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                           Before the
                FEDERAL COMMUNICATIONS COMMISSION
                     Washington, D.C. 20554

In the Matter of                   )    File No. EB-01-IH-0030
                              )
SBC Communications, Inc.           )    NAL/Acct. No. 
200232080004
                              )
Apparent Liability for Forfeiture       )    FRN 0004-3051-24, 
0004-3335-71, 
                              )    0005-1937-01

                         
          
           NOTICE OF APPARENT LIABILITY FOR FORFEITURE

 Adopted:  January 16, 2002              Released:  January 18, 
                              2002 


By the Commission:

                       I.     INTRODUCTION
 
     1.        In this Notice of Apparent Liability for 
Forfeiture (``NAL''), we find that SBC Communications, Inc. 
(``SBC'') has apparently willfully and repeatedly violated one of 
the conditions that the Commission imposed pursuant to its 
approval of the merger application of Ameritech Corp. 
(``Ameritech'') and SBC.1  In particular, it appears that SBC2 
failed to offer shared transport in the former Ameritech states3 
under terms and conditions substantially similar to those that it 
offered in Texas as of August 27, 1999, in violation of the 
SBC/Ameritech Merger Order.  Based upon our review of the facts 
and circumstances surrounding this matter, we find that SBC is 
apparently liable for a forfeiture in the amount of six million 
dollars ($6,000,000.00).

                       II.     BACKGROUND

     2.        SBC is an incumbent local exchange carrier (ILEC) 
that provides local telephone service in 13 states, including 
Arkansas, Kansas, Missouri, Oklahoma, Texas, California, Nevada, 
Illinois, Michigan, Indiana, Ohio, Wisconsin, and Connecticut.  
At the end of 1999, SBC served nearly 60 million local exchange 
access lines in its 13-state region, and served customers in 23 
countries.4  SBC also provides in-region interLATA, wireless, 
Internet access, out-of-region interLATA, cable and wireless 
television, and directory publishing services.5  In 2000, SBC had 
total operating revenues of more than $51 billion.6

     3.        In the SBC/Ameritech Merger Order, the Commission 
approved license transfers to SBC subject to several conditions 
that were first proffered by the applicants and then incorporated 
into the Merger Order as an express condition of the grant of 
approval.7  One condition related to SBC's provision of shared 
transport in the former Ameritech states.  Paragraph 56 of the 
merger conditions states that: 

          Within 12 months of the Merger Closing Date (but 
          subject to state commission approval and the terms 
          of any future Commission orders regarding the 
          obligation to provide unbundled local switching 
          and shared transport), SBC/Ameritech shall offer 
          shared transport in the SBC/Ameritech Service Area 
          within the Ameritech States under terms and 
          conditions, other than rate structure and price, 
          that are substantially similar to (or more 
          favorable than) the most favorable terms 
          SBC/Ameritech offers to telecommunications 
          carriers in Texas as of August 27, 1999.8

     4.        On April 12, 2001, the Enforcement Bureau directed 
SBC to submit a sworn written response to a series of questions 
relating to SBC's compliance with paragraph 56 of the merger 
conditions.9  SBC filed its responses on May 2, May 14, and July 
23, 2001.10  Based on SBC's responses, we conclude below that SBC 
apparently violated this condition in each of the five former 
Ameritech states by refusing to offer shared transport to be used 
to provide intraLATA toll.                        III.     DISCUSSION

     5.        Under section 503(b) of the Act, any person who is 
determined by the Commission to have willfully or repeatedly 
failed to comply substantially with the terms and conditions of 
any license, permit, certificate, or other instrument of 
authorization issued by the Commission, shall be liable for a 
forfeiture penalty.11  In order to impose such a forfeiture 
penalty, the Commission must issue a notice of apparent 
liability, the notice must be received, and the person against 
whom the notice has been issued must have an opportunity to show, 
in writing, why no such forfeiture penalty should be imposed.12  
The Commission will then issue a forfeiture if it finds by a 
preponderance of the evidence that the person has violated the 
Act or a Commission rule.13  As set forth in more detail below, 
we conclude under this standard that SBC is apparently liable for 
a forfeiture for its apparent violations of the Merger Order.

     6.        The fundamental issue in this investigation is 
whether SBC, as required by paragraph 56 of the merger 
conditions, has offered shared transport in the Ameritech states 
on terms ``substantially similar to (or more favorable than)'' 
the most favorable terms it offered in Texas as of August 27, 
1999.  Based on the facts set forth below, we find that it 
apparently has not.  We find that in each of the five former 
Ameritech states, SBC has apparently violated its obligations 
under the paragraph 56 condition, and that this apparent failure 
to comply is apparently willful and repeated.14  We propose a 
forfeiture in the amount of six million dollars.

A.   Apparent Violations of the Merger Conditions

     7.        This investigation has focused on SBC's compliance 
with paragraph 56 of the merger conditions with respect to one 
particular aspect of SBC's shared transport offerings - the use 
of the shared transport UNE to route intraLATA toll calls.  As 
described more fully below, subsequent to the effective date of 
the merger conditions, SBC apparently attempted to restrict or 
prohibit the use of shared transport for routing intraLATA toll 
calls in the Ameritech states.  SBC asserts that the restrictions 
it sought to impose are not less favorable than its August 27, 
1999 offering in Texas.  We disagree.  On August 27, 1999, SBC 
had at least two interconnection agreements in Texas pursuant to 
which it offered CLECs the option of using shared transport to 
route intraLATA toll calls, without restriction, between their 
end user customers and customers served by SBC.  In the Ameritech 
states, by contrast, SBC has opposed carriers' requests for 
agreements that would permit them to use shared transport for 
intraLATA toll traffic.15  Thus, it appears that SBC has violated 
paragraph 56 of the merger conditions.

     8.        SBC disputes that it was offering shared transport 
for routing intraLATA calls pursuant to the agreements that were 
in place in Texas on August 27, 1999.16  Thus, we review here the 
facts about SBC's Texas offering.

     9.        At the beginning of 1999, at least two CLECs in 
Texas, Sage Telecom, Inc. (Sage) and Birch Telecom of Texas, Ltd. 
(Birch), were using shared transport purchased from SBC to route 
intraLATA toll calls between their end user customers and 
customers served by SBC.17  In April 1999, however, SBC notified 
CLECs that it intended to put an end to such use of shared 
transport once intraLATA dialing parity was implemented.18  SBC 
informed CLECs that in the future, intraLATA toll calls would be 
routed off the SBC network to a non-SBC tandem switch, and then 
back again to the SBC network.19  In other words, once dialing 
parity was implemented, shared transport could no longer be used 
to route intraLATA toll calls end-to-end between CLEC and SBC 
customers.

     10.       Sage and Birch objected to this new plan, and 
filed complaints with the Public Utility Commission of Texas 
alleging that SBC's plan would violate their interconnection 
agreements.20  SBC asserted that, to the contrary, the 
interconnection agreements provided that shared transport could 
be used for end-to-end routing of intraLATA toll calls only until 
the implementation of intraLATA dialing parity, and that SBC's 
proposed routing change therefore did not conflict with the 
agreements.21  SBC's obligations under paragraph 56 of the merger 
conditions hinge on which of these parties is correct about the 
scope of SBC's Texas offering, as established by its 
interconnection agreements.  In considering this issue, we have 
the benefit of the fact that the Texas PUC has already resolved 
this dispute between the parties.  

     11.       In November 1999, an arbitration panel of the 
Texas PUC issued an order rejecting SBC's arguments and ruling 
that SBC's agreements with Sage and Birch require SBC to provide 
shared transport for routing intraLATA toll traffic regardless of 
whether dialing parity has been implemented.22  The full PUC 
shortly thereafter approved the Texas Arbitration Award.23  Thus, 
the Texas PUC has interpreted agreements that were in place on 
August 27, 1999 as offering CLECs the ability to use the shared 
transport UNE to route intraLATA toll calls end-to-end, without 
the restrictions that SBC sought to impose in the Ameritech 
states.24

     12.       While admitting that the Texas Arbitration Award 
has not been modified, reversed, or overruled,25 SBC apparently 
disagrees with the Texas PUC's decision, as it raises arguments 
in its response to the Bureau's LOI that were already expressly 
considered and rejected by the Texas PUC.26  Given the special 
expert position of the Texas Commission in interpreting Texas 
interconnection agreements, we accept the interpretation set 
forth in the Texas Arbitration Award, and reject SBC's attempt to 
persuade us to take a different view.27

     13.       SBC also argues that it has not violated the 
merger conditions because (1) the Texas Arbitration Award imposed 
a new obligation that was not in place on August 27, 1999, and 
thus is not relevant to SBC's obligations under the merger 
conditions,28 and (2) SBC was not ``offering'' shared transport 
for intraLATA toll on August 27, 1999, because it allowed Birch 
and Sage to use shared transport on that date only because the 
PUC had temporarily enjoined it from implementing the routing 
changes it proposed in April.  We find no merit in either of 
these contentions.  It is quite clear that the Texas Arbitration 
Award constitutes a review of SBC's obligations under its 
existing agreements, and not a policy decision to impose new 
requirements.  The arbitrators set forth the issues in terms of 
what the interconnection agreements require, and engaged in an 
analysis of specific language from the agreements to determine 
what SBC's obligations were.29  Moreover, SBC seems to have 
understood contemporaneously that the Texas proceeding was 
interpreting an existing agreement, as it apparently made 
arguments about the proper interpretation of that agreement.30  
Thus, although the Texas Arbitration Award was not issued until 
November 1999, it describes obligations that were in effect in 
August.  Moreover, SBC's argument that the arbitrators' 
injunction demonstrates that it did not ``offer'' shared 
transport for routing intraLATA toll calls has no persuasive 
force in light of the Texas PUC's ultimate conclusion that SBC's 
agreements already obligated it to do so.31

     14.        SBC also argues that the way in which CLECs have 
requested to route intraLATA traffic does not constitute ``shared 
transport'' within the meaning of paragraph 56 of the Merger 
Conditions.  First, SBC asserts that: 

     the facilities that SBC's ILECs use to complete 
     intraLATA toll calls are distinct from the `shared 
     transport' that SBC is required to unbundle under the 
     Commission's rules.  Paragraph 56 of the Merger 
     Conditions, which by its terms has to do with the terms 
     and conditions on which Ameritech would offer the 
     shared transport UNE, therefore has nothing whatsoever 
     to do [with the issue under investigation].32

We disagree.  The Merger Conditions define ``shared 
transport'' as that term is defined in the Third Order on 
Reconsideration and Further Notice of Proposed Rulemaking, 
Implementation of the Local Competition Provisions in the 
Telecommunications Act of 1996, 12 FCC Rcd 12460 (1997).  
That order defines shared transport as ``transmission 
facilities shared by more than one carrier, including the 
incumbent LEC, between end office switches, between end 
office switches and tandem switches, and between tandem 
switches, in the incumbent LEC's network.''33  The intraLATA 
toll arrangements that CLECs in the Ameritech states have 
requested (and that the Texas Commission found to be 
required in Texas) consist of routing between end office 
switches and tandem switches.34  Therefore, we reject SBC's 
contention that the facilities that would be used to route 
intraLATA traffic do not fit within the definition of shared 
transport.

     15.       In addition, SBC argues that the Merger Order's 
shared transport obligation is restricted to the use of shared 
transport for purely local service, and does not extend to 
intraLATA toll routing.35  We disagree with SBC's assertion that 
the definition of shared transport encompasses such a use 
restriction.  The definition contained in the Local Competition 
Third Order on Reconsideration does not distinguish between 
purely local services and long distance services.  Moreover, we 
note that when both the Merger Order and the Local Competition 
Third Order on Reconsideration were adopted, the Commission had 
in place a rule prohibiting use restrictions on UNEs.36  Thus, we 
are unpersuaded by SBC's attempt to read such a use restriction 
into its obligations under the merger conditions.

     16.       SBC's responses indicate that in all five of the 
Ameritech states, it has refused to offer shared transport for 
end-to-end routing of intraLATA toll calls, and indeed has 
affirmatively opposed requests for such service before the state 
commissions.  It continued to do so even after the Texas 
Arbitration Award made undeniably clear its obligations in Texas.  
Thus, we find that SBC has apparently violated paragraph 56 of 
the merger conditions, in each of the Ameritech states.

     17.       In addition to arguing that it has complied with 
the merger conditions, SBC argues that the paragraph 56 condition 
is no longer applicable.  In its more recent responses to the 
Bureau's inquiry letter, SBC argues that the requirement that it 
provide shared transport in the former Ameritech states on 
``terms and conditions ... substantially similar to (or more 
favorable than) the most favorable terms SBC/Ameritech offer[ed] 
to telecommunications carriers in Texas as of August 27, 1999'' 
was terminated by the Commission's UNE Remand Order.37  By its 
terms, paragraph 56 was ``[s]ubject to state commission approval 
and the terms of any future Commission orders regarding the 
obligation to provide unbundled local switching and shared 
transport.''38  SBC asserts that because the UNE Remand Order 
addressed the obligation of an incumbent LEC to make shared 
transport available to CLECs,39 any obligation to provide shared 
transport pursuant to paragraph 56 of the Merger Conditions 
terminated upon release of the UNE Remand Order.40  We disagree.  
The UNE Remand Order was adopted on September 15, 1999, three 
weeks before the SBC/Ameritech Merger Order was adopted on 
October 6, 1999.41  Thus, the UNE Remand Order cannot plausibly 
be considered a ``future Commission order'' under paragraph 56 of 
the Merger Conditions.  We reject the suggestion that the 
Commission would have imposed a merger condition that had already 
been superseded by other events that were obviously well-known to 
the Commission at the time the SBC/Ameritech Merger Order was 
adopted.  

     18.       Even if it were a ``future Commission order,'' 
nothing in the UNE Remand Order appears to supersede the 
requirements imposed by paragraph 56.  Here, again, SBC argues 
that the obligation to provide shared transport extends only to 
the use of that UNE in connection with purely local service, not 
intraLATA toll.42  As noted above, however, the definition of 
shared transport in the UNE Remand Order (i.e., the Local 
Competition Third Order on Reconsideration) contains no such 
express restriction, and the Commission's rules generally 
prohibit ILECs from imposing use restrictions on UNEs.  Moreover, 
we note that in a decision that post-dates the UNE Remand Order, 
the Commission treated an allegation that SBC had unlawfully 
precluded competitors from using UNEs to provide intraLATA toll 
service as a section 271 checklist compliance issue.  Thus, by 
implication, the Commission treated the matter as an issue of 
compliance with the Commission's UNE unbundling rules.43

     19.       Finally, SBC argues that the Bureau (and 
presumably, the Commission) lacks authority to adjudicate this 
matter based on the merger conditions.44  SBC notes that 
paragraph 56 states that its requirements are ``subject to state 
commission approval.''  Thus, SBC asserts that enforcement of 
that paragraph ``requires resort to state commission arbitration 
procedures.''  We find SBC's interpretation to be unsupported by 
the SBC/Ameritech Merger Order, and reject SBC's attempt to 
persuade us not to enforce our own order.  The cited clause 
merely refers to the requirement that the interconnection 
agreements be approved by the state regulatory body.

B.     Forfeiture Amount 

     20.       In light of SBC's apparent willful and repeated 
failure to comply with the SBC/Ameritech Merger Order, we find 
that a substantial proposed forfeiture is warranted.  Section 
503(b)(1) of the Act states that any person that willfully or 
repeatedly fails to comply substantially with the terms and 
conditions of any license, permit, certificate, or other 
instrument or authorization issued by the Commission, shall be 
liable to the United States for a forfeiture penalty.45  Section 
503(b)(2)(B) of the Act authorizes the Commission to assess a 
forfeiture of up to $120,000 for each violation, or each day of a 
continuing violation, up to a statutory maximum of $1,200,000 for 
a single act or failure to act.46  In determining the appropriate 
forfeiture amount, we consider the factors enumerated in section 
503(b)(2)(D) of the Act, including ``the nature, circumstances, 
extent and gravity of the violation, and, with respect to the 
violator, the degree of culpability, any history of prior 
offenses, ability to pay, and such other matters as justice may 
require.''47

     21.       In response to the Bureau's letter, SBC has stated 
that the issue of SBC's obligation to allow intraLATA toll 
traffic to be routed over shared transport facilities was 
currently before the state commissions or state arbitrators in 
proceedings in each of the five Ameritech states.  In each of 
those states, SBC failed to offer shared transport on the 
required terms and conditions, and affirmatively objected to 
requests for such service.48  Thus, SBC has apparently violated 
the requirements of the Merger Order in at least five instances, 
one in each state.  Each of these is a continuing violation, 
beginning on October 8, 2000 (12 months after the close of the 
merger), and continuing at least until the date of SBC's May 14, 
2001 response to the Bureau's letter of inquiry in four of the 
five Ameritech states (i.e., Ohio, Indiana, Illinois, and 
Wisconsin), and until March 2001 in Michigan.49  Each continuing 
violation is potentially subject to the statutory maximum 
forfeiture of $1,200,000.

     22.       Considering all the circumstances before us, we 
find SBC apparently liable for a forfeiture in the amount of 
$6,000,000, the statutory maximum for five continuing violations 
lasting at least ten (10) days each during the one-year period 
prior to this Notice of Apparent Liability.  First, the 
Commission emphasized in the Merger Order that it would hold SBC 
to a high standard of compliance, stating that ``[w]e expect that 
SBC/Ameritech will implement each of these conditions in full, in 
good faith and in a reasonable manner to ensure that all 
telecommunications carriers and the public are able to obtain the 
full benefits of these conditions.''50  Second, we find it 
particularly egregious that SBC refused to make shared transport 
available on the same terms available in Texas, even after the 
Texas Arbitration Award made not only ``ascertainably 
certain,''51 but abundantly clear, what SBC's obligations under 
its interconnection agreements were.  Instead, SBC has continued 
to argue to state commissions, and to this Commission, that the 
Texas Arbitration Award imposed only new obligations, despite the 
fact that the order states clearly that it was interpreting 
existing obligations.  SBC's apparent violations have forced 
other carriers to expend time and resources in state proceedings 
trying to obtain what SBC was already obligated to provide.  
Third, the Commission has made clear that it will take into 
account a violator's ability to pay in determining the amount of 
a forfeiture so that forfeitures against ``large or highly 
profitable entities are not considered merely an affordable cost 
of doing business.''52  These factors together persuade us that 
we should propose the statutory maximum forfeiture.

                     IV.    ORDERING CLAUSES

     23.       ACCORDINGLY, IT IS ORDERED THAT, pursuant to 
section 503(b) of the Act,53 and section 1.80 of the Commission's 
Rules,54 SBC Communications is HEREBY NOTIFIED of its APPARENT 
LIABILITY FOR FORFEITURE in the amount of six million dollars 
($6,000,000.00) for willfully and repeatedly violating the 
Commission's merger conditions in the SBC/Ameritech Merger Order.

     24.       IT IS FURTHER ORDERED THAT, pursuant to section 
1.80 of the Commission's Rules, within thirty (30) days of the 
release date of this NOTICE OF APPARENT LIABILITY, SBC 
Communications SHALL PAY to the United States the full amount of 
the proposed forfeiture OR SHALL FILE a written statement showing 
why the proposed forfeiture should not be imposed or should be 
reduced.

     25.       Payment of the forfeiture amount may be made by 
mailing a check or similar instrument payable to the order of the 
Federal Communications Commission, to the Forfeiture Collection 
Section, Finance Branch, Federal Communications Commission, P.O. 
Box 73482, Chicago, Illinois 60673-7482.  The payment should note 
the ``NAL/ Acct. No.'' referenced above.

     26.       The response, if any, must be mailed to Charles W. 
Kelley, Chief, Investigations and Hearing Division, Enforcement 
Bureau, Federal Communications Commission, 445 12th Street S.W., 
Room 5-C814, Washington, D.C., 20554, and must include the 
``NAL/Acct. No.'' referenced above.

     27.       The Commission will not consider reducing or 
canceling a forfeiture in response to a claim of inability to pay 
unless the respondent submits: (1) federal tax returns for the 
most recent three-year period; (2) financial statements prepared 
according to generally accepted accounting practices (``GAAP''); 
or (3) some other reliable and objective documentation that 
accurately reflects the respondent's current financial status.  
Any claim of inability to pay must specifically identify the 
basis for the claim by reference to the financial documentation 
provided.

     28.       IT IS FURTHER ORDERED that a copy of this Notice 
of Apparent Liability shall be sent by Certified Mail/Return 
Receipt Requested to SBC Communications, c/o Caryn D. Moir, Vice 
President-Federal Regulatory, 1401 I Street, N.W., Suite 1100, 
Washington, D.C. 20005.


                         FEDERAL COMMUNICATIONS COMMISSION



                         Magalie Roman Salas
                         Secretary
_________________________

     1    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''), reversed in part on other 
grounds, Association of Communications Enterprises v. FCC, 235 
F.3d 662 (D.C.Cir. 2001).
     2    SBC refers to SBC Communications, Inc. and all its 
affiliates, including its incumbent LECs. 
     3    Throughout this NAL, we refer to the states located in 
Ameritech's territory prior to Ameritech's merger with SBC as 
``the former Ameritech states.''  These states are: Illinois, 
Indiana, Michigan, Ohio, and Wisconsin.  See SBC/Ameritech Merger 
Order, 14 FCC Rcd at 14719, ¶ 6.  
     4    SBC Communications Inc. 1999 Annual Report at 6 (``SBC 
1999 Annual Report'').  In its 2000 Annual Report, SBC reported 
that its total access lines increased by approximately 1% from 
the previous year.  SBC Communications Inc. 2000 Annual Report at 
7 (``SBC 2000 Annual Report'').
     5    SBC 1999 Annual Report at 4.  See also SBC 2000 Annual 
Report at 33-34.
     6    SBC 2000 Annual Report at 4.
     7    SBC/Ameritech Merger Order, 14 FCC Rcd at 14954, ¶ 584.
     8    SBC/Ameritech Merger Order, 14 FCC Rcd at 15023-24, 
Appendix C, ¶ 56.
     9    Letter from David H. Solomon, Chief, Enforcement 
Bureau, FCC, to Cassandra Carr and Sandra L. Wagner, SBC 
Telecommunications, Inc., dated April 12, 2001.
     10   Letter from Sandra L. Wagner, SBC Telecommunications, 
Inc., to Warren Firschein, Attorney, Market Disputes Resolution 
Division, Enforcement Bureau, FCC, dated May 2, 2001 (``May 2 
Response''); Letter from Sandra L. Wagner, SBC 
Telecommunications, Inc., to Warren Firschein, Attorney, Market 
Disputes Resolution Division, Enforcement Bureau, FCC, dated May 
14, 2001 (``May 14 Response''); Letter from Christopher M. 
Heimann, SBC Telecommunications, Inc., to Suzanne Tetreault, 
Assistant Chief, Enforcement Bureau, FCC, dated July 23, 2001 
(``July 23 Response'').  See also Letter from Sandra L. Wagner, 
SBC Telecommunications, Inc., to David H. Solomon, Chief, 
Enforcement Bureau, FCC, dated October 10, 2001 (``October 10 
Letter''), which includes an attachment that ``summarizes the 
evidence presented'' in prior submissions and meetings. 
     11   47 U.S.C. § 503(b); 47 C.F.R. § 1.80(a).
     12   47 U.S.C. § 503(b)(4); 47 C.F.R. § 1.80(f).
     13   See, e.g. Tuscola Broadcasting Co., Memorandum Opinion 
and Order, 76 FCC 2d 367, 371 (1980) (applying preponderance of 
the evidence standard in reviewing Bureau level forfeiture 
order).  Cf. 47 U.S.C. § 312(d) (assigning burden of proof in 
hearings to Commission).
     14        The term ``willful'' means that the violator knew 
it was taking the action in question, irrespective of any intent 
to violate the Commission's rules, and repeated means more than 
once.  See Southern California Broadcasting Co., Licensee, Radio 
Station KIEV(AM) Glendale, California, Memorandum Opinion and 
Order, 6 FCC Rcd 4387, 4387-88, ¶ 5 (1991); see also Liability of 
Hale Broadcasting Corp. Licensee of Radio Station WMTS 
Murfreesboro, Tennessee, Memorandum Opinion and Order, 79 FCC 2d 
169, 171, ¶ 5 (1980).  Furthermore, a continuing violation is 
``repeated'' if it lasts more than one day.  Southern California 
Broadcasting Co., 6 FCC Rcd at 4388, ¶ 5.
     15        See May 2 Response, Sworn Statement of Deborah A. 
Golden at 1 and Exhibit 1.
     16        See, e.g., May 2 Response, Sworn Statement of 
Michael C. Auinbauh, response to question 4.
     17        See Complaint of Birch Telecom of Texas, LTD., 
L.L.P. and Alt Communications, L.L.C. Against Southwestern Bell 
Telephone Company For Refusal to Provide IntraLATA Equal Access 
Functionality, and Complaint of Sage Telecom, Inc. Against 
Southwestern Bell Telephone Company For Violating Unbundled 
Network Elements Provisions of the Interconnection Agreement, 
Arbitration Award, Docket Nos. 20745 and 20755 (Pub. Util. Comm'n 
of Texas, Nov. 4, 1999) (``Texas Arbitration Award'') at 9; see 
also Complaint Of Sage Telecom, Inc. Against Southwestern Bell 
Telephone Company For Violating Unbundled Network Elements 
Provisions Of The Interconnection Agreement, Complaint, Docket 
20755 at 3 (Pub. Util. Comm'n of Texas, filed Apr. 16, 1999); and 
Complaint Of Birch Telecom Of Texas, Ltd., L.L.P. And ALT 
Communications, L.L.C. Against Southwestern Bell Telephone 
Company For Refusal To Provide IntraLATA Equal Access 
Functionality, Complaint, Docket No. 20745 at 3 (Pub. Util. 
Comm'n of Texas, filed Apr. 15, 1999).  Those carriers used 
shared transport to provide all of the necessary transmission and 
routing between the two customers' end offices.  We refer to this 
arrangement in this order as ``end-to-end'' routing of intraLATA 
toll calls.
     18        May 2 Response, Sworn Statement of Michael C. 
Auinbauh at Exhibit A (``Accessible Letter,'' dated April 6, 
1999).
     19        See Texas Arbitration Award at 9.  This would have 
resulted in intraLATA toll calls being routed in the same way as 
interLATA calls.
     20        Complaint Of Sage Telecom, Inc. Against 
Southwestern Bell Telephone Company For Violating Unbundled 
Network Elements Provisions Of The Interconnection Agreement, 
Complaint, Docket No. 20755 (Pub. Util. Comm'n of Texas, filed 
Apr. 16, 1999); and ?????Complaint Of Birch Telecom Of Texas, 
Ltd., L.L.P. And ALT Communications, L.L.C. Against Southwestern 
Bell Telephone Company For Refusal To Provide IntraLATA Equal 
Access Functionality, Complaint, Docket 20745 (Pub. Util. Comm'n 
of Texas, filed Apr. 15, 1999).
     21        Texas Arbitration Award at ??5-6; see also May 2 
Response, Sworn Statement of Michael C. Auinbauh, Response to 
Question 4.
     22        Texas Arbitration Award, supra n.19.  We note that 
the Texas Arbitration Order phrased the issue in terms of whether 
the interconnection agreements allowed SBC, post-dialing parity, 
to route intraLATA toll calls in the same way as interLATA toll 
calls.  This is equivalent, however, to the question of whether 
SBC could, as it proposed, stop providing shared transport end-
to-end and instead route intraLATA toll calls off the SBC network 
to a non-SBC tandem switch, and then back again to the SBC 
network.  See note 21, supra.
     23        Complaint Of Sage Telecom, Inc. Against 
Southwestern Bell Telephone Company For Violating Unbundled 
Network Elements Provisions Of The Interconnection Agreement, 
Docket No. 20755, and Complaint Of Birch Telecom Of Texas, Ltd., 
L.L.P. And ALT Communications, L.L.C. Against Southwestern Bell 
Telephone Company For Refusal To Provide IntraLATA Equal Access 
Functionality, Order, Docket 20745 (Pub. Util. Comm'n of Texas, 
Dec. 1, 1999).
     24   Notably, the Texas PUC found that the interconnection 
agreement ``provides that the UNE common transport permits a CLEC 
to utilize [SBC's] common network between a [SBC] tandem and a 
[SBC] end office [and it] neither differentiates between the 
originating and terminating side of the routing scheme nor makes 
a distinction between pre- and post-dialing parity 
environments.''  Texas Arbitration Award at 31.
     25        May 2, 2001 Response, Sworn Statement of Michael 
C. Auinbauh at 4.
     26        SBC asserts that it need not allow the use of 
shared transport to route intraLATA toll calls in a post-dialing 
parity environment because its agreements with Sage and Birch say 
that ``[a]fter implementation of intraLATA Dialing Parity, 
intraLATA toll calls from [CLEC][unbundled local switching ports] 
will be routed ... [to] the end user intraLATA Primary 
Interexchange Carrier (PIC) choice.''  May 2 Response, Sworn 
Statement of Michael C. Auinbauh, Response to Question 4, citing 
Interconnection Agreement Between Southwestern Bell Tel. Co. and 
Sage Telecom, Inc., App. Pricing-UNE § 5.2.2.2.1.2; 
Interconnection Agreement Between Southwestern Bell Tel. Co. and 
Birch Telecom of Texas, Ltd., App. Pricing-UNE § 5.2.2.2.1.2.  
The Texas Arbitration Award explains, however, that SBC based its 
argument in Texas on this same language, and concludes that 
``[t]he Arbitrators reject SWBT's position.''   Texas Arbitration 
Award at 12-13.
     27   We note that SBC's responses indicate that, in all five 
of the Ameritech states, it has affirmatively opposed requests 
for such service before the state commissions.  See, e.g., 
Investigation Into Tariff Providing Unbundled Local Switching 
With Shared Transport, Order, Case No. 00-0700 (Ill. Commerce 
Comm., Nov. 1, 2000), Exhibit 1(v) to Sworn Statement of Deborah 
A. Golden (Golden Exhibit), submitted with SBC May 2 response 
(investigating an Illinois Bell Telephone Company tariff on the 
issue of whether Ameritech's restrictions on the shared transport 
offering are appropriate, and specifically whether shared 
transport should be available for use by CLECs in transporting 
their intraLATA toll traffic); AT&T Communications of Indiana, 
Inc. TCG Indianapolis Petition for Arbitration of Interconnection 
Rates, Terms and Conditions and Related Arrangements with Indiana 
Bell Telephone Company, Inc. d/b/a Ameritech Indiana Pursuant to 
Section 252(b) of the Telecommunications Act of 1996, Ameritech 
Indiana's Submission of Proposed Order, Cause No. 40571-INT-03 at 
69-71 (Ind. Util. Reg. Comm'n, filed Oct. 10, 2000), Golden 
Exhibit 1(b) (proposed ruling that Ameritech should be permitted 
to prohibit AT&T's use of shared transport for intraLATA toll 
traffic); AT&T Communications, Inc.'s Petition for Arbitration of 
Interconnection Rates, Terms, and Conditions, and Related 
Arrangements with Ameritech Ohio, Ameritech Ohio's Response to 
AT&T's Petition for Arbitration, Case No. 00-1188-TP-ARB at 19 
(Pub. Util. Comm'n of Ohio, filed July 25, 2000), Golden Exhibit 
1(k) (arguing that AT&T should not be permitted to use shared 
transport for intraLATA toll traffic; Application of Ameritech 
Michigan for Approval of a Shared Transport Cost Study and 
Resolution of Disputed Issues Related to Shared Transport, 
Ameritech Michigan's Reply Brief, Case No. U-12622 (Mich. Pub. 
Serv. Comm'n, filed December 28, 2000) (defending a tariff filing 
that prohibited use of shared transport for intraLATA toll 
service); Ameritech Michigan's Exceptions to the Proposal for 
Decision at 4-8 (filed February 12, 2001), Golden Exhibit 1(h) 
(arguing that the Merger Order does not require Ameritech to 
allow the use of shared transport for intraLATA toll service); 
Petition for Arbitration to Establish an Interconnection 
Agreement Between Two AT&T Subsidiaries, AT&T Communications of 
Wisconsin, Inc. and TCG Milwaukee, and Wisconsin Bell, Inc. 
(d/b/a Ameritech Wisconsin), Ameritech Wisconsin's Initial Post-
Hearing Brief, Docket No. 05-MA-120 at 74 (Pub. Serv. Comm'n of 
Wisconsin, filed September 22, 2000), Golden Exhibit 1(o) 
(arguing that Ameritech may prohibit AT&T's use of shared 
transport for intraLATA toll traffic).
     28        In essence, SBC argues that ``[i]t was not until 
November 4, 1999¾more than two months after the relevant date for 
purposes of the Merger Conditions¾that the Texas PUC issued its 
arbitration order forcing Southwestern Bell to accept such a 
request.''  See May 2 Response, Exhibit C at 4.  Thus (according 
to SBC), it was not until that later date that there were ``terms 
[Southwestern Bell] offer[ed] to telecommunications carriers in 
Texas'' that allowed them to use Southwestern Bell's 
interexchange network to complete intraLATA toll calls.  Id.  We 
note, however, that prior to August 27, 1999, the Texas PUC 
issued an interim order requiring SBC to offer shared transport 
to Birch and Sage for the routing of CLEC-originated intraLATA 
toll traffic.  See May 2 Response, Sworn Statement of Michael C. 
Auinbauh, Response to Question 4, citing Birch Telecom of Texas, 
Ltd., LLP v. Southwestern Bell Tel. Co., Order Issuing Interim 
Ruling Pending Dispute Resolution, Docket Nos. 20745 & 20755 at 3 
(Pub. Util. Comm'n of Texas, Apr. 26, 1999).
     29        For instance, as discussed above, the arbitrators 
specifically considered the significance of section 5.2.2.2.1.2 
of the pricing appendix.  
     30        See Texas Arbitration Award at 9 (``according to 
[SBC], in a post-dialing parity environment, the interconnection 
agreement requires CLECs to route their intraLATA traffic in a 
different manner.'').  In another context, SBC also seems to 
recognize that the Texas Arbitration Award did not create new 
obligations, but interpreted an existing agreement.  See Ex Parte 
Presentation from Edwardo Rodriguez Jr., Director - Federal 
Regulatory, SBC, filed December 22, 2000 in CC Docket No. 00-217, 
Application by SBC Communications Inc. for Authorization Under 
Section 271 of the Communications Act to provide in-region 
interLATA service in the States of Kansas and Oklahoma 
(committing to ``interpret ... sections of [Kansas and Oklahoma 
interconnection agreements] in exactly the same fashion that it 
was ordered to'' interpret identical provisions in Texas 
agreement in the Texas Arbitration Award).
     31   Moreover, we note that the language of paragraph 56 of 
the merger conditions made no exception for this issue, even 
though the issue was being litigated in Texas at the same time 
that the Commission was reviewing and finalizing the text of the 
conditions.
     32        May 2 Response at Exhibit C, page 4.
     33        Implementation of the Local Competition Provisions 
in the Telecommunications Act of 1996, Interconnection between 
Local Exchange Carriers and Commercial Mobile Radio Service 
Providers, Third Order on Reconsideration and Further Notice of 
Proposed Rulemaking, 12 FCC Rcd 12460 at Appendix A, rule 51.319 
(1997) (emphasis added).  See 47 C.F.R. § 51.319.
     34        The Texas Arbitration Award makes clear that the 
routing being requested there by CLECs does in fact meet this 
definition.   See Texas Arbitration Award at 7-9 and Appendix A, 
which contains diagrams showing explaining that intraLATA calls 
would be routed using ``option 2'' as set forth at those pages, 
which consists of routing between end offices and tandems.
     35   October 10 Letter at 5-9. 
     36   See 47 C.F.R. § 51.309(a), which provides that ``[a]n 
incumbent LEC shall not impose limitations, restrictions, or 
requirements on requests for, or the  use of, unbundled network 
elements that would impair the ability of a requesting 
telecommunications carrier to offer a telecommunications service 
in the manner the requesting telecommunications carrier 
intends.''
     37   July 23 Response at 7-12.  See Implementation of the 
Local Competition Provisions of the Telecommunications Act of 
1996, Third Report and Order and Fourth Further Notice of 
Proposed Rulemaking, 15 FCC Rcd 3696 (1999) (``UNE Remand 
Order'').
     38   SBC/Ameritech Merger Order, 14 FCC Rcd at 15023-24, 
Appendix C, ¶ 56.
     39   UNE Remand Order, 15 FCC Rcd at 3862-66, ¶¶ 369-79.
     40   July 23 Response at 7-12.
     41   SBC/Ameritech Merger Order, 14 FCC Rcd at 14712; UNE 
Remand Order, 15 FCC Rcd at 3696.
     42   October 10 Letter at 10.
     43   See Joint Application by SBC Communications, Inc., 
Southwestern Bell Telephone Company, and Southwestern Bell 
Communications Services, Inc. d/b/a/ Southwestern Bell Long 
Distance for Provision of In-Region, InterLATA Services in Kansas 
and Oklahoma, Memorandum Opinion and Order, 16 FCC Rcd 6237, 
6322-23, ¶ 174 (2001), remanded on other grounds, Sprint 
Communications Co. v. FCC, __ F.3d __ (D.C.Cir. 2001), 2001 WL 
1657297 (D.C.Cir).
     44   SBC also argues that the Commission lacks enforcement 
jurisdiction under section 251 of the Act. May 2 Response, 
Exhibit C at 5-6.  Because we base this violation on the merger 
conditions, and not section 251, we need not address this issue.
     45   47 U.S.C. §503(b)(1)(A); see also 47 C.F.R. § 
1.80(a)(1).
     46   47 U.S.C. § 503(b)(2)(B); see also 47 C.F.R § 
1.80(b)(2).  In September 2000, the Commission increased the 
maximum forfeiture amount from $1,100,000 to $1,200,000 per 
violation to account for inflation.  See Amendment of Section 
1.80(B) of the Commission's Rules, Adjustment of Forfeiture 
Maxima to Reflect Inflation, Order, 15 FCC Rcd 18221 (2000).  
That change became effective November 13, 2000.  See 65 FR 60868 
(October 13, 2000). 
     47   47 U.S.C. § 503(b)(2)(D); see also The Commission's 
Forfeiture Policy Statement and Amendment of Section 1.80 of the 
Commission's Rules, Report and Order, 12 FCC Rcd 17087, 17100 
(1997) (``Forfeiture Policy Statement''); recon. denied 15 FCC 
Rcd 303 (1999); 47 C.F.R. § 1.80(b)(4).
     48   See note 27, supra.
     49   The Michigan Public Service Commission has required 
Ameritech to file tariffs in Michigan that would permit CLECs to 
use Ameritech's shared transport to provide intraLATA toll.  
Application of Ameritech Michigan for Approval of a Shared 
Transport Cost Study and Resolution of Disputed Issues Related to 
Shared Transport, Opinion and Order, Case No. U-12622 at 6-16 
(Mich. Pub. Serv. Comm'n, March 19, 2001).  Ameritech filed a 
tariff offering this capability, which became effective March 30, 
2001.  See CoreComm Communications, Inc. and Z-Tel 
Communications, Inc. v. SBC Communications, Inc. et al., Joint 
Statement, File No. EB-01-MD-017 (filed Oct. 23, 2001). 
     50   SBC/Ameritech Merger Order, 14 FCC Rcd at 14858, ¶ 360 
(citations omitted). 
     51   Due process requires that parties receive fair notice 
before being deprived of property.  In the absence of notice, the 
courts ask whether ``by reviewing the regulations and other 
public statements issued by the agency, a regulated party acting 
in good faith would be able to identify, with ascertainable 
certainty, the standards with which the agency expects parties to 
conform.''  See Trinity Broadcasting of Florida, Inc. v. FCC, 211 
F.3d 618, 628 (D.C. Cir.2000), quoting General Elec. Co. v. EPA, 
53 F.3d 1324, 1329 (D.C. Cir.1995).   
     52   The Commission's Forfeiture Policy Statement and 
Amendment of Section 1.80 to Incorporate the Forfeiture 
Guidelines, Report and Order, 12 FCC Rcd 17087, 17099-100, ¶ 24 
(1997).  With revenues of more than $51 billion in the year 2000, 
SBC plainly falls into the category of companies to which the 
Commission was referring.
     53   47 U.S.C. § 503(b).
     54   47 C.F.R. § 1.80.