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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
In the Matter of ) File No. EB-06-IH-2307
Communications Options, Inc. ) NAL/Acct. No. 200732080031
Apparent Liability for Forfeiture ) FRN No. 0003735230
)
)
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: July 26, 2007 Released: July 27, 2007
By the Chief, Enforcement Bureau:
I. INtroduction
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
Communications Options, Inc., ("COI"), has apparently violated section
54.711(a) of the Federal Communications Commission's (the "Commission"
or "FCC") rules by willfully and repeatedly failing to maintain
records and documentation to justify information reported in its
Telecommunications Reporting Worksheets ("Worksheets") and provide the
records and documentation to the Commission upon request. We further
find that COI apparently violated a Commission order issued pursuant
to sections 4(i), 4(j), 218 and 403 of the Communications Act of 1934,
as amended (the "Act"), by willfully and repeatedly failing to respond
on a timely basis to a directive of the Enforcement Bureau ("Bureau")
to provide certain information and documents, and support its response
with an affidavit or declaration. Based upon the facts and
circumstances surrounding this matter, we find that COI is apparently
liable for a total monetary forfeiture in the amount of $65,000.
II. Background
2. The Act codified Congress's historical commitment to promote universal
service to ensure that consumers in all regions of the nation have
access to affordable, quality telecommunications services. 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." 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 (the "Fund" or "USF") based upon their interstate and
international end-user telecommunications revenues. The Commission
also requires certain providers of interstate telecommunications,
including interconnected Voice over Internet Protocol (VoIP)
providers, to contribute to the USF. Failure by some providers to pay
their share into the Fund skews the playing field by giving non-paying
providers an economic advantage over their competitors, who must then
shoulder more than their fair share of the costs of the Fund.
3. The Commission has established specific procedures to administer the
universal service program. A filer is required to submit an FCC Form
499-A, also known as the annual Telecommunications Reporting Worksheet
("annual Worksheet") for the purpose of determining its USF payments,
and, with certain exceptions, to file quarterly Worksheets ("quarterly
Worksheets") to determine monthly universal service contribution
amounts. These periodic filings trigger a determination of liability,
if any, and subsequent billing and collection, by the entities that
administer the regulatory programs. For example, the Universal Service
Administrative Company ("USAC"), the administrator of the USF, uses
the revenue projections submitted on the quarterly Worksheets to
determine each carrier's monthly universal service contribution
amount. The Commission's rules explicitly warn contributors that
failure to file forms or submit payments potentially subjects them to
enforcement action.
4. Section 54.711(a) of the Commission's rules requires contributors to
"maintain records and documentation to justify the information
reported in the Telecommunications Reporting Worksheet, including the
methodology used to determine projections, for three years and shall
provide such records and documentation to the Commission or the
Administrator upon request." The recordkeeping requirement is
necessary to ensure that contributors report correct information on
the Worksheets. The Commission and USAC may review records and
documentation underlying revenue reported on contributors' Worksheets
to determine whether contributors are properly reporting revenue, and
thus contributing their fair share to the costs of the universal
service program. The Commission will swiftly and effectively enforce
these recordkeeping obligations to ensure the smooth administration of
the USF program.
5. COI is a telecommunications carrier that began providing
telecommunications service in the United States in November, 1990.
USAC received information in March 2005 alleging that COI was not
reporting revenues collected from Presubscribed Interexchange Carrier
Charges ("PICC") or End User Common Line ("EUCL") charges. PICC and
EUCL charges are "access" charges that allow certain local exchange
carriers to recover the telecommunications service provider costs of
enabling end users to make and receive interexchange calls.
Interexchange carriers ("IXCs") pay PICC charges to local exchange
carriers. IXCs may pass PICC charges on to their subscribers. Local
subscribers pay EUCL charges to local exchange carriers on a per line
basis. Filers are required to report PICC and EUCL charges in the
interstate revenue portion of their Worksheets. PICC and EUCL charges
to end users can account for a significant portion of an interstate
telecommunications provider's interstate revenue. Thus, if an
interstate telecommunications provider fails to report PICC and EUCL
revenue on its Worksheet, the provider may significantly underreport
interstate telecommunications revenue, thereby preventing USAC from
invoicing a full assessment of the provider's fair share of universal
service contributions.
6. USAC initiated an audit of COI on April 11, 2005 to assess whether
COI's 2003 and 2004 annual Worksheets were accurately and properly
prepared to include end-user revenues collected for PICC and EUCL.
After requesting documentation and holding extensive discussions with
COI, USAC concluded that COI's information was "unauditable." On
November 15, 2005, USAC requested that the Commission investigate
whether COI had violated a Commission rule.
7. The Bureau initiated an investigation on July 13, 2006 by a letter of
inquiry ("LOI") to COI. The LOI directed COI to, among other things,
submit a sworn, written response to a series of questions relating to
COI's compliance with its filing and payment obligations involving
regulatory fees, the USF, the Telecommunications Relay Service ("TRS")
Fund, and the North American Numbering Plan Administration ("NANPA")
Fund. COI's response was due on August 2, 2006. On July 19, 2006, COI
informed Bureau staff that COI was planning to submit a response
"within the next 2 weeks." COI failed to respond by August 2, 2006,
and when Bureau staff contacted COI to inquire about the status of
COI's response, COI stated that it "overlooked" the deadline and
requested an extension until August 31, 2006. On August 28, 2006, the
Bureau informed COI that failure to respond fully and timely to a
Bureau letter of inquiry constitutes a violation of the Act and
Commission rules. COI submitted a response to the LOI on August 31,
2006. Contrary to the Bureau's directive, COI's LOI Response was not
supported with an affidavit or declaration under penalty of perjury,
signed and dated by an authorized officer of COI with personal
knowledge of the representations provided in COI's response, verifying
the truth and accuracy of the information submitted and to the
production of all requested information and documents in COI's
possession, custody, control or knowledge.
8. Under section 503(b)(1) 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. 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. 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.
The Commission may also assess a forfeiture 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. 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.
9. 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 $1,325,000 for a
single act or failure to act. 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."
III. Discussion
10. The fundamental issues in this case are whether COI apparently
violated the Commission's rules and order by: (1) willfully or
repeatedly failing to maintain records and documentation to justify
information reported in COI's Worksheets and provide the records and
documentation to the Commission upon request; and (2) willfully or
repeatedly failing to submit a sworn and timely response to a
directive of the Bureau to provide certain information and documents.
We answer these questions affirmatively. Based on a preponderance of
the evidence, and as discussed below, we therefore conclude that COI
is apparently liable for a forfeiture of $65,000 for apparently
willfully and repeatedly violating a Commission order issued pursuant
to sections 4(i), 4(j), 218, and 403 of the Act and section 54.711(a)
of the Commission's rules.
A. Submission of Supporting Records and Documentation for Worksheets
11. We conclude that COI has apparently violated section 54.711(a) of the
Commission's rules by willfully and repeatedly failing to maintain
records and documentation to justify information reported in COI's
Worksheets and provide the records and documentation to the Commission
upon request. Section 54.711(a) of the Commission's rules clearly
establishes a carrier's obligation to maintain supporting
documentation for a period of three years and to provide that
documentation to the Commission on request.
12. The administrators of the federal regulatory programs rely on the
Worksheets telecommunications providers file to determine liability
for, and subsequent billing and collection of, payments for the USF
and other federal regulatory programs. Accuracy in the Worksheets is
therefore vital. The only means by which the Commission or USAC may
verify the accuracy of a provider's Worksheet is through analysis of
the supporting documents in the service providers' own files. The
failure of a provider to maintain, and provide to the Commission or
USAC, records and documentation supporting its Worksheets thwarts the
Commission's ability to verify reported revenue, and could permit
contributors to remove from the base of USF contributions
telecommunications revenues that otherwise should have been included.
Viewed in this context, maintaining and submitting documentation to
support data reported in Worksheets is not simply an administrative
tool, but a fundamental and critical component of the Commission's
universal service program. Consequently, a filer's failure to maintain
records and documentation that support its Worksheets may impede the
very purpose for which Congress enacted section 254(d) - to ensure
that every required contributor "contribute[s], on an equitable and
nondiscriminatory basis, to the specific, predictable, and sufficient
mechanisms established by the Commission to preserve and advance
universal service." The effect on other federal regulatory programs
that rely on an assessment of the Worksheets is similar. Indeed, a
telecommunications provider that prevents the Commission and USAC from
verifying the revenue information submitted in its Worksheets can
operate outside of the Commission's oversight and evade its federal
obligations to fully contribute toward the vital programs linked to
reporting obligations.
13. Upon learning that USAC found COI's records to be "unauditable," the
Bureau directed COI to identify all PICC and EUCL revenue COI
collected and reported, and provide all supporting records and
documentation. In response, COI claimed it reported PICC and EUCL
revenue, but COI did not provide records and documentation that either
(a) demonstrate it reported PICC and EUCL revenue, or (b) support the
revenue it reported on its Worksheets. COI provided financial
statements and general ledger reports with its LOI responses that
could not be tied to the line items for revenue reported in COI's
Worksheets. As a result of COI's failure to satisfy the Commission's
record-keeping requirement, both the Bureau and USAC were unable to
verify whether COI was in fact fully and accurately reporting its
interstate telecommunications revenue, including its PICC and EUCL
revenue.
14. Based on the preponderance of the evidence, we find that COI
apparently violated section 54.711(a) of the Commission's rules by
willfully and repeatedly failing to maintain records and documentation
to justify information reported in COI's Worksheets and provide the
records and documentation to the Commission upon request. We therefore
propose a forfeiture for COI's failure to maintain and submit the
supporting records and documentation.
A. Failure to Provide Sworn LOI Response on a Timely Basis to the Bureau
15. Sections 4(i), 4(j), 218, and 403 of the Act afford the Commission
broad authority to investigate the entities it regulates. Section 4(i)
authorizes the Commission to "issue such orders, not inconsistent with
this Act, as may be necessary in the execution of its functions," and
section 4(j) states that "the Commission may conduct its proceedings
in such manner as will best conduce to the proper dispatch of business
and to the ends of justice." Section 218 of the Act authorizes the
Commission to "obtain from . . . carriers . . . full and complete
information necessary to enable the Commission to perform the duties
and carry out the objects for which it was created." Section 403
likewise grants the Commission "full authority and power to institute
an inquiry, on its own motion . . . relating to the enforcement of any
of the provisions of this Act."
16. The Bureau directed COI to provide certain documents and information
to enable the Commission to perform its enforcement function and
evaluate allegations that COI violated the Act and Commission rules.
As evidenced by the Bureau's facsimile confirmation sheet, and COI's
confirmation of receipt, COI received the LOI on July 13, 2006. COI
failed to respond to the LOI on a timely basis. Only after Bureau
staff contacted COI did it respond to the Bureau's inquiries -- nearly
one month after the response was due. Further, contrary to the
Bureau's directive, COI has not submitted an affidavit or declaration
under penalty of perjury, signed and dated by an authorized officer of
COI with personal knowledge of the representations provided in COI's
response, verifying the truth and accuracy of the information
submitted, and to the production of all requested information and
documents in COI's possession, custody, control or knowledge. We
conclude that COI's substantial and unwarranted delay in responding to
the LOI, and its failure to support its response with an affidavit or
declaration, constitutes an apparent willful and repeated violation of
a Commission order.
A. Proposed Forfeiture
17. We find that a proposed forfeiture against COI in the amount of
$65,000 is warranted. This proposed forfeiture amount includes a
proposed penalty of $50,000 for failing to maintain records and
documentation to justify information reported in its Worksheets and
provide the records and documentation to the Commission upon request,
and a proposed penalty of $15,000 for failing to respond on a timely
basis to a directive of the Bureau to provide certain information and
documents, with a supporting affidavit or declaration.
18. In previous cases, we have taken enforcement action for failure to
satisfy universal service obligations, including the filing of
required quarterly and annual Telecommunications Reporting Worksheets
and payment of required contributions to the fund. We find these
violations of the Act and the Commission's rules egregious in light of
their impact on an important federal program aimed at ensuring
affordable, quality telecommunications services in all regions of the
nation. While this case involves a contributor's failure to maintain
records and documentation to justify information reported in its
Worksheets and to provide those records and documentation to the
Commission upon request, we find it similarly egregious in nature.
Maintaining records and documentation that supports the reported
revenue in the Telecommunications Reporting Worksheets is fundamental
to the administration of multiple statutorily-derived programs -
including the USF. A contributor's failure to maintain supporting
records and documentation precludes the Commission and USAC from
verifying these important federal programs are fully funded "on an
equitable and nondiscriminatory basis" and therefore undermines the
programs and the purposes for which Congress established them.
19. The Commission's Forfeiture Policy Statement and implementing rules
prescribe a base forfeiture of $1,000 for failure to maintain required
records. We find, however, that failing to maintain records and
documentation supporting the Telecommunications Reporting Worksheets
warrants a substantial increase to the base forfeiture amount in light
of the important public policy aspects of the underlying rule. As the
Commission observed in a recent USF enforcement action, "the size and
scope of the universal service and [other federal regulatory] programs
impose a monumental burden on the Commission [and] USAC . . . to
verify that each and every carrier has complied with the revenue
reporting requirements. By necessity, the Commission and the other
entities must rely on carriers' compliance with our rules." To assist
the Commission and USAC in this endeavor, the document retention rule
was adopted to ensure the accuracy of a Worksheet could be
established, particularly in a case where information suggests the USF
contributor is not fully reporting revenue.
20. Thus, we find the failure to maintain documents supporting a Worksheet
as directed by the Commission analogous to the filing of inaccurate
information in that the provider prevents accurate administration of
the program and enforcement of Commission rules. The Commission has
previously concluded a $50,000 forfeiture is appropriate for the
filing of an inaccurate Worksheet. We conclude that the same amount
also is appropriate for the failure to maintain supporting documents
and provide them to the Commission. Taking into account all of the
factors enumerated in section 503(b)(2)(D) of the Act, we therefore
conclude that a proposed forfeiture of $50,000 is warranted for
failing to maintain records and documentation supporting the
Telecommunications Reporting Worksheets.
21. Turning now to COI's failure to provide documentation and respond to
the Bureau's LOI, section 1.80 of the Commission's rules and the
Commission's Forfeiture Policy Statement establish a base forfeiture
amount of $3,000 for failure to file required forms or information,
and $4,000 for failure to respond to a Commission communication. COI's
failure to respond to the Bureau's inquiries for approximately one
month occurred following COI's promise that its response would be
timely submitted. In fact, however, when Bureau staff contacted COI
after the deadline to inquire about a response, COI informed Bureau
staff that COI had "overlooked" its obligation to respond. When COI
finally did submit a response it lacked the required supporting
affidavit or declaration required by the Commission. We find that the
substantial delay in responding to the LOI, and the failure to fully
comply with the Bureau's directives, in the circumstances presented
here, warrants a substantial increase to the base amount. Misconduct
of this type exhibits a blatant disregard for the Commission's
authority that cannot be tolerated, and, more importantly, threatens
to compromise the Commission's ability to adequately investigate
violations of its rules. In this case, the misconduct inhibits our
ability to adequately detect and deter potential rule violations in
areas of critical importance to the Commission, i.e., the reporting
and contribution requirements for the Commission's regulatory
programs. Prompt, sworn responses to Bureau inquiry letters are
critical to the Commission's enforcement function. We therefore
propose a forfeiture against COI of $15,000 for failing to provide a
sworn response to the LOI on a timely basis. This forfeiture amount is
consistent with recent precedent in similar investigations involving
the failures of companies to respond to Bureau inquiries concerning
compliance with the reporting and contribution requirements for the
Commission's regulatory programs, despite evidence that the LOIs had
been received. COI and other carriers are warned that they may not
delay or resist the Bureau's direction to provide information in
response to an LOI. Such conduct obstructs the enforcement process and
will not be tolerated.
IV. Conclusion
22. Based on the facts and circumstances presented, we find that a
proposed forfeiture against COI in the amount of $65,000 is warranted.
We caution that additional violations of the Act or the Commission's
rules could subject COI to further enforcement action. Such action
could take the form of higher monetary forfeitures and/or possible
revocation of COI's operating authority, including disqualification of
COI's principals from the provision of any interstate common carrier
services without the prior consent of the Commission. In addition, we
note that, to the extent COI is ever found to be delinquent on any
debt owed to the Commission (e.g., has failed to pay all of its USF
contributions), the Commission will not act on, and may dismiss, any
application or request for authorization filed by COI, in accordance
with the agency's "red light" rules.
V. ORDERING CLAUSES
23. 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
Communication Options, Inc. is hereby NOTIFIED of its APPARENT
LIABILITY FOR A FORFEITURE in the amount of $65,000 for willfully and
repeatedly violating the Commission's rules and order.
24. IT IS FURTHER ORDERED THAT, pursuant to section 1.80 of the
Commission's Rules, within thirty days of the release date of this
NOTICE OF APPARENT LIABILITY, Communication Options, Inc. SHALL PAY
the full amount of the proposed forfeiture or SHALL FILE a written
statement seeking reduction or cancellation of the proposed
forfeiture.
25. Payment by check or money order, payable to the order of the "Federal
Communications Commission," may be mailed to Forfeiture Collection
Section, Finance Branch, Federal Communications Commission, P.O. Box
358340, Pittsburgh, PA 15251. Payment by overnight mail may be sent to
Mellon Client Service Center, 500 Ross Street, Room 670, Pittsburgh,
PA 15262-0001, Attn: FCC Module Supervisor. Payment by wire transfer
may be made to: ABA Number 043000261, receiving bank Mellon Bank, and
account number 911-6229. The payment should note the NAL/Acct. No.
referenced in the caption.
26. The response, if any, to this NOTICE OF APPARENT LIABILITY FOR
FORFEITURE must be mailed to Hillary DeNigro, Chief, Investigations
and Hearings Division, Enforcement Bureau, Federal Communications
Commission, 445 12th Street, S.W., Suite 4-C330, Washington, D.C.
20554 and must include the NAL/Acct. No. referenced above. E-mail
address: hillary.denigro@fcc.gov.
27. 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.
28. Requests for payment of the full amount of this Notice of Apparent
Liability for Forfeiture under an installment plan should be sent to:
Chief, Revenue and Receivables Operations Group, 445 12th Street, SW,
Washington, DC 20554.
29. IT IS FURTHER ORDERED that a copy of this NOTICE OF APPARENT LIABILITY
FOR FORFEITURE shall be sent by certified mail, return receipt
requested, to P.J. Moody, Controller, Communication Options, Inc., 921
Eastwind Drive, Suite 104, Westerville, Ohio 43081.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Chief
Enforcement Bureau
47 C.F.R. S: 54.711(a).
47 U.S.C. S:S: 154(i), 154(j), 218, 403. 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).
47 U.S.C. S: 254(d).
47 C.F.R. S: 54.706(b). Beginning April 1, 2003, carrier contributions
were based on a carrier's projected, rather than historical, revenues. Id.
See 47 U.S.C. S: 254(d) ("Any other provider of interstate
telecommunications may be required to contribute to the preservation and
advancement of universal service if the public interest so requires.");
Universal Service Contribution Methodology, Report and Order and Notice of
Proposed Rulemaking, 21 FCC Rcd 7518 (2006) (extending section 254(d)
permissive authority to require interconnected VoIP providers to
contribute to the USF) ("2006 Contribution Methodology Order"), petition
for review denied, and vacated in part on other grounds, Vonage Holding
Corp. v. FCC, --- F.3d ----, 2007 WL 1574611 (D.C. Cir. 2007).
Upon submission of a Form 499-A registration, the carrier is issued a
filer identification number by USAC, which is then associated with further
filings by the company and is used to track the carrier's contributions
and invoices.
The Commission has thus 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. 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").
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) ("Quarterly Reporting Order"); 47 C.F.R. S: 54.709(a).
47 C.F.R. S: 54.713. Further, under the Commission's "red light rule,"
action will be withheld on any application to the Commission or request
for authorization made by any entity that has failed to pay when due its
regulatory program payment such as USF contributions, and if payment or
payment arrangements are not made within 30 days from notice to the
applicant, such applications or requests will be dismissed. 47 C.F.R. S:
1.1910. The rule went into effect on November 1, 2004. See FCC Announces
Brief Delay in Enforcement of Red Light Rule, Public Notice, 19 FCC Rcd
19452 (2004).
47 C.F.R. S: 54.711(a).
Matter of Federal-State Board on Universal Service, Report and Order and
Second Further Notice of Proposed Rulemaking, 17 FCC Rcd 24952, 25791, P:
34 (2002).
See Letter from P.J. Moody, Controller, Communication Options, Inc. to
David Janas, Special Counsel, Investigations and Hearings Division,
Enforcement Bureau, Federal Communications Commission, Response 4 (Aug.
30, 2006) ("LOI Response").
Letter from Wayne M. Scott, Vice President, Internal Audit Division,
Universal Service Administrative Company to Hillary DeNigro, Deputy Chief,
Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission, at 1 (Nov. 15, 2005) ("USAC Referral").
Access charges recover the local exchange carrier's non-traffic sensitive
("NTS") costs, which consist primarily of the costs of poles, wires,
conduit, and other local exchange facilities used to provide the telephone
"loop" to local customers, i.e., a subscriber's connection to the public
switched telephone network ("PSTN"). See generally Commission Requirements
for Cost Support Material to be Filed with January 1, 1990 Access Tariff
Revisions, Order, 4 FCC Rcd 6773, 6774, P: 8 (Deputy Chief, Common Carrier
Bureau 1989) (discussing EUCL charges); Access Charge Reform, First Report
and Order, 12 FCC Rcd 15982, 16004-06, P:P: 54-60 (1997) (discussing
PICC).
USAC Referral at 1.
Id. at 2 (stating that due to limitations in COI's billing and reporting
systems, COI does not have the ability to prove or disprove whether it
failed to report PICC and EUCL revenue).
Id.
Letter of Inquiry from Trent Harkrader, Acting Deputy Chief,
Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission to Stephen K. Vogelmeier, President,
Communication Options, Inc. (July 13, 2006) ("LOI").
Electronic Mail Message from P.J. Moody, Controller, Communication
Options, Inc., to Eric Bash, Assistant Division Chief, and David Janas,
Special Counsel, Investigations & Hearings Division, Enforcement Bureau,
Federal Communications Commission (July 19, 2006, 12:35 p.m.) ("July 19,
2006 COI E-Mail").
Letter from Trent Harkrader, Acting Deputy Chief, Investigations and
Hearings Division, Enforcement Bureau, Federal Communications Commission
to P.J. Moody, Controller, Communication Options, Inc. (Aug. 28, 2006).
See Letter from P.J. Moody, Controller, Communication Options, Inc. to
David Janas, Special Counsel, Investigations and Hearings Division,
Enforcement Bureau, Federal Communications Commission, dated August 30,
2006, ("LOI Response").
LOI at 9 (directing COI to comply with 47 C.F.R. S: 1.16).
47 U.S.C. S: 503(b)(1)(B); 47 C.F.R. S: 1.80(a)(1); see also 47 U.S.C. S:
503(b)(1)(D) (forfeitures for violation of 14 U.S.C. S: 1464).
47 U.S.C. S: 312(f)(1).
H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51 (1982).
See, e.g., Southern California Broadcasting Co., Memorandum Opinion and
Order, 6 FCC Rcd 4387, 4388 (1991) ("Southern California Broadcasting
Co.").
See, e.g., Callais Cablevision, Inc., Grand Isle, Louisiana, Notice of
Apparent Liability for Monetary Forfeiture, 16 FCC Rcd 1359, 1362, P: 10
(2001) ("Callais Cablevision") (issuing a Notice of Apparent Liability
for, inter alia, a cable television operator's repeated signal leakage).
Southern California Broadcasting Co., 6 FCC Rcd at 4388, P: 5; Callais
Cablevision, Inc., 16 FCC Rcd at 1362, P: 9.
47 U.S.C. S: 503(b); 47 C.F.R. S: 1.80(f).
See, e.g., SBC Communications, Inc., 17 FCC Rcd 7589, 7591, P: 4 (2002)
("SBC Forfeiture Order") (forfeiture paid).
47 U.S.C. S: 503(b)(2)(B); see also 47 C.F.R. S: 1.80(b)(2); Section
1.80(b) of the Commission's Rules, Adjustment of Forfeiture Maxima to
Reflect Inflation, Order, 19 FCC Rcd 10945 (2004).
47 U.S.C. S: 503(b)(2)(D); See Commission's Forfeiture Policy Statement
and Amendment of Section 1.80 of the Commission's Rules, Report and Order,
12 FCC Rcd 17087, 17100, P: 27 (1997) ("Forfeiture Policy Statement"),
recon. denied, 15 FCC Rcd 303 (1999); 47 C.F.R. S: 1.80(b).
47 U.S.C. S:S: 154(i), 154(j), 218, 403; 47 C.F.R. S: 54.711(a).
47 C.F.R. S: 54.711(a).
47 U.S.C. S: 254(d).
LOI at 5-6.
LOI Response at 9-10.
COI admitted that it did not have the capability to separate USF, PICC and
EUCL revenue in its accounting systems, and stated it would install new
software in September 2006 that does collect the information. LOI Response
at 16.
USAC informed the Bureau that USAC was unable to perform any of its usual
audit steps due to COI's recordkeeping failures. In particular, COI failed
to provide USAC: (a) general ledger breakouts that tie the revenue from
COI's general ledger or billing systems to the line items on COI's
Worksheets; (b) traffic studies that support the percentages of COI's
reported revenue types; and (c) the means to evaluate COI's process for
making good faith estimates underlying its revenue reported on its
Worksheets. USAC Referral at 1.
47 C.F.R. S:54.711(a).
47 U.S.C. S: 154(i).
47 U.S.C. S: 154(j).
47 U.S.C. S: 218.
47 U.S.C. S: 403. Section 403 provides, in part: "The Commission shall
have full authority and power at any time to institute an inquiry, on its
own motion, in any case and as to any matter or thing concerning which
complaint is authorized to be made, to or before the Commission by any
provision of this Act, or concerning which any question may arise under
any of the provisions of this Act."
July 19, 2006 COI E-Mail.
Bureau staff contacted COI by telephone on August 23, 2006 to inquire
about the status of COI's response to the LOI.
LOI at 9.
See, e.g., SBC Forfeiture Order, 17 FCC Rcd at 7599-7600, P:P: 23-28
(2002) ($100,000 forfeiture for egregious and intentional misconduct,
i.e., refusing to attest to truthfulness and accuracy of responses to
LOI); Globcom, Inc., Notice of Apparent Liability for Forfeiture and
Order, 18 FCC Rcd 19893, 19898 n. 36 (2003) ("Globcom NAL") (subsequent
history omitted) (delayed response to an LOI considered dilatory behavior
that may result in future sanctions); BigZoo.Com Corporation, Order of
Forfeiture, 20 FCC Rcd 3954 (Enforcement Bureau 2005) ($20,000 forfeiture
for failure of an entity to provide any response to a USF LOI); American
Family Association, Licensee of Station KBMP(FM), Enterprise, Kansas,
Notice of Apparent Liability for Forfeiture, 19 FCC Rcd 14072 (Enforcement
Bureau 2004) ($3,000 forfeiture for a partial response to an LOI); World
Communications Satellite Systems, Inc., Notice of Apparent Liability for
Forfeiture, 18 FCC Rcd 18545 (Enforcement Bureau 2003) ($10,000 forfeiture
for a non-responsive reply to an LOI); Donald W. Kaminski, Jr., Notice of
Apparent Liability for Forfeiture, 16 FCC Rcd 10707 (Enforcement Bureau
2001) ($4,000 forfeiture after individual refused to respond to an LOI).
Cf. Carrera Communications LP, Order of Forfeiture, 2007 WL 1435605
(2007); OCMC, Inc., Order of Forfeiture, 21 FCC Rcd. 10479 (2006);
Globcom, Inc., Order of Forfeiture, 21 FCC Rcd 4710 (2006) ("Globcom
Forfeiture Order").
47 U.S.C. S: 254(d).
See 47 C.F.R. S: 1.80; Forfeiture Policy Statement, 12 FCC Rcd at 17114.
Globcom Forfeiture Order, 21 FCC Rcd 4710; Globcom NAL, 18 FCC Rcd 19893.
Globcom NAL, 18 FCC Rcd at 19904, P: 30.
See Matter of Federal-State Board on Universal Service, Report and Order
and Second Further Notice of Proposed Rulemaking, 17 FCC Rcd 24952, 25791,
P: 34 (2002).
Globcom Forfeiture Order, 21 FCC Rcd at 4721-24, P:P: 29-38; Globcom NAL,
18 FCC Rcd at 19904-05, P:P: 30-32.
47 C.F.R. S: 1.80; Forfeiture Policy Statement, 12 FCC Rcd at 17114.
See July 19, 2006 COI E-Mail.
See LOI at 9 (directing COI to comply with 47 C.F.R. S: 1.16).
See International Telecom Exchange, Inc., Notice of Apparent Liability for
Forfeiture and Order, 21 FCC Rcd 6232 (Enforcement Bureau 2006) (proposing
$28,062 forfeiture for apparent failure to respond on a timely basis to a
directive of the Enforcement Bureau to provide certain information and
documents, and for apparent failure to contribute to the
Telecommunications Relay Service Fund); BigZoo.com Corp., Order of
Forfeiture, 20 FCC Rcd 3954 (Enforcement Bureau 2005) (imposing $20,000
forfeiture for failure to respond on a timely basis to a directive of the
Enforcement Bureau to provide certain information and documents);
QuickLink Telecom, Inc., Order of Forfeiture, 20 FCC Rcd 14464
(Enforcement Bureau 2005) (same).
See Business Options, Inc., Order to Show Cause and Notice of Opportunity
for Hearing, 18 FCC Rcd 6881, 6894, P: 36 (2003); NOS Communications,
Inc., Order to Show Cause and Notice of Opportunity for Hearing, 18 FCC
Rcd 6952, 6965, P: 27 (2003).
47 C.F.R. S: 1.1910.
See 47 C.F.R. S: 1.80.
47 C.F.R. S: 1.1914.
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Federal Communications Commission DA 07-3411
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Federal Communications Commission DA 07-3411