**Before the**

**Federal Communications Commission**

**Washington, DC 20554**

)

In the Matter of ) File Nos. EB-01-IH-0339

) EB-01-IH-0453

) NAL/Acct. No.200132080059

> ) FRN Nos. 0004-3051-24

SBC Communications, Inc. ) 0004-3335-71

) 0005-1937-01

**ORDER**

**Adopted: May 22, 2002 Released: May 28, 2002**

By the Commission:

1.  The Commission has been conducting two investigations into potential
    violations by SBC Communications, Inc. ("SBC") of sections 251 and
    271 of the Communications Act of 1934, as amended ("the Act"),[^1]
    sections 1.17 and 1.65 of the Commission's Rules,[^2] and the
    requirements of the *SBC/SNET Consent Decree*.[^3] These
    investigations focused on competitors' access to SBC's operations
    support systems ("OSS") and information SBC provided to the
    Commission as part of its section 271 applications.[^4] The
    Commission and SBC have negotiated the terms of a Consent Decree
    that will terminate these investigations. A copy of the Consent
    Decree is attached hereto and is incorporated by reference.

2.  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.

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.

4.  Accordingly, IT IS ORDERED, pursuant to sections 4(i), 4(j), and
    503(b) of the Communications Act of 1934, as amended, 47 U.S.C. §§
    154(i), 154(j), and 503(b), that the Consent Decree, incorporated by
    reference in and attached to this order, is hereby ADOPTED.

5.  IT IS FURTHER ORDERED that the Secretary SHALL SIGN the Consent
    Decree on behalf of the Commission.

6.  IT IS FURTHER ORDERED that the above captioned investigations ARE
    TERMINATED.

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

Secretary

**Before the**

**Federal Communications Commission**

**Washington, DC 20554**

)

In the Matter of ) File No. EB-01-IH-0339

) EB-01-IH-0453

) NAL/Acct. No.200132080059

> ) FRN Nos. 0004-3051-24

SBC Communications Inc. ) 0004-3335-71

> ) 0005-1937-01

**CONSENT DECREE**

# INTRODUCTION

1.  The Federal Communications Commission (the "Commission" or the
    "FCC") and SBC Telecommunications, Inc.,[^5] ("SBC" or the
    "Company") hereby enter into this Consent Decree for the purpose of
    terminating two investigations by the Commission into whether SBC
    may have violated sections 251 and 271 of the Communications Act of
    1934, as amended ("the Act"),[^6] sections 1.17 and 1.65 of the
    Commission's Rules,[^7] and the terms of the June 1999 *SBC/SNET
    Consent Decree.*[^8] The investigations focused on the circumstances
    surrounding SBC's submission to the Commission of inaccurate factual
    information in section 271 application affidavits. Specifically,
    these affidavits contained inaccurate information related to
    competing carriers' allegations concerning purported problems
    obtaining access to loop qualification information in Texas, Kansas,
    Oklahoma, Arkansas, and Missouri, and electronic access to SBC's
    Loop Maintenance Operations System ("LMOS").[^9]

# BACKGROUND

2.  Section 271(d)(1) of the Act requires a Bell Operating Company
    ("BOC") to file an application with the Commission in order to
    receive authorization to provide in-region interLATA service.[^10]
    Applicants must comply with the requirements of section 271 prior to
    receiving such approval. Thus, *inter alia*, an applicant must
    provide requesting carriers nondiscriminatory access to its
    operations support systems ("OSS")[^11] in order to comply with
    section 271(c)(2)(B)(ii) of the Act and obtain section 271
    authorization.[^12] Once the applicant has received section 271
    authority, it must continue to meet the conditions of Commission
    authorization, including providing nondiscriminatory access to its
    OSS.[^13] In this context, the Commission, in addition to its
    general enforcement authority,[^14] has authority to suspend or
    revoke its approval of a section 271 application should the BOC at
    any time cease to meet a condition of the approval.[^15]

3.  Applicants seeking authority to provide in-region interLATA service
    submit affidavits and other evidence as part of their applications
    to demonstrate that they meet the requirements of section 271.
    Section 1.17 of the Commission's Rules states that no applicant
    shall make any misrepresentation or willful material omission in any
    application submitted to the Commission.[^16] Section 1.65 of the
    Commission's Rules requires applicants to furnish "additional or
    corrected information" whenever information furnished in a pending
    application is no longer substantially accurate and complete in all
    significant respects or when there has been a substantial change as
    to any other matter that may be of decisional significance in a
    Commission proceeding involving that application.[^17] Applicants
    that violate these rules are subject to the Commission's enforcement
    authority.[^18]

4.  Pursuant to these rules, the Enforcement Bureau conducted two
    investigations in relation to SBC's Texas, Kansas/Oklahoma and
    Missouri section 271 applications. The first investigation arose
    from SBC's representations in the Kansas/Oklahoma proceeding
    concerning competing carriers' ability to access loop qualification
    information from SBC, which raised questions about potential
    violations of sections 251 and 271 of the Act. It also involved the
    timeliness of disclosures the company made to the Commission
    subsequent to the Commission's approval of the section 271
    application, SBC's implementation of and compliance with the 1999
    *SBC/SNET Consent Decree*, and the veracity of an affidavit by an
    SBC employee that SBC submitted in connection with the
    investigation.[^19] Following the Enforcement Bureau's investigation
    of these issues, the Commission issued a Notice of Apparent
    Liability and Order on October 16, 2001, in which the Commission
    proposed a forfeiture of \$2.52 million for SBC's apparent violation
    of sections 1.17 and 1.65 of the Commission's Rules and of the
    training requirements of the 1999 *SBC/SNET Consent Decree*.[^20]
    Additionally, the Commission required SBC to report to the
    Commission, through an independent audit, on the success of its
    efforts to ensure compliance with section 1.65 of the Commission's
    Rules and the terms of the *SBC/SNET Consent Decree*. SBC submitted
    its response to the NAL on November 21, 2001.[^21]

5.  The Enforcement Bureau's second investigation arose from a competing
    carrier's complaint about difficulties obtaining electronic access
    to SBC's LMOS system.[^22] This investigation, as did the first,
    concerned SBC's compliance with sections 251 and 271 of the Act, the
    veracity of affidavits SBC submitted in connection with section 271
    applications, the timeliness of disclosures the company made in
    relation to the Commission's approval of those applications, and
    questions about SBC's implementation of and compliance with the
    *SBC/SNET Consent Decree*.[^23]

# DEFINITIONS

6.  For purposes of this Consent Decree and the attached Compliance
    Plan, the following definitions shall apply.

###### "FCC" or the "Commission" means the Federal Communications Commission and all of its bureaus and offices.

(a) "SBC" or the "Company" means SBC Communications Inc. and its wholly
    owned subsidiaries, including, but not limited to the following:
    Southwestern Bell Telephone, L.P., Pacific Bell, Nevada Bell,
    Illinois Bell, Indiana Bell, Michigan Bell, Ohio Bell, Wisconsin
    Bell, SNET, Southwestern Bell Communications Services, Inc., SBC
    Advanced Solutions, Inc. (ASI), Ameritech Advanced Data Services
    (AADS), SBC-MSI and SBC long distance subsidiaries. It will not
    apply to Cingular, or any other company that is not wholly owned and
    controlled by SBC, including SBC's foreign affiliates.

(b) "In-region state" is defined at 47 U.S.C. § 271(i)(1), and for SBC
    includes Texas, Kansas, Oklahoma, Missouri, Arkansas, Illinois,
    Indiana, Michigan, Ohio, Wisconsin, Nevada, and California.

(c) "Parties" means SBC and the FCC.

(d) "SBC FCC Representatives" means SBC employees authorized by SBC to
    represent SBC in "Contacts with the Commission," as that term is
    defined in subparagraph (h) of this paragraph. SBC will provide the
    Chief of the Enforcement Bureau a list of SBC employees so
    authorized within 10 calendar days after the Commission Order
    adopting this Consent Decree becomes final, and will provide the
    Chief of the Enforcement Bureau an updated list on a monthly basis.
    This updated list will identify any SBC employees who have been
    added or removed from the previously submitted list. This list will
    include: (1) the Chairman and CEO of SBC and the SBC Officers who
    report directly to the Chairman and CEO; (2) staff assigned to the
    Federal Regulatory Group located in Washington, D.C. and the SBC
    Officer to whom this Group reports; (3) attorneys assigned to the
    FCC Legal Group located in Washington, D.C. and the SBC Legal
    Officer to whom this Group reports; (4) attorneys assigned to the
    SBC 271 Legal Team and the SBC Legal Officer to whom this Team
    reports; (5) all other SBC employees who have been authorized to
    make "contacts" with the FCC by one of the SBC FCC Representatives
    listed above; and (6) SBC employees who sign and submit sworn
    affidavits or statements on behalf of SBC to the FCC after the
    effective date of this Consent Decree.

(e) "SBC Compliance Guidelines" means the Compliance Primer used by SBC
    to provide training to SBC FCC Representatives on the requirements
    of the *SBC/SNET Consent Decree*, this Consent Decree, sections 1.17
    and 1.65 of the Commission's Rules, and any other FCC rule
    pertaining to contacts with and representations to the FCC.

(f) "Compliance Training" means training SBC provides to SBC FCC
    Representatives on the requirements of the *SBC/SNET Consent
    Decree*, this Consent Decree, sections 1.17 and 1.65 of the
    Commission's Rules, and any other FCC rules pertaining to contacts
    with and representations to the FCC.

(g) "Contacts with the Commission" is defined as an in-person meeting
    with an FCC Commissioner or FCC staff, or participation in a
    telephone or conference call with an FCC Commissioner or FCC staff
    that has been scheduled, initiated, coordinated or authorized by an
    SBC FCC Representative for purposes of discussing substantive
    matters concerning a pending matter relating to SBC, or the
    submission of a written statement, including an affidavit or sworn
    statement, to an FCC Commissioner, FCC staff, or the FCC.

(h) "Order" or "Adopting Order" means an order of the FCC adopting this
    Consent Decree without change, addition, or modification.

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

(j) "OSS" or "operations support systems" means systems used by SBC to
    perform the functions of pre-ordering, ordering, provisioning,
    maintenance and repair, and billing as defined in the
    *Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, Third Report and Order, CC Docket
    No. 96-98, 15 FCC Rcd 3696 (1999).

(k) "*SBC/SNET Consent Decree*" refers to the agreement between the
    Commission and SBC, including the Compliance Plan requirements
    contained therein, resolving the informal investigation by the
    Commission into potential violations by SBC of sections 271 and 272
    of the Communications Act and section 1.65 of the Commission's
    rules, and potentially inaccurate statements made by SBC employees,
    all in relation to SBC's application for transfer of various
    authorizations from Southern New England Telephone Company to
    SBC.[^24]

(l) "Investigations" or "investigation" means, collectively or
    singularly, the investigations commenced by letters of inquiry the
    Enforcement Bureau issued to SBC on May 4, 2001 concerning loop
    qualification and/or on July 26, 2001 concerning LMOS, and
    information learned from interviews, documents, informal complaints,
    *ex partes*, or other information received by the Commission related
    to the issues addressed therein (excluding information received in,
    or in connection with, any formal complaint proceeding) prior to the
    date of the Adoption Order.

(m) "Effective Date" means the date on which the Commission adopts the
    Adopting Order.

# AGREEMENT

7.  SBC and the Commission agree that this Consent Decree does not
    constitute either an adjudication of the merits, or any factual or
    legal finding or determination of noncompliance by SBC with the
    requirements of the Act, as amended, with the Commission's Rules, or
    with the requirements of the *SBC/SNET Consent Decree*. The Parties
    agree that this Consent Decree is for settlement purposes only and
    that by agreeing to this Consent Decree, the Company does not admit
    any noncompliance, violation, or liability associated with or
    arising from any alleged actions or failures, including any problems
    or failures described in the letters of inquiry or the NAL, or in
    any informal complaints, *ex partes*, or other information the
    Commission received on or before the Effective Date of this Consent
    Decree.

8.  In express reliance on the covenants and representations contained
    herein, the Commission agrees to terminate the Investigations and
    cancel the NAL, except for the requirements in paragraphs 64, 89, 97
    and 98 regarding the independent audit.[^25]

9.  The Parties agree and acknowledge that this Consent Decree shall
    constitute a final settlement between SBC and the Commission of the
    Investigations. In consideration for the termination of these
    Investigations in accordance with the terms of this Consent Decree,
    SBC agrees to the terms, conditions, and procedures contained herein
    and in the accompanying and incorporated Compliance Plan. To ensure
    SBC's future compliance with the Act and our rules, SBC agrees,
    effective thirty days after the release of the Order, to implement
    the specific measures contained in the attached Compliance Plan. SBC
    also agrees that the definitions of "SBC FCC Representatives" and
    "Contacts with the Commission" contained in paragraph 6 of this
    Consent Decree shall apply to the terms "SBC's FCC representatives"
    and "FCC Contacts" in the SBC Compliance Plan Regarding FCC Rules
    and Regulations attached to the *SBC/SNET Consent Decree*.

10. SBC has performed an internal investigation concerning an SBC
    employee's representations to the Enforcement Bureau related to its
    loop qualification investigation and, because of the unique
    circumstances of these representations (including the fact that
    there were no witnesses to the specific facts upon which the
    representations in question are based), SBC has no basis upon which
    to determine whether each of the facts contained in those
    representations are or are not accurate. SBC confirms that it is SBC
    corporate policy that if, after an internal investigation and based
    upon a preponderance of the evidence, SBC concludes that one of its
    employees has intentionally made any misrepresentation, or engaged
    in any willful material omission in any submission to the
    Commission, either orally or in writing, SBC will take appropriate
    disciplinary action, up to and including dismissal.

11. SBC will make a voluntary contribution to the United States Treasury
    in the amount of \$3.6 million dollars (\$3,600,000) 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 "NAL Acct. No. 200132080059" and "FRN Nos.
    0004-3051-24, 0004-3335-71, and 0005-1937-01." 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.

12. The Commission agrees that, in the absence of material new evidence
    related to these matters, it will not use the facts developed in the
    Investigations through the date of this Consent Decree, or the
    existence of this Consent Decree, to institute, on its own motion,
    any new proceedings, formal or informal, or to take any actions on
    its own motion against the Company concerning the matters that were
    the subject of the Investigations. The Commission also agrees that,
    in the absence of material new evidence related to these matters, it
    will not use the facts the Bureau developed in the Investigations 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. Consistent with the foregoing, nothing in this
    Consent Decree limits the Commission's authority to consider and
    adjudicate any complaint that may be filed pursuant to sections 208
    or 271 of the Communications Act, as amended,[^26] and to take any
    action in response to such complaint.

13. The Company 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.

14. The Company's decision to enter into this Consent Decree is
    expressly contingent upon issuance of an Order that is consistent
    with this Consent Decree, and which adopts the Consent Decree
    without change, addition, or modification.

15. 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.

16. If the Commission, 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 will contest the validity of the
    Consent Decree or Adopting Order, and the Company will waive any
    statutory right to a trial *de novo*.

17. 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.

18. The Parties agree that the terms of the accompanying Compliance Plan
    are incorporated into this Consent Decree. The parties further agree
    that Part II of the accompanying Compliance Plan will remain in
    effect only until SBC has received final authorization for all of
    its section 271 applications for its twelve in-region states. For
    the purposes of this Consent Decree, final authorization will mean
    once a Commission grant of an application is no longer subject to
    reconsideration by the Commission or to review by any court.

19. The Parties agree that Part I of the accompanying Compliance Plan,
    and the *SBC/SNET Consent Decree* shall remain in effect until May
    1, 2007, unless the Commission votes to extend either of them.

20. This Consent Decree shall terminate at such time as Parts I and II
    of the accompanying Compliance Plan have both terminated as set
    forth in paragraphs 18 and 19, above.

21. 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.

22. This Consent Decree may be signed in counterparts.

FEDERAL COMMUNICATIONS COMMISSION

By: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Marlene H. Dortch

Secretary

SBC Telecommunications, Inc.

By:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Priscilla Hill-Ardoin

Senior Vice-President-FCC

#### COMPLIANCE PLAN[^27] {#compliance-plan .unnumbered}

I.  **Contacts with and representations to the FCC.**

    A.  [SBC FCC Representatives]{.underline}:

        1.  SBC will train and provide materials to its SBC FCC
            Representatives concerning the requirements of this Consent
            Decree, the *SBC/SNET Consent Decree*, and certain
            Commission rules. Specifically, SBC will:

            a.  train its SBC FCC Representatives in SBC's obligations
                regarding contacts with and representations to the FCC
                under the terms of the *SBC/SNET Consent Decree*, this
                Consent Decree, and sections 1.17 and 1.65 of the
                Commission's Rules; and

            b.  provide each of its FCC Representatives with the SBC
                Compliance Guidelines setting forth SBC's obligations
                regarding contacts with and representations to the FCC
                under the terms of the *SBC/SNET Consent Decree*, this
                Consent Decree, and sections 1.17 and 1.65 of the
                Commission's Rules.

        2.  SBC will provide the materials and training described in
            I.A.1., above:

            a.  to all SBC FCC Representatives each year;

            b.  except in the case of an employee who signs and submits
                a section 271 affidavit on behalf of SBC, to each
                employee SBC designates as an SBC FCC Representative by
                including such employee on SBC's list of authorized SBC
                FCC Representatives before such employee participates in
                a contact with the FCC; and

            c.  to each SBC employee who signs and submits an FCC
                affidavit on behalf of SBC no later than five business
                days after the date on which such employee is assigned
                responsibility to prepare his or her initial affidavit,
                or before the date the employee signs such affidavit,
                whichever occurs first.

        3.  SBC will maintain written certification from each employee
            in I.A.2. certifying that he or she has received the
            training and understands the obligations regarding contacts
            with and representations to the FCC under the terms of the
            *SBC/SNET Consent Decree*, this Consent Decree, and section
            1.17 and 1.65 of the Commission's Rules, and reviewed and
            understands the SBC Compliance Guidelines.

    B.  [Contacts with the FCC]{.underline}: SBC will take reasonable
        steps to ensure that only an SBC FCC Representative schedules or
        participates in a Contact with the Commission. In particular, at
        least once per calendar year, SBC will notify its management
        employees (*i.e.*, non-bargained for employees) via e-mail that
        they may not contact the FCC, an FCC Commissioner, or FCC staff
        for purposes of discussing substantive matters concerning a
        pending matter relating to SBC, unless they are authorized by
        SBC to engage in such contact and have received Compliance
        Training, as defined in paragraph 6(g) of the Consent Decree.

    C.  [Disciplinary Action]{.underline}: If, after an internal
        investigation and based upon a preponderance of the evidence,
        SBC concludes that one of its employees has intentionally made
        any misrepresentation, or engaged in any willful material
        omission in any submission to the Commission, either orally or
        in writing, SBC will take appropriate disciplinary action, up to
        and including dismissal.

    D.  [Compliance Tracking]{.underline}: SBC will assign a manager in
        its Federal Regulatory Group the responsibility for tracking
        SBC's compliance with the foregoing requirements, including the
        maintenance of records documenting such compliance. SBC will
        make copies of relevant records available to the FCC, upon
        written request, within ten days of such request, unless
        negotiated otherwise.

II. **Section 271 Applications**

    A.  [Affiant Training]{.underline}: SBC will inform each affiant who
        files an affidavit with the FCC in support of any section 271
        application of SBC's obligations under section 1.17 and 1.65 of
        the Commission's Rules no later than five business days after
        the affiant is assigned the responsibility to prepare his or her
        initial section 271 affidavit, or before the date the employee
        signs such affidavit, whichever occurs first.

    B.  [Affidavit Verification]{.underline}: SBC will require that,
        prior to signing an affidavit that is filed with the Commission
        in support of a section 271 application, each affiant verify to
        a reasonable certainty, in writing, that the factual assertions
        included in the affidavit are accurate and complete in all
        significant respects. Such verification must be based on either
        the affiant's own personal knowledge, or the personal knowledge
        of one or more SBC employees whom the affiant reasonably
        believes are knowledgeable and reliable. If an SBC employee
        verifies factual information in an affidavit filed with the
        Commission in support of a section 271 application based on
        personal knowledge, then that SBC employee will identify the
        factual assertions about which he or she has personal knowledge
        and verify to a reasonable certainty, in writing, that the
        factual assertion is accurate and complete in all significant
        respects.

    C.  [SBC Employees Verifying Factual Information Filed with the
        Commission]{.underline}: SBC will provide all employees
        verifying factual information in an affidavit that is filed with
        the Commission in support of a section 271 application with
        written instructions summarizing that employee's responsibility
        under sections 1.17 and 1.65 of the Commission's Rules.

    D.  [List of Employees Verifying Information in
        Affidavits]{.underline}: SBC will maintain a list of those
        employees who, after the effective date of this Consent Decree,
        verify the factual assertions contained in an affidavit, or any
        portion thereof, filed with the FCC in support of a section 271
        application. The list shall specify which affidavit(s) the
        employee verified and, if an employee verified only part of an
        affidavit, which paragraphs of the affidavit the employee
        verified.

    E.  [Affidavit Statement]{.underline}: SBC will require that
        affidavits signed by an SBC employee that are filed with the FCC
        in support of a section 271 application include a statement that
        the affiant has:

        1.  received the training SBC is obligated to provide to all SBC
            FCC Representatives;

        2.  reviewed and understands the SBC Compliance Guidelines;

        3.  signed an acknowledgement of his or her training and review
            and understanding of the Guidelines; and

        4.  complied with the requirements of the SBC Compliance
            Guidelines.

    F.  [Compliance Tracking]{.underline}: The Manager referenced in
        Section I will have responsibility for tracking SBC's compliance
        with the foregoing requirements, including maintaining records
        documenting such requirements. SBC will make copies of the
        relevant records available to the FCC, upon written request,
        within ten days of such request, unless negotiated otherwise.

III. **Independent Audit**

     A.  An independent auditor shall perform a compliance attestation
         of the requirements of this Compliance Plan for the period June
         1, 2002 through May 31, 2003 in accordance with the standards
         promulgated by the American Institute of Certified Public
         Accountants ("AICPA"). The independent auditor shall file its
         audit report with the Chief, Enforcement Bureau no later than
         90 days after the end of the audit period. In particular, the
         independent auditor shall perform an examination engagement
         resulting in a positive opinion (with all exceptions noted).
         The following terms and conditions shall apply to the conduct
         of the audit:

         1.  The independent auditor shall be Ernst & Young, unless
             otherwise agreed by SBC and the Enforcement Bureau;

         2.  The independent auditor shall submit its preliminary audit
             program to the Enforcement Bureau and SBC for review and
             comment before starting any work. The final audit program
             shall be determined by the independent auditor based upon
             AICPA standards, taking into consideration the comments of
             the Enforcement Bureau and SBC; and

         3.  The independent auditor shall make available to the
             Enforcement Bureau upon request its working papers and
             supporting documentation for a period of two years after
             completing the audit.

[^1]: 47 U.S.C. §§ 251, 271.

[^2]: 47 C.F.R. §§ 1.17, 1.65.

[^3]: *See SBC Communications, Inc.,* Order, 14 FCC Rcd 12741 (1999)
    ("*SBC/SNET Consent Decree*").

[^4]: *See* Letter from David H. Solomon, Chief, Enforcement Bureau,
    Federal Communications Commission to Sandra L. Wagner, Vice
    President-Federal Regulatory, SBC Telecommunications, Inc. (May 4,
    2001), and Letter from David H. Solomon, Chief, Enforcement Bureau
    to Sandra L. Wagner, Vice President-Federal Regulatory, SBC
    Telecommunications, Inc. (July 26, 2001). *See also SBC
    Communications, Inc.*, Notice of Apparent Liability for Forfeiture
    and Order, 16 FCC Rcd 19091 (2001).

[^5]: Although the Commission's decisions granting SBC's section 271
    applications refer to the SBC affiliates that applied for section
    271 approval as "SWBT" (the acronym for the SBC affiliate
    Southwestern Bell Telephone, L.P.), throughout this Consent Decree
    we will refer to SBC and its affiliates as "SBC."

[^6]: 47 U.S.C. §§ 251 and 271.

[^7]: 47 C.F.R. §§ 1.17 and 1.65.

[^8]: *See SBC Communications, Inc.,* Order, 14 FCC Rcd 12741 (1999) (
    "*SBC/SNET Consent Decree*"). The *SBC/SNET Consent Decree* resolved
    an investigation into potential violations by SBC of sections 271
    and 272 of the Communications Act and section 1.65 of the
    Commission's rules, and potentially inaccurate statements made by
    SBC employees, all in relation to SBC's application for transfer of
    various authorizations from Southern New England Telephone Company
    ("SNET") to SBC. The *SBC/SNET Consent Decree* required SBC to train
    those employees who have regular contact with the Commission as part
    of their assigned duties in Commission rules governing contacts with
    and representations to the Commission.

[^9]: *See* Letter from David H. Solomon, Chief, Enforcement Bureau,
    Federal Communications Commission, to Sandra L. Wagner, Vice
    President-Federal Regulatory, SBC Telecommunications, Inc. (May 4,
    2001) ("Loop Qualification Letter of Inquiry"), and Letter from
    David H. Solomon, Chief, Enforcement Bureau, to Sandra L. Wagner,
    Vice President-Federal Regulatory, SBC Telecommunications, Inc.
    (July 26, 2001) ("LMOS Letter of Inquiry").

[^10]: 47 U.S.C. § 271(d)(1). A LATA, or local access transport area,
    defines the contiguous geographic area within which a Bell Operating
    Company may provide service. *See* 47 U.S.C. § 153(25).

[^11]: OSS includes the variety of systems, databases, and personnel
    used by an incumbent LEC to provide service to its customers. *See
    Joint Application by SBC Communications, Inc., Southwestern Bell
    Tel. Co., and Southwestern Bell Commun. Serv., Inc. d/b/a
    Southwestern Bell Long Distance for Provision of In-Region,
    InterLATA Services in Kansas and Oklahoma*, CC Docket No. 00-217,
    Memorandum Opinion and Order, 16 FCC Rcd 6237, 6284, para. 104
    (2001), *aff'd and remanded in part by Sprint Communications Co.
    L.P. et al. v. FCC,* 274 F.3d 549 (D.C. Cir. 2001).

[^12]: *See* 47 U.S.C. § 271(c)(2)(B)(ii). *See also* *Application by
    Bell Atlantic New York for Authorization Under Section 271 of the
    Communications Act To Provide In-Region, InterLATA Service in the
    State of New York*, CC Docket No. 99-295, Memorandum Opinion and
    Order, 15 FCC Rcd 3953, at 3971, para. 44 (1999), *aff'd by AT&T
    Corp. v. FCC*, 220 F.3d 607 (D.C. Cir. 2000); *see also* 47 U.S.C. §
    271(c)(2)(B)(ii).

[^13]: *See* § 271(d)(6)(A)(iii). "\[T\]he grant of \[an\] application
    merely closes a chapter. It does not end the story." *Application by
    SBC Communications, Inc., Southwestern Bell Tel. Co., and
    Southwestern Bell Commun. Serv., Inc. d/b/a Southwestern Bell Long
    Distance Pursuant to Section 271 of the Telecommunications Act of
    1996 To In-Region, InterLATA Services in Texas*, CC Docket No.
    00-65, Memorandum Opinion and Order, 15 FCC Rcd 18354, 18359, para.
    7 (2000)..

[^14]: *See generally,* 47 U.S.C. § 503(b).

[^15]: *See, e.g.*, 47 U.S.C. § 271(d)(6)(A)(ii).

[^16]: In relevant part, section 1.17, 47 C.F.R. § 1.17, states: ". .
    .No applicant, permittee or licensee shall in any response to
    Commission correspondence or inquiry or in any application,
    pleading, report or any other written statement submitted to the
    Commission, make any misrepresentation or willful material omission
    bearing on any matter within the jurisdiction of the Commission."

[^17]: In relevant part, section 1.65, 47 C.F.R. § 1.65, states:

    > Each applicant is responsible for the continuing accuracy and
    > completeness of information furnished in a pending application or
    > in Commission proceedings involving a pending application.
    > Whenever the information furnished in the pending application is
    > no longer substantially accurate and complete in all significant
    > respects, the applicant shall as promptly as possible and in any
    > event within 30 days, unless good cause is shown, amend or request
    > the amendment of his application so as to furnish such additional
    > or corrected information as may be appropriate. Whenever there has
    > been a substantial change as to any other matter which may be of
    > decisional significance in a Commission proceeding involving the
    > pending application, the applicant shall as promptly as possible
    > and in any event within 30 days, unless good cause is shown,
    > submit a statement furnishing such additional or corrected
    > information as may be appropriate, which shall be served upon
    > parties of record in accordance with § 1.47. . . For the purposes
    > of this section, an application is "pending" before the Commission
    > from the time it is accepted for filing by the Commission until a
    > Commission grant or denial of the application is no longer subject
    > to reconsideration by the Commission or to review by any court.

[^18]: *See, e.g.,* 47 U.S.C. § 503(b).

[^19]: *See* Loop Qualification Letter of Inquiry.

[^20]: *See* *SBC Communications Inc,*, Notice of Apparent Liability for
    Forfeiture and Order, 16 FCC Rcd 19091 (2001) ("NAL"). The
    Commission premised SBC's apparent section 1.17 violation on
    statements made in an affidavit signed by an SBC employee and
    submitted by SBC with its April 6, 2001 report to the Enforcement
    Bureau.

[^21]: *See* Response of SBC Communications Inc. to Notice of Apparent
    Liability for Forfeiture and Order, EB-01-IH-0339 (filed Nov. 21,
    2001).

[^22]: *See* Comments of AT&T Corp. in Opposition to SBC Communications
    Inc.'s Section 271 Application for Missouri, CC Docket No. 01-88,
    (filed Apr. 24, 2001) and Letter from Richard E. Young, Sidley
    Austin Brown & Wood to Magalie Roman Salas, Secretary, Federal
    Communications Commission, CC Docket No. 01-88, at 7 (filed May 24,
    2001).

[^23]: *See* LMOS Letter of Inquiry.

[^24]: *See SBC/SNET Consent Decree*, 14 FCC Rcd 12741 (1999).

[^25]: *See* NAL, 16 FCC Rcd at 19114, 19125, 19127-28.

[^26]: 47 U.S.C. §§ 208 and 271.

[^27]: This Compliance Plan incorporates Section III: Definitions from
    the Consent Decree.