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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
In the Matter of )
File No. EB-06-IH-2291
COVAD COMMUNICATIONS GROUP, INC. )
FRN No. 0006912380
Parent Company of NextWeb, Inc., Licensee )
of Various Stations in the Microwave NAL Account No.
Industrial/Business Pool and other ) 200732080028
Wireless Services
)
)
)
CONSENT DECREE
1. The Enforcement Bureau of the Federal Communications Commission and
Covad Communications Group, Inc., by their authorized representatives,
hereby enter into this Consent Decree for the purpose of resolving the
Enforcement Bureau's investigation of compliance by Covad
Communications Group, Inc. with Section 310(d) of the Communications
Act of 1934, as amended.
2. For purposes of this Consent Decree, the following definitions shall
apply:
a. "Act" means the Communications Act of 1934, as amended, 47 U.S.C.
S: 151 et seq.
b. "Adopting Order" means an order of the Bureau adopting this
Consent Decree without any modifications adverse to Covad.
c. "Any" shall be construed to include the word "all," and the word
"all" shall be construed to include the word "any." Additionally,
the word "or" shall be construed to include the word "and," and
the word "and" shall be construed to include the word "or." The
word "each" shall be construed to include the word "every," and
the word "every" shall be construed to include the word "each."
d. "Bureau" means the FCC's Enforcement Bureau.
e. "Commission" or "FCC" means the Federal Communications
Commission.
f. "Effective Date" means the date on which the Bureau releases the
Adopting Order.
g. "Final Order" means that, with respect to the Adopting Order: (1)
no request for stay or similar request is pending, no stay is in
effect, the Adopting Order has not been vacated, reversed, set
aside, annulled or suspended, and any deadline for filing such
request that may be designated by statute or regulation has
passed; (2) no timely petition for rehearing or reconsideration
of the Adopting Order, or protest of any kind, is pending before
the FCC and the time for filing any such petition or protest is
passed; (3) the FCC does not have the Adopting Order under
reconsideration or review on its own motion and the time for such
reconsideration or review has passed; and (4) the Adopting Order
is not under judicial review, there is no notice of appeal or
other application for judicial review pending, and the deadline
for filing such notice of appeal or other application for
judicial review has passed.
h. "Covad" means Covad Communications Group, Inc., and any
affiliate, parent company, wholly or partially owned subsidiary,
and all owners, including but not limited to, officers,
directors, and partners of the foregoing.
i. "NextWeb" means NextWeb, Inc., and any affiliate, parent company,
wholly or partially owned subsidiary, and all owners, including
but not limited to, officers, directors, and partners of the
foregoing.
j. "Investigation" means the Bureau's investigation relating to
whether Covad, in connection with its acquisition of NextWeb,
Inc., engaged in an unauthorized transfer of control of certain
licenses held by NextWeb, Inc., in willful and/or repeated
violation of Section 310(d) of the Act.
k. "Parties" means the Bureau and Covad.
I. BACKGROUND
3. Covad is a national provider of integrated voice and data
communications. In February 2006, Covad completed its acquisition of
NextWeb, a broadband wireless carrier operating in California and
Nevada. Covad represents that it assumed at the time of the
transaction that NextWeb held only non-licensed facilities. However,
Covad further represents that, in approximately May, 2006, it learned
that NextWeb in fact held licenses and spectrum leases for microwave
links for which applications requesting Commission consent or
notification to the transfer of control from NextWeb to Covad,
pursuant to Section 310(d) of the Act, should have been filed. Covad
also learned that NextWeb had earlier acquired microwave licenses held
by 1st Universe for which applications requesting Commission consent
to the assignment from 1st Universe to NextWeb, pursuant to Section
310(d) of the Act, should have been filed. In June 2006, Covad
voluntarily informed the Bureau of its failure, and NextWeb's failure,
to timely file such applications prior to Covad's consummation of the
NextWeb transaction, and the Bureau commenced its Investigation. In
November, 2006, following an internal corporate investigation, Covad
filed remedial applications for Commission consent to the transfer of
70 licenses and one spectrum lease from NextWeb to Covad, the
notification of the transfer of control of one spectrum lease from
NextWeb to Covad and the consent to the assignment of three licenses
from 1st Universe to NextWeb. Those applications were subsequently
granted in the ordinary course by the Wireless Telecommunications
Bureau.
4. The Parties acknowledge that any forfeiture proceeding that might
result from the Investigation would be time consuming and require
substantial expenditure of public and private resources. In order to
conserve such resources, to resolve the Investigation, and to promote
compliance by Covad with Section 310(d) of the Act, the Parties are
entering into this Consent Decree, in consideration of the mutual
commitments made herein.
II. AGREEMENT
5. The Parties agree that the provisions of this Consent Decree shall be
subject to approval by the Bureau by incorporation of such provisions
by reference in an Adopting Order, which shall resolve and terminate
the Investigation.
6. The Parties agree that this Consent Decree shall become effective on
the Effective Date. Upon release, the Adopting Order and this Consent
Decree shall have the same force and effect as any other order of the
Commission, and any violation of the terms of this Consent Decree
shall constitute a violation of a Commission order, entitling the
Commission, or the Bureau pursuant to delegated authority, to exercise
any rights and remedies attendant to the enforcement of a Commission
order.
7. Covad acknowledges that the Commission has jurisdiction over the
matters contained in this Consent Decree and the authority to enter
into and adopt this Consent Decree.
8. Covad acknowledges that, pursuant to Section 310(d) of the Act, it
should have filed applications for Commission consent to the transfer
of control of various licenses and a spectrum lease from NextWeb to
Covad and an application notifying the Commission of the transfer of
control of a spectrum lease from NextWeb to Covad prior to Covad's
acquisition of NextWeb and that NextWeb should have filed an
application for Commission consent to acquire the licenses held by 1st
Universe. Covad further acknowledges that it did not file such
applications until approximately nine months after consummation of its
acquisition of NextWeb.
9. The Bureau acknowledges that Covad voluntarily revealed its
derelictions and NextWeb's derelictions to the Commission and,
further, that Covad has cooperated with the Bureau in connection with
its Investigation.
10. In consideration of the terms and conditions set forth herein, the
Bureau agrees to terminate the Investigation. The Bureau further
agrees that, in the absence of new material evidence, it will not use
the facts developed in the Investigation through the Effective Date,
or the existence of this Consent Decree, to institute, on its own
motion, any new proceeding, formal or informal, or take any action on
its own motion against Covad concerning the matters that were the
subject of the Investigation or with respect to the basic
qualifications of Covad to be a Commission licensee.
11. Covad agrees that it will develop and implement a comprehensive
Compliance Plan within 30 days of the Effective Date for the purpose
of ensuring its compliance with Section 310(d) of the Act and,
further, to keep such Compliance Plan in effect for two years
thereafter. The Compliance Plan will include, at a minimum, the
following components:
a. Designation of Wireless Compliance Attorney. Covad will designate a
member of its legal department to serve as the Wireless Compliance
Attorney ("WCA"). The WCA will have responsibility for overseeing Covad's
Wireless Compliance Program and ascertaining the existence of transactions
and/or proposed transactions within Covad and/or NextWeb that trigger or
may trigger compliance-related responsibilities under Section 310(d) of
the Act. Covad and/or NextWeb personnel with questions regarding FCC
compliance will be directed to the WCA for assistance.
b. Compliance Manual. Covad, through the WCA, will develop a Compliance
Manual for distribution on or before the date of the initial Compliance
Training Program described in Paragraph 11(c), to company lawyers,
managers, and other parties responsible for the establishment, purchase,
sale, and use of Covad's wireless assets. The Compliance Manual will
include, in greater detail, the matters covered in the Compliance Training
Program, i.e., an overview of the Commission's requirements for license
ownership and transfers of control, including the Commission's rules and
the requirements of the Communications Act of 1934, as amended, regarding
the need for prior approval of assignments of Commission authorizations
and the transfer of control of the holders of such authorizations. The
Compliance Manual will be updated from time to time as needed.
c. Compliance Training Program. The WCA will conduct an initial education
program within 90-days of the Effective Date for company lawyers,
managers, and other parties responsible for the establishment, purchase,
sale, and use of Covad's wireless assets. This education program will
include an overview of the Commission's requirements for license ownership
and transfers of control, including the Commission's rules and the
requirements of the Communications Act of 1934, as amended, regarding the
need for prior approval of assignments of Commission authorizations and
the transfer of control of the holders of such authorizations. This
education program will be updated and presented annually and additionally
from time to time as needed to ensure that new employees are informed of
regulatory compliance requirements and that existing employees are
reminded of the same.
d. License Database. The WCA will assemble and maintain information about
Covad and/or NextWeb wireless licenses. The database will be updated
regularly and be accessible by all employees who deal with FCC wireless
regulatory compliance or wireless systems.
e. License Renewals. The database will contain a tickler system that will
alert the WCA whenever one of Covad's and/or NextWeb's licenses must be
renewed. The WCA will then have responsibility for ensuring that the
proper renewal application is filed and that FCC approvals are obtained.
f. License Assignments and Transfers. The compliance manual and related
training program will contain information for Covad and/or NextWeb
personnel regarding the need to conduct thorough due diligence regarding
the potential FCC licenses of any company in a potential merger or
acquisition transaction, the need to monitor any corporate reorganization
for potential license assignment or transfer issues, and the need to
obtain prior FCC approval for all assignments and transfers of control of
FCC licenses.
g. Duty to Report. The WCA will report regularly to Covad's General
Counsel and other senior management as necessary about the status of
Covad's FCC-related compliance efforts. The WCA also will promptly notify
Covad's General Counsel and other senior management as necessary about any
transactions or proposed transactions of which he or she is aware which
would or might affect Covad's compliance with Section 310(d) of the Act.
12. One year after the Adopting Order becomes a Final Order, Covad shall
submit an affidavit or declaration under penalty of perjury, signed
and dated by an authorized officer of the Company with personal
knowledge of the representations therein, verifying that Covad has
complied with the terms of this Consent Decree. The declaration shall
be submitted to Hillary S. DeNigro, Chief, Investigations and Hearings
Division, Enforcement Bureau, Federal Communications Commission, 445
12th Street, S.W., Washington, D.C. 20554. The declaration or
affidavit must comply with section 1.16 of the Commission's rules, 47
C.F.R. S: 1.16, and be substantially in the form set forth therein.
13. Within five business days after the Adopting Order becomes a Final
Order, Covad agrees that it shall make a voluntary contribution to the
United States Treasury in the amount of $35,000. The payment shall be
made by check or similar instrument, payable to the order of the
Federal Communications Commission. The payment shall include NAL/Acct.
No. 200732080023 and Covad's FRN No. 0006912380. 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
9116229.
14. Covad agrees to waive any and all rights it may have to seek
administrative or judicial reconsideration, review, appeal or stay, or
to otherwise challenge or contest the validity of this Consent Decree
and the Adopting Order, provided the Consent Decree is adopted without
change, addition, modification or deletion.
15. The Parties agree that if Covad, the Bureau, the Commission, or the
United States acting on the Commission's behalf, brings a judicial
action to enforce the terms of the Consent Decree or the Adopting
Order, none shall contest the validity of this Consent Decree or the
Adopting Order, and Covad shall waive any statutory right to a trial
de novo.
16. The Parties agree that this Consent Decree and Covad's voluntary
contribution are for settlement purposes only and do not constitute an
admission, denial, adverse finding, adverse final action, adverse
adjudication on the merits, or waiver of legal rights except as
otherwise expressly set forth herein.
17. The Parties agree that if any provision of this Consent Decree
conflicts with any subsequent rule or order adopted by the Commission
(except an order specifically intended to revise the terms of this
Consent Decree to which Covad does not expressly consent), such
provision will be superseded by such Commission rule or order.
18. Covad agrees that the terms and conditions of this Consent Decree
shall be binding on its successors and assigns.
19. The Parties agree that in the event that this Consent Decree is
rendered invalid in any court of competent jurisdiction, it shall
become null and void and may not be used in any manner in any legal
proceeding.
20. Covad agrees to waive any claims they may otherwise have under the
Equal Access to Justice Act, 5 U.S.C. S: 504 and 47 C.F.R. S: 1.1501
et seq., relating to the matters addressed in this Consent Decree.
21. Covad and the Bureau each represents and warrants to the other that it
has full power and authority to enter into this Consent Decree.
22. This Consent Decree may be executed in counterparts.
FEDERAL COMMUNICATIONS COMMISSION
ENFORCEMENT BUREAU
By: ____________________________________ Date: ______________________
Kris Anne Monteith, Chief
COVAD COMMUNICATIONS GROUP, INC.
By: ____________________________________ Date: ______________________
James A. Kirkland
Executive Vice President,
Strategic Development and
General Counsel
Federal Communications Commission
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Federal Communications Commission DA 04-3260