SBC Slapped With $6M Fine

Federal regulators fined SBC Communications Inc. $6 million Wednesday
for violating the terms of its 1999 merger with Ameritech, a Regional Bell
Operating Company (RBOC) operating in the Midwest.

The Federal Communications Commission said an investigation prompted by
competitor complaints found that San Antonio-based SBC attempted to
restrict the ability of carriers in five states to share its network.

Many local phone companies that lack their own networks and equipment
rely on the RBOC facilities to be able to offer competing services. The
1996 Telecommunications Act made it possible for new local carriers to
lease lines from RBOCs companies, including SBC and Ameritech, so they
could provide service options for customers.

FCC Chairman Michael Powell condemned SBC’s violations of local
competition rules.

“Such unlawful, anticompetitive behavior is unacceptable,” he said.
“Instead of sharing, as the law requires, SBC withheld and litigated,
forcing competitors to expend valuable time and resources.”

James Smith, SBC senior vice president, said in a statement that the
company believes the FCC is in error.

“We believe that the Commission has mistakenly interpreted not only the
letter, but also the intent of the shared transport merger condition,”
Smith said.

Smith added that SBC is reviewing the FCC’s action and is considering
what to do next. The company contested the fine when the FCC proposed it in

The FCC approved the merger between SBC and Ameritech in October 1999
after adopting 30 conditions to ensure the deal would serve the public

The FCC had required SBC to give competitors providing local telephone
service in five states access to its network for local toll calls on
certain favorable terms. The five states include Wisconsin, Illinois,
Indiana, Ohio and Michigan.

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