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Federal Communications Commission
Washington, D.C. 20554
In the Matter of ) File No. EB -00-IH-0055
Intellicall Operator Services ) NAL/Acct. No. 32080023
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: July 21, 2000 Released: July 27,
By the Commission:
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.
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.
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
hereby NOTIFIED of its APPARENT LIABILITY FOR A FORFEITURE
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.
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.
FEDERAL COMMUNICATIONS COMMISSION
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
24 47 U.S.C. § 503.
25 47 C.F.R. § 1.80.
27 See 47 C.F.R. § 1.1914.