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).


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

In the Matter of                )  File No. EB -00-IH-0055
Intellicall Operator Services   )  NAL/Acct. No. 32080023


   Adopted: July 21, 2000               Released:   July 27, 

By the Commission:

                      I.  INTRODUCTION

     1.  In this Notice of Apparent Liability for Forfeiture 
("NAL"), we find that Intellicall Operator Services 
(``Intellicall'') 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 make required contributions to 
universal service support programs. 1  Based on our review 
of the facts and circumstances in this case, we conclude 
that Intellicall is apparently liable for a forfeiture in 
the amount of  $198,000.

                       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 
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.  Intellicall, an interstate telecommunications 
service provider, does not appear to dispute its liability 
for universal service contributions and has paid a portion 
of the amount it owes for universal service.  USAC's records 
reflect that Intellicall has made over twenty payments to 
USAC in the last two years totaling more than $3 million.  
During that period, however, Intellicall has missed several 
payments, underpaid its monthly invoices and failed to cure 
its arrearages.  As a result, Intellicall owed over $2 
million in universal service payments as of April 17, 2000.

     4. In February 2000, the Enforcement Bureau sent a 
letter to Intellicall which explained that Intellicall was 
the subject of a potential enforcement action. 7  In its 
response, Intellicall states that it is in ``complete 
understanding of the potential enforcement action for 
failure to pay outstanding balances due...''8 In the same 
letter, Intellicall indicates a commitment to ``remedy the 
current situation.'' Since it received the Enforcement 
Bureau letter, Intellicall contacted USAC and presented USAC 
with a payment plan designed to cure its current arrearage 
in twenty-one months.  Intellicall committed to pay each 
month an amount equal to its current monthly obligation and 
an additional $75,000 toward the amount it is in arrears.  
Intellicall began making payments on this plan in April 
2000.  Intellicall made payments for April, May, and June.

                      III.  DISCUSSION

     5.  We conclude that Intellicall 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.  Since early 1998, 
Intellicall has paid only a portion of its universal service 
obligations.  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. 9  
We find that Intellicall'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,10 and ``repeated'' means 
more than once.11  Considering the record before us, it 
appears that Intellicall was aware of its obligation to 
contribute to universal service programs, yet knowingly 
failed to meet that obligation.  Intellicall apparently 
received USAC's invoices, but failed to make the required 
universal service payments. 

     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.12  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.13  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.14  

        7.  Although Intellicall's delinquency has continued 
since early 1998, we limit the scope of this NAL to 
Intellicall's apparent failures to make the contributions 
assessed in USAC invoices for January and February 2000, 
each of which sought a monthly contribution of $288,613 for 
the universal service programs.  Although, in the past, we 
have sanctioned carriers for failure to make the required 
universal service contributions for only one month of a 
continuing violation, we expressly stated that: 

     [I]n light of the accumulating record of non-
     compliance, we are prepared to impose 
     substantially greater forfeitures in the future. . 
     . .  [O]ur future notices likely will cover 
     greater periods of non-payment than a single month 
     . . . [and] will be based on some variant of [our] 
     formula, which includes, as a component of the 
     forfeiture, one half of the unpaid contribution 
     amount for the period in question.15 

        8.  Taking into account the factors listed in 
Section 503(b)(2)(D) of the Act,16 as well as Commission 
precedent, we find Intellicall apparently liable for a 
forfeiture of $198,000.  This forfeiture consists of three 
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.17  As we noted in the Conquest 
Forfeiture Order, it is necessary to set a base figure 
designed to deter delinquencies regardless of their 
amount.18  Second, consistent with the ConQuest Forfeiture 
Order, we have added to the base amount of $40,000 an amount 
equal to one half of the unpaid $577,226 universal service 
contributions for the months of January and February 2000, 
or an addition of $288,613.19  We have 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.20  Finally, for the 
reasons explained below, we have applied a downward 
adjustment of $130,613, approximately 40% of the sum of the 
first two components. 

     9. The Act and the Commission's rules provide a 
framework for adjusting the forfeiture amounts imposed 
depending on the facts and circumstances of the particular 
case.21    Although Intellicall has for more than two years 
failed to pay in full outstanding balances when due, we note 
that Intellicall has acknowledged its liability for the 
amounts assessed, and has made significant efforts to 
satisfy its universal service obligations.  As noted, 
Intellicall made over twenty payments toward its universal 
service obligations, which totaled approximately $3 million.   
Further, Intellicall has now submitted a plan for curing its 
arrearage.  We consider Intellicall's significant efforts to 
pay to be a factor warranting a downward adjustment of the 
amount of the forfeiture. We also consider its submission of 
a plan to cure its outstanding balance and commencement of 
payments on that plan to be a factor warranting a downward 

        10.  Although Intellicall's failure to make payment 
in other months represents independent violations of the Act 
and our 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.22  If Intellicall continues 
to violate our universal service rules, such violations 
could result in future NALs proposing substantially greater 
forfeitures, or could result in issuance of a show cause 
order to revoke Intellicall's operating authority.23    

                    IV.  ORDERING CLAUSES

     11.  Accordingly, IT IS ORDERED THAT, pursuant to 
Section 503(b) of the Act,24 and Section 1.80 of the 
Commission's rules,25 Intellicall Operator Services is 
in the amount of one hundred ninety eight thousand dollars 
($198,000) 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,26 within thirty days of this 
NOTICE OF APPARENT LIABILITY Intellicall Operator Services 
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 

     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. 20554.27  

     17.  IT IS FURTHER ORDERED THAT a copy of this NOTICE 
OF APPARENT LIABILITY shall be sent by Certified Mail Return 
Receipt Requested to Intellicall Operator Services, attn: 
George M. Trevino, Corporate Controller, 16200 Addison Road, 
Suite 100, Addison, TX 75001.



                         Magalie Roman Salas


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 Letter from David H. Solomon, Chief, Enforcement Bureau, 
to Intellicall Operator Services dated February 16, 2000.

8  Letter from George M. Trevino, Corporate Controller, to 
James W. Shook, Investigations and Hearings Division, 
Enforcement Bureau dated March 10, 2000.

9  47 U.S.C. 254(d); 47 C.F.R.  54.706, 54.709. 

10  See Jerry Szoka, 14 FCC Rcd 9857, 9865 (1999); Southern 
California Broadcasting Co., 6 FCC Rcd 4387 (1991). 

11  See Hale Broadcasting Corp., 79 FCC 2d 169, 171 (1980). 

12  47 U.S.C.  503(b)(1)(B); 47 C.F.R.  1.80(a)(2). 

13  47 U.S.C.  503(b)(2)(B); 47 C.F.R.  1.80(b)(2). 

14  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''). 

15 ConQuest Operator Services Corp., 14 FCC Rcd 12518, 12528 
(1999) (``ConQuest Forfeiture Order'').

16  47 U.S.C.  503(b)(2)(D). 

17 See ConQuest Forfeiture Order, 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). 

18  See id.

19  Id.  See also Operator Communications, Inc., 13 FCC Rcd 
16082, 16087 (1998)  

20 See Conquest Forfeiture Order, 14 FCC Rcd at 12,527,  

21  See 1.80(b)(4) of the Commission's rules and 
accompanying note, 47 C.F.R. 1.80(b)(4).  See also 
Forfeiture Guidelines, 12 FCC Rcd at 17100-01 (``[T]he 
adjustment factors we evaluate in considering the actions of 
the violator include egregious misconduct, ability or 
inability to pay, intentional violations, prior violation of 
the same or other requirements, good faith or voluntary 
disclosure, and history of overall compliance.  47 U.S.C.  
503(b)(2)(D).  In sum, although the base amount is the 
starting point in assessing a forfeiture, the forfeiture may 
be decreased below the base amount or increased to the 
statutory maximum when the adjustment criteria are 
considered based on the facts of the case''). 

22  ConQuest Forfeiture Order, 14 FCC Rcd at 12527. 

23  See CCN, Inc. et al., 12 FCC Rcd 8547 (1997) (the 
``Fletcher Companies'').

24  47 U.S.C.  503.

25  47 C.F.R.  1.80.

26  Id. 

27 See 47 C.F.R.  1.1914.