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

In the Matter of                 )    File No. EB-05-IH-0158
                                )
                                )
InPhonic, Inc.                   )    NAL/Acct. No. 200532080139
                                )
                                )
Apparent Liability for           )    FRN No. 0012-5999-16
Forfeiture                       )

                  NOTICE OF APPARENT LIABILITY 
                    FOR FORFEITURE AND ORDER


Adopted:  July 25, 2005                           Released:  July 
25, 2005

By the Commission:

I.   INTRODUCTION 
                                      
     1.   In this Notice of Apparent Liability for Forfeiture 
(``NAL''), we find that a telecommunications provider, operating 
since August 2002 and at least indirectly benefiting from the 
federal programs supporting the telecommunications industry since 
that time, apparently failed to meet its statutory and regulatory 
obligations relating to those programs.  Based upon the facts and 
circumstances surrounding this matter we conclude that this 
company is apparently liable for a total forfeiture of $819,905.  

     2.   We specifically find that InPhonic, Inc. (``InPhonic'') 
has apparently violated section 64.1195 of the Commission's rules 
by willfully and repeatedly failing to register with the 
Commission until January 2005.1  We also find that InPhonic has 
apparently violated sections 54.711(a) and 64.604(c)(5)(iii)(B) 
of the Commission's rules by failing to submit certain 
Telecommunications Reporting Worksheets (``Worksheets'') from 
2002 to 2004.2  Finally, we find that InPhonic has apparently 
violated section 254(d) of the Communications Act of 1934, as 
amended (the ``Act''),3 and sections 54.706(a) and 
64.604(c)(5)(iii)(A) of the Commission's rules by willfully and 
repeatedly failing to contribute to the Universal Service Fund 
(``USF'') and Telecommunications Relay Service (``TRS'') Fund.4    
 
II.  BACKGROUND

     3.   The Commission is charged by Congress with regulating 
interstate and international telecommunications and ensuring that 
providers of such telecommunications comply with the requirements 
imposed on them by the Act and our rules.5  The Commission also 
has been charged by Congress to establish, administer and 
maintain various telecommunications regulatory programs, which 
are described in more detail below, and to fund these programs 
through assessments on the telecommunications providers that 
benefit from them.  In order to accomplish these goals, the 
Commission established ``a central repository of key facts about 
carriers'' through which it could monitor the entry and operation 
of interstate telecommunications providers to ensure, among other 
things, that they are qualified, do not engage in fraud, and do 
not evade oversight.6  Commission rules require that, upon entry 
or anticipated entry into interstate telecommunications markets, 
telecommunications carriers register by submitting information on 
an FCC Form 499-A, also known as the annual Telecommunications 
Reporting Worksheet.7  The Commission also requires 
telecommunications providers to submit financial information on 
annual and, with some exceptions not applicable to InPhonic, 
quarterly short-form Worksheets to enable the Commission to 
determine and collect the statutorily mandated program 
assessments.8

     4.   The Telecommunications Act of 1996 codified Congress' 
historical commitment to promote universal service to ensure that 
consumers in all regions of the nation have access to affordable, 
quality telecommunications services.9  In particular, section 
254(d) of the Act requires, among other things, that ``[e]very 
telecommunications carrier [providing] interstate 
telecommunications services . . . contribute, on an equitable and 
nondiscriminatory basis, to the specific, predictable, and 
sufficient mechanisms established by the Commission to preserve 
and advance universal service.''10  In implementing this 
Congressional mandate, the Commission directed all 
telecommunications carriers providing interstate 
telecommunications services and certain other providers of 
interstate telecommunications to contribute to the Universal 
Service Fund based upon their interstate and international end-
user telecommunications revenues.11  Failure by some providers to 
pay their share into the Fund skews the playing field by giving 
non-paying providers an economic advantage over their competitors 
who must shoulder more than their fair share of the costs of the 
Fund.

     5.   Section 225(b)(1) of the Act, which codifies Title IV 
of the Americans with Disabilities Act of 1990, directs the 
Commission to ``ensure that interstate and intrastate 
telecommunications relay services are available, to the extent 
possible and in the most efficient manner, to hearing-impaired 
and speech-impaired individuals in the United States.''12  To 
that end, the Commission established the TRS Fund to reimburse 
TRS providers for the costs of providing interstate 
telecommunications relay services.13  Pursuant to section 
64.604(c)(5)(iii)(A) of the Commission's rules, every carrier 
that provides interstate telecommunications services must 
contribute to the TRS Fund based upon its interstate end-user 
revenues.14

     6.   The Commission has established specific procedures to 
administer the programs for universal service and 
telecommunications relay services.  A carrier must file 
Worksheets for the purpose of determining its USF, TRS, and other 
regulatory fee program payments.15  These periodic filings 
trigger a determination of liability, if any, and subsequent 
billing and collection by the entities that administer the 
regulatory programs.  For example, USAC uses the revenue 
projections submitted on the quarterly filings to determine each 
carrier's universal service contribution amount.16  The TRS 
Administrator uses the prior year's revenue information provided 
on the annual Worksheet to determine amounts owed for the TRS.17  
Carriers are required to pay their monthly USF contribution by 
the date shown on their invoice.18  The Commission's rules 
explicitly warn contributors that failure to file their forms or 
submit their payments potentially subjects them to enforcement 
action.19  Further, under the Commission's ``red light rule,'' 
action will be withheld on any application to the Commission or 
request for authorization made by any entity that has failed to 
pay when due its regulatory program payments, such as USF 
contributions, and if payment or payment arrangements are not 
made within 30 days from notice to the applicant, such 
applications or requests will be dismissed.20

     7.   InPhonic, through its wholly-owned subsidiary, Star 
Number, Inc., began providing mobile virtual network operator 
(``MVNO'') service in August, 2002.21  InPhonic states that 
``[t]he Company's MVNO segment provides wireless services for 
consumers through wireless airtime service that it purchases 
wholesale from Sprint Corp.  The Company provides the wireless 
resale services under the Company's Liberty Wireless brand 
name.''22  

     8.   In 2004, the Enforcement Bureau (``Bureau'') audit 
staff sought to identify resellers of telecommunications service 
that failed to register as telecommunications service providers 
with the Commission, and, thus, may also have failed to satisfy 
various Commission program requirements.23  In order to identify 
such resellers, the Bureau audit staff compared lists of 
resellers provided by wholesale service providers against the 
Commission's central repository of registered telecommunications 
service providers with filer identification numbers.  If a 
reseller did not appear to have an identification number, the 
audit staff sent an inquiry to that reseller.  

     9.   On March 30, 2004, the Bureau's audit staff sent a 
letter to InPhonic requesting information pertaining to 
InPhonic's compliance with section 64.1195 of the Commission's 
rules.24  On January 18, 2005, more than nine months after the 
March 30, 2004 Audit Letter, InPhonic stated that it still had 
not submitted a Form 499-A, but it intended to submit by January 
31, 2005 all appropriate filings due since the company's 
incorporation in August, 2002.25  On January 28, 2005, InPhonic 
untimely filed its Form 499-Q for May 1, August 1 and November 1, 
2004.  On January 31, 2005, InPhonic finally registered by filing 
its 2003 Form 499-A and also untimely filed its 2004 Form 499-
A.26  


     10.  On March 2, 2005, the Bureau issued a letter of inquiry 
to InPhonic.27  The LOI directed InPhonic, among other things, to 
submit a sworn written response to a series of questions relating 
to InPhonic's apparent failure to register and file 
Telecommunications Reporting Worksheets and to make mandated 
federal telecommunications regulatory program payments.  On March 
18, 2005, InPhonic paid USAC $889,189 for USF contributions it 
owed based on its 2002, 2003 and 2004 revenue.28  InPhonic 
responded to the LOI on April 8, 2005.29  

III. DISCUSSION

     11.  Under section 503(b)(1)(B) of the Act, any person who 
is determined by the Commission to have willfully or repeatedly 
failed to comply with any provision of the Act or any rule, 
regulation, or order issued by the Commission shall be liable to 
the United States for a forfeiture penalty.30  To impose such a 
forfeiture penalty, the Commission must issue a notice of 
apparent liability and the person against whom the notice has 
been issued must have an opportunity to show, in writing, why no 
such forfeiture penalty should be imposed.31  The Commission will 
then issue a forfeiture if it finds by a preponderance of the 
evidence that the person has violated the Act or a Commission 
rule.32  As set forth below, we conclude under this standard that 
InPhonic is apparently liable for a forfeiture for its apparent 
willful and repeated violations of section 254(d) of the Act33 
and sections 54.706(a), 54.711(a), 64.604(c)(5)(iii), and 64.1195 
of the Commission's rules.34

     12.  The fundamental issues in this case are whether 
InPhonic apparently violated the Act and the Commission's rules 
by:  (1) willfully or repeatedly failing to register pursuant to 
section 64.1195 of the Commission's rules;35 (2) willfully or 
repeatedly failing to file Telecommunications Reporting 
Worksheets; and (3) willfully or repeatedly failing to make 
requisite contributions toward the Universal Service and TRS 
Funds.  We answer these questions affirmatively.  Based on a 
preponderance of the evidence, we conclude that InPhonic is 
apparently liable for a forfeiture of $819,905 for apparently 
willfully and repeatedly violating section 254(d) of the Act,36 
and sections 54.706(a), 54.711(a), 64.604(c)(5)(iii), and 64.1195 
of the Commission's rules.37

     13.  Specifically, we propose the following forfeitures for 
apparent violations within the last year: (1) $100,000 for 
failure to register pursuant to section 64.1195 of the 
Commission's rules;38 (2) $100,000 for failure to file two 
Telecommunications Reporting Worksheets; (3) $598,626 for failure 
to make seven monthly USF contributions on a timely basis; and 
(4) $21,279 for failure to timely make its 2004 TRS Fund 
contribution.  Although we propose forfeitures only for apparent 
violations within the last year, we discuss below the history of 
InPhonic's noncompliance in prior years as useful background and 
to demonstrate the scope of InPhonic's misconduct and the context 
of the misconduct that is within the statute of limitations 
period and thus covered by this NAL.

     A.   Registration with the Commission

     14.  We conclude that InPhonic has apparently violated 
section 64.1195(a) of the Commission's rules by failing to 
register with the Commission from when it began providing 
interstate telecommunications services in 2002 until January 31, 
2005.39  InPhonic's failure to register constitutes a clear 
violation of a vital Commission rule.  Section 64.1195(a) of the 
Commission's rules unambiguously requires that all carriers that 
provide, or plan to provide, interstate telecommunications 
services register with the Commission by submitting specified 
information.40  Although InPhonic has been providing interstate 
telecommunications services since 2002, it failed to register in 
accordance with section 64.1195(a) until January 31, 2005, 
approximately 10 months after it received the Bureau's March 30, 
2004 Audit Letter.  As a result of its misconduct, InPhonic 
operated for over two years without participation in any of the 
programs tied to registration.  As an interstate 
telecommunications carrier, InPhonic had a clear and affirmative 
duty to apprise itself of, and satisfy, its federal 
obligations.41    

     15.  We view InPhonic's apparent failure to register for 
over two years as a serious dereliction of its responsibilities 
under the Act and our rules.  A carrier's compliance with the 
Commission's registration requirement is critical to the 
administration of the USF and TRS programs, and accomplishment of 
Congress' objectives in sections 254(d) and 225(b)(1) of the Act.  
As we noted above, a carrier's duty to register upon entry, or 
anticipated entry, into interstate telecommunications markets is 
essential to the fulfillment of the USF and TRS program missions 
because it identifies the company to the various program 
administrators and brings the company within the purview and 
oversight of those administrators.  If a carrier never identifies 
itself as a telecommunications provider by properly registering 
under the Commission's rules, then neither the Commission nor the 
various program administrators can ascertain whether that carrier 
has fulfilled other regulatory obligations, including the 
requirement that carriers file Worksheets and contribute to USF, 
TRS, and other regulatory programs.  Moreover, the program 
administrators have no basis upon which to invoice the carrier 
for contributions.  A telecommunications carrier that fails to 
register thus can operate outside of the Commission's oversight 
and evade its federal obligations to contribute toward the vital 
programs linked to registration.

     16.  The impact of a carrier's failure to register is no 
less severe where, as here, a carrier delays its registration for 
an extended period of time until after it is identified by Bureau 
enforcement efforts.  Although InPhonic registered on January 31, 
2005, has apparently filed some of the required Worksheets in the 
last several months, and ``is prepared to make all future 
filings, remit all resulting obligations, and is committed to 
remaining fully compliant with the Commission's rules and 
regulations,''42 InPhonic took no action until more than nine 
months after receiving a letter from the Bureau.43  The 
Commission has repeatedly stated that subsequent corrective 
measures to address a violation do not eliminate a licensee's 
responsibility for the period during which the violation 
occurred.44  InPhonic's substantial delay in registering after 
receiving the Bureau's letter raises serious questions about its 
intention to do so absent threat of Commission action.  Based on 
a preponderance of the evidence, therefore, we find that InPhonic 
apparently has violated section 64.1195(a) of the Commission's 
rules by willfully and repeatedly failing to register from 2002 
until January 31, 2005.45  

     B.   Submission of Telecommunications Reporting Worksheets 

     17.  We conclude that InPhonic apparently has violated 
sections 54.711(a) and 64.604(c)(5)(iii)(B) of the Commission's 
rules by willfully and repeatedly failing to file annual and 
quarterly Telecommunications Reporting Worksheets, on a timely 
basis, from when it began providing telecommunications services 
in 2002 through January 31, 2005.46  On January 28, 2005, 
InPhonic untimely filed its Form 499-Q for May 1, August 1 and 
November 1, 2004.  On January 31, 2005, InPhonic finally 
registered by filing its 2003 Form 499-A and also untimely filed 
its 2004 Form 499-A.  InPhonic has apparently not filed any other 
Worksheets that were due before January 31, 2005.  Within the 
past year, InPhonic has failed to file, on a timely basis, the 
quarterly Worksheets due August 1 and November 1, 2004.

     18.  Sections 54.711(a) and 64.604(c)(5)(iii)(B) of the 
Commission's rules each clearly establish a carrier's obligation 
to file periodic Telecommunications Reporting Worksheets.47  A 
carrier's failure to file these Worksheets as required has 
serious implications for the USF and TRS programs.  As discussed 
above, the filing of a Telecommunications Reporting Worksheet 
prompts a determination of liability for, and subsequent billing 
and collection of, regulatory fees and contributions by the 
various administrators of the Universal Service and TRS Funds.  
With regard to the federal universal service program in 
particular, the failure of a carrier such as InPhonic to abide by 
its federal filing obligation has a direct and profound 
detrimental impact by removing from the base of USF contributions 
telecommunications revenues that otherwise should be included, 
thereby shifting to compliant carriers additional economic 
burdens associated with the federal universal service program.48  
Consequently, a carrier's failure to file required Worksheets 
thwarts the very purpose for which Congress enacted section 
254(d) - to ensure that every interstate carrier ``contribute, on 
an equitable and nondiscriminatory basis, to the specific, 
predictable, and sufficient mechanisms established by the 
Commission to preserve and advance universal service.''49  Viewed 
in this context, the Telecommunications Reporting Worksheet is 
not only an administrative tool, but a fundamental and critical 
component of the Commission's Universal Service and TRS programs.
  
     19.  Based on a preponderance of the evidence, we find that 
InPhonic apparently has violated section 254 of the Act50 and 
sections 54.711 and 64.604 of the Commission's rules51 by 
willfully and repeatedly failing to file required information 
with the Commission on multiple occasions since 2002, including 
failure to make two filings, on a timely basis, within the last 
year, the time period covered by this NAL.  The NAL proposes a 
forfeiture for InPhonic's failure to file, on a timely basis, the 
Worksheets due August 1 and November 1, 2004.

     C.   Universal Service Contributions

     20.  We further conclude that InPhonic apparently violated 
section 254(d) of the Act and section 54.706 of the Commission's 
rules by willfully and repeatedly failing to contribute to 
universal service support mechanisms.52  Section 54.706(c) of the 
Commission's rules unambiguously directs that ``entities 
[providing] interstate telecommunications to the public . . . for 
a fee . . . contribute to the universal service support 
programs.''53  Although InPhonic has been providing interstate 
telecommunications services to end-users since 2002, InPhonic 
made no universal service contributions until March 18, 2005.54  
During the relevant period, InPhonic was required, pursuant to 
section 54.706(b) of the Commission's rules, to contribute to 
universal service mechanisms based upon either its historical or 
projected revenues.55  As we previously have stated,

       [c]arrier nonpayment of universal service 
       contributions undermines the efficiency and 
       effectiveness of the universal service support 
       mechanisms.  Moreover, delinquent carriers may 
       obtain a competitive advantage over carriers 
       complying with the Act and our rules.  We consider 
       universal service nonpayment to be a serious threat 
       to a key goal of Congress and one of the 
       Commission's primary responsibilities.56 

Based on a preponderance of the evidence, we find that InPhonic 
apparently has violated sections 254(d) of the Act and 54.706 of 
the Commission's rules by willfully and repeatedly failing to 
make its monthly universal service contribution payments for a 
period of years, including seven such failures within the past 
year.  

     D.   Telecommunications Relay Service Contributions

     21.  We also find that InPhonic apparently has violated 
section 64.604(c)(5)(iii)(A) of the Commission's rules by failing 
to make required contributions to the interstate TRS Fund.57  As 
an interstate telecommunications carrier, InPhonic was obligated 
to contribute to the TRS Fund on the basis of its interstate and 
international end-user telecommunications revenues.58  A 
carrier's contribution to the TRS Fund is based upon its subject 
revenues for the prior calendar year and a contribution factor 
determined annually by the Commission.59  Subject carriers must 
make TRS contributions on an annual basis, with certain 
exceptions that are not applicable to InPhonic.60  

     22.  InPhonic made its first TRS Fund payment of $22,455.04 
on April 25, 2005,61 approximately nine months after its 2004 TRS 
contribution became due on July 26, 2004, and 13 months after it 
first received a letter from the Bureau regarding its compliance 
with the Commission's rules.62  Based on a preponderance of the 
evidence, we therefore find that InPhonic apparently has violated 
section 64.604 of the Commission's rules by willfully and 
repeatedly failing to pay its TRS contributions when due, 
including its failure to make on a timely basis the payment due 
on July 26, 2004.
     
     E.   Proposed Forfeiture

     23.  Section 503(b)(1)(B) of the Act provides that any 
person that willfully or repeatedly fails to comply with any 
provision of the Act or any rule, regulation, or order issued by 
the Commission, shall be liable to the United States for a 
forfeiture penalty.63  For the apparent violations in this case, 
section 503(b)(2)(B) of the Act authorizes the Commission to 
assess a forfeiture of up to $120,000 for each violation or each 
day of a continuing violation, up to a statutory maximum of $1.2 
million for a single act or failure to act before September 7, 
2004, and up to $130,000 for each violation or each day of a 
continuing violation, up to a statutory maximum of $1.325 million 
for a single act or failure to act for violations occurring on or 
after September 7, 2004.64  In determining the appropriate 
forfeiture amount, we consider the factors enumerated in section 
503(b)(2)(D) of the Act, including ``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.''65

     24.  Under section 503(b)(6) of the Act, we may only propose 
forfeitures for apparent violations that occurred within one year 
of the date of this NAL.66  Nevertheless, section 503(b) does not 
bar us from assessing whether InPhonic's conduct prior to that 
time period apparently violated the Act or our rules in 
determining the appropriate forfeiture amount for those 
violations within the statute of limitations.67  Therefore, 
although we find that InPhonic apparently violated the Act and 
our rules for over two years, we propose forfeitures here only 
for violations that occurred within the last year.

     25.  In contrast to previous cases in which we have taken 
enforcement action for failure to satisfy universal service 
obligations,68 this case involves a carrier's failure both to 
register and submit any Telecommunications Reporting Worksheets 
from the time it commenced providing telecommunications services 
until after it received a letter from the Bureau - in this case, 
a period of over two years.  We find InPhonic's failure to 
discharge its federal reporting obligations to be particularly 
egregious.  As we stated above, the registration and filing of 
Telecommunications Reporting Worksheets are fundamental to the 
implementation of our central repository of carriers and to the 
administration of multiple statutorily-derived programs - 
including the USF and the TRS Fund.  Where, as here, a carrier 
ignores its obligations by wholly failing to register -- thereby 
affecting the time and manner in which these important federal 
programs are funded -- it undermines the programs and thwarts the 
purposes for which Congress and the Commission established them.  

     26.  The Commission's Forfeiture Policy Statement and 
implementing rules prescribe a base forfeiture of $3,000 for 
failure to file required forms or information.69  In the past, we 
have held that a substantial upward adjustment to $50,000 is 
warranted for a carrier's failure to file its Telecommunications 
Reporting Worksheets for revenue reporting purposes. 70  We find 
that failure to register is an even more egregious violation.  By 
ignoring its registration obligation, InPhonic not only has 
violated our rules with significant ramifications for federal 
telecommunications policies, but has also hampered efficient and 
effective Commission enforcement by delaying detection of, and 
action against, its behavior.  Moreover, carriers' failure to 
register imposes a substantial burden on the Commission, which 
can only identify such carriers through compliance review 
programs that require significant amounts of staff time and 
resources.  This egregious behavior strikes at the core of our 
ability to implement and enforce the Act and our rules 
effectively, thus warranting a substantial forfeiture.  Taking 
into account all of the factors enumerated in section 
503(b)(2)(D) of the Act, we conclude that a proposed forfeiture 
of $100,000 is warranted. 

     27.  In the past, we have held that a substantial forfeiture 
of $50,000 is warranted for a carrier's failure to file a 
Telecommunications Reporting Worksheet for revenue reporting 
purposes.  We find that InPhonic's willful and repeated failure 
to file periodic Telecommunications Reporting Worksheets is 
egregious.  As we noted above, a carrier's obligation to file 
these Worksheets is directly linked to, and thus has serious 
implications for, administration of the USF, TRS, and other 
regulatory programs.  By ignoring its reporting obligations, 
InPhonic has unilaterally shifted to compliant carriers and their 
customers the economic costs associated with the universal 
service, TRS, and other regulatory programs.  Therefore, we find 
that InPhonic is apparently liable for a $100,000 forfeiture for 
its failure to file, on a timely basis, two Worksheets within the 
last year; i.e., those due August 1 and November 1, 2004.

     28.  Based on the facts above, it also appears that InPhonic 
has failed to make the requisite contributions into the Universal 
Service Fund for a period of over two years.  Again, nonpayment 
of universal service contributions is an egregious offense that 
bestows on delinquent carriers an unfair competitive advantage by 
shifting to compliant carriers the economic costs and burdens 
associated with universal service.  A carrier's failure to make 
required universal service contributions hampers realization of 
Congress' policy objective in section 254(d) of the Act to ensure 
the equitable and non-discriminatory distribution of universal 
service costs among all telecommunications providers.71  The 
Commission has established a base forfeiture amount of $20,000 
for each month in which a carrier has failed to make required 
universal service contributions.72  Consequently, we find 
InPhonic apparently liable for a base forfeiture of $140,000 for 
its willful and repeated failure to make seven universal service 
contributions within the past year. 

     29.  In the past, we have calculated upward adjustments to 
forfeitures for failure to make USF and TRS payments based on 
half of the company's unpaid contributions.73  On March 15, 2005, 
InPhonic owed $917,251.59 for USF contributions.74  Therefore, 
taking into account all of the factors enumerated in section 
503(b)(2)(D) of the Act, we propose an upward adjustment of 
$458,626 -- half the amount InPhonic paid for outstanding USF 
contributions on March 18, 2005 -- for InPhonic's apparent 
failure to make universal service contributions.  We thus find 
InPhonic liable for a total proposed forfeiture of $598,626 for 
its apparent willful and repeated failure to make contributions 
into the Universal Service Fund.

     30.  We also find that InPhonic apparently has failed to 
make any TRS contributions from 2003 until April, 2005.75  
InPhonic's 2004 TRS obligation was due on July 26, 2004, and 
InPhonic made this payment in April, 2005 only after it received 
Bureau inquiries into its compliance with the related rules.  
Where a carrier fails to satisfy its TRS obligations for an 
extended period of time, it thwarts the purpose for which 
Congress established section 225(b)(1) of the Act and its 
implementing regulations -- to ensure that telecommunications 
relay services ``are available to the extent possible and in the 
most efficient manner, to hearing-impaired and speech-impaired 
individuals in the United States.''76  

     31.  The Commission has established a base forfeiture amount 
of $10,000 for each instance in which a carrier fails to make 
required TRS contributions.77  In light of InPhonic's failure to 
pay timely its TRS obligation for the 2004-2005 funding period, 
we find it apparently liable for a base forfeiture in the amount 
of $10,000.  For the reasons discussed above regarding InPhonic's 
failure to make universal service contributions and generally 
consistent with Commission precedent,78 we find that an upward 
adjustment, in an amount approximately one-half of the carrier's 
estimated unpaid TRS contributions ($22,557)79 at the time it 
made its first payment in April, 2005, is appropriate for 
InPhonic's apparent failure to make TRS contributions.  Taking 
into account the factors enumerated in section 503(b)(2)(D) of 
the Act, we conclude that an upward adjustment of $11,279 is 
reasonable.  Consequently, we find InPhonic liable for a total 
proposed forfeiture of $21,279 for its willful and repeated 
failure to satisfy its TRS obligations for the 2004-2005 funding 
period.

IV. CONCLUSION

     32.  In light of the seriousness, duration and scope of the 
apparent violations, and to ensure that a company with 
substantial revenues such as InPhonic does not consider the 
proposed forfeiture merely ``an affordable cost of doing 
business,''80 we find that a proposed forfeiture in the amount of 
$819,905 is warranted.  As discussed above, this proposed 
forfeiture amount includes:  (1) a total proposed penalty of 
$100,000 for failing to register pursuant to section 64.1195 of 
the Commission's rules;81 (2) a total proposed penalty of 
$100,000 for failing to file two Telecommunications Reporting 
Worksheets within the past year; (3) a total proposed penalty of 
$598,626 for failing to make seven monthly universal service 
contributions within the past year; and (3) a proposed total 
penalty of $21,279 for failing to make its 2004 TRS program 
contribution when due.     

     33.  We caution that additional violations of the Act or the 
Commission's rules could subject InPhonic to further enforcement 
action.  Such action could take the form of higher monetary 
forfeitures and/or possible revocation of InPhonic's operating 
authority, including disqualification of InPhonic's principals 
from the provision of any interstate common carrier services 
without the prior consent of the Commission.82    In addition, we 
note that, to the extent InPhonic is ever found to be delinquent 
on any debt owed to the Commission (e.g., has failed to pay all 
of its USF contributions), the Commission will not act on, and 
may dismiss, any application or request for authorization filed 
by InPhonic, in accordance with the agency's ``red light'' 
rules.83
V. ORDERING CLAUSES

     34.  ACCORDINGLY, IT IS ORDERED THAT, pursuant to section 
503(b) of the Communications Act of 1934, as amended,84 and 
section 1.80 of the Commission's rules,85 that InPhonic is hereby 
NOTIFIED of its APPARENT LIABILITY FOR A FORFEITURE in the amount 
of $819,905 for willfully and repeatedly violating the Act and 
the Commission's rules.

     35.  IT IS FURTHER ORDERED THAT, pursuant to section 1.80 of 
the Commission's Rules,86 within thirty days of the release date 
of this NOTICE OF APPARENT LIABILITY, InPhonic SHALL PAY the full 
amount of the proposed forfeiture or SHALL FILE a written 
statement seeking reduction or cancellation of the proposed 
forfeiture.

     36.  Payment of the forfeiture must be made by check or 
similar instrument, payable to the order of the Federal 
Communications Commission. The payment must include the 
NAL/Acct. No. and FRN No. referenced above. Payment bycheck or 
money order may be mailed to Federal Communications Commission, 
P.O. Box358340,Pittsburgh, PA 15251-8340. Payment by overnight 
mail may be sent toMellon Bank/LB358340,500 Ross Street, Room 
1540670, Pittsburgh, PA 15251. Payment by wire transfer may be 
made to ABA Number043000261, receiving bankMellon Bank, and 
account number911-6106.

     37.  The response, if any, to this NOTICE OF APPARENT 
LIABILITY must be mailed to William H. Davenport, Chief, 
Investigations and Hearings Division, Enforcement Bureau, Federal 
Communications Commission, Room 4-A237, 445 12th Street, S.W., 
Washington, D.C.  20554 and must include the NAL/Acct. No. 
referenced above.

     38.  The Commission will not consider reducing or canceling 
a forfeiture in response to a claim of inability to pay unless 
the petitioner submits:  (1) federal tax returns for the most 
recent three-year period; (2) financial statements prepared 
according to generally accepted accounting practices (GAAP); or 
(3) some other reliable and objective documentation that 
accurately reflects the petitioner's current financial status.  
Any claim of inability to pay must specifically identify the 
basis for the claim by reference to the financial documentation 
submitted.

     39.  Requests for payment of the full amount of this NAL 
under an installment plan should be sent to Chief, Credit and 
Management Center, 445 12th Street, S.W., Washington, D.C.  
20554.87
     40.  IT IS FURTHER ORDERED that a copy of this NOTICE OF 
APPARENT LIABILITY AND ORDER shall be sent by certified mail, 
return receipt requested, to Darius B. Withers, Esq., Kelley Drye 
& Warren, LLP, 1200 19th Street, N.W., Suite 500, Washington, 
D.C. 20036; and Aaron Daniels, Senior Vice-President and 
Corporate Treasurer, InPhonic, Inc., 1010 Wisconsin Avenue, N.W., 
Suite 600, Washington, D.C. 20007.

                         FEDERAL COMMUNICATIONS COMMISSION



                         Marlene H. Dortch
                         Secretary 
_________________________

147 C.F.R.  64.1195.
247 C.F.R.  54.711(a), 64.604(c)(5)(iii)(B).
347 U.S.C.  254(d).  
447 C.F.R.  54.706(a), 64.604(c)(5)(iii)(A).
5See, e.g., 47 U.S.C.  151.
6See Implementation of the Subscriber Carrier Selection 
Provisions of the Telecommunications Act of 1996, Third Report 
and Order and Second Order on Reconsideration, 15 FCC Rcd 15996, 
16024 (2000) (``Carrier Selection Order'').    
747 C.F.R.  64.1195.
8See 47 U.S.C.  225(d)(3); 254(d).  In 1999, to streamline the 
administration of the programs and to ease the burden on 
regulatees, the Commission consolidated the information filing 
requirements for multiple telecommunications regulatory programs 
into the annual Telecommunications Reporting Worksheet.  See 1998 
Biennial Regulatory Review, Report and Order, 14 FCC Rcd 16602 
(1999).  The next year the Commission revised the 
Telecommunications Reporting Worksheet slightly to collect the 
additional information necessary to achieve its goal of 
establishing a central repository for interstate 
telecommunications providers by the least provider-burdensome 
method.  Carrier Selection Order, 15 FCC Rcd at 16026.  
9The Telecommunications Act of 1996 amended the Communications 
Act of 1934.  See Telecommunications Act of 1996, Pub. L. No. 
104-104, 110 Stat. 56 (1996).
1047 U.S.C.  254(d).  
1147 C.F.R.  54.706(b).  Beginning April 1, 2003, carrier 
contributions were based on a carrier's projected, rather than 
historical, revenues.  Id.  The Commission has appointed the 
Universal Service Administrative Company (``USAC'') as permanent 
administrator of federal universal service support mechanisms and 
has made it responsible for billing and collection of USF 
contributions.  47 C.F.R.  54.701(a), 54.702(b).
1247 U.S.C.  225(b)(1).
13See Telecommunications Relay Services and the Americans with 
Disabilities Act of 1990, Third Report and Order, 8 FCC Rcd 5300, 
5301,  7 (1993).  Telecommunications relay services enable 
persons with hearing and speech disabilities to communicate by 
telephone with persons who may or may not have such disabilities.  
Such services provide telephone access to a significant number of 
Americans who, without it, might not be able to make or receive 
calls from others.  See Telecommunications Relay Services and 
Speech-to-Speech Services for Individuals with Hearing and Speech 
Disabilities, Report and Order, 15 FCC Rcd 5140, 5143,  5 
(2000).  NECA currently is responsible for administering the TRS 
Fund.
1447 C.F.R.  64.604(c)(5)(iii)(A).  
15Upon submission of a Form 499-A registration, the carrier is 
issued a filer identification number by USAC.  The filer 
identification number is then to be included on all further 
filings by the company and is used by the Commission and its 
administrators to track the carrier's contributions and invoices.  
With certain exceptions that do not apply to InPhonic, interstate 
telecommunications carriers must file FCC Form 499-Q quarterly, 
reporting revenue information by February1, May 1, August 1 and 
November 1 of each year, and FCC Form 499-A annually, by April 1 
of each year.  See Instructions for Completing the Worksheet for 
Filing Contributions to Telecommunications Relay Service, 
Universal Service, Number Administration and Local Number 
Portability Support Mechanisms, FCC Form 499, April 2004, at 9.
16Individual universal service contribution amounts that are 
based upon quarterly filings are subject to an annual true-up.  
See Federal-State Joint Board on Universal Service, Petition for 
Reconsideration filed by AT&T, Report and Order and Order on 
Reconsideration, 16 FCC Rcd 5748 (2001); 47 C.F.R.  54.709(a).  
17See 47 C.F.R.  64.604(c).  
18See Globcom, Inc., Notice of Apparent Liability for Forfeiture 
and Order, 18 FCC Rcd 19893, 19896,  5 (2003); 47 C.F.R.  
54.711(a) (``The Commission shall announce by Public Notice 
published in the Federal Register and on its website the manner 
of payment and the dates by which payments must be made.'').  
See, e.g., ``Proposed Third Quarter 2003 Contribution Factor,'' 
Public Notice, 18 FCC Rcd 11442 (WCB 2003) (``Contribution 
payments are due on the date shown on the [USAC] invoice.'')  The 
Act and our rules, however, do not condition payment on receipt 
of an invoice or other notice from USAC.  See 47 U.S.C.  254(d); 
47 C.F.R.  54.706(b).  A carrier that does not file may fail to 
receive an invoice from USAC, but is nonetheless required to 
contribute to the universal service fund, unless its revenues are 
considered de minimus.  Globcom, Inc., 18 FCC Rcd at 19896,  5 & 
n.22.  The instructions for the Telecommunications Reporting 
Worksheet include tables for carriers to determine their annual 
contributions.  InPhonic does not qualify for the de minimus 
exception.
1947 C.F.R.  54.713.
2047 C.F.R.  1.1910.  The rule went into effect on November 1, 
2004.  See ``FCC Announces Brief Delay in Enforcement of Red 
Light Rule,'' Public Notice, 19 FCC Rcd 19452 (2004).
21InPhonic Inc.'s Response to the Enforcement Bureau's March 2, 
2005 Inquiry Regarding Federal Regulatory Fee Payments, EB-05-IH-
0158 at 1 (``LOI Response'').  InPhonic also provides ``wireless 
information services and activation'' and ``data services.''  Id.
22Id.
23See 47 C.F.R.  64.1195(a).
24See Letter from Hugh Boyle, Chief Auditor, Investigations and 
Hearings Division, Enforcement Bureau, to InPhonic dated March 
30, 2004 (``March 30, 2004 Audit Letter'').  The audit staff 
followed up the March 30, 2004 Audit Letter on August 9, 2004 
with an information request concerning InPhonic's FCC Form 499-A 
Registration Requirement.
25Letter from Karly E. Baraga, Esq., Kelly Drye & Warren, LLP, 
counsel to InPhonic, Inc., to Hugh L. Boyle, Chief Auditor, 
Investigations & Hearings Division, Enforcement Bureau, Federal 
Communications Commission, dated January 18, 2005.
26On April 1, 2005, InPhonic filed its 2005 Form 499-A on a 
timely basis.  InPhonic provided the Bureau no other Form 499-A 
or Form 499-Q filings.  InPhonic stated however that it filed its 
Form 499-Q for February 1, 2005 in a timely manner.  LOI Response 
at 2.
27Letter from Hillary S. DeNigro, Deputy Chief, Investigations 
and Hearings Division, Enforcement Bureau, Federal Communications 
Commission, to Darius B. Withers, Esq., Kelley Drye & Warren, 
LLP, counsel to InPhonic, Inc., dated March 2, 2005 (``LOI'').  
28LOI Response, Exhibit I.  According to USAC, InPhonic owed 
$917,251.59 for USF contributions, which was due on March 15, 
2005.
29See supra note 21.
3047 U.S.C.  503(b)(1)(B); 47 C.F.R.  1.80(a)(1).  Section 
312(f)(1) of the Act defines willful as ``the conscious and 
deliberate commission or omission of [any] act, irrespective of 
any intent to violate'' the law.  47 U.S.C.  312(f)(1). The 
legislative history to section 312(f)(1) of the Act clarifies 
that this definition of willful applies to both sections 312 and 
503(b) of the Act, H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51 
(1982), and the Commission has so interpreted the term in the 
section 503(b) context.  See, e.g., Application for Review of 
Southern California Broadcasting Co., Memorandum Opinion and 
Order, 6 FCC Rcd 4387, 4388 (1991) (``Southern California 
Broadcasting Co.'').  The Commission may also assess a forfeiture 
for violations that are merely repeated, and not willful.  See, 
e.g., Callais Cablevision, Inc., Grand Isle, Louisiana, Notice of 
Apparent Liability for Monetary Forfeiture, 16 FCC Rcd 1359 
(2001) (issuing a Notice of Apparent Liability for, inter alia, a 
cable television operator's repeated signal leakage).  
``Repeated'' means that the act was committed or omitted more 
than once, or lasts more than one day.  Callais Cablevision, 
Inc., 16 FCC Rcd at 1362,  9; Southern California Broadcasting 
Co., 6 FCC Rcd at 4388,  5.
3147 U.S.C.  503(b); 47 C.F.R.  1.80(f).
32See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC 
Rcd 7589, 7591,  4 (2002) (``SBC Forfeiture Order'') (forfeiture 
paid).
3347 U.S.C.  254(d).
3447 C.F.R.  54.706(a), 54.711(a), 64.604(c)(5)(iii), 64.1195.
3547 C.F.R.  64.1195.
3647 U.S.C.  254(d).
3747 C.F.R.  54.706(a), 54.711(a), 64.604(c)(5)(iii), 64.1195.
3847 C.F.R.  64.1195.
3947 C.F.R.  64.1195(a).
40Id.  The Commission adopted the registration requirement in 
section 64.1195(a) after finding that such a requirement would 
enable it to better monitor the entry of carriers into the 
interstate telecommunications market and any associated increases 
in slamming activity, and, among other things, would enhance the 
Commission's ability to take appropriate enforcement action 
against carriers that have demonstrated a pattern or practice of 
slamming.  See Carrier Selection Order, 15 FCC Rcd at 16024  62. 
41See The Commission's Forfeiture Policy Statement and Amendment 
of Section 1.80 of the Commission's Rules, Report and Order, 12 
FCC Rcd 17087, 17099,  22 (1997) (``Forfeiture Policy 
Statement''), recon. denied, 15 FCC Rcd 303 (1999) (``[t]he 
Commission expects, and it is each licensee's obligation, to know 
and comply with all of the Commission's rules.'')
42LOI Response at 3.
43See March 30, 2004 Audit Letter.  Further, InPhonic made no 
apparent efforts to pay its long overdue USF obligations until 
after receiving a second letter from the Bureau.
44AT&T Wireless Services, Inc., Forfeiture Order, 17 FCC Rcd 
21866, 21870-71, (2002); America's Tele-Network Corp., Order of 
Forfeiture, 16 FCC Rcd 22350, 22355,  15 (2001); Coleman 
Enters., Inc. d/b/a/ Local Long Distance, Inc., Order of 
Forfeiture, 15 FCC Rcd 24385, 24388,  8 (2000).  
45The proposed forfeitures in this NAL relate only to the portion 
of that period within a year of release of this NAL.
4647 C.F.R.  54.711(a), 64.604(c)(5)(iii)(B).
47See 47 C.F.R.  54.711(a), 64.604(c)(5)(iii)(B).
48Sixty days prior to the start of each quarter, USAC is required 
to provide the Commission with a projection of the high cost, low 
income, schools and libraries, and rural health care funding 
requirements for the following quarter.  See 
www.universalservice.org/overview/filings.  Based on USAC's 
projection of the needs of the USF, and revenue projections from 
the registered carriers subject to universal service 
requirements, the Commission establishes a specific percentage of 
interstate and international end-user revenues that each subject 
telecommunications provider must contribute toward the USF.  This 
percentage is called the contribution factor.  The contribution 
factor, and, consequently, the amount owed to the USF by each 
affected telecommunications company, changes each quarter, 
depending on the needs of the USF and carrier-provided revenue 
projections.  See www.fcc.gov/wcb/universal_service/quarter.  
Thus, in cases where a carrier, such as InPhonic, fails to file 
required Worksheets reporting its revenue projections in a timely 
fashion, its revenues are excluded from the contribution base 
from which universal assessments are derived, and the economic 
burden of contributing falls disproportionately on carriers that 
have satisfied their reporting obligations.   
4947 U.S.C.  254(d).
5047 U.S.C.  254.  
5147 C.F.R.  54.711, 64.604.
5247 U.S.C.  254(d); 47 C.F.R.  54.706.
5347 C.F.R.  54.706(c).  
54See LOI Response at 2.  
55See 47 C.F.R.  54.706(c).  
56Globcom, Inc., Notice of Apparent Liability for Forfeiture and 
Order, 18 FCC Rcd 19893, 19903,  26 (2003).
5747 C.F.R.  64.604(c)(5)(iii)(A).
58Id.  Each subject carrier must contribute at least $25 per 
year.  Carriers whose annual contributions are less than $1,200 
must pay the entire amount at the beginning of the contribution 
period.  47 C.F.R.  64.604(c)(5)(iii)(B).  Otherwise, carriers 
may divide their contributions into equal monthly payments.  Id.
5947 C.F.R.  64.604(c)(5)(iii)(B).  
60See id.
61NECA, the TRS Fund Administrator, has stated that the Company 
still owes $102 for a finance charge and late fee on its April 
25, 2005 payment. 
62See March 30, 2004 Audit Letter.
6347 U.S.C.  503(b)(1)(B); see also 47 C.F.R.  1.80(a)(2).
6447 U.S.C.  503(b)(2)(B); see also 47 C.F.R.  1.80(b)(2).
6547 U.S.C.  503(b)(2)(D); see also Forfeiture Policy Statement, 
12 FCC Rcd at 17100,  27; 47 C.F.R.  1.80(b).
6647 U.S.C.  503(b)(6)(B); see also 47 C.F.R.  1.80(c)(3).
67See, e.g., Globcom, Inc., 18 FCC Rcd at 19903; Roadrunner 
Transp., Inc., Forfeiture Order, 15 FCC Rcd 9669, 9671 (2000); 
Liab. of E. Broad. Corp., Memorandum Opinion and Order, 10 F.C.C. 
2d 37 (1967).
68Cf., Globcom, Inc., 18 FCC Rcd 19893; America's Tele-Network 
Corp., Notice of Apparent Liability for Forfeiture, 15 FCC Rcd 
20903 (2000); Matrix Telecom, Inc., Notice of Apparent Liability 
for Forfeiture, 15 FCC Rcd 13544 (2000); ConQuest Operator 
Services Corp., Order of Forfeiture, 14 FCC Rcd 12518 (1999).  
Each carrier in these cases had registered and filed 
Telecommunications Reporting Worksheets prior to the Commission's 
inquiry and, in some cases, had paid contributions in part. 
69See 47 C.F.R.  1.80(b)(4).
70In the Globcom NAL, the Commission proposed a $50,000 
forfeiture for each instance within the statute of limitations 
that Globcom failed to file a required Worksheet.  Globcom, Inc., 
18 FCC Rcd at 19905,  32.  We note, however, that, unlike 
InPhonic, Globcom had registered with the Commission and 
submitted multiple Worksheets prior to our investigation.
71See 47 U.S.C.  254(d).
72See Globcom, Inc., 18 FCC Rcd at 19903-19904,  25-27.
73See, e.g., id.
74See supra note 28.
75InPhonic stated on April 8, 2005 that it was ``processing'' its 
TRS Fund payment.  LOI Response at 8.
7647 U.S.C.  225(b)(1).
77See Globcom, Inc., 18 FCC Rcd at 19904,  29.
78See id.
79See LOI Response at 8.
80Forfeiture Policy Statement, 12 FCC Rcd at 17099; see also 47 
C.F.R.  1.80(b)(4).
8147 C.F.R.  64.1195.
82See Business Options, Inc., Consent Decree, 19 FCC Rcd 2916 
(2003); NOS Communications, Inc., Affinity Network Incorporated 
and NOSVA Limited Partnership, Consent Decree, 2003 WL 22439710 
(2003).
8347 C.F.R.  1.1910.
8447 U.S.C.  503(b).
8547 C.F.R.  1.80.
86See 47 C.F.R.  1.80(f)(3).
87See 47 C.F.R.  1.1914.