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                            Before the
                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. 
x32080026
                                 

         NOTICE OF APPARENT LIABILITY FOR FORFEITURE

   Adopted: August 2, 2000              Released:  August 4, 
2000   

By the Chief, Enforcement Bureau:

                      I.  INTRODUCTION

     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).

                       II.  BACKGROUND

     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 
     service.2
       
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.      

                      III.  DISCUSSION

     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 
to make.22   

     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. 
referenced above.  

     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 
submitted.  

     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) 
(``ConQuest''). 

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 
``Fletcher Companies'').

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.