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FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of )
) File No. EB-01-IH-0642
SBC Communications, Inc. )
) NAL/Acct. No. 200232080001
Apparent Liability for Forfeiture )
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: November 1, 2001 Released: November
By the Chief, Enforcement Bureau:
1. In this Notice of Apparent Liability for Forfeiture
(``NAL''), we find that SBC Communications, Inc. (``SBC'') has
apparently violated an Enforcement Bureau order that SBC submit a
sworn written response, not later than October 22, 2001, to a
Bureau inquiry conducted pursuant to its authority provided by
the Communications Act of 1934, as amended.1 Based upon our
review of the facts and circumstances surrounding this matter, we
find that SBC is apparently liable for a forfeiture in the amount
of one hundred thousand dollars ($100,000).
2. On September 29, 2000, the Enforcement Bureau sent SBC
a letter of inquiry (``LOI'') ordering SBC to provide digital
subscriber line (``DSL'') provisioning and maintenance data for
its affiliated Internet service provider (``ISP'') and for
unaffiliated ISPs.2 The Bureau sent this LOI pursuant to its
investigation into whether SBC was discriminating in its
provisioning and maintenance of DSL. SBC indicated in its
response to that LOI,3 and in affidavits provided on December 5,
2000,4 that it was unable to supply the information. The major
impediment identified by SBC was that it ``has no method to
identify or separate ISPs from any other [DSL] customer[s],''5
and that ``[t]herefore, a comparison of SBC's ISPs to all other
ISPs is not possible.''6
3. On April 30, 2001, SBC filed comments with the
Commission in an unrelated rulemaking proceeding, in
which it stated that ``SBC has generated data that shows
that SBC's affiliated Internet ISPs and unaffiliated
Internet ISPs received comparable treatment with respect
to [DSL] provisioning and maintenance.''7 SBC attached
the referenced data to its comments.8
4. On October 1, 2001, the Bureau issued a supplemental
LOI to SBC ordering the company to describe, among other
things, the facts and circumstances surrounding the
discrepancy between SBC's statements in October and
December 2000 that it could not provide the requested DSL
data, and SBC's statement in its April 2001 filing that
it had such data available.9 The Bureau, in two separate
paragraphs of its supplemental LOI, directed SBC to
submit a ``sworn written response'' to the LOI.10
5. On October 22, 2001, SBC submitted its response to the
Bureau,11 which failed to include a sworn statement, as
ordered by the Bureau in its October 1, 2001 LOI.12
6. On October 29, 2001, Enforcement Bureau staff contacted
SBC regarding the company's omission of a sworn statement in its
October 22, 2001 response. SBC orally stated to the staff that
the company's failure to submit a sworn statement was not an
oversight; rather, it was intentional.
7. Under section 503(b) of the Act, any person who is
determined by the Commission to have willfully or repeatedly
failed to comply with any of the provisions of the Act, or any
rule or order issued by the Commission under the Act, shall be
liable for a forfeiture penalty.13 In order to impose such a
forfeiture penalty, the Commission must issue a notice of
apparent liability, the notice must be received, and the person
against whom the notice has been issued must have an opportunity
to show, in writing, why no such forfeiture penalty should be
imposed.14 The Commission will then issue a forfeiture if it
finds by a preponderance of the evidence that the person has
violated the Act or a Commission rule.15 Based on the facts set
forth above, we find that SBC is apparently liable for a
forfeiture for willful violation of the Bureau's order that SBC
submit a sworn written response to the Bureau's October 1, 2001
LOI. The term ``willful'' means that the violator knew it was
taking the action in question, irrespective of any intent to
violate the Commission's rules.16
8. Section 503(b)(2)(B) of the Act authorizes the
Commission to assess a forfeiture of up to $120,000 for each
violation, or each day of a continuing violation, up to a
statutory maximum of $1,200,000 for a single act or failure to
act.17 In determining the appropriate forfeiture amount, we
consider the factors enumerated in section 503(b)(2)(D) of the
Act, including ``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
9. Section 1.80 of the Commission's rules and the
Commission's Forfeiture Policy Statement establish a base
forfeiture amount of $3,000 for failure to file required
forms or information.19 The circumstances of this case,
however, appear to justify a substantial increase to this
base amount pursuant to upward adjustment criteria
contained in the rules and the Forfeiture Policy
Statement. Specifically, three factors warrant the
adjustment. First, the misconduct appears egregious.
Second, the violation was apparently intentional. Third,
the forfeiture amount must be high enough to serve a
deterrent effect in view of SBC's ability to pay.20
10. We consider SBC's conduct in this case to be egregious
because its failure to submit a sworn written response to
the Bureau hinders the Bureau's investigation into SBC's
possible discrimination in provisioning and maintenance
of DSL - a technology vital to competition in the ISP
marketplace. Moreover, SBC's decision not to provide the
requisite sworn statement here obstructs the Bureau's
investigation into discrepancies in SBC's various
representations to the Commission. SBC's conduct strikes
at the core of the Bureau's ability to perform its
function, and rises above the level of a mere omission or
failure to file. Therefore, substantial upward
adjustment of the proposed forfeiture amount is
warranted. The fact that SBC apparently intentionally
violated the order provides an additional basis for a
substantial upward adjustment.
11. Finally, SBC's ability to pay warrants an upward-
adjusted forfeiture amount to serve as a deterrent to
future misconduct. In the Forfeiture Policy Statement,
the Commission made it clear that companies with higher
revenues, such as SBC,21 could expect higher forfeitures
than those reflected in the base amounts:
[O]n the other end of the spectrum of potential
violations, we recognize that for large or highly
profitable communication entities, the base forfeiture
amounts . . . are generally low. In this regard, we
are mindful that, as Congress has stated, for a
forfeiture to be an effective deterrent against these
entities, the forfeiture must be issued at a high level
. . . For this reason, we caution all entities and
individuals that, independent from the uniform base
forfeiture amounts . . ., we intend to take into
account the subsequent violator's ability to pay in
determining the amount of a forfeiture to guarantee
that forfeitures issued against large or highly
profitable entities are not considered merely an
affordable cost of doing business. Such large or
highly profitable entities should expect in this regard
that the forfeiture amount set out in a Notice of
Apparent Liability against them may in many cases be
above, or even well above, the relevant base amount.22
12. Based on these factors and the particular circumstances
of this case, we find that SBC is apparently liable for a
forfeiture in the amount of $100,000. The egregiousness and
intentional nature of SBC's misconduct, as well as SBC's ability
to pay, considered in conjunction with the deterrent effect of
the forfeiture, dictate that SBC be held apparently liable for an
amount significantly higher than the base forfeiture amount set
for the relevant misconduct.
IV. ORDERING CLAUSES
· 13. ACCORDINGLY, IT IS ORDERED THAT, pursuant to section
503(b) of the Act,23 and section 1.80 of the Commission's
Rules,24 SBC Communications is HEREBY NOTIFIED of its APPARENT
LIABILITY FOR FORFEITURE in the amount of one hundred thousand
dollars ($100,000) for willfully violating an Enforcement
Bureau directive to submit timely a sworn written response to
a Bureau letter of inquiry.25
14. IT IS FURTHER ORDERED THAT, pursuant to section 1.80 of
the Commission's Rules, within thirty (30) days of the
release date of this NOTICE OF APPARENT LIABILITY, SBC
Communications SHALL PAY to the United States the full
amount of the proposed forfeiture OR SHALL FILE a
written statement showing why the proposed forfeiture
should not be imposed or should be reduced.
15. IT IS AGAIN ORDERED THAT SBC SHALL SUBMIT, not later
than November 7, 2001, a sworn written response to the Bureau's
LOI dated October 1, 2001, in accordance with the delivery
instructions set forth therein.
16. Payment of the forfeiture amount may be made 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.
17. The response, if any, must be mailed to Charles W.
Kelley, Chief, Investigations and Hearings Division, Enforcement
Bureau, Federal Communications Commission, 445 12th Street S.W.,
Room 3-B443, Washington, D.C., 20554, and must include the
``NAL/Acct. No.'' referenced above.
18. IT IS FURTHER ORDERED that a copy of this Notice
of Apparent Liability shall be sent by Certified Mail/Return
Receipt Requested to SBC Communications, c/o Caryn D. Moir, Vice-
President -- Federal Regulatory, 1401 I Street, N.W., Suite 1100,
Washington, D.C. 20005.
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
1 47 U.S.C. §§ 4(i), 4(j), 218, 403.
2 See Sept. 29, 2000 Letter from Charles W. Kelley, Chief,
Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission to Christine Jines, Executive Director
- Federal Regulatory, SBC Telecommunications, Inc.
3 See Oct. 19, 2000 Letter from Christine Jines, Executive
Director - Federal Regulatory, SBC Telecommunications, Inc. to
Charles W. Kelley, Chief, Investigations and Hearings Division,
Enforcement Bureau, Federal Communications Commission.
4 See Dec. 5, 2000 Letter from Priscilla Hill-Ardoin, Senior
Vice President, SBC Telecommunications, Inc. to Brad Berry,
Deputy Chief, Enforcement Bureau, Federal Communications
Commission (``SBC's Dec. 5, 2000 Affidavits'').
5 See SBC's Dec. 5, 2000 Affidavits, Hill-Ardoin Affidavit at
6 Id. at para. 10; see also SBC's Dec. 5, 2000 Affidavits,
Taylor Affidavit at para. 4 (``SBC is unable to identify the
universe of ISP customers'').
7 See Computer III Further Remand Proceedings, Bell Operating
Company Provision of Enhanced Services, CC Dkt No. 95-20; 1998
Biennial Regulatory Review - Review of Computer III ONA
Safeguards and Requirements, CC Dkt No. 98-10, Further Reply
Comments of SBC Communications Inc., Apr. 30, 2001 at 15 (``SBC's
Further Reply Comments'').
8 See SBC's Further Reply Comments at Attachments A and B.
9 See Oct. 1, 2001 Letter from Charles W. Kelley, Chief,
Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission to Sandra L. Wagner, Vice-President -
Federal Regulatory, SBC Telecommunications, Inc. (``Oct. 1, 2001
10 Id. at pp. 2, 4.
11 See October 22, 2001 Letter from William A. Brown, Senior
Counsel, SBC Telecommunications, Inc. to Elizabeth H. Valinoti,
Attorney, Investigations and Hearings Division, Enforcement
Bureau, Federal Communications Commission.
12 See Oct. 1, 2001 LOI.
13 47 U.S.C. § 503(b); 47 C.F.R. § 1.80(a).
14 47 U.S.C. § 503(b)(4); 47 C.F.R. § 1.80(f).
15 See, e.g., Tuscola Broadcasting Co., Memorandum Opinion and
Order, 76 FCC 2d 367, 371 (1980) (applying preponderance of the
evidence standard in reviewing Bureau level forfeiture order).
Cf. 47 U.S.C. § 312(d) (assigning burden of proof in hearings to
16 See Application for Review of Southern California
Broadcasting Co., Memorandum Opinion and Order, 6 FCC Rcd 4387,
17 47 U.S.C. § 503(b)(2)(B); see also 47 C.F.R § 1.80(b)(2);
see also Amendment of Section 1.80(b) of the Commission's Rules,
Adjustment of Forfeiture Maxima to Reflect Inflation, Order, 15
FCC Rcd 18221 (2000).
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 (1997) (``Forfeiture Policy Statement''); recon. denied 15
FCC Rcd 303 (1999); 47 C.F.R. § 1.80(b)(4).
19 47 C.F.R. § 1.80; Forfeiture Policy Statement, 12 FCC Rcd at
17114, Appendix A, Section I.
20 47 C.F.R. § 1.80; Forfeiture Policy Statement, 12 FCC Rcd at
21 In 2000, SBC had operating revenues of $51.4 billion and
operating income of $10.7 billion. See SBC Telecomm., Inc., 2000
Annual Report at 4 (2001).
22 Forfeiture Policy Statement, 12 FCC Rcd at 17099, 17100.
23 47 U.S.C. § 503(b).
24 47 C.F.R. § 1.80.
25 We note that as of October 31, 2001, SBC still had not
submitted the required attestation. SBC's intentional violation
of the Bureau's directive thus has continued from at least
October 22, 2001 through October 31, 2001.