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


In the Matter of                 )
                                )
AT&T CORP.,                      )
                                )
                                              )
Complainant,                     )    File No. E-97-28
                                )
              v.                )
                                )
U S WEST COMMUNICATIONS, INC.,   )
                                )
                                                 )
Defendant.                       )

                                )
In the Matter of                 )
                                )
MCI TELECOMMUNICATIONS           )
     CORPORATION,                )
                                )    File No. E-97-40A
                                              )
Complainant,                     )
                                )
              v.                )
                                )
U S WEST COMMUNICATIONS, INC.,   )

                                                 
Defendant.

                  MEMORANDUM OPINION AND ORDER

     Adopted:  February 14, 2001 Released: February 16, 2001

By the Chief, Enforcement Bureau:

                        I.   INTRODUCTION

     1.   In this Memorandum Opinion and Order, we grant in part 
two formal complaints, one filed by MCI Telecommunications 
Corporation (``MCI'')1 and one by AT&T Corp. (``AT&T''), against 
U S WEST Communications, Inc. (``U S WEST'')2 concerning U S 
WEST's 1-800-4USWEST service (the ``Service'').3  The Service 
provides a calling platform that permits U S WEST's local 
subscribers to place local and long distance calls originating 
inside and outside the U S WEST service area.  Section 271 of the 
Communications Act of 1934, as amended (``Act''), prohibits any 
Bell Operating Company (``BOC'') -- including U S WEST -- from 
providing long distance (``interLATA'') service originating in 
the region where it provides local service, unless and until the 
Commission determines that various conditions relating to 
competition in local telephone service are satisfied.4  U S WEST 
has not received Commission approval to provide long distance 
service in any state in its service region, and therefore is 
subject to the general section 271 prohibition.

     2.   The Commission recently addressed the legality of a 
similar calling platform service offered by another BOC, the 
Ameritech Operating Companies (``Ameritech'').  In the 1-800-
AMERITECH Order, the Commission determined that Ameritech's 
service violated section 271 of the Act.5  The Commission relied 
upon its earlier Qwest Teaming Order to reach this conclusion.6

     3.   The evidence in this case demonstrates that U S WEST's 
Service is, in all material respects, the same as Ameritech's 
unlawful service.  Specifically, like Ameritech, U S WEST: (1) 
designed and developed a combined service offering for its local 
service customers that includes a long distance component; (2) 
relied on its brand name in marketing the combined offering; (3) 
used bill inserts and other mailings to promote the combined 
offering to its local calling subscriber base; (4) maintained 
control and ownership of the customer relationship in connection 
with the combined service offering; (5) exercised exclusive 
control over the marketing of the Service; (6) selected the long 
distance provider that would carry in-region, interLATA calls and 
dictated certain of the terms and conditions of the Service; and 
(7) reserved the right to substitute its own services in place of 
the long distance provider's service as U S WEST obtained 
authority under section 271 to provide long distance service in 
various states.  Accordingly, we conclude, based on the totality 
of circumstances, that U S WEST's 1-800-4USWEST Service violates 
section 271.  Because we find that U S WEST's Service violates 
section 271, we do not reach the remaining claims raised by AT&T 
and MCI regarding other alleged violations of the Act.7

                         II.  BACKGROUND

     4.   In April 1997, U S WEST began offering its 1-800-
4USWEST Service, which permits its subscribers to place local, 
long distance, and international calls from anywhere in the 
country by accessing a dialing platform through the Service's 
toll-free number.8  U S WEST promoted the Service as a way for 
its customers to make calling card calls from payphones without 
paying excessive fees.9  Thus, the promotional materials mailed 
to U S WEST's local-service customers asserted that, by dialing 
1-800-4USWEST, customers could ``bypass unknown pay phone 
companies that can charge . . . exorbitant rates'' and instead 
obtain a single ``great low rate'' for calling card calls, 
including domestic long distance calls.10  Similarly, U S WEST's 
advertisements for the Service stated that, by using the Service, 
callers could ensure that they would avoid having their calls 
blocked from completion.11  

     5.   A year earlier, U S WEST sent a Request for Proposal 
(``RFP'') to long distance carriers, seeking in-region, interLATA 
transport to support its new 1-800-4USWEST Service.12  Among 
other things, the RFP required the long distance carrier to allow 
its calls to be listed on the bill that U S WEST sent to its 
customers for U S WEST-provided services, and provided that 
portions of the long distance provider's contract with U S WEST 
would be terminable on a state-by-state basis on 60 days' notice, 
as U S WEST became eligible in each state to offer in-region 
interLATA service under section 271.13  From the responses that U 
S WEST received, it chose Frontier Communications Services, Inc. 
(``Frontier'')14 to carry the in-region, interLATA calls.15  The 
RFP specifically contemplated that U S WEST could contract with 
other long distance providers, and could utilize its own or its 
affiliate's resources to provide similar services.16

     6.   U S WEST's name and trademark have been far more 
prominently featured in advertisements promoting the Service than 
Frontier's.  The toll-free number for the Service conspicuously 
links U S WEST's name to the Service.  Similarly, the promotional 
materials that U S WEST mailed to its local-service subscribers 
highlight U S WEST's name and logo.17  Only in smaller type do 
the materials identify the carriers that actually transmit the 
calls, and, in many cases, the materials are not specific as to 
which carrier handles which calls.18  Subsequently, U S WEST 
changed the promotional materials to state, usually in small 
print, that Frontier provides in-region, long distance 
services.19

     7.   When a customer accesses the platform by dialing 1-800-
4USWEST, he or she hears a greeting referencing the U S WEST 
name, and then receives a prompt to enter the called number, the 
calling card number, and a personal identification number.  Once 
the calling card number is verified, a customer placing a local, 
intraLATA toll, or out-of-region interLATA call hears ``[t]hank 
you for using U S WEST.''20  A customer placing an in-region, 
interLATA call hears a thank-you message that mentions Frontier 
by name.21 

     8.   The Service is promoted through, among other means, 
bill inserts and other mailings sent to U S WEST's local customer 
base.22  U S WEST serves as the initial sales and customer care 
contact for the 1-800-4USWEST Service, and exercises exclusive 
control over the marketing and promotion of the Service.23  U S 
WEST's agreement with Frontier provides that  U S WEST ``owns and 
creates all marketing communications (card creation, creation 
design, collateral, fulfillment, messages, etc.) as well as the 
caller relationship.''24  The Service is billed through the 
customer's U S WEST monthly service bill.25  

                      III.      DISCUSSION

     I.A.      U S WEST's Service Violates Section 271.

     9.   Complainants' primary contention is that the 1-800-
4USWEST Service violates section 271 of the Act, because it 
amounts to the provision of in-region, interLATA service before U 
S WEST has received approval from the Commission to offer such 
service.  Section 271(a) states that ``[n]either a Bell operating 
company nor any affiliate of a Bell operating company, may 
provide interLATA services except as provided in this 
section.''26  The statute permits a BOC to provide interLATA 
service originating within its local service area on a state-by-
state basis only upon application to and approval from the 
Commission pursuant to section 271(d).27  Section 271 thus ``both 
gives the BOCs an opportunity to enter the long distance market 
and conditions that opportunity on the BOCs' own actions in 
opening up their local markets.''28  Congress intended section 
271 to create a strong incentive for the BOCs to comply with new 
obligations in sections 251 and 252 of the Telecommunications Act 
of 1996,29 which, in turn, were designed to facilitate 
competition in local markets (including interconnection, 
unbundling, and resale).  The statute creates this ``powerful 
incentive'' by conditioning BOC entry into the in-region, long-
distance market on compliance with a checklist of local market-
opening criteria and other requirements.30

     10.  U S WEST has not received approval from the Commission 
to provide long distance service in any state in its region.31  
It is therefore subject to section 271(a)'s general prohibition 
against offering such services.  Complainants' section 271 claim 
presents the generic issue, previously addressed by the 
Commission in the Qwest Teaming Order (affirmed by the Court of 
Appeals) and the 1-800-AMERITECH Order, of whether a challenged 
offering for which a BOC does not actually transmit in-region, 
interLATA traffic may nevertheless amount to the ``provision'' of 
interLATA service.  In the Qwest Teaming Order and the 1-800-
AMERITECH Order - as in this case - the relevant BOCs were 
offering a combined service that included their own local and 
intraLATA toll service bundled with in-region, interLATA 
transport provided by an unaffiliated long distance carrier.

     11.  The Qwest Teaming Order sets forth the issue that the 
Commission considers in deciding whether an offering violates 
section 271:  ``whether a BOC's involvement in the long distance 
market enables it to obtain competitive advantages, thereby 
reducing its incentive to cooperate in opening its local market 
to competition.''32  Thus, the ``provision'' of interLATA 
services, within the meaning of section 271(a), ``must encompass 
activities that, if otherwise permitted, would undermine 
Congress's method of promoting both local and long distance 
competition by prohibiting BOCs from full participation pursuant 
to section 271's competitive checklist.''33  In order to 
determine whether a BOC's long distance-related activities run 
afoul of this standard, the Commission balances the following 
non-exclusive factors:  ``whether the BOC obtains material 
benefits (other than access charges) uniquely associated with the 
ability to include a long-distance component in [the challenged 
offering], whether the BOC is effectively holding itself out as a 
provider of long distance service, and whether the BOC is 
performing activities and functions that are typically performed 
by those who are legally or contractually responsible for 
providing interLATA service to the public.''34  In evaluating the 
challenged BOC actions, the Commission considers ``the totality 
of [the BOC's] involvement, rather than focus[ing] on any one 
particular activity.''35  

     12.  The Commission applied this fact-based test in the 1-
800-AMERITECH Order and concluded that Ameritech's service 
violated section 271.  The U S WEST Service at issue in this case 
is substantially the same as Ameritech's unlawful service.  
Accordingly, as described below, application of the Qwest Teaming 
Order's fact-based test and the Commission's 1-800-AMERITECH 
Order similarly leads us to conclude that the U S WEST Service 
violates section 271.36

          III.A.1.  U S WEST Obtains Material Benefits Uniquely 
               Associated With Its Ability to Include a Long-
               Distance Component in the Service.

     13.  One of the principal factors that led the Commission to 
find section 271 violations in the Qwest Teaming Order and the 1-
800-AMERITECH Order was that the challenged offerings would have 
afforded the defendants a ``significant jumpstart when they do 
obtain 271 authorization.''37  Thus, by developing an extensive 
customer base for the challenged services, the defendant carriers 
could ``pre-position'' those customers for a seamless transition 
to the long distance services of the carriers' section 272 
affiliates, once the carriers received section 271 authority to 
begin providing in-region, interLATA service.  

     14.  As with the arrangements in the Qwest Teaming Order and 
the 1-800-AMERITECH Order, we find that the 1-800-4USWEST Service 
permits U S WEST to obtain material benefits uniquely associated 
with the ability to include a long distance component in the 
Service.  Specifically, the Service allows U S WEST, prior to 
gaining section 271 approval, to build up goodwill as a full 
service provider with its local-service customers, who can place 
their long distance calling-card calls through the Service.38  
Upon receiving section 271 authority, U S WEST would be well 
positioned to substitute the interLATA service of its section 272 
affiliate for that of Frontier, thereby capturing a ready base of 
customers.

     15.  The opportunity to amass goodwill as a full service 
provider appears to be a significant reason why U S WEST 
developed the Service in the first place.  In announcing the 
launch of the Service, U S WEST's Chief Executive Officer stated 
that ``[i]ntroduction of this card represents another step toward 
offering our customers one-stop shopping with complete, 
integrated solutions to meet all their communications needs.''39  
U S WEST explained that its new calling card responded to 
customers' requests that U S WEST give them a way to make long 
distance calls while away from the home or office.  The ``one-
stop shopping'' advantage touted by U S WEST was repeated and 
emphasized in several reports describing the new offering.40

     16.  Our concern in this regard is heightened by the 
structure of U S WEST's agreement with Frontier to provide in-
region, interLATA transmission for the Service.  The Frontier 
agreement, much like the agreement in the 1-800-AMERITECH Order, 
provides that    U S WEST may terminate the contract or any 
orders for service made pursuant to the contract ``for its 
convenience'' at any time after the contract has been in effect 
by giving Frontier 30 days' notice.41  This affords U S WEST the 
right not only to contract with other long distance providers, 
but to utilize its affiliates' resources to provide similar 
services.42  Thus, U S WEST preserved the right to replace 
Frontier's services with the services of U S WEST's section 272 
affiliate once the Commission grants U S WEST section 271 
authorization.43  In doing so, U S WEST positioned itself well 
``to substitute the long distance service offered by [its] 
section 272 affiliate, when [it] obtain[s] section 271 approval, 
into the [1-800-4USWEST] package in the future.''44

     17.  In the Qwest Teaming Order and the 1-800-AMERITECH 
Order, we found that the challenged offerings allowed the 
defendant carriers to ``enhance [their] goodwill in the 
marketplace'' and to ``add value'' when dealing with their 
customers in a way that further cemented their relationships with 
their end users before their markets were open to meaningful 
competition.45  Here, it is apparent that U S WEST sought to 
enhance its goodwill by controlling the customer relationship.  
Specifically, the RFP provided that U S WEST ``owns and creates 
all marketing communications (card creation, creation design, 
collateral, fulfillment, messages, etc.) as well as the customer 
relationship.''46  This requirement was ultimately incorporated 
into U S WEST's contract with Frontier.47  Thus, U S WEST 
controls the information sent to its customers concerning its 
Service, as well as all other aspects of the relationship with 
its customers.48  This provides U S WEST with a significant 
competitive advantage in building goodwill with the 1-800-4USWEST 
customers.  We believe that once U S WEST receives Commission 
authorization to offer in-region, long distance service, the 1-
800-4USWEST customers who receive local service from U S WEST 
will be more inclined to select U S WEST as their presubscribed 
long distance carrier as well.

     18.  Another troubling factor is the manner in which U S 
WEST promotes the Service to its local subscriber base.  In 
addition to advertising through various media, U S WEST avails 
itself of a communication channel that is uniquely available to 
it as the monopoly provider of local service within its region - 
bill inserts and other mailings that draw on its subscriber 
list.49 Thus, U S WEST can advertise the Service to virtually 
every subscriber on its network, and it can do so using a 
customer database that is either unavailable, or available only 
at a significant additional charge, to its competitors in the 
local service market.  Moreover, by using bill inserts, U S WEST 
can effectively promote the Service at a fraction of what a 
stand-alone mailing would cost one of its competitors, even 
assuming the competitor had access to U S WEST's subscriber 
mailing list.  Use of a subscriber list, and the unique benefits 
it provides, is one of the factors the Commission found 
problematic in the 1-800-AMERITECH Order.50

     19.  In sum, U S WEST's participation in the long distance 
market through its 1-800-4USWEST Service enables it to obtain 
significant competitive advantages that are similar to what the 
Qwest Teaming Order found to be objectionable and almost 
identical to what the 1-800-AMERITECH Order found to be 
objectionable.  The Service allows U S WEST to build goodwill 
with its local-service customers, depicting itself as a full-
service provider prior to receiving section 271 approval.  
Indeed, the full-service, or one-stop shopping, advantages 
provided by the Service appear to have been U S WEST's primary 
objective in implementing the Service in the first place.51  As 
the Commission held in the 1-800-AMERITECH Order, these 
competitive advantages could reduce U S WEST's incentive to open 
its local market to competition and, thus, run counter to 
Congress's intent in enacting section 271.52

          III.A.2.  U S WEST Is Effectively Holding Itself Out As 
               a Provider of Long-Distance Service.

     20.  We also must inquire whether U S WEST is effectively 
holding itself out to customers as a provider of long distance 
services.  In the Qwest Teaming Order, the Commission found that, 
through the challenged services, the defendant carriers were 
holding themselves out in such a manner, because they had ``taken 
several specific steps to brand [the challenged offerings] as 
their exclusive combined service offerings.''53  In affirming the 
Commission, the Court of Appeals agreed that, viewed as a whole, 
the challenged promotional materials could lead consumers to 
believe that the BOCs were providing in-region long distance 
service.54

     21.  Similarly, in the 1-800-AMERITECH Order, we noted that 
the use of the vanity 800 number55 was plainly calculated to 
cause customers to associate Ameritech with the services offered 
through the 1-800-AMERITECH platform.56  Thus, the 800 number 
allowed Ameritech to link the service's long distance offering 
(as well as its other offerings) with the carrier's accumulated 
customer good will and its established reputation as a local 
service provider.57  

     22.  In this case, U S WEST virtually concedes that its 
promotional and marketing materials may have caused in the minds 
of its customers the type of confusion that the Commission and 
Court of Appeals have found to be problematic.58  Specifically, U 
S WEST acknowledges that some of its promotional materials 
``might have created some confusion in some customers,'' and that 
``from a regulatory perspective, some of the materials might be 
deemed to have `gone over the line.'''59

     23.  Indeed, an examination of U S WEST's promotional 
materials confirms that U S WEST is holding itself out as a 
provider of long distance service.  The materials prominently 
display the U S WEST brand, creating the impression that U S WEST 
provides all components of the Service, including long 
distance.60  Other statements in the materials similarly foster 
this impression.  For example, one advertisement features the U S 
WEST logo in large type and, in describing the Service, strongly 
suggests that U S WEST is the long distance service provider.61  
Several other promotional materials attest to the card's ability 
to make all types of calls, including long distance.62  The 
promotional materials U S WEST used to introduce and market its 
Service are strikingly similar to those found to be troublesome 
and misleading in the 1-800-AMERITECH Order.63

     24.  U S WEST argues that its 1-800-4USWEST customers always 
have a choice in selecting their long distance service provider, 
because they can dial 0+ to access another service provider.64  
Because this 0+ capability is disclosed on the back of its 
calling card and on certain promotional materials, U S WEST 
contends that it cannot obtain any benefit from holding itself 
out as the provider of long distance services.65  However, even 
while disclosing in certain materials the availability of the 0+ 
option, U S WEST actively discourages its customers from using 
that option.  Almost uniformly, U S WEST describes the 0+ option 
as one that customers should never consider using in comparison 
to dialing 1-800-4USWEST.66  U S WEST's repeated warnings that 
dialing 0+ ``doesn't work'' and that U S WEST cannot ``protect'' 
customers if they dial 0+ severely undercut U S WEST's reliance 
on its advertisements' references to 0+ capability.  Moreover, 
the references to 0+ capability actually support our conclusion 
that U S WEST is unlawfully holding itself out as a long distance 
service provider.  By comparing the long distance services 
provided by its 1-800-4USWEST Service to those furnished by other 
long distance carriers through the 0+ option, U S WEST implicitly 
suggests to its customers that it is a less expensive provider of 
long distance services.67

     25.  U S WEST also contends that the shortcomings in its 
initial promotional materials for the Service were remedied by 
the promotional materials it has used since November 1997, which 
specify that Frontier handles in-region, interLATA calls.68  
However, this is no different from the situation the Commission 
confronted in the 1-800-AMERITECH Order.  Although later 
promotional materials in that case identified the supporting long 
distance provider who handled in-region, interLATA calls, they 
usually did so in small type.69  In this case, there also is a 
proportional dissimilarity in type size between the U S WEST 
brand name and the Frontier brand name.70  Moreover, the 
disclosures are generally relegated to an obscure portion of the 
promotional materials.  

     26.  U S WEST further asserts that in-region interLATA calls 
are branded and billed as Frontier calls, which purportedly 
confirms the distinction between U S WEST and Frontier and 
eliminates any possible customer confusion.71  We disagree.  
Viewing the Service as a whole and the manner in which U S WEST 
promotes it, we conclude that U S WEST holds itself out as a long 
distance provider.72  The vanity access number all but ensures 
that the offering, and all of its components, generally will be 
perceived as a U S WEST-provided service.  Furthermore, given the 
prominence of U S WEST's brand name on the promotional materials, 
the fact that U S WEST does not furnish the in-region, interLATA 
transmission for the Service likely will be lost on all but a few 
sophisticated consumers.73  This is the case regardless of 
whether a customer's monthly U S WEST statement identifies long 
distance calls as being carried by Frontier.74 

          III.A.3.  U S WEST Performs Activities Typically 
               Undertaken by Resellers.

     27.  In determining whether U S WEST performs activities in 
connection with its Service that are typically performed by those 
who resell interLATA service, we look to the degree of control U 
S WEST exercises over marketing and the customer relationship.75  
Although the facts of this case are slightly different than in 
the 1-800-AMERITECH Order, the degree of control U S WEST 
exercises over the customer relationship appears to be just as 
significant.76    U S WEST made it clear in the RFP and the 
resulting agreement with Frontier that U S WEST would exercise 
exclusive control over messages provided to customers and the 
overall customer relationship.77  While Frontier apparently is 
not prohibited from responding to certain customer service 
inquiries, it does so subject to U S WEST's direction, as U S 
WEST is contractually authorized to dictate how Frontier responds 
to customer inquiries and what messages Frontier provides to 
customers.

     28.  Similarly, U S WEST exercises exclusive control over 
the marketing of the 1-800-4USWEST Service.  As described above, 
the agreement between U S WEST and Frontier provides that U S 
WEST ``owns and creates all marketing communications.''78  
Further, the agreement states that ``Frontier does not have any 
approval rights about any of the promotional, advertising or 
fulfillment packages,'' and that U S WEST, ``as a courtesy, 
supplies Frontier with a copy of such materials.''79  Thus, U S 
WEST controls the right to market and sell, under the 1-800-
4USWEST name, not only its own local and intraLATA toll services, 
but Frontier's long distance services as well.80

     29.  U S WEST's exercise of exclusive control over customer 
relations and marketing demonstrates that U S WEST was 
significantly involved in the design and development of the long 
distance component of its 1-800-4USWEST Service.  The fact that U 
S WEST could insist on such requirements, select a long distance 
provider who would accept the requirements without modification, 
and reject those who would not, is a testament to U S WEST's 
control over the design of the Service.81  For these reasons, we 
conclude that U S WEST is engaged in activities typically 
performed by resellers.82

          III.A.4.  Conclusion

     30.  Based on the totality of the circumstances, we conclude 
that, through the 1-800-4USWEST service, U S WEST is "providing" 
in-region, interLATA service in violation of section 271.  First, 
the Service affords U S WEST material benefits uniquely 
associated with the inclusion of long distance service in the 
offering.  Specifically, it permits U S WEST to accumulate a 
significant base of customers who rely on the Service, and it 
enables U S WEST to amass goodwill as a full-service provider 
with its local service customers.  Second, through the Service 
and the many associated promotional materials that prominently 
bear U S WEST's brand, the carrier essentially holds itself out 
as providing long distance service.  Finally, in connection with 
the Service, U S WEST controls numerous functions, including 
marketing and customer care, that are typically performed by a 
reseller of long distance service.  All of these factors lead us 
to conclude that U S WEST is ``providing'' in-region, interLATA 
service in violation of section 271.  

     I.B.      We Reject U S WEST's Arguments Regarding Remedies.

     31.  U S WEST devotes much of its supplemental briefing to 
remedy-related arguments, contending, first, that the 
Commission's alleged delay in ruling on liability renders any 
damages award inappropriate.  According to U S WEST, until a 
ruling in this case, the state of the law regarding the legality 
of its Service was unclear.83  We disagree, but note that we need 
not decide damages at this time.  We will address damages when, 
and if, complainants file supplemental complaints for damages. 

     32.  Second, U S WEST attempts to expand the scope of this 
proceeding by arguing that proposed marketing and promotional 
changes to its Service convert the Service into a lawful 
offering.84  We decline U S WEST's invitation to issue a 
declaratory ruling regarding its prospective conduct.  Our task 
in this section 208 complaint proceeding is to adjudicate the 
lawfulness of prior or current conduct and not to opine on the 
lawfulness of hypothetical or future conduct.  However, U S WEST 
is free to file a Petition for Declaratory Ruling requesting an 
opinion as to the lawfulness of proposed changes to its Service.

     I.C.      We Need Not and Do Not Reach Complainants' Other 
          Claims.

     33.  In addition to their section 271 claims, complainants 
argue that:  (1) the 1-800-4USWEST service amounts to an 
unreasonable practice, in violation of section 201(b); (2) U S 
WEST excluded complainants in a discriminatory manner from 
providing transport services to support the Service, in violation 
of section 202(a); (3) the structure of the Service contravenes    
U S WEST's equal access obligations, in violation of section 
251(g); and (4) by holding out itself as a provider of in-region, 
interLATA services prior to receiving authorization under section 
271, U S WEST has circumvented separate affiliate safeguards, in 
violation of section 272.  Because we find that U S WEST violated 
section 271, we need not and do not reach complainants' claims 
alleging other violations of the Communications Act.85 

                         IV.  CONCLUSION

     34.  We find that U S WEST, through its 1-800-4USWEST 
Service, is providing in-region, interLATA services without 
authorization, in violation of section 271 of the Act.  We do not 
reach other statutory claims raised by complainants.

                      V.   ORDERING CLAUSES

     35.  Accordingly, IT IS ORDERED, pursuant to sections 1, 
4(i), 4(j), 208, and 271 of Act, as amended, 47 U.S.C.  151, 
154(i), 154(j), 208, and 271, that the Formal Complaints filed by 
MCI Telecommunications Corporation and AT&T Corporation ARE 
GRANTED to the extent that they allege that the 1-800-4USWEST 
Service violates section 271 of the Act.  


                              FEDERAL COMMUNICATIONS COMMISSION



                              David H. Solomon
                              Chief, Enforcement Bureau 
_________________________

1    Effective September 14, 1998, MCI Telecommunications  Corp. 
merged with  WorldCom, Inc.  to form  MCI WorldCom,  Inc.   This 
Order uses ``MCI'' to refer to the complainant in File No. E-97-
40A.

2    On June 30, 2000,  U S WEST  merged with Qwest  Corporation 
(``Qwest''), and Qwest is now the  legal successor to U S  WEST.  
This  Order  refers  to  the   defendant  company  in  the   two 
proceedings as ``U S WEST.''

3    Pursuant to  section 1.735(a)  of the  Commission's  formal 
complaint rules  (47 C.F.R.   1.735(a)),  we have  consolidated 
AT&T's and MCI's actions against U S WEST, because the U S  WEST 
Service challenged in both actions is identical. 

4    47 U.S.C.  271(a) (``Neither a Bell operating company, nor 
any affiliate of a Bell operating company, may provide interLATA 
services except  as  provided in  this  section.'').   InterLATA 
service ``means telecommunications between a point located in  a 
local access transport area [LATA]  and a point located  outside 
such  area.''   47  U.S.C.    153(21).   LATAs  are  contiguous 
geographic areas established by a BOC such that no exchange area 
includes points within  more than  one metropolitan  statistical 
area or state.  47 U.S.C.  153(25). 

5    See MCI Telecommunications Corp. v. Illinois Bell Tel. Co., 
et al., Memorandum Opinion  and Order, 15  FCC Rcd 23184  (2000) 
(``1-800-AMERITECH Order'').

6    See AT&T Corp. v. U S  WEST Corp., 13 FCC Rcd 21438  (1998) 
(``Qwest  Teaming   Order''),  aff'd   sub   nom.,  U   S   WEST 
Communications, Inc. v.  FCC, 177  F.3d 1057  (D.C. Cir.  1999), 
cert. denied,  120 S.  Ct. 1240  (2000).  In  the Qwest  Teaming 
Order, the Commission  found that  a self-described  ``teaming'' 
arrangement  between  U  S  WEST   and  Qwest  (and  a   similar 
arrangement between Ameritech and  Qwest) violated section  271.  
U S WEST  combined Qwest's  long distance service  with its  own 
local services and  offered the  resulting package to  U S  WEST 
customers under  a  U S  WEST  brand,  with U  S  WEST  customer 
support.  As  noted above,  U S  WEST subsequently  merged  into 
Qwest.

7    In addition to section 271,  AT&T contends that U S  WEST's 
Service violates  sections  202, 251(g),  and  272 of  the  Act.  
Complaint of AT&T Corp., File No. E-97-28 (May 22, 1997) (``AT&T 
Complaint'') at 9-10 (citing 47 U.S.C.  202, 251(g), and 272).  
MCI argues that U S  WEST's Service violates section 201(b),  as 
well as section 271.  Complaint of MCI Telecommunications, Inc., 
File No. E-97-40  (July 21,  1997) (``MCI  Complaint'') at  7-10 
(citing 47 U.S.C.  201(b)).

8    See Answer of U S WEST Communications, Inc., File No. E-97-
28 (June 23, 1997) (``U S WEST Answer in AT&T Case'') at  12-13, 
 49-50, and Attachment 9.

9    MCI Complaint, Exhibit B.

10   Id.

11   Id.; see Letter dated Jan. 25, 1999 from Robert B.  McKenna 
(counsel for U  S WEST) to  Tonya Rutherford  (Attorney-Advisor, 
FCC), File Nos. E 97-28 and E-97-40 (``U S WEST January 25, 1999 
Letter''), Attachments.

12   U S WEST Answer in AT&T Case, Attachment 11.

13   Id. (RFP at 9).

14   Frontier has since merged  with Global Crossing Ltd.   This 
Order refers to the company as ``Frontier.''

15   U S WEST Answer in AT&T Case at 19,  69.  U S WEST  itself 
is the carrier for both local and intraLATA calls for its 1-800-
4USWEST Service.   Id. at  13-15,   51.  U  S WEST's  interLATA 
affiliate, U S WEST Long  Distance, Inc., carries the  interLATA 
calls originating  outside  U  S  WEST's  region  (out-of-region 
interLATA traffic).   Id.  Section  271(b) permits  a BOC,  upon 
passage of  the  Telecommunications  Act  of  1996,  to  provide 
interLATA  calls  originating  outside  of  its  local   service 
territory through a structurally separate affiliate.  47  U.S.C. 
 271(b), 272.

16   U S WEST Answer in AT&T Case, Attachment 11 (RFP at 9).

17   MCI Complaint, Exhibit  B.  Thus,  the materials  emphasize 
the U S WEST brand as the source for the services provided  with 
the calling card:  ``use the 1-800-4USWEST Calling Card to  make 
local calls, long distance calls,  international calls. . .  .''  
MCI Complaint at  Exhibit B;  ``Introducing 1-800-4USWEST.   All 
your calls with just one card.''  U S WEST Answer in AT&T  Case, 
Attachment 9; ``U  S WEST has  introduced the U  S WEST  Express 
Calling Card, which allows users to place domestic long distance 
calls anytime from  anywhere in  the United States  for just  20 
cents a minute.''  AT&T  Complaint, Exhibit K; ``Because  1-800-
4USWEST gives you a low  20-cents-per-minute rate on every  call 
you make when you're  away from home.  It's  a better rate  than 
those charged  by our  long distance  competitors.''  U  S  WEST 
Answer in AT&T Case, Attachment 8 (emphasis added).

18   See, e.g., MCI Complaint, Exhibit B (``[C]alls made via  1-
800-4USWEST will be handled by U S WEST Communications, U S WEST 
Long Distance  or  Frontier.   Call Customer  Service  for  more 
details.'').  Moreover, in some instances, no mention is made of 
Frontier at all.  See,  e.g., Letter dated  Sept. 30, 1997  from 
Peter  H.  Jacoby  (counsel  for  AT&T)  to  Deena  M.   Shetler 
(Attorney-Advisor, FCC), File  No. E-97-28, attaching  U S  WEST 
brochure  entitled  ``Small  Business  Guide  to  Communications 
Services.''  On a  page entitled ``U  S WEST Complementary  Long 
Distance Services,''  the  1-800-4USWEST card  is  described  as 
``the simple way to  make long distance  calls when you're  away 
from the office.''  Id.  at 23.  The  brochure fails to  mention 
Frontier or its role in providing long distance service.

19   U S WEST January 25, 1999 Letter, Attachments.

20   U S  WEST  Responses to  MCI's  First and  Further  Set  of 
Interrogatories, File No.  E-97-40 (Oct.  3, 1997)  (``U S  WEST 
October 3, 1997 Interrogatory Responses'') at 20-21.

21   Id.

22   Id. at 3-6.

23   See Supplemental Responses of U S WEST to AT&T's First  Set 
of Interrogatories, File No. E-97-28 (Aug. 22, 1997) (``U S WEST 
August 22, 1997 Supplemental  Interrogatory Responses'') at  22, 
28.  

24   U  S  WEST  August  22,  1997  Supplemental   Interrogatory 
Responses at 28.  U S WEST identified several related agreements 
involving its Service that U S  WEST, U S WEST's affiliate (U  S 
WEST Long Distance), Frontier, and Frontier's affiliate (LinkUSA 
Corporation (``LinkUSA'')) executed.  Id.  at 3-28.  This  Order 
refers to these agreements collectively as one agreement between 
U S WEST and Frontier.

25   Stipulation of Undisputed Facts, File No. E-97-28 (Sept. 9, 
1997) (``Stipulation of Undisputed Facts'') at 1,  1. 

26   47 U.S.C.  271(a). 

27   47 U.S.C.  271(d).

28   U S WEST Communications, 177 F.3d at 1060.

29   See 47 U.S.C.  251,  252.  The Telecommunications Act  of 
1996, Pub. L. No. 104-104, 110  Stat. 56, codified at 47  U.S.C. 
 151 et seq., amended the Communications Act of 1934.

30   U S  WEST Communications,  177 F.3d  at 1060;  47 U.S.C.   
271(c).  See also  AT&T Corp. v.  FCC, 220 F.3d  607, 612  (D.C. 
Cir. 2000) (conditional long distance entry pursuant to  section 
271 is designed ``[t]o encourage  BOCs to open their markets  to 
competition  as  quickly   as  possible'').   The   Commission's 
decision in the  Qwest Teaming Order  contains a more  extensive 
explanation of the market-opening incentives behind section 271. 
13 FCC Rcd at 21441-47,  3-7.

31   Supplemental Brief  of WorldCom,  Inc., File  No.  E-97-40A 
(Dec. 8, 2000) at 5; Stipulation of Undisputed Facts at 2,   4.  
U S WEST has not requested authorization from the Commission  to 
provide long distance service in any state in its region.

32   Qwest Teaming Order, 13 FCC Rcd at 21465,  37. 

33   Id. at 21462,  30.

34   Id. at 21465-66,  37.

35   Id.

36   U S  WEST  argues that  the  1-800-AMERITECH Order  is  not 
relevant  precedent,  and  encourages  the  Commission  to  rely 
instead upon  the  Common Carrier  Bureau's  decision  involving 
BellSouth's pre-paid calling card.  See AT&T Corp. v.  BellSouth 
Corp., Memorandum Opinion and Order, 14 FCC Rcd 8515 (Com.  Car. 
Bur. Mar.  30, 1999).   We decline  to do  so; reliance  on  the 
staff-level pre-paid calling card decision would be misplaced in 
these circumstances.   The BellSouth  pre-paid calling  card  is 
meaningfully different than the offerings at issue in the 1-800-
AMERITECH Order and in this case.  As the Commission pointed out 
in  the  1-800-AMERITECH  Order,   the  Common  Carrier   Bureau 
determined that  BellSouth's  pre-paid  card  offering  did  not 
violate section 271 because,  inter alia, (1)  the card did  not 
involve a  continuing,  presubscribed  relationship  that  would 
allow  BellSouth  to  gain  meaningful  information  about  card 
purchasers  and  to  exploit   that  relationship  in   customer 
retention or win-back efforts; and (2) the card served a segment 
of the telecommunications  market that is  replete with  similar 
prepaid offerings  sponsored by  non-carriers, thereby  reducing 
the risk that consumers would perceive BellSouth as offering in-
region, interLATA services.  Id. at 8525-28,  19-27.  In light 
of these differences, the BellSouth pre-paid card case does  not 
support a conclusion in this case that U S WEST's Service passes 
muster under section 271.  Rather, as explained below, this case 
is  controlled  by   the  Commission's  1-800-AMERITECH   Order.  
Similarly, we reject U S  WEST's contention that its Service  is 
not meaningfully different than calling card offerings that were 
lawful under  the Modified  Final Judgment.   QWEST  Corporation 
Supplemental Opening  Brief on  the Relevance  of the  AMERITECH 
Calling Card Order, File No. E-97-28 (Dec. 8, 2000) (``U S  WEST 
Brief re Applicability of Ameritech in AT&T Case'') at 2-4,  12-
14.  The Commission addressed and rejected this same  contention 
in the 1-800-AMERITECH Order.  1-800-AMERITECH Order, 15 FCC Rcd 
at __,  22.

37   Qwest Teaming Order, 13 FCC  Rcd. at 21467,  41  (internal 
quotation omitted).  

38   See U  S  WEST  Communications,  177  F.3d  at  1060  (``By 
offering one-stop  shopping for  local and  long distance  under 
their own brand name and with their own customer care . . . [the 
BOCs]  could  build  up  goodwill  as  full  service  providers, 
positioning themselves  in  these  markets  before  section  271 
allows them actually to enter.'').

39   AT&T Complaint, Exhibit K (emphasis added).

40   AT&T Complaint, Exhibits G,  I, and J.   Further, U S  WEST 
emphasized in a  late 1996  filing to the  Iowa Utilities  Board 
that its calling  card Service  was ``essential for  U S  WEST's 
effective participation  in the  long distance  market.''   Id., 
Exhibit H.  These contemporaneous representations concerning the 
one-stop shopping advantage  U S  WEST sought to  gain with  its 
Service severely undercut U S WEST's current contention that  it 
was not  seeking  a  ``jumpstart.''   See  U  S  WEST  Brief  re 
Applicability of Ameritech in AT&T Case at 9, 11-14.  U S WEST's 
argument is  also belied  by  an independent  industry  analysis 
which concludes that BOC calling card services, like U S WEST's, 
are targeted to ``jumpstarting'' the BOC's entry into the  long-
distance market.  See Yankee Group  Report, Exhibit 1 to  AT&T's 
Reply Brief Concerning Effect of  QWEST Order, File No.  E-97-28 
(Feb. 12, 1999), at 21 (BOCs are ``using calling card  platforms 
in preparation  for  authorization for  in-region  long-distance 
entry,'' and the cards are designed, in part, to ``accustom [the 
BOC's] local customer base  to perceiving the  [BOC] as an  all-
distance, multiple service provider'').

41   U  S  WEST  August  22,  1997  Supplemental   Interrogatory 
Responses at 15.

42   See U S WEST Answer in AT&T Case, Attachment 11 (RFP at 9); 
U S WEST August 22, 1997 Supplemental Interrogatory Responses at 
15, 18. 

43   The RFP provides additional evidence that U S WEST intended 
the Service  to  afford a  considerable  jumpstart for  its  in-
region, long  distance operations  as  it received  section  271 
authority in each state.  For example, pursuant to the RFP, U  S 
WEST  could  cancel  the  portion  of  the  contract  concerning 
Frontier's provision of in-region interLATA service on 60  days' 
notice, and could effect such a cancellation on a state-by-state 
basis.  U S WEST Answer in AT&T Case, Attachment 11 (RFP at  9).  
Thus, the RFP expressly contemplated that U S WEST quickly would 
move, on a state-by-state basis,  to substitute its section  272 
long-distance affiliate as the provider of record for in-region, 
interLATA traffic generated by 1-800-4USWEST customers.

44   Qwest Teaming Order, 13 FCC Rcd at 21467,  41.  See also U 
S WEST Communications, 177 F.3d at 1060.

45   Qwest Teaming  Order, 13  FCC Rcd  at 21468,   42;  1-800-
AMERITECH Order, 15 FCC Rcd at ___,  14.

46   U S WEST  Answer in AT&T  Case, Attachment 11  (RFP at  10) 
(emphasis added).

47   U  S  WEST  August  22,  1997  Supplemental   Interrogatory 
Responses at 28.

48   While Frontier, through  its affiliate LinkUSA,  apparently 
provides  some  customer  service  to  U  S  WEST  customers  in 
connection with their use of the 1-800-4USWEST Service, it is of 
little significance given  U S WEST's  contractual control  over 
messages  provided   to   customers  and   over   the   customer 
relationship in general.

49   U S WEST October 3, 1997 Interrogatory Responses at 3-6.

50   1-800-AMERITECH Order, 15 FCC Rcd at ___,  15.

51   See, supra, at  15.

52   See 1-800-AMERITECH Order,  15 FCC Rcd  at ___,   16; U  S 
WEST Communications, 177 F.3d at 1060.

53   Qwest Teaming Order, 13 FCC Rcd at 21471,  45.

54   U S WEST Communications, 177 F.3d at 1061.  

55   A vanity number is a telephone number for which the letters 
associated with the number's digits on a telephone handset spell 
a name or word of value to  the number holder.  In re Toll  Free 
Service Access  Codes, Fourth  Report and  Order and  Memorandum 
Opinion and Order,  13 FCC Rcd  9058, 9058,   1 (1998)  (``Toll 
Free Service Access Codes Order'').

56   1-800-AMERITECH Order, 15 FCC Rcd at __,  18.

57   As the Commission  stated in the  Toll Free Service  Access 
Codes Order, vanity numbers ``are of value to their  subscribers 
because  they  can   generate  high   visibility  and   consumer 
recognition when used in advertising.''  Id. at 9064,  11.

58   QWEST Teaming Order, 13  FCC Rcd at 21471,   45; U S  WEST 
Communications, 177 F.3d at 1061.

59   U S WEST Brief re  Applicability of Ameritech in AT&T  Case 
at 18.

60   See generally MCI Complaint, Exhibit B; U S WEST Answer  in 
AT&T Case, Attachments 6-9.

61   U S WEST Answer  in AT&T Case,  Attachment 8 (``Because  1-
800-4USWEST gives you  a low 20-cents-per-minute  rate on  every 
call you make when  you're away from home.   It's a better  rate 
than  those  charged  by   our  long  distance   competitors.'') 
(emphasis added).

62   MCI Complaint, Exhibit B  (``use the 1-800-4USWEST  Calling 
Card to  make local  calls, long  distance calls,  international 
calls. .  . '');  U S  WEST Answer  in AT&T  Case, Attachment  9 
(``Introducing 1-800-4USWEST.  All  your  calls  with  just  one 
card''); AT&T Complaint,  Exhibit K (``U  S WEST has  introduced 
the U S WEST Express Calling  Card, which allows users to  place 
domestic long distance calls anytime from anywhere in the United 
States for just 20 cents a minute.'').

63   1-800-AMERITECH Order, 15 FCC Rcd at __,  3, 19.

64   U S WEST Brief re  Applicability of Ameritech in AT&T  Case 
at 2-4, 16-17.

65   Id.

66   See U S WEST  January 25, 1999 Letter  at 1 (``Dial  1-800-
4USWEST'' and ``You Will Save . .  . It Works  . . . [and]  It's 
Complete;''  ``Dial 0'' and ``We Can't Guarantee You'll Save . . 
. It  Doesn't  Work .  .  . [and]  It's  Incomplete.'').   Other 
advertisements warned customers that, although they could  still 
dial  ``0''  when  using  the  Service,  U  S  WEST  could   not 
``protect'' them if they did.  See AT&T Complaint, Exhibit B.

67   Similarly,  U  S  WEST's  promotional  materials  expressly 
compare U S WEST's calling card services for long distance calls 
with the long  distance services  provided by  MCI, Sprint,  and 
AT&T.  U S  WEST January 25,  1999 Letter at  14.  This  further 
bolsters our conclusion that U S WEST is holding itself out as a 
provider of long distance  services.  1-800-AMERITECH Order,  15 
FCC Rcd at __,  20. 

68   U S WEST Brief re  Applicability of Ameritech in AT&T  Case 
at 15-16; U S WEST January 25, 1999 Letter, Attachments. 

69   1-800-AMERITECH Order, 15 FCC Rcd at __,  21.

70   U  S  WEST  January  25,  1999  Letter,  Attachments.    In 
addition, not all of the  later disclaimers state that  Frontier 
handles the in-region,  interLATA calls.   At least  one of  the 
disclaimers continues to use the original language that  ``calls 
made  via   1-800-4USWEST  will   be  handled   by  U   S   WEST 
Communications, U  S  WEST  Long  Distance  or  Frontier.   Call 
Customer Service for more details.''  Id. at 6.

71   U S WEST Brief re  Applicability of Ameritech in AT&T  Case 
at 15.

72   See U S WEST Communications,  177 F.3d at 1061  (considered 
in their  entirety,  the  U S  WEST  and  Ameritech  promotional 
materials could ``lead consumers  to link long-distance  service 
to the BOCs, particularly as  long-distance was offered only  as 
part of a full-service package within a BOC brand name.'').

73   Cf. United States v. Western  Elec. Co., 698 F. Supp.  348, 
356 nn.38, 42  (D.D.C. 1988) (advertisements  for long  distance 
service in  connection  with  BOC-provided  calling  cards  that 
failed to indicate  that the  BOCs were not  providing the  long 
distance service  were  misleading  and  inconsistent  with  the 
Modified Final Judgment's prohibitions, because customers  would 
be misled  into  believing  the  BOCs  were  carrying  the  long 
distance calls). 

74   The fact that the long distance provider's name was  listed 
on Ameritech's customer bills in the 1-800-AMERITECH Order  also 
did not save the Ameritech service from a section 271 violation.  
1-800-AMERITECH Order, 15 FCC Rcd at __,  7, 22.

75   Qwest Teaming  Order, 13  FCC Rcd  at 21473,   48;  1-800-
AMERITECH Order, 15 FCC Rcd at __,  23-25.

76   Indeed, U S  WEST makes  almost no  attempt to  distinguish 
between  the  customer  control  restrictions  imposed  in   its 
agreement with  Frontier  and  those  described  in  the  1-800-
AMERITECH Order.  U S WEST  simply states that ``[t]he  business 
relationship between Frontier and U  S WEST as reflected in  the 
record  demonstrates   some  similarities   and  some   material 
differences as between that relationship and the one outlined in 
the  AMERITECH  Calling  Card  Order.''    U  S  WEST  Brief  re 
Applicability of Ameritech in AT&T Case  at 10, n. 22.  Yet U  S 
WEST fails  to support  this  assertion with  any cites  to  the 
record or  discussion  of differing  contract  terms. U  S  WEST 
merely suggests that Frontier's  carrying, branding, and  rating 
of the calls is inconsistent with  the conclusion that U S  WEST 
acts as a reseller.  Id.   As discussed infra at n.74,  however, 
it is  clear  that  the  long distance  company  in  the  1-800-
AMERITECH Order also branded and carried the calls in  question.  
1-800-AMERITECH Order, 15 FCC Rcd at __,  7, 22.

77   U S WEST Answer in AT&T Case, Attachment 11 (RFP at 10);  U 
S WEST August 22,  1997 Supplemental Interrogatory Responses  at 
28.

78   U  S  WEST  August  22,  1997  Supplemental   Interrogatory 
Responses at 28.

79   Id. at 22.

80   The parties  have not  identified  any instances  in  which 
Frontier engaged in independent marketing, sales, or promotional 
activities in connection with the 1-800-4USWEST Service. 

81   U S  WEST declared,  in  its RFP,  that  it would  own  the 
customer relationship and would exercise exclusive control  over 
the marketing of the 1-800-4USWEST Service.  These  requirements 
were apparently adopted wholesale in  U S WEST's agreement  with 
Frontier.  U S WEST  August 22, 1997 Supplemental  Interrogatory 
Responses at 22, 28.

82   1-800-AMERITECH Order, 15 FCC Rcd at __,  25-26.

83   U S WEST Brief re  Applicability of Ameritech in AT&T  Case 
at 4-6.

84   Id. at 20-22.

85   1-800-AMERITECH Order,  15  FCC  Rcd at  __,    28;  Qwest 
Teaming Order, 13 FCC Rcd at 21476,  53.