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Federal Communications Commission
Washington, DC 20554
In the Matter of )
AT&T CORP., )
) File No. E-97-05B
NYNEX CORPORATION, NEW YORK )
TELEPHONE COMPANY, and NEW )
ENGLAND TELEPHONE AND TELEGRAPH )
MEMORANDUM OPINION AND ORDER
Adopted: August 15, 2001 Released: August 22, 2001
By the Commission:
1. In this Memorandum Opinion and Order, we deny a formal
complaint that AT&T Corp. (``AT&T'') filed against NYNEX
Corporation, New York Telephone Company, and New England
Telephone and Telegraph Company (collectively ``NYNEX'')1
concerning NYNEX's 1-800-54NYNEX calling platform service (the
``Service''). We conclude that the specific facts presented do
not support a finding that the Service violates section 271 of
the Communications Act of 1934, as amended (``Act'').2 We also
conclude that the record does not support a finding that the
Service violates the equal access and nondiscrimination
requirements set forth in sections 202(a) and 251(g) of the Act.3
2. In July 1996, NYNEX introduced its 1-800-54NYNEX
Service. Customers could use the Service to make local,
regional, and long distance calls by dialing the toll-free 1-800
number and then entering the desired telephone number, followed
by the customer's calling card number and personal identification
number.4 At the time it began offering its Service, NYNEX had
not received approval from the Commission under section 271 of
the Act to provide long-distance service in any state in its
region.5 Thus, prior to implementing its Service, NYNEX sought
to partner with a long distance provider to provide the in-
region, long distance component of the Service.6
3. In February 1996, NYNEX solicited bids from long
distance service providers to participate in the new Service.
From the responses it received, NYNEX chose Sprint to provide the
long distance component of the Service.7 NYNEX entered into a
three-year contract with Sprint that NYNEX could terminate only
in the event of a breach by Sprint.8 After NYNEX implemented its
Service in July 1996, NYNEX promoted the Service and usually
clearly described Sprint's role as the long distance service
provider.9 AT&T's Complaint alleges that NYNEX's partnership
with Sprint and the resulting provision of the 1-800-54NYNEX
Service are unlawful.
4. We have previously addressed the legality of a 1-800
calling platform service offered by another BOC, and we are
guided by that decision. In the 1-800-AMERITECH Order, we
determined that the Ameritech Operating Companies'
(``Ameritech'') calling platform service violated section 271 of
the Act.10 We relied upon our earlier Qwest Teaming Order to
reach this conclusion.11 We also note that, subsequently, the
Enforcement Bureau (``Bureau'') considered the legality of a
calling platform service offered by U S WEST Communications, Inc.
(``U S WEST'').12 The Bureau found that the U S WEST service was
markedly similar to the Ameritech offering and concluded that the
U S WEST service violated section 271 for the same reasons that
the Ameritech offering violated section 271.13
5. As set forth below, the record demonstrates that
NYNEX's Service is materially different than the services at
issue in the 1-800-AMERITECH Order and the 1-800-4USWEST Order.
Therefore, we conclude that the record does not support a ruling
that the Service violates section 271 of the Act. Further, we
conclude that AT&T's allegations are insufficient to establish a
violation of the equal access and nondiscrimination requirements
embodied in sections 202(a) and 251(g) of the Act.
III.A. The 1-800-54NYNEX Service Does Not Violate Section
6. AT&T's primary contention is that the 1-800-54NYNEX
Service violates section 271 of the Act, because it amounts to
the provision of in-region, interLATA service before NYNEX 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.''14 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).15 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.''16 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 1996,17 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
7. The Qwest Teaming Order sets forth the issue that we
consider 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.''19 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.''20 In order to determine whether a
BOC's long distance-related activities run afoul of this
standard, we balance the following three 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.''21 In evaluating the challenged BOC actions, we
consider ``the totality of [the BOC's] involvement, rather than
focus[ing] on any one particular activity.''22
8. Here, the totality of the circumstances does not
support a finding that NYNEX violated section 271. We draw this
conclusion principally by comparing the facts of this case to
those present in the two other calling platform cases that we and
the Bureau have recently decided. In the 1-800-AMERITECH Order
and the 1-800-4USWEST Order, we and the Bureau, respectively,
found that Ameritech and U S WEST had engaged in numerous
activities that, when considered as a whole, amounted to the
unauthorized provision of long distance service.
9. Specifically, we and the Bureau found that Ameritech
and U S WEST each: (1) designed and developed a combined service
offering for its local service customers that included 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 it obtained authority under section 271 to
provide long distance service in various states.23
10. In concluding that Ameritech's and U S WEST's calling
card platform services violated section 271, we focused on the
business relationships between the BOCs and their long distance
service provider partners, and the BOCs' marketing and
promotional programs. The business relationship considerations
led us and the Bureau to conclude that two of the Qwest Teaming
Order factors described above were present: 1) the BOC obtained
material benefits uniquely associated with including a long
distance component in a combined package, and 2) the BOC
performed activities typically performed by a reseller.24
11. In particular, we found in the 1-800-AMERITECH Order
and the Bureau found in the 1-800-4USWEST Order that the BOCs
were improperly attempting to obtain a ``jumpstart'' in the long
distance market by structuring their contracts with their long
distance provider partners to allow the BOCs to terminate the
contracts almost immediately after receiving approval under
section 271 to offer their own long distance service.25 This
made it appear as if the long distance provider was not a true
partner, but simply a tool the BOC utilized to build an
entrenched base of customers that it could quickly assume once it
received section 271 authorization. Indeed, the requests for
proposal the BOCs distributed seeking partners for their calling
platform services highlighted the tenuous role the long distance
provider partners would play in those cases.26
12. Further, the contracts between the BOCs and the long
distance provider partners in both cases restricted the long
distance provider's ability to interact with customers, thus
providing the BOCs with an unfettered opportunity to develop
goodwill with a base of long distance customers in advance of
receiving section 271 approval.27 Ameritech prohibited its long
distance partner from contacting any customers without prior
authorization from Ameritech.28 Similarly, U S WEST retained
``ownership'' of the customer relationship and control of
messages provided to customers in its arrangement with its long
distance provider partner.29 The BOCs' attempts to prevent their
long distance partners from developing customer relationships in
connection with the Service helped ensure that the BOCs would
have little difficulty transitioning the customers from the
service provided by the long distance partners to their own long
distance service once they received section 271 authorization.
13. Moreover, the customer relationship restrictions also
demonstrated that the BOCs were assuming responsibilities
typically performed by resellers of long distance service.
Resellers generally retain the right and obligation to market and
promote their services and to engage in customer service
activities.30 Yet Ameritech and U S WEST had no apparent
difficulty dictating contract terms to their long distance
provider partners that allowed the BOCs to assume control of
14. The BOCs' marketing and promotional materials
established the presence of the final Qwest Teaming Order factor
that we and the Bureau analyzed in the 1-800-AMERITECH and 1-800-
4USWEST cases - whether the BOC holds itself out as a long
distance service provider. In those materials, the BOCs made
affirmative attempts to disguise the role of the long distance
partner in providing the service.32 In both cases, the long
distance provider's name was usually buried in fine print and its
role in providing the long distance portion of the service was
either not adequately described or was de-emphasized.33 We and
the Bureau found that the steps taken to brand the offering as
the BOC's exclusive combined offering could lead consumers to
believe that the BOC was providing in-region, long distance
15. The facts of this case are materially different than
those described in the 1-800-AMERITECH Order and the 1-800-
4USWEST Order. We have carefully reviewed the business
relationship between NYNEX and Sprint, as well as NYNEX's
marketing and promotional materials. Our review leads us to
conclude that, based on the totality of the circumstances and
application of the Qwest Teaming Order factors, the record does
not support a finding that NYNEX violated section 271 with its
16. The business relationship between NYNEX and Sprint
differs fundamentally from the business relationships at issue in
1-800-AMERITECH and the 1-800-4USWEST cases. First, NYNEX did
not structure its agreement with Sprint to allow for early
termination. NYNEX's contract with Sprint was for a three year
term, and NYNEX could not terminate the contract early or on
short notice except in the case of a breach by Sprint.35 Thus,
NYNEX's contract with Sprint did not allow NYNEX to obtain an
improper ``jumpstart'' in the long distance market.36
17. Second, NYNEX did not exercise the same degree of
control over the marketing and customer relationship that we
found particularly troubling in the 1-800-AMERITECH and 1-800-
4USWEST cases. In particular, NYNEX did not impose the type of
restrictions on Sprint that Ameritech and U S WEST imposed on
their long distance partners. Sprint was free to engage in
customer care activities and market its services in connection
with the card offering, and Sprint had an affirmative role in
designing the calling card and the advertising program.37 Sprint
remained free to enhance its relationship with customers using
the Service and was not forced by NYNEX, as the long distance
providers partners were in the 1-800-AMERITECH and 1-800-4USWEST
cases, to accept a secondary and restricted role vis a vis the
customer base of card-users.38 Because NYNEX did not employ a
combination of early termination provisions and control over
customer care and marketing that would allow it to pre-position a
customer base for its long distance service prior to receiving
271 authorization, we conclude that the ``material benefit''
factor that we found present in the 1-800-AMERITECH and 1-800-
4USWEST cases is not present here.39
18. Similarly, NYNEX's consent to share marketing and
customer care responsibilities with Sprint also demonstrates that
NYNEX did not function as a reseller would, because it permitted
Sprint to play a significant role in the marketing of the service
as well as customer care. NYNEX apparently could not simply
dictate restrictive terms to Sprint and thereby assume
responsibilities that the long distance provider typically would
perform. As described above, Sprint retained the ability to
engage in customer care and marketing activities. Further,
Sprint retained control over the pricing of its services in
connection with the Service,40 a fact that was not true at least
with respect to the 1-800-AMERITECH service and the Qwest Teaming
Order arrangements.41 Thus, the concern that existed in the
Qwest Teaming Order and the 1-800-AMERITECH Order and 1-800-
4USWEST Order that the BOC assumed responsibilities typically
performed by the long distance provider is not present here.
19. Finally, NYNEX's marketing and promotional materials
establish that NYNEX did not hold itself out as a long distance
provider by trying to disguise or de-emphasize Sprint's role as
the provider of long distance service. Initially, AT&T points to
only three NYNEX promotional materials that it claims are
problematic.42 Two of those materials mention in small type that
``[l]ong distance calling card calls made using 1 800 54NYNEX
will be carried by Sprint.''43 The third promotional document
states, in type that is the same size as the rest of the
advertisement narrative, ``you'll also get Sprint's rates for
long distance.''44 NYNEX effectively counters AT&T's argument
that Sprint's role was de-emphasized by pointing to other
marketing and promotional materials that highlight Sprint's role.
For example, the letters that accompanied the new cards sent to
customers plainly stated that ``long distance calls made by
dialing 1 800 54NYNEX will be provided by Sprint'' and further
noted, in bold print in the middle of the letter, that ``Sprint
will take a spectacular 50% off each minute you spend on your
long distance calls.''45 Other promotional materials similarly
either highlighted Sprint's role or plainly described Sprint's
role in the same type-face used for the remaining narrative
portions of the promotional material.46
20. Further, AT&T's contention that NYNEX's advertisements
for the Service did not adequately reveal Sprint's role in
providing the long distance component of the Service rings hollow
in light of AT&T's original criticism that Sprint's role was
improperly emphasized in NYNEX's advertisements for the Service.
AT&T complained to NYNEX shortly after NYNEX began promoting the
Service that NYNEX's advertisements ``explicitly include
promotion of the Sprint long distance services that are evidently
associated with the calling card.''47 AT&T's original concern
that Sprint's role was made too clear by NYNEX undercuts its
current contention that NYNEX did not adequately explain Sprint's
role in the Service to potential customers.48 Accordingly, the
record does not support a finding that NYNEX is ``holding itself
out'' as a long distance provider in connection with the
21. In sum, we find that NYNEX's Service is materially
different than the services at issue in the 1-800-AMERITECH and
1-800-4USWEST cases. These differences demonstrate that the
concerns expressed in the Qwest Teaming Order are not present
here. Accordingly, we conclude, based on the totality of the
circumstances, that the record does not support a finding that
NYNEX's Service violates section 271.
III.B. AT&T Has Not Established That NYNEX Violated
Sections 202(a) and 251(g).
22. In Count I of its Complaint, AT&T alleges that
NYNEX's partnership with Sprint and its 1-800-54NYNEX Service
violate the equal access and nondiscrimination requirements of
sections 251(g) and 202(a) of the Act.50
23. Section 251(g) imports equal access and
nondiscrimination obligations on BOCs as they existed the day
before enactment of the 1996 Act.51 ``Thus, in order to succeed
on its claim, AT&T must cite either, (a) a pre-1996 Act court
order, consent decree, or Commission order'' squarely on point
that prohibits NYNEX from partnering with a long distance service
provider to provide the Service at issue, ``or (b) a Commission
order issued after passage of the 1996 Act imposing such an
obligation.''52 AT&T cites no such precedent, and we are aware
of none. Accordingly, we conclude that the record does not
support a finding that NYNEX's Service violates section 251(g).
24. AT&T relies principally on United States v.
Western Electric Company, Inc. to support its 251(g) claim, but
this decision does not help AT&T.53 The facts of that case are
far different than those involved here. Western Electric
concerned the discriminatory practice of the BOCs providing
validation data for calls made using their calling cards only for
calls carried by AT&T, their former parent prior to divestiture
under the Modified Final Judgment (``MFJ''). This practice
prevented other long distance service providers from accepting
calls made with the BOC calling cards and thus substantially
advantaged AT&T over its competitors.54 That case also involved
misleading marketing and advertising by the BOCs in failing to
inform customers that they automatically routed all the long
distance traffic to AT&T, rather than themselves providing the
long distance service component of the calling card programs.55
Nothing remotely resembling these practices occurs with NYNEX's
calling card program. Although NYNEX selected Sprint, rather
than AT&T, to handle the long distance component of the Service,
that decision alone does not constitute the type of behavior that
the MFJ court sought to constrain. Rather, Western Electric
makes clear that the BOCs could not use their monopoly market
positions to thwart the ability of AT&T's competitors to
participate fully in the long distance market by impeding
completion of calling card calls. This case does not present
that situation (see discussion infra at ¶ 26), and, therefore, we
decline to expand the section 251(g) obligations in the manner
suggested by AT&T.56
25. Section 202(a) of the Act prevents unreasonable
discrimination in the provision of services.57 AT&T offers no
independent arguments for why we should find a violation of
section 202(a) if we do not find a violation of section 251(g) on
the facts presented. In fact, AT&T includes both claims in a
single count in its Complaint, relies on the same set of facts to
support both claims, and devotes only a single paragraph in its
briefs to arguments related specifically to section 202(a).58
26. AT&T's limited arguments addressed to section
202(a) are insufficient to establish a violation of that section.
AT&T argues principally that NYNEX provided Sprint with a better
opportunity to participate in the Service than it provided to
AT&T, and that NYNEX did not provide AT&T an adequate opportunity
to provide a comparable product after NYNEX and Sprint entered
into their arrangement.59 NYNEX effectively counters AT&T's
arguments by pointing out that AT&T had numerous opportunities to
work with NYNEX to establish their own calling platform service
but that AT&T elected not to pursue these opportunities.60
Accordingly, on the basis of the specific record in this case, we
cannot conclude that NYNEX has engaged in unreasonable
discrimination in violation of section 202(a).
27. We conclude that the record in this proceeding does not
support a finding that NYNEX, through its 1-800-54NYNEX Service,
has violated either section 202(a), 251(g), or 271 of the Act.
Accordingly, we deny AT&T's complaint.
V. ORDERING CLAUSES
28. Accordingly, IT IS ORDERED, pursuant to sections 1,
4(i), 4(j), 202(a), 208, 251(g), and 271 of Act, as amended, 47
U.S.C. §§ 151, 154(i), 154(j), 202(a), 208, 251(g), and 271, that
the Formal Complaint filed by AT&T Corporation IS DENIED.
29. IT IS FURTHER ORDERED, pursuant to sections 4(i), 4(j),
and 208 of the Act, as amended, 47 U.S.C. §§ 154(i), 154(j), and
208, and sections 1.720 through 1.736 of the Commission's rules,
47 C.F.R. §§ 1.720-1.736, that AT&T's Motion to Strike, dated
February 8, 1999, IS DENIED.
FEDERAL COMMUNICATIONS COMMISSION
Magalie Roman Salas
1 After AT&T filed this complaint, Bell Atlantic acquired
NYNEX, which later merged with GTE to form Verizon
Communications, Inc. Notwithstanding these corporate changes,
for purposes of clarity this Order refers to the defendant
companies collectively as ``NYNEX.'' NYNEX replaced its 1-800-
54NYNEX calling card with a new card after its merger with Bell
Atlantic. AT&T has not challenged the lawfulness of that new
card in this proceeding and, accordingly, our order is limited
to the lawfulness of the 1-800-54NYNEX offering. See AT&T's
Brief Concerning the Effect of the Qwest Order, File No. E-97-
05B (Jan. 29, 1999) at 2, n.4.
2 47 U.S.C. § 271(a) (``Neither a Bell operating company
[BOC], 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).
3 47 U.S.C. §§ 202(a) and 251(g).
4 NYNEX Brief, File No. E-97-05B (Apr. 21, 1997) (``NYNEX
Brief'') at 2.
5 AT&T's Opening Brief, File No. E-97-05B (Apr. 21, 1997)
(``AT&T Brief'') at 2. After NYNEX's merger into Bell Atlantic,
the merged company in late 1999 received authorization to provide
interLATA services in New York. See Application by Bell Atlantic
New York for Authorization Under Section 271 of the
Communications Act to Provide In-Region, InterLATA Service in the
State of New York, Memorandum Opinion and Order, 15 FCC Rcd 3953
(1999), aff'd sub nom., AT&T Corp. v. FCC, 220 F.3d 607 (D.C.
Cir. 2000). We also recently authorized Verizon to provide
interLATA services in Massachusetts. Application of Verizon New
England Inc., Bell Atlantic Communications, Inc. (d/b/a Verizon
Long Distance), NYNEX Long Distance Company (d/b/a Verizon
Enterprise Solutions) and Verizon Global Networks Inc., for
Authorization to Provide In-Region, InterLATA Services in
Massachusetts, Memorandum Opinion and Order, CC Docket No. 01-9,
FCC 01-130 (Apr. 16, 2001).
6 As explained infra at paragraph 6, NYNEX is prohibited from
providing long distance service until it receives authorization
to do so by the Commission pursuant to section 271 of the Act.
7 NYNEX Brief at 2-3.
8 Defendants' Initial Brief, File No. E-97-05B (Dec. 8, 2000)
(``Defendants' Initial Brief'') at 6; Defendants' Response
Brief, File No. E-97-05B (Dec. 20, 2000) (``Defendants' Response
Brief'') at 2.
9 See supra at ¶¶ 19-20.
10 See MCI Telecommunications Corp. v. Illinois Bell Tel. Co.,
et al., Memorandum Opinion and Order, 15 FCC Rcd 23184 (2000)
11 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, 528 U.S. 1188 (2000). In the Qwest Teaming Order,
we found that a self-described ``teaming'' arrangement between U
S WEST and Qwest, and a similar arrangement between Ameritech
and Qwest, violated section 271. Each BOC separately combined
Qwest's long distance service with its own local services and
offered the resulting package separately to its customers under
the BOC's brand, with the BOC's customer support.
12 AT&T Corp. v. U S WEST Communications, Inc., File No. E-97-
28, and MCI Telecommunications, Inc. v. U S WEST Communications,
Inc., File No. E-97-40A, Memorandum Opinion and Order, DA 01-418
(Enf. Bur. Feb. 16, 2001) (``1-800-4USWEST Order'').
13 Id. at ¶ 12.
14 47 U.S.C. § 271(a).
15 47 U.S.C. § 271(d).
16 U S WEST Communications, 177 F.3d at 1060.
17 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.
18 U S WEST Communications, 177 F.3d at 1060; 47 U.S.C. §
271(c). See also AT&T Corp., 220 F.3d at 612 (conditional long
distance entry pursuant to section 271 is designed ``[t]o
encourage BOCs to open their markets to competition as quickly
as possible''). Our 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.
19 Qwest Teaming Order, 13 FCC Rcd at 21465, ¶ 37.
20 Id. at 21462, ¶ 30.
21 Id. at 21465-66, ¶ 37.
23 1-800-AMERITECH Order, 15 FCC Rcd at 23185, ¶ 2; 1-800-
4USWEST Order at ¶ 3.
24 1-800-AMERITECH Order, 15 FCC Rcd at 23190-92 and 23195-96,
¶¶ 12-16 and 23-25; 1-800-4USWEST Order at ¶¶ 13-19 and 27-29.
25 See 1-800-AMERITECH Order, 15 FCC Rcd at 23190-91, ¶ 13
(Ameritech could terminate on seventy-five days' notice for any
reason); 1-800-4USWEST Order at ¶ 16 (U S WEST could terminate
on thirty days' notice ``for its convenience'').
26 See 1-800-AMERITECH Order, 15 FCC Rcd at 23190-91, ¶ 13,
n.41; 1-800-4USWEST Order at ¶ 16, n.43.
27 1-800-AMERITECH Order, 15 FCC Rcd at 23191, ¶ 14; 1-800-
4USWEST Order at ¶ 17.
28 1-800-AMERITECH Order, 15 FCC Rcd at 23191, ¶ 14.
29 1-800-4USWEST Order at ¶ 17.
30 See, e.g., Qwest Teaming Order, 13 FCC Rcd at 21473, ¶ 48.
31 In addition, Ameritech was able to dictate the prices the
long distance provider partner would charge for its services, a
clear usurpation of the reseller's role. 1-800-AMERITECH Order,
15 FCC Rcd at 23196, ¶ 25; see also Qwest Teaming Order, 13 FCC
Rcd at 21472, ¶ 47 (BOCs exercised strong prospective influence
over prices of the long distance services provided by the long
distance provider partners).
32 See 1-800-AMERITECH Order, 15 FCC Rcd at 23192-94, ¶¶ 18-
22; 1-800-4USWEST Order at ¶¶ 21-26.
33 See 1-800-AMERITECH Order, 15 FCC Rcd at 23194, ¶¶ 21-22;
1-800-4USWEST Order at ¶ 25.
34 1-800-AMERITECH Order, 15 FCC Rcd at 23194, ¶ 22; 1-800-
4USWEST Order at ¶ 26.
35 Defendants' Initial Brief at 6; Defendants' Response Brief
36 Although AT&T points out that NYNEX's customers may have
appreciated the ``one-stop shopping'' advantages provided by the
Service, that alone does not make the Service unlawful. NYNEX
did not affirmatively structure its contract with Sprint or its
promotional program to allow it to capitalize unfairly on the
benefits its Service provides to consumers.
37 Defendants' Initial Brief at 4-5; Defendants' Response
Brief at 5-6.
38 Sprint's ability to market and promote its services and to
engage in customer care activities also distinguishes this case
from the Qwest Teaming Order, in which the BOCs retained the
exclusive right to market and sell the services at issue and
restricted customer care activities the long distance provider
partners could perform. 13 FCC Rcd at 21451, 21470 and 21473,
¶¶ 13, 45 and 48. AT&T argues that NYNEX similarly prevented or
restricted Sprint from contacting customers in connection with
the Service. AT&T Corp.'s Opening Brief Concerning the Effect
of the AMERITECH Card Order, File No. E-97-05B (Dec. 8, 2000) at
8. As NYNEX points out, this argument is belied by the terms of
its contract with Sprint, which contained no such restrictions.
Defendants' Initial Brief at 4-5; Defendants' Response Brief at
5-6. Further, the contract expressly required Sprint to provide
``operator services'' in connection with the Service. See NYNEX
Responses to Interrogatories, File No. E-97-05 (Dec. 23, 1996)
39 In addition to the absence of evidence of an improper
``jumpstart'' benefit in this case, cf. U S WEST Communications,
177 F.3d at 1060, the record also does not appear to contain
evidence of certain financial benefits that the Commission found
to be troubling in connection with at least one of the programs
at issue in the Qwest Teaming Order. There, the evidence showed
that Ameritech intended to use the disputed program to increase
its sales of certain local services, such as Call Waiting,
Caller ID and Automatic Redial, that had higher profit margins
than basic local service. Qwest Teaming Order, 13 FCC Rcd at
21468, ¶ 43. AT&T has not cited evidence of such a targeted
financial benefit here. This is not to suggest that the facts
described herein and in paragraphs 17 and 18 above are the only
facts that could establish the existence of the ``material
benefit'' factor discussed in the Qwest Teaming Order. We will
continue to evaluate all the facts presented in any future
``partnering'' or ``teaming'' cases to determine, based on the
totality of the circumstances presented, whether the BOC obtains
an improper ``material benefit'' from including long distance
service in a package of services.
40 Defendants' Initial Brief at ¶ 6.
41 1-800-AMERITECH Order, 15 FCC Rcd at 23196, ¶ 25; Qwest
Teaming Order, 13 FCC Rcd at 21472, ¶ 47 (expressing concern
that the BOCs exercised ``strong prospective influence over the
prices, terms and conditions of the long distance services''
provided under the BOCs' programs). See also 1-800-4USWEST
Order at ¶ 29 (discussing U S WEST's apparent ability to dictate
certain terms to its long distance provider partner).
42 AT&T also contends that the NYNEX brand name was the only
name operators referenced in processing calls made with the
Service. AT&T Corp.'s Reply Brief Concerning the Effect of the
AMERITECH Card Order, File No. E-97-05B (Dec. 20, 2000) at 7.
However, the call flow description contained in the contract
between NYNEX and Sprint does not support this contention. AT&T
Brief at Ex. G.
43 AT&T Brief at Ex. H and I. Similar language appears on the
back of the 1-800-54NYNEX calling card.
44 Id. at Ex. J.
45 NYNEX Opposition to Motion to Compel, File No. E-97-05B
(Jan. 23, 1997) at attachments. In addition to differentiating
this case from 1-800-AMERITECH and 1-800-4USWEST, NYNEX's
willingness to make clear Sprint's role in the Service also
distinguishes this case from the Qwest Teaming Order. 13 FCC
Rcd at 21450-51, 21453 and 21470, ¶¶ 11, 13, 16 and 45
(indicating that Qwest's role in providing the long distance
component of the BOCs' services was not clear).
46 Id.; see also Defendants' Response Brief at 7 and
attachments B and C. We also note that the bills NYNEX sent to
customers listed Sprint as the carrier for long distance calls.
See Defendants' Response Brief at 2. Although AT&T contends that
we should not consider this evidence, because it is allegedly
inconsistent with prior NYNEX discovery responses, we are not
persuaded that any inconsistency exists. AT&T Motion to Strike,
File No. E-97-05B (Feb. 8, 1999). More importantly, though, we
fail to see how AT&T is prejudiced by our consideration of this
indisputably relevant evidence. Accordingly, we deny AT&T's
motion to strike.
47 NYNEX Answer, File No. E-97-05 (Dec. 16, 1996) at Ex. 5
(letter from AT&T to NYNEX complaining about the recent
introduction of the NYNEX Service) (emphasis added).
48 AT&T's original concerns regarding NYNEX's advertising of
the Service appeared to involve whether NYNEX had violated
section 251(g) of the Act. This contention is addressed supra
at ¶ 23.
49 We acknowledge the fact that NYNEX used a vanity number
with the NYNEX name in connection with its Service.
Nevertheless, based on our review of the advertising and
promotional materials as a whole, we find it unlikely that
customers would be misled into believing that NYNEX provided the
long distance component of the Service.
50 AT&T Complaint, File No. E-97-05 (Oct. 29, 1996) (``AT&T
Complaint'') at 11; AT&T Supplement to Complaint, File No. E-97-
05B (Jan. 10, 1997) (``AT&T Supplemental Complaint'') at 2.
51 AT&T Corp. v. New York Telephone Company, d/b/a Bell
Atlantic - New York, 15 FCC Rcd 19997, 20001 at ¶ 13 (2000)
(rejecting AT&T's challenge based on section 251(g) to a Bell
Atlantic's in-bound marketing practices for second telephone
lines in New York post-section 271 approval). Section 251(g)
provides, in pertinent part, ``On and after the date of
enactment of the [1996 Act], each local exchange carrier, to the
extent that it provides wireline services, shall provide
exchange access, information access, and exchange services for
such access to interexchange carriers ... in accordance with the
same equal access and non-discriminatory interconnection
restrictions and obligations ... that apply to such carrier on
the date immediately preceding the date of enactment of the
[1996 Act] under any court order, consent decree, or regulation,
order or policy of the Commission, until such restrictions and
obligations are explicitly superseded by regulations prescribed
by the Commission after such date of enactment.'' 47 U.S.C. §
52 AT&T Corp., 15 FCC Rcd at 20000, ¶ 9. Cf., Qwest Teaming
Order, 13 FCC Rcd at 21476-77 (declining to reach a section
251(g) claim and discussing, in dicta, general principles
underlying section 251(g)). Moreover, to the extent that claims
might lie under section 251(g) for denial of an equal
opportunity to participate in a service (an issue we need not
decide here), on the facts presented, we reject any such claim
for the reasons provided in our discussion of section 202(a) in
paragraph 26 below.
53 United States v. Western Electric Company, Inc., 698 F.
Supp. 348 (D.D.C. 1988).
54 Id. at 354.
55 Id. at 356.
56 AT&T also relies on the Shared Tenant Services decision,
but that reliance is similarly misplaced. United States v.
Western Electric Company, Inc., 627 F. Supp. 1090 (D.D.C. 1986)
(``Shared Tenant Services''). The Shared Tenant Services
decision involved attempts by BOCs to buy interexchange services
from interexchange carriers and resell those services in
combined packages to groups of customers, such as tenants in
apartment buildings. Thus, the BOCs were actually providing
interexchange services in that case, rather than merely
marketing a program that included an interexchange services
component provided by an identified interexchange carrier. Id.
at 1100. Accordingly, the Shared Tenant Services decision is
not on point and does not dictate that we find a violation of
section 251(g) here.
57 47 U.S.C. § 202(a).
58 AT&T Complaint at 11; AT&T Supplemental Complaint at 2;
AT&T Brief at 19-20 (in which AT&T asserts, with virtually no
supporting analysis, that ``[f]or these same reasons, NYNEX is
violating section 202(a) . . .'').
59 AT&T Brief at 3-9.
60 NYNEX Brief at 2-7.