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Before the
Federal Communications Commission
Washington, DC 20554
In the Matter of )
) File No. EB-00-TC-005
NOS Communications, Inc. and ) NAL/Acct. No.
200132170011
Affinity Network Incorporated ) FRN 0004942538
)
Apparent Liability for Forfeiture )
ORDER
Adopted: December 20, 2002 Released: December
26, 2002
By the Commission:
1. The Commission has been conducting an investigation
into potential violations by NOS Communications, Inc. (``NOS'')
and Affinity Network Incorporated (``ANI'')1 of Section 201(b) of
the Communications Act of 1934, as amended (the ``Act'').2 The
investigation focused on whether NOS and ANI willfully or
repeatedly engaged in unjust and unreasonable practices in
connection with their provision of interstate communication
services in violation of Section 201(b) of the Act. On April 2,
2001, the Commission issued a Notice of Apparent Liability3
finding that, by apparently failing to disclose clearly and
conspicuously material facts regarding their promotional plan
offerings and call unit pricing methodology, the companies had
apparently engaged in the deceptive marketing of their interstate
communication services in apparent violation of Section 201(b) of
the Act.
2. The Commission, NOS, and ANI have negotiated the terms
of a Consent Decree that will terminate this investigation. A
copy of the Consent Decree is attached hereto and is incorporated
by reference.
3. We have reviewed the terms of the Consent Decree and
evaluated the facts before us. We believe that the public
interest would be served by approving the Consent Decree.
4. Accordingly, IT IS ORDERED, pursuant to sections 4(i),
4(j), and 503(b) of the Communications Act of 1934, as amended,
47 U.S.C. §§ 154(i), 154(j), and 503(b), that the Consent Decree,
incorporated by reference in and attached to this order, is
hereby ADOPTED.
5. IT IS FURTHER ORDERED that the Secretary SHALL SIGN the
Consent Decree on behalf of the Commission.
6. IT IS FURTHER ORDERED that the above captioned
investigation IS TERMINATED.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D. C. 20554
In the Matter of )
) File No. EB-00-TC-005
NOS Communications, Inc. and ) NAL/Acct. No.
200132170011
Affinity Network Incorporated ) FRN 0004942538
)
Apparent Liability for Forfeiture )
CONSENT DECREE
I. INTRODUCTION
1. The Federal Communications Commission (the "FCC" or the
"Commission"), NOS Communications, Inc. (``NOS'') and Affinity
Network Incorporated (``ANI'') (together, ``the Companies''), by
their counsel and authorized representatives, hereby enter into
this Consent Decree to resolve an investigation (the
"Investigation") by the Commission arising out of consumer
complaints alleging that NOS and ANI engaged in the deceptive
marketing of their interstate communication services by failing
to disclose clearly and conspicuously material facts regarding
their call unit pricing methodology and promotional plan
offerings.
2. On April 2, 2001, the Commission, following an
investigation, issued a Notice of Apparent Liability (``NAL'').1
The NAL found that the companies' marketing practices apparently
misled consumers about the fact that quoted cents-per-minute
rates were promotional, apparently failed to inform consumers
that a different, call unit pricing plan would apply after the
promotional period, and apparently failed to inform consumers how
the non-promotional call unit pricing plan would operate. The
NAL found that NOS and ANI apparently engaged in unjust and
unreasonable marketing practices in violation of section 201(b)
of the Communications Act of 1934, as amended (the "Act").2 On
May 2, 2001, the Companies filed their ``Response to the Notice
of Apparent Liability for Forfeiture'' (``Joint Response'')
wherein they responded to the allegations contained in the NAL.
II. DEFINITIONS
3. For the Purposes of this Consent Decree, the following
definitions shall apply:
(a) "NOS" or the "Company" means NOS Communications, Inc.,
all d/b/a and plan entities of the company, including
International Plus, 011 Communications, INETBA (or Internet
Business Association), I-Vantage Network, Cierracom Systems, and
any entity owned, directed or controlled by the company,
including all subsidiaries, commonly-owned inter-exchange
affiliates, concurring carriers, successors, and assigns.
(b) "ANI" or the "Company" means Affinity Network, Inc.,
all d/b/a and plan entities of the company, including HorizonOne
Communications and Quantum Link Communications, and any entity
owned, directed or controlled by the company, including all
subsidiaries, commonly-owned inter-exchange affiliates,
concurring carriers, successors, and assigns.
(c) ``The Companies'' means NOS and ANI.
(d) The "FCC" or the "Commission" means all Bureaus and
Offices of the Commission, including the Enforcement Bureau.
(e) "Parties" means NOS, ANI, and the FCC.
(f) "Adopting Order" means an Order of the Commission
adopting the terms and conditions of this Consent Decree.
(g) "Effective Date" means the date on which the Commission
adopts the Adopting Order.
(h) ``Final Order'' means an order that is no longer
subject to administrative or judicial reconsideration, review,
appeal, or stay.
(i) Notice of Apparent Liability (``NAL'') means the NAL
adopted on March 28, 2001 and released on April 2, 2001, In the
Matter of NOS Communications, Inc. and Affinity Network
Incorporated, Apparent Liability for Forfeiture, 16 FCC Rcd 8133.
(j) ``Investigation'' means the investigation commencing
with the letter of inquiry issued by the Enforcement Bureau to
NOS and/or ANI on September 14, 2000, EB-00-TC-005, and leading
to the issues specified in the NAL or resolved in this Consent
Decree concerning the Companies' marketing, advertising, and sale
of their call unit promotional and non-promotional interstate
communications services. Investigation includes only those
marketing, advertising, and sales practices specified or
referenced in the NAL as reflected in the Companies' rate sheets
and Letters of Agency (``LOAs'').
(k) "Customer" means an authorized consumer (person, a
natural person, individual, governmental agency or entity,
partnership, corporation, limited liability company or
corporation, trust, estate, incorporated or unincorporated
association, and any other legal or commercial entity however
organized) offered, receiving, or previously receiving inter-
exchange services from the Companies.
(l) ``Marketing Personnel or Marketing Employee'' means all
current and future NOS and ANI employees and agents involved with
the marketing, sales, and customer service of the Companies' call
unit promotional and non-promotional interstate communications
services, including customer service, sales, and telemarketing
representatives, managers, supervisors, and agents.
(m) ``Call Unit'' means the pricing methodology whereby
call length is measured in units determined by Minimum Call
Units, Incremental Call Units, Equivalent Call Units, and Total
Call Units rather than minutes.
(n) ``Promotional Plan'' means any rate plan where
temporary rates apply for a set period, including plans which
convert from a cents per minute or any minute pricing methodology
to the call unit pricing methodology after a temporary period.
(o) ``Deceptive'' means a misrepresentation, omission, or
other practice that is likely to mislead the consumer acting
reasonably in the circumstances to the consumer's detriment.
III. AGREEMENT
4. The Companies represent and warrant that they are the
properly named parties to this Consent Decree and are solvent and
have sufficient funds available to meet fully all financial and
other obligations set forth herein. The Companies further
represent and warrant that they have caused this Consent Decree
to be executed by their authorized representative, as a true act
and deed, as of the date affixed next to said representative's
signature. Said representatives and the Companies respectively
affirm and warrant that said representative is acting in his/her
capacity and within his/her authority as a corporate officer of
the Companies, and on behalf of the Companies and that by his/her
signature said representative is binding the Companies to the
terms and conditions of this Consent Decree. The Companies also
represent that they have been represented by counsel of their
choice in connection with this Decree and are fully satisfied
with the representation of counsel.
5. The Companies represent and warrant that they shall not
effect any change in their form of doing business or its
organizational identity or participate directly or indirectly in
any activity to form a separate entity or corporation which
engages in acts prohibited in this Consent Decree or for any
other purpose which would otherwise circumvent any part of this
Decree or the obligations of this Decree.
6. NOS and ANI admit that the FCC has jurisdiction over
them and the subject matter of this action for the purposes of
this Consent Decree.
7. The parties agree that this Consent Decree does not
constitute either an adjudication of the merits, or any factual
or legal finding or determination of noncompliance by the
companies with the requirements of the Act, as amended, or with
the Commission's Rules. The Parties agree that this Consent
Decree is for settlement purposes only and that, by agreeing to
this Consent Decree, the Companies do not admit or deny any
noncompliance, violation, or liability associated with or arising
from any alleged actions or failures, including any problems or
failures described in the letters of inquiry or the NAL, or in
any informal complaints, or other information the Commission
received concerning the companies' purported deceptive marketing
and sale of their call unit promotional and non-promotional
interstate communications services that allegedly occurred prior
to the Effective Date.
8. In express reliance on the covenants and
representations contained herein, the Commission agrees to
terminate the Investigation and resolve the NAL.
9. The Parties agree and acknowledge that this Consent
Decree shall constitute a final settlement of the Investigation.
The FCC will not initiate on its own motion any other enforcement
action against the companies based on this Investigation, or seek
on its
own motion any administrative or other penalties from the
Companies based on this Investigation.
10 The Commission agrees that, in the absence of material
new evidence related to these matters, it will not use the facts
developed in this Investigation to institute, on its own motion,
any new proceedings, formal or informal, or to take any actions
on its own motion against the Companies concerning the matters
that were the subject of this Investigation. Consistent with the
foregoing, nothing in this Consent Decree limits the Commission's
authority to consider and adjudicate any complaint that may be
filed pursuant to sections 208 of the Communications Act, as
amended,3 and to take any action in response to such complaint.
11. The Companies will make a voluntary contribution (not a
fine or penalty) to the United States Treasury in the amount of
$1 million dollars ($1,000,000) within 10 calendar days after the
Commission Order adopting this Consent Decree becomes final. The
Companies must make this payment by check, wire transfer or money
order drawn to the order of the Federal Communications
Commission, and the check, wire transfer or money order should
refer to ``NAL Acct. No. 200132170011.'' If the Companies make
this payment by check or money order, they must mail the check or
money order to: Forfeiture Collection Section, Finance Branch,
Federal Communications Commission, P.O. Box 73482, Chicago,
Illinois, 60673-7482. If the Companies make this payment by wire
transfer, they must wire such payment in accordance with
Commission procedures for wire transfers.
12. The Companies waive any and all rights they may have to
seek administrative or judicial reconsideration, review, appeal
or stay, or to otherwise challenge or contest the validity of
this Consent Decree and the Order adopting this Consent Decree,
provided the Order adopts the Consent Decree without change,
addition, or modification.
13. The Parties agree that the provisions of this Consent
Decree shall be subject to final approval by the Commission
through incorporation of such provisions by reference in an
Adopting Order of the Commission, which shall immediately
terminate the Investigation.
14. The Company's decision to enter into this Consent
Decree is expressly contingent upon issuance of an Order that is
consistent with this Consent Decree, and which adopts the Consent
Decree without change, addition, or modification.
15. In the event that this Consent Decree is rendered
invalid by any court of competent jurisdiction, it shall become
null and void and may not be used in any manner in any legal
proceeding.
16. If the Commission, or the United States on behalf of
the Commission, brings a judicial action to enforce the terms of
the Adopting Order, neither the Companies nor the Commission will
contest the validity of the Consent Decree or Adopting Order, and
the Companies will waive any statutory right to a trial de novo.
17. The Companies waive any rights they may otherwise have
under the Equal Access to Justice Act, Title 5 U.S.C. § 504 and
47 C.F.R. § 1.150 et seq.
18. Any violation of the Consent Decree or the Adopting
Order will constitute a separate violation of a Commission order,
entitling the Commission to exercise any rights and remedies
attendant to the enforcement of a Commission order.
19. The Companies represent and warrant that neither the
Companies nor any of their representatives, employees, agents or
any other person acting under, by, through, or on behalf of the
Companies, directly or indirectly, or through any corporate or
other device, shall state, represent or imply that the FCC, or
any other governmental unit or subdivision thereof, approved or
authorized any practice, act, advertisement or conduct of the
Companies as a result of this Consent Decree, other than the
standards and actions set forth in this Decree.
20. The Companies agree that, with regard to the
marketing/advertising, sale, or customer service of any call unit
promotional or non-promotional interstate communications service,
and beginning no later than 30 days after the Effective Date, the
Companies will:
(a) Make only those representations concerning rates or
other material facts which the Companies know or reasonably
believe to be true and accurate.
(b) Represent or imply at time of sale that rates are in
minutes or cents per minute only where such is the case during
and beyond any promotional period.
(c) Market or promote only in a manner which is consistent
with and which accurately represents the Customer's rates during
and beyond any promotional period, and in a manner which is
appropriate for reasonable understanding by a Customer to which
the plan is offered.
(d) Concerning a call unit promotional rate plan, clearly
and conspicuously indicate that the initial rate is promotional,
specify the basis on which future charges will be billed after
the promotional period ends, and state the duration of the
promotional period.
21. The Parties agree that the terms of the incorporated
Call Unit Marketing and Sales Compliance Program are a binding
part of this Consent Decree.
22. In addition to the Call Unit Marketing and Sales
Compliance Program, NOS and ANI agree to implement within thirty
(30) days of the Effective Date the following measures with
regard to any written materials which market/advertise or promote
the Companies' call unit promotional and non-promotional
interstate communications services:
(a) All written marketing materials concerning a call unit
promotional or non-promotional rate plan will make only those
representations concerning rates or other material facts which
the Companies know or reasonably believe to be true and accurate.
(b) All written marketing materials concerning a call unit
promotional rate plan will clearly and conspicuously indicate
that the initial rate is promotional, specify the basis on which
future charges will be billed after the promotional period ends,
and state the duration of the promotional period.
(c) All written marketing materials concerning a call unit
promotional rate plan which advertise a promotional rate in
cents-per-minute but which will be subsequently billed in call
units following the end of the promotional period will clearly
and conspicuously disclose the call unit pricing methodology.
(d) All written marketing materials concerning any call
unit rate plan, promotional or non-promotional, will clearly and
conspicuously disclose the call unit pricing methodology.
Without limitation, the materials will comply with the following:
i. All print or visual disclosures modifying a rate claim
will be made in reasonable proximity to the claim being modified.
ii. All print or visual disclosures modifying a rate claim
will be made in a color, shade, or manner that readily contrasts
with the background of the advertisement.
iii. All print or visual disclosures modifying a rate claim
will be made in a clear and conspicuous manner and font-type
size.
iv. All print or visual disclosures modifying a rate claim
will be made in plain English (or foreign language if marketed or
sold in a foreign language) that is readily understandable to the
average consumer. Any technical language or industry terms of
art must be explained clearly.
23. The Parties also agree that if any provision of the
Consent Decree conflicts with any subsequent rule or order
adopted by the Commission, where compliance with the provision
would result in a violation, that provision will be superseded by
such Commission rule or order.
24. By this Decree, the Companies do not waive or alter
their right to assert and seek protection from disclosure of any
privileged or otherwise confidential and protected documents and
information, or to seek appropriate safeguards of confidentiality
for any competitively sensitive or proprietary information. The
status of materials prepared for, reviews made and discussions
held in the preparation for and implementation of the Companies'
compliance efforts under this Agreement, which would otherwise be
privileged or confidential, are not altered by the execution or
implementation of the terms of this Decree and no waiver of such
privileges is made by this Agreement.
25. This Consent Decree may be signed in counterparts.
IV. CALL UNIT MARKETING AND SALES COMPLIANCE PROGRAM4
26. The Parties agree that the terms and conditions of this
Call Unit Marketing and Sales Compliance Program shall remain in
effect for thirty-six (36) months from the Effective Date.
27. Prior to causing the dissemination or use of any
marketing, advertising, sales, training, or policy materials
concerning the marketing or sale of their call unit promotional
and non-promotional interstate communications services, the
Companies will submit same to legal counsel of their own
designation for review, editing, and approval to ensure
compliance with this Consent Decree and all applicable federal
and state laws. Said counsel must have experience with consumer
protection laws, including the law relating to fraudulent,
deceptive, unconscionable and unfair acts or practices, and state
and federal rules and statutes relating to telecommunications.
28. Within 30 days of the Effective Date, NOS and ANI will
adopt and implement, through legal counsel of their own
designation, a written Call Unit Marketing and Sales Compliance
Program (the "Program"). Said counsel must have experience with
consumer protection laws, including the law relating to
fraudulent, deceptive, unconscionable and unfair acts or
practices, and state and federal rules and statutes relating to
telecommunications.
29. The Program will include, but is not limited to, the
following components:
(a) Copies of Consent Decree to Prospective Successors or
Assigns: Prior to any sale, dissolution, reorganization,
assignment, merger, acquisition or other action that would result
in a successor or assign for the marketing, advertising, sale, or
provision of the Companies' call unit promotional or non-
promotional interstate communications services, the Companies
will furnish a copy of this Consent Decree to such prospective
successors or assigns and advise same of their duties and
obligations under this Decree.
(b) Notice of Consent Decree Requirements to Officers,
Directors, Managers, and Employees: The Companies will be
responsible for making the substantive requirements and
procedures set forth in this Consent Decree known to their
respective directors and officers, and to managers, employees,
agents, and persons associated with the Companies who are
responsible for implementing the obligations set forth in this
Decree. The Companies will, within thirty (30) days of the
Effective Date, deliver to each of their current directors and
officers, and to all managers, employees, agents, and persons
associated with the Companies having sales,
marketing/advertising, operational or customer service
responsibility (``Marketing Personnel'' or ``Marketing
Employee'') with respect to the Companies' call unit promotional
and non-promotional interstate communications services, written
instructions as to their respective responsibilities in
connection with the Companies' compliance and obligations under
this Decree. The Companies will distribute said instructions to
all of their future directors and officers wherever located, and
to all future managing Marketing Personnel.
(c) Call Unit Marketing, Sales, and Customer Service Code
of Conduct: The Company will establish a Call Unit Marketing,
Sales, and Customer Service Code of Conduct (the "Code"), which
will be reviewed and signed by all current NOS and ANI Marketing
Personnel. As part of their initial training, each new Marketing
Employee will also sign the Code. All Marketing Personnel will
reaffirm annually, in writing, that they have recently reviewed,
and fully understand, the Code. The Code will establish a strict
quality standard, to which all Marketing Personnel will be
required to adhere. The Code will establish that all Marketing
Personnel shall: (1) make only true and accurate representations
concerning the call unit pricing methodology and rate plans,
whether promotional or non-promotional; and (2) make no
misrepresentations or material omissions to consumers or
otherwise mislead or imply that cents per call unit billing is
the same or equal to cents per minute or minute billing. The
Code also will establish that any written materials which market
or promote the Companies' call unit promotional and non-
promotional interstate communications services shall: (1) make
only true and accurate representations concerning the call unit
pricing methodology and rate plans, whether promotional or non-
promotional; and (2) make no misrepresentations or material
omissions to consumers or otherwise mislead or imply that cents
per call unit billing is the same or equal to cents per minute or
minute billing.
(d) Mandatory Quality Training: All Marketing Management
Personnel will be required to attend a comprehensive supplemental
training session regarding the Program and the Code. Such
training sessions will be repeated annually for all Marketing
Management Personnel, at which time they again will be required
to sign the Code, acknowledging their understanding of its
requirements and verifying their intent to comply with them.
(e) Complaints: As of the Effective Date, NOS and ANI will
promptly and in good faith address and resolve all complaints
regarding the marketing and sale of their call unit promotional
and non-promotional interstate communications service in a
reasonable manner consistent with this Consent Decree and the
Program. In all cases where the Companies conclude that
intentionally deceptive conduct occurred by an employee or agent,
the Companies will take appropriate disciplinary action against
the employee or agent in question, consistent with the standards
set forth in the Program.
(f) Reporting: Within 60 days from the Effective Date, the
Companies will provide a formal report to the Bureau of their
progress in implementing the Program. At the request of the
Bureau, during this initial 60-day period following the Effective
Date, the Companies also will provide informal status reports on
the implementation of the Program.
(g) Program Changes: Should NOS and/or ANI wish to make any
changes to the Program outlined in paragraphs 26-29 above during
the term of this Decree, they must submit the proposed change in
writing to the Enforcement Bureau no later than 30 days before
the proposed adoption of the change. Within 30 days of receipt
of any proposed change to the Program, the Enforcement Bureau
shall advise the Companies whether it objects to the proposed
change. Within 10 days of receiving any objection from the
Enforcement Bureau, NOS and ANI shall be permitted to present for
the Bureau's consideration further justification for the
proposal. Should the Bureau fail to object expressly to the
proposed change within the 30-day time period, the Companies
shall be free to implement it.
FEDERAL COMMUNICATIONS COMMISSION
By: __________________________________
Marlene Dortch
Secretary
NOS Communications, Inc./Affinity Network, Inc.
By: /s/ Michael W. Arnau
Michael W. Arnau
Chief Executive Officer
_________________________
1 In the Matter of NOS Communications, Inc. and Affinity
Network Incorporated, Notice of Apparent Liability, 16 FCC
Rcd 8133 (2001) (NOS/ANI NAL).
2 47 U.S.C. §§ 251, 271.
3 47 U.S.C. § 208.
1 In the Matter of NOS Communications, Inc. and Affinity
Network Incorporated, Notice of Apparent Liability, 16 FCC
Rcd 8133 (2001) (NOS/ANI NAL).
3 47 U.S.C. § 208.
4 This Call Unit Marketing and Sales Compliance Program
incorporates Section II: Definitions from the Consent Decree.