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FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of )
) File No. EB-00-IH-0326a
SBC Communications, Inc. )
) NAL/Acct. No. 200132080015
Apparent Liability for Forfeiture )
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: January 17, 2001 Released: January
By the Chief, Enforcement Bureau:
1. In this Notice of Apparent Liability for Forfeiture
(NAL), we find that SBC Communications, Inc. (SBC) has apparently
violated the Commission's rule requiring incumbent local exchange
carriers (ILECs) promptly to post notices of premises that have
run out of collocation space. These violations were discovered
through an independent audit of SBC's compliance with the
Commission's collocation rules. That audit was required by the
Commission's order approving the merger application of Ameritech
Corp. (Ameritech) and SBC.1 It appears that, in numerous
instances during the audit period,2 SBC failed to timely update
the document on its Internet site, required by the Commission's
collocation rules, identifying those SBC premises that have run
out of physical collocation space.3 These violations also
constitute violations of the SBC/Ameritech Merger Order, which
requires that SBC/Ameritech provide collocation consistent with
the Commission's rules.4 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 ninety-four
thousand, five hundred dollars ($94,500).
2. SBC is an 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.5 SBC also provides in-region
interLATA, wireless, Internet access, out-of-region interLATA,
cable and wireless television, security monitoring, and directory
publishing services.6 In 1999, SBC had total operating revenues
of more than $49 billion dollars.7
3. 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.8 The Commission therefore approved the merger
only subject to certain conditions designed to mitigate
the potential public interest harms. One of those
conditions was that SBC retain an independent auditor to
develop and implement a comprehensive audit of the merged
company's compliance with the Commission's collocation
rules for the first eight months after the merger
4. On August 8, 2000, SBC submitted its audit report to
the Commission regarding SBC's compliance with the
Commission's collocation rules from October 8, 1999
through June 8, 2000.10 Based on the Bureau's review of
the audit report and of certain information submitted to
the Bureau by SBC, we conclude that SBC apparently
violated the requirement to timely post exhausted
collocation space in numerous instances during the audit
5. SBC does not dispute that, in certain instances during
the audit period, it violated the Commission's rule
requiring timely posting of notice of exhausted
collocation space.12 Based on information submitted to
the Bureau by SBC, we find that SBC apparently violated
the timely posting requirement in numerous other
6. The posting rule states that an ILEC must update its
Internet website listing premises that have exhausted
collocation space ``within ten days of the date at which
a premises runs out of physical collocation space.''13
The Commission order adopting this rule makes clear that
an ILEC's obligation to post notice of exhausted space is
triggered when such exhaustion occurs.14 Specifically,
the purpose of the rule is to ensure that competitors do
not ``expend significant resources in applying for
collocation space in an incumbent ILEC's premises where
no such space exists.''15 Information provided by SBC
indicates that there have been numerous instances in
which the posting date was more than 10 days after the
date that space actually became exhausted in those
central offices.16 Moreover, in several of those
instances, a competitive local exchange carrier (CLEC)
may have been required to submit a collocation
application, only to have the application denied on the
ground that no space was available as of the time of the
application. As noted above, this is the very result
that section 51.321(h) of the Commission's rules was
designed to avoid.17
7. Based on the facts set forth above, we find that SBC is
apparently liable for a forfeiture for willful and
repeated violation of the Commission's collocation rules
and paragraph 37 of the merger conditions. SBC
apparently violated the Commission rule requiring ILECs
to timely update the document on its Internet site
identifying those premises that have run out of physical
collocation space in numerous instances during the audit
period, and all during the past 12 months. We find that
SBC's failure to timely post notice of exhausted
collocation space was 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.18 Furthermore, a continuing violation is
"repeated" if it lasts more than one day.19
8. Consistent with the Commission's determination in the
SBC/Ameritech Merger Order that its collocation rules are
an integral component to opening local markets to
competition, we find SBC's failure to comply with these
rules to be significant.20 Given the importance of the
Commission's collocation rules, we cannot excuse SBC's
failure to comply with them.
B. Forfeiture Amount
9. 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.21
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.22 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.''23 Considering all of the circumstances described
above, we find SBC apparently liable for a forfeiture in the
amount of $94,500.
IV. ORDERING CLAUSES
· 10. ACCORDINGLY, IT IS ORDERED THAT, pursuant to section
503(b) of the Act, 24 and section 1.80 of the Commission's
Rules, 25 SBC Communications is HEREBY NOTIFIED of its
APPARENT LIABILITY FOR FORFEITURE in the amount of ninety-four
thousand, five hundred dollars ($94,500) for willfully or
repeatedly violating the Commission's collocation rules.
11. 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.
12. 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.
13. 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.
14. 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
15. 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
1 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 (1999) (``SBC/Ameritech Merger Order''); SBC/Ameritech
Merger Order, Appendix C at ¶ 40. See also Association of
Communications Enterprises v. FCC, No. 99-1441 (D.C. Cir. Jan. 9,
2 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. SBC has requested confidential treatment of its
submissions to the Bureau detailing the nature and scope of its
apparent violations, and that request is pending. Accordingly,
we do not here disclose the number of apparent violations or the
premises with respect to which they occurred.
3 47 C.F.R. § 51.321(h).
4 See SBC/Ameritech Merger Order, Appendix C at ¶ 37.
5 SBC 1999 Annual Report at 6.
6 Id. at 4.
7 Id. at 76.
8 See SBC/Ameritech Merger Order at ¶ 348.
9 See SBC/Ameritech Merger Order at ¶ 387; see also
SBC/Ameritech Merger Order Appendix C at ¶ 40. The audit covered
the period from October 8, 1999 through June 8, 2000.
10 See August 8, 2000 Letter from Marian Dyer, Vice-President,
SBC Telecommunications, Inc., to Magalie Salas, Secretary,
Federal Communications Commission; see also August 7, 2000 Report
of Management on Compliance with the FCC's Collocation Rules
(``Management's Assertion on Compliance''); see also August 7,
2000 Report of Independent Accountants, Ernst & Young LLP
(``Auditor's Report on Compliance'').
11 47 C.F.R. § 51.321(h). See also SBC/Ameritech Merger Order,
Appendix C at ¶ 37. See Auditor's Report on Compliance at pp. 1,
2; see also Management's Assertion on Compliance at p. 3.
12 See Auditor's Report on Compliance at pp. 1, 2; see also
Management's Assertion on Compliance at p. 3.
13 47 C.F.R. § 51.321(h).
14 See In the Matter of Deployment of Wireline Services
Offering Advanced Telecommunications Capability, CC Docket 98-
147, First Report and Order and Further Notice of Proposed
Rulemaking, 14 FCC Rcd. 4761, 4793 (1999) (``Advanced Services
15 See Advanced Services Order at 4793.
16 In a November 28, 2000 meeting, SBC told representatives of
the Enforcement Bureau that SBC notified the California Public
Utilities Commission of its intention to delay the postings for
many of its California central offices cited above. At no point,
however, did SBC seek a waiver from the FCC of the requirements
of section 51.321(h).
17 See 47 C.F.R. § 51.321(h); see also Advanced Services Order
18 See Application for Review of Southern California
Broadcasting Co., Memorandum Opinion and Order, 6 FCC Rcd 4387,
4388 (1991) (``Southern California Broadcasting Co.''); see also
Liability of Hale Broadcasting Corp., Memorandum Opinion and
Order, 79 FCC 2d 169, 171 (1980).
19 See Southern California Broadcasting Co., 6 FCC Rcd at 4388.
20 See SBC/Ameritech Merger Order at ¶¶ 355, 386.
21 47 U.S.C. §503(b)(1)(B); see also 47 C.F.R. § 1.80(a)(2).
22 47 U.S.C. § 503(b)(2)(B); see also 47 C.F.R § 1.80(b)(2).
23 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) (``Forfeiture Policy Statement''); recon. denied 15
FCC Rcd 303 (1999); 47 C.F.R. § 1.80(b)(4).
24 47 U.S.C. § 503(b).
25 47 C.F.R. § 1.80.