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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
In the Matter of File No. EB-05-IH-2348
)
Telrite Corporation NAL/Acct. No. 200832080084
)
Apparent Liability for Forfeiture FRN No. 0007-9604-20
)
)
NOTICE OF APPARENT LIABILITY FOR FORFEITURE & ORDER
Adopted: April 16, 2008 Released: April 17, 2008
By the Commission:
I. INtroduction
1. In this Notice of Apparent Liability for Forfeiture and Order ("NAL"),
we find Telrite Corporation ("Telrite") apparently violated sections
52.17(b), 52.32(b), 54.711(a) and 64.604(c)(5)(iii)(B) of the
Commission's rules by willfully or repeatedly filing inaccurate
Telecommunications Reporting Worksheets ("Worksheets") that grossly
under-reported its interstate revenue. Telrite also apparently
violated section 254(d) of the Communications Act of 1934, as amended
(the "Act"), and sections 54.706 and 54.711 of the Commission's rules
by willfully or repeatedly failing to contribute fully to the
Universal Service Fund ("USF"); section 225(b)(1) of the Act and
section 64.604(c)(5)(iii)(A) of the Commission's rules by willfully or
repeatedly failing to contribute fully to the Telecommunications Relay
Services Fund ("TRS Fund"); section 251(e)(2) of the Act and section
52.17(a) of the Commission's rules by willfully or repeatedly failing
to make full North American Numbering Plan ("NANP") administration
contributions; section 251(e)(2) of the Act and section 52.32(a) of
the Commission's rules by willfully or repeatedly failing to make full
Local Number Portability ("LNP") contributions; and section 9(a)(1) of
the Act and sections 1.1154 and 1.1157(b)(1) of the Commission's rules
by willfully or repeatedly failing to pay fully regulatory fees
program payments when due. Based on our review of the facts and
circumstances, we find that Telrite is apparently liable for a total
forfeiture of $924,212.
2. We order Telrite to submit within thirty days a report supported by a
sworn statement or declaration under penalty of perjury of a corporate
officer setting forth in detail its plan to come into compliance with
the reporting and payment obligations discussed herein. We further
order Telrite to file with the Universal Service Administrative
Company ("USAC") within thirty days annual Worksheets reporting
accurate annual revenue for 2005.
II. Background
3. 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 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 USF 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 universal service fund. The Universal
Service Administrative Company ("USAC") currently administers the USF.
USAC bills carriers each month, including Telrite, based on their
quarterly contribution amount. Consistent with the Debt Collection
Improvement Act of 1996 ("DCIA"), USAC transfers USF contributions
more than 90 days delinquent to the Commission to collect the
outstanding debt.
4. Section 225(b)(1) of the Act, which codifies Title IV of the Americans
with Disabilities Act of 1990, directs the Commission to "ensure that
interstate and intrastate telecommunications relay services are
available, to the extent possible and in the most efficient manner, to
hearing-impaired and speech-impaired individuals in the United
States." To that end, the Commission established the TRS Fund to
reimburse TRS providers for the costs of providing interstate
telecommunications relay services. Pursuant to section
64.604(c)(5)(iii)(A) of the Commission's rules, every carrier that
provides interstate telecommunications services must contribute to the
TRS Fund based upon its end-user revenues.
5. In addition, section 251(e)(1) of the Act directs the Commission to
oversee the administration of telecommunications numbering to ensure
the availability of telephone numbers on an equitable basis. Section
251(e)(2) of the Act requires that "[t]he cost of establishing
telecommunications numbering administration arrangements . . . shall
be borne by all telecommunications carriers on a competitively neutral
basis as determined by the Commission." In carrying out this statutory
directive, the Commission adopted section 52.17 of its rules, which
requires, among other things, that all telecommunications carriers
contribute toward the costs of numbering administration on the basis
of their end-user telecommunications revenues for the prior calendar
year. In addition, the Commission adopted section 52.32 of its rules,
which requires, among other things that all telecommunications
carriers contribute toward the costs of local number portability on
the basis of their end-user telecommunications revenues for the prior
calendar year. Similar to USF and TRS, outstanding NANP administration
and LNP obligations are also subject to the DCIA.
6. Pursuant to section 9(a)(1) of the Act and section 1.1151 of the
Commission's rules, providers of interstate telecommunications
services and other providers must pay regulatory fees to the
Commission to cover the costs of certain regulatory activities. In
particular, sections 1.1154 and 1.1157(b)(1) of the Commission's rules
require that interstate telecommunications carriers pay regulatory
fees on the basis of their interstate and international end-user
revenues. Such fees must be paid on an annual basis, and failure to do
so subjects a carrier to late payment penalties, as well as possible
revocation of its operating authority. 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 its regulatory fees or any other program payment when
due, such as USF or TRS Fund contributions, and if payment or payment
arrangements are not made within thirty days from notice to the
applicant, such applications or requests will be dismissed.
7. The Commission has established specific procedures for the
administration of the universal service, TRS, and other associated
federal regulatory programs. A carrier is required to file FCC Form
499-A, also known as the annual Telecommunications Reporting Worksheet
("annual Worksheet" or "Form 499-A"), for the purpose of determining
its USF, TRS, LNP, NANP administration and regulatory fee payments,
and, with certain exceptions, to file Quarterly Telecommunications
Reporting Worksheets ("quarterly Worksheet" or "Form 499-Q") to
determine its 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, USAC, the administrator of the USF,
uses the revenue projections submitted on the quarterly filings to
determine each carrier's monthly universal service contribution
amount. Similarly, the National Exchange Carriers Association ("NECA")
is the TRS Fund administrator, and it uses the annual filings to
determine each carrier's TRS Fund contribution amount. Carriers must
timely pay their contribution invoices, and the Commission's rules
explicitly warn contributors that failure to file forms or submit
payments potentially subjects them to enforcement action. 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 and if payment or payment arrangements are not made within 30
days from notice to the applicant, such applications or requests will
be dismissed.
8. Telrite is a toll reseller providing interstate and information
services to residential and business customers. In 2004, Telrite
purchased at an auction assets formerly associated with Onestar Long
Distance, Inc. ("Onestar"). The projected closing of that sale was
supposed to have occurred by December 31, 2004 but according to
Telrite, because it had not obtained all necessary regulatory
approvals by that date, the time period for closing remained open "for
some period of time thereafter." On November 14, 2005, USAC referred
Telrite to the Bureau for potential enforcement action, alleging that
Telrite failed to comply with the Commission's USF contribution and
reporting rules. The Bureau initiated an investigation on December 15,
2005, by issuing a letter of inquiry ("LOI") to Telrite seeking
information about Telrite's compliance with USF and other related
regulatory obligations. On January 31, 2006, Telrite responded to the
LOI summarizing the circumstances of its purchase of the Onestar
assets, reporting that it was involved in litigation with Onestar
regarding Onestar's revenues.
9. On June 9, 2006, the Bureau sent a second LOI to Telrite seeking
additional information about its acquisition of Onestar's assets,
Onestar's revenues, and whether Telrite filed Worksheets that properly
reported all revenue. On July 10, 2006, Telrite admitted that it had
failed to report either Telrite or Onestar intrastate revenue on its
annual Form 499-A filed in March 2006. Telrite stated that it would
file an amended Form 499-A accurately reporting revenue with USAC, and
then provide this amended filing to the Bureau.
10. In November 2006, the Bureau sent a third LOI to Telrite that
requested specific financial information regarding the company's
revenues and directed Telrite to produce copies of any amended annual
Worksheets it submitted to USAC since its response to the Bureau on
July 10, 2006. On December 27, 2006, Telrite submitted copies of its
federal and state tax returns for 2004 and 2005 to the Bureau, but
failed to produce an amended Form 499-A for the year 2006.
11. On April 2, 2007, Telrite filed its Form 499-A annual Worksheet for
2007, but failed to report any revenue. Telrite sent a copy of this
Worksheet to the Bureau on April 19, 2007, explaining that the company
intended "to remain compliant on USF filings" while it completed an
audit of its billing and revenue data and, if necessary, Telrite would
amend its prior filings. In subsequent conversations with Commission
staff, company representatives explained they were in the process of
auditing the company's 2006 revenue, and planned to file a revised
2007 Worksheet after completion of the audit. On July 12, 2007,
Telrite filed with USAC and submitted to the Bureau a revised 2007
499-A reporting corrected 2006 revenue. Telrite's revised 2007 499-A
reported interstate revenue that was three times greater than the
projected revenue and twice as much as the historical revenue the
company reported on its 2006 quarterly Worksheets.
III. Discussion
12. 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. As we set forth
below, we conclude under this standard that Telrite is apparently
liable for forfeiture for its apparent violations of the Act and the
Commission's rules.
13. The fundamental issues in this case are whether Telrite apparently
violated the Act and the Commission's rules by (1) willfully or
repeatedly failing to make required contributions to the USF; (2)
willfully or repeatedly failing to file accurate quarterly and annual
FCC Form 499s; (3) willfully or repeatedly failing to make required
contributions to the TRS Fund; (4) willfully or repeatedly failing to
pay required regulatory fees to the Commission; (5) willfully or
repeatedly failing to pay NANP administration obligations; and (6)
willfully or repeatedly failing to pay LNP obligations. We answer
these questions in the affirmative. Based on a preponderance of the
evidence, we therefore conclude that Telrite is apparently liable for
a forfeiture of $924,212.
A. Telrite Apparently Failed To Pay Its Universal Service Fund
Contributions
14. Section 54.706(c) of the Commission's rules unambiguously directs that
"entities [providing] interstate telecommunications to the public . .
. for a fee . . . contribute to the universal service support
programs." Telrite was required pursuant to section 54.706(b) of the
Commission's rules to contribute to universal service mechanisms based
upon its projected collected end-user telecommunications revenue filed
on its quarterly Worksheets. Telrite, however, failed to report
accurately its revenues beginning with its November 2005 quarterly
Worksheets and continuing through the filing of each quarterly
Worksheet in 2006 and the first two quarterly Worksheets filed in
2007. In addition, Telrite filed annual Worksheets in March 2006 and
April 2007 that failed to report accurately revenue for 2006. The
revenues reported on a carrier's Worksheet determine its USF
obligation and monthly universal service contribution amounts. As a
result of Telrite's inaccurate revenue reporting, we find that Telrite
underpaid its monthly contributions to the USF in 2006, 2007 and 2008.
The failure of interstate telecommunications service providers to
fully report revenues has a direct and profound detrimental impact on
the USF because it removes from the base of the fund
telecommunications revenues that otherwise should have been included.
By underreporting revenues, interstate telecommunications service
providers shift to compliant contributors disproportionate economic
burdens associated with the federal universal service program and gain
an illegitimate competitive advantage. Consequently, carriers that
underreport revenues thwart the very purpose for which Congress
enacted section 254(d) - to ensure every interstate carrier
"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."
15. We find that Telrite apparently violated the Act and the Commission's
rules when it failed to pay its full contribution obligations by the
due date for each of its monthly invoices to USAC twelve times in
2006. The violations continued with each subsequent day on which it
failed to make full payment. Moreover, each of those violations
continue to this day because Telrite has not yet paid the full amount
of the past due obligations from that year. Similarly, we also find
that Telrite apparently violated the Act and the Commission's rules
ten times in 2007 when it failed to pay its full contribution
obligations by the due date for each of its monthly invoices to USAC.
Each of those violations continues to this date because Telrite has
not yet made remedial payments. Moreover, Telrite apparently continued
to violate the Act and the Commission's rules four times in 2007 and
2008 when it failed to make any monthly contribution payment to USAC.
Each of those violations continues to this date because Telrite has
not yet made remedial payments. Finally, we also find that Telrite
apparently violated the Act and the Commission's rules once thus far
in 2008 when it failed to pay its full contribution obligations by the
due date for its most recent monthly invoice to USAC. Consequently,
based on a preponderance of the evidence, we find that Telrite has
apparently violated section 254(d) of the Act and section 54.706 of
the Commission's rules by willfully or repeatedly failing to fully pay
twenty-seven [as of mid-March 2008] monthly universal service
contributions.
A. Telrite Apparently Filed Inaccurate Telecommunications Reporting
Worksheets
16. Our rules clearly establish a carrier's obligation to file periodic
revenue information on FCC Form 499 Telecommunications Reporting
Worksheets. A carrier's failure to file accurate Worksheets has
serious implications for the USF, TRS, NANP, and LNP programs, as well
as our regulatory fees. A carrier's Worksheet prompts a determination
of liability for, and subsequent billing and collection of, regulatory
fees and contributions by the various fund administrators and affects
all the contribution bases through the unified reporting system. Any
failure to file accurate Worksheets harms these funds by removing from
the contribution base telecommunications revenues that otherwise
should be included, thereby shifting to compliant carriers the
additional economic burdens associated with contributing to the funds.
17. Telrite, as a reseller of toll services, must file Worksheets with
USAC reporting accurate historical and projected telecommunications
revenue. As described above, Telrite failed to report all of its
eligible, assessable revenue on its Worksheets filed in 2005, 2006 and
2007. Based on a preponderance of the evidence, we find that Telrite
has apparently violated sections 52.17(b), 52.32(b), 54.711(a) and
64.604(c)(5)(iii)(B) of the Commission's rules by willfully or
repeatedly filing inaccurate Forms 499-Q quarterly Worksheets
throughout 2005, 2006 and 2007 and by willfully or repeatedly filing
inaccurate Forms 499-A annual Worksheet in March 2006 and on April 2,
2007.
A. Telrite Apparently Failed To Pay Its TRS Fund Contributions
18. As a carrier providing interstate telecommunications service, Telrite
was obligated to contribute to the TRS Fund on the basis of its
end-user telecommunications revenues reported on its annual Worksheet.
A carrier's contribution to the TRS Fund is based upon its subject
revenues for the prior calendar year and a contribution factor
determined annually by the Commission. Subject carriers must make TRS
contributions on an annual basis, with certain exceptions.
19. Telrite reported inaccurate telecommunications revenue on its annual
Worksheets filed March 31, 2006 and April 2, 2007. The inaccurate 2006
Form 499-A resulted in NECA assessing and Telrite paying a smaller TRS
Fund contribution than it should have. Moreover, Telrite's 2007 Form
499-A annual Worksheet reported no revenue. As a result NECA did not
invoice Telrite for any TRS Fund payment in July 2007. Telrite filed a
revised 2007 annual Worksheet but not until July 12, 2007, more than
three months after the revenue report was first due and a few days
after Telrite should have received an invoice from NECA. Thus, Telrite
was not billed for nor had it paid its TRS Fund obligation for 2007 by
the July TRS Fund payment due date. Based on a preponderance of the
evidence, we therefore find that Telrite has apparently violated
section 64.604(c)(5)(iii)(A) of the Commission's rules by willfully or
repeatedly failing to make required TRS contributions.
A. Telrite Apparently Failed to Pay Its Numbering Administration
Contributions
20. As a telecommunications carrier, Telrite must contribute to NANP cost
recovery mechanisms on the basis of the end-user telecommunications
revenues reported on its Form 499-A annual Worksheet. Telrite reported
inaccurate telecommunications revenue on its annual Worksheets filed
on March 31, 2006 and April 2, 2007. The inaccurate 2006 annual
Worksheet resulted in NANPA assessing and Telrite paying a smaller
NANP contribution than it should have. Moreover, for its 2007
obligation, Telrite was assessed the minimum NANP contribution
permitted by our rules. Had its NANP contribution invoice been based
on accurate revenue reported on Telrite's revised annual Worksheet
dated July 12, 2007, Telrite's 2007 contribution would have been
larger than the amount it was invoiced. Telrite has thus not paid the
full amount of its obligation to the NANP administration for 2007. We
therefore conclude that Telrite has apparently violated section
251(e)(2) of the Act and section 52.17(a) of the Commission's rules by
willfully or repeatedly failing to make required NANP contributions in
2006 and 2007.
A. Telrite Apparent Failed to Pay Its Local Number Portability
Contributions
21. As a telecommunications carrier, Telrite was obligated to contribute
to local number portability ("LNP") cost recovery mechanisms on the
basis of its end-user telecommunications revenues reported on its
annual Worksheet. Telrite reported inaccurate telecommunications
revenue on its annual Worksheets filed on March 31, 2006 and April 2,
2007. The inaccurate 2006 annual Worksheet resulted in Neustar
assessing and Telrite paying a smaller LNP Fund contribution than it
should have. Moreover, Telrite's inaccurate 2007 annual Worksheet also
resulted in a smaller LNP Fund payment. Telrite filed a revised annual
Worksheet on July 12, 2007 but Neustar had already calculated
Telrite's 2007 contribution based on the April Worksheet. Even though
Telrite may have been paying the full amounts invoiced by Neustar,
that amount was less than what it owed based on its actual revenue.
Telrite has thus not paid the full amount of its obligation to the LNP
fund for 2006 and 2007. We therefore conclude that Telrite has
apparently violated section 251(e)(2) of the Act and section 52.32 of
the Commission's rules by willfully or repeatedly failing to make
required LNP contributions in 2006 and 2007.
A. Telrite Apparently Failed to Pay Its Regulatory Fees
22. As an interstate telephone service provider, Telrite was required to
pay regulatory fees on the basis of its interstate and international
end-user revenues reported on its Form 499-A annual Worksheet. Telrite
reported inaccurate telecommunications revenue on its annual Worksheet
filed March 31, 2006. The inaccurate 2006 annual Worksheet resulted in
the FCC assessing and Telrite paying a smaller regulatory fee than it
should have. We find that Telrite apparently violated sections 1.1154
and 1.1157(b)(1) of the Commission's rules by willfully or repeatedly
failing to pay regulatory fees program payments when due.
A. Proposed Forfeiture
23. Section 503(b)(1) of the Act provides that any person that willfully
or repeatedly fails to comply with any provision of the Act or any
rule, regulation, or order issued by the Commission, shall be liable
to the United States for a forfeiture penalty. 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)(E) 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."
24. Although Telrite made monthly payments to the USF covering the amounts
invoiced by USAC, those invoiced amounts were based on Telrite's
inaccurate Worksheets filed with USAC, and Telrite should have been
making significantly larger contributions. Based on the facts above,
it appears that Telrite failed to make full contributions into the USF
twenty-seven times beginning in 2006. Moreover, these separate
violations continue today, and thus we may propose forfeitures for
these apparent violations. Payment of inaccurate universal service
contributions is an egregious offense that bestows on delinquent
carriers an unfair competitive advantage by shifting to compliant
carriers the economic costs and burdens associated with universal
service. A carrier's failure to make required universal service
contributions frustrates Congress' policy objective in section 254(d)
of the Act to ensure the equitable and non-discriminatory distribution
of universal service costs among all telecommunications service
providers.
25. Generally, the Commission has established a base forfeiture amount of
$10,000 for each month in which a carrier has failed to fully pay
required universal service contributions and $20,000 for each month in
which a carrier has failed to make any required universal service
contribution, plus an upward adjustment based on one-half of the
company's approximate unpaid contributions. Although we have stated
that each failure to make a full monthly payment to the USF
constitutes a separate, continuing violation until the carrier pays
its outstanding contributions, we have not sought to propose
forfeitures on that basis. Instead, we have proposed forfeitures based
solely on violations committed in the previous twelve month period. We
have placed carriers on notice, however, that they face potential
liability of as much as the statutory maximum for each continuing
violation of our USF contribution requirements. Most recently, in the
Globcom Forfeiture Order, we warned 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."
Based on the facts of this case, as well as the accumulating record of
non-compliance by other carriers, we find that it is now appropriate
to impose such penalties.
26. The Commission has imposed increasingly larger forfeitures for USF
violations because of the scope and scale of violations in this area.
Since January 1, 2006, the Commission has issued orders regarding more
than $3.15 million in proposed forfeitures and voluntary contributions
for the nonpayment of contributions to USF and other programs. Despite
that aggressive enforcement, nonpayment into those programs remains a
serious concern as demands on the USF have increased. Clearly our
previous forfeiture calculation methodology did not deter Telrite from
attempting to avoid reporting accurate revenue and paying its full
universal service contributions.
27. Accordingly, consistent with our previous statements that nonpayment
of USF, TRS, and other contributions constitute continuing violations,
and to effectively deter companies like Telrite from violating our
rules governing payment into the USF, TRS, and other programs, our
forfeiture calculations will reflect not only the violations that
began within the last twelve months, but all such continuing
violations. By including such violations in our forfeiture
calculations, our enforcement actions now will provide increased
deterrence and better reflect the full scope of the misconduct
committed. As in previous orders, we warn carriers that if the
forfeiture calculation methodology described here does not adequately
deter violations of our rules, we will consider larger penalties
within the scope of our authority, including substantially higher
forfeitures and revocation of carriers' operating authority.
28. As a result, we propose a forfeiture of $310,000 for Telrite's willful
or repeated failure to contribute fully and timely to the USF on
twenty-three occasions between January 2006 and the date of this NAL
and for Telrite's willful or repeated failure to make any contribution
to the USF on four occasions between November 2007 and the date of
this NAL. Moreover, consistent with our approach for assessing
liability for apparent USF violations, and taking into account all the
factors enumerated in section 503(b)(2)(E) of the Act, we also propose
an upward adjustment of $417,438 [1/2 the largest balance due (due on
February 15, 2008)], approximately one-half of the largest amount of
Telrite's unpaid USF contributions due to USAC and the FCC, to our
proposed base forfeiture. We therefore issue a total proposed
forfeiture of $727,438 against Telrite for its apparent willful or
repeated failures to contribute fully to the USF.
29. We next find that Telrite's willful or repeated filing of inaccurate
Worksheets is also egregious. A carrier's obligation to accurately
file these Worksheets is directly linked to, and thus has serious
implications for, administration of the USF, TRS, NANP, LNP and
regulatory fee programs. It is imperative that the Worksheets be
accurate so that the Commission can be assured that payment
obligations are correctly apportioned among all carriers consistent
with the directives of the Communications Act and that the burdens are
not improperly shifted from non-compliant to compliant carriers.
Although it is axiomatic that carriers are expected to file truthful
information, the veracity of the information contained in the
Worksheets is especially critical because the Commission does not
audit each carrier's filing. Consequently, we determine that carriers
must be deterred not only from underpaying contributions, but from
submitting, in the first place, deceptive and inaccurate information
to the Commission.
30. Telrite should have filed Worksheets when it first began providing
telecommunications service in the United States. Although the
Worksheets were due on specific dates, Telrite's failure to file
accurate revenue figures had a continued harmful impact on various
programs because the relevant fund administrators could not assess
Telrite's payment obligations. Based on this conclusion, we therefore
reconsider our previous position, as stated in the Globcom Forfeiture
Order, that the statute of limitations under section 503(b)(2)(B) bars
a forfeiture for the failure to file a Worksheet more than one year
beyond the filing deadline. Rather, Telrite's failures to file
constitute continuing violations for which the statute of limitations
for forfeiture does not begin to run until the violation is cured.
Because of our previous position, however, we exercise our
prosecutorial discretion here and decline to propose forfeitures for
Telrite's failures to file Worksheets more than one year prior to the
date of the NAL. We caution Telrite and other carriers that future
enforcement actions may consider all failures to file Worksheets as
continuing violations subject to forfeiture action.
31. As we noted above, a carrier's obligation to accurately file these
Worksheets is directly linked to, and thus has serious implications
for, administration of the USF, TRS, NANP, LNP and regulatory fee
programs. Telrite has avoided making full payment into these programs
and has shifted to compliant carriers and their customers the economic
costs associated with the administration of these programs. As noted
above, in the past, the Commission has proposed a forfeiture of
$50,000 for failure to file a Worksheet or for filing an inaccurate
Quarterly or annual Worksheet. Accordingly, we find that Telrite is
apparently liable for a $50,000 forfeiture for filing an inaccurate
quarterly Worksheet on May 22, 2007. We also find Telrite is
apparently liable for a $50,000 forfeiture for filing an inaccurate
annual Worksheet on April 19, 2007. We therefore find Telrite is
apparently liable for a total forfeiture of $100,000 for filing
inaccurate Worksheets.
32. We also find that Telrite has failed to make full TRS contributions,
including failure to pay its TRS obligations in 2007. Where a carrier
fails to satisfy its TRS obligations, it thwarts the purpose for which
Congress established section 225(b)(1) of the Act and its implementing
regulations -- to ensure that telecommunications relay services "are
available to the extent possible and in the most efficient manner, to
hearing-impaired and speech-impaired individuals in the United
States." The Commission has generally established a base forfeiture
amount of $10,000 for each instance in which a carrier fails to make
required TRS contributions and an upward adjustment based on one-half
of the company's approximate unpaid contributions at the time the
investigation was initiated. Thus, for the reasons described above, we
propose a $20,000 forfeiture for Telrite's failure to fully pay its
TRS Fund contributions in 2006 and 2007 and an upward adjustment of
$26,774, approximately one-half of Telrite's unpaid TRS Fund
contributions resulting from the inaccurate 2007 Form 499-A. We
therefore issue a total proposed forfeiture of $46,774 against Telrite
for its apparent willful or repeated failure to contribute fully to
the TRS Fund.
33. We also find that Telrite apparently failed to make timely
contributions toward NANP administration cost recovery mechanisms on
the basis of its actual end-user telecommunications revenues. As with
universal service and TRS, the failure of carriers to make required
NANP administration contributions for an extended period of time
severely hampers the Commission's ability to ensure that the cost of
establishing telecommunications numbering administration arrangements
is "borne by all telecommunications carriers on a competitively
neutral basis" as Congress envisioned. Consequently, and consistent
with precedent, we find that Telrite is apparently liable for the base
forfeiture of $20,000 for failing to timely pay contributions toward
NANP administration cost recovery mechanisms for 2006 and 2007.
34. We also conclude that Telrite apparently failed to make full
contributions toward LNP cost recovery mechanisms on the basis of its
actual end-user telecommunications revenues. As with NANP, the failure
of carriers to make required LNP contributions for an extended period
of time severely hampers the Commission's ability to ensure that the
cost of establishing number portability arrangements are "borne by all
telecommunications carriers on a competitively neutral basis" as
Congress envisioned. As noted above, the Commission previously
prescribed a $10,000 base forfeiture amount for failure to pay NANP
contributions -- we find that the failure to make LNP contributions
is analogous. We find Telrite is apparently liable for a forfeiture of
$20,000 for its failure to make full LNP payments in 2006 and 2007.
35. We finally conclude that Telrite has apparently failed to fully pay
its regulatory fee obligations to the Commission. A carrier's failure
to contribute toward the costs of certain regulatory activities from
which it benefits undermines the efficiency, equitability, and
effectiveness of the regulatory fee program and accomplishment of
Congress' objectives in section 9(a)(1) of the Act. Telrite's
violation for failing to fully pay its regulatory fee obligation is
continuing until fully paid. The Commission has established a base
forfeiture amount of $10,000 for failure to make required regulatory
fee payments. We, therefore, find Telrite apparently liable for a
$10,000 forfeiture for its apparent violation of sections 1.1154 and
1.1157 of the Commission's rules.
IV. Conclusion
36. In light of the seriousness, duration and scope of the apparent
violations, we find that a proposed forfeiture in the amount of
$924,212 is warranted. As discussed, this proposed forfeiture amount
includes a total proposed forfeiture of $727,438 for Telrite's failure
to fully pay its USF obligations, a total proposed forfeiture of
$100,000 for Telrite's failure to file accurate Telecommunications
Reporting Worksheets, a total proposed forfeiture of $46,774 for
Telrite's failure to make TRS contributions, a total proposed
forfeiture of $20,000 for Telrite's apparent failure to make NANP
contributions, a total proposed forfeiture of $20,000 for Telrite's
apparent failure to make LNP contributions, and a total proposed
forfeiture of $10,000 for Telrite's apparent failure to make ITSP
regulatory fee payment to the Commission.
37. We caution that additional violations of the Act or the Commission's
rules could subject Telrite to further enforcement action. Such action
could take the form of higher monetary forfeitures and/or possible
revocation of Telrite's operating authority, including
disqualification of Telrite'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 Telrite is found
to be delinquent on any debt owed to the Commission (e.g., has failed
to pay all of its TRS contributions), the Commission will not act on,
and may dismiss, any application or request for authorization filed by
Telrite, in accordance with the agency's "red light" rules.
V. ORDERING CLAUSES
38. 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
Telrite Corporation is hereby NOTIFIED of its APPARENT LIABILITY FOR A
FORFEITURE in the amount of $924,212 for willfully and repeatedly
violating the Act and the Commission's rules.
39. 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, Telrite Corporation SHALL PAY the full
amount of the proposed forfeiture or SHALL FILE a written statement
seeking reduction or cancellation of the proposed forfeiture.
40. IT IS FURTHER ORDERED THAT Telrite shall submit within thirty days of
the release date of this NOTICE OF APPARENT LIABILITY, a report
supported by a sworn statement or declaration under penalty of perjury
of a corporate officer setting forth in detail its plan to come into
compliance with the reporting and payment obligations discussed
herein. The report 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; e-mail address: hillary.denigro@fcc.gov.
41. IT IS FURTHER ORDERED THAT Telrite shall file with the Universal
Service Administrative Company within thirty days annual Worksheets
reporting accurate annual revenue for 2005.
42. 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/Account Number and FRN Number referenced
above. Payment by check or money order may be mailed to Federal
Communications Commission, P.O. Box 979088, St. Louis, MO 63197-9000.
Payment by overnight mail may be sent to U.S. Bank - Government
Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO
63101. Payment[s] by wire transfer may be made to ABA Number
021030004, receiving bank TREAS/NYC, and account number 27000001. For
payment by credit card, an FCC Form 159 (Remittance Advice) must be
submitted. When completing the FCC Form 159, enter the NAL/Account
number in block number 23A (call sign/other ID), and enter the letters
"FORF" in block number 24A (payment type code). Requests for full
payment under an installment plan should be sent to: Chief Financial
Officer -- Financial Operations, 445 12th Street, S.W., Room 1-A625,
Washington, D.C. 20554. Please contact the Financial Operations
Group Help Desk at 1-877-480-3201 or Email: ARINQUIRIES@fcc.gov with
any questions regarding payment procedures.
43. 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; e-mail address: hillary.denigro@fcc.gov. The response must
include the NAL/Acct. No. referenced above.
44. 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.
45. Requests for payment of the full amount of this NOTICE OF APPARENT
LIABILITY FOR FORFEITURE under an installment plan should be sent to
Chief Financial Officer -- Financial Operations, Federal
Communications Commission, 445 12th Street, S.W., Room 1-A625,
Washington, D.C. 20554. For answers to questions, please contact the
Financial Operations Group Help Desk at 1-877-480-3201 or Email:
ARINQUIRIES@fcc.gov.
46. 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 Michael Geoffroy, Telrite Corporation, Post Office Box
2207, Covington, Georgia 30015.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
47 C.F.R. S:S: 52.17(b), 52.32(b), 54.711(a) and 64.604(c)(5)(iii)(B).
47 U.S.C. S: 254(d) and 47 C.F.R. S:S: 54.706 and 54.711. 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: 225(b)(1) and 47 C.F.R. S:S: 64.604(c)(5)(iii)(A).
47 U.S.C. S: 251(e)(2); 47 C.F.R. S:S: 52.17(a) and 52.32(a).
47 U.S.C. S: 159(a)(1); 47 C.F.R. S:S: 1.1154, 1.1157(b)(1).
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 also 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, 24969-74, P:P: 29-39
(2002) ("Interim Contribution Order").
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, 489 F.3d 1232 (D.C. Cir. 2007).
47 C.F.R. S: 54.701(a).
See, e.g., Interim Contribution Order, 17 FCC Rcd at 24971-72, P: 35;
Federal-State Board on Universal Service, Further Notice of Proposed
Rulemaking and Order, 15 FCC Rcd 19947, 19954, P: 17 (2000); 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); Changes to the Board of Directors of the National Exchange
Carrier Association, Inc., Federal-State Board on Universal Service,
Second Order on Reconsideration, 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
Second Quarter 2006 Contribution Factor," Public Notice, 21 FCC Rcd 2379
(Wireline Comp. Bur. 2006) ("Contribution payments are due on the date
shown on the invoice."). See also 47 C.F.R. S: 54.713(b) (noting that if a
USF "contributor fails to make full payment on or before the date due date
of . . . the monthly invoice provided by the Administrator, the payment is
delinquent."). Id.
See Debt Collection Improvement Act of 1996, Pub. L. No. 104-134, 110
Stat. 1321, 1358 (1996). In 2004, the Commission adopted rules
implementing the DCIA requirements. See Amendment of Parts 0 and 1 of the
Commission's Rules, Report and Order, 19 FCC Rcd 6540 (2004) ("DCIA
Order"). In its Order, the Commission codified procedures at 47 C.F.R. S:
1.1910, the "red light rule," to extend and clarify existing policies in
the management of the Commission's accounts, and to withhold action on
applications or other requests for benefits by delinquent debtors, and
ultimately to dismiss such applications or other requests if the
delinquency is not resolved. See 47 C.F.R. S: 1.1910; DCIA Order, 19 FCC
Rcd at 6541-45 P:P: 3-15. The DCIA rules specify that the term
"Commission" includes the USF, TRS Fund, "and any other reporting
components of the Commission." See 47 C.F.R. S: 1.1901(b). Thus, the
Commission has determined that unpaid obligations to the USF, TRS, LNP,
and the cost recovery mechanisms for NANP administration are subject to
the DCIA.
Effective July 1, 2003, USAC implemented new collection procedures as
required by the DCIA and the Commission. Pursuant to those procedures,
invoices for USF contributions that become over 90 days delinquent are
transferred to the Commission for further collection. See
http://www.universalservice.org/fund-administration/contributors/understanding-your-invoice/important-invoicing-deadlines.aspx.
Debt collection procedures may include further administrative efforts both
by the Commission and the United States Treasury or, as appropriate, the
Commission may refer the delinquent debt to the Department of Justice for
enforced collection action. 47 C.F.R. S: 1.1917. Collection efforts may
result in additional charges, to include interest and penalties, as
provided under 31 U.S.C. S: 3717, and administrative charges pursuant to
47 C.F.R. S:S: 1.1940 and 54.713, 31 C.F.R. S: 285.12(j).
47 U.S.C. S: 225(b)(1).
See Telecommunications Relay Services and the Americans with Disabilities
Act of 1990, Third Report and Order, 8 FCC Rcd 5300, 5301, P: 7 (1993).
Telecommunications relay services enable persons with hearing and speech
disabilities to communicate by telephone with voice-telephone users. Such
services provide telephone access to a significant number of Americans
who, without it, might not be able to make calls to or receive calls from
voice-telephone users. See Telecommunications Relay Services and
Speech-to-Speech Services for Individuals with Hearing and Speech
Disabilities, Report and Order, 15 FCC Rcd 5140, 5143, P: 5 (2000). The
National Exchange Carriers Association ("NECA") currently is responsible
for administering the TRS Fund.
47 U.S.C. S: 251(e)(1).
47 U.S.C. S: 251(e)(2).
47 C.F.R. S: 52.17(a).
See 47 C.F.R. S: 1.1901 et seq.
Section 9(a)(1) of the Act directs the Commission to "assess and collect
regulatory fees to recover the costs of the following regulatory
activities of the Commission: enforcement activities, policy and
rulemaking activities, user information services, and international
activities." 47 U.S.C. S: 159(a)(1); see also 47 C.F.R. S: 1.1151.
See 47 C.F.R. S:S: 1.1154, 1.1157(b)(1).
47 C.F.R. S: 1.1157(b)(1). Section 1.1154 of the Commission's rules sets
forth the schedule of annual regulatory charges and filing locations for
common carrier services. See 47 C.F.R. S: 1.1154.
See 47 U.S.C. S:S: 159(c)(1), (c)(3).
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).
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"). 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.
See 47 U.S.C. S:S: 225(d)(3); 254(d). In 1999, to streamline the
administration of the programs and to ease the burden on regulatees, the
Commission consolidated the information filing requirements for multiple
telecommunications regulatory programs into the annual Telecommunications
Reporting Worksheet. See 1998 Biennial Regulatory Review, Report and
Order, 14 FCC Rcd 16602 (1999). The next year the Commission revised the
Telecommunications Reporting Worksheet slightly to collect the additional
information necessary to achieve its goal of establishing a central
repository for interstate telecommunications providers by the least
provider-burdensome method. Carrier Selection Order, 15 FCC Rcd at 16026.
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). 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,
P:P: 29-39. 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).
64 C.F.R. S: 64.604(c)(5)(iii)(B).
See 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 (Wir. Comp. Bur. 2003) ("Contribution payments are due on the
date shown on the [USAC] invoice."). The Act and our rules, however, do
not condition payment on receipt of an invoice or other notice from USAC
or NECA. See 47 U.S.C. S: 254(d); 47 C.F.R. S:S: 54.706(b) and
64.604(c)(5)(iii)(A). A carrier that does not file may not receive an
invoice from USAC, but is nonetheless required to contribute to the
universal service fund, unless its revenues are considered de minimis. See
Globcom, Inc., Notice of Apparent Liability, 18 FCC Rcd 19890, 19896, P:
5, n. 22 (2003) ("Globcom NAL") (subsequent history omitted). The
instructions for the Worksheet include tables for carriers to determine
their annual contributions. Providers whose annual contribution is less
than $10,000 are considered de minimis and exempted from contributing to
the USF. 47 C.F.R. S: 54.708.
See 47 C.F.R. S: 54.713.
Id. 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).
See Telrite's 2006 FCC 499-A, Line 105, filed March 24, 2006.
Letter from Michael G. Geoffroy, Corporate Counsel, Telrite Corporation,
to Christopher Shields, Enforcement Bureau, Federal Communications
Commission, dated January 31, 2006 ("LOI Response")
Letter from Hillary S. DeNigro, Deputy Chief, Investigations & Hearings
Division, Enforcement Bureau, FCC, to Telrite Corporation (Dec. 15, 2005)
("LOI").
Letter from Hillary S. DeNigro, Deputy Chief, Investigations & Hearings
Division, Enforcement Bureau, FCC, to Michael Geoffroy, Corporate Counsel,
Telrite Corporation (June 9, 2006).
Letter from Michael G. Geoffroy, Corporate Counsel, Telrite Corporation,
to Christopher Shields, Enforcement Bureau, Federal Communications
Commission, dated July 10, 2006 ("FLOI Response")
Letter from Trent B. Harkrader, Deputy Chief, Investigations & Hearings
Division, Enforcement Bureau, FCC, to Telrite Corporation (November 8,
2006).
Letter from Michael Geoffroy to Christopher Shields, Esq., Investigations
and Hearings Division, Enforcement Bureau, Federal Communications
Commission, dated April 19, 2007. Telrite did not specify which of its
filings it would amend.
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) ("This provision
[inserted in Section 312] defines the terms 'willful' and repeated' for
purposes of section 312, and for any other relevant section of the act
(e.g., section 503).... As defined ... 'willful' means that the licensee
knew that he was doing the act in question, regardless of whether there
was an intent to violate the law. 'Repeated' means more than once, or
where the act is continuous, for more than one day. Whether an act is
considered to be 'continuous' would depend upon the circumstances in each
case. The definitions are intended primarily to clarify the language in
sections 312 and 503, and are consistent with the Commission's application
of those terms ...")
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., Order of Forfeiture, 17 FCC Rcd 7589,
7591, P: 4 (2002) (forfeiture paid).
47 C.F.R. S: 54.706(c).
Id. S: 54.706(b).
Telrite admits in its LOI Response that its acquisition of the Onestar
assets was delayed beyond December 31, 2004 and the period for closing the
transaction remained open "for some period of time thereafter." See LOI
Response at 1. As a result, it is unclear when in 2005 Telrite absorbed
the Onestar assets and was first obligated to report revenue from those
sources. Taking the most conservative approach, we find Telrite was first
obligated to report the Onestar revenue when it filed its final Worksheet
in 2005, the November 2005 Form 499-Q.
47 U.S.C. S: 254(d).
See Globcom NAL, 18 FCC Rcd at 19900P: 16 ("[E]ach month that Globcom
failed to make its universal service contribution constitutes a separate
violation of the Commission's rules").
See Globcom, Inc., Order of Forfeiture, 21 FCC Rcd at 4723, P: 35, n.105
(2006) ("Globcom Forfeiture Order") ("Each failure to pay the amount due
each month constituted a violation that continued for more than 10
days."); Matrix Telecom, Inc., Notice of Apparent Liability, 15 FCC Rcd.
13544 (2000); Conquest Operator Services Corp., Order of Forfeiture, 14
FCC Rcd 12518, 12525 P: 16 (1999). See also VCI Company, Notice of
Apparent Liability for Forfeiture and Order, 22 FCC Rcd 15933 at P: 24 &
n.69 (2007) (holding that failure to return excess Lifeline and LinkUp
support is a continuing violation) (VCI NAL).
Although Telrite may have paid the full amount billed on its USAC invoices
in these months, the invoices reflected less than Telrite's total
obligations to USAC as a result of Telrite's underreporting of revenue.
The Commission has repeatedly stated that carriers must pay their
obligations to USAC regardless of whether or not they receive a bill from
USAC. See Globcom Forfeiture Order, 21 FCC Rcd at 4712 P: 5; BCE Nexxia
Corp., Notice of Apparent Liability, 20 FCC Rcd 15121, 15124, 15126 P:P:
10, 15 (2005).
Id.
Id. See also 47 C.F.R. S: 64.604(c)(5)(iii)(B) (setting forth methods of
computation and payment of carrier contributions to TRS Fund).
Id.
Id. Under the Commission's rules, each subject carrier must contribute at
least $25 per year, and carriers whose annual contributions are less than
$1,200 must pay the entire amount at the beginning of the contribution
period. Otherwise, carriers may divide their contributions into equal
monthly payments. Id.
47 C.F.R. S: 64.604(c)(5)(iii)(A). Although we propose forfeitures only
for apparent violations from the execution of the tolling agreement to the
present, we also note that Telrite apparently failed to make any
regulatory contributions between 1995 and 2003 and we find this apparent
noncompliance is relevant to the scope of Telrite's misconduct.
Id. S: 52.17(a). In particular, contributions to support numbering
administration are based upon a carrier's end-user telecommunications
revenues for the prior calendar year and a contribution factor determined
annually by the Chief of the Wireline Competition Bureau, but in no event
will be less than $25. Id. NANPA contributions are due on an annual
basis, with certain exceptions.
Id. S: 52.32(a)
See 47 C.F.R. S:S: 1.1154, 1.1157(b)(1).
47 U.S.C. S: 159(a)(1); 47 C.F.R. S:S: 1.1154, 1.1157. Payments of
standard regulatory fees applicable to common carrier services must be
filed in full on an annual basis. Id. S: 1.1157(b)(1). Telrite's
regulatory fee obligations for 2007 are not due until September 2007.
47 U.S.C. S: 503(b)(1)(B); 47 C.F.R. S: 1.80(a)(2).
47 U.S.C. S: 503(b)(2)(B); see also 47 C.F.R. S: 1.80(b)(2); see also
Amendment of Section 1.80(b) of the Commission's Rules, Adjustment of
Forfeiture Maxima to Reflect Inflation, Order, 15 FCC Rcd 18221 (2000).
47 U.S.C. S: 503(b)(2)(E).
47 U.S.C. S: 503(b)(6)(B); see also 47 C.F.R. S: 1.80(c)(3).
47 U.S.C. S: 254(d).
See OCMC, Inc., Order of Forfeiture, 21 FCC Rcd 10479, 10482, P: 10 (2006)
("OCMC Forfeiture Order"); Globcom NAL, 18 FCC Rcd at 19903-19904, P:P:
25-27; Globcom Forfeiture Order, 21 FCC Rcd 4710 at 4721-4724, P: 31-38.
See, e.g., Globcom Forfeiture Order, 21 FCC Rcd at 4722, P: 33; OCMC
Forfeiture Order, 21 FCC Rcd at 10482, P: 10. For similar reasons, we also
apply an upward adjustment for TRS payments based on half of a company's
unpaid contributions. Globcom NAL, 18 FCC Rcd at 19903-19904, P:P: 25-27.
See, e.g.,Globcom Forfeiture Order, 21 FCC Rcd at 4723, P: 35 (stating
under the then applicable maximum forfeiture amount "the carrier had full
notice under the APA that the maximum potential forfeiture for each
violation could be as high as $1,200,000") (emphasis in original).
Id. at 4724, P: 38.
See also VCI NAL, 22 FCC Rcd 15933 at P: 24 & n.69.
See, e.g. Globcom Forfeiture Order, 21 FCC Rcd at 4723-24, P:P: 36-37.
See e.g., Telus Communications, Inc., Order, 22 FCC Rcd 17251 (2007)
(order adopting a Consent Decree in which the carrier agreed to make a
voluntary contribution to the United States Treasury in the amount of
$450,000); Verizon Business Global LLC f/k/a MCI, LLC, Order, 22 FCC Rcd
12097 (2007) (order adopting a Consent Decree in which the carrier agreed
to make a voluntary contribution to the United States Treasury in the
amount of $500,000); Carrera Communication LP, Order of Forfeiture, 22 FCC
Rcd 9585 (2007) (imposing a $345,900 forfeiture for, inter alia, failing
to make required universal service contributions); Teletronics, Inc.,
Order, 22 FCC Rcd 8681 (2007) (Teletronics Consent Decree) (order adopting
a Consent Decree in which the carrier agreed to make a voluntary
contribution to the United States Treasury in the amount of $250,000);
InPhonic, Inc., Order of Forfeiture and Further Notice of Apparent
Liability for Forfeiture, 22 FCC Rcd 8689 (2007) (proposing a new
forfeiture of $100,000 as part of the Further Notice of Apparent Liability
for Forfeiture for apparent violations of the Act and the Commission's
rules); Intelecom Solutions, Inc., Order, 21 FCC Rcd 14327 (2006) (order
adopting a Consent Decree in which the carrier agreed to make a voluntary
contribution to the United States Treasury in the amount of $150,000);
Telecom House, Inc., Order, 21 FCC Rcd 10883 (2006) (order adopting a
Consent Decree in which the carrier agreed to make a voluntary
contribution to the United States Treasury in the amount of $170,000);
Communication Services Integrated, Inc., Order, 21 FCC Rcd 10462 (2006)
(order adopting a Consent Decree in which the carrier agreed to make a
voluntary contribution to the United States Treasury in the amount of
$250,000); Local Phone Services Inc., Notice of Apparent Liability for
Forfeiture, 21 FCC Rcd 9974 (2006) (proposing forfeiture of $529,000 for
apparent violations of USF related requirements); FPL FiberNet, LLC,
Order, 21 FCC Rcd 8530 (2006) (order adopting a Consent Decree in which
the carrier agreed to make a voluntary contribution to the United States
Treasury in the amount of $150,000); Clear World Communications Corp.,
Order, 21 FCC Rcd 5304 (2006) (order adopting a Consent Decree in which
the carrier agreed to make a voluntary contribution to the United States
Treasury in the amount of $290,000).
See, e.g., High-Cost Universal Service Support; Federal-State Joint Board
on Universal Service, WC Docket No. 05-337, CC Docket No.96-45, Notice of
Proposed Rulemaking, 22 FCC Rcd 9705 (2007) (seeking comment on
Federal-State Joint Board's recommendation that the Commission take
immediate action regarding increasing demand for USF monies for high-cost
support); Written Statement of The Honorable Kevin J. Martin, Chairman,
Federal Communications Commission, Before the Committee on Commerce,
Science & Transportation, U.S. Senate, February 1, 2007 at 7 (describing
increasing pressure on the stability of the USF due to "[c]hanges in
technology and increases in the number of carriers who are receiving
universal service support").
See Globcom Forfeiture Order, 21 FCC Rcd at 4724, P: 38 & n.105.
See 47 U.S.C. S: 254(d).
Globcom Forfeiture Order, 21 FCC Rcd at 4721 n.33 ("[W]e imposed an
admonishment rather than a proposed forfeiture regarding the [Globcom's
failure to file its Year] 2000 revenue information because the statute of
limitations for a forfeiture action had already elapsed."). See also
Globcom NAL, 18 FCC Rcd at 19902 n.63 ("Under section 503(b)(6) of the Act
and section 1.80(c)(3) of the Commission's rules, the statute of
limitations for this violation [the failure to file an annual Worksheet]
is one year.").
See id.
47 U.S.C. S: 225(b)(1).
See Globcom Forfeiture Order, 21 FCC Rcd at 4721-24, P:P: 31-38.
47 U.S.C. S: 251(e)(2).
Teletronics, Inc., Notice of Apparent Liability for Forfeiture and Order,
20 FCC Rcd 13291, 13303, P: 35 (2005) (Teletronics NAL) (finding that the
carrier was apparently liable for a forfeiture of $10,000 for the
carrier's failure to make its NANP administration contribution), consent
decree entered, Teletronics Consent Decree, 22 FCC Rcd 8681.
See, e.g., Teletronics NAL, 20 FCC Rcd at 13304, P: 35.
47 U.S.C. S: 251(e)(2).
See Teletronics NAL, 20 FCC Rcd at 13303-04, P: 36; Carrera
Communications, LP, Notice of Apparent Liability for Forfeiture and Order,
20 FCC Rcd 13307, 13318-19, P: 30 (2005).
See Business Options, Inc., Consent Decree, 19 FCC Rcd 2916 (2003); NOS
Communications, Inc., Affinity Network Incorporated and NOSVA Limited
Partnership, Consent Decree, 2003 WL 22439710 (2003).
47 C.F.R. S: 1.1910.
See 47 C.F.R. S: 1.1914.
See 47 C.F.R. S: 1.1914.
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Federal Communications Commission FCC 08-116
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Federal Communications Commission FCC 08-116