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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
)
Arbros Communications, Inc. )
) File No. EB-02-TC-038
)
Apparent Liability for ) NAL/Acct. No. 200332170001
Forfeiture ) FRN: 0003793205
)
)
FORFEITURE ORDER
Adopted: February 9, 2004 Released: February 10,
2004
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Forfeiture Order (``Order''), we
issue a monetary forfeiture in the amount of fifty thousand
dollars ($50,000) against Arbros Communications, Inc.
(``Arbros'') for violating section 214(a) of the Communications
Act of 1934, as amended (the ``Act'')1 and sections 63.61, 63.71,
and 63.505 of the Commission's rules2 by discontinuing its
domestic interstate access service in California, Delaware,
Maryland, Massachusetts, New Jersey, New York, Pennsylvania,
Virginia, and Washington, D.C., as well as all of its interstate
long distance service, before receiving authorization to do so
from the Commission.
II. BACKGROUND
2. The facts and circumstances surrounding
this case are set forth in the Notice of Apparent Liability
previously issued by the Bureau and need not be reiterated at
length.3 In the fall of 2001, Arbros decided to exit its
telecommunications resale business, informed its upstream
providers of its intent to do so, and did not pay amounts billed
by these providers.4 At least one of these providers therefore
discontinued service to Arbros.5 Arbros filed an application for
discontinuance with the Commission on March 1, 2002, stating that
between February 12 and February 14, 2002, it had sent notices to
its customers of its intent to terminate service on March 4. In
response to complaints from consumers who received the notice,
Arbros filed a supplemental application with a revised notice
stating that Arbros intended to discontinue service on March 16,
2002,6 and in fact did terminate service during the third week of
March, 2002, without Commission authorization. This
discontinuance occurred too early to permit automatic Commission
authorization in 31 days as provided under Section 63.71 of the
Commission's regulations.7 As a result, long distance service to
some customers was cut off prematurely and they were injured
thereby.8
3. On March 6, 2003, we issued a Notice of
Apparent Liability (``NAL'') for Forfeiture in the amount of
fifty thousand dollars ($50,000).9 Arbros filed a response on
April 15, 2003, enclosing financial documents in support of its
claim that it was unable to pay the proposed forfeiture.10
Arbros did not make any arguments regarding the merits of the
matters discussed in the NAL, other than to say that it stood by
its prior responses to Bureau inquiries. Because Arbros'
financial data was incomplete, and publicly available information
raised questions about Arbros' financial condition, the
Enforcement Bureau sent letters to Arbros on July 15 and October
2, 2003, requesting additional information in support of Arbros's
claim that it was unable to pay the forfeiture.11 Arbros
responded that it had not prepared the requested documents and
that it would not likely be able to do so at this time.12
III. DISCUSSION
4. In its response, Arbros presents data in support of its
claim that it is unable to pay the proposed forfeiture. The
Commission will not consider reducing or canceling a forfeiture
in response to a claim of inability to pay unless the petitioner
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
petitioner's current financial status.13 In most cases, the
Commission has looked to gross revenue as the best indicator of a
carrier's ability to pay a forfeiture.14 Arbros' response does
not contain sufficient information for any of the three
categories described above. Accordingly, we have considered
other sources of information concerning Arbros' financial
condition.
5. During our investigation, we reviewed publicly
available information showing that, shortly after it discontinued
service, Arbros created a holding company, Arcomm Holding Company
(``Arcomm''), and transferred to Arcomm its subsidiary companies,
including companies that provided local exchange
telecommunications services in a number of relevant states.15
Based on this information and the limited information Arbros
submitted concerning its assets, it appears that Arcomm or its
subsidiaries may now hold substantial assets previously held by
Arbros. Because the information Arbros submitted was
insufficient to determine the extent of Arbros's control over or
access to these assets or to other assets previously held by
Arbros, we sought more information from Arbros, including the
2002 tax returns of Arbros and Arcomm.16 Arbros, however, did
not provide the documents or information we requested. In light
of Arbros's failure to provide adequate information to justify a
reduced forfeiture, and significant questions concerning Arbros's
access to assets held by related entities or other assets
previously controlled by Arbros, we decline to reduce the
proposed forfeiture amount. We conclude that the proposed
forfeiture, $50,000, is reasonable based on all the evidence in
the record, including the most recent gross revenue information
Arbros submitted.17
IV. ORDERING CLAUSES
6. ACCORDINGLY, IT IS ORDERED THAT, pursuant to
Section 503(b) of the Communications Act of 1934, as amended,18
Section 1.80(f)(4) of the Commission's rules,19 and authority
delegated by Sections 0.111 and 0.311 of the Commission's
rules,20 Arbros Communications, Inc. IS LIABLE FOR A MONETARY
FORFEITURE in the amount of fifty thousand dollars ($50,000) for
willfully or repeatedly violating Section 214 of the Act and
Sections 63.61, 63.71, and 63.505 of the Commission's rules by
discontinuing its domestic interstate access service in
California, Delaware, Maryland, Massachusetts, New Jersey, New
York, Pennsylvania, Virginia, and Washington, D.C., as well as
all of its interstate long distance service, before receiving
authorization to do so from the Commission.
7. Payment of the forfeiture shall be made in
the manner provided for in Section 1.80 of the Rules within 30
days of the release of this Order. If the forfeiture is not paid
within the period specified, the case may be referred to the
Department of Justice for collection pursuant to Section 504(a)
of the Act.21 Payment may be made by mailing a check or similar
instrument, payable to the order of the ``Federal Communications
Commission,'' to the Federal Communications Commission, P.O. Box
73482, Chicago, Illinois 60673-7482. The payment should note
NAL/Acct. No. 200332170001. Requests for full payment under the
installment plan should be sent to: Chief, Revenue and
Receivables Group, 445 12th Street, S.W., Washington, D.C.
20554.22
8. IT IS FURTHER ORDERED that a
copy of this Order shall be sent by Certified Mail, Return
Receipt Requested to Lawrence Li, P.O. Box 0059, Beltsville,
Maryland 20704-0059.
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
_________________________
1 47 U.S.C. § 214(a).
2 47 C.F.R. §§ 63.61, 63.71, 63.505.
3 Arbros Communications, Inc., Notice of Apparent Liability for
Forfeiture, 18 FCC Rcd 3251 (2003) (``NAL'').
4 Letter from E. Ashton Johnston, counsel for Arbros, to Peter G.
Wolfe, FCC (Sept. 5, 2002).
5 Letters from upstream providers to Peter G. Wolfe, FCC (Aug. 7
and 20, 2002).
6 Comments Invited on Arbros Communications, Inc. and its
Subsidiaries Joint Application to Discontinue Domestic
Telecommunications Services, Public Notice, DA 02-571 (rel. Mar.
7, 2002).
7 47 C.F.R. § 63.71.
8 Declaration of Karl Fischer on behalf of Traffic Planning and
Design (Sept. 4, 2002); Declaration of Charles Tassin on behalf
of Career Transition Center (Aug. 29, 2002); Declaration of Jim
Smith on behalf of Conard-Pyles Company (Aug. 28, 2002);
Declaration of Don Schindhelm on behalf of Applied Information
Technologies (Sept. 4, 2002); Declaration of Rob Edwards on
behalf of Royall & Company (Aug. 27, 2002).
9 Arbros Communications, Inc., Notice of Apparent Liability for
Forfeiture, 18 FCC Rcd 3251 (2003).
10 Response to Notice of Apparent Liability for Forfeiture (Apr.
15, 2003). Arbros requested confidential treatment of its
response. Although we are not ruling at this time on whether the
information meets the requirements for confidential treatment, we
will nonetheless treat such information confidentially.
11 Letter of Colleen K. Heitkamp, Chief, Telecommunications
Consumers Division, Enforcement Bureau, FCC, to Lawrence Li,
Arbros (July 15, 2003); Letter of Colleen K. Heitkamp, Chief,
Telecommunications Consumers Division, Enforcement Bureau, FCC,
to Lawrence Li, Arbros (Oct. 2, 2003).
12 Response to Notice of Apparent Liability for Forfeiture,
Request for Additional Information-Dated 7/15/03 (Aug. 28, 2003);
Letter from Lawrence Li, Arbros, to FCC, Enforcement Bureau,
Telecommunications Consumers' Division (Oct. 9, 2003).
13 See, e.g., Callais Cablevision, Inc. Grand Isle, Louisiana, 16
FCC Rcd 1359 (2001).
14 See Vista Group International, Inc., 16 FCC Rcd 8289, 8295
(2001); PJB Communications of Virginia, Inc., 7 FCC Rcd 2088,
2089 (1992) (``PJB''); David L. Hollingsworth d/b/a Worland
Services, 7 FCC Rcd 6640, 6641 (Com. Car. Bur., 1992)
(``Worland'').
15 Notification of Transfer of Control- Comm South Companies,
Inc. and Arbros Communications, Inc. to Arcomm Holding Company,
Tennessee Regulatory Authority Docket No. 02-01200, October 30,
2002.
16 Letter of Colleen K. Heitkamp, Chief, Telecommunications
Consumers Division, Enforcement Bureau, FCC, to Lawrence Li,
Arbros (July 15, 2003); Letter of Colleen K. Heitkamp, Chief,
Telecommunications Consumers Division, Enforcement Bureau, FCC,
to Lawrence Li, Arbros (Oct. 2, 2003).
17 The $50,000 amount is within the range of percentage of gross
revenues that the Commission has found reasonable in other cases.
See PJB, 7 FCC Rcd at 2089 (1992); Worland, 7 FCC Rcd at 6641
(1992).
18 47 U.S.C. § 503(b).
19 47 U.S.C. § 1.80(f)(4).
20 47 C.F.R. §§ 0.111, 0.311.
21 47 U.S.C. § 504(a).
22 See 47 C.F.R. § 1.1914.