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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of ) File No. EB-02-IH-0757
)
Globcom, Inc. ) NAL Acct. No. 200332080015
d/b/a Globcom Global Communications )
)
Apparent Liability for Forfeiture ) FRN No. 0006-5620-11
)
)
ORDER OF FORFEITURE
Adopted: April 17, 2006 Released: April 19, 2006
By the Commission:
I. INTRODUCTION
1. In this Order of Forfeiture, we assess a monetary forfeiture of
$715,031 against Globcom, Inc. ("Globcom") for willful and repeated
violations of the Communications Act of 1934, as amended (the "Act"),
and our rules. For the reasons set forth below, we find that Globcom
willfully and repeatedly violated the Act and Commission rules by
failing to contribute to the Universal Service Fund ("USF") and the
Telecommunications Relay Service ("TRS") fund. In addition, we find
that Globcom also willfully and repeatedly violated Commission rules
requiring it to file complete and accurate interstate and
international revenue information.
2. Globcom's violations strike at the core of the Commission's mission to
promote access to affordable, quality telecommunications services for
all Americans. In section 254 of the Act, Congress codified the
Commission's historical commitment to universal service for consumers
in all regions of the nation. In section 225 of the Act, Congress
directed the Commission to ensure the availability of TRS to hearing-
and speech-impaired individuals. Both services are supported by
contributions by telecommunications carriers providing interstate
telecommunications services. The Commission thus requires
telecommunications carriers to register with the Commission, and to
provide certain financial information so that the agency can determine
and collect the necessary amounts to fund the programs. To achieve
Congress' goals, carriers subject to contribution requirements must
provide all necessary information and contribute their equitable share
to each of the funds. Failure to do so threatens the integrity and
viability of the universal service and TRS mandates. The Commission
cannot and will not tolerate any carrier's willful or repeated failure
to participate in these programs as required by our rules, and will
use its forfeiture authority to penalize violations, such as those
committed by Globcom.
II. BACKGROUND
3. The facts and circumstances surrounding this case are set forth in the
Notice of Apparent Liability and Order ("Globcom NAL") previously
issued by the Commission, and need not be reiterated here at length.
Globcom, which does business as Globcom Global Communications, is an
interexchange carrier headquartered in Northbrook, Illinois that
provides resale telecommunications services. As a reseller of
interstate and international long-distance services, Globcom is
subject to the obligations of section 254 of the Act and section
54.706(b) of our rules. The Commission's rules in effect during the
time period in question required all telecommunications carriers that
provided interstate telecommunications services, and certain other
providers of interstate telecommunications, to contribute to the
universal service fund based on their gross billed interstate and
international end-user telecommunications revenues. Section
64.604(c)(5)(iii)(A) of our rules also requires Globcom to contribute
to the TRS fund on the basis of its interstate end-user
telecommunications revenues.
4. The Universal Service Administrative Company ("USAC" or the
"Administrator") administers the universal service support mechanisms
and performs billing and collection functions. The National Exchange
Carrier Association ("NECA") administers the TRS fund. The Commission
requires carriers to provide revenue information on FCC Form 499
("Telecommunications Reporting Worksheet") on a periodic basis, and
the administrators use that information to determine each carrier's
universal service and TRS contributions. In 2001, the Commission
modified its reporting requirements for the universal service program
to require carriers to file not only an Annual Worksheet, but also to
file a Telecommunications Reporting Worksheet each quarter with their
interstate and international revenues from the previous quarter. A
carrier's failure to file the worksheets or its submission of
inaccurate or untruthful information "may subject the contributor to
the enforcement provisions of the Act and any other applicable law."
The revenue information provided on the Quarterly Worksheets
determines each carrier's contribution to the universal service fund
on a quarterly basis, with a yearly true-up using the Annual
Worksheet. The revenue information provided on the Annual Worksheet
also determines a carrier's contributions to the TRS fund.
5. USAC bills carriers each month, including Globcom, based on their
quarterly contribution amount. NECA bills carriers annually. The
Commission's rules do not, however, condition payment on receipt of an
invoice or other notice from USAC or NECA. A carrier that does not
file an Annual or Quarterly Worksheet may fail to receive an invoice
from USAC or NECA, but is nonetheless required to contribute to the
TRS fund regardless and is required to contribute to the universal
service fund, unless its revenues are considered de minimis. The
instructions for the Annual and Quarterly Worksheets include tables
for carriers to calculate annual contributions.
6. After receiving information that Globcom had not paid its universal
service fund contributions and that Globcom may have understated its
revenues on its worksheets, the Enforcement Bureau ("Bureau")
initiated an investigation of these payment and reporting issues. The
Bureau issued a letter of inquiry ("2003 LOI") to Globcom on January
13, 2003. After initially ignoring the inquiry, Globcom provided a
response.
7. The Commission released the Globcom NAL on September 30, 2003. At that
time, the Administrator's invoices showed that Globcom owed
$681,837.76 in universal service-related charges, fees, and
adjustments as of the Administrator's August 15, 2003 invoice. This
amount represented Globcom's unpaid balances for 2001 and 2002, as
well as billings and various fees and adjustments for 2003, up to the
date of the Globcom NAL. The Administrator sent Globcom monthly
invoices reflecting these past due balances and current charges
without receiving any response.
8. According to the NECA's records, Globcom also failed to pay its
November 3, 2002 and July 7, 2003 interstate TRS Fund contributions
and owed $11,928 to the TRS Fund. NECA sent Globcom invoices
reflecting these amounts and received no response from Globcom.
9. The Globcom NAL proposed a forfeiture of $806,861 against Globcom for
apparent willful and repeated failures to pay contributions to the USF
and TRS fund, to file accurate revenue information, and to file
required revenue reporting information. The Commission admonished
Globcom for those apparent violations occurring beyond the statutory
period. The Commission further ordered Globcom to submit a report,
supported by a sworn declaration under penalty of perjury of a
corporate officer, stating its plan to come into compliance with the
relevant payment and reporting rules.
10. Globcom filed its response to the Globcom NAL on November 21, 2003.
Globcom admits that it learned of its obligations to file
telecommunications reporting worksheets and contribute to universal
service and TRS funds in 2002, and that "[f]rankly, Globcom has no
explanation for the discrepancy [in its revenue reporting], other than
to say that the confusion it had surrounding the Worksheet was
significant ..." Furthermore, Globcom concedes it owes at least
$316,907.98 for the period January 2000 - August 2003 in overdue USF
contributions.
11. In its response to the Globcom NAL, Globcom raises several arguments:
First, Globcom asserts that its filings actually overstated its
revenue, rather than understating it, that those inaccuracies were
merely negligent and, therefore, that they should not be the subject
of Commission action. Second, Globcom argues that despite its
inaccurate revenue reporting over several years, the Administrator
should give the company credit under the limited international revenue
exception ("international exception") for the entire period because
its interstate revenues were below a defined percentage of its
combined interstate and international revenues. (The international
exception is discussed in greater detail below.) As such, Globcom
asserts that it actually owed the Administrator less than it
originally reported, which is, in Globcom's view, a mitigating
circumstance. Third, Globcom asserts that, because the Globcom NAL's
forfeiture calculation methodology differed from the exact method used
in earlier similar cases, the proposed forfeiture amount was erroneous
and violates the Administrative Procedures Act. Fourth, Globcom claims
that, in any event, it cannot afford to pay the forfeiture amount.
Finally, as we directed in the Globcom NAL, Globcom filed a
Telecommunications Reporting Worksheet Compliance Plan (the
"Compliance Plan"). In its Compliance Plan, Globcom agrees "on a going
forward basis" to timely and accurately file Telecommunications
Reporting Worksheets and revisions, and to "timely pay all properly
assessed contributions related to federal universal service support
mechanisms, TRS, NANPA, and LNP."
12. After receiving Globcom's revised revenue information in its response
to the Globcom NAL, the Bureau issued a second letter of inquiry
("2004 LOI"), seeking information about the percentage of Globcom's
revenues that were interstate during the period in question. Globcom
responded on January 20, 2004. On March 1, 2004, Globcom filed certain
new and revised revenue reporting information with the Administrator
for calendar years 1997-2002, reflecting its newly asserted argument
that the international exception applies. The Administrator accepted
these filings with respect to calendar years 1997-2000 and 2002, and
amended Globcom's debt calculation by adjusting invoices issued for
April through June 2004 accordingly. The Administrator's acceptance of
these new and revised filings resulted in a net downward adjustment of
$123,922 to Globcom's USF contribution debt. Under the Administrator's
procedures in March 2004, however, the 2002 revised Form 499-A,
covering calendar year 2001, was submitted outside the deadline for
such revisions, which was twelve months from the form's original due
date of April 1, 2002. The Administrator rejected the revised Form
499-A filing on April 15, 2005.
13. On December 9, 2004, the Wireline Competition Bureau ("WCB") released
the Form 499-A Filing Revisions Order. On a prospective basis, that
order created a deadline for the acceptance of revised Form 499-A
filings in instances where the revisions would result in decreased
contributions to the universal service fund and directed USAC to
reject revisions filed more than 12 months after the due date for the
original filing. The order, however, also directed USAC to consider
any Form 499-A revisions filed with USAC prior to the release date of
the order and to accept such revisions if the petitioners (1)
demonstrated good cause for submitting the revision beyond the
one-year revision window and (2) provided complete documentation
showing how the revisions derived from corporate financial records.
Additionally, the order directed USAC to permit filers to supplement
the record supporting their revised filings as necessary until the
effective date of the order. This directive created a 32-day window
from the date of the order's release, December 9, 2004, until the
effective date of the order, January 10, 2005, for Globcom to file
information sufficient to support the revised revenue figures
reflected in its pending revised 2002 Form 499-A filing.
14. On or about December 16, 2004, Bureau staff telephoned Globcom's
counsel and confirmed that Globcom knew of the release of the Form
499-A Filing Revisions Order and the 32-day filing window. Globcom's
counsel indicated, however, that the company did not expect to make
any evidentiary submission to support its pending filing. Globcom did
not submit any filings as of the January 10, 2005 deadline. By letter
dated April 15, 2005, USAC informed Globcom that its revised 2002 Form
499-A was rejected because USAC was unable, due to Globcom's failure
to create an evidentiary record, to substantiate the arguments
contained in the Globcom NAL Response and 2004 LOI Response as they
applied to the period covered by that form.
15. Despite Globcom's admission that it owes at least some portion of the
invoiced amounts to the USF, and despite its Compliance Plan
committing to make such payments to the universal service and TRS
funds, Globcom has paid nothing to either fund since February 2003.
Therefore, notwithstanding USAC's adjustments to Globcom's balance,
due to application of the international exception, as of April 17,
2006, Globcom's unpaid balance on USF contributions has increased
since the date of the Globcom NAL to $1,119,921.90. In addition, since
the Globcom NAL, the company has failed to file a single timely report
and has yet to file its four most recent Form 449-Qs and its most
recent 2004 Form 499-A, despite assurances that it would make all such
filings in a timely and accurate manner. Globcom has offered no
explanation for these failures.
III. DISCUSSION
16. Under section 503(b)(1)(B) of 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. 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. The Commission will
then issue a forfeiture if it finds by a preponderance of the evidence
that the person has violated the Act or a Commission rule.
17. As discussed below, we find by a preponderance of the evidence that
Globcom has willfully and repeatedly violated section 254(d) of the
Act and sections 54.706(a) and 64.604(c)(5)(iii)(A) of the
Commission's rules by failing to contribute to the universal service
and the TRS funds. In addition, we find that Globcom willfully and
repeatedly violated section 54.711(a) of the Commission's rules by
failing to file complete and accurate interstate and international
revenue information. We credit Globcom's argument that there should be
a downward adjustment in the forfeiture amount because USAC has
amended its invoices since the date of the Globcom NAL to reflect a
lower outstanding debt for the relevant period based on additional and
revised revenue filings submitted by Globcom after the Globcom NAL was
released. Therefore, we revise that portion of the forfeiture
calculation to reflect USAC's revised invoicing for the relevant
period and adjust the forfeiture to $715,031.
A. Globcom Willfully and Repeatedly Failed to Make Its Universal Service
Fund and TRS Fund Contributions
18. We find that Globcom willfully and repeatedly violated our rules by
failing to make any USF contribution in each of the twelve months
preceding the issuance of the NAL, and by failing to pay the TRS
invoices dated November 3, 2002 and July 7, 2003. Globcom concedes
that it should have -- but did not -- make universal service fund
contributions. Globcom's only explanation for its failure to do so is
that after it received USAC's invoices, the carrier "made some general
inquiries among its industry contacts regarding the invoices, and
based upon those discussions, was under the impression that as a
provider of international telecommunications services, it had no
obligation to remit payment into the universal service fund." Globcom
concludes that this conduct, which it deems "negligent" rather than
"intentional," does not pose a sufficient "danger to Congress' and the
Commission's objectives" to warrant imposition of a forfeiture.
19. Globcom misconstrues the Commission's forfeiture authority under
section 503(b) of the Act. The standard for the imposition of a
forfeiture is not limited to instances of "intentional" violations of
the Act or our rules. Instead, the Commission may impose a forfeiture
when it finds a regulated entity's conduct is "willful or repeated."
First, the Commission may assess and has assessed forfeitures for
violations that are merely repeated, and not willful. "Repeated" means
that the act was committed or omitted more than once, or lasts more
than one day. In this case, we found -- and Globcom does not dispute
-- that Globcom repeatedly failed to make its universal service and
TRS fund contributions. Therefore, the Commission is well within the
authority granted by section 503(b) in assessing a forfeiture against
Globcom.
20. Second, Globcom's purported misunderstanding of the law does not
protect it from a forfeiture action for willful conduct that does, in
fact, violate a law or rule. The Act defines willful as "the conscious
and deliberate commission or omission of [any] act, irrespective of
any intent to violate" the law. 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 Act, and the Commission has so
interpreted the term in the section 503(b) context. Thus, Globcom's
position that it misunderstood the law and our rules is irrelevant.
Its violation was willful under the definition in the Act because it
made an intentional decision not to pay into the fund.
21. Third, although the "reasonableness" of Globcom's belief in its
compliance is similarly irrelevant, we note that Globcom's reliance on
an informal survey of unnamed "industry contacts" on a topic as
important as its universal service contribution obligations is wholly
unpersuasive. Our rules are clear, and the instructions to the Annual
Worksheet explicitly state that "[s]ections 54.706, 54.711, and 54.713
require all telecommunications carriers providing interstate
telecommunications services ... to contribute to universal service and
file this Worksheet once a year and the Telecommunications Reporting
Worksheet (FCC Form 499-Q) four times a year." The instructions
further state that "[s]ection 64.604 requires that every common
carrier providing interstate telecommunications services contribute to
the Telecommunications Relay Services (TRS) Fund on the basis of its
relative share of interstate end-user telecommunications services,
with the calculation based on information provided in this Worksheet."
The instructions also explain how to calculate the limited
international revenues exception. Accordingly, the proposed forfeiture
satisfies section 503(b).
B. Globcom Willfully and Repeatedly Failed to File Accurate Revenue
Information
22. We conclude that the record also supports our finding in the Globcom
NAL that Globcom willfully and repeatedly filed inaccurate Annual
Worksheets in violation of our rules, including one on October 10,
2002. In the Globcom NAL, the Commission found that Globcom violated
our rules by filing inaccurate revenue information and underreporting
its revenues for the years 2000 and 2001. The Commission found that
Globcom had used different revenue amounts in its Annual Worksheet,
its responses to the 2003 LOI, and in its federal income tax returns.
The Commission therefore admonished Globcom for its 2000 filing and
assessed a forfeiture for the 2001 filing.
23. Globcom admits that it filed inaccurate information for 2000 and 2001,
and appears to concede that its actions constituted a "reporting
violation." Globcom does not proffer any explanation for the
inaccuracies. Instead, Globcom takes the position that we should
excuse its inaccurate filings because they were inadvertent.
Specifically, "Globcom failed to disaggregate its revenue into
separate intrastate, interstate, and international components, and
instead, reported its total revenues as one lump sum." In doing so,
Globcom allegedly overstated the revenue subject to universal service
and TRS obligations to its own detriment. Globcom points to this
alleged revenue overstatement as evidence that it acted merely
"negligently," rather than intentionally.
24. Regarding the admonishment for Globcom's failure to provide accurate
information for 2000, the question of whether the violation was
willful is irrelevant to whether a violation has taken place. An
admonishment is simply a finding that a violation has occurred.
Globcom does not dispute that it violated our rules by providing
inaccurate information for 2000. Therefore, the admonition we imposed
for that filing is well-founded. We need not address whether the
behavior was willful or repeated and could have served as the basis of
a forfeiture.
25. Regarding the year 2001 revenue information, we proposed a forfeiture
for Globcom's apparent willful and repeated violation of our rules.
Pointing to its alleged overstatement of international and interstate
revenues, Globcom again alleges that its violation was merely
negligent, and not "willful." As noted above, however, for purposes of
determining whether a forfeiture should lie for Globcom's admitted
provision of inaccurate revenue information, it is irrelevant whether
Globcom knew it was violating our rules when it submitted the
information. Globcom's conduct here was undeniably repeated and the
Act is clear that the Commission may impose a forfeiture for repeated
violations. In addition, the conduct here was willful despite any
purported misunderstanding of the law or rules because Globcom knew it
was submitting the information and the information did not comply with
our rules.
C. Globcom Willfully and Repeatedly Failed to File Annual and Quarterly
Worksheets
26. We conclude that the record supports the finding in the Globcom NAL
that Globcom willfully and repeatedly violated our rules by failing to
file the required Annual and Quarterly Worksheets when due, in
violation of our rules. Pursuant to section 54.711 of the Commission's
rules, carriers must file complete and accurate Telecommunications
Reporting Worksheets on a quarterly and annual basis. Among other
information, the worksheets require carriers to list separately their
interstate and international revenues, which in turn provide the basis
for the carriers' universal service fund and TRS fund contributions.
27. In the Globcom NAL, we concluded that Globcom had filed only two
Annual Worksheets and two Quarterly Worksheets in the previous two
years. We found that Globcom had apparently willfully and repeatedly
violated our requirements regarding filings due in the previous twelve
months, and admonished Globcom for its missed filings for earlier
periods.
28. Globcom does not dispute these findings or otherwise address this
issue in its NAL response. We therefore affirm our initial holding. As
described in the Globcom NAL, the company failed to file required
documents a total of nine times. Indeed, Globcom did not file any
additional Annual or Quarterly Worksheets until after release of the
Globcom NAL on September 30, 2003.
D. Forfeiture Amount
29. We affirm the forfeiture calculation methodology set forth in the
Globcom NAL but adjust the forfeiture amount downward in consideration
of the revenue reported in Globcom's revised 2003 Form 499-A. We
reject, however, Globcom's suggestions that we adjust the forfeiture
downward further or that it is unable to pay a forfeiture of the
original amount.
30. At the time the Globcom NAL was released, section 503(b)(1) of the Act
authorized the Commission to assess a forfeiture of up to $120,000 for
each violation or each day of a continuing violation, up to a
statutory maximum of $1,200,000 for a single act or failure to act. In
exercising such authority, we have the discretion to adjust the
forfeiture amount based on the particular facts and circumstances of
the violations.
31. In the Globcom NAL, we proposed a forfeiture of $806,861 for Globcom's
apparent willful and repeated violations of section 254(d) of the Act
and sections 54.706(a), 54.711(a), and 64.604 of the Commission's
rules. We reached this amount as follows:
* for Globcom's apparent failure to pay universal service contributions,
we applied a base forfeiture amount of $20,000 for 12 months of
nonpayment and added one-half of the total unpaid universal service
contributions ($340,918) to the base forfeiture of $240,000, for a
proposed forfeiture of $580,918;
* for Globcom's apparent failure to pay TRS fund contributions, we
applied a base forfeiture amount of $10,000 for each of the two
violations and added one-half of the total unpaid balance ($5,943),
for a proposed forfeiture of $25,943;
* for Globcom's apparent filing of an inaccurate Annual Worksheet, we
applied a forfeiture of $50,000; and
* for Globcom's apparent failure to submit Quarterly and Annual
Worksheets, we applied a forfeiture of $50,000 for three occasions
when Globcom failed to file the revenue information, for a total
forfeiture of $150,000.
1. The Globcom NAL's Forfeiture Calculation Methodology Is Appropriate
32. Globcom presents two challenges to the forfeiture amount proposed in
the NAL: that the proposed forfeiture amount was erroneously
calculated, and that the upward adjustment in our methodology for
failure to pay into the universal service fun is arbitrary,
capricious, and excessive and therefore violates the Administrative
Procedures Act (the "APA") because it is higher than forfeitures
assessed in previous cases.
33. With respect to the first challenge, the Commission did not err in
calculating the forfeiture. As Globcom notes, in previous universal
service nonpayment cases, we based the proposed forfeiture amount on
$20,000 for each of two months of nonpayment ($40,000) plus one-half
the unpaid universal service contribution for two months. In the
Globcom NAL, however, we stated:
The proposed forfeiture against Globcom for nonpayment of its universal
service contributions consists of two components. First, applying the base
forfeiture amount of $20,000 per violation for the previous twelve months
of non-payment results in a base figure of $240,000. Second, we add an
amount equal to approximately one-half of the unpaid universal service
contributions.
Thus, we proposed a forfeiture in Globcom's case based on Globcom's entire
outstanding balance, rather than two months. As we explained in the
Globcom NAL, and reiterate below, we fully intended to base Globcom's
forfeiture on violations over a longer period of time than we had in the
past, and the fact that we referenced earlier cases in which we took a
similar approach, albeit on a smaller scale, is therefore not evidence of
any error.
34. With respect to Globcom's second challenge, we find that the
forfeiture calculation does not violate the APA. The APA does not
mandate that the Commission mechanically and rigidly apply an
identical methodology in all universal service nonpayment cases, or
that the result of earlier enforcement adjudications automatically
dictates the outcome of all others that follow as Globcom suggests.
Rather, section 503(b)(2)(D) of the Act instructs the Commission, in
establishing a forfeiture, to consider "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." The
Commission properly considered all of these factors in the Globcom
NAL. The Commission noted that Globcom deliberately chose not to pay
its universal service contributions each month for revenues derived
from January 1, 2001 to the release of the Globcom NAL. The Commission
also noted that despite Globcom's clear obligations under our
universal service rules, and despite numerous monthly communications
from USAC informing the carrier of its increasing debt, Globcom did
nothing to address this matter. As such, the Commission considered the
relevant factors and its actions are not arbitrary, capricious or
excessive but appropriately tailored to the case at hand.
35. Furthermore, regarding Globcom's APA argument, we are well within our
statutory authority to impose a forfeiture against Globcom using the
methodology described in the Globcom NAL. As noted above, at the time
the Globcom NAL was released, the Act authorized us to assess common
carriers a forfeiture of up to $120,000 for each violation, or each
day of a continuing violation, up to a statutory maximum of $1,200,000
for a single act or failure to act. Pursuant to section 503(b) of the
Act, weighing the factors set forth in the statute, the Commission may
determine the appropriate forfeiture within the range permitted by the
statute. Thus, in the case of Globcom, the carrier had full notice
under the APA that the maximum potential forfeiture for each violation
could be as high as $1,200,000.
36. Additionally, the Commission noted that in the past it had imposed
increasingly larger forfeitures for USF violations because of the
gravity of violations in this area and the accumulating record of
non-compliance. In the first case of failure to contribute to the USF,
ConQuest, the forfeiture assessed was relatively minor, but the
Commission warned of future increases in our forfeiture methodology.
The Commission assessed a forfeiture for a single month of nonpayment,
even though the carrier had been delinquent for more than eight
months. In that case, the Commission stated that "in light of the
accumulating record of non-compliance, we are prepared to impose
substantially greater forfeitures in the future," and "our future
notices likely will cover greater periods of non-payment than a single
month." After the ConQuest decision, we increased the basis for our
forfeiture calculation method to two months of nonpayment and warned
that we were prepared to take even stronger action against delinquent
carriers, including substantially higher forfeitures and revocation of
carriers' operating authority.
37. As we explained in the Globcom NAL, since the ConQuest decision it has
become apparent that substantially larger forfeiture amounts are
needed to deter carriers from violating our universal service
contribution and reporting rules. The Commission specifically held
that with Globcom's violations the time had come to implement a
substantially greater forfeiture amount in order to deter carriers
from violating our universal service contribution and reporting rules.
Clearly, our prior method of assessing forfeitures did not deter
Globcom, which has yet to pay even the money it admits to owing.
Carrier nonpayment of universal service contributions and failure to
file the required forms undermine 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. Universal service nonpayment threatens a
key goal of Congress and one of the Commission's primary
responsibilities; therefore, we properly increased the number of
months of nonpayment on which we assess forfeiture amounts and the
discretionary upward adjustment.
38. For these reasons, we affirm the forfeiture calculation methodology
for nonpayment of universal service contributions and reporting
violations as set forth in the Globcom NAL. We again warn carriers
that if the forfeiture methodology described herein is not adequate to
deter violations of our USF and TRS rules, our statutory authority
permits the imposition of much larger penalties and we will not
hesitate to impose them.
2. The Forfeiture Amount is Adjusted Downward to Reflect An Amendment to
the Amount Due to the Administrator for the Relevant Period
39. Globcom contends that under the international exception, its universal
service fund obligations are lower than the amount calculated by USAC
at the time the Globcom NAL was released, and therefore the forfeiture
amount should be reduced. Under section 54.706(c) of the Commission's
rules, a provider of interstate and international telecommunications
is not required to contribute based on its international
telecommunications end-user revenues if its interstate
telecommunications end-user revenues constitute less than a defined
percent of its combined interstate and international end-user
telecommunications revenues. The purpose of this limited exception is
to ensure that an entity's universal service contribution does not
exceed the amount of its interstate end-user telecommunications
revenues. Beginning in the second quarter of 2002, the international
exception was increased from eight to twelve percent.
40. Globcom contends that it erroneously included intrastate revenues with
interstate revenues, and, when properly calculated, its interstate
revenues for years 2000 through 2003 fall below the applicable
thresholds for this exception. For calendar year 2002, Globcom
originally filed a 2003 Form 499-A listing interstate revenues greater
than twelve percent of the sum of its interstate and international
revenues combined. As a result of this filing, Globcom was ineligible
for the international exception. Subsequently, on March 1, 2004, after
release of the Globcom NAL, Globcom filed a timely revised 2003 Form
499-A that indicated Globcom's interstate revenues were less than
twelve percent of its overall revenues. The Administrator downwardly
adjusted Globcom's outstanding balance owed to the Administrator by
$183,661 based on the revised 2002 revenue amounts. After adjusting
for the accepted revised 2003 Form 499-A, Globcom's outstanding
universal service fund balance, for our purpose of ascertaining a
forfeiture amount, should have been $498,176 as of August 15, 2003,
the last relevant date for purposes of the Globcom NAL.
41. As noted above, the forfeiture for Globcom's nonpayment of universal
service contributions includes an upward adjustment based on one-half
of the carrier's universal service debt. We applied this adjustment as
an exercise of our discretion under section 503(b) of the Act based on
the nature, circumstances, extent and gravity of the violations.
Globcom deliberately chose not to pay its universal service
contributions each month for more than one and a half years, and this
choice was made in the context of numerous notices to Globcom of its
obligations. As the Commission explicitly held in the Globcom NAL,
because of the gravity of violations in this area and the accumulating
record of non-compliance, the time has come to implement substantially
greater forfeiture amounts to deter future non-compliance. The exact
dollar amount of the adjustment is not dictated by a specific
mathematical calculation. Instead, we find that approximately one-half
of the amount of overdue debt is an appropriate adjustment because it
"illustrates that a delinquent carrier's culpability and the
consequential damage it causes to the goal of universal service may
vary with the size of the contributions it fails to make."
42. Based on the information available at the time of the Globcom NAL, we
held that Globcom's universal service balance for the period at issue
was $681,837, one half of which was $340,918. Based on USAC's
amendments to the amount of Globcom's unpaid USF contributions, we
reduce the forfeiture amount to reflect Globcom's revised universal
service balance as of August 15, 2003, ($498,176), one-half of which
is $249,088.
43. We reject Globcom's argument that the forfeiture should be further
adjusted because the carrier allegedly is eligible for the
international exception for other periods. Such eligibility in a
particular year is based upon the revenue information supplied in the
relevant Form 499-A. With regard to Globcom's obligations to USF in
calendar year 2001, Globcom's original 2002 Form 499-A set forth
interstate revenues that were greater than twelve percent of its
combined interstate and international revenues. Thus, Globcom was
ineligible for the international exception for 2001 revenue. Globcom's
argument that the figures in its original 2002 Form 499-A were
inaccurate and that accurate revenue figures would make Globcom
eligible for the international exception is undercut by Globcom's
repeated failure to abide by our rules and timely file a revision to
its 2002 Form 499-A or to submit evidence to USAC supporting its
untimely revised filing.
44. Globcom missed at least three opportunities to have its 2001 universal
service contribution revised. First, under the Administrator's
practices at the time, Globcom had until December 1, 2002 to file a
revised 2002 Form 499-A. Globcom failed to do so. Second, after
December 1, 2002, Globcom could have submitted a revised filing with
an explanation of the cause for the change, and complete documentation
showing how the revised figures derive from corporate financial
records. Globcom submitted a revised 2002 Form 499-A on March 1, 2004,
23 months after the due date for the original 2002 Form 499-A, but did
not include any documentation to explain how it derived the revised
figures. Finally, after release of the Form 499-A Filing Revisions
Order, Globcom had yet another opportunity to cure the inadequacies in
its revised 2002 Form 499-A. In addition to the public release of this
item, as a courtesy, Bureau staff telephoned Globcom's counsel to
insure that Globcom was aware of this newly opened filing window. To
have its revised 2002 Form 499-A accepted and evaluated with regard to
the international exception, Globcom had only to submit evidence
demonstrating good cause for missing the filing window and
documentation showing how the figures from the revised 2002 Form 499-A
were derived from its corporate financial records. Globcom, however,
did not submit any evidence to support its revised filings and the
revision was rejected. Thus, USAC has concluded that no other
adjustments in Globcom's USF payments for other periods are
appropriate. Based on all the facts and circumstances in this case,
including Globcom's failure to support its claimed adjustments and the
egregious nature of Globcom's conduct with regard to its USF
contributions overall, we conclude that no further adjustment to the
forfeiture is warranted.
45. As noted above, however, Globcom has filed a revised 2003 Form 499-A
that was accepted by USAC, causing a downward adjustment of its USF
debt. This circumstance warrants a downward adjustment of the portion
of the forfeiture penalty that was calculated based on that unpaid
balance. Therefore, the forfeiture amount is reduced to $715,031,
which is calculated as follows:
* for failing to pay universal service contributions, we apply a base
forfeiture amount of $20,000 for 12 months of nonpayment and add
one-half of the (recalculated) unpaid universal service contributions
due as of August 15, 2003, ($249,088) to the base forfeiture of
$240,000 for a forfeiture of $489,088;
* for failing to pay TRS fund contributions, we apply a base forfeiture
amount of $10,000 for each of the two violations and add one-half of
the unpaid balance ($5,943), for a forfeiture of $25,943;
* for filing an inaccurate Annual Worksheet, we apply a forfeiture of
$50,000; and
* for failing to submit Quarterly and Annual Worksheets, we apply a
forfeiture of $50,000 for three occasions when Globcom failed to file
the revenue information, for a forfeiture of $150,000.
3. Globcom Has Not Demonstrated It Is Unable to Pay the Forfeiture Amount
46. Finally, Globcom has not demonstrated an inability to pay the
forfeiture. Globcom contends that it is unable to pay the proposed
forfeiture amount, as demonstrated by its federal income tax returns,
and that such a forfeiture could result in Globcom's insolvency.
Globcom explains that the resold international telecommunications
services business is an extremely low margin business, and that "it is
not uncommon for payments to underlying carriers to account for more
than 80 percent of a resale international carrier's total revenues."
47. We reject Globcom's argument. Although ability to pay a forfeiture is
a statutory factor that we may consider in setting a forfeiture
amount, the Commission has repeatedly held that a carrier's gross
revenues are the best indicator of its ability to pay a forfeiture.
The financial information supplied by Globcom in support of its claim,
including its 2000, 2001 and 2002 tax returns, shows that Globcom's
gross revenues are far in excess of the forfeiture amount and that the
forfeiture amount represents a smaller percentage of gross revenues
than that issued in LLDI and Hoosier, and only slightly higher than
PJB. Globcom has not produced any evidence, through affidavits or
otherwise, that it will not be able to pay the total forfeiture.
IV. CONCLUSION
48. Globcom withheld payments to Congressionally-mandated
telecommunications programs, thereby starving these programs of
essential funding for an extended period of time and totaling hundreds
of thousands of dollars in withheld contributions. In light of the
seriousness, duration and scope of the apparent violations, and to
ensure that a company with substantial revenues such as Globcom does
not consider the forfeiture merely "an affordable cost of doing
business," we find that the forfeiture proposed in the Globcom NAL,
and revised as set forth above to $715,031, is warranted. As discussed
above, this forfeiture amount includes: (1) a total penalty of
$489,088 for failing to make any of its monthly universal service
contributions for a period of twelve months; (2) a total penalty of
$25,943 for failing to make its 2002 and 2003 TRS program contribution
when due; (3) a total penalty of $50,000 for filing an inaccurate
annual worksheet; and (4) a total penalty of $150,000 for failing to
submit quarterly and annual worksheets.
V. ORDERING CLAUSES
49. Accordingly, IT IS ORDERED THAT, pursuant to section 503(b) of the
Communications Act of 1934, as amended, 47 U.S.C. S 503(b), and
section 1.80 of the Commission's rules, 47 C.F.R. S 1.80, that
Globcom, Inc. SHALL FORFEIT to the United States government the sum of
$715,031 for willfully and repeatedly violating the Act and the
Commission's rules.
50. Payment of the forfeiture shall be made in the manner provided for in
section 1.80 of the Commission's 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. 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. Requests for full payment under an installment plan
should be sent to: Associate Managing Director - Financial Operations,
445 12th St, SW, Room 1A625, Washington, DC 20554.
51. IT IS FURTHER ORDERED that copies of this ORDER OF FORFEITURE shall be
sent by certified mail, return receipt requested, to Glenn Kofman,
Globcom, Inc., 2100 Sanders Rd., Suite 150, Northbrook, IL 60047, and
Kemal Hawa, Chadbourne and Parke, LLP, 1200 New Hampshire Avenue, NW,
Washington, DC, 20036.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
47 U.S.C. S 254.
47 C.F.R. SS 54.706(a), 64.604(c)(5)(iii)(A).
47 C.F.R. S 54.711(a).
"Universal service" refers to policies and programs designed to promote
the access of all members of the public to telecommunications. Pursuant to
section 254 of the Act, all providers of telecommunications services must
contribute to a fund that supports this goal, and the Commission is
charged with establishing policies for the advancement and preservation of
universal service, according to Congressionally-defined principles. 47
U.S.C. S 254.
47 U.S.C. S 225.
See Globcom, Inc. d/b/a Globcom Global Communications, Notice of Apparent
Liability for Forfeiture and Order, 18 FCC Rcd 19893 (2003).
At the time of the release of the Globcom NAL, Globcom's website stated
that it provided a number of services, including residential and business
long-distance service, local service, calling cards, and toll-free
numbers. See http://www.globcom.com/index.aspx. The website also had
Globcom's rates for international and interstate toll calls. Subsequently,
Globcom filed a petition in which Globcom stated that it no longer
provides telecom services because its sole underlying carrier, MCI,
suspended service to Globcom. See Petition for Waiver of Section 63.71 and
Section 63.19 of the Commission's Rules, dated November 1, 2005.
The Commission's rules specifically include resellers of interstate
services in the definition of providers of interstate telecommunications
services that must contribute to the fund. 47 C.F.R. S 54.706(a)(16).
47 C.F.R. SS 54.706, 54.709.
Id. S 64.604(c)(5)(iii)(A).
See Changes to the Board of Directors of the National Exchange Carrier
Association, Inc., Report and Order and Second Order on Reconsideration,
12 FCC Rcd 18400, 18415, P 25 (1997) ("NECA Changes Order"); 47 C.F.R.
S\00154.702(b).
47 C.F.R. S 54.711.
See FCC Form 499-A Telecommunications Reporting Worksheet - Annual
Filing, http://www.fcc.gov/Forms/Form499-A/499a-2003.pdf (April 2003)
("Annual Worksheet").
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) ("Quarterly Reporting Order").
The first Quarterly Worksheet, reporting revenue data from the first
quarter of 2001 (January 1 through March 31, 2001) was due May 11, 2001;
thereafter, carriers report their revenues for the prior quarter by the
beginning of the second month in each quarter (i.e., February 1, May 1,
August 1, and November 1). See Quarterly Reporting Order, 16 FCC Rcd at
5755, P 19 & n.32. See FCC Form 499-Q Telecommunications Reporting
Worksheet - Quarterly Filing for Universal Service Contributors,
http://www.fcc.gov/Forms/Form499-Q/499q.pdf (April 2003) ("Quarterly
Worksheet").
47 C.F.R. S 54.713. See also NECA Changes Order, 12 FCC Rcd at 18442, P 80
& n.165 (citing 47 U.S.C. SS 206-209, 312, 403, 503).
See 47 C.F.R. S 54.709(a); "Telecommunications Carrier Registration
Information Now Available Online," Public Notice, DA 01-2465 (rel. Oct.
29, 2001) ("File Online Public Notice"). The Commission modified its rules
on carrier contributions to the universal service fund. See Federal-State
Joint Board on Universal Service, 1998 Biennial Regulatory Review -
Streamlined Contributor Reporting Requirements Associated with
Administration of Telecommunications Relay Services, North American
Numbering Plan, Local Number Portability, and Universal Service Support
Mechanisms, Telecommunications Services for Individuals with Hearing and
Speech Disabilities, and the Americans with Disabilities Act of 1990,
Administration of the North American Numbering Plan and North American
Numbering Plan Cost Recovery Contribution Factor and Fund Size, Number
Resource Optimization, Telephone Number Portability, Truth-in-Billing and
Billing Format, Report and Order and Second Further Notice of Proposed
Rulemaking, 17 FCC Rcd 24952 (2002) ("Interim Contribution Order"). As of
April 1, 2003, USAC bases a carrier's universal service obligation on the
carrier's projected collected revenue rather than its historic
gross-billed revenue. Interim Contribution Order, 17 FCC Rcd at 24969-74,
PP 29-39.
See, e.g., Federal-State Joint Board on Universal Service, Sixteenth Order
on Reconsideration in CC Docket No. 96-45, Eighth Report and Order in CC
Docket No. 96-45, and Sixth Report and Order in CC Docket No. 96-262, 15
FCC Rcd 1679, 1687, P 18 (1999); Federal-State Board on Universal Service,
Further Notice of Proposed Rulemaking and Order, 15 FCC Rcd 19947, 19954,
P 17 (2000); Interim Contribution Order, 17 FCC Rcd at 24971-72, P 35;
Changes to the Board of Directors of the National Exchange Carrier
Association, Inc., Federal-State Board on Universal Service, Second Order
on Reconsideration in CC Docket No. 97-21, 12 FCC Rcd 22423, 22425, P 3
(1997). Carriers must pay by the date shown on the invoice from the
Administrator. 47 C.F.R. S 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 (Wireline Comp. Bur. 2003) ("Contribution payments are due
on the date shown on the administrator invoice.")
See 47 C.F.R. SS 54.706(b); 64.604 (c)(5)(iii)(A).
See "2002 FCC Form 499-A, Telecommunications Reporting Worksheet" at
Instructions--page 1 "Instructions for Completing the Worksheet for Filing
Contributions to Telecommunications Relay Service, Universal Service,
Number Administration, and Local Number Portability Support Mechanisms,"
http://www.fcc.gov/Forms/Form499-A/499a-2002.pdf ("2002 Telecommunications
Reporting Worksheet Instructions").
See Letter from Maureen Del Duca, Acting Division Chief, Investigations
and Hearings Division, Enforcement Bureau, FCC, to Glenn Kofman, Globcom,
Inc., dated January 13, 2003.
Globcom provided responses to the 2003 LOI on March 14, 2003 and April 16,
2003 (collectively, "Globcom 2003 LOI Response"). See also Globcom NAL, 18
FCC Rcd at 19898, n. 36.
Globcom NAL, 18 FCC Rcd at 19897, P 9, n. 32.
NECA, the TRS administrator, bills contributors following the revenue data
collection. See 1998 Biennial Regulatory Review - Streamlined Contributor
Reporting Requirements Associated with Administration of
Telecommunications Relay Services, North American Numbering Plan, Local
Number Portability, and Universal Service Support Mechanisms, Report and
Order, 14 FCC Rcd 16602, 16612-13, P 18 (1999) (Consolidated Reporting
Order). All carriers providing interstate telecommunications services
(including, but not limited to, cellular telephone and paging, mobile
radio, operator services, personal communications service, access,
alternative access and special access, packet-switched, WATS, 800, 900,
message telephone, private line, telex, telegraph, video, satellite,
international, intraLATA, and resale services) must contribute to the TRS
Fund on the basis of their interstate end-user telecommunications
revenues. See Consolidated Reporting Order, 14 FCC Rcd at 16630-34, PP
59-67; 47 C.F.R. S 64.604(c)(5)(iii).
Globcom NAL, 18 FCC Rcd at 19898, P 10, n. 34.
Id., at 19901-02, 19906 PP 20, 35 (finding that Globcom repeatedly
understated its revenues on both its 2001 and 2002 Annual Worksheets,
potentially by more than $2 million for 2000, and by more than $16 million
in 2001, in apparent violation of section 54.711 of the Commission's
rules).
Id., at 19901, 19906, PP 21, 35, 37 (finding that with the exception of
the Annual Worksheets for 2001 and 2002, and two Quarterly Worksheets,
there was no record of any other revenue filings by Globcom in apparent
violation of section 54.711 of the Commission's rules).
Id., at 19906, P 35.
Letter from Kemal Hawa, Chadbourne & Parke, LLP, to Maureen F. Del Duca,
Chief, Investigations and Hearings Division, Enforcement Bureau, FCC,
dated Nov. 21, 2003, at 3 ("Globcom NAL Response").
Globcom NAL Response at 3-4, 10.
Globcom NAL Response at 8.
Globcom NAL Response at 5-10.
See P 37, infra.
Globcom NAL Response at 7.
Globcom NAL Response at 10-18.
Globcom NAL Response, Attachment B (supported by a sworn declaration of
Joe Vitale, Chief Operating Officer, Globcom, Inc.).
See Letter from William H. Davenport, Deputy Chief, Investigations and
Hearings Division, Enforcement Bureau, FCC to Kemal Hawa, Chadbourne &
Parke LLP, dated January 7, 2004.
See Letter from Kemal Hawa, Chadbourne & Parke, LLP, to William Davenport,
Deputy Chief, Investigations and Hearings Division, dated January 20, 2004
("Globcom 2004 LOI Response").
For calendar years 1997-98, Globcom filed Form 457, which was the
pre-cursor to current Form 499-A. USAC accepted those filings as original
filings. Those filings were not the subject of the Globcom NAL and
constituted de minimis adjustments to Globcom's contribution obligations.
Consequently, they are not material to this order.
Under USAC's rules, it may accept original filings or revisions that
result in an upward adjustment in contributions. Pursuant to the
Administrator's rules, with regard to Globcom's March 1, 2004 filings,
USAC accepted a 2000 Form 499-A and a 2001 Form 499-A because each of
these filings constituted upward revisions to Globcom's outstanding USF
balance. USAC also accepted a revised Form 499-A for 2003 as a timely
revision to Globcom's original Form 499-A because it was submitted within
twelve months of the April 1, 2003 due date. See Universal Service
Administrative Company, Board of Directors Meeting, July 27, 1999 Minutes.
http://www.universalservice.org/board/minutes/board/072799.asp.
The filings for calendar years 1999 (2000 Form 499-A) and 2000 (2001 Form
499-A) represent upward adjustments of $25,848 and 33,841, respectively.
The revised filing for calendar year 2002 (2003 Form 499-A) represents a
downward adjustment of $183,661 based on application of the international
exception.
Letter from USAC to Joe Vitale, Globcom, Inc., dated April 15, 2005 ("USAC
Revision Letter").
See Federal-State Joint Board on Universal Service, 1998 Biennial
Regulatory Review - Streamlined Contributor Reporting Requirements
Associated with Administration of Telecommunications Relay Service, North
American Numbering Plan, Local Number Portability, and Universal Service
Support Mechanisms, Changes to the Board of Directors of the National
Exchange Carrier Associations, Inc., Order, 20 FCC Rcd 1012 (Wireline
Comp. Bur. 2004).
Id.
Id. at 1017-18.
Id. at 1018.
Bureau staff submitted to USAC a copy of the Globcom NAL Response and the
2004 LOI Response for USAC's consideration in conjunction with the pending
revised filing. Those materials, however, included no information on how
Globcom derived the revenue reflected in the pending revision from
corporate financial records for the 2002 period.
USAC Revision Letter at 2-3.
Acceptance of the revised 2002 Form 499-A would have added an additional
downward adjustment to Globcom's account for the relevant period of
$274,318. By its inaction, however, Globcom failed to create an
evidentiary record sufficient to support such an adjustment.
Globcom NAL Response at 8. Globcom does not address its TRS obligations.
This includes Globcom's outstanding accounts payable to USAC and monies
owed by Globcom that were transferred pursuant to the Debt Collection
Improvement Act from USAC's books to the Commission for collection.
Globcom NAL Response, Attachment B ("Compliance Plan").
47 U.S.C. S 503(b)(1)(B); 47 C.F.R. S 1.80(a)(1).
47 U.S.C. S 503(b); 47 C.F.R. S 1.80(f).
See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589,
7591, P 4 (2002) ("SBC Forfeiture Order") (forfeiture paid).
47 U.S.C. S 254.
47 C.F.R. SS 54.706(a), 64.604(c)(5)(iii)(A).
47 C.F.R. S 54.711(a).
Globcom NAL, 18 FCC Rcd at 19901, 19903, 19904, PP 16, 24, 27.
Globcom NAL, 18 FCC Rcd at 19901, 19904, PP 18, 28, 29.
Globcom NAL Response at 8-9 (conceding that Globcom owes money to the
universal service fund). Globcom wholly ignores the Globcom NAL's findings
regarding its liability for TRS fund contributions.
Globcom NAL Response at 5.
Globcom NAL Response at 6.
47 U.S.C. S 503(b)(1)(B); 47 C.F.R. S 1.80(a)(1).
See, e.g., Callais Cablevision, 16 FCC Rcd 1359 (issuing a Notice of
Apparent Liability for, inter alia, a cable television operator's repeated
signal leakage).
Southern California Broadcasting, 6 FCC Rcd at 4388, P 5; Callais
Cablevision, 16 FCC Rcd at 1362, P 9.
Globcom NAL, 18 FCC Rcd at 19900, 19901-02, PP 16, 18, 20, 21.
47 U.S.C. S 312(f)(1).
H.R. Rep. No. 97-765, 97^th Cong. 2d Sess. 51 (1982).
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.").
See, e.g., Eure Family Limited Partnership, Memorandum Opinion and Order,
17 FCC Rcd 21861 (2002) (rejecting licensee's argument that tower lighting
violation was not "willful" when licensee had no knowledge that antenna
light had gone out; "It is irrelevant whether Eure knew about the light
outage on its tower....").
We do not mean to suggest that a violation must be as deliberate as
Globcom's to be "willful" under section 503(b).
Globcom Response at 5.
See 47 C.F.R. SS 54.706, 54.711, and 54.713.
See Telecommunications Reporting Worksheet Instructions at 1,
http://www.fcc.gov/Forms/Form499-A/499a.pdf (emphasis added).
Id. (emphasis added).
Id. at 26.
See Globcom NAL, 18 FCC Rcd at 19901-02, 19905, PP 20, 31.
See 47 C.F.R. S 54.711(a). Section 54.711(a) provides, in part:
An officer of the contributor must certify to the truth and accuracy of
the Telecommunications Reporting Worksheet, and the Commission or the
Administrator may verify any information contained in the
Telecommunications Reporting Worksheet at the discretion of the
Commission. Inaccurate or untruthful information contained in the
Telecommunications Reporting Worksheet may lead to prosecution under the
criminal provisions of Title 18 of the United States Code. The
Administrator shall advise the Commission of any enforcement issues that
arise and provide any suggested response.
47 C.F.R. S 54.711(a). See also 47 C.F.R. S 54.713 (permitting the
Administrator to assess charges to contributors for "reasonable costs
incurred because of that contributor's filing of an untruthful or
inaccurate Telecommunications Reporting Worksheet....").
Globcom NAL, 18 FCC Rcd at 19901-2 PP 19-20.
See Globcom NAL Response at 10 ("[G]iven that Globcom's revenue reporting
error worked to its own detriment, the reporting violation is harmless.").
Globcom NAL Response at 4.
Globcom NAL Response at 5-6.
See Request for Extension of Time to Construct Digital Facilities for
Station KXXV-DT, Waco, Texas, Memorandum Opinion and Order, 19 FCC Rcd
15262, 15264, P 7 (2004) ("Station KXXV-DT MO&O") ("Admonishment is a
routine sanction for violation of the Commission's rules...."). As
explained in the Globcom NAL, we imposed an admonishment rather than a
proposed forfeiture regarding the 2000 revenue information because the
statute of limitations for a forfeiture action had already elapsed.
Globcom NAL, 18 FCC Rcd at 19902, P\00120 n.63.
See supra at P 19
Carriers must submit their quarterly Worksheet no later than February 1,
May 1, August 1, and November 1 of each year. See Quarterly Worksheet Form
at 1. Carriers must submit their Annual Worksheets no later than April 1
of each year. See Annual Worksheet Form at 1. The complete filing schedule
is also set forth in the instructions to the Annual Worksheet. See
Telecommunications Reporting Worksheet Instructions at 9, figure 2. As
described above, Globcom filed its 2001 Annual Worksheet on May 7, 2002
and its 2002 Annual Worksheet on August 6, 2002. Late filing of revenue
information harms the universal service fund because USAC and the
Commission cannot accurately project the contribution base for the
upcoming quarter with incomplete revenue information.
47 C.F.R. SS 54.711, 54.713.
Globcom NAL, 18 FCC Rcd at 19902, P 21, n. 67.
See Globcom NAL, 18 FCC Rcd at 19902, P 21. Globcom untimely filed its
2001 Annual Worksheet on May 7, 2002. Globcom filed its 2002 Annual
Worksheet on August 6, 2002. On October 10, 2002, Globcom refiled its 2002
Annual Worksheet to restate its 2001 revenue. Globcom filed a Quarterly
Worksheet for third quarter 2002 on October 10, 2002. On January 27, 2003,
Globcom filed a revised version of the third quarter 2002 filing. On
February 13, 2003, Globcom filed the Quarterly Worksheet for fourth
quarter 2002.
As discussed above, on March 1, 2004, Globcom filed certain additional,
revised and late worksheets for the period 1997-2003. USAC accepted Annual
Worksheets for 1998-2001 and 2003, and rejected a revised 2002 Form 499-A
as untimely. Also, included with Globcom's March 1, 2004 filings were
Quarterly Worksheets for May, August and November, 2003, and February
2004. USAC accepted only the February 2004 filing as timely. Despite its
assurances in the Compliance Plan submitted with its NAL Response, Globcom
has not made any filings for the following more recent periods: April 2004
Form 499-A, May 2004 Form 499-Q, August 2004 Form 499-Q, November 2004
Form 499-Q, February 2005 Form 499-Q, April 2005 Form 499-A, May 2005 Form
499-Q, August 2005 Form 499-Q.
47 U.S.C. S 503(b)(1)(B) (2001). Subsequently, in compliance with the Debt
Collection Improvement Act, the Commission announced increased maximum
forfeiture amounts to $130,000 for each violation or each day of a
continuing violation, up to a statutory maximum of $1,325,000 for a single
act or failure to act. Amendment of Section 1.80(b) of the Commission's
Rules, Order, 19 FCC Rcd 10945 (2004).
47 U.S.C. S 503(b)(1)(B); 47 C.F.R. S 1.80(a)(1).
SBC Communications, Inc., v. FCC, 373 F.3d 140, 151 (D.C. Cir. 2004); 47
U.S.C. S 503(b)(2).
Globcom NAL, 18 FCC Rcd at 19904-05, PP 27-32.
Under section 503(b)(6) of the Act, 47 U.S.C. S 503(b)(6), we have a
one-year statute of limitations for non-broadcast forfeiture actions. See
also 47 C.F.R. S 1.80(c)(3).
Globcom NAL Response at 10-18.
Id. at 10-13 (citing cases).
Globcom NAL, 18 FCC Rcd at 19904, P 27 (citations omitted).
USAC sent Globcom numerous past due notices for Globcom's 2001 and 2002
contributions, as well as current charges. On January 23, 2003, USAC sent
Globcom an invoice due February 14, 2003 for $152,769.62 in 2001 and 2002
universal service-related charges, adjustments, and fees, as well as
current charges. On February 25, 2003, USAC sent Globcom another invoice
informing the carrier that it owed $305,379.87, due March 14, 2003. On
March 21, 2003, USAC sent Globcom another invoice, informing the carrier
that it owed $459,059.51. On April 22, 2003, USAC sent Globcom an invoice
informing the carrier that it now owed $497,240.98. On May 22, 2003, USAC
sent Globcom an invoice stating that the balance due, on June 13, 2003,
was $536,422.36. On June 20, 2003, USAC sent Globcom an invoice informing
the carrier that it owed $575,765.79, due July 15, 2003. On July 22, 2003,
USAC sent Globcom an invoice stating that the balance due, $681,837.76,
was past due on August 15, 2003. See Letter from Anne Marie Trew,
Director, Finance Operations and D. Scott Barash, Vice President and
General Counsel, USAC to William Davenport, Deputy Chief, Investigations
and Hearings Division, Enforcement Bureau, Federal Communications
Commission, dated August 21, 2003.
Globcom NAL Response at 10-18.
Id. at 10-13 (citing cases).
Globcom NAL, 18 FCC Rcd at 19903, P 24.
See Globcom NAL, 18 FCC Rcd at 19900, P 15 (discussing the monthly USAC
invoices and the "more than adequate notice of ConQuest's universal
service obligation").
47 U.S.C. S 503(b)(2)(B). See also 47 C.F.R. S 1.80(b); Amendment of
Section 1.80(b) of the Commission's Rules, Adjustment of Forfeiture Maxima
to Reflect Inflation, Order, 15 FCC Rcd 18221 (2000).
See 47 U.S.C. S503(b); see also 47 C.F.R. S 1.80(a), (b); see also The
Commission's Forfeiture Policy Statement and Amendment of Section 1.80 of
the Rules to Incorporate the Forfeiture Guidelines, 12 FCC Rcd 17087,
17100-01, P 27 (1997) ("Forfeiture Policy Statement"); recon. denied, 15
FCC Rcd 303 (1999). Indeed, in the Station KXXV-DT MO&O, we held that the
Media Bureau did not violate the APA by admonishing a licensee for
violating digital television (DTV) build-out deadlines, even though the
Commission was considering a rulemaking on the appropriate penalties for
such violations. "Although the NPRM sought comment on the suitability of
the entire range of sanctions that were to be imposed for failure to meet
DTV build-out deadlines, at the time of the Letter [of Admonishment] the
Bureau already had the power to issue an admonishment for a violation of
our rules." KXXV-DT MO&O, 19 FCC Rcd at 15264 P 7.
Each failure to pay the amount due each month constituted a violation that
continued for more than 10 days. We also note that, although such warnings
are not necessary under the APA, we repeatedly warned carriers that larger
forfeitures and even revocation of operating authority might be in store
for future universal service nonpayment cases. See Globcom NAL, 18 FCC Rcd
at 19903, P 25, nn.74-75 (citing cases).
ConQuest, 14 FCC Rcd at 12527, P 19.
Id. at 12528, P 20.
ATNC, 15 FCC Rcd at 20906, P 9; Intellicall, 15 FCC Rcd at 13541, P 7;
PTT, 16 FCC Rcd at 7479, P 7; Matrix, 15 FCC Rcd at 13546-47, P 8.
See, e.g., Intellicall, 15 FCC Rcd at 13541, P 7; Matrix, 15 FCC Rcd at
13546, P 7.
Globcom NAL, 18 FCC Rcd at 19903, P 25.
Globcom NAL, 18 FCC Rcd at 19903, PP 24-26.
Globcom NAL, 18 FCC Rcd at 19903-04, P 26.
Id.; SBC Communications, Inc., 373 F.3d at 152 ("When its competitors
suffer, SBC benefits, and therefore it privately benefited from inflicting
harms on its competitors. Because the amount of deterrence necessary to
prevent an action from occurring depends on both a private company's
revenues and the private benefit to the company of taking the action,
there is a rational relationship between this factor and the seriousness
of the fine the FCC imposed").
Globcom NAL, 18 FCC Rcd at 19903-04, P 26.
Globcom NAL Response at 7-9.
47 C.F.R. S 54.706(c).
See Federal-State Joint Board on Universal Service, 1998 Biennial
Regulatory Review - Streamlined Contributor Reporting Requirements
Associated with Administration of Telecommunications Relay Service, North
American Numbering Plan, Local Number Portability, and Universal Service
Support Mechanisms, Telecommunications Services for Individuals with
Hearing and Speech Disabilities, and the Americans with Disabilities Act
of 1990, Administration of the North American Numbering Plan and North
American Numbering Plan Cost Recovery Contribution Factor and Fund Size,
Number Resource Optimization, Telephone Number Portability,
Truth-in-Billing and Billing Format, Further Notice of Proposed Rulemaking
and Report and Order, 17 FCC Rcd 3752, 3806, P 125 (2002) ("February 26
Universal Service Order").
February 26 Universal Service Order, 17 FCC Rcd at 3806, P 125.
Globcom NAL Response at 4.
Globcom NAL Response at 7-8.
The net change by USAC to Globcom's outstanding balance reflected both the
downward adjustment for the revised 2002 revenue figures, and upwards
adjustments reflecting 1999 and 2000 revenue figures. We do not consider
the upward adjustments as part of our forfeiture methodology in this
instance because they were not contemplated in the Globcom NAL. See also
USAC Revision letter at 2-3.
See n. 35, supra.
See P 34, supra; Globcom NAL, 18 FCC Rcd at 19903, PP 24-26.
Globcom NAL, 18 FCC Rcd at 19901, P 27 (quoting Matrix, 15 FCC Rcd at
13546-47, P 8).
"Prior to April 1, 2003, any entity required to contribute to USF whose
interstate end-user telecommunications revenues comprise less than 12
percent of its combined interstate and international end-user
telecommunications revenues shall contribute to the USF based only on such
entity's interstate end-user telecommunications revenues, net of prior
period actual contributions. Beginning April 1, 2003, any entity required
to contribute to USF whose projected collected interstate end-user
telecommunications revenues comprise less than 12 percent of its combined
projected collected interstate and international end-user
telecommunications revenues shall contribute based only on such entity's
projected collected interstate end-user telecommunications revenues, net
of projected contributions." 47 C.F.R. S 54.706(c).
2002 Telecommunications Reporting Worksheet Instructions, Instruction at
9-10.
See Form 499-A Instructions at 11.
USAC Revision Letter at 2.
Form 499-A Filing Revisions Order, DA 04-3669, 2004 WL 2848147.
See Id., at PP 13-14.
USAC Revision Letter at 2.
See Globcom 2003 LOI Response (containing Globcom's 2000 and 2001 federal
tax returns); Globcom NAL Response, Attachment A (containing Globcom's
federal tax returns from 2000 through 2002).
Globcom NAL Response at 18.
Id.
SBC Communications v. FCC, 373 F.3d at 152.
See, e.g., Hoosier Broadcasting Corporation, Memorandum Opinion and Order,
15 FCC Rcd 8640 (2002) (forfeiture not deemed excessive where it
represented approximately 7.6 percent of the violator's gross revenues)
("Hoosier"); Coleman Enterprises d/b/a Local Long Distance, Inc., Order on
Reconsideration, 16 FCC Rcd 10,016 (2001) (forfeiture not deemed excessive
where it represented approximately 7.9 percent of the violator's gross
revenues) ("LLDI"); PJB Communications of Virginia, Inc., Memorandum
Opinion and Order, 7 FCC Rcd 2088, 2089, P 8 (1992) (forfeiture not deemed
excessive where it represented approximately 2.02 percent of the
violator's gross revenues) ("PJB").
See Webnet Communications, Inc., Order of Forfeiture, 18 FCC Rcd 6870,
6878, P 16 (2003); America's Tele-Network Corporation, Order of
Forfeiture, 16 FCC Rcd 22350, 22356-56, P 16 (2001).
Forfeiture Policy Statement, 12 FCC Rcd at 17099; see also 47 C.F.R. S
1.80(b)(4).
47 U.S.C S 504(a).
See 47 U.S.C S 1.1914.
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