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Before the
Federal Communications Commission
Washington, D.C. 20554
In the matter of )
)
ASC Telecom, Inc. d/b/a )
Alternatel ) File No. EB-02-TC-136
) NAL/Acct. No. 200232170006
) FRN: 0004372835
)
)
)
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: September 17, 2002 Released: September 23,
2002
By the Commission:
I. INTRODUCTION
1. In this Notice of Apparent Liability for Forfeiture, we
propose to assess a forfeiture in the amount of $1,440,000
against ASC Telecom, Inc., d/b/a Alternatel (``ASC''),1 for
apparent widespread violations of the Communications Act of 1934,
as amended (the ``Act''), and the Commission's rules governing
operator service providers (``OSPs''). 2 These violations appear
to be particularly egregious because they appear to have occurred
as part of a deliberate plan to mislead consumers.
II. BACKGROUND
2. ASC provides operator services that can be accessed
through aggregator telephones across the United States. 3 These
include hotel and motel room phones, as well as payphones located
in airports, train stations, shopping malls, gas stations, and
other locations where they serve the public or transient users.
As an operator service provider, ASC is required to identify
itself audibly and distinctly at the beginning of each call,
before the consumer incurs any charge; to permit the consumer to
terminate the call at no charge before it is connected; to
provide its rates to consumers upon request; and to provide
instructions to the consumer on how to obtain the total cost of
the call, which must be available either by dialing no more than
two digits or by remaining on the line. 4
3. Over the last several months, the Commission has
received complaints from consumers who were connected to ASC and
billed for charges substantially higher than expected. For
instance, one consumer complained of attempting to dial 1-800-
COLLECT to place a long distance call using MCI's service, and
later receiving a bill from ASC for $5.06 per minute. 5 Another
consumer complained of attempting to place a call through AT&T,
and being charged $10.80 by ASC for leaving a 30-second voice
mail message. 6 This pattern of complaints suggested that
consumers' dialing errors (for instance, dialing 1-800-COLLETT
instead of 1-800-COLLECT) were connecting them to ASC, rather
than the desired carrier, and that ASC's failure to identify
itself as required caused these errors to go unnoticed. The
Enforcement Bureau initiated an investigation into ASC's
practices to determine whether ASC was in compliance with the
requirements for OSPs. As set forth in detail below, that
investigation showed apparent widespread violation of the
Commission's rules, which appears to be part of a deliberate
scheme to take advantage of consumers' dialing errors.
III. DISCUSSION
III.A. Legal Requirements
4. Pursuant to Section 226(b)(1)(A) of the Act and Section
64.703(a)(1) of the Commission's rules, each provider of operator
services must identify itself, audibly and distinctly, to the
consumer at the beginning of each telephone call and before the
consumer incurs any charge for the call.7 This practice is known
as ``branding.'' The purpose of branding is to ensure that the
consumer knows who is carrying the call, in time to request rate
information, and to decide whether to use that carrier's
services. The branding requirement is intended to reduce the
opportunity for carriers to impose excessive charges on
uninformed consumers. In collect calling arrangements handled by
a provider of operator services, both the party on the
originating end of the call and the party on the terminating end
of the call are considered ``consumers.''8 Therefore, to ensure
that both parties are fully informed when making decisions
regarding whether to initiate or accept a collect call, an OSP is
required to brand on both ends of such calls.
5. Each provider of operator services must also disclose
immediately to the consumer, upon request and at no charge, a
quotation of its rates or charges for the call.9 For collect
calls, OSPs must provide this rate information to both the called
party and the calling party.10 In addition, each provider of
operator services must disclose audibly and distinctly to the
consumer, at no charge and before connecting any call,
instructions on how to obtain the total cost of the call or the
maximum possible total cost of the call, before providing further
oral advice to the consumer on how to proceed to make the call.11
This oral disclosure must instruct consumers that they may obtain
applicable rate quotations either, at the option of the provider
of operator services, by dialing no more than two digits or by
remaining on the line.12 Each provider of operator services must
also allow the consumer to terminate the call at no charge before
the call is connected.13
III.B. The Investigation
6. As part of our investigation, Commission staff went to
several aggregator locations and placed multiple calls, including
collect calls, via ASC from approximately 25 different payphones.
Commission staff was also on the receiving end of some of these
collect calls to determine whether ASC identified itself to the
called party as well. The staff placed the calls from payphones
in locations that are heavily used by consumers and travellers in
the Washington, D.C. area, such as Reagan National Airport, Union
Station, and L'Enfant Plaza Shopping Mall, as well as the
Commission's own lobby. To determine whether ASC was handling
calls that were likely the result of misdialed access codes, the
staff placed calls using 10 different toll free numbers that are
similar to well known operator service access numbers, such as
MCI's 1-800-COLLECT, and AT&T's 1-800-CALLATT.14 The numbers
were called multiple times, at different locations and times, to
determine whether there was a pattern of misconduct, and to
preclude the possibility that any lack of compliance was an
anomaly.
7. Our investigation revealed that ASC failed to brand at
the origination point of the telephone call on all 10 of the
telephone numbers dialed, and failed to brand at the termination
point on two of the 10 telephone numbers.15 Our investigation
also revealed that ASC failed to provide rates or charges, or
failed to provide instructions on how to obtain rates or charges,
on four of 10 telephone numbers.16 In addition, on two calls
that were placed from Union Station, the called party was charged
$12.78 for each of two collect calls that were rejected by the
called party.17 Based on these facts, we find that ASC is
apparently liable for 12 separate violations of the branding
requirement of Section 226(b)(1)(A) of the Act and Section
64.703(a)(1) of the Commission's rules; for four separate
violations of the rate disclosure requirements of Section
226(b)(1)(C)(i) of the Act and Sections 64.703(a)(3)(i) and
64.703(a)(4) of the Commission's rules; and for two separate
violations of Section 226(b)(1)(B) of the Act and Section
64.703(a)(2) of the rules for charging for collect calls that
were rejected.18 We note that although we have only proposed
forfeitures for the first of each type of violation associated
with each access number for a total of 18 violations, the calls
made during our investigation revealed numerous (43) additional
violations that are not the subject of this NAL.
IV. FORFEITURE AMOUNT
8. Pursuant to the Commission's Forfeiture Policy
Statement, the base amount for violations of the operator
services requirements is $7,000.19 The maximum potential
forfeiture is $120,000 for each violation.20 Based on the
criteria in Section 503(b)(2)(D) of the Act and the upward
adjustment criteria in the Forfeiture Policy Statement, 21
however, we find that a substantial upward adjustment of the base
forfeiture amount of $7,000 appears to be warranted because the
violations here appear to be egregious and repeated, because ASC
appears to have realized substantial economic gain from its
misconduct, and because substantial consumer harm appears to have
resulted from ASC's pattern of misconduct.
9. We believe that ASC's practices are particularly
egregious for several reasons. First, it appears that ASC has
willfully and deliberately devised a scheme repeated on numerous
access numbers intended to mislead unwitting consumers into using
their operator services while the consumer is attempting to dial
another OSP. For example, if a consumer trying to dial 1-800-
CALLATT misdials by one number, that customer will reach ASC
instead of AT&T. The consumer remains unaware that he or she has
misdialed because ASC fails to identify itself. We believe that
in using such deceptive means to obtain the consumer's business,
ASC's practices are analogous to slamming and should be penalized
accordingly.22 The consumer is even further left in the dark by
not being able to obtain rate information that is essential for
consumers who wish to make informed choices in a competitive
telecommunications market. This is particularly egregious in
light of the fact that the rates ASC charges are significantly
higher than the industry average, and we have seen two examples
where the called party was charged $12.78 for a collect call that
was rejected.23 We believe, therefore, that ASC realizes a
substantial economic gain from these insidious practices.
Moreover, it appears that these misdialed numbers, such as 1-800-
CALLALT or 1-800-CATTATT, are not advertised as a means of
reaching ASC. Therefore, it appears that ASC's only customers
are those who make a mistake in attempting to dial another OSP's
access code.
10. Furthermore, while both parties to a collect call are
involved in making choices regarding whether to use an OSP's
services, we believe that it is particularly troubling that the
called party, the party that ultimately incurs the charges for
the call, is not able to obtain the rates before accepting the
call. Many consumers, reluctant to refuse a call from a relative
or loved one for fear of an emergency, are therefore forced to
enter unwittingly into an agreement to pay significantly higher
rates than they would otherwise pay by accepting such a collect
call, and ASC reaps the benefits of such higher rates.
11. Accordingly, after applying the Forfeiture Policy
Statement and statutory factors to the facts before us, we
conclude that an $80,000 forfeiture is apparently warranted for
each of the 18 violations of Sections 226(b)(1)(A), 226(b)(1)(B),
and 226(b)(1)(C)(i) of the Act and Sections 64.703(a)(1),
64.703(a)(2), 64.703(a)(3)(i), and 64.703(a)(4) of the
Commission's rules, resulting in a total proposed forfeiture
amount of $1,440,000.
V. ORDERING CLAUSES
12. Accordingly, IT IS ORDERED THAT, pursuant to Section
503(b) of the Act, 47 U.S.C. § 503(b), and Section 1.80 of the
Commission's Rules, 47 C.F.R. § 1.80, ASC Telecom, Inc. is hereby
NOTIFIED of its APPARENT LIABILITY FOR A FORFEITURE in the amount
of $1,440,000 for willful or repeated violations of Sections
226(b)(1)(A), (b)(1)(B), and (b)(1)(C)(i) of the Act, 47 U.S.C.
§§ 226(b)(1)(A), (b)(1)(B), (b)(1)(C)(i), and Sections
64.703(a)(1), 64.703(a)(2), 64.703(a)(3)(i), and 64.703(a)(4) of
the Commission's rules, 47 C.F.R. §§ 64.703(a)(1), 64.703(a)(2),
64.703(a)(3)(i), 64.703(a)(4). The amount specified was
determined after consideration of the factors set forth in
Section 503(b)(2)(D) of the Act, 47 U.S.C. § 503(b)(2)(D), and
the guidelines enumerated in the Forfeiture Policy Statement.
13. IT IS FURTHER ORDERED, pursuant to Sections 1.80(f)(3)
and 1.80(h) of the Commission's Rules, that ASC Telecom, Inc.,
within thirty days of the date of release of this Notice of
Apparent Liability, SHALL PAY the full amount of the proposed
forfeiture24 OR SHALL FILE a written response showing why the
proposed forfeiture should be reduced or not imposed.25
14. IT IS FURTHER ORDERED that a copy of this Notice of
Apparent Liability for Forfeiture SHALL BE SENT by certified
mail, return receipt requested, to ASC Telecom, Inc at 6860 W.
115th Street, Overland Park, KS 66211.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
APPENDIX
ASC OSP VIOLATIONS - 2002
1 (800) COOLLECT
Violation of 47 CFR § 64.703(a)(1) (Failure to Brand at
Origination Point): 5/30 (2X)*, 5/31, 6/4, 6/6, 6/12
1 (800) CALL - ALT
Violation of 47 CFR § 64.703(a)(1) (Failure to Brand at
Origination Point): 5/30 (2X), 6/4, 6/13
1 (800) CULLECT
Violation of 47 CFR § 64.703(a)(1) (Failure to Brand at
Origination Point): 5/30 (2X), 6/4, 6/6, 6/12
Violation of 47 CFR§ 64.703(a)(1) (Failure to Brand at
Termination Point): 6/4
1 (800) COLLEC7
Violation of 47 CFR § 64.703(a)(1) (Failure to Brand at
Origination Point): 5/30 (2X), 5/31, 6/4, 6/6, 6/12
Violation of 47 CFR §§ 64.703(a)(3)(i) and/or(a)(4)(Failure to
Provide Rate Information at Termination Point): 6/6
Violation of 47 CFR § 64.703(a)(2)(Connection Fee Charged at
Termination Point Without Authorization): 6/4
1 (800) CATT - ATT
Violation of 47 CFR § 64.703(a)(1) (Failure to Brand at
Origination Point): 5/30 (2X), 6/4, 6/6, 6/13
1 (800) OOERATOR
Violation of 47 CFR § 64.703(a)(1) (Failure to Brand at
Origination Point): 5/30 (2X), 6/4, 6/6, 6/12
1 (800) PERATOR
Violation of 47 CFR § 64.703(a)(1) (Failure to Brand at
Origination Point): 5/30 (2X), 6/4, 6/6
1 (800) COL9ECT
Violation of 47 CFR § 64.703(a)(1) (Failure to Brand at
Origination Point): 5/30 (2X), 5/31, 6/4, 6/6, 6/12
Violation of 47 CFR§ 64.703(a)(1) (Failure to Brand at
Termination Point): 6/4
Violation of 47 CFR §§ 64.703(a)(3)(i) and/or(a)(4)(Failure to
Provide Rate Information at Termination Point): 6/4
1 (800) COLLETT
Violation of 47 CFR § 64.703(a)(1) (Failure to Brand at
Origination Point): 5/30 (2X), 5/31, 6/4, 6/6, 6/12
Violation of 47 CFR §§ 64.703(a)(3)(i) and/or(a)(4)(Failure to
Provide Rate Information at Termination Point): 6/4
Violation of 47 CFR § 64.703(a)(2)(Connection Fee Charged at
Termination Point Without Authorization): 6/4
1 (800) COOLECT
Violation of 47 CFR § 64.703(a)(1) (Failure to Brand at
Origination Point): 5/30 (2X), 5/31, 6/4, 6/6, 6/12
Violation of 47 CFR §§ 64.703(a)(3)(i) and/or(a)(4)(Failure to
Provide Rate Information at Termination Point): 6/4
*Denotes two violations on that particular date.
_________________________
1 ASC is a subsidiary of Sprint Corporation. See ASC's 2002 FCC
Form 499-A Telecommunications Reporting Worksheet. Our records
indicate that ASC is located at 2330 Shawnee Mission Parkway,
Westwood, KS, 66205 and at 6860 W. 115th Street, Overland Park,
KS 66211.
2 47 U.S.C. §§ 226(b)(1)(A), (b)(1)(B), (b)(1)(C)(i); 47 C.F.R.
§§ 64.703(a)(1), (a)(2), (a)(3)(i), (a)(4). Our action in this
Notice of Apparent Liability (``NAL'') does not preclude further
enforcement action. The staff is continuing to investigate ASC's
practices to determine whether they violate the Act and our rules
in other respects.
3 ``Operator services'' are defined by the Act and the
Commission's rules as ``any interstate telecommunications service
initiated from an aggregator location that includes, as a
component, any automatic or live assistance to a consumer to
arrange for billing or completion, or both, of an interstate
telephone call through a method other than: (1) automatic
completion with billing to the telephone from which the call
originated; or (2) completion through an access code used by the
consumer, with billing to an account previously established with
the carrier by the consumer.'' 47 U.S.C. § 226(a)(7)(A)-(B); 47
C.F.R. §§ 64.708(i)(1)-(2), (l). An ``aggregator'' is ``any
person that, in the ordinary course of its operations, makes
telephones available to the public or to transient users of its
premises, for interstate telephone calls using a provider of
operator services.'' 47 U.S.C. § 226(a)(2); 47 C.F.R. §
64.708(b).
4 47 U.S.C. §§ 226(b)(1)(A), (b)(1)(C)(i); 47 C.F.R. §§
64.703(a)(1), (a)(3)(i), (a)(4).
5 Complaint No. IC-02-W2370064, dated January 30, 2002, from
Claudia Valderrama-Celaya.
6 Complaint No. IC-02-W2570712, dated February 27, 2002, from
Elizabeth and Jeffrey Moberg.
7 47 U.S.C. § 226(b)(1)(A); 47 C.F.R. § 64.703(a)(1).
8 47 C.F.R. § 64.708(f).
9 47 U.S.C. § 226(b)(1)(C)(i); 47 C.F.R. § 64.703(a)(3)(i).
10 See 47 C.F.R. §§ 64.703(a)(3)(i), 64.708(f); Amendment of
Policies and Rules Concerning Operator Service Providers and Call
Aggregators, Report and Order and Further Notice of Proposed Rule
Making, 11 FCC Rcd 4532, 4541 (1996).
11 47 C.F.R. § 64.703(a)(4).
12 Id.
13 47 U.S.C. § 226(b)(1)(B); 47 C.F.R. § 64.703(a)(2).
14 See Appendix A.
15 Id.
16 Id.
17 See Telephone Bill from billing agent for ASC, Operator
Assistance Network for $25.56, Appendix B.
18 We note that even for non-operator service calls to which this
rule does not apply, it would be a violation of Section 201(b) of
the Act to charge a called party for a rejected collect call.
19 Forfeiture Policy Statement and Amendment of Section 1.80 of
the Rules to Incorporate Forfeiture Guidelines, Report and Order,
12 FCC Rcd 17087, 17097 (1997) (Forfeiture Policy Statement).
20 Section 503(b)(2)(B) provides for forfeitures up to $100,000
for each violation or a maximum of $1,000,000 for each continuing
violation by common carriers or an applicant for any common
carrier license, permit, certificate or similar instrument. 47
U.S.C. § 503(b)(2)(B). The Debt Collection Improvement Act of
1996 (DCIA) requires, however, that civil monetary penalties
assessed by the federal government be adjusted for inflation
based on the formula outlined in the DCIA. See Pub L. No. 104-
134, § 31001, 110 Stat. 1321 (1996). The current statutory
maxima pursuant to Section 503(b)(2)(B) are $120,000 and
$1,200,000 for individual violations and continuing violations,
respectively. See 47 U.S.C. § 503(b)(2)(B); 47 C.F.R. §
1.80(b)(2), (5); see also Amendment of Section 1.80(b) of the
Commission's Rules and Adjustment of Forfeiture Maxima to Reflect
Inflation, Order, 15 FCC Rcd 18221 (2000).
21 47 U.S.C. § 503(b)(2)(D); 47 C.F.R. § 1.80(b)(4); see also
Forfeiture Policy Statement, 12 FCC Rcd at 17100-01.
22 Slamming is the unauthorized change of a subscriber's
preferred carrier. Section 258 of the Act, as amended by the
Telecommunications Act of 1996, states that ``[n]o
telecommunications carrier shall submit or execute a change in a
subscriber's selection of a provider of telephone exchange
service or telephone toll service except in accordance with such
verification procedures as the Commission shall prescribe.'' 47
U.S.C. § 258. The Commission has used a base amount of $80,000
for slamming involving forged letters of agency, a deceptive
practice analogous to that at issue in this case. See, e.g.,
Amer-I-Net Services Corporation, Order of Forfeiture, 15 FCC Rcd
3118 (2000); see also Brittan Communications International
Corp., Order of Forfeiture, 15 FCC Rcd 4852 (2000).
23 See Telephone Bill from billing agent for ASC, Operator
Assistance Network, for $25.56, Appendix B.
24 The forfeiture amount should be paid by check or money order
drawn to the order of the Federal Communications Commission. ASC
should include the reference ``NAL/Acct. No. 200232170006'' on
its check or money order. Such remittance must be mailed to
Forfeiture Collection Section, Finance Branch, Federal
Communications Commission, P.O. Box 73482, Chicago, Illinois
60673-7482. Requests for full payment under an installment plan
should be sent to: Chief, Credit and Debt Management Center, 445
12th Street, S.W., Washington, D.C. 20554. See 47 C.F.R. §
1.1914.
25 47 C.F.R. §§ 1.80(f)(3), (h). Send or mail any written
responses regarding the reasons why the forfeiture should be
reduced or not imposed to Federal Communications Commission,
Enforcement Bureau, Telecommunications Consumers Division, 445
12th Street, S.W., Washington, D.C., 20554, ATTN: NAL/Acct. No.
200232170006. Any written response should focus on the
mitigating factors outlined in the Forfeiture Policy Statement
and Section 503(b)(2)(D) of the Act.