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Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
File Number EB-07-SE-352
Oceanic Time Warner Cable, )
NAL/Acct. No. 200932100022
a division of Time Warner Cable, Inc. )
Oceanic Kauai Cable System )
Notice OF apparent liability for forfeiture
Adopted: January 19, 2009 Released: January 19, 2009
By the Chief, Enforcement Bureau:
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
that Time Warner Cable, Inc. ("TWC") apparently willfully violated a
Commission Order and Section 76.939 of the Commission's Rules
("Rules") by failing to comply with a Bureau directive to describe the
methodology it planned to use to refund money to subscribers harmed by
the company's apparent violation of various Commission Rules. We
conclude, pursuant to Section 503(b) of the Communications Act of
1934, as amended ("Act"), that TWC is apparently liable for a
forfeiture in the amount of twenty-five thousand dollars ($25,000).
2. On November 8, 2007, the Spectrum Enforcement Division of the
Enforcement Bureau ("Bureau") issued a Letter of Inquiry ("LOI") to
TWC based on complaints that the company had moved certain cable
channels that previously had been accessible to subscribers using
CableCARD-equipped UDCPs, such as digital cable ready television sets
and digital video recorders, to a switched digital video ("SDV")
platform. In doing so, TWC made the affected channels inaccessible to
subscribers unless they leased a set top box from the company. The LOI
sought information on a number of issues, and asked the company to
explain how its implementation of SDV was consistent with various
statutory and regulatory provisions and orders.
3. TWC responded to the LOI on November 30, 2007, and subsequently
provided additional information to the Bureau in response to
supplemental LOIs and information requests. On October 15, 2008, the
Enforcement Bureau issued the Oceanic Kauai NAL and Order, finding
that the company's migration of programming to an SDV platform had
apparently violated various Commission Rules and orders. Consequently,
the Oceanic Kauai NAL and Order proposed a forfeiture against the
company in the amount of $20,000 for the company's apparent
4. Additionally, the Oceanic Kauai NAL and Order directed the company to
provide refunds to subscribers harmed by the implementation and to
provide us with an outline of the company's planned methodology for
issuing those refunds. Specifically, the Oceanic Kauai NAL and Order
ordered TWC, within ninety (90) days of release of the Oceanic Kauai
NAL and Order, to take the following steps:
a. For former CableCARD customers that began to lease any set-top boxes
from TWC following notice of a possible SDV deployment, TWC must
refund the difference in cost (if any) between the charges for the TWC
set-top boxes and the CableCARDs previously leased by such customers;
b. For CableCARD customers that kept their CableCARDs even after notice
of the SDV deployment, TWC must refund the customers' subscriber fees
based on the diminished value of their service following the movement
of linear programming to an SDV platform and reduce their rates on a
going-forward basis accordingly.
5. The Oceanic Kauai NAL and Order also required TWC to submit to the
Enforcement Bureau an explanation of the method the company plans to
use to determine the appropriate amount of refunds, the number of
customers receiving refunds, the total value of such refunds, and the
planned timing of such refunds. The Oceanic Kauai NAL and Order
directed TWC to submit this information to the Enforcement Bureau for
review and approval within thirty (30) days of the release of this
decision and to proceed with its proposed refund plan within sixty
(60) days of such submission provided the Enforcement Bureau approves
TWC's proposed refund plan within thirty (30) days of TWC's
6. TWC responded to the NAL on November 14, 2008. The company also filed
a Petition for Reconsideration and a Request for Stay of the Oceanic
Kauai NAL and Order. TWC did not provide any information about its
methodology for issuing refunds to subscribers harmed by its apparent
violations of Commission Rules, instead arguing that the Oceanic Kauai
NAL and Order was unlawful. Nor has the company taken any other steps
to comply with the Oceanic Kauai NAL and Order. Instead, TWC requests
that the Oceanic Kauai NAL and Order either be stayed, pending final
resolution of the issues in this matter, or be cancelled in its
A. TWC Apparently Has Violated a Commission Order And Section
7. We find that TWC apparently willfully violated a Commission order and
Section 76.939 of the Rules. The Commission has broad investigatory
authority under Sections 4(i), 4(j), and 403 of the Act, its Rules,
and relevant precedent. Section 4(i) authorizes the Commission to
"issue such orders, not inconsistent with this Act, as may be
necessary in the execution of its functions." Section 4(j) states that
"the Commission may conduct its proceedings in such manner as will
best conduce to the proper dispatch of business and to the ends of
justice." Section 403 grants the Commission "full authority and power
to institute an inquiry, on its own motion ... relating to the
enforcement of any of the provisions of this Act." Pursuant to
Section 76.939 of the Rules, a cable operator must comply with FCC
requests for information, orders, and decisions.
8. The Oceanic Kauai NAL and Order expressly directed TWC to provide the
Bureau with an outline of its intended refund methodology. We reject
any contention that TWC was not obligated to comply fully with the
Bureau's order because of the pendency of its Petition for
Reconsideration and Request for Stay. The filing of such pleadings
does not trigger an automatic stay of such order. Neither the Bureau
nor the Commission has granted TWC's Request for Stay or Petition for
Reconsideration. Thus, TWC should have submitted its proposed refund
methodology by November 14, 2008, in compliance with the terms of the
Oceanic Kauai NAL and Order. As the Commission has stated, "parties
are required to comply with Commission orders even if they believe
them to be outside the Commission's authority." TWC failed to do so.
We find, therefore, that TWC apparently willfully violated a
Commission order and Section 76.939 of the Rules.
A. Proposed Forfeiture
9. 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. To impose such a forfeiture penalty, the Commission must
issue a notice of apparent liability and the person against whom such
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 a forfeiture if it finds by a preponderance of the evidence
that the person has violated the Act or a Commission rule. We conclude
under this standard that TWC is apparently liable for forfeiture for
its apparent willful violation of a Commission Order and Section
76.939 of the Rules.
10. Under Section 503(b)(2)(A) of the Act, we may assess a cable operator
a forfeiture of up to $37,500 for each violation, or for each day of a
continuing violation up to a maximum of $375,000 for a single act or
failure to act. In exercising such authority, we are required to take
into account "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."
11. Section 1.80 of the Rules and the Commission's Forfeiture Policy
Statement do not establish a base forfeiture amount for violations of
Section 76.939, although they do establish four thousand dollars
($4,000) as the base amount for failure to respond to Commission
communications. We find that TWC's apparent failure to comply with the
Oceanic Kauai NAL and Order warrants a substantially larger
forfeiture. Misconduct of this type exhibits contempt for the
Commission's authority and threatens to compromise the Commission's
ability to carry out its obligations under the Act. In this case,
TWC's apparent violations have impeded our efforts to carry out the
statutory dictates of Section 629 of the Act and perpetuated harm to
12. We therefore propose a forfeiture of twenty-five thousand dollars
($25,000) against TWC for its apparent violations of the Oceanic
Kauai NAL and Order and Section 76.939. This forfeiture amount is
consistent with precedent in similar cases, where companies failed to
provide responses to Bureau inquiries concerning compliance with the
Commission's rules despite evidence that the LOIs had been received..
IV. ordering clauses
13. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the
Act, and Section 1.80 of the Rules, and the authority delegated by
Sections 0.111 and 0.311 of the Commissions Rules, Time Warner Cable,
Inc. is NOTIFIED of its APPARENT LIABILITY FOR A FORFEITURE in the
amount of twenty-five thousand dollars ($25,000) for its willful
violation of a Commission Order and Section 76.939 of the Rules.
14. IT IS FURTHER ORDERED that, pursuant to Section 1.80 of the Rules,
within thirty (30) days of the release date of this Notice of Apparent
Liability for Forfeiture, TWC SHALL PAY the full amount of the
proposed forfeiture or SHALL FILE a written statement seeking
reduction or cancellation of the proposed forfeiture.
15. 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/Account Number and FRN Number referenced
above. Payment by check or money order may be mailed to Federal
Communications Commission, P.O. Box 979088, St. Louis, MO 63197-9000.
Payment by overnight mail may be sent to U.S. Bank - Government
Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO
63101. Payment by wire transfer may be made to ABA Number 021030004,
receiving bank TREAS/NYC, and account number 27000001. For payment by
credit card, an FCC Form 159 (Remittance Advice) must be submitted.
When completing the FCC Form 159, enter the NAL/Account number in
block number 23A (call sign/other ID), and enter the letters "FORF" in
block number 24A (payment type code). Requests for full payment under
an installment plan should be sent to: Chief Financial Officer --
Financial Operations, 445 12th Street, S.W., Room 1-A625, Washington,
D.C. 20554. Please contact the Financial Operations Group Help Desk at
1-877-480-3201 or Email: ARINQUIRIES@fcc.gov with any questions
regarding payment procedures. TWC will also send electronic
notification on the date said payment is made to JoAnn.Lucanik@fcc.gov
16. The response, if any, must be mailed to the Office of the Secretary,
Federal Communications Commission, 445 12th Street, S.W., Washington,
D.C. 20554, ATTN: Enforcement Bureau - Spectrum Enforcement Division,
and must include the NAL/Acct. No. referenced in the caption. The
response should also be e-mailed to JoAnn Lucanik, Deputy Chief,
Spectrum Enforcement Division, Enforcement Bureau, FCC, at
JoAnn.Lucanik@fcc.gov and Kevin M. Pittman, Esq., Spectrum Enforcement
Division, FCC, at Kevin.Pittman@fcc.gov.
17. 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; 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
18. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability
for Forfeiture shall be sent by first class mail and certified mail
return receipt requested to counsel for Time Warner Cable, Inc.,
Matthew A. Brill, Esq., Latham & Watkins LLP, 555 11th Street, NW,
Suite 1000, Washington, DC, 20004.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Chief, Enforcement Bureau
47 C.F.R. S:76.939 ("Cable operators shall comply with ... the
Commission's requests for information, orders, and decisions.").
See Oceanic Time Warner Cable, Kauai Cable System, Notice of Apparent
Liability for Forfeiture and Order, 23 FCC Rcd 14962, 14976-77, paras.
39-40, 43 (Enf. Bur. 2008) ("Oceanic Kauai NAL and Order") (response
47 U.S.C. S: 503(b).
See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
Enforcement Bureau, Federal Communications Commission to Mark
Lawrence-Apfelbaum, Esq., Executive Vice President and General Counsel,
Time Warner Cable, Inc. (Nov. 8, 2007) ("Nov. 8 LOI").
See Letter from Arthur H. Harding, Fleischman and Harding LLP and Matthew
A. Brill, Latham & Watkins LLP, Counsel for Time Warner Cable, to Kathryn
S. Berthot, Chief, Spectrum Enforcement Division, Enforcement Bureau,
Federal Communications Commission (Nov. 30, 2007) ("Nov. 30 LOI
Oceanic Kauai NAL and Order,23 FCC Rcd at 14976, para. 39-40, 43.
Id. at 14976, paras. 39-40.
Time Warner Cable, Inc.'s Response to Notices of Apparent Liability and
Request for Cancellation of Proposed Forfeitures, File No. EB-07-SE-352
(filed Nov. 14, 2008) ("TWC NAL Response").
Petition for Reconsideration of Time Warner Cable, Inc., File No.
EB-07-SE-352 (filed Nov. 14, 2008) ("TWC Petition for Reconsideration");
Time Warner Cable, Inc. Request for Stay Pending Resolution of Petition
for Reconsideration and Request for Cancellation of Proposed Forfeitures,
File No. EB-07-SE-352 (filed Nov. 14, 2008) ("TWC Request for Stay").
We will address those filings by separate order.
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. S: 312(f)(1). The legislative history of
Section 312(f)(1) of the Act indicates 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., Southern California
Broadcasting Co., Memorandum Opinion and Order, 6 FCC Rcd 4387, 4387-88 P:
5 (1991) ("Southern California Broadcasting").
47 U.S.C. S: 154(i).
47 U.S.C. S: 154(j).
47 U.S.C. S: 403.
47 C.F.R. S: 76.939 ("Cable operators shall comply with ... the
Commission's requests for information, orders, and decisions."). In
carrying out this obligation, a cable operator also must provide truthful
and accurate statements to the Commission or its staff in any
investigatory or adjudicatory matter within the Commission's jurisdiction.
We further note that although TWC posits several arguments related to the
refund provision, those arguments do not address that portion of the
Oceanic Kauai NAL and Order that requires TWC to submit its proposed
refund methodology to the Bureau within 30 days. Instead, TWC's arguments
decry the issuance of the refund to the subscribers harmed by its acts, a
distinct and separate act required under the Oceanic Kauai NAL and Order.
See 47 C.F.R. S:S: 1.102(b), 1.106(n), 1.429(k).
SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589, 7591 para. 5
(2002) ("SBC Forfeiture Order"); see also 47 U.S.C. S: 408 (Commission
orders "shall continue in force for the period of time specified in the
order or until the Commission or a court of competent jurisdiction issues
a superseding order."); 47 U.S.C. S: 416(c) ("It shall be the duty of
every person, its agent and employees ... to observe and comply with such
orders so long as the same shall remain in effect"); Peninsula
Communications, Inc., Forfeiture Order, 17 FCC Rcd 2832, 2834 para. 5
(2002) (subsequent history omitted) (a regulatee "cannot ignore a
Commission order simply because it believes such order to be unlawful");
World Communications Forfeiture Order, 19 FCC Rcd at 2719-2720 (issuing
forfeiture against regulatee who failed to respond to an LOI because it
believed the LOI to be beyond the Commission's jurisdiction).
47 U.S.C. S: 503(b)(1)(B); 47 C.F.R. S: 1.80(a)(1).
47 U.S.C. S: 503(b); 47 C.F.R. S: 1.80(f).
See, e.g., SBC Forfeiture Order, 17 FCC Rcd at 7591.
47 U.S.C. S: 503(b)(2)(A). The Commission has amended Section 1.80(b)(3)
of the Rules, 47 C.F.R. S: 1.80(b)(3), three times to increase the maximum
forfeiture amounts, in accordance with the inflation adjustment
requirements contained in the Debt Collection Improvement Act of 1996, 28
U.S.C. S: 2461. See Amendment of Section 1.80 of the Commission's Rules
and Adjustment of Forfeiture Maxima to Reflect Inflation, 23 FCC Rcd 9845
(2008) (adjusting the maximum statutory amounts for broadcasters and cable
operators from $32,500/$325,000 to $37,500/$375,000); Amendment of Section
1.80 of the Commission's Rules and Adjustment of Forfeiture Maxima to
Reflect Inflation, Order, 19 FCC Rcd 10945 (2004) (adjusting the maximum
statutory amounts for broadcasters and cable operators from
$27,500/$300,000 to $32,500/$325,000); Amendment of Section 1.80 of the
Commission's Rules and Adjustment of Forfeiture Maxima to Reflect
Inflation, Order, 15 FCC Rcd 18221 (2000) (adjusting the maximum statutory
amounts for broadcasters and cable operators from $25,000/$250,000 to
$27,500/$300,000). The most recent inflation adjustment took effect
September 2, 2008 and applies to violations that occur after that date.
See 73 Fed. Reg. 44663-5. TWC's apparent violations occurred after
September 2, 2008 and are therefore subject to the higher forfeiture
47 U.S.C. S: 503(b)(2)(E). See also 47 C.F.R. S: 1.80(b)(4), Note to
paragraph (b)(4): Section II. Adjustment Criteria for Section 503
See 47 C.F.R. S: 1.80(b)(4); The Commission's Forfeiture Policy Statement
and Amendment of Section 1.80 of the Rules to Incorporate the Forfeiture
Guidelines, Report and Order, 12 FCC Rcd. 17087 (1997), recon. denied, 15
FCC Rcd. 303 (1999).
See e.g., SBC Forfeiture Order, 17 FCC Rcd at 7599-7600 P:P: 23-28
(ordering $100,000 forfeiture for egregious and intentional failure to
certify the response to a Bureau inquiry) ("SBC Forfeiture Order");
Digital Antenna, Inc., Notice of Apparent Liability for Forfeiture and
Order, 23 FCC Rcd 7600, 7602 (Spectr. Enf. Div., Enf. Bur. 2008)
(proposing $11,000 forfeiture for failure to provide a complete response
to an LOI); BigZoo.Com Corporation, Forfeiture Order, 20 FCC Rcd 3954
(Enf. Bur. 2005) (ordering $20,000 forfeiture for failure to respond to an
Federal Communications Commission DA 09-90
Federal Communications Commission DA 09-90