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FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
) File No. EB-04-IH-
In the Matter of )
) Acct. No.
SBC Communications Inc. )
) FRN No. 0005049150
1. The Enforcement Bureau (the ``Bureau'') of the
Federal Communications Commission (the ``Commission'' or
``FCC'') and SBC Communications Inc. (``SBC'') and its
wholly-owned subsidiaries and affiliates, hereby enter
into this Consent Decree for the purpose of terminating an
Investigation into whether SBC Connecticut complied with
universal service support requirements of section 254 of
the Communications Act of 1934, as amended (``the Act''),1
and Part 54 of the Commission's rules.2
2. For purposes of this Consent Decree, the following
definitions shall apply.
(a) The ``Commission'' means the Federal
Communications Commission and all of its bureaus
(b) ``Bureau'' means the Enforcement Bureau of the
Federal Communications Commission.
(c) ``SBC'' means SBC Communications Inc., and its
successors and assigns.
(d) ``SBC Connecticut'' means The Southern New
England Telephone Company d/b/a SBC Connecticut, a
wholly owned subsidiary of SBC.
(e) ``Parties'' means SBC and the Bureau.
(f) ``Order'' or ``Adopting Order'' means an order of
the FCC adopting the terms of this Consent Decree
without change, addition, or modification.
(g) ``Final Order'' means an order that is no longer
subject to administrative or judicial
reconsideration, review, appeal, or stay.
(h) ``Investigation'' means the investigation
commenced by the Commission in the above-referenced
file concerning whether SBC Connecticut violated
Part 54 of the Commission's rules in connection
with SBC Connecticut's receipt of universal service
support for New London Public Schools (``NLPS'')
projects, which are referenced in SBC's August 6,
2004 and September 13, 2004, responses to Bureau
(i) ``Effective Date'' means the date on which the
Bureau adopts the Adopting Order.
3. The ``E-Rate'' or ``Education-Rate'' Program is
the universal service fund (``USF'') mechanism designed to
assist eligible schools and libraries in gaining access to
telecommunications and advanced services.4 On August 6,
2004, SBC informed the Bureau that, as part of its
continuing review of its wholly-owned subsidiaries'
involvement in the E-Rate program, it discovered that SBC
Connecticut may have used or received E-Rate funds in a
manner inconsistent with the Commission's rules and
orders. More specifically, SBC informed the Bureau that,
with respect to the NLPS, SBC Connecticut invoiced the
Schools and Libraries Division (``SLD'') of the Universal
Service Administrative Company (``USAC'')5 in one funding
year for services provided in another; that SBC
Connecticut invoiced SLD for services it provided to
certain schools and other entities for which it had not
sought and obtained authorization; and that SBC
Connecticut invoiced SLD for services that are not
eligible for USF support. SBC Connecticut refunded to SLD
the amounts collected in connection with these invoices
and withdrew any outstanding invoices.
4. The Parties agree and acknowledge that this
Consent Decree shall constitute a final settlement of the
Investigation. In express reliance on the covenants and
representations contained herein, and to avoid the further
expenditure of scarce public resources, the Bureau agrees
to terminate the Investigation. In consideration for the
termination of the Investigation and in accordance with
the terms of this Consent Decree, SBC agrees to the terms,
conditions and procedures contained herein.
5. SBC agrees that SBC Connecticut will make a
voluntary contribution to the United States Treasury in
the amount of five hundred thousand dollars ($500,000)
within ten (10) calendar days from the Effective Date.
SBC Connecticut must make this payment by check, wire
transfer or money order drawn to the order of the Federal
Communications Commission, and the check, wire transfer or
money order should refer to ``Acct. No. 200532080007'' and
``FRN No. 0005049150.'' If SBC Connecticut makes this
payment by check or money order, it must mail the check or
money order to: Forfeiture Collection Section, Finance
Branch, Federal Communications Commission, P.O. Box 73482,
Chicago, Illinois, 60673-7482. Payment by overnight mail
may be sent to Bank One/LB 73482, 525 West Monroe, 8th
Floor Mailroom, Chicago, IL 60661. Payment by wire
transfer may be made to ABA Number 071000013, receiving
bank Bank One, and account number 1165259.
6. SBC agrees that within thirty (30) days from the
Effective Date, and to ensure SBC's wholly-owned
subsidiaries' future compliance with the Commission's
rules governing the E-Rate program, SBC will institute a
Compliance Plan. That plan will include, at a minimum,
the following components:
A. Compliance Training Program. SBC shall establish
and maintain an E-rate compliance training program for
its wholly-owned subsidiaries' employees responsible
for sales, account management, and project management
relating to E-Rate contracts and services.6 This
program will include at least the following elements:
i. SBC shall maintain a training package
regarding E-Rate program requirements for its
wholly-owned subsidiaries' employees
responsible for sales, account management, and
project management relating to E-Rate
contracts and services. This package shall
cover the following subject matter areas:
eligible services, competitive bidding, the
application process, service provider roles
and responsibilities, discounts, the
prohibition against free services, service
substitutions and equipment transfers, billing
SLD for services, and document retention
requirements. The training package shall also
include a section on the potential
ramifications of failing to comply with the E-
Rate rules, and a section reminding employees
that they are responsible for knowing their
obligations under the SBC Code of Business
Conduct, which requires employees to comply
with all applicable legal and regulatory
requirements. The training package shall also
remind employees that they are responsible for
maintaining the highest level of honesty and
integrity, and notifying management if they
learn of or suspect that any employee has
engaged in any illegal or unethical business
conduct related to the E-Rate program.
ii. SBC shall provide E-Rate training sessions,
at least annually, utilizing the foregoing
training package for its wholly-owned
subsidiaries' employees responsible for sales,
account management, and project management
relating to E-Rate contracts and services.
SBC also will provide the training package to
new employees of its wholly-owned subsidiaries
that are responsible for sales, account
management, and project management functions
relating to E-Rate contracts and services
within 45 days of being assigned such
iii. SBC shall update and enhance the
foregoing training package regarding the E-
Rate rules as appropriate and necessary to
reflect the current FCC rules.
B. Regional E-Rate Coordinators. SBC shall cause each
of its regional business sales organizations to
designate and maintain an employee to act as the E-Rate
subject matter expert for that organization. The
Regional E-Rate Coordinators shall be responsible for
answering day-to-day E-Rate questions posed by
employees in their business units and bringing
potential violations of the E-Rate rules to the
attention of the SBC Legal Department.
C. E-Rate Oversight Team. SBC shall establish and
maintain an E-Rate Oversight Team to provide training
and act as a resource for SBC's business units
regarding the rules and requirements of the E-Rate
Program. The E-Rate Oversight Team shall include
representatives of SBC's Regulatory Planning and Policy
Group, Regulatory Compliance Group, and Legal
Department. The E-Rate Oversight Team will:
i. act as the central point of contact for
documentation and dissemination of E-Rate
Program requirements throughout the company;
ii. monitor changes in the federal E-Rate rules
and regulations and ensure that those changes
are documented and disseminated
iii. develop and coordinate dissemination of E-
Rate training materials;
iv. serve as a centralized resource for resolving
questions and problems relating to SBC's
compliance with applicable E-Rate Program
rules and regulations; and
v. work with SBC's Regional E-Rate Coordinators
to ensure consistent implementation of the E-
Rate rules and regulations across the
D. E-Rate Oversight Team Subcommittees. The E-Rate
Oversight Team shall establish and maintain inter-
disciplinary E-Rate subcommittees, which will be
charged with the following responsibilities:
i. Program Requirements Subcommittee: Outlining
E-Rate Program requirements and mapping each
to the appropriate organizations and business
ii. Training Subcommittee: Developing and
delivering E-Rate training and updating
training material, as needed, to reflect
iii. Marketing and Communications Subcommittee:
Maintaining the SBC customer and employee E-
Rate websites to serve as repositories for E-
Rate reference materials.
iv. Billing and
Subcommittee: Developing consistent methods
of operations for SLD invoicing, tracking and
monitoring SLD receivables, account
reconciliation, and collections.
v. Process Standardization Subcommittee:
Developing consistent methods and procedures
for sales, customer invoicing, SLD
escalations, document retention and other
issues that might arise.
E. SLD Principal Point of Contact. SBC shall
designate an employee with appropriate background and
experience in E-Rate matters to act as SBC's principal
point of contact with the SLD for questions relating to
interpretation of the E-Rate rules, requests for
extensions of E-Rate deadlines, and appeals of adverse
decisions by SLD. SBC will instruct employees with E-
Rate responsibilities that they should route such
questions to SBC's principal point of contact with the
F. Termination. The provisions of this Paragraph
6 shall remain in effect for two (2) years from
the Effective Date.
7. The Bureau agrees that, in the absence of new
evidence relating to incidents that were not the subject
of the Investigation, the Bureau will not use the facts
developed in the Investigation, or the existence of this
Consent Decree, to institute, on its own motion, any new
proceedings, formal or informal, or to take any actions on
its own motion against SBC concerning the matters that
were the subject of the Investigation. The Bureau also
agrees that, in the absence of such new evidence, it will
not use the facts developed in the Investigation to
institute on its own motion any proceeding, formal or
informal, or take any action against SBC with respect to
its basic qualifications, including its character
qualifications, to be a Commission licensee.
8. Nothing in this Consent Decree shall prevent the
Commission or its delegated authority from adjudicating
any formal complaint that may be filed pursuant to section
208 of the Act, and to take any action in response to such
formal complaint. Except as expressly provided in this
Consent Decree, nothing herein shall prevent the
Commission or its delegated authority from investigating
SBC's compliance with the Act, the Commission's rules, or
this Consent Decree.
9. SBC waives any and all rights it may have to seek
administrative or judicial reconsideration, review, appeal
or stay, or otherwise to challenge or contest the validity
of this Consent Decree and the Adopting Order, provided
the Bureau issues an Adopting Order without change,
addition, or modification.
10. SBC's decision to enter into this Consent Decree
is expressly contingent upon issuance of an Order that is
consistent with this Consent Decree, and which adopts the
Consent Decree without change, addition, or modification.
11. In the event that this Consent Decree is rendered
invalid by any court of competent jurisdiction, it shall
become null and void and may not be used in any manner in
any legal proceeding.
12. If either party (or the United States on behalf of
the Commission), brings a judicial action to enforce the
terms of the Adopting Order, neither SBC nor the Bureau
shall contest the validity of this Consent Decree or the
Adopting Order, and SBC will waive any statutory right to
a trial de novo.
13. The parties agree that this Consent Decree is for
settlement purposes only and that it does not constitute
an admission, denial, adjudication on the merits, or a
factual or legal determination regarding any compliance or
noncompliance with the requirements of section 254 of the
Act or Part 54 of the Commission's rules.
14. Any violation of this Consent Decree or the
Adopting Order will constitute a separate violation of a
Commission order, entitling the Commission or its
delegated authority to exercise any rights and remedies
attendant to the enforcement of a Commission order.
15. The Parties agree that if any provision of this
Consent Decree conflicts with any subsequent rule or order
adopted by the Commission (except an order specifically
intended to revise the terms of this Consent Decree to
which SBC Connecticut does not consent) that provision
will be superseded by such Commission rule or order.
16. This Consent Decree may be signed in counterparts.
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
SBC Communications Inc.
James C. Smith
Senior Vice President - FCC
SBC Telecommunications, Inc.
1 47 U.S.C. § 254.
2 47 C.F.R. § 54.1 et. seq.
3 Letters from Christopher Heimann, General Attorney, SBC
Telecommunications, Inc., to David Janas, Special Counsel,
Investigations & Hearings Division, Enforcement Bureau,
Federal Communications Commission, dated August 6, 2004 and
September 13, 2004.
4 See Part 54, Subpart F, of the Commission's rules, 47
C.F.R. § 54.500 et seq.
5 The Commission has designated USAC to administer
universal service support under Commission direction and
oversight. 47 C.F.R. § 54.701.
6 Under this provision, SBC will not be required to provide
E-Rate compliance training to employees whose
responsibilities do not include any decision making
regarding E-Rate contracts and services, and whose
involvement in E-Rate projects is limited to performing
non-E-Rate specific job functions.