CONSENT DECREE

I. Introduction

1\. The Federal Communications Commission ("Commission" or "FCC") and
SBC Communications Inc. ("SBC") hereby enter this Consent Decree for the
purpose of terminating an investigation by the Commission into: (1)
potential violations of sections 271 and 272 of the Communications Act
of 1934, as amended ("Act"), 47 U.S.C. §§ 271, 272 ("section 271" and
"section 272"), and the Commission's rules and regulations implementing
these provisions; (2) potential violations of section 1.65 of the
Commission's rules, 47 C.F.R. § 1.65; and (3) possibly inaccurate
statements made to the Commission by SBC employees.

# II. Background

2\. On January 4, 1998, SBC and Southern New England Telecommunications
Corporation ("SNET") agreed to a plan of merger under which SNET would
become a wholly owned, first-tier subsidiary of SBC. On February 20,
1998, SBC and SNET filed applications seeking Commission approval to
transfer SNET authorizations to SBC. Those applications were granted
with conditions by the Commission on October 23, 1998. The merger was
consummated on October 26, 1998.

3\. While the merger was pending, SBC and SNET representatives met
periodically with the FCC staff to discuss regulatory issues associated
with the merger. During two of these meetings, SBC and SNET attendees
were asked whether SNET would be in compliance with section 272 once the
merger was completed. In both meetings, an SBC spokesperson responded
that the merger transaction would occur consistent with the structural
separation requirements of section 272. This representation was based on
the SBC representative's understanding of section 272 requirements and
on his understanding that SNET would still be operating as a separate,
stand-alone company at the time the merger closed. The SBC spokesperson
generally understood the structural separation requirements of section
272, but had not specifically researched the section 272 regulatory
requirements prior to the meetings, and he took no steps to confirm or
update his representations after the meetings.

4\. Independent of and subsequent to these meetings with Commission
staff, subject matter and legal experts within SBC were discussing the
legal requirements of section 272 and began investigating whether SNET
provided interLATA information services that would implicate section 272
after the merger. They discovered that SNET offered five interLATA
information services that potentially implicated section 272's
separation requirements. They discussed whether creation of a specific
section 272 subsidiary was therefore required under the Act, or whether
SNET, in its existing corporate structure, met those requirements. They
also discussed how to ensure that the post-merger integration of the
SNET local exchange carrier subsidiary ("SNET Telco") and SBC's Bell
operating company subsidiaries would not violate the section 272 rules.
Before the FCC's approval of the SNET merger, at least some of these SBC
employees may have held concerns that, as of the date of the merger, SBC
might not comply with section 272's requirements. However, based on the
belief that SNET would remain structurally separate at the time the
merger was closed and therefore would be compliant with section 272, the
decision was made not to establish a separate, section 272 affiliate for
SNET prior to the consummation of the merger. The decision was also made
to file with the Commission, after the consummation of the merger, a
forbearance petition, including a request for interim relief. Prior to
the merger closing, SBC employees did not discuss with the FCC staff the
section 272 issues or legal interpretations that had been discussed
internally or the decision to pursue forbearance relief from the Act.

5\. Shortly following the merger, twice in November and once in
mid-December 1998, SBC and SNET representatives met with Commission
staff to discuss the proposed request for forbearance and interim
relief. In the course of these meetings with the FCC staff, SBC and SNET
representatives made or may have made statements to the Commission,
including: that SBC needed forbearance relief to come into compliance
with section 272; that only after the SNET merger did SBC discover the
interLATA information services that were to be the subject of the
forbearance petition; and that the compliance problems were due to
SNET's lack of familiarity with the Commission's orders interpreting
section 272. These statements, if they were made, did not accurately
reflect the circumstances supporting the proposed request for
forbearance and interim relief.

6\. Based on a discussion with the FCC staff in the second November
meeting, SBC representatives believed that it was the FCC staff's view
that, in the absence of forbearance relief, a new section 272 affiliate
would need to be created in order for SNET to continue to provide
interLATA information services.

7\. In the December meeting, the Commission staff indicated that it
would not recommend approval of the forbearance petition and that SBC
needed to be in compliance with section 272. In order to eliminate any
possible section 272 issues, SBC took swift and decisive action to
remove the interLATA links of four of the five information services in
question, although its representatives may still have had questions
about its 272 obligations. SBC created a separate affiliate pursuant to
section 272 for the provision of the final interLATA information
service. Ultimately, SBC did not file a forbearance petition. Also in
December 1998, SBC identified a section 271 violation with respect to
SNET's conference calling service, which was corrected immediately.

8\. Following the December 1998 meeting described in paragraph 7, based
on concerns about what it believed was SBC's lack of discovery of
potential section 272 violations prior to the merger, the Bureau
initiated an investigation, which included a formal document request.
SBC fully cooperated with this investigation. SBC caused an internal
inquiry to be undertaken by a legal review team which was subsequently
expanded to include an outside law firm. That team examined thousands of
documents and interviewed 17 current and former employees of SBC and
SNET. While the legal review team's inquiry was ongoing, SBC
simultaneously provided the Bureau staff with numerous, relevant,
non-privileged documents responsive to the document request.

9\. On May 3, 1999, the legal review team completed its "Report to SBC
Communications Inc. Regarding Compliance with Provisions of the
Telecommunications Act of 1996 Related to the Acquisition of Southern
New England Telecommunications Corporation" ("Report"). The Report was
immediately provided to the Bureau staff. At the same time, based on a
prior agreement with the Bureau staff, SBC partially waived the
attorney-client and attorney work product privileges, for the limited
purposes of conducting this investigation. This allowed the Bureau staff
access to numerous relevant documents, created through the date of the
December 1998 meeting between SBC and FCC staff, which were responsive
to the document request and which would otherwise have been subject, in
SBC's view, to claims of legal privilege.

10\. The Report set forth the factual findings of the legal review team,
which were based on the available evidence. It concluded that, because
of the combination of SNET Telco's provision of operation, installation
and maintenance services to the SNET information services affiliates and
the placement of two Pacific Bell board members on the SNET and SNET
Telco boards, SBC had not been in compliance with section 272. The
Report also acknowledged that the company's internal processes and
procedures for identifying and resolving section 272 issues relating to
the SNET merger caused some compliance problems and mistakes.

11\. The Report included a formalized six-point compliance plan to
ensure that merger-related compliance problems would not occur in the
future. This plan included the creation of an expanded section 272
oversight team; the early involvement of the oversight team in any
future merger; comprehensive early review of services provided by any
acquisition target company; and ongoing, comprehensive training of SBC
employees on section 272 issues. That compliance plan has been
implemented by SBC.

12\. In addition, contemporaneous with its execution of this Consent
Decree, SBC is expanding the compliance plan described in the Report to:
(a) incorporate section 271 and section 272 compliance into its
corporate-wide legal SBC Compliance Program which involves annual
certifications and an annual report to the SBC Board of Directors; (b)
include a new training program for personnel involved in regulatory
contacts; and (c) include an extensive section 271 and 272 training
program for SBC employees generally and training on the obligations of
SBC employees when they are meeting with the FCC.

13\. The Bureau staff fully examined the documents provided by SBC and,
with the cooperation of SBC, deposed seven employees of SBC under oath
on May 21, 24, and 25, 1999. Additionally, SBC has submitted to the
Commission sworn declarations from senior corporate officers indicating
that, during the relevant time periods, they had no knowledge of any
specific statements, representations or conduct of SBC employees, with
respect to the Commission staff, that formed the subject of the
Commission's investigation in this matter.

**III. Definitions.**

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

\(a\) "Commission" means the Federal Communications Commission.

\(b\) "Bureau" means the Commission's Common Carrier Bureau.

\(c\) "SBC" means SBC Communications Inc. and all of its subsidiaries
and affiliates.

\(d\) "SNET" means Southern New England Telecommunications Corporation
and all of and affiliates.

\(e\) "Order" means an order of the Commission adopting this Consent
Decree.

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

**IV. Agreement.**

15\. 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 SBC's
acquisition of SNET.

16\. SBC agrees to implement the compliance plan outlined in the Report,
as well as the additional compliance measures mentioned above. These are
attached hereto in consolidated form.

17\. SBC agrees to make a voluntary contribution to the United States
Treasury in the amount of One Million Three Hundred Thousand Dollars
(\$1,300,000) within 10 calendar days after the Commission Order
adopting this Consent Decree becomes a Final Order. The Commission finds
this amount to be appropriate in light of the following mitigating
factors that it has taken into consideration in this matter: (1) SBC's
history of compliance; (2) SBC's adoption of a comprehensive compliance
plan designed to ensure future compliance with section 271 and section
272; (3) SBC's cooperation in investigating and disclosing the facts and
circumstances surrounding this matter; (4) SBC's cooperation in
providing access to its employees and to documents subject to SBC's
claims of privilege; (5) submission of declarations of SBC senior
corporate officers indicating that, during the relevant time periods,
they had no knowledge of any specific statements, representations or
conduct of SBC employees, with respect to the Commission staff, that
formed the subject of the Commission's investigation in this matter; and
(6) SBC's creation of a training program for all employees dealing with
the FCC.

18\. The Commission agrees that, based on the facts developed in its
investigation and in the absence of material new evidence related to
this matter, it will not use the facts developed in this investigation
or the existence of this Consent Decree to institute any new proceeding,
formal or informal, or take any action against SBC concerning possible
violations of section 271 and section 272, or the rules and regulations
implementing those provisions, or concerning possible violations of
section 1.65 of the Commission's rules. The Commission also agrees that,
based on the facts developed in its investigation, and in the absence of
material new evidence related to this matter, it will not use the facts
developed in this investigation or the existence of this Consent Decree
to institute 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 or with respect to
compliance with the Commission's rules and policies.

19\. In express reliance upon the covenants and representations
contained herein, the Commission agrees to terminate the instant
enforcement proceeding upon the Order adopting this Consent Decree
becoming a Final Order.

20\. 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.

21\. In the event that SBC is found by the Commission or its delegated
authority to have engaged in conduct the same or similar to that
described above, SBC and the Commission agree that the conduct above may
be used only to fashion an appropriate sanction, provided 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 as necessary to defend, in any forum, its interest from challenge
by any person or entity not a party to this Consent Decree.

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

23\. 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.

24\. 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.

25\. SBC and the Commission recognize that 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.

26\. SBC and the Commission agree that if 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.

27\. 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.*

28\. 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.

29\. This Consent Decree may be signed in counterparts.

FEDERAL COMMUNICATIONS COMMISSION

By: /s/

SBC COMMUNICATIONS INC.

By: /s/