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Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
)
In the Matter of ) File Nos.
EB-02-IH-0683
) EB-
02-IH-0805
)
) Acct. No.
200332080018
)
BellSouth Corporation ) FRN No.
FRN No. 0004942-2447
)
ORDER
Adopted: July 15, 2003 Released: July
17, 2003
By the Commission:
1. The Commission has been conducting investigations
into possible violations by the BellSouth Corporation
(``BellSouth'') of sections 271 and 272 of the
Communications Act of 1934, as amended, in connection with
(1) the marketing and provisioning of in-region interLATA
services in states where BellSouth had not received
authorization to provide such services pursuant to section
271 of the Act1 and (2) allegations that BellSouth
improperly rejected the local service requests of
competitive local exchange carriers (``CLECs'').2
2. The Commission and BellSouth have negotiated the
terms of a Consent Decree that would terminate the
Commission's investigations. A copy of the Consent Decree
is attached hereto and is incorporated by reference.
3. We have reviewed the terms of the Consent Decree
and evaluated the facts before us. We believe that the
public interest would be served by approving the Consent
Decree and terminating the investigations.
4. Based on the record before us, and in the absence
of material new evidence relating to this matter, we
conclude that there are no substantial and material
questions of fact as to whether BellSouth possesses the
basic qualifications, including its character
qualifications, to hold or obtain any FCC licenses or
authorizations.
5. Accordingly, IT IS ORDERED, pursuant to sections
4(i) and 4(j) of the Communications Act of 1934, as amended,
47 U.S.C. §§ 154(i) and 154(j) that the Consent Decree,
incorporated by reference in and attached to this order, is
hereby ADOPTED.
6. IT IS FURTHER ORDERED that the Secretary SHALL
SIGN the Consent Decree on behalf of the Commission.
7. IT IS FURTHER ORDERED that the above captioned
investigations ARE TERMINATED.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, DC 20554
In the Matter of )
) File No. EB-02-IH-0683
) EB-02-IH-0805
)
) Acct. No. 200332080018
)
) FRN No. 0004942-2447
BellSouth Corporation )
)
CONSENT DECREE
1. The Federal Communications Commission (the
``Commission'' or the ``FCC'') and BellSouth Corporation
(``BellSouth'') hereby enter into this Consent Decree for
the purpose of terminating Enforcement Bureau (``Bureau'')
investigations into (1) whether BellSouth provided, marketed
or sold in-region, interLATA services prior to its receipt
of authorization pursuant to section 271 of the
Communications Act of 1934 (the ``Act''), as amended, and
(2) whether BellSouth violated the non-discrimination
requirements of sections 271 or 272 of the Act by improperly
rejecting competitive local exchange carrier (``CLEC'')
local service requests. As part of the first investigation,
the Bureau has examined BellSouth's compliance with sections
271(a) and (b) and section 272(g)(2) of the Act, 47 U.S.C.
§§ 271(a) and (b), 272(g)(2), which prohibit a Bell
Operating Company (``BOC'') from marketing or selling in-
region interLATA services provided by an affiliate in states
where it has not received authorization to provide such
services pursuant to section 271 of the Act.3 As part of
the second investigation, the Bureau has examined
BellSouth's compliance with section 271(c) and sections
272(b), (c), and (e) of the Act, 47 U.S.C. §§ 271(c),
272(b), 272(c), 272(e)(1), which impose certain non-
discrimination and separate affiliate requirements on a
BOC.4
2. For purposes of this Consent Decree, the following
definitions shall apply.
(a) ``FCC'' or the ``Commission'' means the Federal
Communications Commission and all of its bureaus
and offices.
(b) ``Bureau'' means the Enforcement Bureau of the
Federal Communications Commission.
(c) ``BellSouth'' means the BellSouth Corporation,
BellSouth Telecommunications, Inc. (``BST'')
incumbent local exchange operating telephone
companies, any affiliate, d/b/a, predecessor-in-
interest, parent companies, any wholly or
partially owned subsidiary, or other affiliated
companies or business, including BellSouth Long
Distance, Inc. (``BSLD''), and their successors
and assigns.
(d) ``Parties'' means BellSouth and the Bureau.
(e) ``In-region state'' is defined at 47 U.S.C. §
271(i)(1), and for BellSouth includes Alabama,
Florida, Georgia, Kentucky, Louisiana,
Mississippi, North Carolina, South Carolina and
Tennessee.
(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 Bureau on August 12, 2002 into
allegations that BellSouth provided, marketed or
sold in-region, interLATA services prior to its
receipt of authorization pursuant to section 271
of the Act during the period from June 1, 2001 to
December 19, 2002. The term specifically includes
the Letters of Inquiry (and BellSouth's responses)
dated August 12, 2002, October 10, 2002, October
30, 2002, November 14, 2002 and December 19, 2002,
and further includes, but is not limited to, all
of the events discussed in the BellSouth voluntary
disclosure letters to the Commission dated August
7, 2002, October 29, 2002 and December 18, 2002.
``Investigation'' also includes the investigation
commenced by the Bureau on November 6, 2002, into
allegations that BellSouth violated the
nondiscrimination requirements of sections 202,
271 and 272 of the Act in relation to its policies
on the provision of BellSouth long distance to
CLEC end-users.
(i) ``Effective Date'' means the date on which the
Commission adopts the Adopting Order.
I. BACKGROUND
3. BellSouth was prohibited from providing interLATA
services originating in a particular in-region state until
it received authorization to provide such services in such
state pursuant to section 271 of the Act. 47 U.S.C. §
271(a). To obtain authorization to provide in-region
interLATA services under section 271, BellSouth was required
to show, among other things, that it fully implemented a
``competitive checklist'' designed to give competitors
nondiscriminatory access and interconnection to its network.
47 U.S.C. § 271(d)(3)(A).
4. Section 272(g)(2) of the Act prohibits a BOC from
marketing or selling in-region interLATA service provided by
an affiliate before it has satisfied the requirements of
section 271. In particular, section 272(g)(2) states that
``[a BOC] may not market or sell interLATA service provided
by an affiliate required by this section within any of its
in-region States until such company is authorized to provide
interLATA services in such States under section 271(d).''5
5. On May 15, 2002, BellSouth received authorization
pursuant to section 271 to provide long distance services to
customers in two of its in-region states, Georgia and
Louisiana. On September 18, 2002, BellSouth received
authorization to provide long distance services to customers
in five additional in-region states, Alabama, Kentucky,
Mississippi, North Carolina and South Carolina. On December
19, 2002, BellSouth received authorization to provide long
distance service to customers in its remaining two in-region
states, Florida and Tennessee. Before receiving approval in
each of these states, to ensure compliance with sections 271
and 272, BellSouth states that it had established specified
procedures to govern the introduction of its long distance
services. In particular, BellSouth states that it had
controls in place for each aspect of the long distance
process - marketing, sales ordering and provisioning - and
states that these applied to BellSouth as well as to the
third-party vendors and suppliers.
6. On August 7, 2002, October 29, 2002 and December
18, 2002, BellSouth voluntarily disclosed to the FCC certain
incidents that potentially constituted marketing, selling,
and/or providing long distance services in pre-relief
states. BellSouth states that it made these disclosures in
good faith and as soon as BellSouth learned of the incidents
and took immediate steps to correct the problems as
described herein. On August 12, 2002, the Bureau began its
Investigation. During the course of the investigation,
BellSouth complied with the Bureau's inquiry in a
cooperative and good faith manner. The Bureau's
investigation included review of the following incidents:
(a) Television Advertisements in May and June 2002. In
a television commercial broadcast from May 24 to June
6, 2002, on stations out of Atlanta, Georgia, and Baton
Rouge and New Orleans, Louisiana and from May 28 to
June 6, 2002, on stations out of Augusta, Columbus, and
Savannah, Georgia and Monore/El Dorado, Louisiana,
BellSouth advertised long distance as a bundled service
with local calling. The thirty second advertisement
contained the following statement in both audio and
video: ``Introducing BellSouth Long Distance. Same
Company, Longer Distance.'' The advertisement could
have been seen by viewers not only in Georgia and
Louisiana but also in Alabama, Mississippi, North
Carolina and South Carolina. Although BellSouth had
section 271 approval for Georgia and Louisiana, it did
not receive approval for the other four states until
September 18, 2002. BellSouth states that the
commercial could have reached approximately 268,000
potential customers in unapproved states. The
commercial did not contain any disclosure that long
distance service was available to customers only in
Georgia and Louisiana.
(b) Vendor Telemarketing in December 2002. From
December 16 to 18, 2002, Communications Solutions and
Technology (``CST''), a vendor working at the direction
of BellSouth, made telemarketing calls to 205 small
business customers in Florida and Tennessee offering
them BellSouth long distance. BellSouth did not
receive section 271 approval in Florida and Tennessee
until December 19, 2002. Fifty-two customers selected
BellSouth long distance. BellSouth states that it
discovered the problem before any of the orders were
entered into its order processing system. Upon
discovery, BellSouth states that it reprimanded CST and
contacted all but three (49) of the 52 customers and
informed them that BellSouth was not yet able to
provide long distance in their state and that their
long distance service would not be switched. BellSouth
states that on October 9, 2002, it provided CST with
training materials, including instructions not to
market long distance to customers in Florida and
Tennessee prior to BellSouth's receipt of section 271
approval. While that direction was not repeated in the
Florida and Tennessee marketing materials sent by
BellSouth to CST on December 11, 2002, BellSouth states
that no further direction other than that contained in
the October 9 training materials was necessary and that
the vendor was aware of the prohibition against pre-
relief marketing in Florida and Tennessee. No other
vendor began activity prior to relief in Florida and
Tennessee.
(c) Vendor Telemarketing in October 2002. From October
23 to 25, 2002, CST employees made eight telemarketing
calls to small business customers in Florida and
Tennessee offering BellSouth long distance. BellSouth
did not receive section 271 approval in those states
until December 19, 2002. Two customers in Florida and
one in Tennessee selected BellSouth long distance.
BellSouth states that two of the orders were identified
by CST staff as improper prior to being input into
BellSouth's order processing system. One order was
input into BellSouth's order processing system but was
then identified by CST staff as improper and cancelled.
The customers were not switched to BellSouth long
distance.
(d) Provisioning in October 2002. In October 2002,
two customers in Florida, and 20 in Tennessee (covering
22 lines) ordered and received BellSouth long distance
for approximately a week prior to BellSouth's receipt
of section 271 authorization on December 19, 2002.
BellSouth states that the situation was caused by a
BellSouth software adjustment that was intended to
allow the provisioning of long distance to end users
located in section 271 authorized states that were
served by central offices across a state border where
BellSouth did not have section 271 approval. The
adjustment, however, also allowed provisioning of
service in unauthorized states when the end user was
served by a central office in an approved state and the
sales representative did not identify the restriction
on service. BellSouth states that approximately half
the customers made no long distance calls and a total
of 86 such calls were connected. BellSouth states that
no bills were issued, all migrations were the result of
inbound customer requests, and BellSouth sales
representatives and vendor staff that entered the
orders acted contrary to their training. Upon
discovery, BellSouth states messages were sent to all
service representatives reminding them of section 271
restrictions. Affected customers were contacted,
informed that BellSouth long distance was not available
in their area, and allowed to select other intraLATA
carriers. On October 9, 2002, BellSouth states it
corrected the edits in its ordering system to block
orders from unapproved states.
(e) Provisioning in September 2002. On September 16,
2002, one residential customer in Alabama ordered and
received BellSouth long distance prior to BellSouth's
receipt of section 271 approval in that state on
September 18, 2002. BellSouth states that the incident
was caused by the failure of a date specifications code
in its electronic ordering system. The code was
intended to prevent customers in the five states with
then pending section 271 applications from ordering
long distance service before a date certain. The code
failed to prevent this Alabama customer from receiving
service from a central office in Georgia, an approved
state, prior to that date certain. BellSouth states
that the incident was discovered at the same time as
the provisioning issue described in paragraph 6(d)
above and after BellSouth had received section 271
approval in Alabama.
(f) Provisioning in May 2002. On May 9, 2002, a small
business customer in Georgia with two locations and
three lines ordered and received BellSouth long
distance for approximately a week prior to BellSouth's
receipt of Section 271 approval in that state on May
15, 2002. BellSouth states that the employee acted
contrary to his training and was reprimanded.
BellSouth states that the customer was contacted,
informed that BellSouth long distance was not yet
available in his area, and selected to have no long
distance service at that time. BellSouth states the
customer made no long distance calls and was not
billed.
7. On November 6, 2002, the Bureau commenced an
investigation into allegations that BSLD refused to provide
service to CLEC end-users. BellSouth responded to the
Bureau on December 6, 2002. BellSouth states that it has
operational procedures in place pursuant to which CLEC end-
users can obtain BellSouth long distance.
II. AGREEMENT
8. The Parties agree and acknowledge that this
Consent Decree shall constitute a final settlement between
BellSouth and the Commission of the Investigation. In
consideration for the termination of this Investigation in
accordance with the terms of this Consent Decree, BellSouth
agrees to the terms, conditions, and procedures contained
herein.
9. BellSouth and the Bureau agree that this Consent
Decree does not constitute either an adjudication on the
merits or a factual or legal finding or determination
regarding any compliance or noncompliance by BellSouth with
the requirements of the Act or the Commission's rules or
orders. The parties agree that this Consent Decree is for
settlement purposes only and that by agreeing to this
Consent Decree, BellSouth does not admit any noncompliance,
violation or liability associated with or arising from its
actions or omissions as described herein.
10. BellSouth states that the following corrective
measures were taken in response to the incidents described
in paragraph 6 herein:
BellSouth retrained personnel where
necessary;
BellSouth implemented system fixes to ensure
no inappropriate orders would be processed;
BellSouth issued appropriate employee and
vendor reprimands;
Daily desk top priority system messages were
initiated in order to remind service
representatives that long distance was not
available in Florida and Tennessee;
BellSouth contacted all other third-party
vendors to ensure that they were in
compliance with BellSouth's instructions
regarding Florida and Tennessee. BellSouth
confirmed that these vendors were in
compliance. BellSouth also instructed the
vendor in question to suspend all customer
calls to BellSouth customers for the duration
of the internal investigation;
All orders created by the third party vendor
for sales of long distance were stopped from
being entered into BellSouth's order
provisioning system, ROS. BellSouth also
tested system edits (SOER) to ensure their
proper function with respect to ordering in
any pre-relief states, and continued to
monitor those systems to ensure proper
function.
11. For purposes of settling the matters set forth
herein, BellSouth agrees to take the actions described
below:
(a) Separate affiliate requirements
(i) BellSouth agrees that it will voluntarily
comply with the separate affiliate requirements
set forth in 47 U.S.C. 272, including section
272(d), until such time as each of the nine states
in BellSouth's region is relieved from the
requirements;6
(ii) BellSouth agrees that it will be subject to
enforcement proceedings for noncompliance with
section 272 that occurs after the effective date
of this Adopting Order in any of the nine states
in BellSouth's region until such time as each of
the nine states in BellSouth's region is relieved
from the requirements;
(iii) BellSouth agrees that it will revise the
section 272 training for employees of BellSouth
Corporation, which includes employees of BST and
BSLD, as well as BellSouth's small business third
party telemarketing vendors, with new materials
more focused on the operational working
relationship between BST and BSLD. BellSouth will
require a Mastery Test to be taken by each
BellSouth employee and each employee of the
affected third party (as described above).
BellSouth will endeavor to start this mandatory
training in June 2003, but will finish the
training in no case later than December 2003;
(iv) BellSouth agrees that it will replace its
current compliance program in the Small Business
organization with a centralized Small Business
Compliance Group (or a successor group) to monitor
and evaluate compliance obligations for both
BellSouth small business employees and small
business third party telemarketing vendors. The
Compliance Group will maintain a certification
program and a tracking mechanism to ensure that
all small business training programs are completed
and completed in a timely manner;
(v) BellSouth agrees that its section 272(d)
audits will include steps evaluating BellSouth's
compliance with the measures contained in
paragraph 11(a)(i) to 11(a)(iv) herein.
(b) BSLD operational agreements with CLECs
(i) For a one year period beginning within two
weeks of the effective date of the Adopting Order,
BellSouth agrees that it will post a notice on the
BellSouth Corporation website
(http://bellsouthcorp.com/policy/) reminding CLECs
of their ability to have their end user customers
purchase BellSouth long distance if the CLEC
avails itself of the available operational
procedures;
(ii) For a one year period beginning within two
weeks of the effective date of the Adopting Order,
BellSouth agrees that it will post the operational
procedures pursuant to which CLECs may obtain
BellSouth long distance for their end users on the
BellSouth Corporation website
(http://bellsouthcorp.com/policy/);
(iii) On a quarterly basis for a one year period
beginning within two weeks of the effective date
of the Adopting Order, BellSouth will post a
Carrier Notification Letter on its interconnection
website reminding CLECs of their ability to have
their end user customers purchase long distance if
the CLEC avails itself of the available operating
procedures;
(iv) Beginning within 30 days of the effective
date of the Adopting Order, BellSouth will amend
the error message sent to CLECs by BellSouth when
BellSouth clarifies an otherwise valid local
service request because the requesting CLEC has
not entered into an operational agreement with
BSLD to include citation to the first Carrier
Notification Letter described in paragraph
11(b)(iii) herein;
(v) Beginning within six months of the effective
date of the Adopting Order, BellSouth agrees that
it will ensure that when a CLEC end user customer
selects BSLD services, BellSouth will not reject
or delay fulfillment of the otherwise valid local
service request because the requesting CLEC has
not entered into an operational agreement with
BSLD unless BellSouth can establish to the
Commission that it has complied fully with
paragraph 11(b) herein.
12. In express reliance on the covenants and
representations contained herein, the Commission agrees
to terminate the Investigation.
13. BellSouth will make a voluntary contribution to
the United States Treasury in the amount of $1.4 million
within 10 calendar days after the Commission Order adopting
this Consent Decree becomes final. BellSouth 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. 200332080018'' and ``FRN No. 0004942447.'' If BellSouth
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. If BellSouth makes
this payment by wire transfer, it must wire such payment in
accordance with Commission procedures for wire transfers.
14. The Commission agrees that, in the absence of
material new evidence relating to incidents that BellSouth
has not disclosed to the Bureau through the Effective Date
of this Consent Decree, it will not use the facts developed
in this Investigation, or the existence of this Consent
Decree, to institute, on its own motion, any new
proceedings, formal or informal, or to make any actions on
its own motion against the Company concerning the matters
that were the subject of the Investigation. The Commission
also agrees that, in the absence of material new evidence
relating to incidents that BellSouth has not disclosed to
the Bureau through the Effective Date of this Consent
Decree, 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 BellSouth
with respect to its basic qualifications, including its
character qualifications, to be a Commission licensee.
Consistent with the foregoing, nothing in this Consent
Decree limits the Commission's authority to consider and
adjudicate any formal complaint that may be filed pursuant
to sections 208 or 271 of the Communications Act, as
amended, and to take any action in response to such formal
complaint.
15. BellSouth waives any and all rights it may have to
seek administrative or judicial reconsideration, review,
appeal or stay, or to otherwise challenge or contest the
validity of this Consent Decree and the Order adopting this
Consent Decree, provided the Commission issues an Order
adopting the Consent Decree without change, addition, or
modification.
16. BellSouth's decision to enter into this Consent
Decree is expressly contingent upon the Commission's
issuance of an Order that is consistent with this Consent
Decree, and which adopts the Consent Decree without change,
addition, or modification.
17. 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.
18. 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 BellSouth nor the
Commission shall contest the validity of the Consent Decree
or Adopting Order, and BellSouth will waive any statutory
right to a trial de novo.
19. Any violation of the Consent Decree or the
Adopting Order will constitute a separate violation of a
Commission order, entitling the Commission to exercise any
rights and remedies attendant to the enforcement of a
Commission order.
20. The Parties also agree that if any provision of
the 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 BellSouth does not consent) that provision
will be superseded by such Commission rule or order.
21. This Consent Decree may be signed in counterparts.
FEDERAL COMMUNICATIONS COMMISSION
By: ___________________________________
Marlene H. Dortch
Secretary
BELLSOUTH CORPORATION
By: ___________________________________
_________________________
1 See Letter from Maureen F. Del Duca, Deputy Chief,
Investigations and Hearings Division, Enforcement Bureau, to
Jonathan Banks, General Attorney, BellSouth, dated August
12, 2002 (``LOI'').
2 See Letter from Maureen F. Del Duca, Deputy Chief,
Investigations and Hearings Division, Enforcement Bureau, to
Jonathan Banks, General Attorney, BellSouth, dated November
6, 2002 (``LOI'').
3 See Letter from Maureen F. Del Duca, Deputy Chief,
Investigations and Hearings Division, Enforcement Bureau, to
Jonathan Banks, General Attorney, BellSouth, dated August
12, 2002.
4 See Letter from Maureen F. Del Duca, Deputy Chief,
Investigations and Hearings Division, Enforcement Bureau, to
Jonathan Banks, General Attorney, BellSouth, dated November
6, 2002.
5 The legislative history for section 272(g)(2) includes
the statement that ``the ability to bundle
telecommunications, information and cable services into a
single package to create `one-stop shopping' will be a
significant competitive marketing tool. As a result, and to
provide for parity among competing industry sectors, the
Committee has included restrictions on joint marketing...''
S.Rep. No. 23, 104th Cong., 1st Sess. 22 (1995).
6 Nothing in section 11(a) shall be construed to prevent
BellSouth from asserting any position on section 272 it
deems appropriate in another Commission proceeding.