Click here for Adobe Acrobat version
Click here for Microsoft Word version
********************************************************
NOTICE
********************************************************
This document was converted from Microsoft Word.
Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.
All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.
Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.
If you need the complete document, download the
Microsoft Word or Adobe Acrobat version.
*****************************************************************
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of ) File No. EB-04-IH-0394
)
)
BCE Nexxia Corporation ) NAL/Acct. No. 200532080143
)
)
Apparent Liability for ) FRN No. 0008-2783-76
Forfeiture )
NOTICE OF APPARENT LIABILITY
FOR FORFEITURE
Adopted: September 13, 2005 Released:
September 13, 2005
By the Commission:
I. INTRODUCTION
1. In this Notice of Apparent Liability for Forfeiture
(``NAL''), we find that an international telecommunications
carrier that has been providing interstate telecommunications
services since at least 2003 and at least indirectly benefiting
from the federal programs supporting the telecommunications
industry since that time, apparently failed to meet its
statutory and regulatory obligations relating to the universal
service program. Based upon the facts and circumstances
surrounding this matter we conclude that this company is
apparently liable for a total forfeiture of $282,000.
2. We specifically find that BCE Nexxia Corporation (``BCE
Nexxia'') has apparently violated sections 54.711(a) of the
Commission's rules by failing to submit certain
Telecommunications Reporting Worksheets (``Worksheets'').1 We
also find that BCE Nexxia has apparently violated section 254(d)
of the Communications Act of 1934, as amended (the ``Act''), and
section 54.706(a) of the Commission's rules by willfully and
repeatedly failing to contribute to the Universal Service Fund
(``USF'').2
3. We are resolved to ensure a level playing field for all
companies that are required to contribute to the maintenance of
our various Congressionally-mandated programs including the
federal universal service program. The failure of a carrier to
fulfill its obligation to contribute to these programs has a
direct and significant detrimental impact on the programs and on
other industry participants because that failure removes from
the base of contributions telecommunications revenues that
otherwise should be included, thereby forcing other
telecommunications carriers to shoulder additional costs
associated with the programs. Thus, this NAL and others like
it, represent one element in a comprehensive approach to
improving the efficacy and fairness of the universal service
program as well as reducing waste, fraud and abuse in the
program.
II. BACKGROUND
4. The Commission is charged by Congress with regulating
interstate and international telecommunications and ensuring
that providers of such telecommunications comply with the
requirements imposed on them by the Act and our rules.3 The
Commission also has been charged by Congress to establish,
administer and maintain various telecommunications regulatory
programs, including the federal universal service program, and
to fund these programs through assessments on the
telecommunications providers that benefit from them. To
accomplish these goals, the Commission established ``a central
repository of key facts about carriers'' through which it could
monitor the entry and operation of interstate telecommunications
providers to ensure, among other things, that they are
qualified, do not engage in fraud, and do not evade oversight.4
Commission rules require that, upon entry or anticipated entry
into interstate telecommunications markets, telecommunications
carriers register by submitting information on an FCC Form 499-
A, also known as the annual Telecommunications Reporting
Worksheet.5 The Commission also requires telecommunications
providers to submit financial information on annual and, with
some exceptions not applicable to BCE Nexxia, quarterly short-
form Worksheets to enable the Commission to determine and
collect the statutorily mandated program assessments.6
5. The Telecommunications Act of 1996 codified Congress'
historical commitment to promote universal service to ensure
that consumers in all regions of the nation have access to
affordable, quality telecommunications services.7 In
particular, section 254(d) of the Act requires, among other
things, that ``[e]very telecommunications carrier [providing]
interstate telecommunications services . . . contribute, on an
equitable and nondiscriminatory basis, to the specific,
predictable, and sufficient mechanisms established by the
Commission to preserve and advance universal service.''8 In
implementing this Congressional mandate, the Commission directed
all telecommunications carriers providing interstate
telecommunications services and certain other providers of
interstate telecommunications to contribute to the Universal
Service Fund based upon their interstate and international end-
user telecommunications revenues.9 Failure by some providers to
pay their share into the USF skews the playing field by
providing non-paying providers with an economic advantage over
their competitors, who must shoulder more than their fair share
of the costs of the USF.
6. The Commission has established specific procedures to
administer the universal service program. A carrier must file
quarterly and annual Worksheets for the purpose of determining
its USF payments.10 These periodic filings trigger a
determination of liability, if any, and subsequent billing and
collection by the Universal Service Administrative Company
(``USAC'').11 USAC uses the revenue projections submitted on
the quarterly filings to determine each provider's universal
service contribution amount.12 Carriers are required to pay
their monthly USF contribution by the date shown on their
invoice.13 The Commission's rules explicitly warn contributors
that failure to file their forms or submit their payments
potentially subjects them to enforcement action.14
7. BCE Nexxia is a Canada-based telecommunications carrier
that long has provided international telecommunications in the
United States. BCE Nexxia also has been providing interstate
telecommunications services in the United States since at least
2003.
8. In 2004, the Enforcement Bureau (``Bureau'') audit
staff sought to identify resellers of telecommunications
services that failed to register as telecommunications service
providers with the Commission, and, thus, may also have failed
to satisfy various Commission program requirements.15 To
identify such resellers, the Bureau audit staff compared lists
of resellers provided by wholesale service providers against the
Commission's central repository of registered telecommunications
service providers with filer identification numbers. If a
reseller did not appear to have an identification number, the
audit staff sent an inquiry to that reseller. On March 30,
2004, the Bureau's audit staff sent a letter to BCE Nexxia
requesting information pertaining to BCE Nexxia's compliance
with section 64.1195 of the Commission's rules.16 Thereafter,
BCE Nexxia registered and belatedly filed on April 30, 2004, the
annual Worksheet due April 1, 2004. BCE Nexxia then responded
to the Bureau's audit staff that it had registered and filed its
first annual Worksheet.17
9. After determining that BCE Nexxia appeared to have
failed to timely register with the Commission or timely file
certain Telecommunications Reporting Worksheets, the Bureau
issued letters of inquiry (``LOIs'') to BCE Nexxia on September
8, 2004, December 6, 2004 and June 22, 2005.18 The LOIs
directed BCE Nexxia, among other things, to submit sworn written
responses to a series of questions relating to BCE Nexxia's
apparent failure to register and file Telecommunications
Reporting Worksheets and to make mandated federal
telecommunications regulatory program payments prior to and
during the investigation. BCE Nexxia responded to the LOIs on
October 19, 2004, December 15, 2004, and July 29, 2005,
providing documents and information as directed by the Bureau.19
10. While BCE Nexxia late-filed the 2004 annual Worksheet,
it did not file any 2004 quarterly Worksheets, despite receiving
multiple letters from the Bureau regarding its compliance with
the reporting rules. On November 24, 2004, USAC notified BCE
Nexxia that it had not received the Worksheet due November 1,
2004 (which would provide revenue projections for the first
quarter of 2005 and enable USAC to prepare first quarter
invoices). BCE Nexxia replied that it had not filed the
November 2004 Worksheet because it qualified for the de minimis
exception and, thus, claimed that it was not required to file.20
In 2005, BCE Nexxia timely filed the quarterly Worksheets due
February 1, May 1, and August 1, 2005 and the annual Worksheet
due April 1, 2005.
III. DISCUSSION
11. Under section 503(b)(1) of the Communications Act of
1934, as amended (the ``Act''), any person who is determined by
the Commission to have willfully or repeatedly failed to comply
with any provision of the Act or any rule, regulation, or order
issued by the Commission shall be liable to the United States
for a forfeiture penalty.21 Section 312(f)(1) of the Act
defines willful as ``the conscious and deliberate commission or
omission of [any] act, irrespective of any intent to violate''
the law.22 The legislative history to section 312(f)(1) of the
Act clarifies that this definition of willful applies to both
sections 312 and 503(b) of the Act23 and the Commission has so
interpreted the term in the section 503(b) context.24 The
Commission may also assess a forfeiture for violations that are
merely repeated, and not willful.25 ``Repeated'' means that the
act was committed or omitted more than once, or lasts more than
one day.26 To impose such a forfeiture penalty, the Commission
must issue a notice of apparent liability 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.27 The Commission will then issue a forfeiture if it
finds by a preponderance of the evidence that the person has
willfully or repeatedly violated the Act or a Commission order
or rule.28 As set forth below, we conclude under this standard
that BCE Nexxia is apparently liable for forfeiture for its
apparent willful and repeated violations of section 254(d) of
the Act and sections 54.711(a) and 54.706(a) of the Commission's
rules.29
12. The fundamental issues in this case are whether BCE
Nexxia apparently violated the Act and the Commission's rules
by: (1) willfully or repeatedly failing to file certain
Telecommunications Reporting Worksheets; and (2) willfully or
repeatedly failing to make requisite contributions toward the
USF. We answer these questions affirmatively. Based on a
preponderance of the evidence, we conclude that BCE Nexxia is
apparently liable for a forfeiture of $282,000 for apparently
willfully and repeatedly violating section 254(d) of the Act and
sections 54.711(a) and 54.706(a) of the Commission's rules.30
13. Specifically, we propose the following forfeitures for
apparent violations within the last year: (1) $50,000 for
failure to file the Telecommunications Reporting Worksheet due
November 1, 2004; and (2) $232,000 for failure to make eight
monthly USF contributions within the past twelve months.
Although we propose forfeitures only for apparent violations
within the last year, we note BCE Nexxia's noncompliance in
prior years as useful background demonstrating the context of
the misconduct that is within the statute of limitations period
and thus covered by this NAL.
A. Submission of Telecommunications Reporting
Worksheets
14. We conclude that BCE Nexxia apparently has violated
section 54.711(a) of the Commission's rules by willfully and
repeatedly failing to file certain annual or quarterly
Telecommunications Reporting Worksheets at least since 2003,
when it began providing interstate telecommunications services,
through November 1, 2004. Section 54.711(a) of the Commission's
rules clearly establishes a carrier's obligation to file
periodic Telecommunications Reporting Worksheets.31 A carrier's
failure to file these Worksheets as required has serious
implications for the USF. As discussed above, the filing of a
Telecommunications Reporting Worksheet prompts a determination
of liability for, and subsequent billing and collection of, USF
contributions. The failure of a carrier such as BCE Nexxia to
abide by its federal filing obligation has a direct and profound
detrimental impact by removing from the base of USF
contributions telecommunications revenues that otherwise should
be included, thereby shifting to compliant carriers additional
economic burdens associated with the federal universal service
program.32 Consequently, a carrier's failure to file required
Worksheets thwarts the very purpose for which Congress enacted
section 254(d) - to ensure that every interstate carrier
``contribute, on an equitable and nondiscriminatory basis, to
the specific, predictable, and sufficient mechanisms established
by the Commission to preserve and advance universal service.''33
Viewed in this context, the Telecommunications Reporting
Worksheet is not only an administrative tool, but a fundamental
and critical component of the Commission's universal service
program.
15. As noted above, BCE Nexxia untimely registered and
late-filed the 2004 annual Telecommunications Reporting
Worksheet (reporting 2003 revenue and due April 1, 2004) on
April 30, 2004 and did so only after receiving an inquiry from
the Commission.34 BCE Nexxia did not file the quarterly
Worksheets due May 1, August 1, and November 1, 2004.35 On
November 24, 2004, USAC notified BCE Nexxia that it had not
received the Worksheet due November 1, 2004 (which would provide
revenue projections for the first quarter of 2005 and enable
USAC to prepare first quarter invoices). BCE Nexxia replied
that it had not filed the November 2004 Worksheet because it
qualified for the de minimis exception and claimed it thus was
not required to file.36 We reject this contention. BCE
Nexxia's own subsequent filings establish that BCE Nexxia
accrued 2004 interstate revenues that placed it well above the
range of the de minimis exception by November 1, 2004. Thus, it
was obligated to file the quarterly Worksheet due November 1.37
Based on a preponderance of the evidence, we find that BCE
Nexxia apparently has violated section 254 of the Act and
section 54.711 of the Commission's rules38 by willfully and
repeatedly failing to file required information with the
Commission on multiple occasions since at least 2003, including
the failure to make the November 1, 2004 quarterly filing.
B. Universal Service Contributions
16. We further conclude that BCE Nexxia apparently violated
section 254(d) of the Act and section 54.706 of the Commission's
rules by willfully and repeatedly failing to contribute to
universal service support mechanisms.39 Section 54.706(c) of
the Commission's rules unambiguously directs that ``entities
[providing] interstate telecommunications to the public . . .
for a fee . . . contribute to the universal service support
programs.''40 During the relevant period, BCE Nexxia was
required, pursuant to section 54.706(b) of the Commission's
rules, to contribute to universal service mechanisms based upon
projected revenues.41 BCE Nexxia did not make any universal
service contributions until June 13, 2005.42 BCE Nexxia claims
that prior to April 2005, it was ``exempt from contribution to
the USF based on the de minimis rule'' and that it ``became
subject to USF payments by virtue of its 2005 Form 499A filing
for the year 2004.''43 We reject these contentions. The ``de
minimis rule'' states that ``[i]f a contributor's contribution
to universal service in any given year is less than $10,000 that
contributor will not be required to submit a contribution.''44
As discussed above, during 2004 and 2005, BCE Nexxia's actual
interstate revenues far exceeded the amount that would generate
a contribution obligation greater than $10,000. Thus, during
the relevant periods, BCE Nexxia was required, pursuant to
section 54.706(b) of the Commission's rules, to contribute to
universal service mechanisms based upon projected revenues.45
BCE Nexxia did not become subject to USF contribution
obligations only when it chose to report the 2004 revenue
information necessary for USAC to calculate its 2004
contribution, nor did its failure to file quarterly Worksheets
relieve BCE Nexxia of the obligation to pay USF contributions.
As we previously have stated:
[c]arrier nonpayment of universal service
contributions undermines the efficiency and
effectiveness of the universal service support
mechanisms. Moreover, delinquent carriers may
obtain a competitive advantage over carriers
complying with the Act and our rules. We consider
universal service nonpayment to be a serious threat
to a key goal of Congress and one of the
Commission's primary responsibilities.46
Based on a preponderance of the evidence, we find that BCE
Nexxia apparently has violated sections 254(d) of the Act and
54.706 of the Commission's rules by willfully and repeatedly
failing to make eight monthly universal service contribution
payments.
C. Proposed Forfeiture
17. Section 503(b)(1)(B) of the Act provides that any
person that willfully or repeatedly fails to comply with any
provision of the Act or any rule, regulation, or order issued by
the Commission, shall be liable to the United States for a
forfeiture penalty.47 For the apparent violations in this case,
section 503(b)(2)(B) of the Act authorizes the Commission to
assess a forfeiture of up to $130,000 for each violation or each
day of a continuing violation, up to a statutory maximum of
$1.325 million for a single act or failure to act for
violations.48 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.''49
18. Under section 503(b)(6) of the Act, we may only propose
forfeitures for apparent violations that occurred within one
year of the date of this NAL.50 Nevertheless, section 503(b)
does not bar us from assessing whether BCE Nexxia's conduct
prior to that time period apparently violated the Act or our
rules in determining the appropriate forfeiture amount for those
violations within the statute of limitations.51 Therefore,
although we find that BCE Nexxia apparently violated the Act and
our rules in prior periods, we propose forfeitures here only for
violations that occurred within the last twelve months.
19. In the past, we have held that a substantial forfeiture
of $50,000 is warranted for a carrier's failure to file a
Telecommunications Reporting Worksheet for revenue reporting
purposes.52 As we noted above, a carrier's obligation to file
these Worksheets is directly linked to, and thus has serious
implications for, administration of the USF program. By
ignoring its 2004 reporting obligations, BCE Nexxia unilaterally
shifted to compliant carriers and their customers the economic
costs associated with the universal service program. Therefore,
we find that BCE Nexxia is apparently liable for a $50,000
forfeiture for its failure to file the quarterly Worksheet due
November 1, 2004.
20. Based on the facts above, it also appears that BCE
Nexxia has failed to make requisite contributions into the USF
during 2004 and until June 13, 2005. Nonpayment of universal
service contributions is an egregious offense that bestows on
delinquent carriers an unfair competitive advantage by shifting
to compliant carriers the economic costs and burdens associated
with universal service. A carrier's failure to make required
universal service contributions frustrates Congress' policy
objective in section 254(d) of the Act to ensure the equitable
and non-discriminatory distribution of universal service costs
among all telecommunications providers.53 The Commission has
established a base forfeiture amount of $20,000 for each month
in which a carrier has failed to make required universal service
contributions.54 Consequently, we find BCE Nexxia apparently
liable for a base forfeiture of $160,000 for its willful and
repeated failure to make universal service contributions for
eight months.55 As discussed below, however, that base amount
is subject to an upward adjustment.
21. In the past, we have calculated upward adjustments to
forfeitures for failure to make USF payments based on one-half
of the company's approximate unpaid contributions.56 During the
course of this investigation, BCE Nexxia has filed the financial
information necessary for USAC to determine the contribution
amounts BCE Nexxia would have been assessed had it properly
filed quarterly Worksheets prior to February 1, 2005.
Therefore, taking into account all the factors enumerated in
section 503(b)(2)(D) of the Act, we propose an upward adjustment
of $72,000, approximately one-half of the carrier's unpaid USF
contributions at the time it made its first payment in June
2005, for BCE Nexxia's apparent nonpayment violations. We thus
find BCE Nexxia apparently liable for a total proposed
forfeiture of $232,000 for its apparent willful and repeated
failure to make contributions into the USF.
IV. CONCLUSION
22. In light of the seriousness, duration and scope of the
apparent violations, and to ensure that a company with
substantial revenues such as BCE Nexxia does not consider the
proposed forfeiture merely ``an affordable cost of doing
business,''57 we find that a proposed forfeiture in the amount
of $282,000 is warranted. As discussed above, this proposed
forfeiture amount includes: (1) a total proposed penalty of
$50,000 for failing to file the Telecommunications Reporting
Worksheet due November 1, 2004; and (2) a total proposed penalty
of $232,000 for failing to make eight monthly universal service
contributions within the past year.
23. We caution that additional violations of the Act or the
Commission's rules could subject BCE Nexxia to further
enforcement action. Such action could take the form of higher
monetary forfeitures and/or possible revocation of BCE Nexxia's
operating authority, including disqualification of BCE Nexxia's
principals from the provision of any interstate common carrier
services without the prior consent of the Commission.58
V. ORDERING CLAUSES
24. ACCORDINGLY, IT IS ORDERED THAT, pursuant to section
503(b) of the Communications Act of 1934, as amended, 47 U.S.C.
§ 503(b), and section 1.80 of the Commission's rules, 47 C.F.R.
§ 1.80, that BCE Nexxia is hereby NOTIFIED of its APPARENT
LIABILITY FOR A FORFEITURE in the amount of $282,000 for
willfully and repeatedly violating the Act and the Commission's
rules.
25. IT IS FURTHER ORDERED THAT, pursuant to section 1.80 of
the Commission's Rules, 47 C.F.R. § 1.80, within thirty days of
the release date of this NOTICE OF APPARENT LIABILITY, BCE
Nexxia SHALL PAY the full amount of the proposed forfeiture or
SHALL FILE a written statement seeking reduction or cancellation
of the proposed forfeiture.
26. Payment of the forfeiture must be made by check or
similar instrument, payable to the order of the Federal
Communications Commission. The payment must include the
NAL/Acct. No. and FRN No. referenced above. Payment by check or
money order may be mailed to Federal Communications Commission,
P.O. Box 358340, Pittsburgh, PA 15251-8340. Payment by
overnight mail may be sent to Mellon Bank /LB 358340, 500 Ross
Street, Room 1540670, Pittsburgh, PA 15251. Payment by wire
transfer may be made to ABA Number 043000261, receiving
bank Mellon Bank, and account number 911-6106.
27. The response, if any, to this NOTICE OF APPARENT
LIABILITY must be mailed to William H. Davenport, Chief,
Investigations and Hearings Division, Enforcement Bureau,
Federal Communications Commission, 445 12th Street, S.W.,
Washington, D.C. 20554 and must include the NAL/Acct. No.
referenced above.
28. 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.
Any claim of inability to pay must specifically identify the
basis for the claim by reference to the financial documentation
submitted.
29. Requests for payment of the full amount of this NAL
under an installment plan should be sent to Chief, Credit and
Management Center, 445 12th Street, S.W., Washington, D.C.
20554.59
30. IT IS FURTHER ORDERED that a copy of this NOTICE OF
APPARENT LIABILITY AND ORDER shall be sent by certified mail,
return receipt requested, to Jonathan Blakey, Esq., Assistant
General Counsel, Regulatory Law, 14th Floor, 110 O'Connor,
Ottawa, Ontario, Canada K1P 1H1.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
_________________________
1 47 C.F.R. §§ 54.711(a).
2 47 U.S.C. § 254(d); 47 C.F.R. §§ 54.706(a).
3 See, e.g., 47 U.S.C. § 151.
4 See Implementation of the Subscriber Carrier Selection
Provisions of the Telecommunications Act of 1996, Third Report
and Order and Second Order on Reconsideration, 15 FCC Rcd 15996,
16024 (2000) (``Carrier Selection Order''). BCE Nexxia
apparently began providing interstate telecommunications services
at some point in 2003 but did not register until after it
received a Bureau inquiry in 2004. See ¶ 7 infra.
5 47 C.F.R. § 64.1195.
6 See 47 U.S.C. §§ 159(a),(b); 225(d)(3); 251(e)(2); 254(d). In
1999, to streamline the administration of the programs and to
ease the burden on regulatees, the Commission consolidated the
information filing requirements for multiple telecommunications
regulatory programs into the annual Telecommunications Reporting
Worksheet. See 1998 Biennial Regulatory Review, Report and
Order, 14 FCC Rcd 16602 (1999). The next year the Commission
revised the Telecommunications Reporting Worksheet slightly to
collect the additional information necessary to achieve its goal
of establishing a central repository for interstate
telecommunications providers by the least provider-burdensome
method. Carrier Selection Order, 15 FCC Rcd at 16026.
7 The Telecommunications Act of 1996 amended the Communications
Act of 1934. See Telecommunications Act of 1996, Pub. L. No.
104-104, 110 Stat. 56 (1996).
8 47 U.S.C. § 254(d).
9 47 C.F.R. § 54.706(b). Beginning April 1, 2003, carrier
contributions were based on a carrier's projected, rather than
historical, revenues. Id.
10 Upon submission of a Form 499-A registration, the carrier is
issued a filer identification number by USAC. The filer
identification number is then to be included on all further
filings by the company and is used by the Commission and its
administrators to track the carrier's contributions and invoices.
11 The Commission has appointed USAC as the administrator of
federal universal service support mechanisms and has made it
responsible for billing and collection of USF contributions. 47
C.F.R. §§ 54.701(a), 54.702(b).
12 Individual universal service contribution amounts that are
based upon quarterly filings are subject to an annual true-up.
See Federal-State Joint Board on Universal Service, Petition for
Reconsideration filed by AT&T, Report and Order and Order on
Reconsideration, 16 FCC Rcd 5748 (2001); 47 C.F.R. § 54.709(a).
13 See Globcom, Inc. Notice of Apparent Liability for Forfeiture
and Order, 18 FCC Rcd 19893, 19896 (2003) (``Globcom''); 47
C.F.R. § 54.711(a) (``The Commission shall announce by Public
Notice published in the Federal Register and on its website the
manner of payment and the dates by which payments must be
made.''). See, e.g., ``Proposed Third Quarter 2003 Contribution
Factor,'' Public Notice, 18 FCC Rcd 11442 (WCB 2003)
(``Contribution payments are due on the date shown on the [USAC]
invoice.''). A carrier that does not file Worksheets may not
receive an invoice from USAC, but is nonetheless required to
contribute to the USF, unless its revenues are considered de
minimis. The Act and our rules do not condition USF
contribution payment on receipt of an invoice or other notice
from USAC. See 47 U.S.C. § 254(d); 47 C.F.R. § 54.706(b);
Globcom, 18 FCC Rcd at 19896, n. 22. The instructions for the
Telecommunications Reporting Worksheet include tables for
carriers to project or determine their approximate annual
contribution based on their projected telecommunications
revenues. Providers whose annual contribution is less than
$10,000 are covered by the Commission's ``de minimis rule'' and
are exempted from contributing to the USF. 47 C.F.R. § 54.708.
As discussed in more detail below, BCE Nexxia's interstate
revenues in 2004 and 2005 do not qualify for the de minimis
exception.
14 47 C.F.R. § 54.713.
15 See 47 C.F.R. § 64.1195(a).
16 See Letter from Hugh Boyle, Chief Auditor, Investigations and
Hearings Division, Enforcement Bureau, to BCE Nexxia dated March
30, 2004 (``March 30 Audit Letter'').
17 See electronic mail response to the March 30 Audit Letter from
Paula Kerr, BCE Nexxia, dated April 30, 2004.
18 Letters from Hillary S. DeNigro, Deputy Chief, Investigations
and Hearings Division, Enforcement Bureau, to David C. Kidd, Vice
President, Regulatory Law, BCE Nexxia, dated September 8, 2004
and December 6, 2004, and to Jonathan Blakey, Assistant General
Counsel, BCE Nexxia, dated June 22, 2005.
19 See responses from Isabelle Courville, Chairman and President,
BCE Nexxia, to Hillary S. DeNigro, Deputy Chief, Investigations
and Hearings Division, Enforcement Bureau, dated October 19,
2004, and from Jonathan Blakey, Assistant General Counsel,
Regulatory Law, BCE Nexxia, and Mirko Bibic, Vice President,
Regulatory Law, BCE Nexxia, to Carla Conover, Investigations and
Hearings Division, Enforcement Bureau, dated December 15, 2004
and July 29, 2005, respectively.
20 See electronic mail from Suhail Smith, NECA Services (USAC's
contractor for data collection duties at that time) to Paula M.
Kerr, BCE Nexxia, and the electronic mail response from Paula M.
Kerr to Suhail Smith, both dated November 24, 2004.
21 47 U.S.C. § 503(b)(1)(B); 47 C.F.R. § 1.80(a)(1); see also 47
U.S.C. § 503(b)(1)(D) (forfeitures for violation of 14 U.S.C. §
1464).
22 47 U.S.C. § 312(f)(1).
23 H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51 (1982).
24 See, e.g., Application for Review of Southern California
Broadcasting Co., Memorandum Opinion and Order, 6 FCC Rcd 4387,
4388 (1991) (``Southern California Broadcasting Co.'').
25 See, e.g., Callais Cablevision, Inc., Grand Isle, Louisiana,
Notice of Apparent Liability for Monetary Forfeiture, 16 FCC Rcd
1359, 1362, ¶ 10 (2001) (``Callais Cablevision'') (issuing a
Notice of Apparent Liability for, inter alia, a cable television
operator's repeated signal leakage).
26 Southern California Broadcasting Co., 6 FCC Rcd at 4388, ¶ 5;
Callais Cablevision, Inc., 16 FCC Rcd at 1362, ¶ 9.
27 47 U.S.C. § 503(b); 47 C.F.R. § 1.80(f).
28 See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC
Rcd 7589, 7591, ¶ 4 (2002) (``SBC Forfeiture Order'').
29 47 U.S.C. § 254(d); 47 C.F.R. §§ 54.711(a), 54.706(a).
30 47 U.S.C. § 254(d); 47 C.F.R. §§ 54.711(a), 54.706(a).
31 See 47 C.F.R. §§ 54.711(a).
32 Sixty days prior to the start of each quarter, USAC is
required to provide the Commission with a projection of the high
cost, low income, schools and libraries, and rural health care
funding requirements for the following quarter. See
www.universalservice.org/overview/filings. Based on USAC's
projection of the needs of the USF, and revenue projections from
the registered carriers subject to universal service
requirements, the Commission establishes a specific percentage of
interstate and international end-user revenues that each subject
telecommunications provider must contribute toward the USF. This
percentage is called the contribution factor. The contribution
factor, and, consequently, the amount owed to the USF by each
affected telecommunications company, changes each quarter,
depending on the needs of the USF and carrier-provided revenue
projections. See www.fcc.gov/wcb/universal_service/quarter.
Thus in cases where a carrier, such as BCE Nexxia, fails to file
required Worksheets reporting its revenue projections in a timely
fashion, its revenues are excluded from the contribution base
from which universal assessments are derived, and the economic
burden of contributing falls disproportionately on carriers that
have satisfied their reporting obligations.
33 47 U.S.C. § 254(d).
34 See March 30 Audit Letter. The Commission has repeatedly held
that post-investigation corrective measures are not sufficient to
avoid enforcement action. See AT&T Wireless Services, Inc.,
Forfeiture Order, 17 FCC Rcd 21866, 21870-71 (2002); America's
Tele-Network Corp., Order of Forfeiture, 16 FCC Rcd 22350, 22355,
¶ 15 (2001); Coleman Enters., Inc. d/b/a/ Local Long Distance,
Inc., Order of Forfeiture, 15 FCC Rcd 24385, 24388, ¶ 8 (2000).
35 See BCE Nexxia's response dated July 29, 2005. This
information is confirmed by USAC's records.
36 See electronic mail from Suhail Smith, NECA Services (USAC's
contractor for data collection duties at that time) to Paula M.
Kerr, BCE Nexxia, and the electronic mail response from Paula M.
Kerr to Suhail Smith, both dated November 24, 2004.
37 See BCE Nexxia's quarterly February 1, 2005 Worksheet
(reporting actual revenue for the last quarter of 2004 and
projecting revenue for the second quarter of 2005) and its 2004
and 2005 annual Worksheets (reporting annual revenue for 2003 and
2004, respectively). These filings show that BCE Nexxia's 2004
interstate telecommunications revenue exponentially exceeded that
of 2003 and that revenue reporting by BCE Nexxia on November 1,
2004 would have revealed that it was not de minimis.
Telecommunications providers are required to project good faith
estimates of quarterly revenue. See, e.g., Federal-State Joint
Board on Universal Service, Report and Order and Second Further
Notice of Proposed Rulemaking, 17 FCC Rcd 24952, 24971 (2002).
38 47 U.S.C. § 254; 47 C.F.R. § 54.711.
39 47 U.S.C. § 254(d); 47 C.F.R. § 54.706.
40 47 C.F.R. § 54.706(c).
41 See 47 C.F.R. § 54.706(c).
42 See BCE Nexxia's July 29, 2005 response. This information
also is confirmed by USAC's records.
43 See BCE Nexxia response dated July 29, 2005.
44 47 C.F.R. § 54.708
45 See 47 C.F.R. § 54.706(c).
46 Globcom, 18 FCC Rcd at 19903 ¶ 26.
47 47 U.S.C. § 503(b)(1)(B); see also 47 C.F.R. § 1.80(a)(2).
48 47 U.S.C. § 503(b)(2)(B); see also 47 C.F.R. § 1.80(b)(2).
Effective September 7, 2004, the Commission amended its rules to
increase the maximum penalties to account for inflation since the
last adjustment of the penalty rates. See Amendment of Section
1.90 of the Commission's Rules, Order, 19 FCC Rcd 10945, 10946 ¶
6 (2004).
49 47 U.S.C. § 503(b)(2)(D); see also Commission's Forfeiture
Policy Statement and Amendment of Section 1.80 of the Rules to
Incorporate the Forfeiture Guidelines, Report and Order, 12 FCC
Rcd 17087, 17100, ¶ 27 (1997) (``Forfeiture Policy Statement''),
recon. denied 15 FCC Rcd 303 (1999); 47 C.F.R. § 1.80(b).
50 47 U.S.C. § 503(b)(6)(B); 47 C.F.R. § 1.80(c)(3).
51 See, e.g., Globcom, 18 FCC Rcd at 19903; Roadrunner Transp.,
Inc., Forfeiture Order, 15 FCC Rcd 9669, 9671 (2000); Liab. of E.
Broad. Corp., Memorandum Opinion and Order, 10 F.C.C. 2d 37
(1967).
52 Globcom, 18 FCC Rcd at 19905; Carrera Communications, LP,
Notice of Apparent Liability for Forfeiture and Order, FCC 05-
147, 2005 WL 1750417 (F.C.C.) at ¶ 25 (released July 25, 2005);
InPhonic, Inc., Notice of Apparent Liability for Forfeiture and
Order, FCC 05-145, 2005 WL 1750418 (F.C.C.) at ¶ 27 (released
July 25, 2005); Teletronics, Inc., Notice of Apparent Liability
for Forfeiture and Order, FCC 05-146, 2005 WL 1750420 (F.C.C.) at
¶ 31 (released July 25, 2005).
53 See 47 U.S.C. § 254(d).
54 See Globcom, 18 FCC Rcd at 19903-19904, ¶¶ 25-27. See also
Carrera Communications, Inc., 2005 WL 1750417 (F.C.C.) at ¶ 26;
InPhonic, Inc., 2005 WL 1750418 (F.C.C.) at ¶ 28; Telecom Mgmt.,
Inc., FCC 05-156, 2005 WL ___ (F.C.C.) at ¶ 17 (released Aug.
12, 2005); Teletronics, Inc., 2005 WL 1750420 (F.C.C.) at ¶ 32.
55 The eight months at issue are September 2004 to April 2005.
As discussed above, although it is not clear exactly when BCE
Nexxia accrued 2004 interstate telecommunications revenue in
excess of de minimis amounts, BCE Nexxia's own reporting for 2004
indicates that it should have been contributing at least by
September 2004, if not well before.
56 See, e.g., Globcom, Inc., 18 FCC Rcd at 19904.
57 Forfeiture Policy Statement, 12 FCC Rcd at 17099; see also 47
C.F.R. § 1.80(b)(4).
58 See Business Options, Inc., Consent Decree, 19 FCC Rcd 2916
(2003); NOS Communications, Inc., Affinity Network Incorporated
and NOSVA Limited Partnership, Consent Decree, 2003 WL 22439710
(2003).
59 See 47 C.F.R. § 1.1914.