Before the

[Federal Communications Commission]{.smallcaps}

# Washington, D.C. 20554

In the Matter of ) ) File No. EB-00-IH-0326a

SBC Communications, Inc. )

) NAL/Acct. No. 200132080015

Apparent Liability for Forfeiture )

###### NOTICE OF APPARENT LIABILITY FOR FORFEITURE

# Adopted: January 17, 2001 Released: January 18, 2001 

By the Chief, Enforcement Bureau:

# I. INTRODUCTION

1.  In this Notice of Apparent Liability for Forfeiture (NAL), we find
    that SBC Communications, Inc. (SBC) has apparently violated the
    Commission's rule requiring incumbent local exchange carriers
    (ILECs) promptly to post notices of premises that have run out of
    collocation space. These violations were discovered through an
    independent audit of SBC's compliance with the Commission's
    collocation rules. That audit was required by the Commission's order
    approving the merger application of Ameritech Corp. (Ameritech) and
    SBC.[^1] It appears that, in numerous instances during the audit
    period,[^2] SBC failed to timely update the document on its Internet
    site, required by the Commission's collocation rules, identifying
    those SBC premises that have run out of physical collocation
    space.[^3] These violations also constitute violations of the
    SBC/Ameritech Merger Order, which requires that SBC/Ameritech
    provide collocation consistent with the Commission's rules.[^4]
    Based upon our review of the facts and circumstances surrounding
    this matter, we find that SBC is apparently liable for a forfeiture
    in the amount of ninety-four thousand, five hundred dollars
    (\$94,500).

##### II. BACKGROUND

########  

2\. SBC is an ILEC that provides local telephone service in 13 states,
including Arkansas, Kansas, Missouri, Oklahoma, Texas, California,
Nevada, Illinois, Michigan, Indiana, Ohio, Wisconsin, and Connecticut.
At the end of 1999, SBC served nearly 60 million local exchange access
lines in its 13-state region, and served customers in 23 countries.[^5]
SBC also provides in-region interLATA, wireless, Internet access,
out-of-region interLATA, cable and wireless television, security
monitoring, and directory publishing services.[^6] In 1999, SBC had
total operating revenues of more than \$49 billion dollars.[^7]

3.  In the *SBC/Ameritech Merger Order*, the Commission concluded that
    the merger of SBC and Ameritech posed significant public interest
    harms that were not mitigated by the proposed transaction's
    potential public interest benefits.[^8] The Commission therefore
    approved the merger only subject to certain conditions designed to
    mitigate the potential public interest harms. One of those
    conditions was that SBC retain an independent auditor to develop and
    implement a comprehensive audit of the merged company's compliance
    with the Commission's collocation rules for the first eight months
    after the merger closing.[^9]

4.  On August 8, 2000, SBC submitted its audit report to the Commission
    regarding SBC's compliance with the Commission's collocation rules
    from October 8, 1999 through June 8, 2000.[^10] Based on the
    Bureau's review of the audit report and of certain information
    submitted to the Bureau by SBC, we conclude that SBC apparently
    violated the requirement to timely post exhausted collocation space
    in numerous instances during the audit period.[^11]

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III. **DISCUSSION**

**A. Violations**

5.  SBC does not dispute that, in certain instances during the audit
    period, it violated the Commission's rule requiring timely posting
    of notice of exhausted collocation space.[^12] Based on information
    submitted to the Bureau by SBC, we find that SBC apparently violated
    the timely posting requirement in numerous other instances.

6.  The posting rule states that an ILEC must update its Internet
    website listing premises that have exhausted collocation space
    "within ten days of the date at which a premises runs out of
    physical collocation space."[^13] The Commission order adopting this
    rule makes clear that an ILEC's obligation to post notice of
    exhausted space is triggered when such exhaustion occurs.[^14]
    Specifically, the purpose of the rule is to ensure that competitors
    do not "expend\[\] significant resources in applying for collocation
    space in an incumbent ILEC's premises where no such space
    exists."[^15] Information provided by SBC indicates that there have
    been numerous instances in which the posting date was more than 10
    days after the date that space actually became exhausted in those
    central offices.[^16] Moreover, in several of those instances, a
    competitive local exchange carrier (CLEC) may have been required to
    submit a collocation application, only to have the application
    denied on the ground that no space was available as of the time of
    the application. As noted above, this is the very result that
    section 51.321(h) of the Commission's rules was designed to
    avoid.[^17]

7.  Based on the facts set forth above, we find that SBC is apparently
    liable for a forfeiture for willful and repeated violation of the
    Commission's collocation rules and paragraph 37 of the merger
    conditions. SBC apparently violated the Commission rule requiring
    ILECs to timely update the document on its Internet site identifying
    those premises that have run out of physical collocation space in
    numerous instances during the audit period, and all during the past
    12 months. We find that SBC's failure to timely post notice of
    exhausted collocation space was willful and repeated. The term
    "willful" means that the violator knew it was taking the action in
    question, irrespective of any intent to violate the Commission's
    rules, and repeated means more than once.[^18] Furthermore, a
    continuing violation is \"repeated\" if it lasts more than one
    day.[^19]

8.  Consistent with the Commission's determination in the *SBC/Ameritech
    Merger Order* that its collocation rules are an integral component
    to opening local markets to competition, we find SBC's failure to
    comply with these rules to be significant.[^20] Given the importance
    of the Commission's collocation rules, we cannot excuse SBC's
    failure to comply with them.

**B. Forfeiture Amount**

9\. Section 503(b)(1) of the Act states that any person that willfully
or repeatedly fails to comply with any provision of the Act or any rule,
regulation, or order issued by the Commission, shall be liable to the
United States for a forfeiture penalty.[^21] For the time period
relevant to this proceeding, section 503(b)(2)(B) of the Act authorizes
the Commission to assess a forfeiture of up to \$110,000 for each
violation, or each day of a continuing violation, up to a statutory
maximum of \$1,100,000 for a single act or failure to act.[^22] In
determining the appropriate forfeiture amount, we consider the factors
enumerated in section 503(b)(2)(D) of the Act, including "the nature,
circumstances, extent and gravity of the violation, and, with respect to
the violator, the degree of culpability, any history of prior offenses,
ability to pay, and such other matters as justice may require."[^23]
Considering all of the circumstances described above, we find SBC
apparently liable for a forfeiture in the amount of \$94,500.

> **IV. ORDERING CLAUSES**

IV. 10\. ACCORDINGLY, IT IS ORDERED THAT, pursuant to section 503(b) of
    the Act, [^24] and section 1.80 of the Commission's Rules, [^25] SBC
    Communications is HEREBY NOTIFIED of its APPARENT LIABILITY FOR
    FORFEITURE in the amount of ninety-four thousand, five hundred
    dollars (\$94,500) for willfully or repeatedly violating the
    Commission's collocation rules.

11\. IT IS FURTHER ORDERED THAT, pursuant to section 1.80 of the
Commission's Rules, within thirty (30) days of the release date of this
NOTICE OF APPARENT LIABILITY, SBC Communications SHALL PAY to the United
States the full amount of the proposed forfeiture OR SHALL FILE a
written statement showing why the proposed forfeiture should not be
imposed or should be reduced.

12\. Payment of the forfeiture amount may be made by mailing a check or
similar instrument, payable to the order of the Federal Communications
Commission, to the Forfeiture Collection Section, Finance Branch,
Federal Communications Commission, P.O. Box 73482, Chicago, Illinois
60673-7482. The payment should note the "NAL/Acct. No." referenced
above.

13\. The response, if any, must be mailed to Charles W. Kelley, Chief,
Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission, 445 12^th^ Street S.W., Room 3-B443,
Washington, D.C., 20554, and must include the "NAL/Acct. No." referenced
above.

14\. The Commission will not consider reducing or canceling a forfeiture
in response to a claim of inability to pay unless the respondent
submits: (1) federal tax returns for the most recent three-year period;
(2) financial statements prepared according to generally accepted
accounting practices ("GAAP"); or (3) some other reliable and objective
documentation that accurately reflects the respondent's current
financial status. Any claim of inability to pay must specifically
identify the basis for the claim by reference to the financial
documentation provided.

15\. IT IS FURTHER ORDERED that a copy of this Notice of Apparent
Liability shall be sent by Certified Mail/Return Receipt Requested to
SBC Communications, c/o Sandra L.Wagner, Vice President-Federal
Regulatory, 1401 I Street, N.W., Suite 1100, Washington, D.C. 20005.

FEDERAL COMMUNICATIONS COMMISSION

David H. Solomon

Chief, Enforcement Bureau

[^1]: *See Applications of Ameritech Corp., Transferor, and SBC
    Communications, Inc., Transferee, For Consent to Transfer Control of
    Corporations Holding Commission Licenses and Lines Pursuant to
    Sections 214 and 310(d) of the Communications Act and Parts 5, 22,
    24, 25, 63, 90, 95, and 101 of the Commission's Rules*, CC Docket
    98-141, Memorandum Opinion and Order, 14 FCC Rcd 14712 at ¶ 387
    (1999) (*"SBC/Ameritech Merger Order"*); *SBC/Ameritech Merger
    Order*, Appendix C at ¶ 40. *See also Association of Communications
    Enterprises v. FCC*, No. 99-1441 (D.C. Cir. Jan. 9, 2001).

[^2]: *See* January 9, 2001 Letter from Sandra L. Wagner,
    Vice-President, SBC Telecommunications, Inc., to Brad Berry, Deputy
    Chief, Federal Communications Commission Enforcement Bureau, Exhibit
    A. SBC has requested confidential treatment of its submissions to
    the Bureau detailing the nature and scope of its apparent
    violations, and that request is pending. Accordingly, we do not here
    disclose the number of apparent violations or the premises with
    respect to which they occurred.

[^3]: 47 C.F.R. § 51.321(h).

[^4]: *See SBC/Ameritech Merger Order*, Appendix C at ¶ 37.

[^5]: SBC 1999 Annual Report at 6.

[^6]: *Id.* at 4.

[^7]: *Id.* at 76.

[^8]: *See SBC/Ameritech Merger Order* at ¶ 348.

[^9]: *See SBC/Ameritech Merger Order* at ¶ 387; *see also*
    *SBC/Ameritech Merger Order* Appendix C at ¶ 40. The audit covered
    the period from October 8, 1999 through June 8, 2000.

[^10]: *See* August 8, 2000 Letter from Marian Dyer, Vice-President, SBC
    Telecommunications, Inc., to Magalie Salas, Secretary, Federal
    Communications Commission; *see also* August 7, 2000 Report of
    Management on Compliance with the FCC's Collocation Rules
    ("Management's Assertion on Compliance"); *see also* August 7, 2000
    Report of Independent Accountants, Ernst & Young LLP ("Auditor's
    Report on Compliance").

[^11]: 47 C.F.R. § 51.321(h). *See also* *SBC/Ameritech Merger Order*,
    Appendix C at ¶ 37. *See* Auditor's Report on Compliance at pp. 1,
    2; *see also* Management's Assertion on Compliance at p. 3.

[^12]: *See* Auditor's Report on Compliance at pp. 1, 2; *see also*
    Management's Assertion on Compliance at p. 3.

[^13]: 47 C.F.R. § 51.321(h).

[^14]: *See* *In the Matter of Deployment of Wireline Services Offering
    Advanced Telecommunications Capability*, CC Docket 98-147, First
    Report and Order and Further Notice of Proposed Rulemaking, 14 FCC
    Rcd. 4761, 4793 (1999) ("*Advanced Services Order*").

[^15]: *See Advanced Services Order* at 4793.

[^16]: In a November 28, 2000 meeting, SBC told representatives of the
    Enforcement Bureau that SBC notified the California Public Utilities
    Commission of its intention to delay the postings for many of its
    California central offices cited above. At no point, however, did
    SBC seek a waiver from the FCC of the requirements of section
    51.321(h).

[^17]: *See* 47 C.F.R. § 51.321(h); *see also* *Advanced Services Order*
    at 4793.

[^18]: *See Application for Review of Southern California Broadcasting
    Co*., Memorandum Opinion and Order, 6 FCC Rcd 4387, 4388 (1991)
    ("*Southern California Broadcasting Co.")*; *see also Liability of
    Hale Broadcasting Corp*., Memorandum Opinion and Order, 79 FCC 2d
    169, 171 (1980).

[^19]: *See* *Southern California Broadcasting Co*., 6 FCC Rcd at 4388.

[^20]: *See* *SBC/Ameritech Merger Order* at ¶¶ 355, 386.

[^21]: 47 U.S.C. §503(b)(1)(B); *see also* 47 C.F.R. § 1.80(a)(2).

[^22]: 47 U.S.C. § 503(b)(2)(B); *see also* 47 C.F.R § 1.80(b)(2).

[^23]: 47 U.S.C. § 503(b)(2)(D); *see also* *The Commission's Forfeiture
    Policy Statement and Amendment of Section 1.80 of the Rules to
    Incorporate the Forfeiture Guidelines*, 12 FCC Rcd 17087, 17100
    (1997) ("*Forfeiture Policy Statement*"); *recon. denied* 15 FCC Rcd
    303 (1999); 47 C.F.R. § 1.80(b)(4).

[^24]: 47 U.S.C. § 503(b).

[^25]: 47 C.F.R. § 1.80.