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Federal Communications Commission
Washington, D.C. 20554
In the matter of )
Applications of AMERITECH )
) CC Docket No. 98 -141
SBC Communications Inc., )
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
MEMORANDUM OPINION AND ORDER
Adopted: October 7, 2002 Released: October 8,
By the Chief, Enforcement Bureau:
I. INTRODUCTION AND BACKGROUND
1. In this Order, we deny the petition filed by Z-Tel
Communications, Inc. to toll the expiration of all of the
SBC/Ameritech merger conditions pending the outcome of a broader
investigation of the public interest benefits of that merger and
of whether the merged company should be allowed to continue
2. On September 3, 2002, Z-Tel filed a petition urging the
Commission to review the public interest benefits of the merger
and to toll the expiration of all of the merger conditions
pending the outcome of such an investigation.1 In its petition,
Z-Tel argues generally that SBC Communications (``SBC'') failed
to comply with the merger conditions.2 In addition, Z-Tel argues
that SBC's out-of-region competition commitments failed to
deliver the benefits promised by SBC during the merger
proceeding.3 Z-Tel requests that, if the Commission's post-
tolling review of the merger conditions demonstrates that the
merger has not produced the relied-upon public interest benefits,
the Commission require the divestiture from SBC of the Ameritech
companies or revoke the merged firm's authority to be a common
carrier. On September 13, 2002, SBC filed an opposition to Z-
Tel's petition; Worldcom filed comments supporting Z-Tel's
petition that same day.
3. On October 6, 1999, the Commission approved the
transfer of control of licenses and lines from Ameritech
Corporation (``Ameritech'') to SBC.4 During the course of the
Commission's review, SBC and Ameritech proposed -- and the
Commission adopted as conditions of its approval -- a set of
voluntary commitments intended to promote the deployment of
advanced services, to open SBC's and Ameritech's in-region
markets to competition, to foster local competition out-of-
territory, to improve residential telephone service, and to
ensure continued compliance with the conditions.5 The effective
period for many of the merger conditions terminates thirty-six
months after the Merger Closing Date, i.e., October 8, 2002.6
Some of the conditions, however, are not subject to that
expiration date because the condition itself specifically
establishes its own period of applicability.7 In addition, the
Chief of the Enforcement Bureau may extend a particular condition
on the basis of a finding that SBC has failed to comply with that
4. We deny Z-Tel's petition. Paragraph 69 of the Merger
Order allows the Commission to extend a particular condition upon
a finding of noncompliance with that condition,9 but Z-Tel has
not requested such specific extensions. Z-Tel points to no
authority on which the Commission could base the type of
wholesale and unilateral extension of the merger conditions that
the company seeks in this petition. To the extent Z-Tel seeks
relief beyond that available under the Merger Order, it has not
provided a sufficient basis for such relief.
III. ORDERING CLAUSES
5. Accordingly, IT IS ORDERED that the Petition to
Investigate the Public Interest Benefits of the Transfer and to
Toll the Expiration of Certain SBC/Ameritech Merger Conditions
Pending Investigation, filed by Z-Tel Communications, Inc. IS
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
1 Z-Tel Petition at 1-3.
2 Z-Tel Petition at 10-22.
3 Id. at 23-26.
4 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,
Memorandum Opinion and Order, 14 FCC Rcd 14712 (1999)
(``SBC/Ameritech Merger Order''), vacated in part, ASCENT v. FCC,
235 F.3d 662 (D.C. Cir. 2001).
5 See SBC/Ameritech Merger Order at Appendix C.
6 The merger conditions state that, except where other
termination dates are specified or in the event of noncompliance,
the merger conditions ``shall cease to be effective and shall no
longer bind SBC/Ameritech in any respect 36 months after the
Merger Closing Date.'' SBC/Ameritech Merger Order at Appendix C,
para. 74. In the preamble to Appendix C, the merger conditions
define the term ``Merger Closing Date'' as ``the day on which . .
. SBC and Ameritech cause a Certificate of Merger to be executed,
acknowledged, and filed with the Secretary of State of
Delaware.'' Id. at Appendix C. That event took place on October
7 SBC/Ameritech Merger Order at Appendix C, para. 74. For
example, SBC must continue to comply with the shared transport
obligations in para. 56 of the conditions. Consistent with para.
359, para. 56 expressly provides its own merger condition sunset,
stating that this obligation shall remain in effect unless and
until either the Commission were to find in the UNE Remand
proceeding that SBC is not required to provide shared transport,
or a court were to issue a final non-appealable order to that
effect. Neither of those events has occurred, and the condition,
therefore, is not set to expire. Other conditions that are
effective beyond the general October 8, 2002 expiration date
include conditions covering the Carrier-to-Carrier Performance
Plan, paras. 23-24; the post-sunset provisions of the separate
affiliate requirements, para. 13; OSS enhancements and interfaces
developed during collaborative discussions with competitive
carriers, paras. 16 and 33; loop qualification information, para.
19; provision of correct promotional discounts to eligible
competitive carriers, para. 46(c); availability of unbundled
network elements (``UNEs'') and combinations of UNEs as were in
effect on January 24, 1999, para. 53; completion of efforts to
offer telecommunications services outside its current 13-state
region, para 59 (c); refraining from instituting mandatory
minimum monthly or flat-rate charges on interLATA calls, para. 60
(b); offering enhanced Lifeline plans to eligible consumers,
para. 61; reporting certain service quality data, para. 62; and
ensuring compliance with the remaining conditions through an
annual independent audit, paras. 65-66.
8 Id. para. 69, 74; see also In the Matter of Delegation of
Additional Authority to the Enforcement Bureau, Order, 17 FCC Rcd
4795 (2002), delegating to the Enforcement Bureau certain merger-
related audit and compliance duties formerly delegated to the
Common Carrier Bureau (``Delegated Authority Order'').
9 SBC/Ameritech Merger Order at Appendix C, para. 69. Paragraph
69, as amended by the Delegated Authority Order, provides that
``If the Chief of the . . . Bureau makes a determination that
SBC/Ameritech has during the effective period of a Condition
failed to comply with that Condition, the Bureau Chief may, at
his or her discretion, extend the effective period of that
Condition for a period that does not exceed the period during
which SBC/Ameritech failed to comply with the Condition.''