We have reviewed the terms of the Consent Decree
and evaluated the facts before us. We believe that the
public interest would be served by approving the Consent
Decree and terminating the investigation.
4. Based on the record before us, and in the absence
of material new evidence relating to this matter, we
conclude that there are no substantial and material
questions of fact as to whether SBC possesses the basic
qualifications, including its character qualifications, to
hold or obtain any FCC licenses or authorizations.
5. Accordingly, IT IS ORDERED, pursuant to sections
4(i) and 4(j) of the Communications Act of 1934, as amended,
47 U.S.C. §§ 154(i) and 154(j), that the Consent Decree,
incorporated by reference in and attached to this order, is
hereby ADOPTED.
6. IT IS FURTHER ORDERED that the Secretary SHALL
SIGN the Consent Decree on behalf of the Commission.
7. IT IS FURTHER ORDERED that the above captioned
investigation IS TERMINATED.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, DC 20554
In the Matter of )
) File No. EB-03-IH-0013
)
) Acct. No. 200332080019
)
) FRN No. 0004333571
SBC Communications Inc. )
)
CONSENT DECREE
1. The Federal Communications Commission (the
``Commission'' or the ``FCC'') and SBC Communications Inc.
(``SBC'') hereby enter into this Consent Decree for the
purpose of terminating an investigation by the Commission
into whether SBC provided interLATA services prior to its
receipt of authorization pursuant to section 271 of the
Communications Act of 1934, as amended (the ``Act''). As
part of the investigation, the Enforcement Bureau
(``Bureau'') has examined SBC's compliance with sections
271(a) and (b) of the Act, 47 U.S.C. §§ 271(a) and (b),
which prohibit a Bell Operating Company (``BOC'') from
providing in-region interLATA services in states where it
has not received authorization to provide such services
pursuant to section 271 of the Act.2
2. For purposes of this Consent Decree, the following
definitions shall apply.
(a) ``FCC'' or the ``Commission'' means the Federal
Communications Commission and all of its bureaus
and offices.
(b) ``Bureau'' means the Enforcement Bureau of the
Federal Communications Commission.
(c) ``SBC'' means the SBC Communications Inc., its
incumbent local exchange telephone companies, any
wholly or partially owned subsidiary, or other
affiliated companies or business, and their
successors and assigns.
(d) ``Parties'' means SBC and the Commission.
(e) ``In-region state'' is defined at 47 U.S.C. §
271(i)(1), and for SBC includes Arkansas,
California, Illinois, Indiana, Kansas, Michigan,
Missouri, Nevada, Ohio, Oklahoma, Texas, and
Wisconsin.
(f) ``Order'' or ``Adopting Order'' means an order of
the FCC adopting the terms of this Consent Decree
without change, addition, or modification.
(g) ``Final Order'' means an order that is no longer
subject to administrative or judicial
reconsideration, review, appeal, or stay.
(h) ``Investigation'' means the investigation
commenced by the Bureau on March 10, 2003 into
whether SBC provided, marketed and/or sold in-
region, interLATA services prior to its receipt of
authorization pursuant to section 271 of the Act
during the period from January 1, 2002 to the
present. The term specifically includes the
matters identified in SBC's responses to the
Bureau's Letter of Inquiry dated March 10, 2003,
and the events discussed in the SBC voluntary
disclosure letters to the Commission dated July 3,
2002 and November 19, 2002, and in meetings with
the Bureau on June 21, 2002 and January 15, 2003.
(i) ``Effective Date'' means the date on which the
Commission adopts the Order.
(j) ``Compliance Plan'' means the safeguards stated in
paragraphs 8 and 9 herein.
I. BACKGROUND
3. SBC is prohibited from providing certain interLATA
(or ``long distance'') services originating in a particular
in-region state until it receives authorization to provide
such services in such state pursuant to section 271 of the
Act. 47 U.S.C. § 271(a). To obtain authorization to
provide in-region interLATA services under section 271, SBC
must show, among other things, that it fully implemented a
``competitive checklist'' designed to give competitors
nondiscriminatory access and interconnection to its network.
47 U.S.C. § 271(d)(3)(A).
4. SBC received authorization pursuant to section 271
to provide long distance services to customers in Texas in
2000, and in Arkansas, Kansas, Missouri, and Oklahoma in
2001. More recently, SBC received authorization pursuant to
section 271 to provide long distance services to customers
in California on December 19, 2002, in Nevada on April 14,
2003, and in Michigan on September 17, 2003. On July 17,
2003, SBC filed its pending applications for authorization
to provide long distance services to customers in Indiana,
Illinois, Ohio and Wisconsin.
5. On March 1 and 19, June 21 and 24, July 3,
November 19, December 30, 2002, and January 15, 2003, SBC
disclosed to FCC staff in the Wireline Competition Bureau
and the Enforcement Bureau certain incidents that
potentially constituted providing long distance services in
pre-relief states. SBC states that it made these
disclosures in good faith soon after SBC learned of the
incidents and that SBC took immediate steps to correct the
problems as described herein. On March 10, 2003, the
Enforcement Bureau opened an informal Investigation. SBC
states that it cooperated with the Bureau's Investigation in
good faith. The Bureau's Investigation included review of
the following incidents:
(a) Continued Provisioning to Former Affiliates:
Prior to the SBC/Ameritech merger, Ameritech
affiliates had received long-distance service on
approximately 980 lines from Ameritech's 272
affiliate, pursuant to the Official Communications
Services (``OCS'') exemption in section 271(f) of
the Act, 47 U.S.C. § 271(f). Following the
SBC/Ameritech merger, SBC divested these
affiliates, however, many of the lines associated
with the service of these previous affiliates
continued to be identified in an SBC database as
an affiliate line although the section 271(f)
exemption no longer applied. SBC states that it
failed to remove these lines from its OCS database
due to human error and between October 1999 and
November 2002 inadvertently continued to provide
the long-distance service free-of-charge. SBC
states that once it discovered the problem, it
promptly took steps to remove these lines from the
OCS database, terminated the provision of long
distance service over these lines, and voluntarily
disclosed the matter to Commission staff.
(b) ASI Provisioning: SBC states that between
February 2001 and April 2002, SBC's advanced
services affiliate, Advanced Services, Inc.
(``ASI'') inadvertently provided interLATA
transport of traffic for nine customers in
California. SBC states that these incidents
occurred because an SBC technician mistakenly used
an interLATA connection between ASI and the
customers' Internet service providers (``ISPs''),
instead of an intraLATA connection. SBC states
that ASI did not bill the ISPs or the end user
customers for the interLATA connections, and that
SBC voluntarily disclosed this matter to
Commission staff.
(c) SBC West Provisioning: SBC states that between
July 1987 and November 2002, SBC inadvertently
provided and billed for in-region long-distance
service involving approximately 140 lines in its
former Pacific Bell (now SBC West) region. SBC
states that it discovered these lines following a
comprehensive review of its circuits in the SBC
West region. SBC states that, in many cases, the
causes of the problems are unknown to SBC, but SBC
generally attributes the problems to a combination
of human error and problems with SBC and third-
party databases. SBC states that once it
discovered this issue, it promptly took steps to
terminate service over the affected lines and
voluntarily disclosed the matter to Commission
staff. SBC states that it voluntarily refunded
all charges for inadvertently provided interLATA
service.
(d) California Pre-Launch Testing Provisioning: On
December 19, 2002, the Commission released its
decision authorizing SBC to provide long-distance
service in California. Prior to the effective
date of that order, SBC began testing its process
for connecting long-distance customers in
California, which involved changing customers'
presubscribed interexchange carrier (``PIC'') from
another long distance provider to SBC. Although
the test was intended to be internal, SBC's system
sent twelve PIC change orders to Verizon. Verizon
converted five of the twelve orders on December
23, 2002, and SBC was designated as the
presubscribed long distance service provider for
these customer accounts. SBC and Verizon returned
all of these customers to their original carriers
no more than eight days later. SBC states that
this event occurred because SBC personnel did not
realize that the California order delivery process
was active at the time of the testing.
(e) PIC and Switched Toll Free Orders: SBC states that
in 37 separate instances, SBC inadvertently placed
orders to either change a customer's
presubscribed interexchange carrier or establish a
toll-free service terminating in states where it
did not have section 271 authority. SBC states
that in most cases it cancelled these orders
before they were provisioned and it did not
complete or bill for any long distance calls as a
result of the PIC changes. SBC asserts that these
incidents were due to inadvertent mistakes by
sales representatives.
II. AGREEMENT
6. The Parties agree and acknowledge that this
Consent Decree shall constitute a final settlement between
SBC and the Commission of the Investigation. In
consideration for the termination of this Investigation in
accordance with the terms of this Consent Decree, SBC agrees
to the terms, conditions, and procedures contained herein.
7. SBC and the Bureau agree that this Consent Decree
does not constitute either an adjudication on the merits or
a factual or legal finding or determination regarding any
compliance or noncompliance by SBC with the requirements of
the Act or the Commission's rules or orders. The Parties
agree that this Consent Decree is for settlement purposes
only and that by agreeing to this Consent Decree, SBC does
not admit any noncompliance, violation or liability
associated with or arising from its actions or omissions as
described herein.
8. SBC states that it took the following corrective
measures in response to the incidents described in paragraph
5 herein:
(a) Implemented processes to validate new numbers
added to affiliate databases.
(b) Implemented the following processes
applicable to the SBC-West ordering and
provisioning systems:
(b)1) Designed and implemented pre-design and
post-design Trunk Information Record Keeping
System (``TIRKS'') edits to prevent the
provisioning of interLATA circuits without
human intervention.
(b)2) Required manager approval to override
TIRKS system edit.
(b)3) Updated Methods and Procedures to
educate provisioning and maintenance managers
on permissible interLATA serving arrangements
prior to section 271 authorization.
(b)4) Updated Network Operations and
Translation methods and procedures to add
steps to the provisioning and maintenance
process to identify interLATA circuits and
document the interLATA exemption that applies.
(b)5) Designed additional system edits to the
Service Order Retrieval and Distribution
(``SORD'') ordering system and the Carrier
Access Billing System (``CABS'') to prevent
the ordering of interLATA circuits without
human intervention. These system edits will
be completed on or before December 31, 2003.
(c) Made edits in the SBC Long Distance ordering
system that provide notice to service
representatives when an attempt is made to
establish an account in an unauthorized state.
Service representatives now must get legal and/or
regulatory approval to proceed with the order.
(d) Required refresher training to service
representatives and sales teams on Switched Toll
Free Service to ensure that the terminating
telephone number is in a state where SBC is an
authorized long distance provider.
(e) Ensured that SBC Long Distance daily report
that identifies billing accounts established in
unauthorized states is reviewed early in the day
and acted on before the end of the same day to
ensure that ordering errors are corrected before
services are provisioned. If any unauthorized
accounts are identified within the SBC Long
Distance organization, the accounts are cancelled,
and the billing system is checked for usage on the
accounts to ensure that no customer is billed.
9. Compliance Plan. For purposes of settling the
matters set forth herein, SBC commits to retain and
incorporate into a Compliance Plan the safeguards described
in paragraph 8 herein, except for the processes set forth in
paragraph 8(b). In addition to retaining these measures,
SBC commits to implement the following additional safeguards
as part of the Compliance Plan:
(a) SBC will implement a process for regular review
and validation of LATA tables used in provisioning
and pre-order systems to detect errors downloaded
from third-party databases.
(b) SBC will modify its Methods and Procedures to add
steps to the provisioning and maintenance process to
identify interLATA circuits.
(c) SBC will enhance its affiliate OCS administration
procedures, expanding semi-annual review of
affiliate database telephone numbers and migration
procedures for the sale or purchase of affiliates.
(d) SBC will develop a comprehensive plan for
administering OCS to its affiliates to prevent the
inadvertent provision of interLATA OCS to
unaffiliated entities. Upon initiating the sale or
divestiture of an affiliate, SBC will undertake a
process to identify and migrate the affected
affiliate's official communications services.
(e) SBC will modify its existing section 272
compliance training materials and section 272
employee compliance guidelines to add additional
emphasis as to the impermissibility of premature
selling, marketing and provisioning of interLATA
services. These materials will be made available to
employees via SBC's intranet website.
10. SBC will assign the oversight of the Compliance
Plan to the SBC 272 Oversight Team that is comprised of
senior managers. The SBC 272 Oversight Team will meet
monthly and review compliance with this Compliance Plan.
11. Review of SBC's compliance with this Compliance
Plan will be included in the Enforcement Bureau's Section
271 Compliance Review Program.
12. SBC will implement this Compliance Plan within 30
days of the Effective Date of the Consent Decree, unless
otherwise noted in the Compliance Plan.
13. This Compliance Plan shall remain in effect until
such time as SBC obtains authorization pursuant to section
271 of the Act to provide long distance services in each of
its twelve in-region states.
14. In express reliance on the covenants and
representations contained herein, the Commission agrees
to terminate the Investigation.
15. SBC will make a voluntary contribution to the
United States Treasury in the amount of $1.35 million within
10 calendar days after the Commission Order adopting this
Consent Decree becomes final. SBC must make this payment by
check, wire transfer or money order drawn to the order of
the Federal Communications Commission, and the check, wire
transfer or money order should refer to ``Acct. No.
200332080019'' and ``FRN No. 0004333571.'' If SBC makes
this payment by check or money order, it must mail the check
or money order to: Forfeiture Collection Section, Finance
Branch, Federal Communications Commission, P. O. Box 73482,
Chicago, Illinois, 60673-7482. If SBC makes this payment by
wire transfer, it must wire such payment in accordance with
Commission procedures for wire transfers.
16. The Commission agrees that, in the absence of
material new evidence relating to incidents that SBC has not
disclosed to the Bureau through the Effective Date of this
Consent Decree, it will not use the facts developed in this
Investigation, or the existence of this Consent Decree, to
institute, on its own motion, any new proceedings, formal or
informal, or to make any actions on its own motion against
the Company concerning the matters that were disclosed in
the Investigation. The Commission also agrees that, in the
absence of material new evidence relating to incidents that
SBC has not disclosed to the Bureau through the Effective
Date of this Consent Decree, it will not use the facts
developed in the Investigation to institute on its own
motion 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. Nothing in this Consent Decree limits the
Commission's authority to consider and adjudicate any formal
complaint that may be filed pursuant to sections 208 or 271
of the Communications Act, as amended, and to take any
action in response to such formal complaint.
17. 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 Commission issues an Order adopting the
Consent Decree without change, addition, or modification.
18. SBC's decision to enter into this Consent Decree
is expressly contingent upon the Commission's issuance of an
Order that is consistent with this Consent Decree, and which
adopts the Consent Decree without change, addition, or
modification.
19. 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.
20. If either party (or the United States on behalf of
the Commission), brings a judicial action to enforce the
terms of the Adopting Order, neither SBC nor the Commission
shall contest the validity of the Consent Decree or Adopting
Order, and SBC will waive any statutory right to a trial de
novo.
21. Any violation of the Consent Decree or the
Adopting Order will 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.
22. The Parties also agree that if any provision of
the Consent Decree conflicts with any subsequent rule or
order adopted by the Commission (except an order
specifically intended to revise the terms of this Consent
Decree to which SBC does not consent) that provision will be
superseded by such Commission rule or order.
23. This Consent Decree may be signed in counterparts.
FEDERAL COMMUNICATIONS COMMISSION
By: ___________________________________
Marlene H. Dortch
Secretary
SBC COMMUNICATIONS INC.
By: ___________________________________
James C. Smith
Senior Vice President - Federal Regulatory
SBC Telecommunications, Inc.
_________________________
1 See Letter from Maureen F. Del Duca, Chief, Investigations
and Hearings Division, Enforcement Bureau, to Michelle
Thomas, Executive Director, Federal Regulatory, SBC
Communications Inc., dated March 10, 2003.
2 See Letter from Maureen F. Del Duca, Chief,
Investigations and Hearings Division, Enforcement Bureau, to
Michelle Thomas, Executive Director, Federal Regulatory, SBC
Communications Inc., dated March 10, 2003.