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Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
SBC Communications Inc. ) File No. EB-00-IH-0326a
Apparent Liability for ) NAL/Acct. No. 200132080015
ORDER OF FORFEITURE
Adopted: May 23, 2001 Released: May 24, 2001
By the Chief, Enforcement Bureau:
In this Forfeiture Order, we find that SBC Communications, Inc.
(SBC) willfully and repeatedly violated section 51.321(h) of the
Commission's rules, requiring incumbent local exchange carriers
(ILECs) promptly to post notice of premises that have run out of
collocation space.1 These violations were discovered through an
independent audit of SBC's compliance with the Commission's
collocation rules, in which Ernst & Young found material
instances of noncompliance with the posting rule. Based on the
facts and circumstances before us and after considering SBC's
responses to our Notice of Apparent Liability (NAL) in this
matter, we conclude that SBC is liable for a forfeiture of
ninety-four thousand, five hundred dollars ($94,500.00), the
amount proposed in the NAL.
In the NAL, we found that SBC apparently violated section
51.321(h) of the Commission's rules, which states: ``The
incumbent LEC must maintain a publicly available document, posted
for viewing on the incumbent LEC's publicly available Internet
site, indicating all [collocation] premises that are full, and
must update such a document within ten days of the date at which
a premises runs out of physical collocation space.''2 We found
that SBC was apparently liable for a forfeiture of $94,500.00.3
In its February 20, 2001 Response to the NAL, SBC contested the
Bureau's finding of apparent liability on the bases that: (1) the
NAL failed to specify the alleged violations and, therefore,
deprived SBC of a meaningful opportunity to respond; (2) SBC's
few admitted posting lapses were not willful; and (3) the NAL
failed to explain the forfeiture amount assessed.4 In response
to SBC's first claim, on March 9, 2001, the Bureau issued a
confidential letter to SBC's outside counsel explaining that the
NAL omitted the details of the alleged violations because SBC had
requested confidential treatment of its submissions to the Bureau
detailing the nature and scope of its violations.5 The Bureau's
letter detailed the number and locations of the apparent
violations, and provided SBC with an additional 30 days in which
it could file a supplemental response to the NAL.6
On April 9, 2001, SBC filed its Supplemental Response to the NAL
claiming that the Bureau's NAL is ``badly flawed'' on the bases
that: (1) the Bureau failed to explain the rationale behind its
proposed forfeiture; (2) SBC's office-closing and Internet-
posting policy is pro-competitive and fully consistent with
Commission policy and rules; (3) SBC has not ``willfully''
disregarded its office-closing and Internet-posting legal
obligations; (4) three of the apparent violations are barred from
forfeiture by the statute of limitations; and (5) the Bureau's
proposed forfeiture assessment is unexplained, unjustified, and
arbitrary. As explained below, we are not persuaded by SBC's
II.A. Specificity of Allegations
The initial issue raised by SBC in its Response was that the NAL
failed to specify the alleged violations and therefore deprived
SBC of a meaningful opportunity to respond.7 As noted above, the
Bureau issued a confidential letter to SBC's outside counsel
detailing both the number of apparent violations, and the central
offices where each apparent violation occurred.8 We believe that
this letter fully responded to SBC's concern and note that SBC
did not raise this issue again in its Supplemental Response.
II.B. Appropriateness of SBC's Collocation Posting
SBC's policy is to post notice of exhausted collocation space
only when it determines exhaustion has occurred, ``[a]s a general
matter . . . pursuant to the denial or partial denial of a
collocation application, though it sometimes is made in the
course of approving such an application or conducting an internal
floor space assessment.''9 SBC asserts that, to its knowledge,
all other ILECs determine the appropriate time at which they must
post collocation space exhaustion using roughly the same criteria
as SBC.10 SBC's policy of posting only once it has denied a
collocation application conflicts with the plain language of the
collocation posting rule. Section 51.321(h) requires posting
``within ten days of the date at which a premises runs out of
physical collocation space.''11 SBC's denial of a collocation
application is not the event that causes a premise to run out of
space. Indeed, the denial makes clear that the premise already
had run out of space. Moreover, SBC's approach conflicts with
the stated purposes of the rule, to ``allow competitors to avoid
expending significant resources in applying for collocation space
in an incumbent LEC's premises where no such space exists.''12
By waiting until it denies an application, SBC in each instance
causes at least one competitive local exchange carrier (CLEC) to
waste time and resources on an application.
In arguing against the plain language of the rule, SBC asserts
that in adopting the posting rule, the Commission ``expressly
stated that it was `adopt[ing] the proposal of Sprint''' and that
``Sprint . . . suggested the Internet-posting requirement as an
additional reporting requirement that would also be triggered by
the denial of a collocation application.''13 We find nothing in
Sprint's comments to support this statement. Sprint merely urged
that ``ILECs be required simply to maintain a current, publicly
available list of offices where no space is available.''14 The
fact that Sprint specifies that the Internet document should be
``current'' suggests, contrary to SBC's argument, that ILECs
would have to keep track of current space availability, which
would obviously be affected by each use or reservation of space.
SBC also asserts that the Commission's Regulatory Flexibility
Analysis in the Advanced Services Order ``casts further doubt on
the existence of'' a requirement that ILECs monitor their
collocation floor space after each space reservation and
equipment installation.15 SBC quotes the Commission's statement
that the burden of the Internet-posting requirement on ILECs ``is
minimal, because an Internet site is easy and cheap to maintain,
and all [the ILECs] are doing is making available information
that they already know themselves.''16 SBC argues that keeping
track of space availability in every office cannot be considered
``minimal.''17 We disagree. The Internet-posting requirement
simply requires that ILECs make publicly accessible information
about the availability of collocation space in offices that they
occupy on a daily basis. Accordingly, we reject SBC's assertion
that the Bureau's interpretation of the collocation space
exhaustion posting requirement conflicts with the Commission's
Regulatory Flexibility Analysis of its Advanced Services Order.
Similarly, we reject SBC's argument that the Commission must
obtain additional approval from the U.S. Office of Management and
Budget under the Paperwork Reduction Act before imposing the
collocation space exhaustion posting requirement on ILECs.18 The
Commission has already obtained such approval.19 The fact that
SBC claims not to have realized the rule meant what it said is
not a basis for requiring re-approval.
In its Supplemental Response, SBC alleges that the Bureau failed
to explain the rationale behind its finding of apparent
violations.20 We disagree. As explained above and in the NAL,
SBC failed to post notices of space exhaustion within 10 days of
the event that actually caused the space to become unavailable
for collocation. We note that in SBC's pending application to
the Commission to provide long distance service in Missouri, SBC
proposed to modify its posting policy so as to post notice of a
central office closing within 10 days of a collocation request or
space assignment that would exhaust the collocation space at that
central office.21 This approach would bring SBC into compliance
with the rule.
II.C. Willfulness Standard
In both its initial and supplemental responses to the NAL, SBC
contends that any violations of section 51.321(h) were not
``willful.''22 Pointing to the Commission's statement in Midwest
Radio-Television that ``the policy factor which has been the main
key to our actions'' in the forfeiture area is ``a demonstrated
lack of concern or indifference on the part of the licensee for
compliance with the Act or our Rules,''23 SBC asserts that the
NAL has failed to establish that any noncompliance was willful
because the Bureau has not demonstrated a lack of concern or
indifference for compliance on SBC's part.24 Even assuming the
continuing validity of Midwest Radio-Television, in light of
decades of subsequent Commission case law, SBC's argument has no
merit. The violations upon which the Bureau relied in issuing its
NAL are not consistent with SBC's description of its compliance
with the Commission's collocation requirements as ``characterized
by extreme care and meticulousness.''25 Rather, SBC violated
these rules in numerous instances during the audit period.26 It
has long been established that the word ``willfully,'' as
employed in section 503(b) of the Act, does not require a
demonstration that a party knew it was acting unlawfully. Section
503(b) requires only a finding that SBC knew it was doing the
acts in question and that the acts were not accidental.27
SBC further contends in its Supplemental Response that a
``willful'' violation must be predicated on a standard
``sufficient to put [the licensee] on notice.''28 In this
regard, SBC states that (1) the Bureau's standard is unclear; and
(2) it is ``SBC's collocation [space exhaustion posting] policy -
not the Bureau's - that is followed by the entire ILEC
industry,'' and that the practice of the ILECs must by definition
be legal if they all act the same way.29 We reject both of these
First, as explained above, the collocation space exhaustion
posting requirement is clear on its face. Second, we find SBC's
assertions about the practices of other ILECs to be irrelevant.
Because, as stated above, we find that SBC's policy clearly does
not satisfy the posting requirement, the purported behavior of
other companies cannot legitimize SBC's noncompliance. In light
of SBC's statement regarding apparent non-compliance by other
ILECs, we will, however, consider undertaking appropriate
investigations and taking appropriate enforcement action.
SBC contends that the proposed forfeiture is unexplained,
unjustified and arbitrary.30 SBC argues that the Bureau (1)
failed to explain its proposed forfeiture amount of $94,500;31
(2) failed to identify the number of violations at issue;32 and
(3) failed to provide the base forfeiture amount it used in
determining the total forfeiture amount.33 Further, SBC argues
that the Bureau is required to examine downward adjustment
factors in determining a forfeiture amount.34 To that end, SBC
argues that its performance in providing collocation arrangements
to CLECs has been ``outstanding''; that its overall record of
compliance with the Commission's collocation and other rules is
``outstanding''; that no competitor or consumer was harmed by
SBC's posting policy; and that SBC has ``operated in good faith''
in dealing with the Bureau on this matter and has made
``voluntary disclosure'' of the information relied upon by the
Bureau in its determination of a proposed forfeiture.35 SBC
further argues that its willingness to modify its ``office-
closing and Internet-posting policy'' should be taken into
account by the Bureau in considering a downward adjustment.36
We believe the Bureau's March 9, 2001 letter to SBC's outside
counsel sufficiently explains the proposed forfeiture amount,
identifies the number of violations at issue, and provides the
base forfeiture amount.37 Because of SBC's request for
confidential treatment, these matters were not described in as
much detail in the NAL as is typically the case. We reject all
of SBC's arguments for adjusting downward the proposed forfeiture
amount. SBC's argument that its collocation performance in
general is ``outstanding'' does not mitigate SBC's failure to
comply specifically with the Commission's collocation space
exhaustion posting rule. Moreover, we note that this is not the
only recent instance in which SBC has been found in violation of
FCC rules.38 Further, SBC's assertion that no competitor or
consumer was harmed by its posting policy likely is false.
Information submitted to the Bureau by SBC strongly suggests that
several CLECs applied for collocation space from SBC where no
such space remained, and were accordingly denied collocation by
SBC.39 Had SBC complied with the Commission's collocation space
exhaustion posting rule, such denials likely would not have
occurred as the CLECs would have been on notice as to the space
exhaustion and would not have applied for space or had to incur
the related costs of such applications.
The Bureau is not persuaded to reduce the forfeiture amount by
SBC's arguments that it ``voluntarily'' disclosed to the Bureau
information that the Bureau relied upon in determining its
proposed forfeiture, and that it is willing to revise its posting
policy. First, the Bureau first learned of SBC's violations from
an audit report that SBC was required to file.40 Moreover, SBC
was legally bound to respond to the Bureau's subsequent
inquiries.41 Thus, there was no voluntary disclosure. Second,
SBC's willingness to revise its policy after an NAL has been
issued provides no basis to adjust downward the proposed
forfeiture amount. We give no weight to SBC's promise to comply
with its existing obligation.
17. Furthermore, we disagree with SBC's contention that the
Bureau failed to comply with the Commission's forfeiture
guidelines by not explaining in its NAL whether it used a base
forfeiture amount, and how, if at all, it adjusted such a base
amount.42 In its March 9, 2001 letter to SBC's outside counsel,
the Bureau provided the number of violations at issue, and the
amount it proposed to assess per violation.43 As explained in
the NAL, the Bureau considered ``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'' in determining the forfeiture amount.44 This
forfeiture amount is justified here in light of the number of
SBC's violations and the possible competitive harm caused by the
II.D. Statute of Limitations
18. In its supplemental response, SBC contends that posting
violations at three of the central offices the Bureau relied upon
in determining apparent violations for its NAL are barred by the
Commission's one-year statute of limitations.46 SBC argues that
because the NAL did not specify the central offices upon which
the Bureau relied in determining its proposed forfeiture, the NAL
was ``insufficient to place SBC on notice'' with respect to the
apparent violations at issue - other than the three instances SBC
had identified in prior submissions.47 SBC states that it first
was put on proper notice of the apparent violations on March 9,
2001, the date on which the Bureau issued a confidential letter
to SBC's outside counsel setting forth the number and location of
the violations upon which the Bureau relied in determining its
proposed forfeiture.48 As explained above, the NAL did not
specify the apparent violations because SBC itself had requested
confidential treatment of all information it submitted to the
Bureau in conjunction with this proceeding.
19. We reject SBC's statue of limitations argument on two
grounds: (1) the very reason the NAL did not specify the
violations at issue was that SBC itself had requested
confidential treatment of that information; and (2) SBC's
Supplemental Response - filed thirty days after SBC's receipt of
the Bureau's March 9, 2001 letter detailing the violations - does
not defend substantively any specific instances of apparent
violations, thereby indicating that the specific details provided
in the Bureau letter were not needed by SBC to respond
effectively to the NAL.
III. ORDERING CLAUSES
20. ACCORDINGLY, IT IS ORDERED that, pursuant to section
503(b) of the Act, 49 and section 1.80 of the Commission's
Rules,50 SBC Communications SHALL FORFEIT to the United States
Government the sum of ninety-four thousand, five hundred dollars
($94,500.00) for willfully and repeatedly violating the
Commission's rule requiring ILECs promptly to post notice of
premises that have run out of collocation space.
21. IT IS FURTHER ORDERED that payment shall be made in the
manner provided for in section 1.80 of the Commission's rules
within 30 days of release of this order. If the forfeiture is
not paid within the period specified, the case will be referred
to the Department of Justice for collection pursuant to section
504(a) of the Act.
22. IT IS FURTHER ORDERED that a copy of this Order of
Forfeiture 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
1 47 C.F.R. § 51.321(h).
2 See SBC Communications, Inc., Notice of Apparent Liability
for Forfeiture, DA 01-128 (Jan. 18, 2001) (NAL). 47 C.F.R. §
3 NAL at ¶¶ 1, 9.
4 See February 20, 2001 Response of SBC Communications Inc.
to Notice of Apparent Liability for Forfeiture (Response).
5 See March 9, 2001 Letter from David H. Solomon, Chief,
Federal Communications Commission Enforcement Bureau, to Michael
K. Kellogg, Counsel for SBC Communications, Inc. (March 9, 2001
7 Response at 12 - 14.
8 See March 9, 2001 Solomon Letter.
9 Response at 3; see also April 9, 2001 Supplemental Response
of SBC Communications Inc. to Notice of Apparent Liability for
Forfeiture at 4 (Supplemental Response); see also August 7, 2000
Report of Management on Compliance with the FCC's Collocation
Rules at 3, 4.
10 Supplemental Response at 13.
11 47 C.F.R. § 51.321(h).
12 See In the Matter of Deployment of Wireline Services
Offering Advanced Telecommunications Capability, CC Docket No.
98-147, First Report and Order and Further Notice of Proposed
Rulemaking, 14 FCC Rcd 4761, 4793 (Advanced Services Order).
13 Supplemental Response at 13 (emphasis added).
14 See Sprint comments at 18 (emphasis added).
15 Supplemental Response at 14.
16 Supplemental Response at 14 (citing the Advanced Services
Order at App. C, ¶ 18).
17 Supplemental Response at 14.
18 Supplemental Response at 15.
19 OMB No. 3060-0848.
20 Supplemental Response at 3.
21 See Application by SBC Communications Inc., Southwestern
Bell Telephone Company, and Southwestern Bell Communications
Services, Inc. d/b/a Southwestern Bell Long Distance for
Provision of In-Region, InterLATA Services in Missouri, CC
Docket No. 01-88 (filed April 4, 2001), Appendix A, Volume 1,
Tab 5 at p. 10.
22 Response at 15 - 18; Supplemental Response at 16, 17.
23 See Midwest Radio-Television Inc., Memorandum Opinion and
Order, 45 FCC 1137, 1141 (1963).
24 Response at 15 - 17.
25 Response at 15.
26 See January 9, 2001 Letter from Sandra L. Wagner, Vice-
President, SBC Telecommunications, Inc., to Brad Berry, Deputy
Chief, Federal Communications Commission Enforcement Bureau,
Exhibit A (January 9, 2001 Wagner Letter).
27 E.g., ConQuest Operator Services Corp., Order of
Forfeiture, FCC 99-194, at ¶ 15 n.41 (rel. July 26, 1999);
Target Telecom., Inc., Order of Forfeiture, 13 FCC Rcd 4456,
4458 (1998); Southern California Broadcasting Co., Memorandum
Opinion and Order, 6 FCC Rcd 4387, 4387-88 (1991).
28 Supplemental Response at 16 (citing Cedar Constr. Co. v.
OSHRC, 587 F.2d 1303, 1306 (D.C. Cir. 1978)).
29 Supplemental Response at 17.
30 See Response at 19, 20; see also Supplemental Response at
31 Response at 19.
33 Response at 19; Supplemental Response at 17, 18.
34 Response at 19, 20; Supplemental Response at 18.
36 Supplemental Response at 18.
37 See March 9, 2001 Solomon Letter.
38 See, e.g., SBC Communications, Inc., Order of Forfeiture,
DA 01-680, (March 15, 2001); C.F. Communications Corp., et al.
v. Century Telephone of Wisconsin, Inc., et. al., Memorandum
Opinion and Order on Remand, 15 FCC Rcd 8759 (2000), appeal
pending, Bell Atlantic, et al. v. FCC, No. 00-1207 (D.C. Cir.
filed May 15, 2000); AT&T Corp., MCI Telecommunications Corp.,
et al. v. Bell Atlantic-Pennsylvania, et al., Memorandum Opinion
and Order, 14 FCC Rcd 556 (1998); recon. denied 15 FCC Rcd 7467
(2000); review denied 15 FCC Rcd 16,124 (2000); Southwestern
Bell Telephone Co., Memorandum Opinion and Order on
Reconsideration, 13 FCC Rcd 6964 (1998); AT&T Corp.
International Telecharge v. Southwestern Bell Telephone Co.,
Memorandum Opinion and Order, 11 FCC Rcd 10061 (1996).
39 See January 9, 2001 Wagner Letter, Exhibit A.
40 See Applications of Ameritech Corp., Transferor, and SBC
Communications, Inc., Transferee, For Consent to Transfer
Control of Corporations Holding Commission Licenses and Lines
Pursuant to Sections 214 and 310(d) of the Communications Act
and Parts 5, 22, 24, 25, 63, 90, 95, and 101 of the Commission's
Rules, CC Docket 98-141, Memorandum Opinion and Order, 14 FCC
Rcd 14712 at ¶ 387, Appendix C at ¶ 40 (1999).
41 Sections 4(i), 218, and 403 of the Communications Act of
1934, as amended, provide the Commission with broad authority to
make reasonable inquires of the carriers it regulates. 47
U.S.C. §§ 4(i), 218, 403.
42 Response at 19; Supplemental Response at 17, 18.
43 See March 9, 2001 Solomon Letter.
44 NAL at ¶ 9. 47 U.S.C. § 503(b)(2)(D); see also The
Commission's Forfeiture Policy Statement and Amendment of
Section 1.80 of the Rules to Incorporate the Forfeiture
Guidelines, 12 FCC Rcd 17087, 17100 (1997); recon. denied 15 FCC
Rcd 303 (1999); 47 C.F.R. § 1.80(b)(4).
45 NAL at ¶ 6.
46 Supplemental Response at 17 (citing 47 U.S.C. § 503(b)(6)).
47 Supplemental Response at 17.
49 47 U.S.C. § 503(b).
50 47 C.F.R. § 1.80.