Click here for Microsoft Word Version
******************************************************** 
                      NOTICE
********************************************************

This document was converted from
WordPerfect or Word to ASCII Text format.

Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.

All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.

Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.

If you need the complete document, download the
Word or WordPerfect version or Adobe Acrobat version (above).

*****************************************************************



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


In the Matter of                 )
                                )
MCI TELECOMMUNICATIONS           )
     CORPORATION,                )    File No. E-97-19A
                                                 )
Complainant                      )
                                )
              v.                )
                                )
ILLINOIS BELL TELEPHONE          )
COMPANY,                         )
INDIANA BELL TELEPHONE COMPANY,  )
     INC.,                       )
MICHIGAN BELL TELEPHONE          )
COMPANY,                         )
OHIO BELL TELEPHONE COMPANY,     )
WISCONSIN BELL, INC., d/b/a/     )
AMERITECH OPERATING COMPANIES    )
and AMERITECH COMMUNICATIONS, 
INC.,

                                                 
Defendants.



                  MEMORANDUM OPINION AND ORDER

     Adopted:  October 16, 2000   Released: October 19, 2000

By the Commission:


                        I.   INTRODUCTION


     1.   In this Memorandum Opinion and Order, we grant in part 
a formal complaint filed by MCI Telecommunications Corporation1 
against the Ameritech Operating Companies2 concerning Ameritech's 
1-800-AMERITECH service (the Service).  This Service permits 
Ameritech's local subscribers to place local and long distance 
calls originating both inside and outside of the Ameritech 
service area.  Section 271 of the Communications Act of 1934 
(Act) generally bars each Bell Operating Company (``BOC'') -- 
including Ameritech -- 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.3  Ameritech has not 
received Commission approval to provide long distance service in 
any state in its service region.  This complaint presents the 
question whether the 1-800-AMERITECH service violates section 
271.


     2.   The evidence demonstrates that Ameritech: (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) promoted 
the combined offering through bill inserts to Ameritech's local 
calling subscriber base; (4) served as the exclusive point of 
contact for the customer for all service inquiries for the 
combined offering; (5) maintained the exclusive right to market 
the Service; (6) selected the long distance carrier; (7) 
precluded the long distance carrier from contacting 1-800-
AMERITECH customers without Ameritech's prior consent; (8) 
reserved the right to substitute its own services in place of the 
contracting provider; and (9) established the prices, terms, and 
conditions under which the long distance component would be 
offered.  Applying Commission and judicial precedent in this 
area,4 we conclude, based on the totality of circumstances 
presented in the record, that Ameritech's 1-800-AMERITECH 
offering violates section 271.  Because we find that Ameritech 
violated section 271, we do not reach other claims raised by MCI 
regarding other alleged violations of the Act by Ameritech.

                         II.  BACKGROUND

     3.   In late November of 1996, Ameritech began offering its 
1-800-AMERITECH 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.5 Ameritech promoted the Service as a way for 
its customers to make calling-card calls from payphones without 
paying excessive fees.6  Thus, the promotional materials asserted 
that, by dialing 1-800-AMERITECH, customers were ``guaranteed low 
rates . . . for all domestic long distance calls.''7  Similarly, 
advertisements mailed to Ameritech's local-service customers 
asserted that, by using the Service, callers could ensure that 
they would "never be surprised by exorbitant calling card charges 
again."8  Other advertisements promoted the Service as a way for 
consumers to have control over which long distance company 
carries their calls, and to ensure that their calls would not be 
blocked by pay phone operators.9

     4.   In September 1996, Ameritech sent a notice of 
solicitation to approximately 144 long distance carriers, seeking 
in-region, interLATA transport to support the 1-800-AMERITECH 
service.10  Among other things, the notice of solicitation 
proposed a requirement that the IXC supporting the Service would 
show its calls on the Ameritech bill associated with an 
Ameritech-provided service,11 that the IXCs' contracts with 
Ameritech be on a month-to-month basis, that the contracts be 
terminable by Ameritech on 10 days' notice, and that cancellation 
could be effected on a LATA-by-LATA basis.12  From the responses 
that it received, Ameritech chose WilTel Communications Group 
(WilTel), which Ameritech states was the only carrier that 
submitted a qualifying response to the notice of solicitation.13  
Ameritech itself is the carrier for both local and intraLATA 
calls for its 1-800-AMERITECH service.14  Ameritech's interLATA 
affiliate, Ameritech Communications, Inc. (ACI), carries the 
interLATA calls originating outside Ameritech's region (out-of-
region interLATA traffic) pursuant to Ameritech's F.C.C. Tariff 
No.2.15  At the time MCI filed its complaint, WilTel carried the 
in-region, interLATA calls.16  Subsequently, Ameritech terminated 
its contract with WilTel and chose TelTrust Communications 
Services (TelTrust) as the sole IXC to support the Service.17  
Under the TelTrust agreement, Ameritech reserved the right not 
only to contract with other IXCs, but also to utilize its own and 
its affiliates' resources to provide similar services.18  

     5.   Ameritech's name and trademark have been far more 
prominently featured in advertisements promoting the Service than 
the identity of the long distance carriers involved.   The toll-
free number for the Service conspicuously links Ameritech's name 
to the service.  Similarly, the promotional materials that 
Ameritech mailed to its local-service subscribers prominently 
feature Ameritech's name and logo.  Only in smaller type does the 
mailer identify the carriers that actually transmit the calls, 
stating that ``in-region intraLATA calls will be handled by 
Ameritech,'' and that ``[a]ll other calls will be handled by 
Ameritech Long Distance or WilTel.''19  Although the brochure to 
which the calling card was attached in Ameritech's initial 
mailing stated that interLATA calls would be handled by Ameritech 
Long Distance or WilTel, the calling card itself did not identify 
any carrier other than Ameritech.20  Other promotional materials 
used to market 1-800-AMERITECH included television and radio 
commercials and a print advertisement.  Following the initial 
launch of the Service, these ads mentioned WilTel, but they did 
not identify it as the carrier for in-region, interLATA calls.21  
Subsequently, the promotional materials were changed to state 
that in-region carrier services are provided by the IXC 
supporting the Service.22

     6.   When a customer accesses the platform by dialing 1-800-
AMERITECH, she hears, "Welcome to 800-AMERITECH,'' and then 
receives a prompt to enter the called number, her calling card 
number and a personal identification number.  Once the calling 
card number is verified and the customer places a call, she hears 
"Thank you for using 800-AMERITECH" when placing local, intraLATA 
toll, or out-of-region, interLATA calls.  When placing in-region, 
interLATA calls, the customer hears a thank-you message that 
mentions the supporting carrier by name.  In-region, interLATA 
calls are routed to the supporting IXC's network in the same 
manner as such calls would be routed to any other long distance 
carrier's network by Ameritech.23  

     7.   The Service is promoted, among other means, through 
bill inserts sent to Ameritech's local customer base.24  The 
record before us indicates that Ameritech serves as both the 
initial and exclusive customer care contact for the 1-800-
AMERITECH service.25 The TelTrust agreement prohibits TelTrust 
from communicating with the 1-800-AMERITECH customers without 
prior written consent from Ameritech.26  The Service is billed 
through the customer's Ameritech monthly service bill.27  

                      III.      DISCUSSION

     I.A.      Section 271 claim.

     8.   MCI's primary contention in this proceeding is that the 
1-800-AMERITECH service violates section 271 of the Act because 
it amounts to the provision of in-region interLATA service before 
Ameritech has received approval from the Commission to offer such 
services.  Section 271(a) states ``[n]either a Bell operating 
company nor any affiliate of a Bell operating company, may 
provide interLATA services except as provided in this 
section.''28  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 the Commission and approval 
from the Commission pursuant to section 271(d).  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.''29  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 1996,30 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.31

     9.   Ameritech has not received approval from the Commission 
to provide long distance service in any state in its region.32  
It is therefore subject to the general section 271(a) prohibition 
on the offering of such services.  MCI's claim under section 271 
presents the generic issue, previously addressed by the 
Commission in the Qwest Teaming Order and affirmed by the Court 
of Appeals, 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 for 
purposes of section 271.  In that case - as in this case - the 
relevant BOCs were offering a combined service that included 
their own local and intraLATA toll service bundled with interLATA 
transport provided by an unaffiliated long distance carrier.

     10.  In the Qwest Teaming Order, we stated that the 
determination of whether a non-transmitting BOC violated section 
271 turns on ``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.''33  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.''34  In order to 
determine whether a BOC's long distance-related activities ran 
afoul of section 271, we found it instructive in the Qwest 
Teaming Order to balance 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.''35  In evaluating the challenged BOC actions, ``we 
consider the totality of its involvement, rather than focus on 
any one particular activity.''36  We apply the same fact-based 
test to MCI's claim that the 1-800-AMERITECH service amounts to 
the prohibited provision of in-region interLATA service.

     11.  In the Qwest Teaming Order, one of the principal 
factors that led us to find a section 271 violation 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 in-
region interLATA service.  

     12.  As with the arrangements at issue in the Qwest Teaming 
Order, we find that the 1-800-AMERITECH service permits Ameritech 
to obtain material benefits uniquely associated with the ability 
to include a long distance component in the 1-800-AMERITECH 
service.  The Service permits Ameritech to accumulate a 
significant base of customers who rely on the Service.  After 
receiving section 271 authority, Ameritech would be well 
positioned to substitute the interLATA service of its section 272 
affiliate for that of the IXC currently supporting the Service.  
In so doing, Ameritech could build up goodwill as a full service 
provider with its local-service customers who already routinely 
placed their long distance calling-card calls through the 1-800-
AMERITECH service before gaining section 271 approval from the 
Commission.38  The ability of Ameritech to avail itself of a 
ready base of customers that is positioned for migration to its 
eventual interLATA service is a troublesome material benefit 
uniquely associated with the ability to include a long-distance 
component in the 1-800-AMERITECH service.

     13.  Our concern in this regard is heightened by the 
structure of Ameritech's agreements with the IXCs that have 
provided in-region interLATA transmission to the Service.  The 
TelTrust agreement, for example, states that Ameritech ``may at 
any time and for any or no reason terminate this Agreement, in 
whole or in part, by giving seventy-five (75) days prior written 
notice . . .''39  In addition, Ameritech reserved the right not 
only to contract with other IXCs, but it also reserved the right 
to utilize its own and its affiliates' resources to provide 
similar services.40  Read together, these contract provisions 
give Ameritech the right to replace TelTrust's services with the 
services of Ameritech's section 272 affiliate once the Commission 
grants Ameritech authorization to provide long distance services 
in-region.41  Thus, as in the Qwest Teaming Order, Ameritech 
structured the agreement in such a way that it would be ``well-
poised to substitute the long distance service offered by [its] 
section 272 affiliate, when [it] obtain[s] section 271 approval, 
into the [1-800-AMERITECH] package in the future.''42

     14.  In the Qwest Teaming 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.43  This, in turn, makes it even more 
difficult for competitors successfully to enter the market.  The 
TelTrust agreement flatly prohibits TelTrust from communicating 
with the 1-800-AMERITECH customers in any manner without the 
prior written consent of Ameritech.44  Thus, Ameritech enjoys a 
significant competitive advantage in building goodwill with the 
1-800-AMERITECH customers, including with regard to the provision 
of long distance services.  As a result, once Ameritech receives 
Commission authorization to offer long distance service in-
region, the 1-800-AMERITECH customers, who receive local service 
from Ameritech, may be more inclined to select Ameritech as their 
presubscribed long distance carrier as well.

     15.  Another troubling aspect of the Service is the manner 
in which Ameritech has promoted it to its local subscriber base.  
In addition to advertising the offering through various media 
outlets, Ameritech has availed 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.45  Thus, Ameritech can promote 
the Service to virtually every subscriber on its network, and it 
can do so using a customer database that is either unavailable to 
any one of its competitors in the local service market or 
available only at a significant additional charge.  Moreover, 
through the use of bill inserts, Ameritech can effectively 
promote the Service at a slight fraction of what a stand-alone 
mailing would cost one of its competitors, even if those 
competitors had access to Ameritech's subscriber mailing list.

     16.  Ameritech's participation in the long distance market 
through its 1-800-AMERITECH service enables it to obtain 
significant competitive advantages in a way that is similar to 
what we found objectionable in the Qwest Teaming Order.  We 
recognize that the service offering at issue in this case may not 
be as strong a disincentive to the opening of Ameritech's local 
markets as were the pre-subscribed combined service offerings at 
issue in the Qwest Teaming Order.  Nevertheless, we believe that 
this Service allows Ameritech to build up goodwill with its 
local-service customers as a full-service provider prior to 
receiving section 271 approval.  This permits Ameritech a 
significant competitive advantage that could reduce its incentive 
to open its local market to competition.46  We find that the 
provision of the 1-800-AMERITECH service runs counter to the 
incentive structure established by Congress in section 271.

     17.  Under the analytical framework set forth in the Qwest 
Teaming Order, we also inquire whether Ameritech is effectively 
holding itself out to customers as a provider of long distance 
services, and whether Ameritech is engaged in various actions 
typically performed by those who resell interLATA service.  In 
the Qwest Teaming Order, for example, we 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.''47  Thus, the defendants 
held the ``exclusive right to market and sell Qwest's long 
distance services in conjunction with the marketing and sale of 
their own local services,'' and they served as the initial point 
of contact for customers experiencing problems with the long 
distance service portion of the offerings.48  In reviewing the 
Qwest Teaming Order, the Court of Appeals specifically noted the 
reasonableness of our conclusion that, viewed as a whole, the 
challenged promotional materials could lead consumers to believe 
that the BOC was providing in-region long distance service.49

     18.  We begin our analysis of whether Ameritech holds itself 
out as providing long distance service with the toll-free number 
through which subscribers reach the Service.  The vanity number50 
is plainly calculated to cause customers to associate Ameritech 
with all of the services offered through the 1-800-AMERITECH 
platform.  Thus, the number allows 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. 51 

     19.  Examination of Ameritech's promotional materials for 
the Service also informs our decision on whether Ameritech holds 
itself out as providing long distance service.  These materials 
prominently display the Ameritech brand, creating the impression 
that 1-800-AMERITECH is an offering for which the carrier 
provides all components of the service offered, including long 
distance.52  Other statements in the materials foster this 
impression.  For example, in a letter displaying only the 
Ameritech logo, the carrier states that the 1-800-AMERITECH 
service ensures customers will have their ``calls carried at 
Ameritech's low rates every time.''53  Similarly, a mailer that 
accompanies the new Ameritech calling cards explains that the 
benefits of using the 1-800-AMERITECH service include "gain[ing] 
control of who carries your local and long distance calls" and 
"pay[ing] a GUARANTEED low rate of $0.25 per minute for all 
domestic long distance calls billed to your Ameritech Calling 
Card."54  The same mailer encourages calling card customers to 
"dial 1-800-AMERITECH every time you make a local or long 
distance calling card call" and "[start] using the Ameritech 
Calling Card to save money on all your calls - local, long 
distance, and international."55  

     20.  In the promotional materials for the Service, Ameritech 
directly analogizes the Service to AT&T's and MCI's calling card 
offerings by comparing the rates of the three services for an 
eight-minute call.56  In that regard, Ameritech admits that 
customers are generally aware that they can choose their long 
distance carrier on an ad hoc basis "by dialing an 800 number 
associated with the customer's chosen carrier (e.g., MCI's '1-
800-ANYCALL' or AT&T's '1-800 CALLATT')."57 By dialing these 
numbers, which are heavily promoted by the respective carriers, 
customers reach an IXC that actually provides interLATA 
transmission service regardless of where the call originates.  
Ameritech asserts, however, that because of disclosures in its 
promotional materials for the Service, those materials do not 
hold Ameritech out as similarly providing long distance 
service.58  We are not persuaded by this argument, based as it is 
on the relatively inconspicuous disclaimers in Ameritech's 
marketing materials.  It requires too fine of a line to 
distinguish between the ``holding out'' accomplished by MCI's and 
AT&T's vanity-number services and the ``holding out'' 
accomplished by 1-800-AMERITECH.

     21.  Ameritech points out that several portions of its 
promotional materials indicate that it handles only the calls it 
is authorized to carry and that Ameritech Communications, Inc., 
or the supporting contract carrier handles all other calls.59  
Thus, in their original form, Ameritech's promotional materials 
stated merely that "other calls are handled by WilTel."60  The  
materials have since been changed to state:  "In region carrier 
services provided by Teltrust.  Out of region carrier services 
provided by Ameritech Communications, Inc."61  We are troubled by 
the proportional dissimilarity in type size between the 
prominence of the Ameritech brand name, including the number of 
times that the Ameritech brand name is associated with long 
distance service and rates, and the in-region service disclaimer 
and their proximity.  The disclosures essentially are relegated 
to a hidden portion of the promotional materials.

     22.  Ameritech further asserts that "the customer's bill 
clearly indicates the carrier for each call, confirming the 
distinction and eliminating any possible confusion."62  While 
that much is true, when we examine the Service as a whole and the 
manner in which Ameritech promotes it, we conclude that, through 
its 1-800-AMERITECH offering, Ameritech holds itself out as 
providing in-region long distance service.  The Ameritech vanity 
access number all but ensures that the offering, and all of its 
components, generally will be perceived as Ameritech-provided 
services.  Indeed, the notice of solicitation even proposed a 
requirement that all calls placed through the Service would show 
up on Ameritech's bill as being associated with an Ameritech-
provided service.63  Furthermore, given the prominence of 
Ameritech's brand on the promotional materials and in the 
system's voice prompts,64 the fact that Ameritech does not 
furnish the in-region, interLATA transmission for the Service 
likely will be lost on all but a few sophisticated consumers.65  
In affirming the Qwest Teaming Order, the Court of Appeals noted 
that viewing the promotional materials as a whole 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 with a BOC brand name.''66  The same is true here.

     23.  In addition, as with the arrangements at issue in the 
Qwest Teaming Order, the record reveals that Ameritech serves as 
both the initial, and apparently the only, customer care contact 
for the 1-800-AMERITECH service.  Our examination of the record 
reveals no instance - nor has Ameritech identified any - in which 
Ameritech employees are instructed to pass customer inquiries or 
complaints to the IXC supporting the service.  When a customer 
probes for information about which carrier transmits in-region 
interLATA calls, the operator scripts in the record instruct the 
Ameritech employees simply to answer the question by identifying 
the contract carrier.67  It does not appear that Ameritech 
employees ever refer to the supporting IXC a customer complaint 
about long distance rates or service.  By contrast, when faced 
with a question about cellular service, Ameritech operators are 
instructed to refer the customer to the toll-free number for 
Ameritech's cellular business unit.68  Ameritech's provision of 
customer care for all aspects of the service, including the long 
distance component, supports the conclusion that, in connection 
with the 1-800-Ameritech service, Ameritech is performing 
activities typically performed by a reseller.

     24.  Additionally, Ameritech controls the exclusive right to 
market the 1-800-AMERITECH service.  Notably, the TelTrust 
agreement states that TelTrust ``can perform no advertising or 
promotion of 1-800-AMERITECH without the prior written consent of 
Ameritech other than in the normal course of providing the 
service."69  The agreement further requires that TelTrust obtain 
Ameritech's written consent before even mentioning its 
arrangement with Ameritech in any promotional materials.70  As 
noted above, the agreement also prohibits TelTrust from 
``communicat[ing] with the 1-800-AMERITECH customers in any 
manner without the prior written consent of Ameritech.''71  Taken 
together, these provisions make it clear that Ameritech controls 
the exclusive right to market and sell, under the 1-800-AMERITECH 
name, its own local and intraLATA toll services and its contract 
carrier's long distance services.

     25.  We also note that Ameritech appears to have had a 
significant degree of involvement in the design and development 
of the long distance component of its 1-800-AMERITECH service.  
Ameritech chose the IXC that would carry the in-region long 
distance traffic based on requirements that are very similar to 
those established in the notice of solicitation.  Indeed, the 
final terms of the agreement related to certain pricing and usage 
rates do not differ from the terms in the notice of 
solicitation.72  Thus, the supporting IXC simply agreed to 
participate in the offering under the pricing and usage terms and 
conditions that Ameritech had already established on its own.

     26.  These factors bolster our conclusion that Ameritech 
effectively is holding itself out to consumers as a provider of 
long distance service, and that it is engaged in various actions 
typically performed by a reseller.  The similarities are striking 
between Ameritech's activities here and its activities that were 
found unlawful in the Qwest Teaming Order.

     27.  On balance, based on the totality of the circumstances 
discussed above, we conclude that, through the 1-800-AMERITECH 
service, Ameritech is "providing" in-region, interLATA service in 
violation of section 271.  The Service affords Ameritech material 
benefits uniquely associated with the inclusion of long distance 
service in the offering.  It permits Ameritech to accumulate a 
significant base of customers who rely on the Service; it enables 
Ameritech to build up goodwill as a full service provider with 
its local-service customers by prohibiting the IXC supporting the 
Service from communicating with 1-800-AMERITECH customers without 
Ameritech's prior written consent, and by availing itself of a 
communication channel that is uniquely available to Ameritech as 
the monopoly provider of local service within its region - bill 
inserts and other mailings that draw on its subscriber list.  
Through the Service and the many associated promotional materials 
that prominently bear Ameritech's brand, the carrier essentially 
holds itself out as providing long distance service.  And, in 
connection with the Service, Ameritech performs numerous 
functions, including marketing and customer care that are 
typically performed by a reseller of long distance service.  All 
of these factors point to the conclusion that, through the 
Service, Ameritech is ``providing'' in-region, interLATA service.  

     I.B.      Other claims.

     28.  MCI also argues that (1) the 1-800-AMERITECH service 
amounts to an unreasonable practice in violation of section 
201(b); (2) MCI was excluded from providing transport services to 
support the Service in a discriminatory manner in violation of 
section 202(a) and (3) the structure of the Service violates 
Ameritech's equal access obligations under section 251(g).  
Because we find that Ameritech violated section 271, we need not 
and do not reach the claims raised by MCI regarding alleged 
violations of other provisions of the Communications Act.73  

                         IV.  CONCLUSION

     29.  As discussed above, we find that Ameritech, through its 
1-800-AMERITECH 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 MCI.

                      V.   ORDERING CLAUSES

     30.  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, 271, that the Formal Complaint filed by MCI 
Telecommunications Corporation IS GRANTED to the extent that it 
alleges that the 1-800-AMERITECH service violates section 271.  

     31.  IT IS FURTHER ORDERED that MCI, pursuant to section 
1.722 of the Commission's rules, 47 C.F.R.  1.722, MAY FILE a 
supplemental complaint concerning damages relating to our 
findings in this Order within 60 days of the date of this 
decision.


                              FEDERAL COMMUNICATIONS COMMISSION



                              Magalie Roman Salas
                              Secretary 
_________________________

1         Effective September 14,  1998, MCI  Telecommunications 
Corp. merged with WorldCom, Inc. to form MCI WorldCom, Inc.  All 
references herein to MCI after September 14, 1998, refer to  MCI 
WorldCom, Inc. 

2    The  Ameritech  Operating  Companies  are:   Illinois  Bell 
Telephone  Company;  Indiana   Bell  Telephone  Company,   Inc.; 
Michigan  Bell  Telephone  Company;  The  Ohio  Bell   Telephone 
Company; and Wisconsin Bell Inc.   Ameritech Answer at 1.   This 
Order refers to  them collectively as  Ameritech.  We note  that 
effective October  6,  1999,  Ameritech Corp.  merged  with  SBC 
Communications, Inc.  As a result of the merger, Ameritech is  a 
wholly owned subsidiary of SBC Communications, Inc.

3    47 U.S.C.  271(a).   Section 271(a) provides: ``Neither  a 
Bell operating company,  nor any affiliate  of a Bell  operating 
company, may provide  interLATA services except  as provided  in 
this section.''  47 U.S.C.   271(a).  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  Bell Operating  Company  (BOC) such  that  no 
exchange area includes points within more than one  metropolitan 
statistical area or state.  47 U.S.C.  153(25). Ameritech's in-
region  states  are  Illinois,   Indiana,  Michigan,  Ohio   and 
Wisconsin. 

4    See AT&T Corp. v. Ameritech  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). 
 
5    Ameritech Answer,  4.

6    Ameritech's Answer to  MCI Interrogatories,  June 9,  1997, 
Exh. 3 (News Release, Nov. 25, 1996).

7    Ameritech Letter to Tonya Rutherford, Jan. 15, 1999, Att. 2 
at 1 (January 15, 1999 Letter).  See also News Release, Nov. 25, 
1996.

8    Ameritech Answer, Exh. 1.

9    Ameritech Answer, Exh. 1; see  also News Release, Nov.  25, 
1996.

10   Ameritech Answer,  25.

11   Notice of Solicitation at 3.

12   Notice of Solicitation at 3-4.

13   Ameritech Answer,  25.

14   Ameritech Answer,  5.

15   Ameritech Answer,  6.  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   Ameritech Answer,  11;  Stipulations of Fact at 2.

17   On January 9, 1998, Ameritech again solicited bids for IXCs 
to carry the in-region interLATA traffic for the 1-800-AMERITECH 
service.   Through  this  process,  Ameritech  ultimately  chose 
TelTrust.  January 15, 1999 Letter, Att. 1.

18   Letter to Magalie Roman Salas, September 16, 1999, Att.  at 
11 ( 2.13) (TelTrust Agreement).

19   Ameritech Answer, Exh. 1.

20   Ameritech Answer, Exh. 1.

21   The 30-second television commercial contains the  following 
written statement (on the screen for approximately 3 seconds  in 
the middle of  the commercial):  "Ameritech  handles calls  when 
authorized.   Other  calls  carried   by  WilTel."   The   radio 
commercial contains the following statement  (at the end of  the 
commercial):  "Ameritech  guarantees lawful  calling card  rates 
and handles  calls where  authorized.   Other calls  carried  by 
WilTel."   The  print   advertisement  contains  the   following 
statement (at the bottom  of the page  in six-point Times  Roman 
print):  "Ameritech  guarantees lawful  calling card  rates  and 
handles calls where authorized.  Other calls handled by WilTel."  
Attachments  to  Letter  from  Frank  Michael  Panek,  Ameritech 
Counsel, to Diane  Griffin Harmon, FCC  Counsel (July 14,  1997) 
(Ameritech Factual Supplement).  All three promotional materials 
advertise  1-800-AMERITECH  in   conjunction  with   Ameritech's 
calling card.   See, e.g.,  Print Advertisement  ("Now the  card 
that  connects   also   protects.    (When   you   dial   1-800-
AMERITECH.)").  Id.

22   January 15, 1999 Letter, Att. 2 at 9.

23   Ameritech Factual Supplement.

24   January 15, 1999 Letter, Att. 2 at 21.

25   See   \* MERGEFORMAT 23 below.  

26   TelTrust Agreement at 1 ( 1.03).

27   TelTrust Agreement, Att. A at 22. 

28   47 U.S.C.  271(a). 

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

30   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.

31   U S  WEST Communications,  177 F.3d  at 1060;  47 U.S.C.   
271(c).  See also AT&T Corp. v. FCC, 220 F3d 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 21438, 21441-
47,  3-7 (1998).

32   Ameritech has twice applied  to the Commission for  section 
271 authorization  to provide  in-region, interLATA  service  in 
Michigan.  Ameritech's first section 271 application, filed Jan. 
17,  1997,  was  dismissed  by  the  Commission  at  Ameritech's 
request.  Application by Ameritech Michigan Pursuant to  Section 
271 of the Communications  Act of 1934,  as Amended, to  Provide 
In-Region, InterLATA Services in Michigan, 12 FCC Rcd 2088 (Com. 
Car. Bur.  1997).  On  August 19,  1997, the  Commission  denied 
Ameritech's second application, filed May 21, 1997.  Application 
by  Ameritech   Michigan  Pursuant   to  Section   271  of   the 
Communications Act of  1934, as Amended,  to Provide  In-Region, 
InterLATA  Services  in  Michigan,  12  FCC  Rcd  20543   (1997) 
(Ameritech Michigan 271 Order).

33   Qwest Teaming  Order,  13  FCC  Rcd at  21465,    37.  The 
Commission recently applied  the test articulated  in the  Qwest 
Teaming Order in the  context of approving  a transfer of  radio 
licenses associated with U  S WEST's merger  with Qwest. In  the 
Matter of Qwest Communications International, Inc. and U S WEST, 
Inc., Applications  for  Transfer  of Control  of  Domestic  and 
International  Sections   214   and   310   Authorizations   and 
Applications to Transfer  Control of a  Submarine Cable  Landing 
License, Memorandum  Opinion  and  Order, FCC  00-231,  2000  WL 
821252 (F.C.C.) (Rel. June 26, 2000).  The Commission  concluded 
that  Qwest's  proposed  divestiture  of  interLATA   customers, 
services  and  assets  in  U  S  WEST's  service  region  was  a 
legitimate, arms-length  transaction,  and,  as  a  transitional 
device designed to minimize disruption to customers, would allow 
the merger to  proceed in  compliance with  the requirements  of 
section 271.  See also AT&T Corp. v. BellSouth Corp., Memorandum 
Opinion and  Order, DA  99-609 (Com.  Car. Bur.  Mar. 30,  1999) 
(Com.  Car.  Bur.  1999)  (staff-level  decision  holding   that 
BellSouth's pre-paid calling card did not violate section 271 on 
the basis of  findings that, 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).  

34   Qwest Teaming Order, at 21462,  30.

35   Id. at 21465-66,  37.  

36   Id. at 21465-66,  37.

37   Id. 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 . . . U  S 
WEST and  Ameritech  could build  up  goodwill as  full  service 
providers,  positioning  themselves  in  these  markets   before 
section 271 allows them actually to enter.''

39   TelTrust Agreement at 2  ( 1.06). 

40   TelTrust Agreement at 2  ( 2.13). 

41   Ameritech's initial notice of solicitation provides further 
evidence that  the  Service  would permit  Ameritech  to  enjoy, 
almost immediately, a considerable  jumpstart for its  in-region 
long distance operations as it received section 271 authority in 
each state.  For  example, the notice  of solicitation  proposed 
that Ameritech could cancel the IXC's service with only 10 days' 
notice, and it would have  permitted Ameritech to effect such  a 
cancellation on a LATA-by-LATA basis.  Notice of Solicitation at 
2.  Thus, the notice  of solicitation envisioned that  Ameritech 
quickly would  move,  on  a  state-by-state  basis,  its  1?800-
AMERITECH customers,  and  the  traffic they  generate,  to  its 
section 272 affiliate's network.

42   Qwest Teaming Order, 13  FCC Rcd at 21467,   41.  See U  S 
WEST Communications, 177 F.3d at 1060.  We note that, under  the 
totality  of  circumstances  test,  this  factor  alone  is  not 
dispositive in determining  whether a BOC  has violated  section 
271 of the Act.

43   Qwest Teaming Order, 13 FCC Rcd at 21468,  42.  

44   TelTrust Agreement at 1 ( 1.03). 

45   January 15, 1999 Letter, Att. 2 at 21.

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

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

48   Id. at 21471,  45-46.

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

50   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).

51   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.  Cf. 
Complainant's Reply Brief at 4  (arguing that Ameritech name  in 
800 number reinforces impression that Ameritech is sole  carrier 
supporting Service).

52   See generally January  15, 1999 Letter,  Att. 2;  Ameritech 
Answer, Exh. 1.

53   January 15, 1999 Letter, Att.  2 at 1.  See also  Ameritech 
Answer, Exh. 1 ("by dialing  1-800-AMERITECH your calls will  be 
carried at our low rates").  

54   Id.  The mailer makes the following statements: ``when  you 
dial 1-800-AMERITECH  you have  control  over who  carries  your 
local and long distance calls;'' ``Just dial 1-800-AMERITECH and 
you're guaranteed to  get low local  and long distance  calls;'' 
and ``By dialing 1-800-AMERITECH you  can enjoy great local  and 
long distance rates - all  itemized on just one monthly  bill.''  
Id.

55   January 15, 1999 Letter, Att. 2 at 3.

56   See January 15, 1999 Letter,  Att. 2 at 9.  The  comparison 
indicates a 29% savings off of  AT&T's calling card rates and  a 
27% customer savings off  of MCI's calling  card rates when  the 
customer uses the  1-800-AMERITECH service.   Cf. Shared  Tenant 
Services, 627 F. Supp. at 1101 (MFJ Court finding that the  BOCs 
would  be  directly  competing   with  the  IXCs  through   rate 
comparisons). 

57   Ameritech Answer,  26.

58   Ameritech Supplemental Reply Brief at 6.

59   Ameritech Answer, Exh. 1; January  15, 1999 Letter, Att.  2 
at 1.

60   Ameritech Answer, Exh. 1.

61   January 15,  1999  Letter, Att.  2  at 9.  Even  this  more 
complete disclosure regarding TelTrust appears in  exceptionally 
small print compared to the prominence of Ameritech's brand name 
in the promotional materials.

62   Ameritech's Initial Brief at 5.

63   Notice of Solicitation at 3.

64   Ameritech Factual Supplement.

65   The MFJ Court similarly  found that BOC advertisements  for 
long distance service  in connection  with BOC-provided  calling 
cards that did not  indicate that the  BOCs were not   providing 
the long distance service were misleading and inconsistent  with 
the MFJ's prohibitions.  United States v. Western Elec. Co., 698 
F. Supp.  348,  356  n.42  (D.D.C. 1988).   The  MFJ  Court  was 
concerned that customers would be misled into believing the BOCs 
were carrying their long distance calls.  Id. at 356 n.38.

66   U S WEST Communications, 177 F.3d 1057.  

67   Ameritech's Answers to MCI's Interrogatories, Exh. 1.

68   Id.  

69   TelTrust Agreement at 1 ( 1.03). 

70   TelTrust Agreement at 12 ( 2.16). 

71   TelTrust Agreement  at  1  (  1.03).    In  addition,  the 
original RFP, which resulted in Ameritech choosing WilTel as the 
participating  IXC,  states  that  the  service  provider  "must 
provide, at Ameritech's request, 800 



AMERITECH customer  and call  detail for  Ameritech's  marketing 
efforts in support  of 800  AMERITECH."  Letter  from Julian  P. 
Gehman, Attorney for Ameritech, Att. at 12. 

72   Compare Notice  of  Solicitation  at 3  (stating  that  the 
``[s]ervice provider shall charge surcharge and usage rates that 
are no more than  10% higher than the  average of the  surcharge 
and usage  rates  charged  by AT&T,  MCI  and  Sprint..'')  with 
January 15, 1999 Letter,  Att. 2 at 19  (stating that rates  for 
the 1-800-AMERITECH calling card result  in 29% and 27%  savings 
compared to AT&T and MCI, respectively).

73   See, e.g., Qwest Teaming Order, 13 FCC Rcd at 21476,  53.