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                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554

In the Matter of                )  File No. EB 00-IH-0054
                                )  TRS Company Code: 815576
North American Telephone Network, LLC   )    NAL/Acct.   No. 

                      FORFEITURE ORDER

   Adopted: February 28, 2001           Released:  March  2, 

By the Chief, Enforcement Bureau:

                      I.  INTRODUCTION

     1.  In this Forfeiture Order, we find that North 
American Telephone Network, LLC (``NATN'') has violated 47 
U.S.C.  254(d) and 47 C.F.R.  54.706 by willfully and 
repeatedly failing to make required contributions to 
universal service support programs.  Based on our review of 
the facts and circumstances of this case and after 
considering NATN's response to our Notice of Apparent 
Liability (``NAL'') in this matter,1 we conclude that NATN 
is liable for a forfeiture in the amount of fifty-five 
thousand dollars ($55,000), the amount proposed in the NAL. 

                       II.  BACKGROUND

     2.  In the NAL, we briefly described the universal 
service program, including the mechanisms established by the 
Commission in response to Congress' 1996 amendments to the 
Communications Act (the ``Act'') creating the universal 
service program.  In particular, Section 254(d) of the Act 
requires that:    

     Every telecommunications carrier that provides 
     interstate telecommunications services shall 
     contribute, on an equitable and nondiscriminatory 
     basis, to the specific, predictable, and 
     sufficient mechanisms established by the 
     Commission to preserve and advance universal 

In implementing that section, the Commission authorized the 
Universal Service Administrative Company (``USAC'') to 
administer universal service support mechanisms and to 
perform billing and collection functions.3  The Commission 
gave USAC the authority to bill carriers monthly, starting 
in February 1998, for their contributions.4

     3.  In accordance with its authority, USAC began 
billing NATN in 1998.  Notwithstanding its receipt of 
monthly bills and despite repeated contacts from USAC, NATN 
had paid less than 20 percent of the amount billed by USAC 
through January 2000.5  In February 2000, the Enforcement 
Bureau sent a letter to NATN explaining that it was 
potentially the subject of an enforcement action.6  On March 
1, 2000, NATN made a payment of $100,000.  In its response 
to the Bureau's letter, NATN noted that it recently had made 
this payment and stated that it was working with USAC ``to 
set up a reasonable payment plan and to address any 
incorrect information.''7  Although NATN subsequently made 
three additional payments of $30,000 each in April, May and 
June 2000, it did not establish a payment plan designed to 
eliminate its arrearage.  Accounting for the referenced 
payments, USAC's records indicated that NATN still owed more 
than $800,000 as of July 2000. 

     4.  We concluded in the NAL that NATN had apparently 
violated the Act and our rules by willfully and repeatedly 
failing to pay universal service contributions.  We further 
concluded that NATN's apparent violations warranted a 

     5.  In its response to the NAL, NATN contends that it 
is not liable for a forfeiture because the universal service 
contributions it made in the year 2000 exceeded the invoiced 
amounts for December 1999 and January 2000.  NATN further 
states that its revenues decreased by approximately two-
thirds following the sale of its customer base in September 
1999, and it requests that the Bureau recalculate its 
universal service liability based on actual revenues 
collected during the relevant time periods.  NATN also 
states that it was unable to meet its universal service 
obligations because it had not collected universal service 
fees from its customers and its level of uncollectible 
revenues rose.  Finally, although NATN asserts that USAC 
incorrectly calculated NATN's universal service obligations, 
it did not attempt to show that the cited invoices were 
calculated other than in accordance with the Commission's 
rules and the applicable contribution factors. 

                         III.  DISCUSSION
      6.  Section 503(b)(1)(B) of the Act provides that any 
person who willfully or repeatedly fails to comply with the 
Act or the Commission's rules shall be liable for a 
forfeiture penalty.9  If the violator is a common carrier, 
47 U.S.C.  503(b)(2)(B) authorizes the Commission to assess 
a forfeiture of up to $110,000 for each violation, or each 
day of a continuing violation, up to a statutory maximum of 
$1,100,000 for a single act or failure to act.10  In 
assessing a forfeiture, we are required by 47 U.S.C.  
503(b)(2)(D) to consider 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.11  

     7.  The NAL proposed a forfeiture of $55,000, based on 
two components.  The first component consisted of a base 
figure of $40,000 as a general penalty of $20,000 each for 
the two violations at issue.  The second component, which we 
added to the base amount of $40,000, was an amount equal to 
approximately one-half of the contributions due for the 
months of December 1999 and January 2000, or $15,000.  After 
carefully considering the record and NATN's arguments, we 
conclude that NATN is liable for the full amount of the 
forfeiture as proposed.  As discussed below, the record 
reveals that NATN has willfully and repeatedly failed to 
make the required contributions, and there is nothing before 
us suggesting that the invoiced amounts are incorrect.  
Further, we find nothing that warrants a downward adjustment 
to the forfeiture. 

     8.  Prior to its receipt of our February 2000 letter, 
NATN had paid less than 20 percent of the total amount 
billed by USAC during the preceding 24 months.  NATN's 
repeated failures to pay the invoiced amounts occurred 
despite numerous requests from USAC for payment and despite 
NATN's sale of its LEC-billed customer base in September 
1999.  In this regard, although NATN's income declined, the 
company did not explain why it ignored USAC prior to that 
sale, nor does it explain why none of the sale proceeds were 
applied to its universal service obligations.  After 
receiving our February 2000 letter, NATN contributed another 
$190,000, which USAC credited to the oldest outstanding 
invoices.12  Consequently, at the time of the NAL, NATN had 
failed to pay the December 1999 and January 2000 invoices.  
Those invoices remain unpaid, and NATN's current liability 
for universal service contributions exceeds hundreds of 
thousands of dollars.  In the meantime, NATN has made no 
payments to USAC between June 2000 and February 2001 and has 
not yet unequivocally committed to pay off its arrearage.13  
We have considered NATN's other arguments regarding its 
difficulties in meeting its universal service obligations, 
and we conclude that they do not mitigate its failures to 
pay the cited invoices, nor do they provide a basis for 
reducing or eliminating the forfeiture.  The Commission's 
rules and policies currently require carriers to pay 
universal service based on their prior year revenues,14 and 
the Commission recently declined a carrier's petition for 
forbearance from those rules.15  There is no basis for 
treating NATN differently.  Finally, although NATN's recent 
contacts with USAC and apparent resumption of payments may 
bode well for the future, they are not equivalent to the 
``significant efforts'' cited by the Commission in the 
Notices of Apparent Liability issued to Intellicall and 
Matrix, which supported the downward adjustments made to the 
proposed forfeitures.  In both instances, the carriers 
submitted plans to eliminate their universal service debts 
to USAC and commenced paying down their arrearages prior to 
issuance of their respective Notices of Apparent Liability.    

                      IV.  ORDERING CLAUSES

     9.  Accordingly, IT IS ORDERED THAT, pursuant to 47 
U.S.C.  503(b) and 47 C.F.R.  1.80(f)(4), North American 
Telephone Network, LLC is LIABLE FOR A FORFEITURE in the 
amount of fifty-five thousand dollars ($55,000) for 
willfully and repeatedly violating 47 U.S.C.   254(d) and 
47 C.F.R.  54.706. 
     10.  Payment of the forfeiture shall be made in the 
manner provided for in 47 C.F.R.  1.80 within thirty days 
of the release of this Forfeiture Order.  If the forfeiture 
is not paid within the period specified, the case may be 
referred to the Department of Justice for collection 
pursuant to 47 U.S.C.  504(a).  North American Telephone 
Network, LLC may pay the forfeiture by mailing a check or 
money order, 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.  A request 
for payment of the full amount of this Forfeiture Order 
under an installment plan should be sent to: Chief, Revenue 
and Receivables Operations Group, 445 12th Street, S.W., 
Washington, D.C. 20554.16  

     11.  IT IS FURTHER ORDERED THAT a copy of this 
Forfeiture Order shall be sent by Certified Mail Return 
Receipt Requested to North American Telephone Network, LLC 
in care of Timothy J. Cooney, Esq., Wilkinson, Barker, 
Knauer, LLP, 2300 N Street, N.W., Washington, D.C. 20037, and to North American Telephone Network, 4151 
Ashford Dunwoody, #675, Atlanta, Georgia 30319, attention: 
Hans Kasper.


                         David H. Solomon
                         Chief, Enforcement Bureau 

1  North American Telephone Network, LLC, 15 FCC Rcd 14022 
(Enf. Bureau 2000) (``NAL'').  

2  47 U.S.C.  254(d). 

3  See Amendment of Parts 54 and 69 - Changes to Board of 
NECA, Inc., 12 FCC Rcd 18400, 18415 (1997) (``NECA Changes 
Order''); 47 C.F.R.  54.702(b).

4  See Amendment of Part 54 - Universal Service, 12 FCC Rcd 
22423, 22425 (1997); 47 C.F.R.  54.709(a)(4-5). 

5  NATN paid approximately $186,000 in universal service 
contributions in 1998 but nothing further until March 2000.  
According to USAC, NATN's total liability through January 
2000 exceeded $1.1 million. 

6  Letter from David H. Solomon, Chief, Enforcement Bureau, 
to North American Telephone Network dated February 16, 2000 
(``February 2000 letter''). 

7  Letter from Kay P. Shihata, CPA, Accounting Manager, 
North American Telephone Network to James W. Shook, 
Investigations and Hearings Division, Enforcement Bureau, 
dated March 8, 2000.    

8  See America's Tele-Network Corp., 15 FCC Rcd 20903 (2000) 
(Notice of Apparent Liability); Intellicall Operator 
Services, 15 FCC Rcd 13539 (2000) (Notice of Apparent 
Liability); Matrix Telecom, Inc., 15 FCC Rcd 13544 (2000) 
(Notice of Apparent Liability). 

9  47 U.S.C.  503(b)(1)(B).  See also 47 C.F.R.  
1.80(a)(2).  Recently, the Commission amended section 
1.80(b) of its rules to increase the maximum penalties that 
may be imposed.  For a common carrier, the forfeiture limit 
for each violation is now $120,000, with a maximum potential 
forfeiture of $1,200,000 for a continuing violation 
involving a single act or failure to act.  See Amendment of 
Section 1.80(b) of the Commission's Rules, 15 FCC Rcd 18221 

10  See also 47 C.F.R.  1.80(b)(2). 

11  See also The Commission's Forfeiture Policy Statement 
and Amendment of Section 1.80 of the Rules to Incorporate 
the Forfeiture Guidelines, 12 FCC Rcd 17087, 17100-01 
(1997), recon. denied, 15 FCC Rcd 303 (1999). 

12  See Intellicall Operator Services, 15 FCC Rcd 21771, 
21772-73 (2000) (Forfeiture Order).  As discussed therein, 
USAC's practice, prior to May 2000, was to credit payments 
made towards the oldest outstanding invoice unless the 
carrier requested different treatment.  Because NATN had not 
requested that its payments be applied to any particular 
invoice, USAC credited payments made in March and April 2000 
to invoices issued in 1998.  Moreover, beginning in May 
2000, USAC uniformly credits payments to the oldest 
outstanding invoice.  See Intellicall Forfeiture Order, 15 
FCC Rcd at 21772 n. 8.  Thus, USAC credited NATN's payments 
in May and June 2000 to 1998 invoices.

13  By letter from Barry P. Miller, Esquire to Scott Barasch 
at USAC, dated January 10, 2001, NATN proposed to pay off 
its indebtedness, as recalculated by it, in 36 monthly 
installments.  Subsequently, NATN advised that it made a 
payment equal to its January 2001 contribution as billed by 
USAC on February 22, 2001.  

14  47 C.F.R.  54.711, provides that ``[c]ontributions 
shall be calculated and filed in accordance with the 
Telecommunications Reporting Worksheet.''  That worksheet 
(and its predecessor, the Universal Service Worksheet) 
requires carriers to report revenue for the prior year.  
USAC then calculates the carrier's contribution based on 
that reported revenue.  See NECA Changes Order, 12 FCC Rcd 
at 18424, 18442, 18501-02; 1998 Biennial Regulatory Review - 
Parts 1, 52, 54 and 64, 14 FCC Rcd 16602 (1999).  See also 
Federal - State Joint Board on Universal Service (Petitions 
for Waiver or Reconsideration of Sections 54.706, 54.709 
and/or 54.711 of the Commission's Rules), 15 FCC Rcd 20769 

15  See Federal - State Joint Board on Universal Service 
(Petition for Forbearance from Enforcement of Sections 
54.709 and 54.711 of the Commission's Rules by Operator 
Communications, Inc. d/b/a Oncor Communications), FCC 01-51, 
released February 13, 2001 (``Oncor MO&O'').  Currently, the 
Commission is considering changes to the universal service 
contribution methodology for all telecommunications 
carriers.  See Oncor MO&O, at  14, citing Federal - State 
Joint Board on Universal Service, 15 FCC Rcd 19947 (2000) 
(Further Notice of Proposed Rulemaking and Order). 

16 See 47 C.F.R.  1.1914.