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Federal Communications Commission
Washington, D.C. 20554
In the Matter of ) File No. EB -00-IH-0057
Matrix Telecom, Inc. ) NAL/Acct. No. X32080022
Adopted: February 8, 2001 Released: February
By the Commission:
1. In this Forfeiture Order, we find that Matrix
Telecom, Inc. (``Matrix'') has violated Section 254(d) of
the Communications Act of 1934, as amended (the
``Communications Act'' or the ``Act''), 47 U.S.C. § 254(d),
and Section 54.706 of the Commission's rules, 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 in this case
and after considering Matrix's response to our Notice of
Apparent Liability (``NAL'') in this matter,1 we conclude
that Matrix is liable for a forfeiture in the amount of one
hundred thirteen thousand dollars ($113,000).
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 creating the universal service program.
In particular, Section 254 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 Section 254, 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. Matrix, an interstate telecommunications carrier,
does not dispute its liability for universal service
contributions. Since it began receiving invoices, Matrix
has paid more than $1 million dollars towards universal
service. Matrix, however, has missed payments, underpaid
its monthly invoices and failed to cure its arrearages. As
a result, Matrix owed over $1 million in universal service
payments as of April 2000.
4. In February 2000, the Enforcement Bureau sent a
letter to Matrix explaining that it was the subject of a
potential enforcement action. 5 In its response, Matrix
stated that it ``wishes to ensure full compliance with the
Commission's Rules and seeks to retire its outstanding
universal service obligation as soon as practicable.''6 In
a follow-up letter, Matrix reported that it had presented
USAC with a payment plan designed to cure its arrearage in
thirty-six months.7 Matrix represented that each month it
will pay an amount equal to its current monthly obligation
and an additional $21,500 toward the amount it is in
arrears. Matrix began making payments pursuant to this plan
in May 2000, prior to the issuance of the NAL in this
5. In the NAL, we found Matrix apparently liable for
a forfeiture of $113,000 based on its failure to make
required universal service contributions in November and
December 1999. In its response, Matrix asserts that the
Commission should reduce or rescind the proposed forfeiture.
Matrix contends that the amount of the forfeiture is too
high in light of its efforts to pay its universal service
contributions. Matrix also argues that its current
financial condition will not permit it to pay a forfeiture
of this size.
6. We disagree with Matrix's contention that the
amount of the forfeiture is too high in light of its efforts
to pay its universal service contributions. Matrix and
other carriers that fail to pay required universal service
contributions and accrue arrearages of the amounts present
in this case are appropriately subject to commensurate
forfeitures. In calculating the forfeiture amount in the
NAL, we took into account Matrix's significant efforts to
satisfy its universal service obligations. In recognition
of those efforts, we applied a downward adjustment of
$76,614 to the proposed forfeiture, a reduction of over 40
percent. Consequently, we decline to reduce or rescind the
proposed forfeiture amount.
7. We also disagree with Matrix's assertion that it
is unable to pay a forfeiture of $113,000. We have reviewed
the financial information submitted by Matrix and find that
Matrix has ample current assets to pay a forfeiture of this
amount. The Commission previously has held that a licensee's
gross revenues are generally the best indicator of its
ability to pay a forfeiture. See, e.g., Independent
Communications, Inc., FCC 00-284 (released August 25, 2000)
(a proposed forfeiture equal to one percent of the corporate
licensee's gross revenues was not excessive and elimination
or reduction of the forfeiture was not warranted even though
the company operated at a loss); PJB Communications of
Virginia, Inc., 7 FCC Rcd 2088, 2089 (1992) (forfeiture not
deemed excessive where it represented approximately 2.02
percent of the violator's gross revenues). The financial
information provided by Matrix indicates that the proposed
forfeiture amount is substantially less than one percent of
Matrix's annual gross revenues. As we stated in the
Forfeiture Policy Statement, forfeitures should not be
simply an affordable cost of doing business.8 We continue
to believe that a forfeiture in the amount of $113,000 is
appropriate based on all the facts and circumstances of this
IV. ORDERING CLAUSES
8. Accordingly, IT IS ORDERED THAT, pursuant to
Section 503(b) of the Act,9 and Section 1.80(f)(4) of the
Commission's rules,10 Matrix IS LIABLE FOR A FORFEITURE in
the amount of one hundred thirteen thousand dollars
($113,000) for willfully and repeatedly violating Section
254 of the Act, 47 U.S.C. § 254, and Section 54.706 of the
Commission's rules, 47 C.F.R. § 54.706.
9. Payment of the forfeiture shall be made in the
manner provided for in Section 1.80 of the Commission's
rules within 30 days of the release of this Forfeiture
Order. If the forfeiture is not paid within the period
specified, the Commission may refer the case to the
Department of Justice for collection pursuant to Section
504(a) of the Act, 47 U.S.C. § 504(a). Matrix may pay the
forfeiture by mailing a check or similar instrument, payable
to the order of the Federal Communications Commission, to
the Federal Communications Commission, P.O. Box 73482,
Chicago, Illinois 60673-7482. The payment should note the
NAL/Acct. No. referenced above. Requests for full payment
under an installment plan should be sent to: Chief, Credit
and Debt Management Center, 445 12th Street, S.W.,
Washington, D.C. 20554. See 47 C.F.R. § 1.1914.
10. IT IS FURTHER ORDERED THAT a copy of the
Forfeiture Order shall be sent by Certified Mail Return
Receipt Requested to Matrix's counsel, Thomas Crowe, Esq.,
2300 M Street, N.W., Suite 800, Washington, D.C. 20037.
FEDERAL COMMUNICATIONS COMMISSION
Magalie Roman Salas
1 Matrix Telecom, Inc., Notice of Apparent Liability for
Forfeiture, FCC 00-262, (released July 27, 2000).
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); 47 C.F.R. §
4 See Amendment of Part 54 - Universal Service, 12 FCC Rcd
22423, 22425 (1997); 47 C.F.R. §§ 54.709(a)(4), 54.709(d).
5 Letter from David H. Solomon, Chief, Enforcement Bureau,
to Matrix Telecom, Inc. dated February 16, 2000.
6 Letter from Thomas K. Crowe, Esq., counsel for Matrix to
David H. Solomon, Chief, Enforcement Bureau, dated March 10,
7 Letter from Todd Murcer, Manager of Business Development,
Matrix Telecom, Inc. to Suzanne M. Tetreault, Assistant
Chief, Enforcement Bureau, dated May 30, 2000.
8 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).
9 47 U.S.C. § 503(b).
10 47 C.F.R. § 1.80(f)(4).