*Pages 1--7 from Microsoft Word - Erratum to ATT Proposal PN _10 16 06_.doc* PUBLIC NOTICE Federal Communications Commission 445 12 th St., S. W. Washington, D. C. 20554 News Media Information 202 / 418- 0500 Internet: http:// www. fcc. gov TTY: 1- 888- 835- 5322 October 16, 2006 ERRATUM APPLICATION FOR CONSENT TO TRANSFER OF CONTROL FILED BY AT& T INC. and BELLSOUTH CORPORATION COMMISSION SEEKS COMMENT ON PROPOSALS SUBMITTED BY AT& T INC. AND BELLSOUTH CORPORATION WC Docket No. 06- 74 By the Chief, Wireline Competition Bureau: On October 13, 2006, the Wireline Competition Bureau released a Public Notice in the above-captioned proceeding. 1 Attached to the Public Notice was a written ex parte presentation setting forth proposals made by AT& T Inc. (“ AT& T”) and BellSouth Corporation (“ BellSouth”) (collectively, “the Applicants”) at the request of members of the Commission. Counsel for AT& T subsequently filed a written ex parte presentation correcting certain aspects of the Applicants’ proposals. 2 This Erratum replaces the attachment to the Public Notice with the Applicants’ corrected written ex parte presentation, which is attached to this Erratum. For the sake of clarity, the Commission seeks public comment on the attachment to this Erratum and the proposals contained therein. Interested parties still must file comments no later than October 24, 2006, pursuant to the procedures set forth in the Public Notice. FEDERAL COMMUNICATIONS COMMISSION Thomas W. Navin Chief Wireline Competition Bureau 1 See Commission Seeks Comment on Application For Consent to Transfer of Control Filed By AT& T Inc. and BellSouth Corp., Public Notice, WC Docket No. 06- 74, DA 06- 2035 (rel. Oct. 13, 2006) (Public Notice). 2 See Letter from Peter J. Schildkraut, Counsel for AT& T, to Marlene H. Dortch, Secretary, FCC, WC Docket No. 06- 74 (filed Oct. 13, 2006). 1 Robert W. Quinn, Jr. AT& T Services, Inc. Senior Vice President 1120 20 th Street NW, Suite 1000 Federal Regulatory Washington, D. C. 20036 Phone 202 457- 3851 Fax 832 213- 0243 October 13, 2006 The Honorable Kevin Martin Chairman Federal Communications Commission 445 Twelfth Street, SW, 8th Floor Washington, DC 20554 Re: AT& T Inc. and BellSouth Corporation App lications for Approval of Transfer of Control, WC Docket No. 06- 74 Notice of Ex Parte Filing Dear Chairman Martin: On October 12, 2006, Jim Cicconi, Wayne Watts, Gary Phillips, Jack Zinman, and I participated in a series of telephone conversations with, and initiated by, Michelle Carey, Senior Legal Advisor to Chairman Martin, and Tom Navin, Chief of the Wireline Competition Bureau, to respond to questions regarding objections rais ed and potential merger conditions that were proposed by parties in this proceeding in order to obtain unanimous approval of this transaction. This letter memorializes the subs tance of those conversations. As an initial matter, we reiterated our firm conviction that the merger should be approved promptly without any conditions whatsoever. We noted that, throughout the course of this proceeding, AT& T and BellSouth have demonstrated that the merger will decidedly advance the public interest by bringing together two companies with complementary assets and strengths, thereby creating a more efficient, more innovative company capable of accelerating and expanding the delivery of high quality advanced technologies and services to all classes of customers, large and small. We have shown that the merger will solidify and secure the nation’s status as a world leader in telecommunications and that it will strengthen national security. And we have shown that all of these benefits will be realized without any cognizable harm to competition. We further noted that our steadfast belief in the consumer benefits of this transaction has been corroborated by the findings of 18 state commissions and th ree foreign countries, all of which approved the merger without imposing any conditions. It also has been confirmed by the Department of Justice, which subjected the tr ansaction to months of exacting scrutiny and likewise found no anticompetitive effects that warranted any merger conditions. Nevertheless, in response to an inquiry from Commission staff, we indicated that, in the interest of facilitating the speediest possible approval of the merger by the Commission, we would not object to the imposition of certain me rger conditions previously proposed by certain parties in this proceeding and requested by the Democratic Commissioners, in order to obtain expeditious unanimous approval of the merger. All of these discussions were oral and in 2 Mr. Martin October 13, 2006 Page 2 of 6 response to questions raised by Staff and no writings reflecting these conditions were received from the Commission or any Commission Staff. Listed below are potential conditions which the Company discussed. Potential Merger Conditions For the avoidance of doubt, unless otherwise expre ssly stated to the contrary, all conditions and commitments proposed in this letter would apply in the AT& T/ BellSouth in- region territory, as defined herein, for a period of thirty months from the Merger Closing Date and would automatically sunset thereafter. Promoting Accessibility of Broadband Service 1. By December 31, 2007, AT& T/ BellSouth 1 will offer broadband Internet access service (i. e., Internet access service at speeds in excess of 200 kbps in at least one direction) to 100 percent of the residential living units in the AT& T/ BellSouth in- region territory. 2 To meet this commitment, AT& T/ BellSouth will offer broadband Internet access services to at least 85 percent of such living units using wireline technologies (the “Wireline Buildout Area”). The merged entity will make available broadband Internet access service to the remaining living units using alternative technologies and operating arrangements, including but not limited to satellite and Wi- Max fixed wireless technologies. AT& T/ BellSouth further comm its that at least 30 percent of the incremental deployment after the Merger Closing Date necessary to achieve the Wireline Buildout Area commitment will be to rural areas or low income living units. 3 2. AT& T/ BellSouth will provide an ADSL modem without charge (except for shipping and handling) to residential subscribers within the Wireline Buildout Area who, during calendar year 2007, replace their AT& T/ BellSouth dial- up Inte rnet access service with AT& T/ BellSouth’s ADSL service a nd elect a term plan for their ADSL service of twelve months or greater. 1 AT& T/ BellSouth refers to AT& T Inc., BellSouth Cor poration, and their affiliates that provide domestic wireline services. 2 As used herein, the AT& T/ BellSouth “in- region territory” means the areas in which an AT& T or BellSouth operating company is the incumbent local exchange carrier, as defined in 47 U. S. C. § 251( h)( 1)( A) and (B)( i). 3 For purposes of this commitment, a low income living unit shall mean a living unit in AT& T/ BellSouth’s in- region territory with an aver age annual income of less than the $35,000, determined consistent with Census Bureau data, see California Public Utilities Code section 5890( j)( 2) (as added by AB 2987) (defining low income house holds as those with annual incomes below $35,000), and a rural area shall consist of the zones in AT& T /BellSouth’s in- region territory with the highest deaveraged UNE loop rates as established by the state commission consistent with the procedures set forth in section 51.507 of the Commission’s rules. 47 C. F. R. § 51. 507. 3 Mr. Martin October 13, 2006 Page 3 of 6 3. AT& T/ BellSouth will offer to retail consumer s in the Wireline Buildout Area who have not previously subscribed to AT& T’s or BellSouth’s ADSL service broadband Internet access service at a speed of up to 768 Kbps at a monthly rate (exclusive of any applicable taxes and regulatory fees) of $10 per month. Public Safety and Disaster Recovery 1. By June 1, 2007, AT& T will complete the steps necessary to allow it to make its disaster recovery capabilities available to facilitate restoration of service in BellSouth’s in- region territory in the event of an extended se rvice outage caused by a hurricane or other disaster. 2. In order to further promote public safety, within thirty days of the Merger Closing Date, AT& T/ BLS will donate $1 million to a section 501( c)( 3) foundation or public entities for the purpose of promoting public safety. UNEs 1. The AT& T and BellSouth incumbent LECs shall continue to offer and shall not seek any increase in State- approved rates for UNEs or collocation that are in effect as of the Merger Closing Date. This condition shall not limit the ability of the AT& T and BellSouth incumbent LECs and any other telecommunications carrier to agree voluntarily to any different UNE or collocation rates. 2. AT& T/ BellSouth shall recalculate its wire cente r calculations for the number of business lines and fiber- based collocations and, for those that no longer meet the non- impairment thresholds established in 47 CFR §§ 51.319( a) and (e), provid e appropriate loop and transport access. In identifying wire centers in which there is no impairment pursuant to 47 CFR §§ 51.319( a) and (e), the merged entity shall exclude the follo wing: (i) fiber- based collocation arrangements established by AT& T or its affiliates; (ii) entities that do not operate ( i. e., own or manage the optronics on the fiber) their own fiber into and out of their own collocation arrangement but merely cross- connect to fiber- based collocation arrangements; and (i ii) special access lines obtained by AT& T from BellSouth as of the day before the Merger Closing Date. 3. AT& T/ BellSouth shall terminate all pending au dits of compliance with the Commission’s EELs eligibility criteria and shall not initiate any new audits. Special Access 1. AT& T/ BellSouth affiliates that meet the definition of a Bell operating company in section 3( 4)( A) of the Act (“ AT& T/ BellSouth BOCs”) 4 will implement, in the AT& T and 4 For purposes of these conditions, AT& T Advanced Solutions, Inc. and the Ameritech Advanced Data Services Companies, doing business collectively as “ASI,” shall not be considered a BOC. 4 Mr. Martin October 13, 2006 Page 4 of 6 BellSouth Service Areas, 5 the Service Quality Measurement Plan for Interstate Special Access Services (“ the Plan”), similar to that set forth in the SBC/ AT& T Merger Conditions. The AT& T/ BellSouth BOCs shall provide the Commission with performance measurement results on a quarterly basis, which shall consist of data collected according to the performance measurements listed therein. Such reports shall be provided in an Excel spreadsheet format and shall be designed to demonstrate the AT& T/ BellSouth BOCs’ monthly performance in delivering interstate special access services within each of the states in the AT& T and BellSouth Service Areas. These data shall be reported on an aggregated basis for interstate special access services delivered to (i) AT& T and BellSouth section 272( a) affiliates, (ii) their BOC and other affiliates, and (iii) non- affiliates. 6 The AT& T/ BellSouth BOCs shall provide performance measurement results (broken down on a monthly basis) for each quarter to the Commission by the 45th day after the end of the quarter. The AT& T/ BellSouth BOCs shall implement the Plan for the first full quarter following the Merger Closing Date. This condition shall terminate on the earlier of (i) thirty months and 45 days after the beginning of the first full quarter following the Merger Closing Date (that is, when AT& T/ BellSouth files its 10th quarterly repor t); or (ii) the effective date of a Commission order adopting performance measurement requirements for interstate special access services. 2. AT& T/ BellSouth shall not increase the rates paid by existing customers (as of the Merger Closing Date) of DS1 and DS3 local private line services that it provides in the AT& T/ BellSouth in- region territory pursuant t o, or referenced in, TCG FCC Tariff No. 2 above their level as of the Merger Closing Date. 3. AT& T/ BellSouth will not provide special access offerings to its wireline affiliates that are not available to other similarly situated special access customers on the same terms and conditions. 4. To ensure that AT& T/ BellSouth may not provide special access offerings to its affiliates that are not available to other special access customers, before AT& T/ BellSouth provides a new or modified contract tariffed service under section 69.727( a) of the Commission’s rules to its own section 272( a) affiliate( s), it will certify to the Commission that it provides service pursuant to that contract tariff to an unaffiliated customer other than Verizon Communications Inc., or its wireline affiliates. AT& T/ BellSouth also will not unreasonably discriminate in favor of its affiliates in establishing the terms and conditions for grooming special access facilities. 5. AT& T/ BellSouth shall not increas e the rates in its interstate tariffs, including contract tariffs, for special access services that it provides in the AT& T/ BellSouth in- region 5 For purposes of this condition, “AT& T and BellSouth Service Areas” means the areas in which the AT& T and BellSouth Bell operating company subsidiaries, as defined in 47 U. S. C. § 153( 4)( A), are incumbent local exchange carriers. 6 BOC data shall not include retail data. 5 Mr. Martin October 13, 2006 Page 5 of 6 territory and that are set forth in tariffs on file at the Commission on the Merger Closing Date. Wireless AT& T/ BellSouth shall initiate ten new trials of broadband Internet access service using 2.3 GHz or 2.5 GHz spectrum by the end of 2007. At l east five of those trials will be conducted in BellSouth’s in- region territory. Transit Service The AT& T and BellSouth incumbent LECs will not increase the rates paid by existing customers for their existing tandem transit service arrangements that the AT& T and BellSouth incumbent LECs provide in the AT& T/ BellSouth in- region territory. 7 ADSL Service 1. Within twelve months of the Merger Closing Date, AT& T/ BellSouth will deploy and offer within the BellSouth in- region territory ADSL service to ADSL- capable customers without requiring such customers to also purchase circuit switched voice grade telephone service. AT& T/ BellSouth will continue to o ffer this service in each state for thirty months after the “implementation date” in that state. For purposes of this condition, the “implementation date” for a state shall be the date on which AT& T/ BellSouth can offer this service to eighty percent of the ADSL- capable premises in BellSouth’s in- region territory in that state. 8 Within twenty days after meeting the implementation date in a state, AT& T/ BellSouth will file a letter with the Commission certifying to that effect. In all events, this commitment will terminate no later than forty- two months after the Merger Closing Date. 2. AT& T/ BellSouth will ex tend until thirty mont hs after the Merger Closing Date the availability within AT& T’s in- region territory of ADSL service, as described in the ADSL Service Merger Condition, set forth in Appendix F of the SBC/ AT& T Merger Order (FCC 05- 183). 7 Tandem transit service means tandem- switched transport service provided to an originating carrier in order to indirectly send intraLATA traffic subject to § 251( b)( 5) of the Communications Act of 1934, as amended, to a terminating carrier, and includes tandem switching functionality and tandem switched transport functionality between an AT& T/ BellSouth ta ndem switch location and the terminating carrier. 8 After meeting the implementation date in each state, AT& T/ BellSouth will continue deployment so that it can offer the service to all ADSL- capable premises in its in- region territory within twelve months of the Merger Closing Date. 6 Mr. Martin October 13, 2006 Page 6 of 6 ADSL Transmission Service AT& T/ BellSouth will offer to Internet servi ce providers, for their provision of broadband Internet access service to ADSL- capable retail customer premises, ADSL transmission service in the combined AT& T/ BellSouth territory that is functionally the same as the service AT& T offered within the AT& T in- region territory as of the Merger Closing Date. Such wholesale offering will be at prices comparable to those available in the overall market for wholesale broadband services. Net Neutrality Effective on the Merger Closing Date, and continuing for thirty months thereafter, AT& T/ BellSouth will conduct business in a manner that comports with the principles set forth in the FCC’s Policy Statement, issued September 23, 2005 (FCC 05- 151). Forbearance For thirty months from the Merger Closing Date, AT& T/ BellSouth will not seek a ruling, including through a forbearance petition under section 10 of the Communications Act (the “Act”) 47 U. S. C. 160, or any other petition, altering the status of any facility being currently offered as a loop or transport UNE under section 251( c)( 3) of the Act. Annual Certification For three years following the Merger Closing Date, AT& T/ BellSouth shall file annually a declaration by an officer of the corporation attesting that AT& T/ BellSouth has substantially complied with the terms of these conditions in all material respects. The first declaration shall be filed 45 days following the one- year anniversary of the Merger Closing Date, the second and third declaration shall be filed one and two years thereafter respectively. In addition to those conditions, we also discussed the possibility of further conditions relating to the repatriation to BellSouth territory of jobs that had been expatriated to overseas locations, Internet backbone peering arrangements, network neutrality non- discrimination, and the impact of Commission forbearance decisions on any conditions that might be imposed. In accordance with Section 1.1203, 1.1204 and 1.1206 of the Commission’s rules, this letter is being filed electronically with your office for inclusion in the public record. Sincerely, /s/ Robert W. Quinn, Jr. 7