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Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
BroadStreet Communications, )
Inc. ) File No. EB-02-TC-001
) NAL/Acct. No. 20023217-0001
Apparent Liability for )
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: April 26, 2002 Released: April 29, 2002
By the Chief, Enforcement Bureau:
1. In this Notice of Apparent Liability for Forfeiture
(``NAL''),1 we find that BroadStreet Communications, Inc.
(``BroadStreet'')2 apparently willfully or repeatedly violated
section 214(a) of the Communications Act of 1934, as amended (the
``Act''),3 and sections 63.61, 63.63, 63.71, and 63.505 of the
Commission's rules4 by discontinuing its domestic interstate
access service in Baltimore, Maryland, and Norfolk, Virginia, as
well as all of its long distance service, before receiving
authorization to do so from the Commission. Based upon our review
of the facts and circumstances surrounding these apparent
violations, we find that BroadStreet is apparently liable for a
forfeiture in the amount of five thousand dollars ($5000) for
each violation, resulting in a total proposed forfeiture of
2. BroadStreet is a non-dominant provider of local
exchange, exchange access, resold long distance, and data
services in twelve states. BroadStreet Communications, L.L.C.,
the parent organization, is a limited liability company, under
which limited unitholders were required to make capital
contributions upon call by the management. According to
BroadStreet, on November 1, 2001, one of its three equity
investors refused to make the required capital contribution, and
the other equity investors advised they would not fund
BroadStreet unless another investor was found who would replace
the contribution of the first investor.6 If they refused to make
While management sought to continue BroadStreet's operations, the
three equity investors advised on December 7, 2001, that because
BroadStreet was at or near insolvency absent additional funding,
the company had to wind down operations. As a result, BroadStreet
received from its equity investors $450,000 to ensure transition
time for BroadStreet's customers and provide time for the
necessary Federal and state regulatory approvals, as well as for
liquidation by BroadStreet's senior secured creditor and
dissolution of the BroadStreet companies.7 As of the middle of
February, there were only four BroadStreet employees who would be
paid for approximately one more month.8 Despite BroadStreet's
alleged financial insolvency, the company has stated to the
Commission that it does not intend to file for bankruptcy.9
3. As a result of these funding decisions, on December 7,
2001, Broadstreet ceased paying its bills to the facilities-
based providers whose services BroadStreet resold. Once those
carriers became aware of BroadStreet's situation, they were
reluctant to continue service to BroadStreet; the intervention of
the Virginia and Maryland State Commissions persuaded some of
these carriers to continue service for a short period of time.10
BroadStreet terminated long distance service on or about December
7, 2001. BroadStreet terminated local service and exchange
access in Baltimore, Maryland on December 13, 2001, resulting in
a loss of service on 583 lines. BroadStreet terminated local
service and exchange access in Norfolk, Virginia, first for one
day on December 18, 2001, and then permanently on January 11,
2002, resulting in a loss of service on 781 lines.11
4. After being contacted by the Commission staff,
BroadStreet filed with the Commission on December 18, 2001, an
application for discontinuance of all of its interstate
services.12 The Commission staff issued a Public Notice on
December 19, 2001,13 and the application was automatically
granted on January 19, 2002. By that date, however, all long
distance service had been terminated, and exchange access service
had been terminated in Baltimore and Norfolk.14 As of January
24, 2002, 421, or 72% of the Baltimore lines, and 675, or 86% of
the Norfolk lines, had been transferred to other carriers.15 It
is not known whether the remaining 268 lines in those locations
were abandoned by the customers or whether they represented
customers who lost all service.16
I.A. Violations Evidenced in the Record
5. BroadStreet's responses to our staff's inquiries
establish that BroadStreet did not meet its obligations as a
common carrier to seek Commission approval before it discontinued
service, in apparent violation of section 214(a) of the Act and
the relevant Commissionsections 63.61, 63.71, and 63.505 of the
Commission's rules. Section 214(a) has an essential role in the
Commission's efforts to protect consumers. Unless the Commission
has the ability to determine whether a discontinuance of service
is in the public interest, it cannot protect customers from
having essential services cut off without adequate warning, or
ensure that these customers have other viable alternatives.17 We
therefore intend to strictly enforce section 214 and our rules
regarding prior authorization of discontinuances.
6. BroadStreet should have filed for authorization as soon
as it knew that discontinuance would be required. Although
BroadStreet contends that it had no choice but to discontinue
service when it did, it appears that the deadlines were imposed
by BroadStreet's Board of Directors, and were not long enough to
permit expeditious Commission action on a discontinuance
application, BroadStreet knew by November 1, 2002,2001, that it
might have to discontinue service, and it should have anticipated
thehave made a timely decision to seek such approvals based on
the anticipated length of time it would take to notify customers
and obtain regulatory approvals for the discontinuances. Instead
it waited until December 18, 20022001 to file its application,
after it had already discontinued service to some customers.
Further, BroadStreet's actions were apparently caused by the
actions of its own limited unitholders. WhileAlthough these
limited unitholders aremay be protected by their agreement from
liability for the actions of the Company, that is no reason to
allowcompany,18 BroadStreet nonetheless had legal obligations to
to avoid its obligations.notify customers and obtain Commission
approval before discontinuing service. In view of the foregoing
discussion,facts, it appears that BroadStreet willfully or
repeatedly discontinued service without Commission authorization
in violation of section 214(a) of the Act and sections 63.61,
63.71, and 63.505 of the Commission's rules.
I.B. Forfeiture Amount
7. The forfeiture guidelines establish a base forfeiture
amount of $5000 per violation for unauthorized discontinuance of
service.19 Service wasBroadStreet first discontinued service for
long distance, then for exchange access in Baltimore, and finally
for exchange access in Norfolk. SinceBecause there were three
violations, i.e., unauthorized discontinuances of long for
Baltimore, Norfolk, and long distance,distance service and of
exchange access service in these two locations, this results in a
total proposed forfeiture of $7500.$15,000.
III. CONCLUSION AND
8. We have determined that BroadStreet apparently violated
section 214(a) of the Communications Act and sections 63.61,
63.71, and 63.505 of the Commission's regulationsrules by
discontinuing service on three separate occasions without
Commission authorization, as described above. We have further
determined that BroadStreet is apparently liable for forfeitures
in the amount of $5000 for each of the violations, resulting in a
total forfeiture amount of $15,000.
9. Accordingly, IT IS ORDERED, pursuant to section 503(b)
of the Communications Act of 1934, as amended, 47 U.S.C. §
503(b), section 1.80 of the Commission's rules, 47 C.F.R. § 1.80,
and authority delegated by section 0.311 of the Commission's
rules, 47 C.F.R.§ 0.311, that BroadStreet Communications, Inc. IS
HEREBY NOTIFIED of an Apparent Liability for Forfeiture in the
amount of $15,000 for willful or repeated violations of section
214(a) of the Act20 and sections 63.61, 63.63, 63.71, and 63.505
of the Commission's rules as described in the paragraphs above.21
10. IT IS FURTHER ORDERED, pursuant to section 1.80 of the
Commission's rules, 47 C.F.R. § 1.80, that within thirty (30)
days of the release of this Notice of Apparent Liability,
BroadStreet Communications, Inc. SHALL PAY the full amount of the
proposed forfeiture22 OR SHALL FILE a response showing why the
proposed forfeiture should not be imposed or should be reduced.
11. IT IS FURTHER ORDERED that copies of this Notice of
Apparent Liability for Forfeiture SHALL BE SENT by certified mail
to Philip M. Fraga, Senior Vice President and General Counsel,
BroadStreet Communications, Inc., 601 Technology Drive, Suite
300, Southpointe, Canonsburg, Pennsylvania 15317.
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
1 See 47 U.S.C. § 503(b)(4)(A). The Commission has authority
under this section of the Act to assess a forfeiture penalty
against a common carrier if the Commission determines that the
carrier has ``willfully or repeatedly'' failed to comply with the
provisions of the Act or with any rule, regulation, or order
issued by the Commission under the Act. The section provides
that the Commission must assess such penalties through the use of
a written notice of apparent liability.
2 BroadStreet is otherwise known as Net Impact Communications,
Inc. and is a subsidiary of BroadStreet Communications Holdings,
Inc., which is thea subsidiary of BroadStreet Communications,
L.L.C. ItBroadStreet Communications, Inc. is also affiliated
with BroadStreet Communications of Virginia, L.L.C. Its main
office is at 601 Technology Drive, Southpointe, Canonsburg, PA
15317. Randolph S. Fowler is Chairman and CEO; Thomas W. Cady is
President and COO; and Philip M. Fraga is Senior Vice President
and General Counsel. BroadStreet has blanket operating authority
from the Commission under sections 63.01 and 63.02 of the
Commission's rules, 47 C.F.R. §§ 63.01, 63.02.
3 47 U.S.C. § 214(a). This section provides in pertinent part
that ``[n]o carrier shall discontinue, reduce, or impair service
to a community, or part of a community, unless there shall first
have been obtained from the Commission a certificate that neither
the present nor future public convenience and necessity will be
adversely affected thereby; except that the Commission may, upon
appropriate request being made, authorize temporary or emergency
discontinuance, reduction, or impairment of service, or partial
discontinuance, reduction, or impairment of service....''
4 47 C.F.R. §§ 63.61, 63.63, 63.71, 63.505.
5 See 47 U.S.C. § 503(b)(2)(B); 47 C.F.R. § 1.80(b)(2).
6 Letter dated February 19, 2002, from Philip M. Fraga,
BroadStreet, to Peter G. Wolfe, FCC (``BroadStreet Letter'').
12 An application had been filed on October 9, 2001 to
discontinue service in Roanoke, Virginia, and this application
was granted on November 28, 2001, before service was terminated
13 Public Notice, ``Comments Invited on BroadStreet
Communications, Inc. and BroadStreet Communications of Virginia,
LLC Application to Discontinue Domestic Telecommunications
Services,'' NSD File No. W-P-D-551, DA 01-2972.
14 Local service and exchange access in Washington, D.C.,
Pittsburgh, Pennsylvania, and Richmond, Virginia was not
terminated until after the Commission authorized discontinuance
on January 19, 2002.
15 BroadStreet Letter.
16 Our staff held a telephone conference with BroadStreet
employees, including its Vice President and General Counsel, on
January 8, 2002, and sent a letter of inquiry to BroadStreet on
January 23, 2002. BroadStreet filed a response on February 19,
17 See Implementation of Section 402(b)(2)(A) of the
Telecommunications Act of 1996 and Petition for Forbearance of
the Independent Telephone & Telecommunications Alliance, Report
and Order in CC Docket No.97-11 and Second Memorandum Opinion and
Order in AAD File No. 98-43, 14 FCC Rcd 11364, 11380-81 (1999).
18 According to the company's Limited Liability Company
Agreement, if unitholders refuse to make contributions, the only
remedy is to deprive them of their voting rights and rights as
members of the Board of Directors, and to permit the company to
repurchase their units. See BroadStreet Letter, Attachment,
Second Amended and Restated Limited Liability Company Agreement
(May 30, 2001).
19 47 C.F.R. § 1.80.
20 47 U.S.C. § 214(a).
21 47 C.F.R. §§ 63.61, 63.63, 63.71, 63.505.
22 The forfeiture amount should be paid by check or money order
drawn to the order of the Federal Communications Commission.
Reference should be made on BroadStreet Communications, Inc.'s
check or money order to ``NAL/Acct. No. 20023217-0001.'' Such
remittances must be mailed to Forfeiture Collection section,
Finance Branch, federal Communications Commission, P.O. Box
73482, Chicago, Illinois 60673-7482.