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                                   Before the

                       Federal Communications Commission

                             Washington, D.C. 20554


                                         )                               
                                                                         
     In the Matter of                    )                               
                                             File No. EB-07-IH-5124      
     Liberty Phones, Inc.                )                               
                                             NAL/Acct. No. 200732080037  
     Apparent Liability for Forfeiture   )                               
                                                                         
                                         )                               



             NOTICE OF APPARENT LIABILITY FOR FORFEITURE AND ORDER

   Adopted: September 20, 2007 Released: September 24, 2007

   By the Chief, Investigations and Hearings Division:

   I. INTRODUCTION

    1. In this Notice of Apparent Liability for Forfeiture and Order ("NAL"),
       we find that Liberty Phones, Inc. ("Liberty Phones") apparently
       violated Commission orders by willfully and repeatedly failing to
       respond to directives of the Enforcement Bureau ("Bureau") to provide
       certain information and documents. Based on our review of the facts
       and circumstances of this case, and for the reasons discussed below,
       we find that Liberty Phones is apparently liable for a monetary
       forfeiture in the amount of $20,000.

   II. BACKGROUND

    2. Liberty Phones, an Arkansas-based company authorized to provide local
       and interexchange telecommunications services since 2002, provides
       prepaid residential and small business telephone service. On February
       6, 2006, Liberty Phones submitted to the Bureau a Certificate of
       Customer Proprietary Network Information ("CPNI") filing pursuant to
       section 64.2009(e) of the Commission's rules. Upon checking, Bureau
       staff learned there was no record of Liberty Phones registering with
       the Commission or submitting Telecommunications Reporting Worksheets
       (FCC Form 499) to the Universal Service Administrative Company
       ("USAC"), or making associated payments to the requisite federal
       regulatory programs.

    3. On May 31, 2007, the Bureau issued a letter of inquiry ("LOI") to
       Liberty Phones to obtain information concerning Liberty Phones'
       compliance with various Commission filing and contribution
       requirements. The LOI directed Liberty Phones to respond to the
       Bureau's inquiries by June 20, 2007. On June 19, 2007, staff from the
       office of Liberty Phones' attorney requested an extension to submit
       Liberty Phones' LOI response until June 29, 2007, citing conflicting
       work demands. Bureau staff granted Liberty Phones' request for an
       extension to respond to the LOI. On June 26, 2007, staff from the
       office of Liberty Phones' counsel requested another extension to
       respond to the LOI, citing again other work demands. In response, on
       June 28, 2007, Bureau staff denied Liberty Phones' request for an
       additional blanket extension, but advising that counsel could contact
       Bureau staff regarding concerns with responding to any specific
       inquiries. On June 29, Liberty Phones did not provide any response to
       the LOI.

    4. The Bureau sent a follow-up letter on July 17, 2007 directing Liberty
       Phones to provide complete responses to inquiries in the LOI by no
       later than July 24, 2007. The July 17, 2007 Letter also warned Liberty
       Phones that its failure to respond fully to the Bureau's LOI by the
       due date that already passed could itself subject the company to
       potential enforcement action. Liberty Phones failed to respond to the
       July 17, 2007 Letter in any manner. Bureau staff made a final attempt
       on July 24, 2007 to contact Liberty Phones, through its counsel's
       office, to determine the status of Liberty Phones' LOI response. Staff
       in the office of Liberty Phones' counsel told the Bureau that she had
       delivered the July 17, 2007 Letter to counsel but could not make any
       representation about when or if her office or Liberty Phones would
       respond to the LOI. To date, the Bureau has not received any response
       to the LOI.

    5. Under section 503(b)(1) of the Communications Act of 1934, as amended
       (the "Act"), any person who is determined by the Commission to have
       willfully or repeatedly failed to comply with any provision of the Act
       or any rule, regulation, or order issued by the Commission shall be
       liable to the United States for a forfeiture penalty. 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
       also may 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
       willfully or repeatedly violated the Act or a Commission order or
       rule.

    6. 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

   A. Apparent Violation

    7. We find that Liberty Phones apparently violated Commission orders by
       willfully and repeatedly failing to respond to Bureau inquiries.
       Section 218 of the Act specifically 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." Sections 4(i), 4(j), and 403 of
       the Act unequivocally grant the Commission the power to direct
       responses to inquires in order to execute its functions. As indicated
       above, the Bureau directed Liberty Phones to provide certain documents
       and information to enable the Commission to perform its enforcement
       function and evaluate allegations that Liberty Phones may have
       violated Commission rules. There is no question that Liberty Phones
       received both the May 31, 2007 LOI and the July 17, 2007 Letter, as
       evidenced by confirmation of the facsimile transmissions, return
       receipts, and correspondence with staff in the office of Liberty
       Phones' attorney. Indeed, Liberty Phones, through its counsel, even
       requested and was granted an extension of the original LOI due date
       from June 20 to June 29, 2007. Further, Bureau staff took the
       additional step of attempting to contact the office of Liberty Phones'
       counsel by telephone to determine the status of Liberty Phones'
       response to the LOI. Despite the Bureau's efforts to elicit
       information from Liberty Phones, as of the date of this NAL, Liberty
       Phones has failed to provide any response whatsoever to the Bureau's
       LOI. We therefore conclude that Liberty Phones' continuing failure to
       respond to the Bureau's LOI constitutes an apparent willful and
       repeated violation of Commission orders.

     A. Proposed Forfeiture Amount

    8. We propose a forfeiture in the amount of $20,000 for Liberty Phones'
       willful and repeated failure to respond to the 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. We find that Liberty Phones' total
       failure to respond to the LOI, notwithstanding the Bureau's multiple
       attempts to obtain the company's response and its grant of a requested
       extension of time, warrants a substantial increase to this base
       amount. Misconduct of this type exhibits a disregard for the
       Commission's authority and, more importantly, threatens to compromise
       the Commission's ability to adequately investigate violations of its
       rules. In this case, such misconduct inhibits our ability adequately
       to detect and deter potential rule violations in areas of critical
       importance to the Commission -- contributions to the federal
       regulatory programs. Prompt and full responses to Bureau inquiry
       letters are critical to the Commission's enforcement function. We
       therefore propose a total forfeiture against Liberty Phones of $20,000
       for failing to respond to Commission communications. This forfeiture
       amount is consistent with recent precedent in similar cases, where
       companies failed to provide responses to Bureau inquiries concerning
       compliance with the Commission's rules despite evidence that the
       letters of inquiry had been received.

    9. We also direct Liberty Phones to respond fully to the May 31, 2007 LOI
       within thirty (30) days of the release of this order. Failure to do so
       may constitute an additional violation potentially subjecting Liberty
       Phones to further penalties, including potentially higher monetary
       forfeitures, the revocation of operating authority, and the
       disqualification of any Liberty Phones principal from the provision of
       any common carrier services without the prior consent of the
       Commission.

   IV. ORDERING CLAUSES

   10. 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, Liberty
       Phones, Inc., is hereby NOTIFIED of its APPARENT LIABILITY FOR
       FORFEITURE in the amount of $20,000 for willfully and repeatedly
       violating Commission orders.

   11. IT IS FURTHER ORDERED THAT, pursuant to section 1.80 of the
       Commission's rules, 47 C.F.R. S: 1.80, within thirty (30) days of the
       release date of this NOTICE OF APPARENT LIABILITY FOR FORFEITURE,
       Liberty Phones, Inc., SHALL PAY the full amount of the proposed
       forfeiture currently outstanding on that date or SHALL FILE a written
       statement seeking reduction or cancellation of the proposed
       forfeiture.

   12. 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.
       reference above.

   13. IT IS FURTHER ORDERED, that pursuant to sections 4(i), 4(j), 218 and
       403 of the of the Communications Act of 1934, as amended, 47 U.S.C.
       S:S: 4(i), 4(j), 218 and 403, and section 54.711 of the Commission's
       rules, 47 C.F.R. S: 54.711, Liberty Phones, Inc., shall fully respond
       to the May 31, 2007 and July 17, 2007 Letters of Inquiry sent by the
       FCC's Enforcement Bureau within thirty (30) days of the release of
       this order.

   14. The response, if any, to this NOTICE OF APPARENT LIABILITY FOR
       FORFEITURE must be mailed to Hillary S. 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. In
       addition, a copy of the response, if any, should be sent to the
       following E-mail address: hillary.denigro@fcc.gov.

   15. 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; 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.

   16. 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.

   17. IT IS FURTHER ORDERED THAT a copy of this NOTICE OF APPARENT LIABILITY
       shall be sent, by certified mail/return receipt requested to
       Christopher Malish, Foster, Malish, Blair, and Cowan, LLP, 1403 West
       6th Street, Austin TX 78703.

   FEDERAL COMMUNICATIONS COMMISSION

   Hillary S. DeNigro

   Chief, Investigations and Hearings Division

   See Application of Liberty Phones, Inc. for a Certificate of Public
   Convenience and Necessity to Provide Services as a Competing Local
   Exchange Carrier Within the State of Arkansas, Docket No. 02-095-U, Order,
   2 (Ark Comm. 2002); see also text-only cache of 
   http://libertyphonesinc.com/ as retrieved on December 3, 2006, 14:07 GMT.

   Letter from Rodney H. Williams, President, Liberty Phones, Inc., to
   Telecommunications Consumer Division, Enforcement Bureau, Federal
   Communications Commission, Docket 06-36, Certificate of CPNI filing for
   Liberty Phones, Inc. (filed February 6, 2006). Telecommunications carriers
   are required to submit a compliance certificate on an annual basis signed
   by an officer stating that, as an agent of the carrier, the officer has
   personal knowledge that the company has established operating procedures
   that adequately safeguard the use of CPNI, as provided in the Commission's
   rules. See 47 C.F.R. S: 64.2009(e). Telecommunications carriers also must
   provide a statement accompanying the certificate explaining how it is or
   is not in compliance with the Commission's CPNI rules. See id.

   See FCC Form 499-A (2007) (annual "Telecommunications Reporting Worksheet"
   or "Worksheet"); FCC Form 499-A Instructions (2007) at 1, 3-5.
   Telecommunications carriers must submit first a Form 499-A registration,
   and upon issuance of a filer identification number by USAC, must submit
   thereafter annual Telecommunications Reporting Worksheets for the purpose
   of assessing various regulatory fee program payments. See 47 C.F.R. S:S:
   1.1157, 52.17, 52.32, 54.706, 54.711, 64.604 and 64.1195. In addition,
   telecommunications carriers, with certain exceptions, must file quarterly
   Worksheets to determine monthly universal service contributions. See 47
   C.F.R. S:S: 54.706, 54.711, 54.713; FCC Form 499-Q (2007) (quarterly
   Worksheets). USAC is the data collection agent for FCC Form 499s. See  FCC
   Form 499-A (2007) at 8; FCC Form 499-Q (2007). 

   Letter from Trent B. Harkrader, Deputy Chief, Investigations and Hearings
   Division, Enforcement Bureau, to Rodney H. Williams, President, Liberty
   Phones, Inc., dated May 31, 2007 (the "LOI"). Bureau staff sent the LOI to
   Liberty Phones' address in North Little Rock, Arkansas by certified mail,
   return receipt requested and facsimile. Receipt of the letter is shown by
   confirmation of the facsimile transmission to the Liberty Phones facsimile
   number. The certified mail/return receipt hard copy was returned
   undeliverable.

   E-mail from Jennifer Washington, Paralegal, Foster, Malish, Blair and
   Cowan, LLP, to Diana Lee, Attorney Advisor, Investigations and Hearings
   Division, June 19, 2007 (requesting extension to submit the LOI response
   until June 29, 2007).

   E-mail from Diana Lee, Attorney Advisor, Investigations and Hearings
   Division, Enforcement Bureau, to Jennifer Washington, Paralegal, Foster,
   Malish, Blair and Cowan, LLP, June 19, 2007.

   E-mail from Jennifer Washington, Paralegal, Foster, Malish, Blair and
   Cowan, LLP, to Diana Lee, Attorney Advisor, Investigations and Hearings
   Division, Enforcement Bureau, June 26, 2007 (requesting further extension
   to submit Liberty Phones' response to the LOI by July 6, 2007).

   E-Mail from Diana Lee, Attorney Advisor, Investigations and Hearings
   Division, Enforcement Bureau, to Jennifer Washington, Paralegal, Foster,
   Malish, Blair and Cowan, LLP, June 28, 2007 (denying Liberty Phones
   request for another extension and expressed willingness to consider a
   limited extension for specific inquiries).

   Letter from Trent B. Harkrader, Deputy Chief, Investigations and Hearings
   Division, Enforcement Bureau, to Christopher Malish, Foster, Malish, Blair
   and Cowan, LLP, outside counsel for Liberty Phones, dated July 17, 2007
   ("July 17, 2007 Letter"). The letter was sent by certified mail/return
   receipt requested, e-mail, and facsimile to Liberty Phone outside counsel.
   Receipt of the letter is confirmed by facsimile transmission to Liberty
   Phones outside counsel's facsimile number, by the certified mail return
   receipts, and by transmission to the E-mail address of Ms. Jennifer
   Washington, Paralegal, Foster, Malish, Blair and Cowan, LLP.

   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., 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., 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., 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., Forfeiture Order,  17 FCC Rcd 7589,
   7591 (2002) ("SBC Forfeiture Order").

   47 U.S.C. S: 503(b)(2)(B); see also 47 C.F.R. S: 1.80(b)(2); Amendment of
   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).

   47 U.S.C. S: 218.

   47 U.S.C. S:S: 154(i),(j), & 403.

   See, e.g., SBC Forfeiture Order, 17 FCC Rcd 7589, 7599-7600, P:P: 23-28
   (ordering $100,000 forfeiture for egregious and intentional failure to
   certify the response to a Bureau inquiry); Globcom, Inc., Notice of
   Apparent Liability for Forfeiture and Order, 18 FCC Rcd 19893, 19898 n. 36
   (2003) (noting delayed response to an LOI is considered dilatory behavior
   which may result in future sanctions); BigZoo.Com Corporation, Notice of
   Apparent Liability for Forfeiture and Order, 19 FCC Rcd 24437 (Enf. Bur.
   2004), Order of Forfeiture, 20 FCC Rcd 3954 (Enf. Bur. 2005) ("BigZoo")
   (ordering $20,000 forfeiture for failure to respond to an LOI); American
   Family Association, Licensee of Station KBMP(FM), Enterprise, Kansas,
   Notice of Apparent Liability for Forfeiture, 19 FCC Rcd 14072, Forfeiture
   Order, 19 FCC Rcd 22025 (Enf. Bur. 2004) (ordering $3,000 forfeiture
   against non-commercial educational station for a partial response to an
   LOI); World Communications Satellite Systems, Inc., Notice of Apparent
   Liability for Forfeiture, 18 FCC Rcd 18545 (Enf. Bur. 2003) (proposing
   $10,000 forfeiture for non-responsive reply to an LOI); Donald W.
   Kaminski, Jr., Notice of Apparent Liability for Forfeiture, 16 FCC Rcd
   10707 (Enf. Bur. 2001), Forfeiture Order, 18 FCC Rcd 26065 (Enf. Bur.
   2003) (ordering $4,000 forfeiture for individual's failure to respond to
   an LOI).

   47 C.F.R. S: 1.80; Commission's Forfeiture Policy Statement and Amendment
   of Section 1.80 of the Rules to Incorporate the Forfeiture Guidelines,
   Report and Order, 12 FCC Rcd 17087, 17114 (1997) ("Forfeiture Policy
   Statement"), recon. denied 15 FCC Rcd 303 (1999).

   See, e.g., Universal Telecommunications, Inc., Notice of Apparent
   Liability for Forfeiture and Order, 21 Rcd 6579 (Enf. Bur. 2006) (ordering
   $20,000 forfeiture for failure to respond to an LOI); BigZoo, 20 FCC Rcd
   at 3955 (same); QuickLink Telecom, Inc., Order of Forfeiture, 20 FCC Rcd
   14464 (Enf. Bur. 2005) (same).

   See CCN, Inc., et. al, Order to Show Cause and Opportunity for Hearing,
   Order, 13 FCC Rcd 13599 (1998) (revoking carrier's operating authority
   based on findings of repeated violations); see also, e.g., Business
   Options, Inc., Consent Decree, 19 FCC Rcd 2916 (2003); NOS Communications,
   Inc., Affinity Network Incorporated and NOSVA Limited Partnership, Consent
   Decree, 2003 WL 22439710 (2003).

   See 47 C.F.R. S: 1.1914.

   (Continued from previous page)

                                                               (continued...)

   Federal Communications Commission DA  07-4016

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   Federal Communications Commission DA  07-4016