**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+----+------------------------------+
| In the matter of                 | *  | Transmittal No. 1312         |
|                                  | *) |                              |
| Ameritech Operating Companies    | ** | Transmittal No. 20           |
|                                  |    |                              |
| Tariff FCC No. 2                 | *  | Transmittal No. 77           |
|                                  | *) |                              |
| Nevada Bell Telephone Companies  | ** | Transmittal No. 772          |
|                                  |    |                              |
| Tariff FCC No. 1                 | *  | Transmittal No. 2906         |
|                                  | *) |                              |
| Pacific Bell Telephone Company   | ** |                              |
|                                  |    |                              |
| FCC Tariff No. 1                 | *  |                              |
|                                  | *) |                              |
| Southern New England Telephone   | ** |                              |
| Companies                        |    |                              |
|                                  | *  |                              |
| Tariff FCC No. 39                | *) |                              |
|                                  | ** |                              |
| Southwestern Bell Telephone      |    |                              |
| Company                          | *  |                              |
|                                  | *) |                              |
| FCC Tariff No. 73                | ** |                              |
|                                  |    |                              |
|                                  | *  |                              |
|                                  | *) |                              |
|                                  | ** |                              |
|                                  |    |                              |
|                                  | *  |                              |
|                                  | *) |                              |
|                                  | ** |                              |
|                                  |    |                              |
|                                  | *  |                              |
|                                  | *) |                              |
|                                  | ** |                              |
|                                  |    |                              |
|                                  | *  |                              |
|                                  | *) |                              |
|                                  | ** |                              |
|                                  |    |                              |
|                                  | *  |                              |
|                                  | *) |                              |
|                                  | ** |                              |
|                                  |    |                              |
|                                  | *  |                              |
|                                  | *) |                              |
|                                  | ** |                              |
+----------------------------------+----+------------------------------+

**ORDER**

**Adopted: August 16, 2002 Released: August 16, 2002**

By the Division Chief, Pricing Policy Division:

# INTRODUCTION

1.  Pursuant to section 204(a)(3) of the Communications Act of 1934, as
    amended,[^1] the Ameritech Operating Companies (Ameritech), the
    Nevada Bell Telephone Companies (Nevada Bell), the Pacific Bell
    Telephone Company (Pacific Bell), the Southern New England Telephone
    Companies (SNET), and the Southwestern Bell Telephone Company (SWBT)
    filed Transmittal Nos. 1312, 20, 77, 772, and 2906, respectively,
    revising certain provisions of their interstate access tariffs, FCC.
    Nos. 2, 1, 1, 39, and 73, respectively, to become effective August
    17, 2002.[^2] Because these telephone companies are all part of SBC
    Communications, Inc., they will be referred to collectively
    throughout this order as "SBC." SBC's tariff revisions would amend
    the sections of its tariffs regarding security deposits to allow SBC
    to require security deposits in circumstances not covered by its
    existing tariffs. The revisions also would add provisions regarding
    advance payment for services.

2.  SBC's current tariffs allow it to require security deposits from a
    customer that has a late payment history or lacks established
    credit. The revisions permit SBC to require a two-month deposit or
    prepayment if a customer has a late payment history or no
    established credit, and the customer has "impaired credit
    worthiness." "Impaired credit worthiness" is defined as meeting one
    of the following criteria: (1) the customer's or its parent's senior
    debt securities are below investment grade as defined by the
    Securities and Exchange Commission; (2) the customer's or its
    parent's senior debt securities are rated the lowest investment
    grade rating category by a nationally recognized statistical rating
    organization and are put on review by the rating organization for a
    possible downgrade; (3) if the customer does not have securities
    rated by credit rating agencies, the customer is rated "fair" or
    below in a composite credit appraisal as published by Dun and
    Bradstreet, or received a "high risk" Paydex score as published by
    Dun and Bradstreet; (4) the customer or its parent informs SBC or
    publicly states that it is unable to pay its debts; or (5) the
    customer or its parent is in voluntary or involuntary bankruptcy.
    SBC would require deposits or prepayments from customers with
    impaired credit worthiness only if their most recent interstate
    access bills total \$1 million or more. [^3] The tariff revisions
    also provide that customers who have "impaired credit worthiness"
    but no history of late payment or lack of established credit have a
    choice of paying a one-month security deposit or prepaying for one
    month of service.[^4] Such customers also must pay their bills in 21
    days rather than 30 days.

3.  SBC's revisions also provide that, if a customer subject to a
    two-month deposit requirement fails to pay its bills on time, SBC
    would shorten from 30 days to 15 days the notice period for it to
    refuse to process new orders, including Primary Interexchange
    Carrier (PIC) orders from end users, or to discontinue service. If a
    customer subject to a one- month deposit requirement fails to pay
    its bills on time, this notice period would be shortened to 10
    days.[^5] Similarly, if a customer fails to pay a required deposit
    within 21 days, SBC could refuse to process orders or terminate
    service after a 10-day notice period.[^6] Last, the revisions would
    allow SBC to refuse to process new orders or to terminate service
    after a 15-day notice period if a customer fails to make required
    payments to the Universal Service Fund.[^7]

4.  As justification for these revisions, SBC states that it has
    participated in 53 bankruptcies in the past two years.[^8] SBC
    estimates that WorldCom owes it more than \$300 million, "most of
    which . . . could be lost in bankruptcy proceedings."[^9]

5.  On August 9, 2002, AT&T Corp. (AT&T); WorldCom, Inc. (WorldCom); and
    counsel for the Association for Local Telecommunications Services
    (ALTS), the Competitive Telecommunications Association (CompTel),
    Grande Communications Networks, Inc., Ionex Telecommunications,
    Inc., KMC Telecom Holdings, Inc., NuVox, Inc., Sage Telecom, Inc.,
    Talk America, Inc., and XO Communications, Inc.; and counsel for the
    Association of Communications Enterprises (ASCENT), ATX
    Communications, Inc., Focal Communication Corp., Level 3
    Communications, LLC, Pac-West Telecomm, Inc., US LEC Corp., and U.S.
    TelePacific Corp. filed petitions to reject, or, in the alternative,
    to suspend and investigate all the SBC tariffs.[^10] Sprint
    Corporation (Sprint) filed a petition to reject, or, in the
    alternative, to suspend and investigate the Ameritech, Pacific Bell,
    SNET and SWBT tariffs.[^11] MPower Communications Corp. (MPower)
    filed a petition to reject, or, in the alternative, to suspend and
    investigate the Ameritech, Pacific Bell, and SWBT tariffs.[^12]
    Nextel Communications, Inc. (Nextel) filed a petition to reject, or,
    in the alternative, to suspend and investigate the SWBT tariff.[^13]
    On August 16, 2002, SBC filed its reply.[^14] SBC filed its reply
    one day later than required by our rules,[^15] and, therefore, filed
    a motion to accept its late-filed reply.[^16] In this Order we grant
    the petitions of AT&T, WorldCom, ALTS, Sprint, MPower and Nextel so
    far as they ask us to suspend and investigate SBC's tariffs, and we
    suspend for five months and set for investigation SBC's revisions to
    its interstate access Tariffs FCC Nos. 2, 1, 1, 39, and 73. We also
    grant SBC's motion to accept its late-filed reply, because, as we
    are suspending SBC's tariffs, no party is prejudiced by our grant of
    this motion.

# DisCUSSION

6.  We find that petitioners raise substantial questions regarding the
    lawfulness of SBC's tariff revisions that require further
    investigation. They question whether the revisions violate a
    Commission prescription, are unjust, unreasonable, and
    discriminatory in violation of sections 201(b) and 202(a) of the
    Act, and whether the language of the revisions is vague and
    ambiguous in violation of sections 61.2 and 61.54 of the
    Commission's rules.[^17] Petitioners further question whether SBC
    has demonstrated substantial cause for a material change by a
    dominant carrier in a provision of a term plan.[^18] Finally,
    certain petitioners claim that SBC's revisions conflict with
    provisions of the bankruptcy code.[^19] For these reasons, we
    conclude that substantial questions regarding the lawfulness of
    SBC's FCC Tariffs Nos. 2, 1, 1, 39 and 73, Transmittal Nos. 1312,
    20, 77, 772, and 2906, respectively, require further investigation,
    and we suspend them for five months. The specific issues that will
    be the subject of the investigation will be identified in an
    upcoming designation order and may include, but not be limited to,
    the issues identified in this paragraph. We may also, by order,
    identify discrete issues that do not warrant further investigation.

# *ex parte* requirements

7.  This investigation is a permit-but-disclose proceeding and is
    subject to the requirements of section 1.1206(b) of the Commission's
    rules, 47 C.F.R. § 1.1206(b), as revised. Persons making oral *ex
    parte* presentations are reminded that memoranda summarizing the
    presentations must contain a summary of the substance of the
    presentation and not merely a listing of the subjects discussed.
    More than a one- or two-sentence description of the views and
    arguments presented is generally required.[^20] Other rules
    pertaining to oral and written presentations are also set forth in
    section 1.1206(b).

# ordering clauses

8.  ACCORDINGLY, IT IS ORDERED that, pursuant to section 204(a) of the
    Communications Act of 1934, as amended, 47 U.S.C. § 204(a), and
    through the authority delegated pursuant to sections 0.91 and 0.291
    of the Commission's rules, 47 C.F.R. §§ 0.91 and 0.291, Transmittal
    Nos. 1312, 20, 77, 772, and 2906, respectively, Tariffs FCC Nos. 2,
    1, 1, 39, and 73 of the Ameritech Operating Companies, the Nevada
    Bell Telephone Company, the Pacific Bell Telephone Company, the
    Southern New England Telephone Companies, and the Southwestern Bell
    Telephone Company ARE SUSPENDED for five months and an investigation
    IS INSTITUTED.

9.  IT IS FURTHER ORDERED that the Ameritech Operating Companies, the
    Nevada Bell Telephone Company, the Pacific Bell Telephone Company,
    the Southern New England Telephone Companies, and the Southwestern
    Bell Telephone Company SHALL FILE a supplement within five business
    days from the release date of this order reflecting the suspension.
    They should cite the "DA" number on the instant order as the
    authority for the filing.

10. IT IS FURTHER ORDERED that the Motion for Acceptance of Late-Filed
    Reply filed by SBC Communications, Inc. IS GRANTED.

11. IT IS FURTHER ORDERED that the petitions to reject, or, in the
    alternative, to suspend and investigate filed by AT&T Corp.;
    WorldCom, Inc.; counsel for the Association for Local
    Telecommunications Services, the Competitive Telecommunications
    Association, Grande Communications Networks, Inc., Ionex
    Telecommunications, Inc., KMC Telecom Holdings, Inc., NuVox, Inc.,
    Sage Telecom, Inc., Talk America, Inc., and XO Communications, Inc.;
    Sprint Corporation; MPower Communications Corporation; and Nextel
    Communications, Inc.; and the Association of Communications
    Enterprises, ATX Communications, Inc., Focal Communication Corp.,
    Level 3 Communications, LLC, Pac-West Telecomm, Inc., US LEC Corp.,
    and U.S. TelePacific Corp., ARE GRANTED to the extent indicated
    herein and otherwise ARE DENIED.

    FEDERAL COMMUNICATIONS COMMISSION

> Tamara L. Preiss
>
> Division Chief, Pricing Policy Division
>
> Wireline Competition Bureau

[^1]: 47 U.S.C. § 204(a)(3).

[^2]: Ameritech Operating Companies, Nevada Bell Telephone Company,
    Pacific Bell Telephone Company, Southern New England Telephone
    Companies, and Southwestern Bell Telephone Company, Transmittal Nos.
    1312, 20, 77, 772, and 2906, respectively, Tariffs FCC. Nos. 2, 1,
    1, 39, and 73, respectively, (filed August 2, 2002).

[^3]: *See, e.g*., Southwestern Bell Telephone Company Tariff FCC No.
    73, Transmittal No. 2906, Original Pages 2-55.2 and 2-55.3.

[^4]: See, e.g., *d.,* Original Page 2-55.3.

[^5]: See, e.g., *id*., 6^th^ Revised Page 2-20 and 2-21.

[^6]: *See, e.g., id*., Original Page 2-55.4

[^7]: *See, e.g., id.,* 1^st^ Revised Page 2-22.

[^8]: *See, e.g,* *id.*, Description and Justification at 7.

[^9]: *See, e.g., id.* at 7-8.

[^10]: Ameritech Operating Companies, Nevada Bell Telephone Company,
    Pacific Bell Telephone Company, Southern New England Telephone
    Companies, and Southwestern Bell Telephone Company, Transmittal Nos.
    1312, 20, 77, 772, and 2906, respectively, Tariffs FCC Nos. 2, 1, 1,
    39, and 73, respectively, Petition of AT&T Corp. (Aug. 9, 2002)
    (*AT&T Petition*); WorldCom Petition to Reject or, in the
    Alternative, Suspend and Investigate (Aug. 9, 2002) (*WorldCom
    Petition*); Petition to Reject or, Alternatively, to Suspend and
    Investigate of ALTS, CompTel, Grande Communications Networks, Inc.,
    Ionex Telecommunications, Inc., KMC Telecom Holdings, Inc., NuVox,
    Inc., Sage Telecom, Inc., Talk America, Inc., and XO Communications,
    Inc. (Aug. 9, 2002) (*ALTS* *Joint Petition*); Petition to Reject or
    Suspend And Investigate Proposed Tariff Revisions of ASCENT, ATX
    Communications, Inc., Focal Communications Corp., Level 3
    Communications, LLC, Pac-West Telecomm, Inc., US LEC Corp., and U.S.
    Telepacific Corp. (*ASCENT Joint Petition*).

[^11]: Ameritech Operating Companies, Pacific Bell Telephone Company,
    Southern New England Telephone Companies, and Southwestern Bell
    Telephone Company, Transmittal Nos. 1312, 77, 772, and 2906,
    respectively, Tariffs FCC Nos. 2, 1, 39, and 73, respectively,
    Petition of Sprint to Reject or Alternatively Suspend and
    Investigate (Aug. 9, 2002) (*Sprint Petition*).

[^12]: Ameritech Operating Companies, Pacific Bell Telephone Company,
    and Southwestern Bell Telephone Company, Transmittal Nos. 1312, 77,
    and 2906, respectively, Tariffs FCC Nos. 2, 1, and 73, respectively,
    Petitions of MPower Communications Corp. to Reject or Alternatively
    Suspend and Investigate (Aug. 9, 2002) *(MPower Petitions*).

[^13]: Southwestern Bell Telephone Company, Transmittal No. 2906, Tariff
    FCC No. 73, Petition of Nextel Communications, Inc. to Reject or
    Alternatively Suspend and Investigate (Aug. 9. 2002) (*Nextel
    Petition*).

[^14]: Ameritech Operating Companies, Nevada Bell Telephone Company,
    Pacific Bell Telephone Company, Southern New England Telephone
    Companies, and Southwestern Bell Telephone Company, Transmittal Nos.
    1312, 20, 77, 772, and 2906, respectively, Tariffs FCC Nos. 2, 1, 1,
    39, and 73, respectively, SBC Opposition to Petition to Reject or,
    in the Alternative, Suspend and Investigate (Aug. 16, 2002).

[^15]: 47 C.F.R. §1.773(b).

[^16]: Ameritech Operating Companies, Nevada Bell Telephone Company,
    Pacific Bell Telephone Company, Southern New England Telephone
    Companies, and Southwestern Bell Telephone Company, Transmittal Nos.
    1312, 20, 77, 772, and 2906, respectively, Tariffs FCC Nos. 2, 1, 1,
    39, and 73, respectively, SBC Motion for Acceptance of Late-Filed
    Reply (Aug. 16, 2002).

[^17]: 47 U.S.C. § 201(b), 47 C.F.R. §§ 61.2, 61.54. *See, e.g*., AT&T
    Petition at 11-16; Nextel Petition at 4-7; MPower Petitions at 1-6.

[^18]: *See*, *e.g*., ALTS Joint Petition at 16-17; Sprint Petition at
    6-7.

[^19]: *See, e.g*., WorldCom Petition at 8-9; ALTS Joint Petition at 10.

[^20]: *See* 47 C.F.R. §1.1206(b)(2), as revised.