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Federal Communications Commission
Washington, D.C. 20554
In the Matter of ) File No. EB-05-IH-0913
Local Phone Services, Inc. ) NAL/Acct. No. 200632080168
Apparent Liability for Forfeiture ) FRN No. 0008358343
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: August 28, 2006 Released: August 29, 2006
By the Commission:
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
Local Phone Services, Inc., d/b/a Best Phone ("LPSI"), a
telecommunications carrier that has been operating and at least
indirectly benefiting from federal programs supporting the
telecommunications industry for over two years, apparently failed to
meet its statutory and regulatory obligations related to the Universal
Service Fund ("USF" or "Fund"). Specifically, we find that LPSI has
apparently violated section 54.711(a) of the Commission's rules by
failing to timely submit certain Telecommunications Reporting
Worksheets ("Worksheets"). Furthermore, we find that LPSI has
apparently violated section 254(d) of the Communication's Act of 1934,
as amended (the "Act"), and section 54.706(a) of the Federal
Communications Commission's (the "Commission") rules by willfully and
repeatedly failing to contribute fully and timely to the USF. Based
upon the facts and circumstances surrounding this matter, we find that
LPSI is apparently liable for a total monetary forfeiture in the
amount of $529,000.
2. The Act codified Congress's historical commitment to promote universal
service to ensure that consumers in all regions of the nation have
access to affordable, quality telecommunications services. 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." 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 USF based upon
their interstate and international end-user telecommunications
revenues. 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 then shoulder more than
their fair share of the costs of the Fund.
3. The Commission has established specific procedures to administer the
universal service program. A carrier is required to file FCC Form
499-A, also known as the annual Telecommunications Reporting
Worksheets ("annual Worksheets") for the purpose of determining its
USF payments, and, with certain exceptions, to file quarterly
short-form Worksheets ("quarterly Worksheets") to determine monthly
universal service contribution amounts. 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, the Universal Service Administrative Company ("USAC"),
the administrator of the USF, uses the revenue projections submitted
on the quarterly filings to determine each carrier's universal service
contribution amount. Carriers are required to timely pay their monthly
USF contribution invoice, and the Commission's rules explicitly warn
contributors that failure to file forms or submit payments potentially
subjects them to enforcement action. 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 payment 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.
4. LPSI is a telecommunications carrier that began providing long
distance service in Kansas in 2002. In March 2003, LPSI registered
with USAC and filed an annual Worksheet in or about the same month.
During 2002 and 2003, LPSI's revenues were considered de minimis and
the carrier was exempted from contributing to the USF. LPSI no longer
qualified for that exemption at some point in 2004, but failed to file
Worksheets and make contributions to the USF for that year as
required. Between July 5 and August 12, 2005, the Commission released
six NALs alleging apparent failures by telecommunications carriers,
among other things, to register, file worksheets, and make
contributions to the USF. On August 26, 2005, LPSI sent a letter to
the Enforcement Bureau ("Bureau") informing the Commission of possible
violations of the Commission's USF obligations of which it became
aware following an internal financial audit beginning in June 2005.
LPSI stated that it intended to take immediate corrective measures,
including filing outstanding FCC Form 499 Worksheets, no later than
early October 2005, and intended to promptly pay all amounts properly
invoiced by USAC and the Commission.
5. Based on LPSI's representation, the Bureau initiated an investigation
on October 18, 2005 by a letter of inquiry ("LOI") regarding LPSI's
compliance with its filing and payment obligations involving, among
other things, the USF. LPSI submitted its LOI response on December 7,
2005 and supplemental response on December 23, 2005. In its responses,
LPSI informed the Commission it filed its first quarterly Worksheet
three weeks late on November 23, 2005. Two weeks later, on December 9,
2005, LPSI submitted a revised 2003 annual Worksheet and back-filed
its 2004 and 2005 annual Worksheets as well as the May 1 and August 1,
2005 quarterly Worksheets. LPSI made its first USF payment on May 26,
6. Under section 503(b)(1) 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. 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. 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, and the
Commission has so interpreted the term in the section 503(b) context.
The Commission may also assess a forfeiture for violations that are
merely repeated, and not willful. "Repeated" means that the act was
committed or omitted more than once, or lasts more than one day. 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. The Commission will then issue
forfeiture if it finds by a preponderance of the evidence that the
person has violated the Act or a Commission rule.
7. Section 503(b)(2)(B) of the Act authorizes the Commission to assess a
forfeiture of up to $130,000 for each violation or each day of a
continuing violation, up to a statutory maximum of $1,325,000 for a
single act or failure to act. 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."
8. The fundamental issues in this case are whether LPSI apparently
violated the Act and the Commission's rules by: (1) willfully or
repeatedly failing to file Worksheets; and (2) willfully or repeatedly
failing to make requisite contributions to the USF. We answer these
questions affirmatively. Based on a preponderance of the evidence, and
as discussed below, we therefore conclude that LPSI is apparently
liable for a forfeiture of $529,000 for apparently willfully and
repeatedly violating section 254(d) of the Act and sections 54.706 and
54.711 of the Commission's rules.
A. Submission of Telecommunications Reporting Worksheets
9. We conclude that LPSI has apparently violated sections 54.711(a) of
the Commission's rules by willfully and repeatedly failing to file on
a timely basis certain Worksheets beginning in 2004 and continuing
through November 2005. Section 54.711(a) of the Commission's rules
clearly establishes a carrier's obligation to file periodic
Worksheets. The filing of a Worksheet prompts an accurate
determination of liability for, and subsequent billing and collection
of, payments by the administrator of the universal service cost
recovery mechanism. The failure of a carrier, such as LPSI, 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 disproportionate economic burdens
associated with the federal universal service program. Consequently, a
carrier's failure to file required Worksheets thwarts the very purpose
for which Congress enacted section 254(d) - to ensure 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." Viewed in
this context, the Worksheet is not simply an administrative tool, but
a fundamental and critical component of the Commission's universal
10. Notwithstanding its regulatory obligations, LPSI failed to file
Worksheets throughout all of 2004 and most of 2005, neglecting to
timely file any quarterly or annual Worksheets despite its revenues
exceeding the de minimis exemption in 2004. The company failed to file
any quarterly Worksheets in 2004 and 2005 until November 23, 2005,
when it late-filed the quarterly Worksheet that was due November 1,
2005. Likewise, LPSI failed to timely file annual Worksheets until
December 9, 2005, when it filed a revised 2003 annual form and
late-filed 2004 and 2005 annual Worksheets, as well as the quarterly
Worksheets due May 1 and August 1, 2005.
11. Based on the preponderance of the evidence, we find that LPSI
apparently violated section 54.711 of the Commission's rules by
willfully and repeatedly failing to timely file required information
with the Commission on multiple occasions since 2004, including its
failure to timely file four worksheets since March 4, 2005. We
therefore propose a forfeiture for LPSI's failure to file the 2005
annual Worksheet due April 1, 2005 and the quarterly Worksheets due
May 1, August 1, and November 1, 2005.
A. Universal Service Contributions
12. We also conclude that LPSI 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. 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." LPSI 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 beginning at
some point in 2004. Despite this requirement, LPSI made no universal
service contributions until May 26, 2006. As we previously have
[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.
Based on a preponderance of the evidence, we find that LPSI 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 since 2004, including fifteen such failures since
March 4, 2005. The failures include the payments due each month from March
2005 through and including May 2006.
A. Proposed Forfeiture
13. 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. Nevertheless, section 503(b) does not bar us from assessing
whether LPSI'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.
Notwithstanding that statutory provision, LPSI has entered into an
agreement with the Bureau that tolled the one-year statute of
limitations as of March 3, 2006. Therefore, we propose forfeitures
here only for violations that have occurred since March 4, 2005.
14. In the past, we have held that a substantial forfeiture of $50,000 is
warranted for a carrier's failure to file a Worksheet for revenue
reporting purposes. As we noted above, a carrier's obligation to file
Worksheets is directly linked to, and thus has serious implications
for, administration of the USF program. By ignoring its reporting
obligations, LPSI unilaterally shifted to compliant carriers and their
customers the economic costs associated with the universal service
program. Therefore, we find that LPSI is apparently liable for a
$200,000 forfeiture for its failure to file four Worksheets, including
the annual Worksheet due April 1, 2005, and quarterly Worksheets due
May 1, August 1, and November 1, 2005.
15. Based on the facts above, it also appears that LPSI has failed to make
requisite contributions into the USF beginning in 2004 and continuing
until May 26, 2006. 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 frustrates
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. 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. Consequently, we find LPSI apparently liable for a base
forfeiture of $300,000 for its willful and repeated failure to make
universal service contributions for fifteen months. As discussed
below, however, that base amount is subject to an upward adjustment.
16. In the past, we have calculated upward adjustments to forfeitures for
failure to make USF payments based on one-half of the company's
approximate unpaid contributions. During the course of this
investigation, LPSI filed the financial information necessary for USAC
to determine the contribution amounts LPSI would have been assessed
had it properly filed annual and quarterly Worksheets. Therefore,
taking into account all the factors enumerated in section 503(b)(2)(D)
of the Act, we propose an upward adjustment of $29,000, approximately
one-half of the carrier's unpaid USF contributions accumulated by the
time it made its first payment, for LPSI's apparent nonpayment
violations. We thus find LPSI apparently liable for a total proposed
forfeiture of $329,000 for its apparent willful and repeated failure
to make contributions into the USF.
17. Although the Commission typically downward adjusts a proposed
forfeiture when a company voluntarily discloses a violation of our
rules, we decline to do so today. Specifically, pursuant to section
1.80(b)(4) of our rules, the Commission has adjusted downward proposed
forfeitures where a target of an investigation voluntarily disclosed
its violations prior to the initiation of any investigative or
enforcement actions. When deciding to discount a proposed forfeiture
because of a regulatee's voluntary disclosure, the Commission
reasonably expects the regulatee to take swift and effective
corrective actions, and to comply with its Commission obligations.
Here, the record evidence demonstrates that LPSI has failed to perform
these expected actions.
18. Specifically, LPSI failed, until just prior to release of this item,
to come into compliance since it voluntarily disclosed its violations
nearly twelve months ago. As noted above, after LPSI became aware of
its violations, it contacted the Bureau, disclosing its failures to
file Worksheets and to contribute to the USF. LPSI explicitly defined
the corrective steps that it intended to take, including the timely
filing of the relevant Worksheets and making on-time payments for the
USF assessments as they became due. LPSI's post-disclosure compliance
efforts, however, fall short of its commitments. For example, in
August 2005, LPSI committed that it would file all required worksheets
by the beginning of October 2005. While LPSI has filed Worksheets
necessary to determine the carrier's USF payments, it filed these
worksheets after the October deadline; filed the quarterly Worksheet
due November 1, 2005 on November 23; and waited until December to file
the revised 2003 annual Worksheet, the 2004 and 2005 annual Worksheets
and the May and August 2005 quarterly Worksheets.
19. Of more concern is LPSI's failure to timely pay all of its USF
obligations. Following LPSI's November 2005 quarterly Worksheet
filing, USAC began invoicing the carrier in January 2006. From
February to April, LPSI failed to make any payments to USAC. It was
not until May 26, 2006 when LPSI paid the balance due on the January
USAC invoice -- approximately four months after payment was due. LPSI
made another payment on June 30 equal to the balances due on the
February and March USAC invoices. The May and June payments, however,
still left LPSI with an approximately $21,000 balance, which is
comprised of a combination of past due and current obligations.
Despite our rules requiring carriers to make monthly payments to USAC,
and the commitment that LPSI made last year, in August 2005, to pay
all of its USF obligations, LPSI still owed past-due and current USF
obligations through mid-August 2006.
20. Given the evidence currently before us that LPSI has failed to follow
through in a timely manner on its express commitments to discharge its
contribution obligationsand file required Worksheets, we decline to
discount the proposed forfeiture amount for its voluntary disclosure.
We recognize, however, that we may be presented with new evidence in
the future as to why a downward adjustment to the proposed forfeiture
is appropriate. For example, LPSI's Worksheets may demonstrate that,
as a carrier with relatively small gross revenues, it has compelling,
financial arguments to reduce the proposed forfeiture. The Commission
will fully consider any such arguments made by LPSI in its response to
this NAL. For purposes of determining the issues in the instant
proceeding, however, we conclude that a proposed forfeiture of
$529,000 is warranted.
21. In this NAL, we consider foremost the seriousness, duration and scope
of the apparent violations and our policy to ensure that a company
such as LPSI does not consider the proposed forfeiture merely "an
affordable cost of doing business." On the other hand, we also
consider the utility of voluntary disclosures as another element in
our comprehensive approach to improving the efficacy and fairness of
the universal service program as well as reducing waste, fraud and
abuse in the program. Based on these considerations, we find that a
proposed forfeiture for $529,000 is warranted.
22. We caution that additional violations of the Act or the Commission's
rules could subject LPSI to further enforcement action. Such action
could take the form of higher monetary forfeitures and/or possible
revocation of LPSI's operating authority, including disqualification
of LPSI's principals from the provision of any interstate common
carrier services without the prior consent of the Commission. In
addition, we note that, to the extent LPSI 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 LPSI,
in accordance with the agency's "red light" rules.
V. ORDERING CLAUSES
23. ACCORDINGLY, IT IS ORDERED THAT, pursuant to section 503(b) of the
Communications Act of 1934, as amended, 47 U.S.C. S 503(b), and
section 1.80 of the Commission's rules, 47 C.F.R. S 1.80, that Local
Phone Services, Inc. is hereby NOTIFIED of its APPARENT LIABILITY FOR
A FORFEITURE in the amount of $529,000 for willfully and repeatedly
violating the Act and the Commission's rules.
24. IT IS FURTHER ORDERED THAT, pursuant to section 1.80 of the
Commission's Rules, within thirty days of the release date of this
NOTICE OF APPARENT LIABILITY, Local Phone Services, Inc. SHALL PAY the
full amount of the proposed forfeiture or SHALL FILE a written
statement seeking reduction or cancellation of the proposed
25. 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 by check or money order may be mailed to Federal
Communications Commission, P.O. Box 358340, Pittsburgh, PA 15251-8340.
Payment by overnight mail may be sent to Mellon Bank /LB 358340, 500
Ross Street, Room 1540670, Pittsburgh, PA 15251. Payment by wire
transfer may be made to ABA Number 043000261, receiving bank Mellon
Bank, and account number 911-6106.
26. The response, if any, to this NOTICE OF APPARENT LIABILITY FOR
FORFEITURE must be mailed to William H. Davenport, Chief,
Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission, 445 12^th Street, S.W., Suite 4-C330,
Washington, D.C. 20554 and must include the NAL/Acct. No. referenced
above. E-mail address: firstname.lastname@example.org.
27. 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
28. Requests for payment of the full amount of this NOTICE OF APPARENT
LIABILITY FOR FORFEITURE under an installment plan should be sent to
Associate Managing Director -- Financial Operations, Room 1A625, 445
12^th Street, S.W., Washington, D.C. 20554.
29. IT IS FURTHER ORDERED that a copy of this NOTICE OF APPARENT LIABILITY
FOR FORFEITURE shall be sent by certified mail, return receipt
requested, to Bradford M. Berry, Wilmer, Cutler, Pickering, Hale and
Dorr LLP, 2445 M Street N.W., Washington, D.C. 20037.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
47 U.S.C. S 254.
The Telecommunications Act of 1996 amended the Communications Act of 1934.
See Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56
47 U.S.C. S 254(d).
47 C.F.R. S 54.706(b). Beginning April 1, 2003, carrier contributions were
based on a carrier's projected, rather than historical, revenues. Id.
Upon submission of a Form 499-A registration, the carrier is issued a
filer identification number by USAC, which is then associated with further
filings by the company and is used to track the carrier's contributions
Individual 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) ("Quarterly Reporting Order"); 47 C.F.R. S 54.709(a).
See Globcom, Inc., Notice of Apparent Liability for Forfeiture and Order,
18 FCC Rcd 19893,19896, P 5 (2003) ("Globcom NAL"); 47 C.F.R. S 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 (Wir. Comp. Bur.
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. S 254(d);
47 C.F.R. S 54.706(b). A carrier that does not file may not receive an
invoice from USAC, but is nonetheless required to contribute to the
universal service fund, unless its revenues are considered de minimis.
Globcom NAL, 18 FCC Rcd at 19896, P 5, note 22. The instructions for the
Worksheet include tables for carriers to determine their annual
contributions. Providers whose annual contribution is less than $10,000
are considered de minimis and exempted from contributing to the USF. 47
C.F.R. S 54.708. LPSI has not qualified for the de minimis exemption since
47 C.F.R. S 54.713.
Id. S 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).
See Letter from Bradford M. Berry, counsel for LPSI, to William Davenport,
Chief, Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission, dated August 26, 2005, at 1 ("Voluntary
See Supplemental Response, Inquiry 4.
Id. at Inquiry 2.
See Carrera Communications, LP, Notice of Apparent Liability for
Forfeiture and Order, 20 FCC Rcd 13307 (2005); InPhonic, Inc., Notice of
Apparent Liability for Forfeiture and Order, 20 FCC Rcd 13277 (2005);
Teletronics, Inc., Notice of Apparent Liability for Forfeiture and Order,
20 FC Rcd 13291 (2005); Telecom Management Inc, Notice of Apparent
Liability for Forfeiture, 20 FCC Rcd 14151 (2005); Telecom House, Inc.,
Notice of Apparent Liability for Forfeiture and Order, 20 FCC Rcd 15131
(2005); Communications Services Integrated, Inc., Notice of Apparent
Liability for Forfeiture and Order, 20 FCC Rcd 17251 (2005)
Voluntary Disclosure Letter at 1.
Letter from Hillary S. DeNigro, Deputy Chief, Investigations and Hearings
Division, Enforcement Bureau, to Local Phone Services, Inc., c/o Bradford
M. Berry, counsel for LPSI, dated October 18, 2005.
See Letter from Bradford M. Berry, counsel for LPSI, to Diana Lee,
Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission, dated December 7, 2006 ("LOI Response"); E-mail
from Diana Lee, Investigations and Hearings Division, to Bradford M.
Berry, counsel for LPSI (November 2, 2005, 11:26 a.m. EST) (granting
LPSI's request for an 30-day extension to file its LOI Response); Letter
from Bradford M. Berry, counsel for LPSI, to Diana Lee, Investigations and
Hearings Division, Enforcement Bureau, Federal Communications Commission,
dated December 23, 2005. ("Supplemental Response").
Shortly thereafter, the Bureau began consent decree negotiations with
LPSI, which failed to result in settlement of the investigation. To
facilitate these discussions, LPSI executed an agreement with the Bureau
in which the one-year statute of limitations set forth in 47 U.S.C. S
503(b)(6) would be tolled from March 3, 2006 until August 29, 2006. See
Tolling Agreement at P 5(a), signed by Christopher Olsen, Deputy Bureau
Chief, Enforcement Bureau on March 9, 2006 and by Lawrence Edward Hisken,
President, Local Phone Services, Inc. on March 3, 2006 ("LPSI Tolling
Agreement"); Tolling Agreement Extension, signed by Christopher Olsen,
Deputy Bureau Chief, Enforcement Bureau on May 31, 2006 and by Lawrence
Edward Hisken, President, Local Phone Services, Inc. on May 25, 2006
("LPSI Tolling Agreement Extension").
See USAC invoice to LPSI dated June 22, 2006.
47 U.S.C. S 503(b)(1)(B); 47 C.F.R. S 1.80(a)(1); see also 47 U.S.C. S
503(b)(1)(D) (forfeitures for violation of 14 U.S.C. S 1464).
47 U.S.C. S 312(f)(1).
H.R. Rep. No. 97-765, 97^th Cong. 2d Sess. 51 (1982).
See, e.g., Southern California Broadcasting Co., Memorandum Opinion and
Order, 6 FCC Rcd 4387, 4388 (1991) ("Southern California Broadcasting
See, e.g., Callais Cablevision, Inc., Grand Isle, Louisiana, Notice of
Apparent Liability for Monetary Forfeiture, 16 FCC Rcd 1359, 1362, P 10
(2001) ("Callais Cablevision") (issuing a Notice of Apparent Liability
for, inter alia, a cable television operator's repeated signal leakage).
Southern California Broadcasting Co., 6 FCC Rcd at 4388, P 5; Callais
Cablevision, Inc., 16 FCC Rcd at 1362, P 9.
47 U.S.C. S 503(b); 47 C.F.R. S 1.80(f).
See, e.g., SBC Communications, Inc., 17 FCC Rcd 7589, 7591, P 4 (2002)
47 U.S.C. S 503(b)(2)(B); see also 47 C.F.R. S 1.80(b)(2); Section 1.80(b)
of the Commission's Rules, Adjustment of Forfeiture Maxima to Reflect
Inflation, 19 FCC Rcd 10945 (2004).
47 U.S.C. S 503(b)(2)(D); See The Commission's Forfeiture Policy Statement
and Amendment of Section 1.80 of the Commission's Rules, Report and Order,
12 FCC Rcd 17087, 17100, P 27 (1997), recon. denied, 15 FCC Rcd 303
(1999); 47 C.F.R. S 1.80(b).
47 U.S.C. SS 254(d); 47 C.F.R. SS 54.706(a), 54.711(a).
47 C.F.R. S 54.711(a).
47 U.S.C. S 254(d).
Based on its LOI supplemental response, LPSI's revenues demonstrate that
it falls under the de mimimis exemption in 2002 and 2003. See LOI Response
at Inquiry 2. Based on the interstate and international telecommunications
revenues report on its 2005 annual Worksheet (reporting 2004 revenues),
however, LPSI would have lost that exemption at some point in 2004. See
id. Given that LPSI did not file quarterly Worksheets in 2004 and February
2005, we do not have the information to further specify the particular
quarter that LPSI lost that exemption.
47 C.F.R. S54.711.
See infra, P 13.
47 U.S.C. S 254(d); 47 C.F.R. S 54.706.
47 C.F.R. S 54.706(c).
Id. S 54.706(b).
Globcom NAL, 18 FCC Rcd at 19903, P 26.
See infra, P 13.
47 U.S.C. S 503(b)(6)(B); see also 47 C.F.R. S 1.80(c)(3); but see supra P
5 & note 19.
See, e.g., Globcom NAL, 18 FCC Rcd at 19903, P 23; Roadrunner Transp.,
Inc., Forfeiture Order, 15 FCC Rcd 9669, 9671, P 8 (2000); Liab. of E.
Broad. Corp., Memorandum Opinion and Order, 10 F.C.C. 2d 37 (1967).
See generally LPSI Tolling Agreement; LPSI Tolling Agreement Extension.
Globcom NAL, 18 FCC Rcd at 19905, P 32; Globcom, Inc., 21 FCC Rcd 4710,
4727, P 45 (2006) ("Globcom Forfeiture Order").
See 47 U.S.C. S 254(d).
See Globcom NAL, 18 FCC Rcd at 19903-19904, PP 25-27; Globcom Forfeiture
Order, 21 FCC Rcd 4721-4724, P 31-38.
The fifteen months at issue are March 2005 to May 2006.
See, e.g., Globcom NAL, 18 FCC Rcd at 19904, P 27; Globcom Forfeiture
Order, 21 FCC Rcd 4722, P 33.
See 47 C.F.R. S 1.80(b)(4); see, e.g., National Weather Networks, Inc.,
Notice of Apparent Liability for Forfeiture, 21 FCC Rcd 3922 (Enf. Bur.
2006); Gilmore Broadcasting Corporation Evansville, Indiana, Notice of
Apparent Liability, 21 FCC Rcd 6284 (Enf. Bur. 2006) (downwardly adjusted
the proposed aggregate forfeiture based on the target's history of
compliance and prompt and voluntary disclosure of its violations); see
also, e.g., Emery Telephone, 13 FCC Rcd 23854, PP 5, 10 (1998), recon
denied, 15 FCC Rcd 7181 (1999) (reducing an aggregate forfeiture amount
from $12,000 to $6,000 for failure to file operation notifications because
carrier voluntarily disclosed the six violations and promptly filed the
forms after discovering its mistake, but declining to reduce two other
forfeitures for lack of voluntary disclosure); Victoria Cellular Corp.,
Memorandum Opinion and Order, 7 FCC Rcd 7853, 7854, PP 10-11 (1992)
(reducing a proposed forfeiture from $15,000 to $6,000 for notification
and filing violations because the carrier made a voluntary disclosure, by
bringing the violation to the Commission's attention).
See generally Voluntary Disclosure Letter. LPSI had paid more than
$40,000 as of the end of June but, until making a belated payment on
August 17, still owed a significant amount of USF payments. See USAC
invoice to LPSI dated June 22, 2006; USAC invoice to LPSI dated July 21,
LPSI made a substantial payment to USAC on August 17 to correct the
outstanding balance, upon learning that enforcement action was imminent
and being advised that the company remained out of compliance.
Forfeiture Policy Statement, 12 FCC Rcd at 17099, P 24; see also 47 C.F.R.
See 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).
47 C.F.R. S 1.1910.
See 47 C.F.R. S 1.1914.
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Federal Communications Commission FCC 06-127
Federal Communications Commission FCC 06-127