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Federal Communications Commission
Washington, D.C. 20554
In the Matter of ) File No. EB -00-IH-0053
America's Tele-Network Corp. ) NAL/Acct. No. x32080024
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: July 27, 2000 Released: August 1,
By the Commission:
1. In this Notice of Apparent Liability for Forfeiture
("NAL"), we find that America's Tele-Network Corp.
(``ATNC'') 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 ATNC is
apparently liable for a forfeiture in the amount of one
hundred fifty-four thousand dollars ($154,000).
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, with the first
payment being due in February 1998.5 To foster compliance
with universal service requirements, the Commission's rules
provide that a carrier's failure ``to submit required . . .
contributions may subject the contributor to the enforcement
provisions of the Act and any other applicable law.''6
3. ATNC filed its first Worksheet in February 1998.
Based upon information in the Worksheet, USAC sent ATNC an
invoice dated February 25, 1998, which set forth ATNC's
liability to the universal service funds for high cost and
low income areas, school and libraries, and rural health
care. The invoice stated that payment of the contribution,
which at that time totaled $45,637.44, was due by March 17,
1998. ATNC failed to submit the required contribution.
Beginning in March 1998,7 USAC repeatedly contacted ATNC and
informed ATNC of its delinquency in making universal service
contributions. Notwithstanding USAC's invoices and repeated
contacts, ATNC made no payments in 1998 or 1999.
4. ATNC's apparent recalcitrance continued into 2000.
In February 2000, the Enforcement Bureau sent a letter to
ATNC, which explained that ATNC was the subject of a
potential enforcement action.8 In its response, ATNC
expressly stated that it was ``withholding payments'' due to
its belief that ``universal service support programs and
contribution assessments are unconstitutional and invalid,''
despite acknowledging that the U.S. Court of Appeals for the
Fifth Circuit had found otherwise. 9 In subsequent
responses to further staff inquiries,10 ATNC claimed, among
other things, that its non-payment occurred because its
customers failed to pay specific line item charges for
universal service.11 Nonetheless, ATNC acknowledged that it regularly received from its billing agent a pre-set
percentage of the amounts billed to customers and that the
billed amounts included the universal service line item.12
5. Notwithstanding its arguments seeking to justify
its prior failures to pay, ATNC submitted to USAC a
contribution of $208,984.58 on May 8, 2000, and two
additional contributions of $48,051.38 and $10,000 on June
6, 2000. On July 18, 2000, USAC received from ATNC another
payment of $56,962.76. Accounting for ATNC's most recent
payments, ATNC currently owes $964,808.52, which consists of
required contributions and late payment penalties billed
through June 2000.
6. We conclude that ATNC 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. From February 1998 until
May 2000, ATNC failed to pay any portion of its universal
service obligations. Beginning in May 2000, ATNC has paid a
little more than 25 percent of the total amount owed. 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. 13 We find
that ATNC'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,14 and ``repeated'' means more than once.15
Considering the record before us, it appears that ATNC was
not only aware of its obligation to contribute to universal
service programs, it deliberately chose not to meet that
7. 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.16 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.17 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.18
8. Although ATNC's delinquency has continued since
March 1998, we limit the scope of this NAL to ATNC's
apparent failures to make the contributions assessed in USAC
invoices for November and December 1999, each of which
sought a monthly contribution of $62,671.52 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.19
9. Taking into account the factors listed in section
503(b)(2)(D) of the Act,20 as well as Commission precedent,
we find ATNC apparently liable for a forfeiture of $154,000.
This forfeiture consists of three components. First, we
have assessed a base figure of $40,000 as a general penalty
of $20,000 for each of the two violations at issue.21 As we
noted in the ConQuest Forfeiture Order, it is necessary to
set a base figure designed to deter delinquencies regardless
of their amount.22 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 $125,442
universal service contributions for the months of November
and December 1999, or an addition of $62,671.23 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.24
Finally, as explained in greater detail below, because we
believe that ATNC's violations are both egregious and
intentional, we have applied an upward adjustment of
$51,329, slightly less than 50 percent of the sum of the
first two components. 10. The Act and Commission's rules provide a framework
for adjusting the forfeiture amounts imposed depending on
the facts and circumstances of the particular case.25 Here,
it appears that ATNC deliberately chose for more than two
years to pay nothing toward universal service. During that
period, ATNC failed to respond to USAC's invoices, telephone
calls and letters. Moreover, even after the Commission
notified ATNC of potential enforcement action, ATNC
initially sought to justify its failures to pay by arguing
that the universal service program was unconstitutional even
while acknowledging that the only court decision it
referenced had concluded otherwise. Subsequently, in
responding to a staff inquiry, ATNC shifted its defense by
claiming that its failures to pay resulted from a notice
appearing on LEC bills stating that non-payment of long
distance charges would not result in interruption of local
service. ATNC asserts that this notice encouraged customers
either to withhold payment of charges imposed on behalf of
ATNC, or to seek refunds of such charges. While it appears
that some customers may have withheld payment or sought
refunds, it also appears that ATNC received substantial
income from its billing agent on a regular basis. Only when
it appeared that enforcement action was imminent did ATNC
start making payments. However, even then, ATNC made no
commitment to pay off its arrearage, and its current payment
pattern provides no assurance that it will do so any time in
the foreseeable future. In sum, it appears that ATNC's
failures to pay, prior to May 2000, were in defiant
disregard of its obligations. Moreover, while ATNC's recent
payments have been encouraging, its efforts to shift to
others the blame for its apparent violations and the absence
of a plan to eliminate its arrearage, reflect a continued
disregard for its universal service obligations. In this
regard, we emphatically reject ATNC's attempt to blame
others for its failures to contribute to universal service.
11. Although ATNC's failure to make payment in other
months represents independent violations of the Act and our
rules, we do not find apparent liability for these apparent
violations at this time. Nevertheless, we note that these
violations could form the basis for additional notices of
apparent liability.26 If ATNC 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
ATNC's operating authority.27
IV. ORDERING CLAUSES
12. Accordingly, IT IS ORDERED THAT, pursuant to
section 503(b) of the Act,28 and section 1.80 of the
Commission's rules,29 America's Tele-Network Corp. is hereby
NOTIFIED of its APPARENT LIABILITY FOR A FORFEITURE in the
amount of one hundred fifty-four thousand dollars ($154,000)
for violating the Act and the Commission's rules requiring
regular contributions for universal service.
13. IT IS FURTHER ORDERED THAT, pursuant to section
1.80 of the Commission's rules,30 within thirty days of this
NOTICE OF APPARENT LIABILITY, America's Tele-Network Corp.
SHALL PAY the full amount of the proposed forfeiture or
SHALL FILE a written statement seeking reduction or
cancellation of the proposed forfeiture.
14. 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.
15. 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.
16. 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
17. 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. 20554.31
18. IT IS FURTHER ORDERED THAT a copy of this NOTICE
OF APPARENT LIABILITY shall be sent by Certified Mail Return
Receipt Requested to America's Tele-Network Corp. in care of
Charles H. Helein, Esq., The Helein Law Group, P.C., 8180
Greensboro Drive, Suite 700, McLean, Virginia 22102, and to
720 Hembree Place, Roswell, Georgia 30076, attention: John
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)(4-5).
6 47 C.F.R. § 54.713.
7 USAC's records reflect a total of 17 contacts or
attempted contacts between March 1998 and February 2000.
8 Letter from David H. Solomon, Chief, Enforcement Bureau,
to America's Tele-Network Corp. dated February 16, 2000.
9 Letter from Charles H. Helein, Esq., counsel for ATNC, to
James W. Shook, Investigations and Hearings Division,
Enforcement Bureau, dated February 25, 2000, citing Texas
Office of Public Utility Counsel v. FCC, 183 F.3d 393 (5th
Cir. 1999) (subsequent history omitted).
10 Letter from David H. Solomon, Chief, Enforcement Bureau,
to America's Tele-Network Corp. dated April 20, 2000.
Letter from David H. Solomon, Chief, Enforcement Bureau, to
America's Tele-Network Corp. dated May 3, 2000.
11 Letter from John W. Little, President, to Charles W.
Kelley, Chief, Investigations and Hearings Division,
Enforcement Bureau, dated April 28, 2000. Letter from
Charles H. Helein, Esq., counsel for ATNC, to Charles W.
Kelley, Chief, Investigations and Hearings Division,
Enforcement Bureau, dated May 15, 2000.
12 Documentation supplied by ATNC and its billing agent
indicates that ATNC does not bill its customers directly.
Rather, ATNC sells its customer accounts to the billing
agent, which pays ATNC roughly 70 percent of the gross
amount ATNC's customers will be billed for its service
(amounts, which, according to ATNC's Worksheets, exceeded
millions of dollars for calendar years 1998 and 1999). The
billing agent, in turn, sells the accounts to the local
exchange carriers (LECs) whose customers use ATNC. The LECs
bill their own customers and include ATNC's charges. On a
regular basis, ATNC and its billing agent adjust the amounts
to be paid to ATNC according to the amounts actually paid to
the LECs (and then by the LECs to the billing agent) with
respect to the charges assessed on behalf of ATNC.
13 47 U.S.C. 254(d); 47 C.F.R. §§ 54.706, 54.709.
14 See Jerry Szoka, 14 FCC Rcd 9857, 9865 (1999); Southern
California Broadcasting Co., 6 FCC Rcd 4387 (1991).
15 See Hale Broadcasting Corp., 79 FCC 2d 169, 171 (1980).
16 47 U.S.C. § 503(b)(1)(B); 47 C.F.R. § 1.80(a)(2).
17 47 U.S.C. § 503(b)(2)(B); 47 C.F.R. § 1.80(b)(2).
18 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'').
19 ConQuest Operator Services Corp., 14 FCC Rcd 12518,
12528 (1999) (``ConQuest Forfeiture Order''). See also
Intellicall Operator Services, FCC 00-261, released July 27,
2000 (Notice of Apparent Liability); Matrix Telecom, Inc.,
FCC 00-262, released July 27, 2000 (Notice of Apparent
20 47 U.S.C. § 503(b)(2)(D).
21 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).
22 See id.
24 See id., at ¶ 19.
25 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'').
26 ConQuest Forfeiture Order, 14 FCC Rcd at 12527.
27 See CCN, Inc. et al., 12 FCC Rcd 8547 (1997) (the
28 47 U.S.C. § 503.
29 47 C.F.R. § 1.80.
31 See 47 C.F.R. § 1.1914.