Click here for Microsoft Word Version
This document was converted from
WordPerfect or Word to ASCII Text format.
Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.
All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.
Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.
If you need the complete document, download the
Word or WordPerfect version or Adobe Acrobat version (above).
Federal Communications Commission
Washington, D.C. 20554
In the Matter of ) File No. EB -00-IH-0054
North American Telephone Network, LLC ) NAL/Acct. No.
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: August 2, 2000 Released: August 4,
By the Chief, Enforcement Bureau:
1. In this Notice of Apparent Liability for Forfeiture
("NAL"), we find that North American Telephone Network, LLC
(``NATN'') has apparently violated section 254(d) of the
Communications Act of 1934, as amended (the ``Act''), and
section 54.706 of the Commission's rules by willfully and
repeatedly failing to contribute to universal service
support programs.1 Based on our review of the facts and
circumstances in this case, we conclude that NATN is
apparently liable for a forfeiture in the amount of fifty-
five thousand dollars ($55,000).
2. In 1996, Congress amended the Act to require that:
Every telecommunications carrier that provides
interstate telecommunications services shall
contribute, on an equitable and nondiscriminatory
basis, to the specific, predictable, and
sufficient mechanisms established by the
Commission to preserve and advance universal
In implementing section 254, the Commission authorized the
Universal Service Administrative Company (``USAC'') to
administer universal service support mechanisms and to
perform billing and collection functions.3 As to these
matters, the Commission directed USAC to distribute, receive
and process the Universal Service Worksheet (now the
Telecommunications Reporting Worksheet) (``Worksheet''),
which is used to report certain categories of revenue for
the purpose of calculating a carrier's universal service
contribution, and to adjust carriers' contributions in
accordance with factors established by the Commission.4 In
addition, the Commission gave USAC the authority to bill carriers monthly, starting in
February 1998, for their contributions.5 To foster
compliance with universal service requirements, the
Commission's rules provide that a carrier's failure ``to
submit the required . . . contributions may subject the
contributor to the enforcement provisions of the Act and any
other applicable law.''6
3. Based upon information in NATN's first Worksheet,
USAC began sending invoices to NATN in July 1998.7 In 1998,
NATN made two payments, totaling approximately $186,000.
Between November 1998 and February 2000, NATN made no
universal service payments.
4. By letter dated February 16, 2000, the Enforcement
Bureau advised NATN that the Commission was considering
possible enforcement action against it because USAC's
records reflected that NATN owed nearly $800,000 as of
USAC's December 17, 1999, invoice.8 In response to the
Bureau's letter, NATN's accounting manager, Kay Shihata,
advised by letter dated March 8, 2000, that NATN had made a
payment of $100,000 on March 1, 2000.9 Ms. Shihata further
advised that NATN was working with USAC ``to set up a
reasonable payment plan and to address any incorrect
information.'' Subsequently, on April 11, 2000, May 18,
2000, and June 20, 2000, NATN made additional payments of
$30,000 each. However, there is no information before us
indicating that NATN has committed itself to any plan that
will result in full payment of the amount it owes, or that
it has demonstrated that the amount it owes is incorrect.
As of July 1, 2000, including late payment and filing
penalties, the amount NATN owes exceeds $800,000.
5. We conclude that NATN is apparently liable for
forfeiture for willful and repeated violations of section
254 of the Act and the Commission's rules governing
universal service contributions. As noted above, section
254(d) of the Act and sections 54.706 and 54.709 of the
Commission's rules require that interstate
telecommunications carriers make universal service
contributions in the amount calculated by USAC. 10 The
record before us reflects that although NATN made two
universal service payments in 1998, it made no payments
between November 1998 and February 2000. Moreover, during
this period, NATN apparently received, but ignored, USAC's
invoices, and consistently failed to respond to USAC's
repeated contacts. Only in response to our letter dated
February 16, 2000, did NATN make a payment and initiate
contact with USAC in order to establish a framework for
eliminating its debt. Given this record, we find that
NATN's failure to make the required contributions is both
willful and repeated. The term ``willful'' means that the
violator knew that it was taking the action in question,
irrespective of any intent to violate the Commission's
rules,11 and ``repeated'' means more than once.12
6. Section 503(b)(1)(B) of the Act provides that any
person who willfully or repeatedly fails to comply with the
Act or the Commission's rules shall be liable for a
forfeiture penalty.13 Section 503(b)(2)(B) of the Act
authorizes the Commission to assess a forfeiture of up to
$110,000 for each violation, or each day of a continuing
violation, up to a statutory maximum of $1,100,000 for a
single act or failure to act.14 In assessing a forfeiture,
we take into account the statutory factors set forth in
section 503(b)(2)(D) of the Act, which include 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.15
7. In determining the proposed forfeiture in this
case, we note that NATN failed to make any of the required
payments in response to invoices sent by USAC from November
1998 through January 2000. Consequently, the amount NATN
now owes in universal service contributions exceeds
$800,000. Further, prior to the receipt of the Enforcement
Bureau's February 16, 2000, letter, NATN apparently ignored
USAC's collection efforts and made no commitment to pay the
money it owed.
8. Although NATN's delinquencies continued for
approximately 15 months, we limit the scope of this NAL to
NATN's apparent failures to make the contributions assessed
in USAC invoices for December 1999 and January 2000.
Previously, the Commission sanctioned carriers for failure
to make the required universal service contributions for
only one month of a continuing violation. Recently,
however, the Commission sanctioned three carriers for two
months of a continuing violation, and we believe NATN's
apparent violation warrants similar treatment.16
9. Taking into account the factors listed in section
503(b)(2)(D) of the Act,17 as well as Commission
precedent,18 we find NATN apparently liable for a forfeiture
of $55,000. This forfeiture consists of two components.
First, we have assessed a base figure of $40,000 as a
general fixed penalty of $20,000 for each of the two
violations at issue.19 As the Commission noted in ConQuest,
it is necessary to set a base figure designed to deter
delinquencies regardless of their amount.20 Second,
consistent with notices of apparent liability recently
issued by the Commission, we have added to the base amount
of $40,000 an amount equal to approximately one-half of the
unpaid universal service contributions for the months of
December 1999 and January 2000, or $15,000.21 The
Commission has imposed this component of the forfeiture to
illustrate that a delinquent carrier's culpability and the
consequential damage it causes to the goal of universal
service may vary with the size of the contributions it fails
10. Although NATN's failure to make payments in other
months represents independent violations of the Act and the
Commission's rules, we are not imposing any sanction for
these apparent violations at this time. Nevertheless, we
note that these violations could form the basis for
additional notices of apparent liability.23 If NATN
continues to violate the Commission's universal service
rules, such violations could result in future notices of
apparent liability proposing substantially greater
forfeitures, or could result in issuance of a show cause
order to revoke NATN's operating authority.24
IV. ORDERING CLAUSES
11. Accordingly, IT IS ORDERED THAT, pursuant to
section 503(b) of the Act,25 and sections 0.111, 0.311 and
1.80 of the Commission's Rules,26 North American Telephone
Network is hereby NOTIFIED of its APPARENT LIABILITY FOR A
FORFEITURE in the amount of fifty-five thousand dollars
($55,000) for violating the Act and the Commission's rules
requiring regular contributions for universal service.
12. IT IS FURTHER ORDERED THAT, pursuant to section
1.80 of the Commission's rules,27 within thirty days of this
NOTICE OF APPARENT LIABILITY, North American Telephone
Network SHALL PAY the full amount of the proposed forfeiture
or SHALL FILE a written statement seeking reduction or
cancellation of the proposed forfeiture.
13. Payment of the forfeiture may be made by credit
card through the Commission's Credit and Debt Management
Center at (202) 418-1995 or by mailing a check or similar
instrument, payable to the order of the Federal
Communications Commission, to the Forfeiture Collection
Section, Finance Branch, Federal Communications Commission,
P.O. Box 73482, Chicago, Illinois 60673-7482. The payment
should note the NAL/Acct. No. referenced above.
14. The response, if any, must be mailed to the
Federal Communications Commission, Enforcement Bureau,
Investigations and Hearings Division, 445 12th Street, S.W.,
Washington, D.C. 20554 and MUST INCLUDE THE NAL/Acct. No.
15. The Commission will not consider reducing or
canceling a forfeiture in response to a claim of inability
to pay unless the respondent 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
respondent's current financial status. Any claim of
inability to pay must specifically identify the basis for
the claim by reference to the financial documentation
16. Requests for payment of the full amount of this
Notice of Apparent Liability under an installment plan
should be sent to: Chief, Credit and Debt Management Center,
445 12th Street, S.W., Washington, D.C. 20554.28
17. IT IS FURTHER ORDERED THAT a copy of this NOTICE
OF APPARENT LIABILITY shall be sent by Certified Mail Return
Receipt Requested to North American Telephone Network, LLC,
4151 Ashford Dunwoody Road, #675, Atlanta, Georgia 30319,
attention: Kay P. Shihata, CPA, Accounting Manager.
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
1 47 U.S.C. § 254(d); 47 C.F.R. § 54.706.
2 47 U.S.C. § 254(d).
3 See Amendment of Parts 54 and 69 - Changes to Board of
NECA, Inc., 12 FCC Rcd 18400, 18415 (1997) (``NECA Changes
Order''); 47 C.F.R. § 54.702(b).
4 See NECA Changes Order, 12 FCC Rcd at 18424-25; 47 C.F.R.
§§ 54.709(a)(1-3), 54.711(a).
5 See Amendment of Part 54 - Universal Service, 12 FCC Rcd
22423, 22425 (1997); 47 C.F.R. §§ 54.709(a)(4), 54.709(d).
6 47 C.F.R. § 54.713.
7 NATN's Chief Financial Officer, Ron Levitt, certified
that the Worksheet was accurate.
8 Letter from David H. Solomon, Chief, Enforcement Bureau,
to North American Telephone Network dated February 16, 2000.
9 Letter from Kay P. Shihata, CPA, Accounting Manager, to
James W. Shook, Investigations and Hearings Division,
Enforcement Bureau dated March 8, 2000.
10 47 U.S.C. 254(d); 47 C.F.R. §§ 54.706, 54.709.
11 See Jerry Szoka, 14 FCC Rcd 9857, 9865 (1999); Southern
California Broadcasting Co., 6 FCC Rcd 4387 (1991).
12 See Hale Broadcasting Corp., 79 FCC 2d 169, 171 (1980).
13 47 U.S.C. § 503(b)(1)(B); 47 C.F.R. § 1.80(a)(2).
14 47 U.S.C. § 503(b)(2)(B); 47 C.F.R. § 1.80(b)(2).
15 47 U.S.C. § 503(b)(2)(D). See also The Commission's
Forfeiture Policy Statement and Amendment of Section 1.80 of
the Rules to Incorporate the Forfeiture Guidelines, 12 FCC
Rcd 17087, 17100-01 (1997), recon. denied, 15 FCC Rcd 303
(1999) (``Forfeiture Guidelines'').
16 See America's Tele-Network Corp., FCC 00-276, released
August 1, 2000 (Notice of Apparent Liability); Matrix
Telecom, Inc., FCC 00-262, released July 27, 2000 (Notice of
Apparent Liability); Intellicall Operator Services, FCC 00-
261, released July 27, 2000 (Notice of Apparent Liability).
17 47 U.S.C. § 503(b)(2)(D).
18 See cases cited note 16, supra. See also ConQuest
Operator Services Corp., 14 FCC Rcd 12518 (1999)
19 See ConQuest, 14 FCC Rcd at 12527. (The Commission
determined that $20,000 should be the general penalty for
failure to pay the assessed universal service contribution
in a timely manner).
20 See id.
21 See cases cited in note 16, supra.
22 See ConQuest, 14 FCC Rcd at 12527 at ¶ 19.
23 ConQuest Forfeiture Order, 14 FCC Rcd at 12527.
24 See CCN, Inc. et al., 12 FCC Rcd 8547 (1997) (the
25 47 U.S.C. § 503(b).
26 47 C.F.R. §§ 0.111, 0.311, 1.80.
27 47 C.F.R. § 1.80.
28 See 47 C.F.R. § 1.1914.