Before the

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of                 | )  | File No. EB-04-MD-010        |
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| AT&T Corp.,                      | )  |                              |
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| Complainant,                     | )  |                              |
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| v\.                              | )  |                              |
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| BellSouth Telecommunications,    | )  |                              |
| Inc.,                            |    |                              |
|                                  | )  |                              |
| Defendant.                       |    |                              |
|                                  | )  |                              |
|                                  |    |                              |
|                                  | )  |                              |
|                                  |    |                              |
|                                  | )  |                              |
+----------------------------------+----+------------------------------+

memorandum opinion and ORDER

Adopted: December 8, 2004 Released: December 9, 2004

By the Commission:

[Table of Contents]{.underline}

[para. no.]{.underline}

I. INTRODUCTION 1

II\. BACKGROUND A. The Parties and Market Context 2

B. The Transport Savings Plan -- History and Operation 8

C. AT&T's Complaint 17

III\. DISCUSSION

A. BellSouth's TSP Violates Sections 272(c)(1) and 272(e)(3) 18

of the Act by Discriminating in Favor of BellSouth Long Distance.

> 1\. The TSP's disproportional discounts 22
>
> discriminate in favor of BellSouth Long Distance, in
>
> violation of section 272.
>
> 2\. The TSP's 90% commitment requirement 34
>
> discriminates in favor of BellSouth Long Distance, in
>
> violation of section 272.

B. Neither the Statute of Limitations nor Equitable Estoppel 44

Bars AT&T's Complaint.

C. The Discrimination Caused by the TSP Is Appropriately 52

Redressed Through Removal of the Evergreen Provision and,

After a Reasonable Period, Termination of the TSP.

D. AT&T's Claims Against the PSIP Are Denied. 58

IV\. ORDERING CLAUSES 59

# **introduction**

1.  In this Order, we partially grant and otherwise dismiss or deny the
    claims alleged in the formal complaint[^1] that AT&T Corp. Inc.
    ("AT&T") filed against BellSouth Telecommunications, Inc.
    ("BellSouth") under section 208 of the Communications Act of 1934,
    as amended ("the Act").[^2] Briefly, AT&T's complaint alleges that
    two of BellSouth's optional tariff discount plans for special access
    services, the Transport Savings Plan ("TSP") and the Premium Service
    Incentive Plan ("PSIP"), violate sections 201(b), 202(a), and 272 of
    the Act[^3] because they lack cost justification, impede the
    development of facilities-based competition in the BellSouth region,
    and discriminate in favor of BellSouth's interexchange affiliate. We
    find that BellSouth's TSP discriminates in favor of BellSouth's
    interexchange affiliate, BellSouth Long Distance, Inc. ("BellSouth
    Long Distance"), in violation of section 272. In light of this
    finding, and because the remedy we apply under section 272 grants to
    AT&T all the relief it would be due under sections 201(a) and
    202(b), we dismiss without prejudice AT&T's claims alleging that the
    TSP violates sections 201(b) and 202(a). In addition, we deny all of
    AT&T's claims concerning the PSIP.[^4]

    II\. BACKGROUND

    A. The Parties and Market Context

2.  AT&T offers telecommunications services, including interexchange and
    local exchange services.[^5] AT&T purchases special access services
    from BellSouth.[^6]

3.  BellSouth is an incumbent local exchange carrier ("incumbent LEC")
    and a Bell Operating Company ("BOC") within the meaning of sections
    3(4) and 251(h) of the Act.[^7] BellSouth provides local exchange,
    exchange access, special access, and other telecommunications
    services in a nine-state service area.[^8]

4.  BellSouth Long Distance is a corporate affiliate of BellSouth that
    provides retail interexchange services.[^9] Created in 1996,
    BellSouth Long Distance first obtained operational authority under
    section 271 of the Act, 47 U.S.C. §271, in May 2002.[^10] Like AT&T,
    BellSouth Long Distance purchases special access services from
    BellSouth and uses those services as inputs for its retail
    interexchange services.[^11]

5.  Special access is a service that provides a dedicated connection
    between two points.[^12] Special access customers run the gamut from
    telecommunications carriers and information service providers to all
    types of businesses in every segment of the economy.[^13] For
    example, special access is purchased (by end user customers or by
    interexchange carriers) to connect end user locations that generate
    large volumes of long distance traffic to an interexchange carrier's
    network.[^14] Similarly, special access is purchased by wireless
    carriers to connect their radio towers to their mobile switching
    centers, and by various carriers to connect their networks to
    particular tandem or end office switches on the incumbent carrier's
    network.[^15] Special access is also purchased by Internet service
    providers, other information service providers, and end user
    customers to obtain dedicated connections between specific
    points.[^16]

6.  AT&T and its interexchange and local exchange competitors purchase
    special access to facilitate their provision of retail
    communications services.[^17] Certain retail data and voice services
    that AT&T provides to large and medium-sized enterprises, and long
    distance voice services that AT&T provides to small businesses and
    residential consumers, use BellSouth's special access services.[^18]
    AT&T also purchases special access from BellSouth to provide retail
    voice and other services as a local carrier to businesses and
    consumers.[^19] End users, including AT&T, also purchase BellSouth's
    special access services for their own telecommunications
    requirements.[^20]

7.  BellSouth provides its interstate special access services pursuant
    to its Tariff FCC No. 1.[^21] In addition to its basic rates for
    special access services, BellSouth offers various optional discount
    plans to customers that are willing to make various commitments with
    respect to their purchases of BellSouth's special access
    services.[^22] One such plan is the Transport Savings Plan, *i.e.*,
    the TSP.

    B. The Transport Savings Plan -- History and Operation

8.  BellSouth filed the TSP on March 22, 1999.[^23] Although AT&T and
    MCI WorldCom ("MCI") both objected to the TSP,[^24] Commission staff
    found that their objections did not "present\[ \] compelling
    arguments that \[the\] transmittal\[ \] \[is\] so patently unlawful
    as to require rejection,"[^25] and the TSP became effective April 6,
    1999, without suspension or investigation.[^26]

9.  The TSP is an optional tariff volume discount plan for special
    access services.[^27] It is primarily an "overlay" plan, meaning
    that it may function in combination with other BellSouth special
    access discount plans, and provides incremental discounts beyond
    those available under those other plans.[^28] Except for the PSIP,
    the TSP is BellSouth's only special access plan that offers volume
    discounts.[^29]

10. The discount level of the TSP varies according to two factors: the
    customer's volume (or revenue) band, and the year in the plan.[^30]
    For example, a customer whose Committed Volume Level is in the \$3
    million - \$10 million revenue band (the lowest volume band) earns a
    discount of 1% in the first year of its TSP term (to a maximum of 3%
    in year 5 and any extension year), while a customer whose Committed
    Volume Level is in the \$500 million - \$600 million revenue band
    earns a discount of 5% in the first year of its TSP term (to a
    maximum of 12% in the fifth of its five years and any extension
    year), above and beyond the discounts earned in other BellSouth
    (non-volume-based) plans.[^31] The TSP's discounts apply not just to
    the Committed Volume Level, but also to any eligible purchases above
    that Level.[^32]

11. In order to qualify for the TSP, a customer initially had to agree
    to commit for five years to buy special access services from
    BellSouth in annual amounts equal to at least 90% of its purchases
    from BellSouth in the six months immediately prior to its
    subscription to the plan, annualized (the customer's "Committed
    Volume Level").[^33] If the customer does not meet its Committed
    Volume Level in a particular period, it must pay certain shortfall
    charges;[^34] if it leaves the TSP before the plan's scheduled end,
    the customer must pay certain termination charges.[^35] At the end
    of the five-year term, TSP customers have the option to invoke the
    "evergreen" provision and extend the TSP in one-year
    increments,[^36] which enables them to continue the plan
    perpetually. A customer extending for another year must maintain or
    increase its Committed Volume Level.[^37]

12. The TSP allows a customer to adjust its Committed Volume Level
    upward but not downward.[^38] As originally filed, however, the TSP
    permitted a customer the possibility of establishing a lower
    Committed Volume Level by (i) terminating its subscription early or
    allowing its 5-year term to lapse; (ii) waiting six months; (iii)
    re-subscribing to the TSP, and (iv) obtaining a new Committed Volume
    Level, based on the greater of 90% of its qualifying revenues or its
    selected volume band.[^39] As discussed below,[^40] BellSouth
    subsequently amended the TSP to eliminate that possibility.

13. \[Confidential Information regarding the identity, number, and
    relative size of TSP subscribers, including AT&T and BellSouth Long
    Distance\].

14. \[Confidential Information regarding AT&T's Committed Volume Level
    and the timing of AT&T's TSP subscribership\].

15. BellSouth Long Distance subscribed to the TSP beginning April 19,
    2001.[^41] Within a matter of months, BellSouth Long Distance
    upgraded its Committed Volume Level to \$10 million on October 23,
    2001.[^42]

16. On June 24, 2004, BellSouth filed an amendment to the TSP that
    closed the plan to new subscribers.[^43] Under this amendment,
    current TSP customers may continue in the TSP through the remainder
    of their terms, and may continue indefinitely to extend their
    subscriptions in one-year increments at their current Committed
    Volume Levels or higher.[^44] Current customers, however, can no
    longer allow their terms to lapse, wait six months, and re-subscribe
    at a lower Committed Volume Level.[^45]

C. AT&T's Complaint

17. On July 1, 2004, AT&T filed the instant Complaint. In brief, AT&T
    alleges that: (1) the TSP is unlawfully discriminatory, in violation
    of section 272 of the Act, because it provides volume discounts to
    BellSouth Long Distance that are neither cost-based nor proportional
    to the discounts available to BellSouth Long Distance's larger
    competitors;[^46] (2) the TSP is unjust and unreasonable, in
    violation of section 201(b) of the Act, because it facilitates
    anticompetitive conduct and non-market-based pricing;[^47] and (3)
    the TSP discriminates unreasonably, in violation of section 202(a)
    of the Act, because it unreasonably restricts the availability of
    volume discounts, offers different prices and terms for like
    services without reasonable justification, and unreasonably seeks to
    improve the competitive position of smaller carriers.[^48]

    III\. DISCUSSION

A. BellSouth's TSP Violates Sections 272(c)(1) and 272(e)(3) of the Act
by Discriminating in Favor of BellSouth Long Distance.

18. AT&T alleges that BellSouth's TSP violates sections 272(c)(1) and
    272(e)(3) of the Act by discriminating in favor of BellSouth's
    interexchange affiliate, BellSouth Long Distance.[^49] To support
    its allegations, AT&T relies on BellSouth's own description of the
    operation and purposes of the TSP.[^50] Specifically, BellSouth
    states that the TSP was designed and operates to provide to
    relatively low-volume customers, including BellSouth Long Distance,
    larger discounts than would be available under a plan whose
    discounts were more closely proportional to volume; concomitantly,
    BellSouth states that the TSP was designed and operates to provide
    to relatively high-volume customers, including AT&T, smaller
    discounts than would be available under a plan whose discounts were
    more closely proportional to volume.[^51] In AT&T's view, these
    BellSouth statements prove that the TSP creates a "class of favored
    customers" that includes BellSouth Long Distance, in violation of
    section 272.[^52] For the following reasons, we agree with AT&T.

19. Section 272 provides, in pertinent part:

> 272(c)(1): In its dealings with its affiliate . . . a Bell operating
> company . . . may not discriminate between that . . . affiliate and
> any other entity in the provision or procurement of goods, services,
> facilities, and information, or in the establishment of
> standards.[^53]
>
> 272(e)(3): \[A Bell operating company\] shall charge \[its\] affiliate
> . . . or impute to itself . . . an amount for access to its telephone
> exchange service and exchange access that is no less than the amount
> charged to any unaffiliated interexchange carriers for such
> service.[^54]

The Commission has discussed and interpreted section 272 in a way that
provides significant clarity here.[^55] As its plain language indicates,
section 272 "establishes an unqualified prohibition against
discrimination by a BOC in its dealings with its section 272 affiliate
and unaffiliated entities."[^56] In fact, section 272 "impos\[es\] a
flat prohibition against discrimination more stringent than the bar on
'unjust and unreasonable' discrimination contained in section 202 of the
Act. In short, the BOCs must treat all other entities in the same manner
in which they treat their section 272 affiliates."[^57] In other words,
section 272 requires, "at a minimum," that the BOC "must provide to
unaffiliated entities the same goods, services, facilities, and
information it provides to its section 272 affiliate at the same rates,
terms, and conditions."[^58] The Commission further recognizes that even
a facially neutral practice may have an unlawfully discriminatory impact
under section 272. For example, "a BOC may have an incentive to offer
tariffs that, while available on a nondiscriminatory basis, are in fact
tailored to its affiliate's specific size, expansion plans, or other
needs."[^59]

20. Applying those principles to volume and term discounts, the
    Commission has concluded that a BOC may offer such discounts to its
    interexchange affiliate, as long as the BOC makes such discounts
    "available on a nondiscriminatory basis to all unaffiliated
    interexchange carriers."[^60] That is because "price differences,
    such as volume and term discounts, *when based upon legitimate
    variations in cost*, are permissible. . . ."[^61] Accordingly, a BOC
    accused of offering a volume discount that allegedly violates
    section 272 "may demonstrate, among other things, that rate
    differentials between the section 272 affiliate and unaffiliated
    entity reflect differences in cost. . . . \[W\]here costs differ,
    rate differences that accurately reflect those differences are not
    unlawfully discriminatory."[^62]

21. AT&T's allegations that BellSouth's TSP violates section 272 fall
    into two general areas: (i) the discount levels themselves
    discriminate in favor of BellSouth Long Distance, and (ii) the 90%
    commitment requirement discriminates in favor of BellSouth Long
    Distance. We consider each of these allegations below.

1\. The TSP's disproportional discounts discriminate in favor of
BellSouth Long Distance, in violation of section 272.

22. In general, the Commission has looked favorably upon tariffed volume
    discount plans where, as for special access services, volume and
    cost appear to have a fairly direct, inverse relationship that
    reflects the economies and efficiencies gained as volumes
    increase.[^63] Accordingly, the volume discounts contained in
    typical federal tariffs are significantly linear, *i.e.*, the
    discounts rise in close proportion to the rise in volume, reflecting
    the ever-diminishing per-unit costs of providing service in
    increasingly higher volumes.[^64]

23. BellSouth points out that the TSP is not a typical, proportional
    volume discount plan.[^65] Specifically, BellSouth asserts that it
    designed the TSP's discounts to be somewhat *dis*proportional to
    volume, in order to achieve BellSouth's stated goal of providing
    more substantial discounts to a broader range of BellSouth's
    customers than would be possible under a proportional volume
    discount plan; this, in turn, enhances the competitiveness of
    smaller carriers more than a proportional volume discount plan would
    do.[^66] As a result, the relationship of the TSP's discounts to
    volume is far from linear, and the discounts skew substantially in
    favor of relatively low-volume customers, such as BellSouth Long
    Distance, and substantially against relatively high-volume
    customers, such as AT&T and \[Confidential Information identifying
    another TSP customer\]. [^67]

24. BellSouth quantifies this skewing effect by comparing the discounts
    provided by the TSP with the discounts that would be provided by a
    proportional volume and term discount plan.[^68] For example, as
    shown in the table below, comparing the TSP's fifth-year discounts
    with discounts calculated under a more directly proportional plan,
    the TSP discount is *43* times higher (3.0% versus .07%) for volumes
    of \$3 million - \$10 million; some *21* times higher (5% versus
    .24%) for volumes of \$10 million -\$100 million (\[Confidential
    Information regarding specific TSP customer\]); almost four times
    higher (9.0% versus 2.40%) for volumes of \$100 million - \$300
    million; about a third higher (10.0% versus 7.2%) for volumes of
    \$300 million - \$500 million; and some 15% *lower* (12.5% versus
    14.4%) for volumes over \$600 million.[^69]

    Comparison of Discount Levels[^70]

  ----------------------- ----------------------- -----------------------
  Customer size (in       under TSP (year 5)      under proportional
  eligible revenues)                              volume discount plan

  \$3 - \$10 million      3%                      0.07%

  \$10 - \$100 million    5%                      0.24%

  \$100 - \$300 million   9%                      2.40%

  \$300 - \$500 million   10%                     7.20%

  \$500 - \$600 million   12%                     12.00%

  over \$600 million      12.5%                   14.40%
  ----------------------- ----------------------- -----------------------

25. These substantial boosts to the discount levels available to
    relatively small carriers under the TSP benefit such carriers not
    only in absolute terms, but also in relation to their larger
    competitors.  Specifically, the discount percentages available to
    relatively small carriers are much closer in amount to the discount
    percentages available to relatively large carriers.[^71] For
    example, under a more proportional discount plan, a carrier with
    volume in the \$10 million - \$100 million range would receive a
    discount (in the fifth year) of 0.24%, which is almost 12 percentage
    points less than (or 1/50 of) the discount a carrier with volume in
    the \$500 million - \$600 million range would receive, *i.e*., 12%. 
    By contrast, under the TSP, that same small carrier receives a
    discount (in the fifth year) of 5%, which is only 7 percentage
    points less than (or almost ½ of) the discount received by the large
    carrier, *i.e.,* 12%.[^72]  Thus, the TSP favors relatively small
    carriers by substantially reducing the \"discount differential\"
    between small and large carriers that would occur in a closely
    proportional volume discount plan.[^73]

26. Moreover, the TSP's volume band structure increases its
    discriminatory impact. The TSP's relatively narrow bands at lower
    volumes, and relatively wide bands at higher volumes, particularly
    serve to benefit a quickly growing customer such as BellSouth Long
    Distance.[^74] In addition, the TSP's relatively wide volume bands
    at higher volumes render its discounts even less reflective of any
    volume-based cost differences. For example, a carrier with a little
    over \$100 million in volume receives the same discount as a carrier
    with almost three times that volume (*i.e.,* almost \$300 million).
    Thus, as compared to a volume discount plan more reflective of cost
    differences, the TSP's wide "stair-steps" favor smaller carriers
    over larger carriers within the same wide bands (and \[Confidential
    Information identifying a potential customer in this band\]).[^75]

27. In sum, the TSP accomplishes exactly what BellSouth states it was
    designed to do: it provides relatively low-volume customers, such as
    BellSouth Long Distance, with far greater discounts than would be
    available under a strictly proportional plan, both in absolute terms
    and in comparison to the discounts provided to relatively
    high-volume customers, such as AT&T. In turn, as BellSouth
    acknowledges, the TSP enhances the competitiveness of relatively
    low-volume customers, such as BellSouth Long Distance, vis-à-vis
    relatively high-volume customers, such as AT&T.

28. BellSouth proffers no cost justification for the non-proportional
    relationship between the TSP's discounts and the volumes to which
    those discounts apply. In particular, BellSouth does not argue that
    its costs decrease in anything other than fairly close proportion to
    increases in volume, or that its savings rise with increases in
    volume at low levels, then dip (or rise more slowly) as volumes
    increase further. BellSouth simply asserts, instead, that the TSP's
    substantial departure from the typical, proportional volume discount
    structure is a reasonable means to achieve laudable goals: spreading
    "meaningful" discounts across its entire customer base,[^76] and
    "leveling the playing field" a bit.

29. BellSouth's own description of the operation of the TSP reveals the
    TSP's unlawfulness under section 272 of the Act. The TSP's discounts
    substantially favor BellSouth Long Distance and substantially
    disfavor BellSouth Long Distance's larger competitors in a manner
    that appears to lack any cost basis. Section 272 "flatly" forbids
    such discrimination.

30. According to BellSouth, in other contexts, the Commission and courts
    have found practices that favored smaller customers to be
    reasonable.[^77] BellSouth's assertion, even if accurate,[^78] is
    irrelevant in the unique context of section 272. As previously
    stated, section 272 imposes an "unqualified prohibition" on BOC
    discrimination that favors the BOC's affiliate, regardless of
    whether the discrimination is arguably reasonable.[^79] Likewise,
    the fact that several relatively small customers other than
    BellSouth Long Distance also benefit from the TSP's skewed discounts
    does not shield the TSP from section 272's reach; [^80] section
    272's prohibition on discrimination favoring a BOC affiliate is
    "flat," "unqualified," and "stringent," and thus permits no
    exception for conduct that happens to benefit certain
    non-affiliates, as well.[^81] Similarly, the fact that BellSouth
    Long Distance has, thus far, received far fewer dollars in TSP
    discounts than many other carriers[^82] is beside the point. The
    point under section 272 is that BellSouth Long Distance has received
    far more than a *de minimis* dollar amount in discounts above what
    it would have received in the absence of the TSP's discriminatory
    rates; and, but for our ruling today, the difference between the
    total amount of discount dollars received by BellSouth Long Distance
    and the total amount received by its larger competitors would surely
    shrink over time, as BellSouth Long Distance's volumes and time of
    participation in the plan grew -- even assuming those larger
    competitors could maintain their participation in the TSP.

31. Finally, we reject BellSouth's assertion that, as long as the TSP
    provides higher discounts for higher volumes, the discounts need not
    be closely proportional to volume, because the TSP allegedly serves
    reasonable business goals.[^83] BellSouth argues that the Commission
    should not unduly straight-jacket carriers' flexibility to devise
    volume discounts to meet the particular competitive needs of
    specific markets.[^84] In BellSouth's words, \"\[i\]t cannot be the
    case...that Section 272 imposes a blanket, strict cost justification
    standard on volume discounts, prohibiting BOCs in every instance
    from softening the advantage they confer on larger customers, simply
    because the BOC affiliate falls within the class of customers who
    benefit from a departure from strictly linear discounts.\"[^85]

32. BellSouth's argument that section 272 does not require strict linear
    proportionality has some force. Here, however, our determination
    that the TSP violates section 272 rests on more than just the
    absence of strictly proportional discounts. Specifically, on these
    facts, we find that: (i) when challenged with this allegation of
    discrimination, BellSouth has acknowledged the disproportionality,
    but has proffered no cost justification for it; (ii) the discounts
    depart *dramatically* from a linear relationship to volume; (iii)
    the TSP produces a large, disproportionate benefit to BellSouth's
    affiliate, BellSouth Long Distance; and (iv) by BellSouth's own
    admission, the disproportionate nature of the discounts derives not
    from the discount structure alone, but from the discount structure
    in combination with the 90% commitment requirement -- a requirement
    that is itself unlawful under section 272, as we explain, *infra*.
    Thus, this Order does not preclude disproportional special access
    volume discounts *per se*; we merely reaffirm the Commission's prior
    finding that a BOC charged with discrimination in violation of
    section 272 may defend its challenged tariff by, *inter alia*,
    providing a cost showing that justifies the rates and
    practices.[^86] Here, the disproportionality is very
    significant,[^87] yet BellSouth has not attempted to cost-justify
    it.[^88]

33. We note that, although the Commission has, in fact, allowed LECs a
    substantial amount of discretion in their creation of volume
    discounts,[^89] and has in certain contexts removed the requirement
    that such discounts be supported *ab initio* by cost
    justification,[^90] the Commission has never allowed such discretion
    to produce discrimination favoring a BOC's affiliate.[^91] In
    addition, the Commission orders granting flexibility and allowing
    discretion in the creation of volume discounts concerned the
    reasonableness of volume discounts under sections 201(b) and
    202(a),[^92] whereas in the 272 context the Commission has focused
    on the unqualified avoidance of discrimination, and has emphasized
    the primacy of cost-based pricing as a defense to an alleged
    violation.[^93] In fact, even in contexts not involving section 272,
    the Commission has reiterated the need to avoid departures from cost
    that foster anti-competitive discrimination.[^94]

2\. The TSP's 90% commitment requirement discriminates in favor of
BellSouth Long Distance, in violation of section 272.

34. Although we have found the TSP's disproportional discounts to be
    unlawful, we cannot decline to evaluate also the TSP's 90%
    commitment requirement. Indeed, BellSouth urges us to view the TSP
    as a whole, and that the TSP's 90% commitment requirement and the
    discount structure are inseparable. Specifically, BellSouth states
    that, but for the TSP's 90% commitment requirement, BellSouth could
    not and would not have skewed the TSP's discounts in favor of
    smaller customers (including BellSouth Long Distance).[^95]

35. This statement by BellSouth demonstrates the unlawfulness of the 90%
    commitment requirement under section 272. As just explained above,
    we conclude that the TSP's discounts discriminate unlawfully under
    section 272. It follows, therefore, that the TSP's 90% commitment
    requirement is likewise unlawful under section 272, as an
    inextricable component of the discriminatory effect.

36. Furthermore, AT&T alleges that the TSP's 90% commitment requirement,
    in itself, violates section 272 by favoring smaller, growing
    customers, such as BellSouth Long Distance, over larger, established
    customers, such as AT&T.[^96] AT&T adds that BellSouth's recent
    closure of the TSP to all but existing customers exacerbates this
    discrimination by precluding some existing and potential competitors
    of BellSouth Long Distance from obtaining the higher discounts that
    BellSouth Long Distance enjoys.[^97] AT&T also contends that the
    TSP's evergreen provision further exacerbates the discrimination by
    allowing BellSouth Long Distance to maintain its access to the
    higher discounts indefinitely.[^98] For the following reasons, we
    agree with AT&T that the 90% commitment requirement has unlawful
    flaws under section 272, independent of its relationship to the
    skewed discount levels.

37. In certain material ways the TSP's 90% commitment requirement
    resembles a so-called "growth discount," which the Commission has
    consistently rejected.[^99] A growth discount is a pricing plan
    under which an incumbent LEC offers either (i) reduced per-unit
    access service prices to customers that commit to purchase a certain
    percentage above their past usage, or (ii) reduced prices based on
    growth in traffic placed over the incumbent LEC's network.[^100] The
    Commission has stated that such "\[g\]rowth discounts violate
    \[section 272\] because they offer reduced prices based on growth in
    interexchange traffic, and they therefore create 'an artificial
    advantage for BOC long distance affiliates with no subscribers,
    relative to existing IXCs and other new entrants.'"[^101] In other
    words, growth discounts unlawfully discriminate in favor of BOC
    affiliates, "because BOC affiliates will begin with existing
    relationships with end users, name recognition, and no subscribers,
    \[and thus\] they will grow much more quickly than existing IXCs and
    other new entrants. . . ."[^102] This unique capacity for expansion
    appears to place BOC affiliates in a unique position to qualify for
    and benefit from growth discounts.

38. Similarly here, given BellSouth Long Distance's rapid and
    substantial growth,[^103] and that much of its future growth will
    likely derive from business won from existing competitors rather
    than from new demand,[^104] the 90% commitment requirement
    unlawfully favors BellSouth Long Distance over its established
    competitors under section 272.[^105] Specifically, BellSouth Long
    Distance will continue to qualify readily for the TSP's discounts
    throughout its five-year term and as the annual renewal periods
    arrive; meanwhile, BellSouth Long Distance's established competitors
    will likely come to lack the volume needed to qualify for renewing
    the TSP, or incur significant shortfall penalties, as they lose
    business to BellSouth Long Distance or others. In addition, Bell
    South Long Distance's "headroom," *i.e.*, the excess of its total
    qualifying volume over its Committed Volume Level, \[Confidential
    Information regarding BellSouth Long Distance's headroom\]; at the
    same time, even established competitors who continue to qualify for
    renewing the TSP will likely experience diminishing headroom and,
    thus, diminishing flexibility in how they manage that traffic, as
    they lose business to BellSouth Long Distance or others. [^106]
    Moreover, BellSouth's recent limitation on the TSP's availability
    exacerbates the foregoing effects, because existing TSP customers
    whose volumes are stagnant or declining no longer have the option of
    allowing their terms to lapse, waiting six months, and then
    re-subscribing at a lower Committed Volume Level.[^107] Therefore,
    even though the TSP does not require a customer to grow in order to
    obtain discounts, the TSP still favors the predictably fast and
    substantial growth of BellSouth Long Distance, in violation of
    section 272.[^108]

39. BellSouth argues that it could not have designed the 90% commitment
    requirement in order to favor BellSouth Long Distance, because
    BellSouth filed the TSP in April 1999, whereas BellSouth Long
    Distance did not subscribe to the TSP until 2001, and did not obtain
    authorization to start providing service until 2002.[^109]
    BellSouth's argument is unavailing. As described above, liability
    under section 272 hinges on effect, not intent (although evidence of
    intent might be probative of effect). Thus, whether BellSouth
    designed the TSP intentionally to benefit BellSouth Long Distance is
    irrelevant.[^110] In any event, BellSouth created BellSouth Long
    Distance in 1996; BellSouth had twice applied for authority to
    provide long distance service by April 1999; and obtaining authority
    to provide long distance authority was a principal "carrot" for the
    BOCs in the 1996 Act. Therefore, BellSouth's assertion that it
    designed the TSP without BellSouth Long Distance in mind is
    unpersuasive.

40. BellSouth maintains that the 90% commitment requirement is
    cost-justified because it facilitates network utilization and
    planning and ensures recovery of costs incurred to build and
    maintain facilities for each TSP customer.[^111] The Commission has
    never before adopted this customer-retention theory of cost
    justification. Carried to its logical conclusion, this theory would
    "justify" a 100% commitment requirement. We need not approve or
    reject this theory *per se*, however, because BellSouth has provided
    no actual evidence that it has not already recovered its facilities
    costs or cannot recover its facilities costs through means other
    than discriminating in favor of BellSouth Long Distance. In other
    words, even assuming, *arguendo*, that BellSouth's theory could
    prevail, it fails here for lack of proof.

41. Finally, BellSouth contends that the 90% commitment requirement (as
    well as the skewed discount levels) cannot violate section 272,
    because the TSP is available to all existing customers on the same
    terms.[^112] Even assuming, *arguendo*, that the TSP is facially
    neutral, BellSouth's contention lacks merit, because it assumes
    incorrectly that facial neutrality equates to lawfulness. We must
    examine the actual effect of the tariff's terms to determine whether
    unlawful discrimination exists. As the Commission has recognized, "a
    BOC may have an incentive to offer tariffs that, *while available on
    a non-discriminatory basis*, are in fact tailored to its affiliate's
    specific size, expansion plans, or other needs."[^113] Indeed, the
    Commission has rejected growth discounts under section 272, even
    though such discounts appeared in the context of a facially neutral
    tariff.[^114] The TSP is likewise unlawful, even assuming it appears
    in the context of a facially neutral tariff, for all of the reasons
    stated above.

42. Similarly, though BellSouth asserts that it recently closed the TSP
    to new customers to address AT&T's concerns,[^115] and that AT&T
    cannot logically claim additional injury from this limitation on the
    very plan it attacks as discriminatory,[^116] in fact the
    discriminatory impact of the TSP is exacerbated by both the TSP's
    evergreen provision and its newly limited availability, singly and
    in combination. First, the evergreen provision continues
    indefinitely the discount benefits for any current customer that can
    maintain its commitment level.[^117] As discussed herein, that
    effect favors small and growing companies, including BellSouth Long
    Distance, over BellSouth Long Distance's larger competitors. Thus,
    over time, BellSouth Long Distance will have a growing edge over its
    larger competitors. Moreover, the absence of the TSP as an option
    for those who are currently not TSP customers creates a perpetual
    advantage for BellSouth Long Distance over those customers, because
    the TSP's overlay discounts exceed all other discounts available to
    those customers. In addition, the recent closure of TSP to "new"
    customers deprives even existing customers of an option they had
    previously: terminating their terms or allowing their terms to
    lapse, waiting six months, and then re-subscribing to the TSP at a
    lower Committed Volume Level.[^118] That option might have been
    especially attractive to BellSouth Long Distance's larger
    competitors, whose volumes are stagnant or declining.

    \* \* \* \* \* \*

43. AT&T claims that the TSP violates sections 201(b) and 202(a) of the
    Act, as well as section 272. Because we find the TSP unlawful under
    section 272, and because we award AT&T under section 272 all the
    injunctive relief to which it would be entitled under sections
    201(b) and 202(a),[^119] we need not reach those claims and thus
    dismiss them without prejudice.

B. Neither the Statute of Limitations Nor Equitable Estoppel Bars AT&T's
Complaint.

44. Section 415(b) of the Act provides, in pertinent part, that "\[a\]ll
    complaints against carriers for the recovery of damages . . . shall
    be filed with the Commission within two years from the time the
    cause of action accrues, and not after."[^120] BellSouth argues that
    section 415(b) bars AT&T's Complaint because the causes of action
    therein accrued on April 6, 1999, when the TSP became effective,
    which predates the filing of the Complaint by more than five
    years.[^121] We disagree, for the following reasons.

45. The Commission has repeatedly held that the two-year statute of
    limitations in section 415(b) applies only to claims for damages,
    and not to claims for prospective relief.[^122] AT&T's Complaint
    seeks prospective relief as well as damages.[^123] Therefore,
    section 415(b) does not bar AT&T's Complaint. Moreover, we need not
    decide in this Order whether or to what extent section 415(b) limits
    AT&T's ability to recover damages, because AT&T "bifurcated" its
    damages request from its liability and prospective relief requests
    pursuant to section 1.722(d) of our rules, 47 C.F.R. §
    1.722(d).[^124] We will address those questions if and when AT&T
    files a supplemental complaint for damages.[^125]

46. According to BellSouth, we should not follow the Commission orders
    holding that section 415(b) applies only to claims for damages,
    because court decisions and other Commission orders have stated that
    the running of the statute of limitations in section 415(b) (and its
    counterpart in the Interstate Commerce Act) "not only bars the
    remedy, but destroys the liability."[^126] In BellSouth's view, that
    phrase means that no part of a complaint -- not even a claim seeking
    a liability determination for the purpose of obtaining prospective
    relief -- survives if a damages claim therein is barred by section
    415(b).[^127]

47. BellSouth places more weight on that phrase than it can bear. First,
    BellSouth's interpretation contradicts the plain language of section
    415(b), which by its clear terms applies to "complaints against
    carriers *for the recovery of damages*. . . ."[^128] In addition,
    none of the cases in which that phrase appears involved a situation
    where, as here, the complaint sought both damages and prospective
    relief. Therefore, the phrase about "destroying" liability was not
    designed, as BellSouth would have it, to "destroy" claims for
    prospective relief along with claims for damages. Indeed, upon close
    examination of the cases, it appears that the phrase was designed,
    instead, solely to emphasize that the limitations period in section
    415(b) cannot be waived or tolled in the absence of extraordinary
    circumstances, because the limitations period plays an important
    role in achieving the Act's goals of preventing discrimination and
    ensuring prompt payment of carrier charges.[^129] Allowing a claim
    for prospective relief to proceed, even while a related claim for
    damages is time-barred, would not undermine either of those goals.
    Consequently, where, as here, a complaint seeks both damages and
    prospective relief regarding circumstances that continue to exist
    when the complaint is filed, section 415(b) does not apply to the
    prospective relief portion of the complaint.

48. That said, a complainant cannot sit on its alleged right to
    prospective relief indefinitely. As the Commission has observed, if
    a complainant "delay\[s\] unreasonably in bringing its claims for
    declaratory and injunctive relief, we have discretion to dismiss
    those claims on equitable grounds."[^130]

49. BellSouth asserts that such equitable grounds for dismissal of
    AT&T's Complaint exist here.[^131] To support that assertion,
    BellSouth points out principally that (i) AT&T filed its complaint
    over five years after knowing fully about the terms of the TSP on
    which AT&T's Complaint largely, if not exclusively, focuses;[^132]
    and (ii) two years after the TSP became available, and three years
    before AT&T filed its Complaint, AT&T \[Confidential Information
    regarding AT&T business decision.\][^133]

50. BellSouth's argument has some persuasive force. Nevertheless, on the
    particular facts here, we decline to exercise our discretion to
    dismiss AT&T's Complaint on equitable grounds. Some of the relevant
    events occurred more recently than five years ago, *e*.*g.*, the
    addition of the evergreen provision in 2001, and the preclusion of
    new customers (including current or former customers re-subscribing
    at lower Committed Volume Levels) in 2004. As explained above,[^134]
    these actions exacerbate the TSP's unlawful discrimination in favor
    of BellSouth Long Distance.[^135] Furthermore, since the TSP began,
    certain changes in the marketplace -- including the 'bursting' of
    the 'Internet bubble,' and the substitution of wireless and
    VoIP[^136] services for traditional long distance services -- have
    substantially dampened demand for special access services in recent
    years,[^137] which renders the TSP's illegalities more acute.[^138]
    Moreover, BellSouth has pled or argued neither that it detrimentally
    relied on the absence of any challenge to the TSP's legality, nor
    that AT&T has failed to meet its commitments under the TSP; thus,
    BellSouth has received the benefit of its bargain to date.[^139]
    Finally, the Complaint raises issues of exceptional importance going
    to the core of the Commission's mission of protecting the public
    interest.

51. We caution, however, that neither AT&T nor any other prospective
    complainant should view this decision as condoning lassitude in the
    filing of complaints seeking prospective relief. To avoid the risk
    of dismissal, such complaints should be brought without undue delay.

C. The Discrimination Caused by the TSP Is Appropriately Redressed
Through Removal of the Evergreen Provision and, After a Reasonable
Period, Termination of the TSP.

52. Upon a finding of liability, AT&T seeks a Commission order (i)
    striking the 90% commitment requirement; (ii) striking the
    requirement that a customer maintain its initial (or higher, in the
    case of a voluntary increase) Committed Volume Level for the term of
    the plan, thereby allowing existing TSP customers to re-select their
    Committed Volume Levels (and associated discount); (iii) requiring
    BellSouth to reopen the TSP, as revised, to new customers; and (iv)
    leaving the remainder of the TSP intact.[^140] BellSouth argues that
    such a remedy would amount to an unjustified and unauthorized
    prescription of a new tariff.[^141]

53. For the reasons discussed below, we grant in part and deny in part
    AT&T's requested relief.[^142] We direct BellSouth to strike the
    TSP's evergreen provision immediately, so that no TSP customer may
    further extend its term;[^143] and we direct BellSouth to terminate
    the TSP entirely on June 9, 2005, six months after the release date
    of this Order.[^144]

54. Under sections 4(i) and 208 of the Act,[^145] the Commission has
    broad discretion to fashion an injunctive remedy for a violation of
    the Act, much like a court under similar circumstances.[^146] In
    exercising that discretion, we consider the totality of the
    circumstances to determine a just and fair result. Here, the
    relevant circumstances include (i) the nature and extent of the
    violation; (ii) the expectations and reliance of the parties; (iii)
    the expectations and reliance of non-party subscribers of the TSP;
    and (iv) the nature of the TSP.

55. In light of section 272's unqualified prohibition of discrimination
    in favor of a BOC affiliate, and the significant extent of such
    discrimination found here, the TSP must end, and end soon. There are
    \[Confidential Information identifying the number of TSP customers\]
    non-parties who are TSP customers, however, and they likely have
    formed some business expectations regarding the continued
    availability of the TSP's substantial discounts, especially because
    the TSP has been in place for over five years. On balance,
    therefore, we conclude that existing TSP customers should be allowed
    to continue their participation until their present terms expire, or
    until six months from the date of this Order, whichever occurs
    first.[^147] This remedy ends the discriminatory conduct quickly,
    but somewhat ameliorates the industry disruption that might
    otherwise occur if the TSP were terminated immediately, *i.e.*,
    non-party TSP customers will have some time to adjust their business
    plans to account for the elimination of the TSP.[^148]

56. Assuming, *arguendo*, that we would have authority under section 205
    of the Act[^149] to afford the prescriptive relief sought by
    AT&T,[^150] we decline to do so. AT&T has cited no Commission order,
    and we have found none, where the Commission has required a carrier
    to implement a plan that is optional to customers (*i.e.*, a plan
    concerning a service that customers can obtain via a *required*,
    approved tariff), and to omit from the optional plan terms but for
    which the carrier would never have volunteered the plan in the first
    place.[^151] Such a result would be unduly punitive to BellSouth.
    Moreover, we are not convinced that the present record contains
    sufficient evidence for us to conclude, as we must under section
    205, that the plan that would result from the deletions and changes
    sought by AT&T would be "just, fair, and reasonable."[^152]

57. We recognize that a potential negative result of our remedy is that
    special access customers in BellSouth's region may ultimately have
    no volume discount option with BellSouth. Therefore, we encourage
    BellSouth to fashion a volume discount plan that does not suffer
    from the discriminatory effects identified in this Order. Indeed,
    one of the virtues of the remedy imposed here is that BellSouth has
    some time to formulate a new volume discount plan before a large
    number of the TSP terms conclude. If BellSouth fails to do so, that
    failure may be relevant evidence in determining, in other Commission
    proceedings, whether the Commission's predictive judgments about the
    development of special access competition were accurate.

    D. AT&T's Claims Against the PSIP Are Denied.

58. AT&T also claims that another of BellSouth\'s special access
    discount plans, the Premium Savings Incentive Plan (\"PSIP\"),
    violates sections 201(b), 202(a), and 272 of the Act.[^153] Although
    the PSIP is somewhat similar to the TSP, it differs in some
    determinative respects. First, the PSIP has (and always will have)
    \[Confidential Information identifying the number of PSIP
    customers\].[^154] Moreover, the PSIP contains no evergreen
    provision, and thus does not have the "perpetual" characteristic of
    the TSP.[^155] Finally, BellSouth Long Distance does not and cannot
    subscribe to the PSIP.[^156] Given these circumstances, we conclude
    that the PSIP does not unlawfully discriminate in favor of BellSouth
    Long Distance under section 272, and does not have an unjust or
    unreasonable effect on the special access market under sections
    201(b) and 202(a). Accordingly, AT&T\'s claims concerning the PSIP
    are denied.

IV\. ORDERING CLAUSES

59. Accordingly, IT IS ORDERED, pursuant to sections 4(i), 201, 202,
    208, and 272 of the Communications Act of 1934, as amended, 47
    U.S.C. §§ 154(i), 201, 202, 208, and 272, that the formal complaint
    filed by AT&T Corporation, Inc., against BellSouth
    Telecommunications, Inc. is GRANTED IN PART and is OTHERWISE
    DISMISSED without prejudice or DENIED, as discussed above.

60. IT IS FURTHER ORDERED, pursuant to sections 272 and 4(i) of the Act,
    47 U.S.C. §§ 272 and 154(i), that BellSouth Telecommunications, Inc.
    SHALL REVISE its FCC Tariff No. 1, in compliance with relevant
    requirements of the Commission's rules, to remove the evergreen
    provision, BellSouth Tariff FCC No.1 § 2.4.8(E)(4), and SHALL FILE
    this revision no later than December 16, 2004, one week following
    the release of the instant Order.

    61\. IT IS FURTHER ORDERED, pursuant to sections 272 and 4(i) of the
    Act, 47 U.S.C. §§ 272 and 154(i), that BellSouth Telecommunications,
    Inc. SHALL TERMINATE its Transport Savings Plan ("TSP"), Tariff FCC
    No. 1 § 2.4.8(E), through a tariff revision filed in compliance with
    relevant requirements of the Commission's rules, effective June 9,
    2005.

    FEDERAL COMMUNICATIONS COMMISSION

    Marlene H. Dortch

    Secretary

    Confidential Appendix

    Not Included in Public Files

[^1]: Complaint of AT&T Corp. v. BellSouth Telecommunications, Inc.,
    File No. EB-04-MD-010 (filed July 1, 2004) ("Complaint").

[^2]: 47 U.S.C. § 208.

[^3]: 47 U.S.C. §§ 201(b), 202(a), 272.

[^4]: Pursuant to section 1.731 of the Commission\'s rules, 47 C.F.R. §
    1.731, Commission staff entered a Protective Order limiting the
    disclosure of sensitive business information that either AT&T or
    BellSouth designated as confidential ("Confidential Information\"). 
    AT&T Corp. v. BellSouth Telecommunications, Inc., File No.
    EB-04-MD-010, Letter Ruling (July 8, 2004) ("Protective Order").
    Pursuant to that Protective Order, this public version of the
    Memorandum Opinion and Order redacts all Confidential Information
    that is contained in the confidential version of the Memorandum
    Opinion and Order, and that redacted Confidential Information
    appears in the Confidential Appendix.  Such redactions are signified
    herein by bracketed, generic references to Confidential
    Information.    

[^5]: Joint Statement of Stipulated Facts, Disputed Facts, and Key Legal
    Issues, File No. EB-04-MD-010 (filed Aug. 3, 2004) ("Joint
    Statement") at para. 3.

[^6]: *Id.*

[^7]: 47 U.S.C. §§ 153(4), 251(h); Joint Statement at para. 4.

[^8]: *Id.*

[^9]: *Id.*

[^10]: *See, e.g.,*
    [**www.bellsouth.com**](http://www.bellsouth.com/)[/longdistance/history.html]{.underline};
    *Joint Application by BellSouth Corp., BellSouth Telecommunications,
    Inc., and BellSouth Long Distance, Inc. for Provision of In-Region,
    InterLATA Services in Georgia and Louisiana*, Memorandum Opinion and
    Order, 17 FCC Rcd 9018 (2002).

[^11]: Joint Statement at para. 4.

[^12]: *Id*. at para. 6. In this proceeding, "special access services"
    includes dedicated switched transport services, which are deployed
    when an interexchange carrier connects its points of presence to a
    LEC end office switch or tandem switch. *Id.*

[^13]: *Id.*

[^14]: *Id.*

[^15]: *Id*.

[^16]: *Id.*

[^17]: *Id.* at para. 7.

[^18]: *Id.*

[^19]: *Id.*

[^20]: *Id.*

[^21]: *Id.* at para. 8.

[^22]: *Id.*

[^23]: *Id.* at para. 15; BellSouth Telecommunications, Inc.\'s Answer
    to AT&T Corp.'s Formal Complaint, File No. EB-04-MD-010 (filed July
    21, 2004) ("BellSouth Answer") at Tab 3, Attachment B, BellSouth
    Transmittal No. 495.

[^24]: Joint Statement at para. 25. MCI challenged one section of
    Transmittal No. 495, a "growth" discount provision, while AT&T
    challenged the entire filing, arguing that BellSouth had not
    provided sufficient cost support. BellSouth Answer at Tab 3,
    Attachments C, D. AT&T asserted that the cost support provided by
    BellSouth \-- two worksheets alleged to demonstrate that the
    discount rates would not produce below-cost prices \-- did not
    adequately support the proposed discount plans. Under special
    permission, before the TSP became effective, BellSouth struck the
    section of the TSP to which MCI had objected. BellSouth Answer at
    Tab 3, Attachment E.

[^25]: *Protested Tariff Transmittals Action Taken,* Public Notice, 14
    FCC Rcd 6199 (Com. Carr. Bur.-Comp. Pr. Div. 1999) ("*TSP Public
    Notice*").

[^26]: Joint Statement at para. 15.

[^27]: *Id.* at para. 16.

[^28]: *Id.* At the time that the TSP was introduced, BellSouth had in
    place three optional payment and savings discount plans for its
    special access customers, and these plans continued in place: the
    Area Commitment Plan ("ACP"); the Channel Services Payment Plan
    ("CSPP"); and the Transport Payment Plan ("TPP"). All three of these
    plans are still available to current and new customers. Joint
    Statement at paras. 9-14.

[^29]: *Id.* at paras. 16, 38.

[^30]: The TSP's revenue bands are from \$3 million to \$10 million
    (with discounts ranging from 1% in the first year to 3% in the
    fifth); from \$10 million to \$100 million (with discounts ranging
    from 2% to 5%); from \$100 million to \$300 million (with discounts
    ranging from 3% to 9%); from \$300 million to \$500 million (with
    discounts ranging from 4.5% to 10%); from \$500 million to \$600
    million (with discounts ranging from 5% to 12%); and above \$600
    million (with discounts ranging from 5.5% to 12.5%). Complaint, Tab
    H (citing BellSouth Tariff FCC No. 1 at section 2.4.8(E)(7)(b)). As
    just indicated, the discount levels increase within each band over
    time, and between bands, so a TSP customer can increase its discount
    just by staying in the plan, and can increase it still more by
    voluntarily raising its Committed Volume Level above the ceiling of
    its current band. Joint Statement at para. 21; Complaint Tab H,
    BellSouth Tariff FCC No. 1, section 2.4.8 (E)(7).

[^31]: Joint Statement at para. 21.

[^32]: *Id.*; Complaint Tab H, BellSouth Tariff FCC No. 1, section 2.4.8
    (E)(8).

[^33]: Joint Statement at para. 17. The customer could also commit to a
    particular revenue band amount, as long as that amount was 90% or
    more of its historic expenditure with BellSouth. *Id*. Most, but not
    all, of BellSouth's special access services are eligible for
    inclusion in the TSP. Joint Statement at para. 16. Revenues
    generated by a customer's purchase of TSP-eligible special access
    services, plus some additional specified low-volume services, are
    called "qualifying revenues." Joint Statement at para. 21; BellSouth
    Answer, Tab 3, Declaration of Greg Mims ("Mims Declaration") at
    para. 37 .

[^34]: Joint Statement at para. 18; Complaint Tab H, BellSouth Tariff
    FCC No. 1, section 2.4.8 (E)(8).

[^35]: Mims Declaration at para. 34; Complaint Tab H, BellSouth Tariff
    FCC No. 1, section 2.4.8 (E)(10).

[^36]: Joint Statement at para. 18. This "evergreen" provision was added
    in December 2001. *Id*. at para. 30; Complaint Tab H, BellSouth
    Tariff FCC No. 1 section 2.4.8 (E)(4); Mims Declaration at para. 84;
    BellSouth's Reply Brief, File No. EB-04-MD-010 (filed Oct. 4, 2004)
    ("BellSouth Reply Brief") at 28.

[^37]: Joint Statement at para. 18; Complaint Tab H, BellSouth Tariff
    FCC No. 1, section 2.4.8 (E)(6).

[^38]: Joint Statement at paras. 17, 19.

[^39]: Complaint Tab H, BellSouth Tariff FCC No. 1, sections 2.4.8
    (E)(1), (4), and (10) (the current tariff, as modified in June
    2004); Answer Tab 9 B, BellSouth Tariff FCC No. 1, section 2.4.8
    (E)(11) (the tariff as filed March 22, 1999); Complaint at 36;
    Complaint Tab G, Affidavit of John W. Mayo on Behalf of AT&T Corp.
    ("Mayo Affidavit") at para. 67; AT&T Initial Brief at 111, 135. Such
    a customer would also return to the lower, first-year discount
    levels, and work its way to higher discounts over the course of the
    new five-year term. Mims Declaration at para. 84; BellSouth Reply
    Brief at 28.

[^40]: See discussion, *infra,* at para. 16.

[^41]: *See*
    [**www.bellsouthcorp.com/policy/transactions/tariffsum.vtml**](http://www.bellsouthcorp.com/policy/transactions/tariffsum.vtml),
    cited in AT&T Supplemental Filing in Response to Commission Notice
    of Formal Complaint of AT&T, File No. EB-04-MD-010 (filed July 13,
    2004) ("AT&T Supplement"), Tab P, Supplemental Affidavit of Jeffrey
    C. Huels in Support of Formal Complaint of AT&T Corp. ("Huels
    Supplemental Affidavit") at 2; Mims Declaration at Attachment G;
    BellSouth Telecommunications, Inc.'s Responses to AT&T Corp.'s First
    Set of Interrogatories, EM-04-MD-010 (filed Aug. 27, 2004)
    ("BellSouth Interrogatory Response") No. 4 at Tab A, page 2.

[^42]: Mims Declaration at Attachment G; BellSouth Interrogatory
    Response No. 4, Tab A at 2.

[^43]: Joint Statement at para. 51; AT&T Supplement, Tab 8, BellSouth
    Transmittal No. 829, filed June 23, 2004, effective June 24, 2004.
    BellSouth's tariff amendment closed both the TSP and the PSIP (which
    BellSouth had filed just three months earlier, on March 20, 2004) to
    new subscribers. Joint Statement at para. 36.

[^44]: Joint Statement at para. 51.

[^45]: *Id.* BellSouth FCC Tariff No. 1, sections 2.4.8 (E)(1) and (10).
    *See* Complainant's Initial Brief, File. No. EB-04-MD-010 (filed
    Sept. 22, 2004) ("AT&T Initial Brief") at 134-35; Complainant's
    Reply Brief, File No. EB-04-MD-010 (filed Oct. 4, 2004) ("AT&T Reply
    Brief") at 6; BellSouth Reply Brief at 28.

[^46]: Complaint at 4-6, 8-9, 28, 55-62, 65-67; Complaint at Tab C,
    Affidavit of Stephen G. Huels in Support of AT&T Corp. ("Huels
    Affidavit") at paras. 34-35; Complaint at Tab G, Mayo Affidavit at
    paras. 5-6, 11, 20, 51-52; Complainant AT&T's Reply to Defendant
    BellSouth's Answer, File No. EB-04-MD-010 (filed July 26, 2004)
    ("Reply") at 2-3, 12, 13-14 & n.52, 15-16, 37-40, 42-43; AT&T
    Initial Brief at 4, 11-12, 49 & n.174, 54-55, 140-44, 148, 156-63;
    AT&T Reply Brief at 3, 58, 72-76.

[^47]: Complaint at 27-54; Reply at 6-20; AT&T Initial Brief at 87-127;
    AT&T Reply Brief at 9-49.

[^48]: Complaint at 4-6, 8-9, 28, 55-62, 65-67; Huels Affidavit at
    paras. 34-35; Mayo Affidavit at paras. 5-6, 11, 20, 51-52; Reply at
    12, 13-14 & n.52, 15-16, 37-40, 42-43; AT&T Initial Brief at 4,
    11-12, 49 & n.174, 54-55, 140-44, 148, 156-63; AT&T Reply Brief at
    58, 72-76.

[^49]: Complaint at 4-6, 8-9, 28, 55-62, 65-67; Huels Affidavit at
    paras. 34-35; Mayo Affidavit at paras. 5-6, 11, 20, 51-52; Reply at
    12, 13-16, 37-38, 40-44; AT&T Initial Brief at 11-12, 49, 54-56,
    140-44, 148, 156-63; AT&T Reply Brief at 58, 72-76.

[^50]: Complaint at 4-6, 8-9, 28, 55-62, 65-67; Huels Affidavit at
    paras. 34-35; Mayo Affidavit at paras. 5-6, 11, 20, 51-52; Reply at
    2-3, 12, 13-14 & n.52, 15-16, 37-38, 40-44; AT&T Initial Brief at 4,
    11-12, 49 & n.174, 54-55, 140-144, 148, 156-63; AT&T Reply Brief at
    3, 58, 72-76.

[^51]: BellSouth Answer at 2, 17, 19-20, 66-69, 72; BellSouth Answer,
    Tab 2, Legal Analysis ("BellSouth Legal Analysis") at 2-3, 18-20,
    65-69, 73; Mims Declaration at paras. 28, 35, 44-46, 48-51, 72,
    78-80; BellSouth's Initial Brief, EB-04-MD-010 (filed Sept. 22,
    2004) ("BellSouth Initial Brief") at 32-33, 35-36, 39, 44-45, 48-51,
    57-62, 70, 105; BellSouth Reply Brief at 8-9, 30-35, 37-38, 53-56;
    BellSouth Interrogatory Response No. 1 at 2-3; BellSouth
    Interrogatory Response No. 4, Attachment A.

[^52]: AT&T Reply Brief at 74. *See* Complaint at 8, 28; Reply at 12,
    14, 40-43; Reply at Tab A, Reply Affidavit of John W. Mayo on Behalf
    of AT&T Corp. ("Mayo Reply Affidavit") at paras. 20-21, 48-50; AT&T
    Initial Brief at 156-63; AT&T Reply Brief at 72-76.

[^53]: 47 U.S.C. § 272(c)(1).

[^54]: 47 U.S.C. § 272(e)(3). We note that neither party has argued that
    sections 272(c)(1) and (e)(3) impose different substantive
    prohibitions, at least as applied to volume discount plans. Further,
    as the discussion in this section demonstrates, the relevant
    Commission precedent calls into question discount plans that favor a
    BOC affiliate under both 272(c)(1) and (e)(3). Accordingly, our
    conclusions that the TSP is unlawful arise under both section
    272(c)(1) and section 272(e)(3).

[^55]: *See, e.g.,* *Joint Application by BellSouth Corp., BellSouth
    Telecommunications Inc., and BellSouth Long Distance, Inc., for
    Provision of In-Region, InterLata Services in Alabama, Kentucky,
    Mississippi, North Carolina, and South Carolina*, Memorandum Opinion
    and Order, 17 FCC Rcd 17595, 17748-50 (2002) ("*BellSouth 5-State
    Order"*); *Access Charge Reform*, Fifth Report and Order and Further
    Notice of Proposed Rulemaking, 14 FCC Rcd 14221, 14288-91 (1999)
    ("*Pricing Flexibility Order*") (subsequent history omitted);
    *Implementation of the Non-Accounting Safeguards of Sections 271 and
    272 of the Communications Act of 1934, as Amended*, Second Order on
    Reconsideration, 12 FCC Rcd 8653, 8657-58, 8663 (1997)
    ("*Non-Accounting Safeguards Recon. Order*") (subsequent history
    omitted); *Implementation of the Non-Accounting Safeguards of
    Sections 271 and 272 of the Communications Act of 1934, as Amended*,
    First Report and Order and Further Notice of Proposed Rulemaking, 14
    FCC Rcd 21905 (1996) ("*Non-Accounting Safeguards Order*")
    (subsequent history omitted); *Access Charge Reform*, Third Report
    and Order and Notice of Inquiry, 11 FCC Rcd 21354, 21435-38 (1996)
    (*"Access Charge Reform Order"*) (subsequent history omitted).
    Regarding Commission policy on volume discounts in general, *see
    Transport Rate Structure and Pricing*, Fourth Order and Order on
    Reconsideration, 10 FCC Rcd 12979, 12979-86 (1995) ("*Fourth*
    *Transport Rate Order*") (addressing the propriety of volume and
    growth discounts under sections 201(b) and 202(a)); *Expanded
    Interconnection with Local Telephone Company Facilities, Amendment
    of the Part 69 Allocation of General Support Facility Costs,* Report
    and Order and Notice of Proposed Rulemaking, 7 FCC Rcd 7369, 7412-15
    (1992) ("*Expanded Interconnection Order*") (same) (subsequent
    history omitted).

[^56]: *Non-Accounting Safeguards Order*, 14 FCC Rcd at 22200, para. 197
    (discussing section 272(c)(1)).

[^57]: *Non-Accounting Safeguards Order*, 14 FCC Rcd at 21914, para.16.
    *See id.* at 20999, para. 197 (discussing section 272(c)(1) and
    stating that "Congress did not intend section 272\'s prohibition
    against discrimination in the 1996 Act to be synonymous with the
    'unjust and unreasonable' discrimination language used in the 1934
    Act, but rather, intended a more stringent standard.").

[^58]: *Non-Accounting Safeguards Order*, 14 FCC Rcd at 22201, para. 202
    (discussing section 272(c)(1)). Congress deliberately made section
    272's anti-discrimination requirements unusually stringent in order
    "to effectuate the goal of preventing anticompetitive abuses by BOCs
    that control essential local facilities and seek to enter
    competitive markets that require these facilities as an input."
    *Non-Accounting Safeguards Recon. Order*, 12 FCC Rcd at 8657-58,
    para. 10.

[^59]: *Non-Accounting Safeguards Order*, 14 FCC Rcd at 22028-29, para.
    257 (discussing section 272(e)(3)). *See* ***BellSouth** 5-State
    Order*, 17 FCC Rcd at 17748, para. 272; *Pricing Flexibility Order*,
    14 FCC Rcd at 14294, para. 135; *Access Charge Reform Order*, 11 FCC
    Rcd at 21437, para. **192;** *Transport Rate Structure and Pricing*,
    Third Memorandum Opinion and Order on Reconsideration, 10 FCC Rcd
    3030, 3083 at para. 114 (1994) ("*Transport Rate Order*")
    (subsequent history omitted).

[^60]: *Non-Accounting Safeguards Order*, 14 FCC Rcd at 22028-29, para.
    257 (discussing section 272(e)(3)).

[^61]: *Id.* at 22204-05, para. 212 (discussing section 272(c)(1) and
    quoting *Implementation of the Local Competition Provisions in the
    Telecommunications Act of 1996; Interconnection between Local
    Exchange Carriers and Commercial Mobile Radio Service Providers,*
    First Report and Order, 11 FCC Rcd 15499, 15928, at para. 860 (1996)
    ("*First Interconnection Order"*) (emphasis added)).

[^62]: *Non-Accounting Safeguards Order*, 14 FCC Rcd at 22204-05, para.
    212.

[^63]: *See, e.g., Access Charge Reform Order,* 11 FCC Rcd at 21435,
    para. 187 ("\[Volume and term\] discounts should be permitted . . .
    because they encourage efficiency and full competition"); *Fourth
    Transport Rate Order*, 10 FCC Rcd at 12984, para. 13 (citing
    *Expanded Interconnection Order,* 7 FCC Rcd 7369 at 7463, para. 199
    (recognizing "both volume and term discounts as generally legitimate
    means of pricing special access facilities so as to encourage the
    efficiencies associated with larger traffic volumes and the
    certainty associated with longer-term relationships")); *Price Cap
    Local Exchange Carrier Performance Review*, First Report and Order,
    10 FCC Rcd 8961, 9042-43 at para. 417 (1995) (*"LEC Performance
    Review Order*"); *Transport Rate Order*, 10 FCC Rcd at 3078-79,
    3083, paras. 105, 114 (noting that acceptable volume discounts grant
    "reduced per-unit prices for a particular number of units of
    service"); *Private Line Rate Structure and Volume Discount
    Practices*, Report and Order, 97 F.C.C. 2d 923, 947, 948 at paras.
    38, 40 (1984) ("*Volume Discount Order*").

[^64]: *See, e.g., Pricing Flexibility Order,* 14 FCC Rcd at 14288-89,
    paras. 123-24; *Access Charge Reform Order*, 11 FCC Rcd at 21437,
    para. 190; *Fourth* *Transport Rate Order,* 10 FCC Rcd at 12979-86;
    *Transport Rate Order*, 10 FCC Rcd at 3093, para. 141; *Expanded
    Interconnection Order,* 7 FCC Rcd at 7463, paras. 199-200.

[^65]: *See, e.g*., BellSouth Answer at 2, 17, 19-20, 66-69, 72;
    BellSouth Legal Analysis at 2-3, 18, 66-69; Mims Declaration at
    paras. 28, 35, 44-46, 48-51, 72, 78-80; BellSouth Initial Brief at
    32-33, 35-36, 39, 44-45, 48-51, 59-62, 70, 105; BellSouth Reply
    Brief at 8-9, 33-35, 53-56; BellSouth Interrogatory Response No. 1
    at 2-3; BellSouth Interrogatory Response No. 4.

[^66]: *See, e.g*., BellSouth Answer at 2, 17, 19-20, 66-69, 72;
    BellSouth Legal Analysis at 2-3, 19, 66-69; Mims Declaration at
    paras. 28, 35, 44, 45, 46 (stating that "the discounts had to be
    significant enough to avoid undercutting \[smaller customers'\]
    competitiveness"), 48-51, 72, 78-79, 80 (stating that the TSP offers
    "economically rational volume-based marginal discounts \[that\] . .
    . provid\[e\] attractive discounts to the vast majority of
    BellSouth's special access customers."); BellSouth Initial Brief at
    32-33, 35-36, 39, 44-45, 48-51, 57-62, 70, 105; BellSouth Reply
    Brief at 8-9, 30-35, 37-38, 53-56; BellSouth Interrogatory Response
    No. 1 at 2-3; BellSouth Interrogatory Response No. 4, Attachment A.

[^67]: BellSouth Answer at 2, 17, 19-20, 66-69, 72; BellSouth Legal
    Analysis at 2-3, 18-20, 48-49, 65-69, 73; Mims Declaration at paras.
    28, 35, 44-46, 48-51, 72, 78-80; BellSouth Initial Brief at 32-33,
    35-36, 39, 44-45, 48-51, 57-62, 70, 105; BellSouth Reply Brief at
    8-9, 30-31, 32-33, 33-35, 37-38, 53-56; BellSouth Interrogatory
    Response No. 1 at 2-3; BellSouth Interrogatory Response No. 4,
    Attachment A.

[^68]: Mims Declaration at para. 50.

[^69]: *Id.* These figures flow from holding constant the discount level
    for the \$500 million - \$600 million band and calculating the
    discount levels for all other bands on a basis that is strictly
    proportional to volume. *Id.*

[^70]: *Id.*

[^71]: *Id.*

[^72]: *Id.* Put differently, the difference between the discount for a
    carrier in the \$500 million - \$600 million band and the discount
    for a carrier in the \$10 million - \$100 million band would be
    about twenty times larger under a proportional volume discount plan
    than it is under TSP. (Under TSP, the larger carrier's discount is
    only about 2 ½ times larger than the smaller carrier's; under a
    proportional discount plan, the larger carrier's discount would be
    50 times larger than the smaller carrier's.) \[Confidential
    Information regarding specific TSP customers' volume bands has been
    redacted from this footnote.\]

[^73]: \[Confidential Information regarding specific TSP customers'
    volume bands has been redacted from the text above and from this
    footnote.\] As suggested by the text above, by \"discount
    differential,\" we mean the spread of percentage points between the
    discounts available in different volume bands. For example, in the
    TSP, the \$3 million - \$10 million volume band has a 3% discount in
    the fifth year, and the \$10 million - \$100 million band has a 5%
    discount, so the "discount differential" is two percentage points.
     Comparing the complete set of discount differentials reveals the
    following:  As compared to what the discount differentials would be
    in the fifth year under a more directly proportional plan, the TSP's
    discount differential is (i) about 33% less (9 percentage-point
    differential versus 11.93 percentage-point differential) as between
    a \$3 million - \$10 million customer and a \$500 million - \$600
    million customer; (ii) about 40% less (7 percentage-point
    differential versus 11.76 percentage point differential) as between
    a \$10 million - \$100 million customer and a \$500 million - \$600
    million customer; (iii) about 70% less (3 percentage-point
    differential versus 9.6 percentage-point differential) as between a
    \$100 million - \$300 million customer and a \$500 million - \$600
    million customer; (iv) about 60% less (2 percentage-point
    differential versus 4.8 percentage-point differential) as between a
    \$300 million - \$500 million customer and a \$500 million - \$600
    million customer; and (v) about 500% *more* (½ percentage-point
    differential versus 2.4 percentage-point differential) as between a
    customer in the over-\$600 million band and a customer in the \$500
    million - \$600 million band. Mims Declaration at para. 50.

[^74]: *See* AT&T Initial Brief at 77-78; AT&T Reply Brief at 75
    (observing that the TSP's band structure "particularly serves to
    benefit a quickly growing customer such as BellSouth Long
    Distance").

[^75]: *See* BellSouth Interrogatory Response No. 4, Tab A.

[^76]: BellSouth Answer at 2, 17, 19-20, 66-69, 72; BellSouth Legal
    Analysis at 2-3, 67-69; Mims Declaration at paras. 28, 35, 44-46,
    48-51, 72, 78-80; BellSouth Initial Brief at 32-33, 35-36, 39,
    44-45, 48-51, 59-62, 70, 105; BellSouth Reply Brief at 8-9, 33-35,
    53-56; BellSouth Interrogatory Response No. 1 at 2-3; BellSouth
    Interrogatory Response No. 4, Attachment A. In fact, although
    BellSouth argues that the TSP is structured to help BellSouth retain
    its customers' business, and that this constitutes a form of "cost
    justification," it also acknowledges that this is the main aim of
    any volume and term discount plan. Mims Declaration at para. 49.

[^77]: BellSouth Initial Brief at 61-62 (citing *Private Line Rate
    Structure and Volume Discount Practices,* Report and Order, 97
    F.C.C. 2d 923, 948 (1984) ("*Volume Discount Order*")*; BellSouth
    5-State Order*, 14 FCC Rcd at 13440, paras. 12-13; *First
    Interconnection Order,* 11 FCC Rcd at 15971, para. 953; *Coastal
    Fuels of Puerto Rico, Inc. v. Caribbean Petroleum Corp.,* 79 F.3d
    182, 192 (1^st^ Cir. 1996)); BellSouth Answer, Tab 2, Legal
    Analysis, at 44-45 (citing *NYNEX Mobile Communications Co.,*
    Memorandum Opinion and Order, 12 FCC Rcd 22280, 22288 at para. 16
    (1997) ("*NYNEX Mobile*")).

[^78]: We note that, in other contexts, courts have disallowed actions
    that favored "minnows over trout." *See U.S. v. Western Electric
    Co., Inc.*, 969 F.2d 1231, 1243 (D.C. Cir. 1992) (upholding the
    district court's denial of a waiver of the MFJ's line-of-business
    restrictions, even though granting such a waiver might have assisted
    small interexchange carriers to compete against AT&T and MCI);
    *Competitive Telecommunications Assn' v FCC*, 87 F.3d 522, 531-32
    (D.C. Cir. 1996) (rejecting a Commission rule regarding rate
    structures, even though the rule helped small interexchange carriers
    compete against AT&T).

[^79]: *Non-Accounting Safeguards Order,* 14 FCC Rcd at 21999, para.
    197. As the Commission has recognized, "\[e\]ven the slightest
    preference or discrimination can be highly consequential in a
    fast-paced competitive market." *Non-Accounting Safeguards Recon.
    Order*, 12 FCC Rcd at 36221, para. 20.

[^80]: *See, e.g*., BellSouth Legal Analysis at 49, 77-78; BellSouth
    Initial Brief at 49, 69-70.

[^81]: *See Non-Accounting Safeguards Order*, 14 FCC Rcd at 21914, para.
    16; at 21998, para. 197; at 22029, para. 257. *See also Access
    Charge Reform Order*, 11 FCC Rcd at 21437-38, para. 192;
    *Non-Accounting Safeguards Order,* 14 FCC Rcd at 21909, 22001,
    paras. 197, 202; *BellSouth 5-State Order*, 17 FCC Rcd at 17750,
    para. 274 & n.1061. *See also BellSouth 5-State Order*, 17 FCC Rcd
    at 17750, para. 274 & n.1061; *Non-Accounting Safeguards Order,* 14
    FCC Rcd at 21909, 22001, paras. 197, 202; *Access Charge Reform
    Order*, 11 FCC Rcd at 21437-38, para. 192.

[^82]: *See, e.g.,* BellSouth Initial Brief at 49-50, 69-70; BellSouth
    Reply Brief at 2, 5, 29-30; BellSouth Interrogatory Response No. 4.

[^83]: *See* BellSouth Initial Brief at 45-50, 70, 97 (noting discounts
    are somewhat higher for higher volumes, 39-40, 70, and generally
    reflect cost savings, 51, thus making them comparable to traditional
    volume and term discounts, 93-94); Mims Declaration at paras.
    44-45*. See also* BellSouth Answer at 2, 17, 19-20, 66-69, 72;
    BellSouth Legal Analysis at 2-3, 38-40, 67-69; Mims Declaration at
    paras. 28, 35, 44-46, 48-51, 72, 78-80; BellSouth Initial Brief at
    32-33, 35-36, 39, 44-45, 48-51, 59-62, 70, 93-94, 105; BellSouth
    Reply Brief at 8-9, 33-35, 53-56; BellSouth Interrogatory Response
    No. 1 at 2-3; BellSouth Interrogatory Response No. 4, Attachment A.

[^84]: *See, e.g*., BellSouth Initial Brief at 48-49, 62-70; BellSouth
    Reply Brief at 54-55, 60*.*

[^85]: BellSouth Initial Brief at 48-49. *See* BellSouth Legal Analysis
    at 11, 70-78; BellSouth Answer, Tab 4, Declaration of Dennis W.
    Carlton and Hal S. Sider on Behalf of BellSouth Telecommunications,
    Inc. ("Carlton Declaration") at 77-78; BellSouth Initial Brief at
    45-50, 97; BellSouth Reply Brief at 29-30.

[^86]: *See Non-Accounting Safeguards Order*, 14 FCC Rcd at 22004-05,
    para. 212. For discussions of cost justification defense generally,
    *see* *Price Cap Performance Review Order for Local Exchange
    Carriers,* First Report and Order, 10 FCC Rcd 8961, 9142-43 at para.
    417 (1995) (discussing balance between pricing flexibility for LECs
    and cost justification support in a non-section 272 context);
    *Amendments of Part 69 of the Commission's Rules Relating to the
    Creation of Access Charge Supplements for Open Network Architecture
    Policy and Rules Concerning Rates for Dominant Carriers Petitions
    for Reconsideration,* Memorandum Opinion and Order on Third Further
    Reconsideration, 10 FCC Rcd 1570, 1471 at para. 8 (1994) (same);
    *Investigation of Special Access Tariffs of Local Exchange
    Carriers,* Tentative Decision, 8 FCC Rcd 1059, 1079 at para. 135
    (Com. Carr. Bur. 1993) (discussing departure from cost justification
    requirement, but reliance on cost justification as defense against
    discrimination in a section 202(b) context).

[^87]: *See* paras. 23-27, *supra*; Mims Declaration at para. 50.

[^88]: BellSouth's efforts to cost-justify the TSP all pertain to the
    90% commitment requirement. BellSouth Answer at 69; BellSouth Legal
    Analysis at 1-2, 65-66; Carlton Declaration at paras. 29-30; Mims
    Declaration at para. 80; BellSouth Initial Brief at 6, 50-51, 56-60,
    62-63; BellSouth Reply Brief at 37-38, 55-56; BellSouth
    Interrogatory Response No. 1.

[^89]: *See Pricing Flexibility Order*, 14 FCC Rcd at 14291, para. 127;
    *Access Charge Reform Order*, 11 FCC Rcd at 21437, paras. 190-91;
    *Fourth Transport Rate Order*, 10 FCC Rcd at 12984, para. 13 (citing
    *Expanded Interconnection Order,* 7 FCC Rcd 7369 at 7463, para.
    199); *LEC Performance Review Order*, 10 FCC Rcd at 9042-43, para.
    417; *Transport Rate Order*, 10 FCC Rcd at 3078-79, 3083, paras.
    105, 114; *Volume Discount Order*, 97 F.C.C. 2d at 947, 948, paras.
    38, 40. *See also* BellSouth Legal Analysis at 40-41, 43-44;
    BellSouth Initial Brief at 63-67; BellSouth Reply Brief at 54-55,
    60.

[^90]: *See* *Pricing Flexibility Order*, 14 FCC Rcd at 14291, para.
    127; *TSP Public Notice,* 14 FCC Rcd at 6199. *See also* BellSouth
    Initial Brief at 63-67; BellSouth Reply Brief at 54-55, 60.

[^91]: *See generally Non-Accounting Safeguards Order*, 14 FCC Rcd at
    22000, para. 197.

[^92]: *See Pricing Flexibility Order*, 14 FCC Rcd at 14291, para. 127;
    *Access Charge Reform Order*, 11 FCC Rcd at 21437, paras. 190-91.

[^93]: *Non-Accounting Safeguards Order,* 14 FCC Rcd*.* at 22004-05,
    para. 212 (discussing section 272(c)(1)). Contrary to BellSouth's
    suggestion otherwise, BellSouth Initial Brief at 49, the
    Commission's refusal to require BOCs to charge their affiliates a
    price per unit of traffic that reflects the highest unit price
    charged under a volume discount plan does not support BellSouth's
    position here. *Non-Accounting Safeguards Order,* 14 FCC Rcd at
    22028-29, para. 257. Indeed, that refusal reflects the same
    preference for cost-based pricing that we demonstrate here.

[^94]: *See* *Pricing Flexibility Order*, 14 FCC Rcd at 14290, para.
    125; *Access Charge Reform Order*, 11 FCC Rcd at 21437, paras. 190,
    192; *Price Cap Local Exchange Carrier Performance Review*, First
    Report and Order, 10 FCC Rcd 8961, 9042-43 at para. 417 (1995)
    (subsequent history omitted); ***Volume Discount Order*, 97 F.C.C.
    2d 923 at 947, 948, paras. 38, 40**. We note that, pursuant to
    section 272(f) of the Act, 47 U.S.C. §272(f), the obligations
    imposed on BellSouth by section 272(c)(1) may begin to sunset
    in mid-2005 (***e.g***., in Georgia and Louisiana on May 15, 2005,
    absent a Commission order extending the applicable period), but the
    obligations imposed by section 272(e)(3) will not.  Specifically,
    the obligations of section 272(e)(3) will continue to apply (i) to
    BellSouth Long Distance, as long as it exists as a separate section
    272 affiliate of BellSouth, and (ii) to BellSouth, if and when it
    integrates BellSouth Long Distance and uses special access for the
    provision of its own services.

[^95]: BellSouth Legal Analysis at 2, 19-20; Mims Declaration at para.
    45; BellSouth Initial Brief at 52, 58-60, 62-63; BellSouth Reply
    Brief at 31-33; 54-55.

[^96]: Complaint at 8, 55-62; Reply at 12, 14-17, 40-44; Mayo Reply
    Affidavit at paras. 20-21, 48-50; AT&T Initial Brief at 156-63; AT&T
    Reply Brief at 3, 58-60, 72-76.

[^97]: Complaint at 9-10, 35-36, 42; Mayo Affidavit at para. 67; Huels
    Affidavit at para. 27; Reply at 16, 20-21; AT&T Initial Brief at
    6-7, 111, 134-35, 163; AT&T Reply Brief at 6, 7, 8, 39-40, 80, 89;
    *but see* BellSouth Reply Brief at 28-29.

[^98]: Complaint at 9, 55-57, 59, 61; Mayo Affidavit at para. 67; Reply
    at 20-21; AT&T Reply Brief at 41, 47-49.

[^99]: *See **BellSouth** 5-State Order*, 17 FCC Rcd at 17748, para.
    272; *Pricing Flexibility Order*, 14 FCC Rcd at 14294, para. 135;
    *Access Charge Reform Order*, 11 FCC Rcd at 21437-38, para. **192;**
    *Fourth Transport Rate* Order, 10 FCC Rcd at 12986, para. 17;
    *Transport Rate Order*, 10 FCC Rcd at 3083, at para. 114. We
    recognize that the analogy to growth discounts is not perfect
    (*e.g.*, growth discounts apply to volume above past levels, while
    the TSP's discounts apply to volume below past levels);
    nevertheless, for the reasons described in this Order, it is
    sufficiently close to be instructive.

[^100]: *See, e.g.,* *Pricing Flexibility Order*, 14 FCC Rcd at 14294,
    para. 134 (citing *Access Reform Order*, 11 FCC Rcd at 21437).

[^101]: *BellSouth 5-State Order*, 17 FCC Rcd at 17749, para. 272
    (citing section 272(c)(1) and (e)(3) and quoting *Pricing
    Flexibility Order,* 14 FCC Rcd at 14294, para. 134).

[^102]: *Access Charge Reform Order*, 11 FCC Rcd at 21437-38, para. 192.

[^103]: In the period from 2002 to 2004, BellSouth Long Distance's total
    qualifying volume \[Confidential Information regarding BellSouth
    Long Distance's total qualifying volume\], while that of its largest
    competitors \[Confidential Information regarding certain large
    carriers' total qualifying volume\]. BellSouth Interrogatory
    Response No. 4, Tab A.

[^104]: In this same 2002-2004 period, BellSouth's TSP-eligible revenues
    \[Confidential Information regarding BellSouth's TSP-eligible
    revenues\]. *Id*

[^105]: We recognize that our conclusion that the TSP's 90% commitment
    requirement is akin to growth discounts \-- and thus unlawful under
    section 272 \-- rests partially on our assessment of current market
    conditions and predictive judgments about future conditions in a
    notoriously volatile market. It is well settled, however, that the
    Commission may rely on its predictive judgment regarding matters
    within its expertise. *See generally Sioux Valley Regional
    Television, Inc. v. FCC*, 349 F.3d 667, 679 (D.C. Cir. 2003);
    *Consumer Electronics Assoc. v. FCC*, 347 F.3d 291, 300, 303 (D.C.
    Cir. 2003); *Time Warner Entertainment Co., L.P. v. FCC*, 240 F.3d
    1126, 1133 (D. C. Cir. 2001); *Fresno Mobile Radio, Inc. v. FCC*,
    165 F.3d 965, 971 (D.C. Cir. 1999); *BellSouth Corp. v. FCC,* 162
    F.3d 1215, 1221-22 (D.C. Cir. 1999) (subsequent history omitted);
    *Melcher v. FCC*, 134 F.3d 1143, 1151-52 (D.C. Cir. 1998).

[^106]: \[Confidential Information regarding TSP customers' headroom and
    revenue trends\]. *See* AT&T Initial Brief at 83; BellSouth Reply
    Brief at 51-52; BellSouth's Interrogatory Response No. 4, Tab A.
    \[Confidential Information regarding TSP customers' headroom and
    revenue trends\]. BellSouth's Response to Interrogatory No. 4, Tab
    A. \[Confidential Information regarding TSP customers' headroom and
    revenue trends\]. *Id.*

[^107]: Complaint at 35-36; Complaint Tab H, BellSouth Tariff FCC No. 1,
    sections 2.4.8 (E)(1), (4), and (10) (the current tariff, as
    modified in June 2004); Answer Tab 9 B, BellSouth Tariff FCC No. 1,
    section 2.4.8 (E)(11) (the tariff as filed March 22, 1999); AT&T
    Initial Brief at 111, 135; Mayo Affidavit at para. 67.

[^108]: BellSouth argues that the analogy to growth discounts must fail
    because growth discounts require the customer to commit demand as to
    which the carrier has not yet sunk any investment, whereas the TSP's
    90% commitment requirement encourages customers to continue using
    facilities that BellSouth has already built for the customers' use.
    Thus, in BellSouth's view, the latter is cost-justified, while the
    former is not. BellSouth Legal Analysis at 6-7, 41-47; BellSouth
    Initial Brief at 36-38, 68-69. BellSouth's argument is unpersuasive,
    however. First, the TSP does not necessarily encourage a customer to
    continue using facilities that BellSouth has already built for the
    customer's use. A customer can, and inevitably does, meet its 90%
    commitment requirement through a shifting range of purchases, as its
    retail customer base churns and changes. That is, TSP customers
    secure new facilities and abandon old ones, and the TSP's discounts
    are not linked to particular facilities. Moreover, BellSouth has
    presented no evidence that it cannot recover, and has not recovered,
    its facility investments at the time customers sign up for or renew
    their TSP subscriptions. *See* Reply at 3, 12-13, 35-38, 41-42; AT&T
    Initial Brief at 4, 139-40, 150-51; AT&T Reply Brief at 3, 65,
    68-70.

[^109]: *See* BellSouth Legal Analysis at 77-78; BellSouth Initial Brief
    at 45-46, 49 n.142; BellSouth Reply Brief at 2, 5, 29-30. *See also*
    Huels Affidavit at 2;
    [www.bellsouthcorp/policy/transactions/tariffsum/vtml]{.underline}.

[^110]: Also irrelevant is the fact that the Commission denied petitions
    to suspend or investigate the TSP. BellSouth Answer, Tab 2, Legal
    Analysis, at 37-38 (citing *TSP Public Notice*, 14 FCC Rcd 6199). It
    is well-established that such Commission action does not preclude a
    subsequent challenge to the tariff on the same grounds under section
    208 of the Act. *See, e.g., Examination of Current Policy Concerning
    the Treatment of Confidential Information Submitted to the
    Commission*, Notice of Inquiry and Notice of Proposed Rulemaking, 11
    FCC Rcd 12406, 12428 at para. 45 (1996); *Bell Atlantic Telephone
    Companies*, Memorandum Opinion and Order, 8 FCC Rcd 2732, 2733 at
    para. 7 (1993) ("*Bell Atlantic Order"*); *Policy and Rules
    Concerning Rates for Dominant Carriers*, Notice of Proposed
    Rulemaking, 2 FCC Rcd 5208, 5209 at para. 7 (1987); *In the Matter
    of AT&T Communications Tariff F.C.C. Nos. 1 and 2, Transmittal Nos.
    604 and 628,* Memorandum Opinion and Order, 2 FCC Rcd 548, 550 at
    para. 14 (1987); *AT&T Communications Revisions to Tariff F.C.C.
    Nos. 1, 9 and 10, Transmittal Nos. 434 and 435*, Memorandum Opinion
    and Order on Reconsideration, 1 FCC Rcd 930, 931 at para. 10 (1986);
    *Bell Atlantic Co. Tariff F.C.C. No. 1*, Order on Reconsideration, 7
    FCC Rcd 5271, 5272 at para. 7 (Com. Carr. Bur. 1992) ("*Bell
    Atlantic Recon. Order*"); *In the Matter of American Telephone and
    Telegraph Co. Revisions to Tariff F.C.C. No. 1, Transmittal No.
    1105,* Order on Reconsideration, 3 FCC Rcd 3572, 3572 at para. 3
    (Com. Carr. Bur. 1988); *In* *the Matter of Southwestern Bell
    Telephone Company Transmittal Nos. 1537 and 1560 Revisions to Tariff
    F.C.C. No. 68,* Order Designating Issues for Investigation, 3 FCC
    Rcd 2339, 2339 at paras. 6-7 (Com. Carr. Bur. 1988) (subsequent
    history omitted). BellSouth's reliance on *NYNEX Tel. Cos. Revision
    to Tariff F.C.C. No. 1, Trans. Nos. 311, 314 and 350*, Order, 9 FCC
    Rcd 7832 (Com. Carr. Bur.-Tar. Div. 1994) ("*NYNEX*") is likewise
    misplaced, because the Commission there simply denied petitions to
    suspend or investigate the tariff at issue. Moreover, that tariff
    differed materially from the TSP by allowing the customer to choose
    the amount of volume to commit to the plan. *NYNEX*, 9 FCC Rcd at
    7832, para. 1; AT&T Reply Brief at 65-67.

[^111]: *See* BellSouth Initial Brief at 58 (noting its goal of
    "ensuring relatively high usage of BellSouth's deployed facilities,
    which thus continue to earn a return on the investment made on
    behalf of that customer"). *See also* BellSouth Legal Analysis at
    65-66, 69; Carlton Declaration at paras. 29-30; Mims Declaration at
    paras. 44, 80, 96; BellSouth Initial Brief at 6, 50-51, 56-59,
    62-63; BellSouth Reply Brief at 14, 31-32, 37-38, 55-56; BellSouth
    Interrogatory Response No. 1; *but see* BellSouth Initial Brief at
    56 (noting that TSP customers may use any combination of services
    and facilities in meeting their Committed Volume Levels). Supporting
    this view of non-specific facility use, *see generally* Reply at 12;
    Mayo Reply Affidavit paras. 18-19 & n.2; AT&T Initial Brief at 39,
    51-52, 124-27, 132-34; AT&T Reply Brief at 50-52.

[^112]: BellSouth Legal Analysis at 71, 76; BellSouth Initial Brief at
    31-32, 43-44, 47-48; BellSouth Reply Brief at 24-26; BellSouth
    Interrogatory Response No. 1.

[^113]: *Non-Accounting Safeguards Order,* 14 FCC Rcd at 22028-29, para.
    257 (discussing section 272(e)(3)) (emphasis added).

[^114]: ***Access Charge Reform Order*, 11 FCC Rcd at 21437, para.
    192.**

[^115]: BellSouth Legal Analysis at 4, 32.

[^116]: BellSouth Reply Brief at 28.

[^117]: Joint Statement at para. 18; *but cf.* BellSouth Reply Brief at
    12-13, 19-20, 28-29 (arguing that the evergreen provision was
    developed at the request of TSP customers, including AT&T).

[^118]: Complaint Tab H, BellSouth Tariff FCC No. 1, sections 2.4.8
    (E)(1), (4), and (10) (the current tariff, as modified in June
    2004); Answer Tab 9 B, BellSouth Tariff FCC No. 1, section 2.4.8
    (E)(11) (the tariff as filed March 22, 1999); Complaint at 36; Mayo
    Affidavit at para. 67; AT&T Initial Brief at 111, 135.

[^119]: *See* Part III. C, *infra*. Moreover, we have no reason to
    believe that AT&T's right to damages, if any, would be any different
    for liability arising under sections 201(b) and 202(a) than under
    section 272.

[^120]: 47 U.S.C. § 415(b).

[^121]: BellSouth Answer at 22; BellSouth Legal Analysis at 5, 32-36;
    BellSouth Initial Brief at 26-30; BellSouth Reply Brief at 68-69.

[^122]: *See, e.g., AT&T v. Winback & Conserve Program, Inc.,*
    Memorandum Opinion and Order, 16 FCC Rcd 16074, 16081 at n.53 (2001)
    ("*Winback*") ("Section 415(b) applies only to claims for
    damages."); *ACC Long Distance Corp. v. Yankee Microwave, Inc*.,
    Memorandum Opinion and Order, 10 FCC Rcd 654, 670 at para. 30 (1995)
    (affirming a Bureau order because "the Bureau did not find that
    ACC's entire complaint, including its requests for declaratory
    rulings, is barred by the statute of limitations in Section 415 of
    the Act.") (subsequent history omitted); *Bunker Ramo Corp. v.
    Western Union Telegraph*, Memorandum Opinion and Order, 31 F.C.C. 2d
    449, 454 (Rvw. Bd. 1971) ("Section 415(b), both by its terms and as
    it has been construed in past proceedings, applies exclusively as a
    bar to the recovery of damages; it does not operate as a bar to
    other forms of relief.") (subsequent history omitted); *Municipality
    of Anchorage v. Alascom, Inc.*, Memorandum Opinion and Order, 4 FCC
    Rcd 2472, 2465 at para. 25 (Com. Carr. Bur. 1989) ("*Anchorage v.
    Alascom*"). *See generally* *Heritage Cablevision v. Texas Utilities
    Electric Co.*, Memorandum Opinion and Order, 6 FCC Rcd 7099, 7106 at
    para. 36 (1991) (noting that "Section 415(b) does not limit our
    ability to redress harm caused by longstanding misconduct such as
    this on a prospective basis.").

[^123]: Complaint at 68-69.

[^124]: Complaint at 2, para. 2.

[^125]: *Compare* Complaint at 68; AT&T Supplement at 6-9; Reply at
    24-26, *with* BellSouth Answer at 22; BellSouth Legal Analysis at
    32-36; BellSouth Initial Brief at 26-28 (taking opposing views on
    when AT&T's damages claims accrued). For the same reasons, we need
    not and do not decide in this Order whether 47 U.S.C. § 204(a)(3)
    bars all, or only part, of AT&T's entitlement to seek recovery of
    any damages. *Compare* BellSouth Legal Analysis at 37-38; BellSouth
    Initial Brief at 9, 11-12 (arguing that section 204(a)(3) bars
    retrospective (but not prospective) relief and thus eliminates all
    of AT&T's entitlement to damages, if any), *with* AT&T Reply Brief
    at 78-79 (acknowledging that section 204(a)(3) does bar its recovery
    of some of its alleged damages, but not all such damages).

[^126]: *Armstrong Utilities, Inc. v. General Telephone Co. of PA*,
    Memorandum Opinion, Order, and Temporary Authorization, 25 F.C.C. 2d
    385, 389 at para. 11 (1970) ("*Armstrong*") (subsequent history
    omitted). *See* *MCI Telecommunications Corp. v. Pacific Tel. Co. of
    PA,* Memorandum Opinion and Order, 12 FCC Rcd 13243, 13252 at para.
    15 (1997) (subsequent history omitted); *Michael J. Valenti and Real
    Estate Marketplace v. AT&T Co.,* Memorandum Opinion and Order, 12
    FCC Rcd 2611, 2621 at para. 24 (1997) ("*Valenti*");
    *Tele-Valuation, Inc. v. AT&T Co*., Memorandum Opinion and Order, 73
    F.C.C. 2d 450, 451 at para. 6 (1979) ("*Tele-Valuation v. AT&T*");
    *MCI Telecommunications Corp. v. Northwestern Bell Tel. Co*., Order
    to Show Cause, 4 FCC Rcd 6096, 6097-98 n.8 (Com. Car. Bur. 1989)
    ("*MCI v. Northwestern Bell*"); *Anchorage v. Alascom*, 4 FCC Rcd at
    2473, para 14; *Mid-State Horticultural Co. v. Pennsylvania
    Railway*, 320 U.S. 356, 364 (1943) ("*Mid-State*"); *A.J. Phillips
    Co. v. Grand Trunk W. Railway Co.,* 236 U.S. 662, 667 (1915)
    ("*Grand Trunk*"); *Ward v. Northern Ohio Telephone Co*., 251 F.
    Supp. 606, 609 (N.D. Ohio 1966), *aff'd,* 381 F. 2d 16 (6^th^ Cir.
    1967).

[^127]: *See* BellSouth Legal Analysis at 32-35; BellSouth Initial Brief
    at 28-29.

[^128]: 47 U.S.C. § 415(b) (emphasis added).

[^129]: *See* *Valenti*, 12 FCC Rcd at 2621-22, para. 24;
    *Tele-Valuation v. AT&*T, 73 F.C.C. 2d at 451, para. 6; *Armstrong,*
    25 F.C.C. 2d at 389, para. 11; *MCI v. Northwestern Bell,* 4 FCC Rcd
    at 6097-98, n.8; *Mid-State,* 320 U.S. at 367; *Grand Trunk,* 236
    U.S. at 667.

[^130]: *Winback*, 16 FCC Rcd at 16081, n.53. *See Black Radio Network
    v. New York Telephone Co.*, Memorandum Opinion and Order, 12 FCC Rcd
    13737 at 13748, n.40 (Com. Carr. Bur. 1997) (noting that "even in
    the absence of a damage claim, the Bureau is always concerned with
    the timeliness of complaints. We will not hesitate to dismiss causes
    of action as untimely when considerations of equity so require.").
    *But cf.* *AT&T, MCI v. Bell Atlantic -- PA*, Memorandum Opinion and
    Order, 14 FCC Rcd 556, 566 at para. 18 (1998) ("*AT&T v. Bell
    Atlantic PA*") (declining to dismiss a complaint as untimely on
    equitable grounds, because the defendants failed to cite specific
    authority supporting such a dismissal).

[^131]: BellSouth Answer at 22; BellSouth Legal Analysis at 32-36;
    BellSouth Initial Brief at 26-30.

[^132]: BellSouth Answer at 22; BellSouth Legal Analysis at 33, 34;
    BellSouth Initial Brief at 26-27.

[^133]: BellSouth Legal Analysis at 3-4, 22-25, 36; Joint Statement at
    para. 29; BellSouth Initial Brief at 2-3, 26, 27, 30, 37-38, 74,
    78-79, 81-82, 84; BellSouth Reply Brief at 11, 23-24, 27, 48, 61.
    BellSouth also observes that: (i) but for \[Confidential Information
    regarding AT&T business decision and subsequent events\],
    eliminating any competitive or financial harm that the TSP allegedly
    causes AT&T today, BellSouth Initial Brief at 2-3, 30; BellSouth
    Reply Brief at 11; (ii) given that the TSP existed for years without
    legal challenge, other TSP customers and potential customers have
    formed business plans based on the continued availability of the
    TSP, BellSouth Initial Brief at 21-22; (iii) some of the evils that
    statutes of limitation are designed to prevent have occurred in this
    proceeding \-- specifically, potentially relevant witnesses and
    documents that might have been available had the complaint been
    filed sooner were not available, BellSouth Reply Brief at 35-36; and
    (iv) AT&T has \[Confidential Information regarding the amount of TSP
    discounts received by AT&T\], BellSouth Interrogatory Response No.
    4, Tab A; BellSouth Initial Brief at 30; BellSouth Reply Brief at
    11.

[^134]: *See* para. 42, *supra.*

[^135]: We do not, in our discussion here, make any determination about
    when AT&T\'s claim for damages accrued under section 415(b).

[^136]: Voice over Internet Protocol ("VoIP").

[^137]: For example, from 2002 to 2004, BellSouth's TSP-eligible revenue
    \[Confidential Information regarding BellSouth revenues\]. BellSouth
    Interrogatory Response No. 4.

[^138]: Complaint at 15-17 & n.40, 22, 45, 58-59; Huels Affidavit at
    paras. 11-16; Mayo Affidavit at paras. 6, 33-34; Mayo Reply
    Affidavit at para. 5; AT&T Initial Brief at 48, 82-85; AT&T
    Interrogatory Response No. 1 at 17-19.

[^139]: *See ,e.g.*, *AT&T v. Business Telecom, Inc.*, Memorandum
    Opinion and Order, 16 FCC Rcd 12312 (2001) ("AT&T v. BTI")
    (subsequent history omitted).

[^140]: Complaint at 68-69; AT&T Supplement at 6-9; Reply at 24-26; AT&T
    Initial Brief at 163-73; AT&T Reply Brief at 76-92. Although AT&T
    seeks damages from BellSouth, in an amount to be determined in a
    supplemental proceeding, AT&T states that it "principally seeks
    other relief (declaratory, injunctive, and prescriptive) . . .".
    AT&T Initial Brief at 14.

[^141]: BellSouth Answer at 23-24, 68; BellSouth Legal Analysis at
    20-21, 37-38, 78-86; BellSouth Initial Brief at 4-5, 9-11, 12-25;
    BellSouth Reply Brief at 9-10, 68-70.

[^142]: Given that we find in favor of AT&T on liability, AT&T may now
    file a supplemental complaint for damages in compliance with 47
    C.F.R. § 1.722. If BellSouth plans to seek reconsideration or court
    review of this Order, however, the parties may wish to seek jointly
    a waiver and extension of our 60-day deadline for filing such a
    damages complaint.

[^143]: As a practical matter, \[Confidential Information regarding the
    impact on TSP customers of this action\].

[^144]: Between now and the expiration of a TSP customer's term, the
    customer remains liable for any shortfall charges it may incur.

[^145]: 47 U.S.C. §§ 154(i), 208.

[^146]: *Implementation of the Telecommunications Act of 1996: Amendment
    of Rules Governing Procedures To Be Followed When Formal Complaints
    Are Filed Against Common Carriers*, 12 FCC Rcd 22497, 22565-66 at
    para. 159 & n.464 ("*Formal Complaints Rulemaking Order*")
    (subsequent history omitted); *Bell Atlantic Order*, 8 FCC Rcd at
    2733, n.8.

[^147]: Both parties agree that we have authority under sections 4(i)
    and 272 of the Act to order this result. AT&T Supplement at 4-10;
    Reply at 26-28; AT&T Reply Brief at 82 n.268; BellSouth Initial
    Brief at 5, 8. Both parties also agree that we have the authority to
    strike just the evergreen provision, so that the TSP would terminate
    customer-by-customer, as each reached the end of its five-year
    commitment or one-year extension. AT&T Supplement at 6-9; Reply at
    26-28; AT&T Initial Brief at 163-67; AT&T Reply Brief at 82 n.268;
    BellSouth Initial Brief at 5, 6, 8. The virtue of such a result is
    that some TSP customers would have longer than six months to adjust
    to the future elimination of the TSP, thereby reducing market
    disruption. The vice of such a result, however, is that BellSouth
    Long Distance would be one of those favored TSP customers; indeed,
    BellSouth Long Distance would remain under the TSP until April 10,
    2006, \[Confidential Information regarding the remaining terms of
    other TSP customers\], thereby perpetuating and exacerbating the
    very discrimination that this Order seeks to remedy. Mims
    Declaration, Attachment G; AT&T Initial Brief at 6-7; AT&T Reply
    Brief at 82 n.268. Thus, we decline to adopt this approach.

[^148]: In this regard, the remedy we fashion here is analogous to the
    Commission's actions in the *CLEC Access Charge Order, Access Charge
    Reform: Reform of Access Charges Imposed by Competitive Local
    Exchange Carriers*, Seventh Report and Order and Further Notice of
    Proposed Rulemaking, 16 FCC Rcd 9924 (2001) (subsequent history
    omitted), and in the *ISP Remand Order, Implementation of the Local
    Competition Provisions in the Telecommunications Act of 1996:
    Intercarrier Compensation for ISP-Bound Traffic*, Order on Remand
    and Report and Order, 16 FCC Rcd 9151 (2001), where the Commission
    ordered the gradual reduction of rates, rather than a "flashcut," so
    as to minimize industry disruption (subsequent history omitted).
    *Cf.* *In the Matter of Unbundled Access to Network Elements*, Order
    and Notice of Proposed Rulemaking, FCC 04-179, 2004 WL 1900394, at
    para. 30 (Aug. 20, 2004) (\"We recognize that transition plans are
    always imperfect, as they by definition retain \-- temporarily \--
    aspects of the regime being discarded.\").

[^149]: 47 U.S.C. § 205.

[^150]: ***See generally National Ass'n of Motor Bus Owners v. FCC,* 460
    F.2d 561, 565 (2d Cir. 1972); *Implementation of Section
    402(b)(1)(A) of the Telecommunications Act of 1996*, Order on
    Reconsideration, 17 FCC Rcd 17040, 17042-43 at para. 6 (2002)
    (confirming Commission's authority to prescribe rates in a complaint
    proceeding); *AT&T v BTI*, 16 FCC Rcd at 12312, para. 13 ("Section
    205 thus expressly authorizes the Commission to prescribe rates in
    the context of a complaint proceeding under section 208");
    *MTS/WATS,* Report and Order, 83 F.C.C. 2d 167, 191 at paras. 70-73
    (1980); *Implementation of Section 402(b)(1)(A) of the
    Telecommunications Act of 1996,* Notice of Proposed Rulemaking, 11
    FCC Rcd 11233, 11236-37 at para. 8 & n.22 (1996); *Regulatory
    Policies Concerning Resale and Shared Use of Common Carrier Services
    and Facilities,* Order, 60 F.C.C. 2d 261,284-85, 321-22 at paras.
    42, 130-32 (1976).**

[^151]: *See, e.g.,* BellSouth Legal Analysis at 67-69; Mims Declaration
    at paras. 45-51.

[^152]: 47 U.S.C. § 205(a).

[^153]: Complaint at 3-10, 18-69; Reply at 1-22, 35-48; AT&T Initial
    Brief at 156-163; AT&T Reply Brief at 72-76.

[^154]: BellSouth Legal Analysis at 30-31; Mims Declaration at para. 94
    and Attach. H.

[^155]: Joint Statement at para. 40; Mims Declaration at para. 55.

[^156]: Mims Declaration at para. 95.