**Before the**

## FEDERAL COMMUNICATIONS COMMISSION

## Washington, D.C. 20554

In the Matter of )

)

Enforcement of Section 275(a)(2) of the ) CCB Pol. 96-17

Communications Act of 1934, as amended by ) CCB Pol. 97-7

the Telecommunications Act of 1996, ) CCB Pol. 97-8

Against Ameritech Corporation ) CCB Pol. 97-11

)

# ORDER

**Adopted: October 24, 2000 Released: October 27, 2000**

By the Commission:

1.  In this Order, we adopt a Consent Decree terminating the
    above-captioned proceedings related to Ameritech Corporation's
    acquisition of the alarm monitoring services assets of five
    unaffiliated entities in 1996. With respect to four of the
    acquisitions, the Commission previously found that Ameritech
    violated section 275(a)(2) of the Communications Act of 1934, as
    amended, by obtaining financial control of unaffiliated alarm
    monitoring service entities prior to February 2001.[^1]

2.  Pursuant to section 1.1204(b)(10) of the Commission's rules,[^2] the
    Commission and SBC Communications, Inc. (SBC)[^3] have negotiated
    the terms of a Consent Decree that would terminate the
    above-captioned proceedings related to Ameritech's acquisitions. A
    copy of the Consent Decree is attached hereto and is incorporated by
    reference.

3.  We have reviewed the terms of the Consent Decree and evaluated the
    facts before us. We believe that the public interest would best be
    served by approving the Consent Decree and terminating the
    proceedings related to Ameritech's acquisition of the assets of the
    five unaffiliated alarm monitoring entities. The Alarm Industry
    Communications Committee (AICC) filed comments supporting an order
    requiring divestiture on the grounds that the acquisitions violated
    section 275(a)(2) of the Act, and Ameritech should not be allowed to
    retain the unlawfully acquired assets. We believe, however, that
    divestiture of only the unlawfully acquired alarm monitoring
    services assets in these circumstances might well create substantial
    confusion and inconvenience for the customers Ameritech acquired
    from the five alarm monitoring services entities.[^4] The situation
    is further complicated by the fact that the statutory ban expires in
    February 2001.[^5] Thus, if we required divestiture of the
    unlawfully acquired customer accounts, SBC likely would be able
    legally to acquire the companies that purchase the customer
    accounts, after the section 275 ban expires. In light of the limited
    duration of the statutory prohibition of section 275(a)(2), the
    customer confusion and inconvenience that likely would result from
    divestiture of the unlawfully acquired alarm monitoring assets in
    this proceeding suggest that such a remedy may not best serve the
    public interest in these circumstances.[^6]

4.  Under the Consent Decree, SBC agrees that it shall use its best
    efforts, prior to February 9, 2001, to divest itself of
    SecurityLink, which is comprised of the grandfathered alarm
    monitoring assets that Ameritech lawfully held before February 1996
    and the alarm monitoring services assets that Ameritech unlawfully
    acquired after February 1996. If, despite its best efforts, SBC is
    unable to enter into a legally enforceable and commercially
    reasonable contract to divest itself of SecurityLink and does not
    submit such a contract to the Commission by February 9, 2001, SBC
    shall make a voluntary contribution to the United States Treasury of
    One Million Dollars (\$1,000,000) on February 10, 2001. In the event
    that SBC divests itself of SecurityLink, it would divest both the
    grandfathered alarm monitoring assets that Ameritech lawfully held
    before February 1996 and the alarm monitoring services assets that
    Ameritech unlawfully acquired after February 1996. Such divestiture
    would not result in the confusion and disruption to customers that
    would be caused by the partial divestiture of the unlawfully
    acquired alarm monitoring assets. In the event that SBC enters into
    and submits to the Commission a legally enforceable and commercially
    reasonable divestiture contract by February 9, 2001, but fails to
    divest itself of SecurityLink by the later of: (a) June 9, 2001;
    or (b) the ninth (9^th^) business day after the Commission approves
    any transfer of control applications required under the
    Communications Act for completion of the divestiture transaction,
    then SBC shall make a voluntary contribution to the United States
    Treasury of One Million Dollars (\$1,000,000) on the first business
    day after such later date.

5.  Finally, SBC agrees not to become involved with other alarm
    monitoring businesses prior to the February 2001 expiration of
    section 275(a)(2).

6.  We conclude that adoption of the Consent Decree serves the public
    interest. In addition, 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.

7.  Accordingly, IT IS ORDERED, pursuant to sections 4(i), 4(j), 275,
    and 312 of the Communications Act, 47 U.S.C. §§ 154(i), 154(j), 275,
    and 312, that the Consent Decree, incorporated by reference in and
    attached to this order, is hereby ADOPTED.

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

9.  IT IS FURTHER ORDERED that the above proceedings ARE TERMINATED.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

**Before the**

## FEDERAL COMMUNICATIONS COMMISSION

## Washington, D.C. 20554

In the Matter of )

)

Enforcement of Section 275(a)(2) of the ) CCB Pol. 96-17

Communications Act of 1934, as amended by ) CCB Pol. 97-7

the Telecommunications Act of 1996, ) CCB Pol. 97-8

Against Ameritech Corporation ) CCB Pol. 97-11

**C****ONSENT DECREE**

**I. Introduction**

1.  The Federal Communications Commission (\"Commission\" or \"FCC\")
    and SBC Communications Inc., and its subsidiary, Ameritech
    Corporation (\"Ameritech\"), and Ameritech\'s wholly-owned
    subsidiary, SecurityLink from Ameritech, Inc. (\"SecurityLink\")
    (all of them, collectively \"SBC" or "SBC and its affiliates\"),
    hereby enter into this Consent Decree for the purpose of terminating
    certain enforcement proceedings pending before the Commission
    concerning compliance, by Ameritech and SecurityLink, with Section
    275 of the Communica­tions Act of 1934, as amended (\"Act\"), 47
    U.S.C. § 275.

**II. Background**

2.  On June 28, 1996, SecurityLink acquired the alarm monitoring assets
    of the Home Security Division of Circuit City Stores, Inc.
    (\"Circuit City\"). In April 1997, SecurityLink acquired the alarm
    monitoring assets of Central Control Alarm Co. (\"Central\") and
    Norman Security Systems, Inc. (\"Norman\"). On June 19, 1997,
    SecurityLink acquired the alarm monitoring assets of Masada
    Security, Inc. (\"Masada\"). On October 3, 1997, SecurityLink
    acquired the alarm monitoring assets from six subsidiaries of
    Republic Security Companies Holding Co., II, Inc. (\"Repub­lic\").
    These transactions will be referred to collectively herein as the
    \"Transactions.\"

3.  Section 275(a)(2) of the Act permits Ameritech to provide alarm
    monitoring services either directly or through an affiliate.[^7]
    However, that provision prohibits Ameritech from obtaining financial
    control of any unaffiliated alarm monitoring service entity for a
    period of 5 years from the effective date of the Act, which was
    February 8, 1996.[^8]

4.  The Alarm Industry Communications Committee (\"AICC\") filed motions
    with the Commission with respect to each of the Transactions,
    alleging that they violated Section 275(a)(2) and requesting that
    the Commission issue a cease and desist order, pursuant to Section
    312(b)(2) of the Act, directing Ameritech to rescind its purchase of
    the alarm monitoring assets.

5.  AICC filed its first motion, challenging the Circuit City
    transaction, on August 12, 1996. The Commission initially denied
    this motion in an order released on March 25, 1997. *See Enforcement
    of Section 275(a)(2) of the Communi­cations Act of 1934, as amended
    by the Telecommunications Act of 1996, Against Ameritech
    Corporation,* CCBPol 96-17, Memorandum Opinion and Order, 12 FCC
    Rcd. 3855 (1997) (*\"Circuit City*"). The U.S. Court of Appeals for
    the District of Columbia Circuit vacated and remanded the
    Commission's *Circuit City* order on December 31, 1997. *See* *Alarm
    Industry Communications Committee v. FCC*, 131 F.3d 1066 (1997). On
    remand, the Commission issued a show cause order, which is presently
    pending. *Enforcement of Section 275(a)(2) of the Communications Act
    of 1934, as amended by the Telecommunications Act of 1996, Against
    Ameritech Corporation, Motion for Orders to Show Cause and to Cease
    and Desist,* CCBPol 96-17, Memorandum Opinion and Order on Remand
    and Order to Show Cause, 13 FCC Rcd. 19046 (1998).

6.  AICC filed a motion challenging the Norman and Central acquisitions
    on May 1, 1997. AICC filed its third motion, challenging the Masada
    acquisition, on July 2, 1997. On July 8, 1998, the Commission issued
    a show cause order, which is presently pending, in those
    proceedings. *Enforcement of Section 275(a)(2) of the Communications
    Act of 1934, as amended by the Telecommunications Act of 1996,
    Against Ameritech* *Corporation*, *Emergency Motions for Orders to
    Show Cause and to Cease and Desist*, CCBPol 97-7, 97-8, Memorandum
    Opinion and Order and Order to Show Cause, 13 FCC Rcd. 15053 (1998).

7.  AICC filed its final motion, challenging the Republic acquisition,
    on October 8, 1997. *See* Public Notice, CCBPol 97-11, 12 FCC Rcd.
    16428 (Com. Car. Bur. 1997) (setting pleading cycle for comments on
    AICC motion challenging Republic acquisition). The Commission has
    taken no action with regard to this final motion, which remains
    pending.

8.  In its two orders to show cause relating to the Circuit City,
    Central, Norman and Masada acquisitions, the Commission concluded
    that Ameritech had acquired financial control of the subject alarm
    monitoring services entities in violation of section 275(a)(2).
    Consequently, the Commission ordered Ameritech to show cause why it
    should not be required to divest itself of the subject alarm
    monitoring services assets. Ameritech responded to the two show
    cause orders on August 7, 1998, and October 28, 1998. Ameritech also
    submitted a letter to the staff on October 29, 1999. Ameritech's
    responses to the show cause orders contended that divestiture was an
    inappropriately severe remedy on the facts of this case and that it
    would be difficult to administer given the commingling of assets
    that had occurred since the various Transactions. AICC filed
    comments supporting an order requiring divestiture.

**III. Definitions.**

9.  For the purposes of this Consent Decree, the following definitions
    shall apply:

    1.  "Commission" means the Federal Communications Commis­sion.

    2.  "Affiliate" shall have the meaning set forth in 47 U.S.C. §
        153(1).

    3.  "SBC" means SBC Communications Inc. and all of its subsid­iaries
        and affiliates.

    4.  "Proceedings" means the Commission proceedings identified in
        paragraphs 4 through 7 above, CCB Pol. 96-17, 97-7, 97-8 and
        97-11.

    5.  "Order" means an order of the Commission adopting this Consent
        Decree.

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

# Agreement

10. SBC and the Commission agree that this Consent Decree does not
    constitute an adjudication of the merits, or any finding on the
    facts or law regarding any violations committed by SBC arising out
    of the Transactions. This Consent Decree does, however, constitute a
    settlement of all issues raised heretofore, or which, in the absence
    of material new evidence, may be raised by the Commission hereafter,
    concerning the permissible scope, under section 275(a)(2), of SBC's
    actions with respect to the Transactions.

11. Pursuant to this Consent Decree, SBC shall use its best efforts,
    prior to February 9, 2001, to enter into a legally enforceable and
    commercially reasonable contract with a Buyer to divest itself of
    SecurityLink such that SBC does not retain *de jure* or *de facto*
    control of SecurityLink or the Buyer. In the event that SBC enters
    into such a contract, SBC shall submit such contract to the
    Commission by February 9, 2001. If, despite its best efforts, SBC is
    unable to enter into such a contract and does not submit such a
    contract to the Commission by February 9, 2001, SBC shall make a
    voluntary contribution to the United States Treasury of one million
    dollars (\$1,000,000) on February 10, 2001. In the event that SBC
    enters into and submits to the Commission a legally enforceable and
    commercially reasonable contract by February 9, 2001, but fails to
    divest itself of SecurityLink by the later of: (a) June 9, 2001;
    or (b) the ninth (9^th^) business day after the Commission approves
    any transfer of control applications required under the
    Communications Act for completion of the divestiture transaction,
    then SBC shall make a voluntary contribution to the United States
    Treasury of one million dollars (\$1,000,000) on the first business
    day after such later date. SBC agrees that, barring unforeseen
    circumstances, it will file any necessary transfer of control
    applications with the Commission no later than thirty (30) days from
    the date it submits a legally enforceable and commercially
    reasonable divestiture contract.

12. In addition, SBC agrees that during the time between release of the
    Order and February 9, 2001 it will not: (1) acquire any of the
    customer accounts or other assets of any unaffiliated alarm
    monitoring entity, (2) acquire any options to purchase or otherwise
    acquire any unaffiliated alarm monitoring entity or the assets,
    including the customer accounts, of any unaffiliated alarm
    monitoring entity, (3) have any joint directors, officers or
    employees with an unaffiliated alarm monitoring entity, or (4)
    obtain or acquire *de jure* or *de facto* control over an
    unaffiliated alarm monitoring entity, whether by providing financing
    or otherwise.

13. Notwithstanding any other provision herein, the restrictions in
    paragraph 12 shall not apply to SecurityLink or a Buyer as of the
    date on which SecurityLink ceases to be an Affiliate of SBC.

14. The Commission agrees that, in the absence of material new evidence
    related to the Proceedings, it will not use the facts developed in
    its investigations or the existence of this Consent Decree either to
    initiate on its own motion any new proceeding, formal or informal,
    or to initiate on its own motion any enforcement action against SBC
    concerning those Proceedings. The Commission also agrees that, in
    the absence of material new evidence related to the Proceedings, it
    will not use the facts developed in its investigations or the
    existence of this Consent Decree to initiate on its own motion any
    proceeding, formal or informal, or initiate on its own motion any
    action against SBC, with respect to its basic qualifications,
    including its character qualifications, to be a Commission licensee
    or with respect to compliance with the Commission\'s rules and
    policies.

15. The Parties agree that this Consent Decree will terminate if SBC
    divests itself of SecurityLink or makes a voluntary contribution to
    the United States Treasury consistent with the terms of this Consent
    Decree.

16. In express reliance upon the covenants and representations contained
    herein, the Commission agrees to terminate the Proceedings when the
    Order adopting this Consent Decree becomes a Final Order.

17. In consideration for the termination of these Proceedings in
    accor­dance with the terms of this Consent Decree, SBC agrees to the
    terms, conditions and procedures contained herein.

18. In the event that SBC, or any of its affiliates or subsidiaries, are
    found by the Commission or its delegated authority to have engaged
    in conduct the same or similar to that described in the Proceedings,
    SBC and the Commission agree that the conduct described in the
    Proceedings may be used only to fashion an appropriate sanction. The
    parties further agree that SBC shall not be precluded or estopped
    from litigating *de novo* any and all of the issues arising from the
    facts and allegations in the investigation record of any of the
    Proceedings only as necessary to defend, in any forum, its interest
    from challenge by any person or entity not a party to this Consent
    Decree.

19. SBC admits the jurisdiction of the Commission to adopt this Consent
    Decree.

20. SBC waives any and all rights it may have to seek administrative or
    judicial reconsideration, review, appeal or stay, or to otherwise
    challenge or contest the validity of this Consent Decree and the
    Order adopting this Consent Decree, provided the Order adopts the
    Consent Decree without change, addition, or modifica­tion.

21. SBC and the Commission agree that the effectiveness of this Consent
    Decree is expressly contingent upon issuance of the Order, provided
    the Order adopts the Consent Decree without change, addition, or
    modification and provided the Order is consistent with the Consent
    Decree.

22. SBC and the Commission agree that if SBC, the Commission, or the
    United States on behalf of the Commission, brings a judicial action
    to enforce the terms of the Order adopting this Consent Decree,
    neither SBC nor the Commission shall contest the validity of the
    Consent Decree or Order, and SBC and the Commis­sion shall waive any
    statutory right to a trial *de novo* with respect to any matter upon
    which the Order is based, and shall consent to a judgment
    incorporating the terms of this Consent Decree.

23. SBC agrees to waive any claims it may otherwise have under the Equal
    Access to Justice Act, Title 5 U.S.C. § 504 and 47 C.F.R. § 1.1501,
    *et seq*.

24. SBC agrees that any violation of the Consent Decree or the Order
    adopting this Consent Decree shall 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.

25. This Consent Decree may be signed in counterparts.

FEDERAL COMMUNICATIONS COMMISSION

> Magalie Roman Salas,
>
> Secretary
>
> SBC COMMUNICATIONS INC.

Priscilla Hill-Ardoin

Senior Vice-President - FCC

[^1]: 47 U.S.C. § 275(a)(2). *Enforcement of Section 275(a)(2) of the
    Communications Act of 1934, as amended by the Telecommunications Act
    of 1996, Against Ameritech Corporation, Motion for Orders to Show
    Cause and to Cease and Desist*, Memorandum Opinion and Order on
    Remand and Order to Show Cause, 13 FCC Rcd 19046 (1998) (Ameritech's
    acquisition of the alarm monitoring services assets of a division of
    Circuit City Stores, Inc.) (Circuit City Order to Show Cause);
    *Enforcement of Section 275(a)(2) of the Communications Act of 1934,
    as amended by the Telecommunications Act of 1996, Against Ameritech
    Corporation, Emergency Motions for Orders to Show Cause and to Cease
    and Desist*, Memorandum Opinion and Order and Order to Show Cause,
    13 FCC Rcd 15053 (1998) (Ameritech's acquisition of the alarm
    monitoring services assets of Central Control Alarm Corp. (CCA),
    Norman Systems Securities, Inc. (Norman), and Masada Security, Inc.
    (Masada) (CCA Order to Show Cause). *See also* Public Notice,
    Pleading Cycle Established for Comments on Alarm Industry
    Communications Committee Fourth Emergency Motion for Orders to Show
    Cause and to Cease and Desist, CCBPol 97-11 DA 97-2176, Rel. Oct.
    10, 1997.

[^2]: 47 C.F.R. § 1.1204(b)(10); *see* *New York Telephone Co*., 6 FCC
    Rcd 3303, 3305 ¶¶ 19-21 (1991), *aff\'d sub nom*. *New York State
    Department of Law v. FCC*, 984 F.2d 1209 (D.C. Cir. 1993).

[^3]: On 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. *In re
    Applications of Ameritech Corp., Transferor and SBC Communications
    Inc., Transferee,* Memorandum Opinion and Order, 14 FCC Rcd 14712
    (1999).

[^4]: *See* SecurityLink from Ameritech, Inc.'s Reply to AICC Letter
    Urging Divestiture, Nov. 10, 1998.

[^5]: The prohibition in section 275(a)(2) sunsets five years after the
    date of enactment of the Telecommunications Act of 1996. 47 U.S.C. §
    275(a)(2).

[^6]: None of the cases cited by AICC necessitates divestiture.

[^7]: Section 275(a)(2) permits "the provision, directly or through an
    affiliate, of alarm monitor­ing services by a Bell operating company
    that was engaged in providing alarm monitoring services as of
    November 30, 1995." 47 U.S.C. § 275(a)(2).

[^8]: A Bell operating company that was engaged in providing alarm
    monitoring services as of November 30, 1995 "may not acquire any
    equity interest in, or obtain financial control of, any unaffiliated
    alarm monitoring service entity after November 30, 1995, and until 5
    years after the date of enactment of the Telecommunications Act of
    1996." 47 U.S.C. § 275(a)(2). *See also Alarm Industry
    Communications Committee v. FCC*, 131 F.3d 1066 (D.C. Cir. 1997).