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                 Before the
               Federal Communications Commission
                     Washington, D.C. 20554

In the Matter of                   )                             
                                   )    File No. EB-00-IH-0432
SBC Communications, Inc.           )    
                              )    NAL/Acct. No. 200132080011
Apparent Liability for Forfeiture       )
                         
          
          NOTICE OF APPARENT LIABILITY FOR FORFEITURE

    Adopted:  December 19, 2000Released:  December 20, 2000 

By the Chief, Enforcement Bureau:

                         I.INTRODUCTION
 
1.     In this Notice of Apparent Liability for Forfeiture (NAL), we find that SBC
Communications, Inc. (SBC) has apparently violated certain of the conditions that the Commission
imposed pursuant to its approval of the merger application of Ameritech Corp. (Ameritech) and
SBC.  In particular, it appears that, in seven of its in-region states and for a period of up to 13
months, SBC failed to report certain performance data in accordance with the published Business
Rules adopted in the Carrier-to-Carrier Performance Plan that SBC agreed to undertake as part of
the merger conditions adopted in the SBC/Ameritech Merger Order.

2.     The Carrier-to-Carrier Performance Plan is central to achieving the public interest goals
enumerated in the SBC/Ameritech Merger Order, including that of ensuring open local markets by
monitoring the quality of SBC's service to other telecommunications carriers.  The Commission
adopted the Performance Plan as a means to ensure that "SBC/Ameritech's service to
telecommunications carriers will not deteriorate as a result of the merger and the larger firm's
increased incentive and ability to discriminate and to stimulate the merged entity to adopt 'best
practices' that clearly favor public rather than private interests ."  Based upon our review of the
facts and circumstances surrounding this matter, we find that SBC is apparently liable for a forfeiture
in the amount of eighty eight thousand dollars ($88,000.00).
                         II.BACKGROUND
                                
3.     SBC is an incumbent local exchange carrier (ILEC) that provides local telephone service
in 13 states, including Arkansas, Kansas, Missouri, Oklahoma, Texas, California, Nevada, Illinois,
Michigan, Indiana, Ohio, Wisconsin, and Connecticut.  At the end of 1999, SBC served nearly 60
million local exchange access lines in its 13-state region, and served customers in 23 countries. 
SBC also provides in-region interLATA, wireless, Internet access, out-of-region interLATA, cable
and wireless television, security monitoring, and directory publishing services.  In 1999, SBC had
total operating revenues of more than $49 billion.

4.     In the SBC/Ameritech Merger Order, the Commission concluded that the merger of SBC
and Ameritech posed significant public interest harms that were not mitigated by the proposed
transaction's potential public interest benefits.  The Commission, however, also found that the
voluntary conditions submitted by the Applicants, and as modified by the Commission, would alter
the public interest balance by mitigating substantially the potential public interest harms while
providing additional public interest benefits.  The Commission explained that these merger
conditions were designed to accomplish five primary public interest goals: (a) promoting equitable
and efficient advanced services deployment; (b) ensuring open local markets; (c) fostering out-of-
territory competition; (d) improving residential phone service; and (e) ensuring compliance with and
enforcement of the conditions.  These conditions would remain in effect for 36 months after release
of the SBC/Ameritech Merger Order. 
 
5.     The Carrier-to-Carrier Performance Plan is part of the package of conditions designed to
foster the public interest goal of opening local markets to competition by ensuring that SBC's service
to competitors does not deteriorate as a result of the merger.  The Performance Plan requires SBC to
file with the Commission and each of the relevant state commissions, on a monthly basis, performance
data reflecting 20 different categories for each of SBC's 13 in-region states.  The data in the 20
categories reflect SBC's performance in responding to requests for facilities and services from its rivals,
as well as its end-user customers.  The Business Rules accompanying the Carrier-to-Carrier
Performance Plan describe the specific data requirements and measurement standards for each
performance measurement.  This condition also requires that SBC make voluntary incentive payments
to the U.S. Treasury in the event that it fails to meet designated performance thresholds.  The merger
conditions also require SBC to retain an independent auditor to provide a thorough and systematic
review of SBC's compliance with the conditions and to determine the sufficiency of its internal
controls.  The Commission approved SBC's retention of Ernst and Young, LLC as its independent
auditor.                                                                                                                                                    
                                                                                                                                                            

6.     On August 31, 2000, Ernst and Young submitted its attestation report regarding SBC's
compliance with the Commission's merger conditions from October 8, 1999 through December 31,
1999.  The independent auditor's report is confined to the statements made by SBC in its assertion,
in the accompanying Report of Management on Compliance with the Merger Conditions, that it had
complied with the merger conditions set forth in the SBC/Ameritech Merger Order, except as noted
therein, and had corrected the noted deficiencies.  The auditor's report, along with the underlying
data in SBC's monthly filings, revealed numerous instances of SBC's failure to comply with the
requirements of the Carrier-to-Carrier Performance Plan through the submission of inaccurate
performance data.  In particular, the record shows that, in submitting data for 13 of the performance
measurements for Texas, Oklahoma, Kansas, Missouri, Arkansas, California, and Nevada, SBC
continuously used incorrect benchmarks and disaggregation levels, and also excluded key data for a
period of up to 13 months.  

7.     The performance measurements at issue in this NAL concern: Percent Firm Order
Confirmations (FOCs) Returned Within "X" Hours (PM 1); Average Response Time for OSS Pre-
Order Interfaces (PM 2); Order Process Percent Flow Through (PM 3); Percent SWBT Caused Missed
Due Dates (PM 4); Average Delay Days for SWBT Caused Missed Due Dates (PM 7); Average
Response Time for Loop Qualification Information (PM 9); Mean Time to Restore (PM 12); Trouble
Report Date (PM 13); Average Trunk Restoration Interval (PM 14); Percent Trunk Blockage (PM 15);
Percent Missed Collocation Due Dates (PM 17); Billing Timeliness (PM 18); and OSS Interface
Availability (PM 19).  

8.     Because the Commission's ability to detect potential discriminatory conduct depends upon
SBC's strict compliance with the approved terms and conditions of the Carrier-to-Carrier Performance
Plan, failure to report the performance data in accordance with the published Business Rules could
compromise the effectiveness of the merger conditions in ensuring open local markets.  The Carrier-
to-Carrier Performance Plan is, therefore, a key aspect of the Commission's oversight of SBC's
behavior towards it competitors.

                      III.DISCUSSION

A.   Violations 

4.     Based on the facts set forth below, we find that SBC is apparently liable for a forfeiture
for willful and repeated violation of the merger conditions adopted in the SBC/Ameritech Merger
Order.  For a period of up to 13 months from November, 1999 through November, 2000, SBC
apparently violated its obligation to report accurately the data sought by the performance
measurements in the Carrier-to-Carrier Performance Plan for Texas, Oklahoma, Kansas, Missouri,
Arkansas, California, and Nevada.  We find that SBC's failure to report this information accurately
is willful and repeated.  The term "willful" means that the violator knew it was taking the action in
question, irrespective of any intent to violate the Commission's rules, and repeated means more than
once.  Furthermore, a continuing violation is "repeated" if it lasts more than one day. 

5.      SBC, in its Assertion on Compliance, does not dispute that it gathered and reported the data
sought by the specific performance measurements discussed below in a manner contrary to the Business
Rules for those measurements.  Although we are aware that a few of the violations occurred as a result
of SBC's application of different standards, which were required by the Texas and California business
rules, SBC was, nevertheless, obligated to seek the Commission's advice and approval before
modifying the Commission's Business Rules.  The merger conditions require that no changes be
implemented until the Common Carrier Bureau is notified and directs SBC to implement such
changes.  Given the importance of maintaining the integrity of the Carrier-to-Carrier Performance
Plan, we cannot excuse SBC's failure to diligently follow the Business Rules set forth in the
SBC/Ameritech Merger Order. 

6.       Consistent with the Commission's determination in the SBC/Ameritech Merger Order
that our monitoring of SBC's performance through these measurements is a key tool in offsetting
or preventing some of the potential harmful effects of that merger, we find SBC's lack of diligence
in following the Business Rules to be significant.  One of the goals behind establishing detailed
Business Rules at the outset was to have the Carrier-to-Carrier Performance Plan work in a self-
executing manner in order to ensure timely disclosure of accurate performance data and submission
of any required payments.  This would enable Commission staff to focus its resources on analyzing
the results of the data, rather than monitoring the gathering of the data.  SBC's failure to follow the
Business Rules could lead to inaccurate and unreliable results which would compromise the
Commission's ability to monitor effectively SBC's conduct towards other carriers.  For example, the
use of less rigorous standards than those required under the designated business rules could mask
material deficiencies in SBC's performance and ultimately undermine the voluntary payment scheme
established in the merger conditions.  The omission of key data could also lead to a "muddying" of
the reported results.  In addition, inaccurate results will make it difficult for CLECs to determine
independently whether there are discrimination problems. Therefore, we must insist on rigorous
adherence to the Carrier-to-Carrier Performance Plan. 

7.       The record evidences the following specific apparent violations by SBC of the Carrier-to-
Carrier Performance Plan:

Apparent violations of PM 1 (Percent Firm Order Confirmations (FOCs) Returned Within "X"
Hours) by SBC:

         For ten months from November 1, 1999, until August 31, 2000, SBC apparently
       violated the Business Rules for Performance Measurement 1 in the SWBT region by
       failing to report correctly the percent of FOCs timely returned by using the incorrect
       date, and standard (i.e., 2:00), instead of military (i.e.,14:00), time.  The use of
       standard time masked whether the return of FOCs occurred in the a.m. or p.m. and
       thereby potentially overstated the percent of FOCs timely returned.

         For three months from December 1, 1999, until February 20, 2000, SBC apparently
       violated the Business Rules for Performance Measurement 1 in the PacBell and
       Nevada Bell regions by overstating the percent of FOCs timely returned by excluding
       from the measurement the interval of time from the receipt of a fax request to the time
       the information was entered into the order entry system.

Apparent violations of PM 2 (Average Response Time for OSS Pre-Order Interfaces) by
SBC:
     
                 For six months from November 1, 1999, until April 17, 2000, SBC apparently violated
       the Business Rules for Performance Measurement 2 in the SWBT region by overstating
       its speed in assessing service availability by using a benchmark of 86,400 seconds,
       instead of 5.5 seconds. 
     
                 For six months from November 1, 1999, until April 17, 2000, SBC apparently violated
       the Business Rules for Performance Measurement 2 in the SWBT region by failing to
       report accurately the response time for requests for customer service records by
       collecting the data into a single category, instead of disaggregating the data into two
       categories of "CSR Summary 1-30 Lines" and "CSR 31 Lines or more," thereby
       masking differences between the categories.

Apparent violation of PM 3 (Order Process Percent Flow Through) by SBC:
     
         For nine months from November 1, 1999, until July 20, 2000, SBC apparently violated
       the Business Rules for Performance Measurement 3 in the SWBT region by failing to
       report accurately the percent of  Mechanized Order Generator (MOG) eligible orders
       that progress through SBC's ordering system by disaggregating the data by OSS
       interface, rather than by service type, thereby masking potential problems occurring
       within different types of services.

     Apparent violations of PM 4 (Percent SWBT Caused Missed Due Dates) by SBC:

         For six months from November 1, 1999, until April 20, 2000, SBC apparently violated
       the Business Rules for Performance Measurement 4c in the SWBT region by failing to
       report accurately the percent of missed due dates for installation of UNEs by
       disaggregating the data into two categories of field work and no field work, instead of a
       single UNE category.
     
         For eight months from November 1, 1999, until June 20, 2000, SBC apparently violated
       the Business Rules for Performance Measurement 4c in the SWBT region by failing to
       report accurately the percent of missed due dates for installation of UNEs by excluding
       the data from two categories.
     
     Apparent violation of PM 7 (Average Delay Days for SWBT Caused Missed Due Dates) by
     SBC:
     
         For nine months from November 1, 1999, until July 20, 2000, SBC apparently violated
       the Business Rules for Performance Measurement 7c in the SWBT region by failing to
       report accurately the average number of delay days on missed due dates for installation
       of UNEs by excluding the data from two categories.
     
     Apparent violations of PM 9 (Average Response Time for Loop Qualification Information)
     by SBC:
     
         For five months from December 1, 1999, until April 20, 2000, SBC apparently violated
       the Business Rules for Performance Measurement 9 in the PacBell and Nevada Bell
       regions by understating the average response time for providing loop qualification
       information for ADSL by excluding the data reflecting the time interval between receipt
       of a request for loop information and the submission of the request to the Outside Plant
       Engineer handling this request.
     
         For four months from November 1, 1999, until February 20, 2000, SBC apparently
       violated the Business Rules for Performance Measurement 9 in the SWBT region by
       understating the average response time for providing loop qualification information for
       ADSL by excluding the data reflecting the time interval between receipt of a request for
       loop information and the submission of the request to the Outside Plant Engineer
       handling this request.
     
     Apparent violations of PM 12 (Mean Time to Restore) by SBC:

         For eight months from November 1, 1999, until June 5, 2000, SBC apparently violated
       the Business Rules for Performance Measurement 12b in the SWBT region by failing
       to report accurately the mean time to restore design service by disaggregating the data
       into categories of dispatch and no dispatch, instead of a single category for design
       service.
     
         For eight months from November 1, 1999, until June 5, 2000, SBC apparently violated
       the Business Rules for Performance Measurement 12c in the SWBT region by failing
       to report accurately the mean time to restore UNE by disaggregating the data into
       categories of dispatch and no dispatch, instead of a single category for UNE service.

     Apparent violation of PM 13 (Trouble Report Date) by SBC:

         For nine months from December 1, 1999, until August 31, 2000, SBC apparently
       violated the Business Rules for Performance Measurement 13a in the Nevada Bell
       region by failing to report accurately the frequency of customer trouble reports by using
       an incorrect number of UNEs in the denominator of the calculation of the trouble report
       rate. 
     
     Apparent violation of PM 14 (Average Trunk Restoration Interval) by SBC:
     
         For ten months, from December 1, 1999, until September 8, 2000, SBC apparently
       violated the Business Rules for Performance Measurement 14 in the PacBell region by
       failing to report accurately the average trunk restoration interval by disaggregating the
       data at a statewide level, rather than by market region, thereby masking potential
       problems occurring at the market region level.

     Apparent violation of PM 15 (Percent Trunk Blockage) by SBC:

            For nine months from December 1, 1999, until August 31, 2000, SBC apparently
       violated the Business Rules for Performance Measurement 15 in the PacBell region by
       failing to report accurately the percent of trunk blockage by disaggregating the data at a
       statewide level, rather than by market region, thereby masking potential problems
       occurring at the market region level. 

     Apparent violations of PM 17 (Percent Missed Collocation Due Dates) by SBC:

         For eight months from November 1, 1999, until June 5, 2000, SBC apparently violated
       the Business Rules for Performance Measurement 17 in the SWBT region by failing to
       report accurately the percent of missed collocation due dates by disaggregating the data
       into additional categories of collocation (caged initial; caged augments; cageless initial;
       cageless augments; shared caged initial; shared caged augments; virtual initial; and
       virtual augments.), instead of limiting the disaggregation to the categories of physical,
       virtual, cageless, and additions.
     
     Apparent violation of PM 18 (Billing Timeliness) by SBC:

         For 13 months from November 1, 1999, until at least November 20, 2000, SBC
       apparently violated the Business Rules for Performance Measurement 18 in the SWBT
       region by failing to report accurately billing timeliness by excluding the billing
       information for all provisioned UNEs.
 
     Apparent violations of PM 19 (OSS Interface Availability) by SBC:

         For nine months from December 1, 1999, until August 30, 2000, SBC apparently
       violated the Business Rules for Performance Measurement 19 in the PacBell region by
       region by failing to report accurately on their web site the availability of OSS interface
       by failing to include the Z-scores for this measurement.
      
         For three months from December 1, 1999, until March 20, 2000, SBC apparently
       violated the Business Rules for Performance Measurement 19 in the PacBell and
       Nevada Bell regions by overstating OSS interface availability by excluding system
       outage data.

B.      Forfeiture Amount   

20.    In light of SBC's apparent willful or repeated failure to comply with the merger
conditions in the SBC/Ameritech Merger Order, we find that a forfeiture is warranted.  Section
503(b)(1) of the Act states that any person that willfully or repeatedly fails to comply with any
provision of the Act or any rule, regulation, or order issued by the Commission, shall be liable to
the United States for a forfeiture penalty.  For the time period relevant to this proceeding,
section 503(b)(2)(B) of the Act authorizes the Commission to assess a forfeiture of up to
$110,000 for each violation, or each day of a continuing violation, up to a statutory maximum of
$1,100,000 for a single act or failure to act.  In determining the appropriate forfeiture amount,
we consider the factors enumerated in section 503(b)(2)(D) of the Act, including "the nature,
circumstances, extent and gravity of the violation, and, with respect to the violator, the degree of
culpability, any history of prior offenses, ability to pay, and such other matters as justice may
require."

21.     SBC has submitted 13 monthly reports embodying one or more of the apparent
violations detailed above and thus has committed 13 separate apparent violations of the
SBC/Ameritech Merger Order. While several of the apparent violations discussed in this NAL
clearly had the effect of casting SBC's performance in a more favorable light, all of the apparent
violations we have discussed demonstrate that SBC repeatedly failed to implement the Business
Rules as adopted by the Commission.  Because section 503(b)(6) of the Act limits the
Commission's jurisdiction over this cause of action to one year from the time the action accrued,
our forfeiture calculation does not include a penalty for any violations that occurred during
November and December of 1999.  Therefore, for forfeiture purposes, SBC has committed 11
apparent violations of the SBC/Ameritech Merger Order.

15. Under the Commission's forfeiture guidelines, the base forfeiture amount for failure to file
required forms or information is $3000 per violation.  The Commission's rules, however, explicitly
provide that the Commission and its staff may issue a higher or lower forfeiture than provided in the
guidelines, as permitted by statute.  We believe that an upward adjustment in the forfeiture amount is
warranted in this case.  As explained above, inaccurate reporting of performance data may compromise
the effectiveness of the merger conditions in promoting open local markets.  Moreover, we are faced
here with noncompliance with a number of the reporting requirements in the SBC/Ameritech Merger
Order over an extended period of time.  Therefore, we will apply a forfeiture amount of $8000 to each
of the 11 violations described herein, and find SBC apparently liable for a forfeiture amount in the
amount of $88,000.  We note that our imposition of a proposed forfeiture in this proceeding is
independent of SBC's obligation to make voluntary payments for failure to perform according to the
benchmarks and other parity guidelines set forth in Appendix C of the SBC/Ameritech Merger Order.
   
                    
                    IV.  ORDERING CLAUSES
                    
  IV 16.    ACCORDINGLY, IT IS ORDERED THAT, pursuant to section 503(b) of the Act,  and
  section 1.80 of the Commission's Rules,  SBC Communications is HEREBY NOTIFIED of its
  APPARENT LIABILITY FOR FORFEITURE in the amount of eighty eight thousand dollars
  ($88,000.00) for willfully or repeatedly violating the Commission's merger conditions in the
  SBC/Ameritech Merger Order.
  V  
     17.  IT IS FURTHER ORDERED THAT, pursuant to section 1.80 of the Commission's Rules,
within thirty (30) days of the release date of this NOTICE OF APPARENT LIABILITY, SBC
Communications SHALL PAY to the United States the full amount of the proposed forfeiture OR
SHALL FILE a written statement showing why the proposed forfeiture should not be imposed or
should be reduced.

18. Payment of the forfeiture amount may be made by mailing a check or similar instrument
payable to the order of the Federal Communications Commission, to the Forfeiture Collection
Section, Finance Branch, Federal Communications Commission, P.O. Box 73482, Chicago, Illinois
60673-7482.  The payment should note the "NAL/ Acct. No." referenced above.

19.  The response, if any, must be mailed to Charles W. Kelley, Chief, Investigations and
Hearings Division, Enforcement Bureau, Federal Communications Commission, 445 12th Street
S.W., Room 3-B443, Washington, D.C., 20554, and must include the "NAL/Acct. No."
referenced above.

20.  The Commission will not consider reducing or canceling a forfeiture in response to a
claim of inability to pay unless the respondent submits: (1) federal tax returns for the most recent
three-year period; (2) financial statements prepared according to generally accepted accounting
practices ("GAAP"); or (3) some other reliable and objective documentation that accurately
reflects the respondent's current financial status.  Any claim of inability to pay must specifically
identify the basis for the claim by reference to the financial documentation provided.

     21.  IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability shall be sent
by Certified Mail/Return Receipt Requested to SBC Communications, c/o Sandra L.Wagner, Vice
President-Federal Regulatory, 1401 I Street, N.W., Suite 1100, Washington, D.C. 20005.


                    FEDERAL COMMUNICATIONS COMMISSION



                    David H. Solomon
                    Chief, Enforcement Bureau