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

In the Matter of                )  File No. EB -00-IH-0057
Matrix Telecom, Inc.            )  NAL/Acct. No. X32080022

                      FORFEITURE ORDER

   Adopted:  February 8, 2001           Released:   February 
20, 2001

By the Commission:

                      I.  INTRODUCTION

     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).

                       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  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 

                      III.  DISCUSSION

     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.


                         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).