Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554

In the Matter of ) ) Application of BellSouth Corporation, ) BellSouth Telecommunications, Inc. ) CC Docket No. 98-121 and BellSouth Long Distance, Inc. ) For Provisions of In-Region interLATA Services ) In Louisiana )

OPPOSITION OF BELL ATLANTIC1 TO AT&T MOTION FOR EXPEDITED DECISION

The Commission should reject AT&T’s motion to expedite and ultimately reject the underlying petition to limit the statutory right of Bell operating companies to market affiliates’ long distance services to inbound callers to their business offices. AT&T provides no basis for expedited reconsideration of this issue. The Commission has already considered and rejected AT&T’s arguments on multiple occasions. Indeed,

AT&T voluntarily withdrew a reconsideration petition on an earlier Commission order on the exact same issue.

Regardless, when the Commission does reach the merits of AT&T’s petition, the

Commission should reject it. AT&T seeks to muzzle new competition and deny

1 This filing is on behalf of the Bell Atlantic telephone companies as well as the Bell Atlantic long distance companies (collectively “Bell Atlantic”). The Bell Atlantic telephone companies are Bell Atlantic-Delaware, Inc.; Bell Atlantic-Maryland, Inc.; Bell Atlantic-New Jersey, Inc.; Bell Atlantic- Pennsylvania, Inc.; Bell Atlantic-Virginia, Inc.; Bell Atlantic-Washington, D.C., Inc.; Bell Atlantic-West Virginia, Inc.; New York Telephone Company; and New England Telephone and Telegraph Company. The Bell Atlantic long distance companies are Bell Atlantic Communications, Inc. and NYNEX Long Distance Company (d/b/a Bell Atlantic Business Services). consumers the one-stop shopping benefits they were promised in the Act. There is no legal or public policy basis for such a change.

I. There is No Justification to Expedite Consideration of AT&T’s Petition

AT&T claims that expedition is required because consumers are suffering

“immediate and irreparable harm” absent a rule change. AT&T Motion at 1. But AT&T never articulates what the harm is, much less link elimination of that harm back to the relief it seeks. In reality, AT&T previously abandoned the exact same argument it makes here in an earlier petition for reconsideration that it subsequently withdrew. See Letter from AT&T (Roy E. Hoffinger), CC Dkt. No. 97-208 (filed Feb 20, 1998) (withdrawing

AT&T petition for reconsideration).

The real spur for AT&T’s motion is Commission approval of Bell Atlantic’s long distance service in New York. For the first time, AT&T is facing real competition from an RBOC that can offer a full alternative to AT&T’s services, including long distance services. While it scrupulously avoids saying so, AT&T wants the Commission to believe that existing customers calling into Bell Atlantic business offices are not aware that AT&T offers long distance service in New York. The charge is nonsensical and

AT&T knows it. The real reason for AT&T’s motion is that when customers are given a new choice of service providers, many are not choosing AT&T. While it is understandable that AT&T would make efforts to muzzle such competition, there is no basis in those efforts for the Commission to grant AT&T’s motion to expedite.

II. The BellSouth Louisiana Decision Is Consistent With The Prior Commission Rulemaking

Regardless, AT&T’s underlying petition should be rejected on its merits. AT&T claims that that the BellSouth-Louisiana section 271 decision on joint marketing violates

2 section 251(g) because the Commission failed to act within the context of a rulemaking proceeding. AT&T Petition at 11. AT&T would have the Commission treat the

BellSouth section 271 decisions (both Louisiana and South Carolina) in isolation, as if they had been made in a regulatory vacuum. They were not. What AT&T ignores is that the Commission addressed the issue of equal access and joint marketing in the context of its section 272 safeguards rulemaking and that the BellSouth decisions are foursquare in line with that decision.

In its Safeguards Order implementing section 272, the Commission expressly held that “the continuing obligation to advise new customers of other interLATA options is not incompatible with BOCs’ right to market and sell the services of their section 272 affiliates under section 272(g).” Implementation of the Non-Accounting Safeguards of

Section 271 and 272, 11 FCC Rcd 21905, ¶ 292 (“Safeguards Order”). As a result, once it receives authority under section 271, a BOC “may market its affiliate’s interLATA services to inbound callers” so long as it notifies new customers that they may have other options. Id. In the BellSouth section 271 orders, the Commission reaffirmed this general rule, and provided further guidance by describing a marketing script consistent with its prior Safeguards Order. See Application of BellSouth Corp. To Provide In-Region,

InterLATA Services in South Carolina, 13 FCC Rcd 539, ¶¶ 236-37 (1997) (“South

Carolina Order”); Application of BellSouth Corp. for Provision of In-Region, InterLATA

Services in Louisiana, 13 FCC Rcd 20599, ¶¶ 356-358 (1998) (“Louisiana Order”).

AT&T tries to dismiss this result in favor of its own preferred interpretation of the

Safeguards Order, but its claims are not supported by anything in the Safeguards Order.

Ultimately, AT&T is forced to rely on the Ameritech-Michigan Order as the only support

3 for its post hoc interpretation. AT&T Petition at 12. In dicta included in the Ameritech

Order, the Commission objected to Ameritech’s inbound marketing script because it did not require a random list to be read prior to mentioning of Ameritech’s own long distance service. Application of Ameritech Michigan to Provide In-Region, InterLATA Services in

Michigan, 12 FCC Rcd 20543, ¶ 376 (1997). But the Commission has since rejected the approach in the Ameritech Order in favor of its original determination in the Safeguards

Order. And for good reason, since that aspect of the Ameritech Order would have effectively blocked any practical way to jointly market or sell to new service customers on inbound calls.2 As a result, that language was inconsistent with the prior Safeguards

Order, and with section 272(g). Under AT&T’s own logic, the isolated language in the

Ameritech section 271 order cannot overturn the conclusions reached by the Commission in a rulemaking proceeding.

III. The BellSouth Decision Is Consistent With The Act And With Sound Public Policy

The decision here is also consistent with the Telecommunications Act of 1996.

AT&T argues otherwise, and cites to section 251(g), which preserves equal access and nondiscrimination requirements in existence at the time the Act was passed. But that general provision cannot trump another more specific provision that expressly permits

Bell operating companies to jointly market their services with long distance services. See

2 Indeed, AT&T’s current petition goes beyond what even the Ameritech Order required and would completely prohibit all marketing on inbound calls. This argument not only seeks reconsideration of the Louisiana Order, but seeks to reconsider the conclusions of the Safeguards Order as well. See Safeguards Order, ¶ 292 (“a BOC may market its affiliate’s interLATA services to inbound callers”). To this extent, AT&T is asking for reconsideration of the Safeguards Order years after the statutorily mandated time limit for requesting reconsideration of that order. See 47 U.S.C. § 405(a).

4 47 U.S.C. § 272(g). In section 272(g) of the 1996 Act, Congress expressly permitted a

Bell operating company and its interLATA affiliate to jointly market and sell their local and long distance services, and made it clear that this joint marketing did not violate a

Bell company’s non-discrimination obligations under the Act.

Moreover, as AT&T acknowledges, the section 251(g) restrictions only continue in their original form until superseded by new rules. In its non-accounting safeguard rulemaking, the Commission reconciled the right to jointly market services with the preexisting requirement that new service customers be given an opportunity to hear that they have other choices. This reconciliation was not necessary prior to the Act because sales of long distance services by Bell companies and their affiliates was barred until the passage of the 1996 Act.

AT&T argues that Bell companies have other avenues to market their long distance affiliates’ services. But these alternatives are irrelevant to the question of whether customers calling into Bell company offices may get the benefit of one-stop shopping. Just as customers who call AT&T may learn about all of AT&T’s services

(both local and long distance), a customer calling Bell Atlantic should be able to learn about all of its services. In fact, the legislative history makes clear that Congress intended to permit a Bell company to “offer the same one-stop shopping alternatives that long distance companies can offer.” See 141 Cong. Rec. E1913-20, E1913 (Oct. 11,

1995)(remarks of Rep. Mike Ward, Kentucky). Congress simply did not intend for a

5 long distance incumbent to sell all their services to a customer on an inbound call, while denying that same opportunity to a Bell company.3

AT&T complains that the BellSouth decisions give local carriers an unfair advantage. In fact, the rule only puts local carriers on an equal footing with their competition, which can already offer one-stop shopping today.

IV. Restrictions Sought By AT&T Are Inconsistent With The First Amendment

Were the Commission to impose further limitations on the right of Bell operating companies to communicate with their customers, it would raise serious constitutional concerns. As the Commission has recognized, commercial speech of the type at issue here is afforded First Amendment protection so long as the speech concerns a lawful activity and is not misleading or fraudulent -- not an issue here. Posadas de Puerto Rico

Assoc. v. Tourism Co., 478 U.S. 328, 340 (1986). Such speech can only be restricted where there is a substantial governmental interest directly advanced by the restrictions and the restrictions are no more extensive than necessary to serve that interest. 478 U.S. at 340 (citing Central Hudson Gas & Electric Corp. v. Public Service Commission of

New York, 447 U.S. 557, 566 (1980)).

The further restrictions on speech sought by AT&T cannot withstand that test.

Any conceivable governmental concern is addressed by reminding callers that they have a choice of long distance carriers, and, if a caller is uncertain, offering to provide a list of

3 This conclusion is further buttressed by section 274 of the Act. That provision bars a Bell operating company, as a general matter, from engaging in joint marketing with its separate electronic publishing affiliate (section 274(c)(1)), but expressly permits the Bell operating company to provide “inbound telemarketing or referral services.” Section 274(c)(2)(A). And if inbound services are permitted even where joint marketing is restricted, then they must certainly be permitted where it is not.

6 those carriers. In today’s world of multi-million dollar long distance marketing campaigns, customers already are aware that they have choices for long distance service.

Indeed, customers are least likely to be aware that the Bell company’s affiliate also offers such service. If a cone of silence is lowered over the Bell company, customers are less likely to understand their long distance options, and will be less able to benefit from the additional competition that Bell company entry into the long distance market can provide.

As a result, it actually harms the very governmental interest that AT&T claims to be protecting.

V. AT&T’s Allegations Concerning Bell Atlantic’s Marketing Practice Are Both Wrong And Irrelevant

AT&T attempts to buttress its motion here by submitting the results of a “study” that purports to demonstrate that Bell Atlantic is not complying with the current requirements on joint marketing. Even if AT&T’s “study” results were accepted at face value, the so-called study is irrelevant in determining what the rules should be. In any event, the issue of Bell Atlantic’s compliance will be fully tested through the statutorily mandated audit of compliance with all section 272 obligations. See Joint Federal/State

Oversight Group General Standard Procedures for Biennial Audits as of December 16,

1998, Objective VII, Procedure 8 (requires monitoring of inbound calls to check on compliance with equal access requirements).

7 Moreover, for present purposes, AT&T’s “study” merely confirms that its real objective is to change (and broaden) existing rules.4 On their face, the Commission’s prior orders imposing a requirement to inform customers of their alternatives (and if they are uncertain as to their choice, to offer to read a randomized list) expressly applied that requirement only to new connections. In contrast, AT&T implies that the requirement should be extended to contexts other than new connections such as second lines. But that proposed expansion simply is not consistent with the Commission’s prior orders.

For example, in the Safeguards Order, the Commission stated that “BOCs must continue to inform new local exchange customers of their right to select the interLATA carrier of their choice” and they “must provide any customer who orders new local exchange service with the names, and if requested, telephone numbers of all of the carriers offering interexchange services.” Safeguards Order, ¶ 292 (emphasis added).

Moreover, the Commission expressly defined the scope of the obligation: “A customer orders ‘new service’ when the customer either receives service from the BOC for the first time, or moves to another location within the BOC’s in-region territory.” Id (emphasis added).

4 There is a separate issue as to AT&T’s methods for obtaining information. According to their own filings, AT&T representatives masqueraded as customers seeking a second line when they never intended to purchase service. They then went through the time consuming process of ordering service, making certain that the representative never reached the final processing of an order. Instead, the AT&T callers were instructed to say “I must check with my (INSERT FAMILY MEMBER) before you can put this order through.” AT&T Test Call Study at 11. Such abuse is costly to Bell Atlantic and hinders its ability to provide service to legitimate customers. AT&T’s fraudulent service orders are no different (although more numerous) than the recently aborted (and much criticized) practice of Time Warner. See “Time Warner to Encounter Salvo From Congress Over Fake Orders,” Wall Street Journal, B14 (May 25, 2000).

8 Likewise, in the South Carolina Order, the Commission again expressly reasserted that the requirement applied to “new customers,” even going so far as to repeat the limited definition of that customer class. South Carolina Order, ¶ 231. Similarly, in the Order at issue here, the Commission again cited the “new service” language as the basis for its requirement. Louisiana Order, ¶ 357.

And the scope of this requirement tracks the equal access cases cited by AT&T.

Indeed, the new service definition used for equal access purposes stems from a decision by Judge Greene imposing a requirement to inform customers of their service choices that apply only in the context of new service connections. See United States v. Western

Electric, 578 F. Supp. 668, 676 (D.D.C. 1983).

Moreover, the distinction for new service connections is a sensible divide.

Customers who already have at least one long distance connection presumably are aware they have a choice of providers. Indeed, most of those customers have AT&T as their provider. There is no protective value in telling them again, and AT&T’s attempt to expand the requirement further should be rejected.

9 Conclusion

For the foregoing reasons, the Commission should deny the AT&T motion, and when it reaches the merits, deny the AT&T reconsideration petition.

Respectfully submitted,

Of Counsel ______Michael E. Glover Edward Shakin 1320 N. Courthouse Road 8th Floor Arlington, Virginia 22201 703-974-4864

Attorney for the Bell Atlantic telephone companies and the Bell Atlantic long distance companies

June 5, 2000

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