Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | File No. E-97-19A            |
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| MCI TELECOMMUNICATIONS           | ) |                              |
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| CORPORATION,                     | * |                              |
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| Complainant                      | * |                              |
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| v\.                              | ) |                              |
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| ILLINOIS BELL TELEPHONE COMPANY, | * |                              |
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| INDIANA BELL TELEPHONE COMPANY,  | * |                              |
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| INC.,                            | ) |                              |
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| MICHIGAN BELL TELEPHONE COMPANY, | * |                              |
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| OHIO BELL TELEPHONE COMPANY,     | * |                              |
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| WISCONSIN BELL, INC., d/b/a/     | ) |                              |
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| AMERITECH OPERATING COMPANIES    | * |                              |
| and AMERITECH COMMUNICATIONS,    |   |                              |
| INC.,                            | * |                              |
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| Defendants.                      | ) |                              |
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**MEMORANDUM OPINION AND ORDER**

> **Adopted:** October 16, 2000 **Released:** October 19, 2000

By the Commission:

# Introduction

1.  In this Memorandum Opinion and Order, we grant in part a formal
    complaint filed by MCI Telecommunications Corporation[^1] against
    the Ameritech Operating Companies[^2] concerning Ameritech's
    1-800-AMERITECH service (the Service). This Service permits
    Ameritech's local subscribers to place local and long distance calls
    originating both inside and outside of the Ameritech service area.
    Section 271 of the Communications Act of 1934 (Act) generally bars
    each Bell Operating Company ("BOC") \-- including Ameritech \-- from
    providing long distance ("interLATA") service originating in the
    region where it provides local service, unless and until the
    Commission determines that various conditions relating to
    competition in local telephone service are satisfied.[^3] Ameritech
    has not received Commission approval to provide long distance
    service in any state in its service region. This complaint presents
    the question whether the 1-800-AMERITECH service violates section
    271.

2.  The evidence demonstrates that Ameritech: (1) designed and developed
    a combined service offering for its local service customers that
    includes a long distance component; (2) relied on its brand name in
    marketing the combined offering; (3) promoted the combined offering
    through bill inserts to Ameritech's local calling subscriber
    base; (4) served as the exclusive point of contact for the customer
    for all service inquiries for the combined offering; (5) maintained
    the exclusive right to market the Service; (6) selected the long
    distance carrier; (7) precluded the long distance carrier from
    contacting 1-800-AMERITECH customers without Ameritech's prior
    consent; (8) reserved the right to substitute its own services in
    place of the contracting provider; and (9) established the prices,
    terms, and conditions under which the long distance component would
    be offered. Applying Commission and judicial precedent in this
    area,[^4] we conclude, based on the totality of circumstances
    presented in the record, that Ameritech's 1-800-AMERITECH offering
    violates section 271. Because we find that Ameritech violated
    section 271, we do not reach other claims raised by MCI regarding
    other alleged violations of the Act by Ameritech.

# BACKGROUND

3.  In late November of 1996, Ameritech began offering its
    1-800-AMERITECH service, which permits its subscribers to place
    local, long distance and international calls from anywhere in the
    country by accessing a dialing platform through the Service's
    toll-free number.[^5] Ameritech promoted the Service as a way for
    its customers to make calling-card calls from payphones without
    paying excessive fees.[^6] Thus, the promotional materials asserted
    that, by dialing 1-800-AMERITECH, customers were "guaranteed low
    rates . . . for all domestic long distance calls."[^7] Similarly,
    advertisements mailed to Ameritech's local-service customers
    asserted that, by using the Service, callers could ensure that they
    would \"never be surprised by exorbitant calling card charges
    again.\"[^8] Other advertisements promoted the Service as a way for
    consumers to have control over which long distance company carries
    their calls, and to ensure that their calls would not be blocked by
    pay phone operators.[^9]

4.  In September 1996, Ameritech sent a notice of solicitation to
    approximately 144 long distance carriers, seeking in-region,
    interLATA transport to support the 1-800-AMERITECH service.[^10]
    Among other things, the notice of solicitation proposed a
    requirement that the IXC supporting the Service would show its calls
    on the Ameritech bill associated with an Ameritech-provided
    service,[^11] that the IXCs' contracts with Ameritech be on a
    month-to-month basis, that the contracts be terminable by Ameritech
    on 10 days\' notice, and that cancellation could be effected on a
    LATA-by-LATA basis.[^12] From the responses that it received,
    Ameritech chose WilTel Communications Group (WilTel), which
    Ameritech states was the only carrier that submitted a qualifying
    response to the notice of solicitation.[^13] Ameritech itself is the
    carrier for both local and intraLATA calls for its 1-800-AMERITECH
    service.[^14] Ameritech\'s interLATA affiliate, Ameritech
    Communications, Inc. (ACI), carries the interLATA calls originating
    outside Ameritech's region (out-of-region interLATA traffic)
    pursuant to Ameritech\'s F.C.C. Tariff No. 2.[^15] At the time MCI
    filed its complaint, WilTel carried the in-region, interLATA
    calls.[^16] Subsequently, Ameritech terminated its contract with
    WilTel and chose TelTrust Communications Services (TelTrust) as the
    sole IXC to support the Service.[^17] Under the TelTrust agreement,
    Ameritech reserved the right not only to contract with other IXCs,
    but also to utilize its own and its affiliates' resources to provide
    similar services.[^18]

5.  Ameritech's name and trademark have been far more prominently
    featured in advertisements promoting the Service than the identity
    of the long distance carriers involved. The toll-free number for the
    Service conspicuously links Ameritech's name to the service.
    Similarly, the promotional materials that Ameritech mailed to its
    local-service subscribers prominently feature Ameritech's name and
    logo. Only in smaller type does the mailer identify the carriers
    that actually transmit the calls, stating that "in-region intraLATA
    calls will be handled by Ameritech," and that "\[a\]ll other calls
    will be handled by Ameritech Long Distance or WilTel."[^19] Although
    the brochure to which the calling card was attached in Ameritech\'s
    initial mailing stated that interLATA calls would be handled by
    Ameritech Long Distance or WilTel, the calling card itself did not
    identify any carrier other than Ameritech.[^20] Other promotional
    materials used to market 1-800-AMERITECH included television and
    radio commercials and a print advertisement. Following the initial
    launch of the Service, these ads mentioned WilTel, but they did not
    identify it as the carrier for in-region, interLATA calls.[^21]
    Subsequently, the promotional materials were changed to state that
    in-region carrier services are provided by the IXC supporting the
    Service.[^22]

6.  When a customer accesses the platform by dialing 1-800-AMERITECH,
    she hears, \"Welcome to 800-AMERITECH," and then receives a prompt
    to enter the called number, her calling card number and a personal
    identification number. Once the calling card number is verified and
    the customer places a call, she hears \"Thank you for using
    800-AMERITECH\" when placing local, intraLATA toll, or
    out-of-region, interLATA calls. When placing in-region, interLATA
    calls, the customer hears a thank-you message that mentions the
    supporting carrier by name. In-region, interLATA calls are routed to
    the supporting IXC's network in the same manner as such calls would
    be routed to any other long distance carrier\'s network by
    Ameritech.[^23]

7.  The Service is promoted, among other means, through bill inserts
    sent to Ameritech's local customer base.[^24] The record before us
    indicates that Ameritech serves as both the initial and exclusive
    customer care contact for the 1-800-AMERITECH service.[^25] The
    TelTrust agreement prohibits TelTrust from communicating with the
    1-800-AMERITECH customers without prior written consent from
    Ameritech.[^26] The Service is billed through the customer's
    Ameritech monthly service bill.[^27]

# DISCUSSION

## Section 271 claim.

8.  MCI's primary contention in this proceeding is that the
    1-800-AMERITECH service violates section 271 of the Act because it
    amounts to the provision of in-region interLATA service before
    Ameritech has received approval from the Commission to offer such
    services. Section 271(a) states "\[n\]either a Bell operating
    company nor any affiliate of a Bell operating company, may provide
    interLATA services except as provided in this section."[^28] The
    statute permits a BOC to provide interLATA service originating
    within its local service area on a state-by-state basis only upon
    application to the Commission and approval from the Commission
    pursuant to section 271(d). Section 271 thus "both gives the BOCs an
    opportunity to enter the long distance market and conditions that
    opportunity on the BOCs' own actions in opening up their local
    markets."[^29] Congress intended section 271 to create a strong
    incentive for the BOCs to comply with new obligations in sections
    251 and 252 of the Telecommunications Act of 1996,[^30] which, in
    turn, were designed to facilitate competition in local markets
    (including interconnection, unbundling and resale). The statute
    creates this "powerful incentive" by conditioning BOC entry into the
    in-region, long-distance market on compliance with a checklist of
    local market-opening criteria and other requirements.[^31]

9.  Ameritech has not received approval from the Commission to provide
    long distance service in any state in its region.[^32] It is
    therefore subject to the general section 271(a) prohibition on the
    offering of such services. MCI's claim under section 271 presents
    the generic issue, previously addressed by the Commission in the
    *Qwest Teaming Order* and affirmed by the Court of Appeals, of
    whether a challenged offering, for which a BOC does not actually
    transmit in-region, interLATA traffic, may nevertheless amount to
    the "provision" of interLATA service for purposes of section 271. In
    that case -- as in this case -- the relevant BOCs were offering a
    combined service that included their own local and intraLATA toll
    service bundled with interLATA transport provided by an unaffiliated
    long distance carrier.

10. In the *Qwest Teaming Order*, we stated that the determination of
    whether a non-transmitting BOC violated section 271 turns on
    "whether a BOC's involvement in the long distance market enables it
    to obtain competitive advantages, thereby reducing its incentive to
    cooperate in opening its local market to competition."[^33] Thus,
    the "provision" of interLATA services, within the meaning of section
    271(a), "must encompass activities that, if otherwise permitted,
    would undermine Congress's method of promoting both local and long
    distance competition by prohibiting BOCs from full participation
    pursuant to section 271's competitive checklist."[^34] In order to
    determine whether a BOC's long distance-related activities ran afoul
    of section 271, we found it instructive in the *Qwest Teaming Order*
    to balance the following, non-exclusive factors: "whether the BOC
    obtains material benefits (other than access charges) uniquely
    associated with the ability to include a long-distance component in"
    the challenged offering; whether the BOC is effectively holding
    itself out as a provider of long distance service; and whether the
    BOC is performing activities and functions that are typically
    performed by those who are legally or contractually responsible for
    providing interLATA service to the public."[^35] In evaluating the
    challenged BOC actions, "we consider the totality of its
    involvement, rather than focus on any one particular activity."[^36]
    We apply the same fact-based test to MCI's claim that the
    1-800-AMERITECH service amounts to the prohibited provision of
    in-region interLATA service.

11. In the *Qwest Teaming Order*, one of the principal factors that led
    us to find a section 271 violation was that the challenged offerings
    would have afforded the defendants a "significant jumpstart when
    they do obtain 271 authorization."[^37] Thus, by developing an
    extensive customer base for the challenged services, the defendant
    carriers could "pre-position" those customers for a seamless
    transition to the long distance services of the carriers' section
    272 affiliates once the carriers received section 271 authority to
    begin in-region interLATA service.

12. As with the arrangements at issue in the *Qwest Teaming Order*, we
    find that the 1-800-AMERITECH service permits Ameritech to obtain
    material benefits uniquely associated with the ability to include a
    long distance component in the 1-800-AMERITECH service. The Service
    permits Ameritech to accumulate a significant base of customers who
    rely on the Service. After receiving section 271 authority,
    Ameritech would be well positioned to substitute the interLATA
    service of its section 272 affiliate for that of the IXC currently
    supporting the Service. In so doing, Ameritech could build up
    goodwill as a full service provider with its local-service customers
    who already routinely placed their long distance calling-card calls
    through the 1-800-AMERITECH service before gaining section 271
    approval from the Commission.[^38] The ability of Ameritech to avail
    itself of a ready base of customers that is positioned for migration
    to its eventual interLATA service is a troublesome material benefit
    uniquely associated with the ability to include a long-distance
    component in the 1-800-AMERITECH service.

13. Our concern in this regard is heightened by the structure of
    Ameritech's agreements with the IXCs that have provided in-region
    interLATA transmission to the Service. The TelTrust agreement, for
    example, states that Ameritech "may at any time and for *any* or
    *no* reason terminate this Agreement, in *whole* or in *part*, by
    giving seventy-five (75) days prior written notice . . ."[^39] In
    addition, Ameritech reserved the right not only to contract with
    other IXCs, but it also reserved the right to utilize its own and
    its affiliates' resources to provide similar services.[^40] Read
    together, these contract provisions give Ameritech the right to
    replace TelTrust's services with the services of Ameritech's section
    272 affiliate once the Commission grants Ameritech authorization to
    provide long distance services in-region.[^41] Thus, as in the
    *Qwest Teaming Order*, Ameritech structured the agreement in such a
    way that it would be "well-poised to substitute the long distance
    service offered by \[its\] section 272 affiliate, when \[it\]
    obtain\[s\] section 271 approval, into the \[1-800-AMERITECH\]
    package in the future."[^42]

14. In the *Qwest Teaming Order*, we found that the challenged offerings
    allowed the defendant carriers to "enhance \[their\] goodwill in the
    marketplace" and to "add value" when dealing with their customers in
    a way that further cemented their relationships with their end users
    before their markets were open to meaningful competition.[^43] This,
    in turn, makes it even more difficult for competitors successfully
    to enter the market. The TelTrust agreement flatly prohibits
    TelTrust from communicating with the 1-800-AMERITECH customers in
    any manner without the prior written consent of Ameritech.[^44]
    Thus, Ameritech enjoys a significant competitive advantage in
    building goodwill with the 1-800-AMERITECH customers, including with
    regard to the provision of long distance services. As a result, once
    Ameritech receives Commission authorization to offer long distance
    service in-region, the 1-800-AMERITECH customers, who receive local
    service from Ameritech, may be more inclined to select Ameritech as
    their presubscribed long distance carrier as well.

15. Another troubling aspect of the Service is the manner in which
    Ameritech has promoted it to its local subscriber base. In addition
    to advertising the offering through various media outlets, Ameritech
    has availed itself of a communication channel that is uniquely
    available to it as the monopoly provider of local service within its
    region -- bill inserts and other mailings that draw on its
    subscriber list.[^45] Thus, Ameritech can promote the Service to
    virtually every subscriber on its network, and it can do so using a
    customer database that is either unavailable to any one of its
    competitors in the local service market or available only at a
    significant additional charge. Moreover, through the use of bill
    inserts, Ameritech can effectively promote the Service at a slight
    fraction of what a stand-alone mailing would cost one of its
    competitors, even if those competitors had access to Ameritech's
    subscriber mailing list.

16. Ameritech's participation in the long distance market through its
    1-800-AMERITECH service enables it to obtain significant competitive
    advantages in a way that is similar to what we found objectionable
    in the *Qwest Teaming Order*. We recognize that the service offering
    at issue in this case may not be as strong a disincentive to the
    opening of Ameritech's local markets as were the pre-subscribed
    combined service offerings at issue in the *Qwest Teaming Order*.
    Nevertheless, we believe that this Service allows Ameritech to build
    up goodwill with its local-service customers as a full-service
    provider prior to receiving section 271 approval. This permits
    Ameritech a significant competitive advantage that could reduce its
    incentive to open its local market to competition.[^46] We find that
    the provision of the 1-800-AMERITECH service runs counter to the
    incentive structure established by Congress in section 271.

17. Under the analytical framework set forth in the *Qwest Teaming
    Order*, we also inquire whether Ameritech is effectively holding
    itself out to customers as a provider of long distance services, and
    whether Ameritech is engaged in various actions typically performed
    by those who resell interLATA service. In the *Qwest Teaming Order*,
    for example, we found that, through the challenged services, the
    defendant carriers were holding themselves out in such a manner
    because they had "taken several specific steps to brand \[the
    challenged offerings\] as their exclusive combined service
    offerings."[^47] Thus, the defendants held the "exclusive right to
    market and sell Qwest's long distance services in conjunction with
    the marketing and sale of their own local services," and they served
    as the initial point of contact for customers experiencing problems
    with the long distance service portion of the offerings.[^48] In
    reviewing the *Qwest Teaming Order*, the Court of Appeals
    specifically noted the reasonableness of our conclusion that, viewed
    as a whole, the challenged promotional materials could lead
    consumers to believe that the BOC was providing in-region long
    distance service.[^49]

18. We begin our analysis of whether Ameritech holds itself out as
    providing long distance service with the toll-free number through
    which subscribers reach the Service. The vanity number[^50] is
    plainly calculated to cause customers to associate Ameritech with
    all of the services offered through the 1-800-AMERITECH platform.
    Thus, the number allows Ameritech to link the Service's long
    distance offering (as well as its other offerings) with the
    carrier's accumulated customer good will and its established
    reputation as a local service provider. [^51]

19. Examination of Ameritech's promotional materials for the Service
    also informs our decision on whether Ameritech holds itself out as
    providing long distance service. These materials prominently display
    the Ameritech brand, creating the impression that 1-800-AMERITECH is
    an offering for which the carrier provides all components of the
    service offered, including long distance.[^52] Other statements in
    the materials foster this impression. For example, in a letter
    displaying only the Ameritech logo, the carrier states that the
    1-800-AMERITECH service ensures customers will have their "calls
    carried at Ameritech\'s low rates every time."[^53] Similarly, a
    mailer that accompanies the new Ameritech calling cards explains
    that the benefits of using the 1-800-AMERITECH service include
    \"gain\[ing\] control of who carries your local and long distance
    calls\" and \"pay\[ing\] a GUARANTEED low rate of \$0.25 per minute
    for all domestic long distance calls billed to your Ameritech
    Calling Card.\"[^54] The same mailer encourages calling card
    customers to \"dial 1-800-AMERITECH every time you make a local or
    long distance calling card call\" and \"\[start\] using the
    Ameritech Calling Card to save money on all your calls -- local,
    long distance, and international.\"[^55]

20. In the promotional materials for the Service, Ameritech directly
    analogizes the Service to AT&T's and MCI's calling card offerings by
    comparing the rates of the three services for an eight-minute
    call.[^56] In that regard, Ameritech admits that customers are
    generally aware that they can choose their long distance carrier on
    an *ad hoc* basis \"by dialing an 800 number associated with the
    customer\'s chosen carrier (e.g., MCI\'s \'1-800-ANYCALL\' or
    AT&T\'s \'1-800 CALLATT\').\"[^57] By dialing these numbers, which
    are heavily promoted by the respective carriers, customers reach an
    IXC that actually provides interLATA transmission service regardless
    of where the call originates. Ameritech asserts, however, that
    because of disclosures in its promotional materials for the Service,
    those materials do not hold Ameritech out as similarly providing
    long distance service.[^58] We are not persuaded by this argument,
    based as it is on the relatively inconspicuous disclaimers in
    Ameritech's marketing materials. It requires too fine of a line to
    distinguish between the "holding out" accomplished by MCI's and
    AT&T's vanity-number services and the "holding out" accomplished by
    1-800-AMERITECH.

21. Ameritech points out that several portions of its promotional
    materials indicate that it handles only the calls it is authorized
    to carry and that Ameritech Communications, Inc., or the supporting
    contract carrier handles all other calls.[^59] Thus, in their
    original form, Ameritech\'s promotional materials stated merely that
    \"other calls are handled by WilTel.\"[^60] The materials have since
    been changed to state: \"In region carrier services provided by
    Teltrust. Out of region carrier services provided by Ameritech
    Communications, Inc.\"[^61] We are troubled by the proportional
    dissimilarity in type size between the prominence of the Ameritech
    brand name, including the number of times that the Ameritech brand
    name is associated with long distance service and rates, and the
    in-region service disclaimer and their proximity. The disclosures
    essentially are relegated to a hidden portion of the promotional
    materials.

22. Ameritech further asserts that \"the customer\'s bill clearly
    indicates the carrier for each call, confirming the distinction and
    eliminating any possible confusion.\"[^62] While that much is true,
    when we examine the Service as a whole and the manner in which
    Ameritech promotes it, we conclude that, through its 1-800-AMERITECH
    offering, Ameritech holds itself out as providing in-region long
    distance service. The Ameritech vanity access number all but ensures
    that the offering, and all of its components, generally will be
    perceived as Ameritech-provided services. Indeed, the notice of
    solicitation even proposed a requirement that all calls placed
    through the Service would show up on Ameritech's bill as being
    associated with an Ameritech-provided service.[^63] Furthermore,
    given the prominence of Ameritech's brand on the promotional
    materials and in the system's voice prompts,[^64] the fact that
    Ameritech does not furnish the in-region, interLATA transmission for
    the Service likely will be lost on all but a few sophisticated
    consumers.[^65] In affirming the *Qwest Teaming Order*, the Court of
    Appeals noted that viewing the promotional materials as a whole
    could "lead consumers to link long-distance service to the BOCs,
    particularly as long distance was offered only as part of a
    full-service package with a BOC brand name."[^66] The same is true
    here.

23. In addition, as with the arrangements at issue in the *Qwest Teaming
    Order*, the record reveals that Ameritech serves as both the
    initial, and apparently the only, customer care contact for the
    1-800-AMERITECH service. Our examination of the record reveals no
    instance -- nor has Ameritech identified any -- in which Ameritech
    employees are instructed to pass customer inquiries or complaints to
    the IXC supporting the service. When a customer probes for
    information about which carrier transmits in-region interLATA calls,
    the operator scripts in the record instruct the Ameritech employees
    simply to answer the question by identifying the contract
    carrier.[^67] It does not appear that Ameritech employees ever refer
    to the supporting IXC a customer complaint about long distance rates
    or service. By contrast, when faced with a question about cellular
    service, Ameritech operators are instructed to refer the customer to
    the toll-free number for Ameritech's cellular business unit.[^68]
    Ameritech\'s provision of customer care for all aspects of the
    service, including the long distance component, supports the
    conclusion that, in connection with the 1-800-Ameritech service,
    Ameritech is performing activities typically performed by a
    reseller.

24. Additionally, Ameritech controls the exclusive right to market the
    1-800-AMERITECH service. Notably, the TelTrust agreement states that
    TelTrust "can perform no advertising or promotion of 1-800-AMERITECH
    without the prior written consent of Ameritech other than in the
    normal course of providing the service.\"[^69] The agreement further
    requires that TelTrust obtain Ameritech's written consent before
    even mentioning its arrangement with Ameritech in any promotional
    materials.[^70] As noted above, the agreement also prohibits
    TelTrust from "communicat\[ing\] with the 1-800-AMERITECH customers
    in any manner without the prior written consent of Ameritech."[^71]
    Taken together, these provisions make it clear that Ameritech
    controls the exclusive right to market and sell, under the
    1-800-AMERITECH name, its own local and intraLATA toll services and
    its contract carrier's long distance services.

25. We also note that Ameritech appears to have had a significant degree
    of involvement in the design and development of the long distance
    component of its 1-800-AMERITECH service. Ameritech chose the IXC
    that would carry the in-region long distance traffic based on
    requirements that are very similar to those established in the
    notice of solicitation. Indeed, the final terms of the agreement
    related to certain pricing and usage rates do not differ from the
    terms in the notice of solicitation.[^72] Thus, the supporting IXC
    simply agreed to participate in the offering under the pricing and
    usage terms and conditions that Ameritech had already established on
    its own.

26. These factors bolster our conclusion that Ameritech effectively is
    holding itself out to consumers as a provider of long distance
    service, and that it is engaged in various actions typically
    performed by a reseller. The similarities are striking between
    Ameritech's activities here and its activities that were found
    unlawful in the *Qwest Teaming Order*.

27. On balance, based on the totality of the circumstances discussed
    above, we conclude that, through the 1-800-AMERITECH service,
    Ameritech is \"providing\" in-region, interLATA service in violation
    of section 271. The Service affords Ameritech material benefits
    uniquely associated with the inclusion of long distance service in
    the offering. It permits Ameritech to accumulate a significant base
    of customers who rely on the Service; it enables Ameritech to build
    up goodwill as a full service provider with its local-service
    customers by prohibiting the IXC supporting the Service from
    communicating with 1-800-AMERITECH customers without Ameritech's
    prior written consent, and by availing itself of a communication
    channel that is uniquely available to Ameritech as the monopoly
    provider of local service within its region -- bill inserts and
    other mailings that draw on its subscriber list. Through the Service
    and the many associated promotional materials that prominently bear
    Ameritech's brand, the carrier essentially holds itself out as
    providing long distance service. And, in connection with the
    Service, Ameritech performs numerous functions, including marketing
    and customer care that are typically performed by a reseller of long
    distance service. All of these factors point to the conclusion that,
    through the Service, Ameritech is "providing" in-region, interLATA
    service.

## Other claims.

28. MCI also argues that (1) the 1-800-AMERITECH service amounts to an
    unreasonable practice in violation of section 201(b); (2) MCI was
    excluded from providing transport services to support the Service in
    a discriminatory manner in violation of section 202(a) and (3) the
    structure of the Service violates Ameritech's equal access
    obligations under section 251(g). Because we find that Ameritech
    violated section 271, we need not and do not reach the claims raised
    by MCI regarding alleged violations of other provisions of the
    Communications Act.[^73]

# CONCLUSION

29. As discussed above, we find that Ameritech, through its
    1-800-AMERITECH service, is providing in-region, interLATA services
    without authorization in violation of section 271 of the Act. We do
    not reach other statutory claims raised by MCI.

# ORDERING CLAUSES

30. Accordingly, IT IS ORDERED, pursuant to sections 1, 4(i), 4(j), 208,
    and 271 of Act, as amended, 47 U.S.C. §§ 151, 154(i), 154(j), 208,
    271, that the Formal Complaint filed by MCI Telecommunications
    Corporation IS GRANTED to the extent that it alleges that the
    1-800-AMERITECH service violates section 271.

31. IT IS FURTHER ORDERED that MCI, pursuant to section 1.722 of the
    Commission\'s rules, 47 C.F.R. § 1.722, MAY FILE a supplemental
    complaint concerning damages relating to our findings in this Order
    within 60 days of the date of this decision.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

[^1]: Effective September 14, 1998, MCI Telecommunications Corp. merged
    with WorldCom, Inc. to form MCI WorldCom, Inc. All references herein
    to MCI after September 14, 1998, refer to MCI WorldCom, Inc.

[^2]: The Ameritech Operating Companies are: Illinois Bell Telephone
    Company; Indiana Bell Telephone Company, Inc.; Michigan Bell
    Telephone Company; The Ohio Bell Telephone Company; and Wisconsin
    Bell Inc. Ameritech Answer at 1. This Order refers to them
    collectively as Ameritech. We note that effective October 6, 1999,
    Ameritech Corp. merged with SBC Communications, Inc. As a result of
    the merger, Ameritech is a wholly owned subsidiary of SBC
    Communications, Inc.

[^3]: 47 U.S.C. § 271(a). Section 271(a) provides: "Neither a Bell
    operating company, nor any affiliate of a Bell operating company,
    may provide interLATA services except as provided in this section."
    47 U.S.C. § 271(a). InterLATA service \"means telecommunications
    between a point located in a local access transport area \[LATA\]
    and a point located outside such area.\" 47 U.S.C. § 153(21). LATAs
    are contiguous geographic areas established by a Bell Operating
    Company (BOC) such that no exchange area includes points within more
    than one metropolitan statistical area or state. 47 U.S.C. §
    153(25). Ameritech's in-region states are Illinois, Indiana,
    Michigan, Ohio and Wisconsin.

[^4]: *See AT&T Corp. v. Ameritech Corp*., 13 FCC Rcd 21438 (1998)
    ("*Qwest Teaming Order*"), *aff'd sub nom., U S WEST Communications,
    Inc. v. FCC*, 177 F.3d 1057 (D.C. Cir. 1999), *cert. denied*, 120
    S.Ct. 1240 (2000).

[^5]: Ameritech Answer, ¶ 4.

[^6]: Ameritech's Answer to MCI Interrogatories, June 9, 1997, Exh. 3
    (News Release, Nov. 25, 1996).

[^7]: Ameritech Letter to Tonya Rutherford, Jan. 15, 1999, Att. 2 at 1
    (January 15, 1999 Letter). *See also* News Release, Nov. 25, 1996.

[^8]: Ameritech Answer, Exh. 1.

[^9]: Ameritech Answer, Exh. 1; *see also* News Release, Nov. 25, 1996.

[^10]: Ameritech Answer, ¶ 25.

[^11]: Notice of Solicitation at 3.

[^12]: Notice of Solicitation at 3-4.

[^13]: Ameritech Answer, ¶ 25.

[^14]: Ameritech Answer, ¶ 5.

[^15]: Ameritech Answer, ¶ 6. Section 271(b) permits a BOC, upon passage
    of the Telecommunications Act of 1996, to provide interLATA calls
    originating outside of its local service territory through a
    structurally separate affiliate. 47 U.S.C. § § 271(b), 272.

[^16]: Ameritech Answer, ¶ 11; Stipulations of Fact at 2.

[^17]: On January 9, 1998, Ameritech again solicited bids for IXCs to
    carry the in-region interLATA traffic for the 1-800-AMERITECH
    service. Through this process, Ameritech ultimately chose TelTrust.
    January 15, 1999 Letter, Att. 1.

[^18]: Letter to Magalie Roman Salas, September 16, 1999, Att. at 11 (§
    2.13) (TelTrust Agreement).

[^19]: Ameritech Answer, Exh. 1.

[^20]: Ameritech Answer, Exh. 1.

[^21]: The 30-second television commercial contains the following
    written statement (on the screen for approximately 3 seconds in the
    middle of the commercial): \"Ameritech handles calls when
    authorized. Other calls carried by WilTel.\" The radio commercial
    contains the following statement (at the end of the commercial):
    \"Ameritech guarantees lawful calling card rates and handles calls
    where authorized. Other calls carried by WilTel.\" The print
    advertisement contains the following statement (at the bottom of the
    page in six-point Times Roman print): \"Ameritech guarantees lawful
    calling card rates and handles calls where authorized. Other calls
    handled by WilTel.\" Attachments to Letter from Frank Michael Panek,
    Ameritech Counsel, to Diane Griffin Harmon, FCC Counsel (July 14,
    1997) (Ameritech Factual Supplement). All three promotional
    materials advertise 1-800-AMERITECH in conjunction with Ameritech\'s
    calling card. See, e.g., Print Advertisement (\"Now the card that
    connects also protects. (When you dial 1-800-AMERITECH.)\"). *Id.*

[^22]: January 15, 1999 Letter, Att. 2 at 9.

[^23]: Ameritech Factual Supplement.

[^24]: January 15, 1999 Letter, Att. 2 at 21.

[^25]: *See* ¶ 23 below.

[^26]: TelTrust Agreement at 1 (§ 1.03).

[^27]: TelTrust Agreement, Att. A at 22.

[^28]: 47 U.S.C. § 271(a).

[^29]: *U S WEST Communications*, 177 F.3d at 1060.

[^30]: The Telecommunications Act of 1996, Pub. L. No. 104-104, 110
    Stat. 56, *codified at* 47 U.S.C. §§ 151 *et. seq.*, amended the
    Communications Act of 1934.

[^31]: *U S WEST Communications*, 177 F.3d at 1060; 47 U.S.C. § 271(c).
    *See also AT&T Corp. v. FCC*, 220 F3d 607, 612 (D.C. Cir. 2000)
    (conditional long distance entry pursuant to section 271 is designed
    "\[t\]o encourage

    BOCs to open their markets to competition as quickly as possible").
    The Commission's decision in the *Qwest Teaming Order* contains a
    more extensive explanation of the market-opening incentives behind
    section 271. 13 FCC Rcd 21438, 21441-47, ¶¶ 3-7 (1998).

[^32]: Ameritech has twice applied to the Commission for section 271
    authorization to provide in-region, interLATA service in Michigan.
    Ameritech\'s first section 271 application, filed Jan. 17, 1997, was
    dismissed by the Commission at Ameritech\'s request. *Application by
    Ameritech Michigan Pursuant to Section 271 of the Communications Act
    of 1934, as Amended, to Provide In-Region, InterLATA Services in
    Michigan*, 12 FCC Rcd 2088 (Com. Car. Bur. 1997). On August 19,
    1997, the Commission denied Ameritech\'s second application, filed
    May 21, 1997. *Application by Ameritech Michigan Pursuant to Section
    271 of the Communications Act of 1934, as Amended, to Provide
    In-Region, InterLATA Services in Michigan*, 12 FCC Rcd 20543 (1997)
    (*Ameritech Michigan 271 Order*).

[^33]: *Qwest Teaming Order*, 13 FCC Rcd at 21465, ¶ 37. The Commission
    recently applied the test articulated in the *Qwest Teaming Order*
    in the context of approving a transfer of radio licenses associated
    with U S WEST's merger with Qwest. *In the Matter of Qwest
    Communications International, Inc. and U S WEST, Inc., Applications
    for Transfer of Control of Domestic and International Sections 214
    and 310 Authorizations and Applications to Transfer Control of a
    Submarine Cable Landing License*, Memorandum Opinion and Order, FCC
    00-231, 2000 WL 821252 (F.C.C.) (Rel. June 26, 2000). The Commission
    concluded that Qwest's proposed divestiture of interLATA customers,
    services and assets in U S WEST's service region was a legitimate,
    arms-length transaction, and, as a transitional device designed to
    minimize disruption to customers, would allow the merger to proceed
    in compliance with the requirements of section 271. *See also AT&T
    Corp. v. BellSouth Corp.*, Memorandum Opinion and Order, DA 99-609
    (Com. Car. Bur. Mar. 30, 1999) (Com. Car. Bur. 1999) (staff-level
    decision holding that BellSouth's pre-paid calling card did not
    violate section 271 on the basis of findings that, *inter alia*, (1)
    the card did not involve a continuing, presubscribed relationship
    that would allow BellSouth to gain meaningful information about card
    purchasers and to exploit that relationship in customer retention or
    win-back efforts; and (2) the card served a segment of the
    telecommunications market that is replete with similar prepaid
    offerings sponsored by non-carriers, thereby reducing the risk that
    consumers would perceive BellSouth as offering in-region, interLATA
    services).

[^34]: *Qwest Teaming Order*, at 21462, ¶ 30.

[^35]: *Id.* at 21465-66, ¶ 37.

[^36]: *Id.* at 21465-66, ¶ 37.

[^37]: *Id.* at 21467, ¶ 41 (internal quotation omitted).

[^38]: *See U S WEST Communications*, 177 F.3d at 1060 ("By offering
    one-stop shopping for local and long distance under their own brand
    name and with their own customer care . . . U S WEST and Ameritech
    could build up goodwill as full service providers, positioning
    themselves in these markets before section 271 allows them actually
    to enter."

[^39]: TelTrust Agreement at 2 (§ 1.06).

[^40]: TelTrust Agreement at 2 (§ 2.13).

[^41]: Ameritech's initial notice of solicitation provides further
    evidence that the Service would permit Ameritech to enjoy, almost
    immediately, a considerable jumpstart for its in-region long
    distance operations as it received section 271 authority in each
    state. For example, the notice of solicitation proposed that
    Ameritech could cancel the IXC's service with only 10 days' notice,
    and it would have permitted Ameritech to effect such a cancellation
    on a LATA-by-LATA basis. Notice of Solicitation at 2. Thus, the
    notice of solicitation envisioned that Ameritech quickly would move,
    on a state-by-state basis, its 1‑800-AMERITECH customers, and the
    traffic they generate, to its section 272 affiliate's network.

[^42]: *Qwest Teaming Order*, 13 FCC Rcd at 21467, ¶ 41. *See U S WEST
    Communications*, 177 F.3d at 1060. We note that, under the totality
    of circumstances test, this factor alone is not dispositive in
    determining whether a BOC has violated section 271 of the Act.

[^43]: *Qwest Teaming Order*, 13 FCC Rcd at 21468, ¶ 42.

[^44]: TelTrust Agreement at 1 (§ 1.03).

[^45]: January 15, 1999 Letter, Att. 2 at 21.

[^46]: *See U S WEST Communications*, 177 F.3d at 1060.

[^47]: *Qwest Teaming Order*, 13 FCC Rcd at 21471, ¶ 45.

[^48]: *Id.* at 21471, ¶¶ 45-46.

[^49]: *U S WEST Communications*, 177 F.3d at 1061.

[^50]: A vanity number is a telephone number for which the letters
    associated with the number\'s digits on a telephone handset spell a
    name or word of value to the number holder. *In re Toll Free Service
    Access Codes*, Fourth Report and Order and Memorandum Opinion and
    Order, 13 FCC Rcd 9058, 9058 ¶ 1 (1998) (*Toll Free Service Access
    Codes Order*).

[^51]: As the Commission stated in the *Toll Free Service Access Codes
    Order*, vanity numbers \"are of value to their subscribers because
    they can generate high visibility and consumer recognition when used
    in advertising.\" *Id.*, at 9064, ¶ 11. *Cf.* Complainant\'s Reply
    Brief at 4 (arguing that Ameritech name in 800 number reinforces
    impression that Ameritech is sole carrier supporting Service).

[^52]: *See generally* January 15, 1999 Letter, Att. 2; Ameritech
    Answer, Exh. 1.

[^53]: January 15, 1999 Letter, Att. 2 at 1. *See also* Ameritech
    Answer, Exh. 1 (\"by dialing 1-800-AMERITECH your calls will be
    carried at *our* low rates\").

[^54]: *Id*. The mailer makes the following statements: "when you dial
    1-800-AMERITECH you have control over who carries your local and
    long distance calls;" "Just dial 1-800-AMERITECH and you\'re
    guaranteed to get low local and long distance calls;" and "By
    dialing 1-800-AMERITECH you can enjoy great local and long distance
    rates - all itemized on just one monthly bill." *Id*.

[^55]: January 15, 1999 Letter, Att. 2 at 3.

[^56]: *See* January 15, 1999 Letter, Att. 2 at 9. The comparison
    indicates a 29% savings off of AT&T\'s calling card rates and a 27%
    customer savings off of MCI\'s calling card rates when the customer
    uses the 1-800-AMERITECH service. *Cf. Shared Tenant Services*, 627
    F. Supp. at 1101 (MFJ Court finding that the BOCs would be directly
    competing with the IXCs through rate comparisons).

[^57]: Ameritech Answer, ¶ 26.

[^58]: Ameritech Supplemental Reply Brief at 6.

[^59]: Ameritech Answer, Exh. 1; January 15, 1999 Letter, Att. 2 at 1.

[^60]: Ameritech Answer, Exh. 1.

[^61]: January 15, 1999 Letter, Att. 2 at 9. Even this more complete
    disclosure regarding TelTrust appears in exceptionally small print
    compared to the prominence of Ameritech's brand name in the
    promotional materials.

[^62]: Ameritech\'s Initial Brief at 5.

[^63]: Notice of Solicitation at 3.

[^64]: Ameritech Factual Supplement.

[^65]: The MFJ Court similarly found that BOC advertisements for long
    distance service in connection with BOC-provided calling cards that
    did not indicate that the BOCs were not providing the long distance
    service were misleading and inconsistent with the MFJ\'s
    prohibitions. *United States v. Western Elec. Co*., 698 F. Supp.
    348, 356 n.42 (D.D.C. 1988). The MFJ Court was concerned that
    customers would be misled into believing the BOCs were carrying
    their long distance calls. *Id.* at 356 n.38.

[^66]: *U S WEST Communications*, 177 F.3d 1057.

[^67]: Ameritech's Answers to MCI's Interrogatories, Exh. 1.

[^68]: *Id.*

[^69]: TelTrust Agreement at 1 (§ 1.03).

[^70]: TelTrust Agreement at 12 (§ 2.16).

[^71]: TelTrust Agreement at 1 (§ 1.03). In addition, the original RFP,
    which resulted in Ameritech choosing WilTel as the participating
    IXC, states that the service provider \"must provide, at
    Ameritech\'s request, 800

    AMERITECH customer and call detail for Ameritech\'s marketing
    efforts in support of 800 AMERITECH.\" Letter from Julian P. Gehman,
    Attorney for Ameritech, Att. at 12.

[^72]: *Compare* Notice of Solicitation at 3 (stating that the
    "\[s\]ervice provider shall charge surcharge and usage rates that
    are no more than 10% higher than the average of the surcharge and
    usage rates charged by AT&T, MCI and Sprint..") *with* January 15,
    1999 Letter, Att. 2 at 19 (stating that rates for the
    1-800-AMERITECH calling card result in 29% and 27% savings compared
    to AT&T and MCI, respectively).

[^73]: *See, e.g., Qwest Teaming Order*, 13 FCC Rcd at 21476, ¶ 53.