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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
)
In the Matter of File No. EB-06-IH-3060
)
Compass Global, Inc. NAL/Acct. No. 200832080083
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Apparent Liability for Forfeiture FRN No. 0009690256
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)
)
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: April 8, 2008 Released: April 9, 2008
By the Commission:
I. INTRODUCTION
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
that Compass Global, Inc. ("Compass") apparently violated sections 9,
225, 251(e)(2), and 254 of the Communications Act of 1934, as amended
(the "Act"), and sections 1.1154, 1.1157, 52.17(a), 52.32(a),
54.706(a), and 64.604(c)(5)(iii)(A) of the Commission's rules, by
willfully or repeatedly failing to make the required regulatory
payments as well as to contribute fully and timely to the Universal
Service Fund ("USF"), Telecommunications Relay Service ("TRS") Fund,
and cost recovery mechanisms for the North American Numbering Plan
("NANP") administration and Local Number Portability ("LNP"). Based on
our review of the facts and circumstances surrounding this matter, and
for the reasons discussed below, we find that Compass is apparently
liable for a total forfeiture of $828,613.44.
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 register with the Commission, comply
with annual and quarterly filing requirements and 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
Compass, based on their quarterly contribution amount. The National
Exchange Carrier Association ("NECA"), which administers the TRS fund,
bills carriers each July based upon their annual revenue. Consistent
with the Debt Collection Improvement Act of 1996 ("DCIA"), USF or TRS
contributions that have become over 90 days delinquent are transferred
to the Commission for further action to collect the outstanding debt.
3. The Commission is charged by Congress with regulating interstate and
international telecommunications and ensuring that providers of such
telecommunications comply with the requirements imposed on them by the
Act and our rules. The Commission also has been charged by Congress to
establish, administer and maintain various telecommunications
regulatory programs, and to fund these programs through assessments on
the telecommunications providers that benefit from them. To accomplish
these goals, the Commission 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. Commission rules require that, upon entry or
anticipated entry into interstate telecommunications markets,
telecommunications carriers register by submitting information on FCC
Form 499-A, also known as the annual Telecommunications Reporting
Worksheet ("annual Worksheets").
4. Additionally, the Commission has established specific procedures to
administer the universal service program. A carrier is required to
file the FCC Form 499-A, for the purpose of determining its USF
payments, and, with certain exceptions, to file quarterly short-form
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, USAC uses the revenue projections submitted on the
quarterly filings to determine each carrier's 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.
5. Title IV of the Americans with Disabilities Act of 1990, codified at
47 U.S.C. S: 225, directs the Commission to ensure that interstate and
intrastate TRS 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 established the TRS Fund to
reimburse TRS providers for the costs of providing interstate TRS. TRS
enables persons with hearing and speech disabilities to communicate by
telephone with voice telephone users. TRS provides telephone access to
a significant number of Americans who, without it, might not be able
to make or receive calls. Pursuant to section 64.604 of the
Commission's rules, every carrier providing interstate
telecommunications services must contribute to the TRS fund. As
discussed above, NECA invoices common carriers each year for their
contribution based on their interstate revenues, and like USF
contributions, outstanding TRS obligations are subject to the DCIA.
6. 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. The Commission also adopted section 52.32 of its rules, which
requires 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 payments and LNP payments
are also subject to the DCIA.
7. Pursuant to section 9(a)(1) of the Act and section 1.1151 of the
Commission's rules, interstate telecommunications 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 when due its
regulatory fees or any other program payment, such as USF
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.
8. Compass, a New Jersey-based company, has provided telecommunications
services since 1998. Compass currently provides telecommunications
services as a toll reseller and a prepaid card provider. On May 7,
2007, the Bureau issued a letter of inquiry ("LOI"), initiating an
investigation into whether Compass may have violated, the Act and the
Commission's rules. After receiving two extensions of time, Compass
responded to the LOI on June 29, 2007. Compass filed supplemental
materials on July 30, 2007. Among other services, Compass provides
unaffiliated companies with toll-free access to its PIN-accessible,
prepaid calling-card switching platform. Compass provides these
companies with platform access and switching capabilities for delivery
of their private label prepaid calling cards. While Compass argues
that it is not obligated to contribute to universal service based on
most of the services it provides, it admits in its initial response
that it is a provider and/or consumer of "telecommunications
services," with regard to its "switched toll free inbound service that
is integrated with Compass' PIN accessible switching platform
service." In its Supplemental Response, however, Compass argues it is
not providing a telecommunications service, and is thus not required
to report revenue on a Form 499-A. Compass explains that consumers
purchase prepaid calling cards from its business customers and may
place interstate and international calls by dialing a toll-free number
accessing Compass' network. Compass sells this access to its network
only to other companies, not directly to consumers, and the prepaid
calling cards sold to consumers by Compass' business customers do not
identify Compass as either the calling card provider or the network
services provider. Compass argues it does not provide a
telecommunications service because it does not sell or market prepaid
calling card directly to consumers. In addition, Compass states it
provides an "Enhanced Wholesale Service" by reselling network capacity
to communications companies who transmit their international voice and
data calls over the Compass Internet Protocol network. Compass
contends this service is not a telecommunications service because it
is only offered wholesale and, as an exclusively IP-enabled service,
it is only characterized as an information service.
9. Compass has a history of failing to comply with the Commission's
rules. On December 27, 2006, prior to the initiation of the current
investigation, the Commission proposed a forfeiture against Compass
for apparent violations of the Commission's payphone compensation
rules. The Commission determined that Compass, among other apparent
violations, had apparently violated our rules and the Act by failing
to establish on a timely basis a call tracking system that accurately
tracks coinless access code or subscriber toll-free payphone calls to
completion; failing to have that call tracking system audited; and
failing to compensate payphone service providers for calls or provide
compliant call data reports. The Commission also found that Compass
failed to respond on a timely basis to a directive of the Enforcement
Bureau to provide information and documents. Compass' compliance
problems did not end with its payphone compensation obligations.
Compass also concedes that it did not register or file any of the
required Form 499s until September 2006 when it filed its Form 499-A
reporting revenue for the year 2005, five months late. Compass then
timely filed a 2007 Form 499-A reporting revenue for 2006 on March 27,
2007.
10. On July 30, 2007, however, Compass submitted to the Bureau two Form
499s purportedly revising the 2007 and 2006 Form 499-As. Compass
provided the Form 499s at the same time it provided its Supplemental
Response, arguing that neither the prepaid calling card service nor
the IP transport service was a telecommunications service. Compass
explains that it revised the Form 499-As to correct its previous,
mistaken filings that reported what they now argue is
non-telecommunications revenue as telecommunications revenue. Compass
also explains in the Supplemental Response that the revised 499-As
account for the retail revenue it derives from the prepaid calling
card service as ordinary long distance out of an abundance of caution.
The revenue Compass reported on the revised 2006 and 2007 forms dated
July 30, 2007 was significantly less than initially reported on the
original Form 499s. Compass has yet to submit the revised Form 499-As
to USAC. One day after submitting its Supplemental Response and
revised Form 499-As to the Bureau, however, Compass did file with USAC
another version of the revised 2007 Form 499-A. This filing reported
revenues far greater than that reported on the revised Forms submitted
to Bureau, but less than originally reported on the Form 499-A dated
March 27, 2007.
III. DISCUSSION
11. 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
forfeiture if it finds by a preponderance of the evidence that the
person has violated the Act or a Commission rule.
12. The fundamental issues in this case are whether Compass Is a
telecommunications carrier and therefore apparently violated the Act
and the Commission's rules by: (1) failing to timely pay in full USF
contributions; (2) failing to timely pay in full TRS Fund
contributions; (3) failing to timely pay contributions to NANP
administration cost recovery mechanisms; (4) failing to timely pay LNP
contributions; and (5) willfully or repeatedly failing to pay
regulatory fees to the Commission. We answer this/these questions
affirmatively. Based on a preponderance of the evidence, we therefore
conclude that Compass is apparently liable for a forfeiture of
$828,613.44 for apparently willfully and repeatedly violating sections
9, 225, 251(e)(2), and 254 of the Act and sections 1.1154, 1.1157,
52.17(a), 52.32(a), 54.706(a), and 64.604(c)(5)(iii)(A) of the
Commission's rules.
A. Compass Provides Telecommunications Services
13. Compass argues that that the services at issue are "IP-in-the-middle"
wholesale services, and that they, as well as prepaid calling card
services, are not "telecommunications services." As discussed below,
we find these services are telecommunications services subject to our
regulations and, upon reviewing Compass' compliance with our rules,
conclude that Compass apparently violated the Act and our rules by
failing to timely pay in full contributions toward the Universal
Service, TRS Funds, cost recovery mechanisms for NANP administration
and LNP, and required regulatory fees.
14. We conclude that the wholesale services Compass sells to prepaid
calling card providers are telecommunications services under our rules
and the Act. "Telecommunications service" is defined as "the offering
of telecommunications for a fee directly to the public or to such
classes of users as to be effectively available directly to the public
regardless of the facilities used." "Telecommunications" means "the
transmission, between or among points specified by the user, of
information of the user's choosing, without change in the form or
content of the information as sent and received." Compass explains
that consumers purchase prepaid calling cards from its business
customers and are able to place interstate and international calls by
dialing a toll-free number accessing Compass' network - i.e.,
"switched toll free inbound service that is integrated with Compass'
PIN accessible switching platform service." Compass sells this access
to its network only to other companies, not directly to consumers, and
the prepaid calling cards sold to consumers by Compass' business
customers do not identify Compass as either the calling card provider
or the network services provider. Compass does not dispute that its
provision of prepaid calling cards constitutes "the offering of
telecommunications." Indeed, Compass has admitted the
telecommunications nature of this service. Rather, the sole basis for
Compass' argument is that its provision of this service is on a
wholesale basis and thus does not constitute a "telecommunications
service" because Compass does not provide this service to the public.
15. Compass' reliance on the wholesale nature of this service is
misplaced. As we have previously stated, "[t]he definition of
`telecommunications services' long has been held to include both
retail and wholesale services under Commission precedent." The
Commission has previously held that the phrase "to the public" in the
definition of "telecommunications service" does not mean a service
must be offered to the entire public to qualify as a
telecommunications service. A service offered to a defined class of
potential customers is a telecommunications service as long as the
service provider "holds itself out indiscriminately to serve all
within that class." To qualify as a telecommunications carrier,
companies only need to offer indiscriminate service to whatever public
their services may legally and practically be of use. Thus, the focus
of the inquiry is on whether the carrier offers its telecommunications
in such a manner as to make it a common carrier, i.e., by "hold[ing
itself] out to serve indifferently all potential users." Compass has
provided no evidence that the wholesale services provided to prepaid
calling card companies are not available indiscriminately to all
companies seeking to provide prepaid card services. We therefore
conclude that Compass' offering of wholesale service to prepaid
calling card providers is a telecommunications service.
16. We are also not persuaded that Compass' invocation of an Enforcement
Bureau Order resolving a formal complaint compels a finding that
Compass is not providing telecommunications services. APCC Services,
Inc. v. Network IP, LLC involved a section 208 formal complaint
against Network IP, a telecommunications carrier offering other
companies a package of services enabling those companies to provide
prepaid calling cards to end-user customers. The complainants alleged
that Network IP failed to pay compensation required by the
Commission's payphone compensation rules, and the Bureau ultimately
agreed. Compass contends that its wholesale platform providing voice,
information, call routing and account management services is similar
to Network IP's platform, but Compass fails to explain how this
supports a finding that Compass is not a telecommunications service
provider. Like Network IP, Compass offers other companies this
wholesale services package which is used to provide prepaid calling
cards to consumers. APCC finds that Network IP - not the business
customers to whom Network IP provides wholesale service - was
obligated to make payphone compensation payments, and the Order
repeatedly describes the wholesale service package provided by Network
IP as "telecommunications services," enabling Network IP's business
customers to offer prepaid calling card services to the public. Our
determination that Compass' provision of wholesale service to prepaid
calling card providers is a telecommunications service is therefore
consistent with the treatment of Network IP's wholesale package.
17. We also conclude that the services Compass calls "Enhanced Wholesale
Service" are also telecommunications services. Compass resells network
capacity to communications companies who transmit international voice
calls and data over Compass' IP network. Compass claims it mistakenly
reported revenue derived from this service on the Form 499-As
originally filed in 2006 and 2007 as "telecommunications." Compass
argues this service is not a telecommunications service because it is
an "enhanced/information service" that receives and transmits
communications exclusively in Internet Protocol. Compass argues that
its service must be an information service because it utilizes only IP
and does not transmit voice traffic using traditional methods.
18. We reject Compass' argument. The Act says the term "information
service" means "the offering of a capability for generating,
acquiring, storing, transforming, processing, retrieving, utilizing,
or making available information via telecommunications, and includes
electronic publishing but does not include any use of any such
capability for the management, control, or operation of a
telecommunications system or the management of a telecommunications
service." The Commission has said that the definitions of
"telecommunications service" and "information service" do not hinge on
the particular type of facilities used, but on the functions
available. Thus, the fact that Internet Protocol is used exclusively
as transport for the traffic has no bearing on whether these voice and
data services are appropriately considered telecommunications service.
The Commission has also said that services that are not so
inextricably linked with information-processing capabilities, but are
utilized by end-users of the service for basic transmission purposes,
are telecommunications services and subject to Title II requirements.
We cannot conclude Compass' services are inextricably linked with the
information-processing capabilities. Compass' services, including the
offering of network access for basic voice services, are used by end
users for basic transmission purposes, and thus we find the services
are telecommunications services subject to Title II requirements.
19. We also reject Compass' contention that its wholesale access transport
service is not a telecommunications service because it differs from
the telecommunications service in the AT&T IP Telephony Services
Order. In that Order, the Commission found AT&T's service, which
transported voice traffic by utilizing Internet Protocol in some
parts, was a telecommunications service for which AT&T was obligated
to pay interstate access charges. The Commission expressly limited its
decision to AT&T's interexchange service. This service was found to
enable end users to place calls using ordinary customer premises
equipment with no enhanced functionality that originated and
terminated on the public switched telephone network. The service also
underwent no net protocol conversion and provided no enhanced
functionality to end users due to the use of the IP technology.
Compass claims the Commission's holding was limited only to retail,
end-to-end service offerings, arguing that its service is not a
telecommunications service because it is not an end-to-end retail
service.
20. We do not agree with Compass' narrow reading. Compass describes the
services it provides as international wholesale services, provided to
other communications companies, who then in turn use the service to
transmit voice and data. Compass does not claim its service undergoes
any net protocol conversion nor does it claim its service enables end
users a "capability for generating, acquiring, storing, transforming,
processing, retrieving, utilizing, or making available information,"
which, according to AT&T IP Telephony Services, would be required to
characterize it as an information service. Compass also does not claim
end users place or receive voice calls any differently because of the
IP portion of the service than they would if using traditional
circuit-switched service. If anything, much like the service at issue
in the AT&T IP Telephony Services Order, any use of IP services
appears to be for transport only and similar to "internetworking
conversions" which the Commission has found to be telecommunications
services. Additionally, a finding that the services Compass provides
are telecommunications services regardless of the fact that IP is used
for the entirety of the transmission service is consistent with the
Commission's prior ruling in the 2006 Prepaid Calling Card Order. In
that case, AT&T had stated that it developed a new prepaid calling
card that used IP technology to transport part or all of the call, and
the Commission ultimately determined that these calling card services
were "telecommunications service." The Commission has for many years
recognized that packet switched interstate transmission services may
appropriately be classified as telecommunications services. We
therefore conclude that Compass' wholesale access service is a
telecommunication service. Having found that Compass' wholesale access
services are telecommunications services, it follows that the revenue
Compass derives from its wholesale prepaid calling card services and
its wholesale access services must reported on the FCC Form 499-A.
B. Compass Apparently Failed To Make Universal Service Fund Contributions
21. Section 54.706(a) unambiguously directs that "entities [providing]
interstate telecommunications to the public . . . for a fee . . .
contribute to the universal service support mechanisms." Compass has
demonstrated a pattern of failing to fulfill its contribution
obligations by making insufficient payments to the USF. The record is
clear that between May 2005 and December 2005 as well as between
January 2006 and December 2006, Compass failed to make any payments to
USAC. Additionally, in 2007 Compass failed to make January and March
payments. As a result of these failures, Compass has consistently
maintained large outstanding USF balances with USAC, particularly over
the past three years. Compass has accrued $159,005 in overdue
payments. As we previously have stated,
[c]arrier nonpayment of universal service contributions undermines the
efficiency and effectiveness of the universal service support mechanisms.
Moreover, delinquent carriers may obtain a competitive advantage over
carriers complying with the Act and our rules. We consider universal
service nonpayment to be a serious threat to a key goal of Congress and
one of the Commission's primary responsibilities.
22. Based on the preponderance of the evidence, we find that Compass has
apparently violated section 254(d) of the Act and section 54.706(a) of
the Commission's rules by willfully or repeatedly failing to
contribute fully and timely to the USF.
C. Compass Apparently Failed to Make TRS Contributions
23. As an interstate telecommunications carrier, Compass was obligated to
contribute to the TRS fund on the basis of its interstate end-user
telecommunications revenues. 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 that are not applicable to Compass. The record indicates
that to date Compass has failed to make any payments towards its TRS
Fund obligation. We therefore conclude that Compass has apparently
violated section 225 of the Act and section 64.604(c)(5)(iii)(A) of
the Commission's rules by willfully or repeatedly failing to make full
and timely TRS contributions.
D. Compass Apparently Failed to Make Timely NANP Administration
Contributions
24. As a telecommunications carrier, Compass was obligated to contribute
to NANP administration cost recovery mechanisms on the basis of its
end-user telecommunications revenues. The record demonstrates that
Compass has failed to make timely NANP payments in 2005 and 2006.
Compass failed to make a payment until April 12, 2007 We therefore
conclude that Compass 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 timely NANP administration contributions.
E. Compass Apparently Failed to Make Timely LNP Contributions
25. As a telecommunications carrier, Compass was obligated to contribute
to the LNP cost recovery mechanisms on the basis of its end-user
telecommunications revenues. The record demonstrates that Compass has
repeatedly failed to make timely LNP payments since 2005. The first
payment was made by Compass on April 9, 2007 and even then Compass
failed to make a full payment. We therefore conclude that Compass has
apparently violated section 252(e)(2) of the Act and section 52.32(a)
of the Commission's rules by willfully or repeatedly failing to make
timely LNP contributions.
F. Compass Apparently Failed to Pay Its Regulatory Fees
26. As an interstate telephone service provider, Compass was required to
pay regulatory fees on the basis of its interstate and international
end-user revenues. Compass admits that to the best of its knowledge it
has never paid FCC regulatory fees. For these reasons, we find that
Compass apparently has violated sections 1.1154 and 1.1157(b)(1) of
the Commission's rules by willfully and repeatedly failing to pay
regulatory fees program payments when due in 2005 and 2006.
G. Proposed Forfeiture Amount
27. 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."
28. We note that although Compass has been providing telecommunications
service since at least 2005, it failed to file FCC Form 499 Worksheets
until September 7, 2007. A carrier's obligation to file these
Worksheets is directly linked to, and thus has serious implications
for, administration of the USF, TRS, NANP, LNP and regulatory fee
programs. By failing to report its revenue, Compass has avoided making
full payment into these programs and has unilaterally shifted to
compliant carriers and their customers the economic costs associated
with the programs.
29. Compass should have filed Worksheets when it first began providing
telecommunications service in the United States. Although the
Worksheets were due on specific dates, Compass' failure to report
revenue had a continued, harmful impact on various programs because
the relevant fund administrators could not assess Compass' 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, Compass' failures to file constitute
continuing violations for which the statute of limitations for
forfeiture is tolled until the violation is cured. Because of our
previous position, however, we exercise our prosecutorial discretion
here and decline to propose forfeitures for Compass' failures to file
Worksheets more than one year prior to the date of the NAL. We caution
Compass and other carriers that future enforcement actions may
consider all failures to file Worksheets as continuing violations
subject to forfeiture action.
30. Based on the facts above, Compass apparently has consistently failed
to make timely and full payments to the USF in 2005, 2006 and into
2007. Nonpayment of 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 hampers realization of
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 providers.
31. Generally, the Commission has established a base forfeiture amount of
$10,000 or $20,000 for each month in which a carrier has failed to
fully pay required universal service contributions, 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 that began 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.
32. Clearly, our previous forfeiture calculation methodology has not
deterred companies from attempting to avoid universal service
contributions. 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.
33. Accordingly, consistent with our previous statements that nonpayment
of USF, TRS, and other obligations constitute continuing violations,
and to effectively deter companies like Compass 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.
34. Applying this methodology to the instant case, we find that Compass is
apparently liable for 22 continuing violations for failure to make
timely and full monthly payments to the USF. We propose a $20,000 base
amount for each of the 22 months in which Compass failed to remit any
contribution toward its outstanding USF obligation. Thus, we find
Compass apparently liable for a base forfeiture of $440,000 for its
willful or repeated failure to contribute fully and timely to the USF
on 22 occasions between May 2005 and December 2005 as well as between
January 2006 and December 2006 and again in January and March 2007.
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 $79,503, approximately one-half of Compass' untimely paid USF
contributions, to our proposed base forfeiture. We therefore issue a
total proposed forfeiture of $519,503 against Compass for its apparent
willful or repeated failures to contribute fully and timely to the
USF.
35. We also find that Compass has failed to make timely TRS contributions
in 2005, 2006 and 2007. Where a carrier fails to satisfy its TRS
obligations for an extended period of time, 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."
36. The Commission has established a base forfeiture amount of $10,000 for
each instance in which a carrier fails to make required TRS
contributions. In light of Compass' failure to timely pay its TRS
obligations for the 2005, 2006 and 2007 funding periods, we find it
apparently liable for a base forfeiture in the amount of $30,000. For
the reasons discussed above regarding Compass' failure to make
universal service contributions and consistent with Commission
precedent, we find that an upward adjustment in an amount of
approximately one half of the carrier's estimated unpaid TRS
contributions (approximately $438,340.89) is appropriate for Compass'
apparent failure to make TRS contributions. Taking into account the
factors enumerated in section 503(b)(2)(E) of the Act, we conclude
that a $219,110.44 upward adjustment is reasonable. Consequently, we
find Compass is liable for a total proposed forfeiture of $249,110.44
for its willful and repeated failure to satisfy its TRS obligations
for the 2005, 2006 and 2007 funding periods.
37. We also conclude that Compass apparently failed to make timely
contributions toward NANP administration and LNP cost recovery
mechanisms on the basis of its actual end-user telecommunications
revenues since 2005. For the same reasons that failures to make USF
and TRS contributions are continuing violations, we find the failure
to make NANP administration and LNP contributions to be continuing
violations until they are cured by payment of all monies due. As with
universal service and TRS, the failure of carriers to make required
NANP administration and LNP 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 Compass is apparently liable
for the base forfeiture of $20,000 for failing to timely pay
contributions toward NANP administration cost recovery mechanisms for
2005 and 2006. With respect to Compass' failure to make its LNP
contributions, we find that this violation is sufficiently analogous
to the failure to pay NANP administration contributions and establish
the same base forfeiture amount -- $10,000. Accordingly, we find that
Compass is apparently liable for a forfeiture of $20,000 for failing
to timely pay LNP contributions for 2005 and 2006.
38. Finally, we conclude that Compass has apparently failed to make any
regulatory fee payments to the Commission in 2005 or 2006. 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.
As with failure to make universal service, TRS, NANP administration
and LNP contributions, we find failures to make regulatory fee
payments to be continuing until they are cured by the payment of all
monies owed. In recent orders, the Commission has established a base
forfeiture amount of $10,000 for failure to timely make required
regulatory fee payments for one calendar year. Therefore, we find
Compass apparently liable for a $20,000 forfeiture for its apparent
violation of sections 1.1154 and 1.1157 of the Commission's rules.
IV. ORDERING CLAUSES
39. 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
Compass Global, Inc. is hereby NOTIFIED of its APPARENT LIABILITY FOR
A FORFEITURE in the amount of $828,613.44 for willfully and repeatedly
violating the Act and the Commission's rules.
40. 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, Compass Global, Inc. SHALL PAY the full
amount of the proposed forfeiture or SHALL FILE a written statement
seeking reduction or cancellation of the proposed forfeiture.
41. 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.
42. The response, if any, to this NOTICE OF APPARENT LIABILITY must be
mailed to Hillary S. DeNigro, Chief, Investigations and Hearings
Division, Enforcement Bureau, Federal Communications Commission, 445
12th Street, S.W., Room 4-C330, Washington, D.C. 20554 and must
include the NAL/Acct. No. referenced above. A response should also be
sent via email to Hillary.DeNigro@fcc.gov.
43. 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.
44. 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 Jonathan S. Marashlin, Counsel for Compass Global, Inc.,
Helien and Marashlian, LLC, 1483 Chain Bridge Road, Suite 301, McLean,
Virginia 22101.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
47 U.S.C. S:S: 159, 225, 251(e)(2), 254.
47 C.F.R. S:S: 1.1154, 1.1157, 52.17(a), 52.32(a), 54.706(a),
64.604(c)(5)(iii)(A).
See 47 U.S.C. S: 254. 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 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., Federal-State Joint Board on Universal Service, Sixteenth Order
on Reconsideration in CC Docket No. 96-45, Eighth Report and Order in CC
Docket No. 96-45, and Sixth Report and Order in CC Docket No. 96-262, 15
FCC Rcd 1679, 1687, P: 18 (1999); Federal-State Board on Universal
Service, Further Notice of Proposed Rulemaking and Order, 15 FCC Rcd
19947, 19954, P: 17 (2000); Interim Contribution Order, 17 FCC Rcd at
24971-72, P: 35; Changes to the Board of Directors of the National
Exchange Carrier Association, Inc., Federal-State Board on Universal
Service, Second Order on Reconsideration, 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 dates by which payments must be made.") See, e.g.,
"Proposed Second Quarter 2006 Universal Service Contribution Factor,"
Public Notice, 21 FCC Rcd 2379, 2381 (Wireline Comp. Bur. 2006)
("Contribution payments are due on the date shown on the [administrator]
invoice.").
See "TRS Resources," online available:
http://www.neca.org/source/NECA_Resources_216.asp. 17 July 2007.
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, 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 (continued) (continued
from previous page) 90 days delinquent are transferred to the Commission
for further collection. See Universal Service Administrative Company,
"Important Invoicing Deadlines,"
http://www.universalservice.org/fund-administration/contributors/understanding-your-invoice/important-invoicing-deadlines.aspx
(last visited July 16, 2007). 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).
See, e.g., 47 U.S.C. S: 151.
See Implementation of the Subscriber Carrier Selection Changes Provisions
of the Telecommunications Act of 1996, Third Report and Order and Second
Order on Reconsideration, 15 FCC Rcd 15996, 16024-26 (2000) ("Carrier
Selection Order").
47 C.F.R. S: 64.1195.
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.
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). 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. See Interim Contribution Order, 17 FCC Rcd at
24969-74, P:P: 29-39.
47 C.F.R. S: 54.713.
Pub. L. No. 101-336, S: 401, 104 Stat. 327, 366-69 (1990) (adding section
225 to the Act).
See Telecommunications Relay Services and the Americans with Disabilities
Act of 1990, Third Report and Order, 8 FCC Rcd 5300, 5301, P: 7 (1993)
(TRS III Order).
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).
See 47 C.F.R. S: 64.604(c)(5)(iii).
All carriers providing interstate telecommunications services (including,
but not limited to, cellular telephone and paging, mobile radio, operator
services, personal communications service, access, alternative access and
special access, packet-switched, WATS, 800, 900, message telephone,
private line, telex, telegraph, video, satellite, international,
intraLATA, and resale services) must contribute to the TRS Fund on the
basis of their interstate end-user telecommunications revenues. See 1998
Biennial Regulatory Review - Streamlined Contributor Reporting
Requirements Associated with Administration of Telecommunications Relay
Services, North American Numbering Plan, Local Number Portability, and
Universal Service Support Mechanisms, Report and Order, 14 FCC Rcd 16602,
16630-34, P:P: 59-67; 47 C.F.R. S: 64.604(c)(5)(iii).
See supra para. 2, note 10. Any entity owing money to the TRS Fund will be
considered delinquent if payment is not made by the due date specified on
the annual or monthly invoice. NECA notifies the Commission of all TRS
delinquencies. See National Exchange Carrier Association, "Red Light Rule
Notice- October 2004," http://www.neca.org/SOURCE/NECA_RESOURCES_3430.ASP
(last visited July 16, 2007).
47 U.S.C. S: 251(e)(1).
47 U.S.C. S: 251(e)(2).
47 C.F.R. S: 52.17(a).
47 C.F.R. S: 52.32.
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 Letter from Jonathan S. Marashlin, Counsel for Compass, to Brian
Hendricks, Attorney Advisor, Investigations & Hearings Division,
Enforcement Bureau, FCC, dated June 29, 2007, at 1 and Attachment 1 ("LOI
Response").
See Compass' 2005 FCC Form 499-A Telecommunications Reporting Worksheet,
LOI Response at Attachment 6-B; Compass' 2006 FCC Form 499-A
Telecommunications Reporting Worksheet, Id. at Attachment 6-B; Compass'
2007 FCC Form 499-A Telecommunications Reporting Worksheet, Id. at
Attachment 6-E.
Letter from Trent Harkrader, Deputy Chief, Investigations & Hearings
Division, Enforcement Bureau, FCC, to Mr. Dean Cary, President and Chief
Executive Officer, Compass Global, Inc., dated May 7, 2007 ("LOI").
See LOI Response.
Letter from Jonathan S. Marashlian, Counsel for Compass, to Brian
Hendricks, Attorney Advisor, Investigations and Hearings Division, and
Trent Harkrader, Deputy Division Chief, Investigations and Hearings
Division, July 30, 2007. ("Supplemental Response").
LOI Response at 2 Inquiries 1 and 2.
Id. at 1-2.
See LOI Response at 2 inquiry 2.
LOI Response at 3 inquiry 5.
Supplemental Response at 3.
Supplemental Response at 2.
Compass, Inc. D/B/A Compass Global, Inc., Notice of Apparent Liability
for Forfeiture and Order, 21 FCC Rcd 15132 (2006).
LOI Response at 3 inquiry 5.
Supplemental Response at 5. Compass further represents it will continue to
report and pay contributions on the revenue from the prepaid card service
out of abundance of caution.
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., Application for Review of Southern California Broadcasting Co.,
Memorandum Opinion and Order, 6 FCC Rcd 4387, 4388, P: 5 (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, Inc.") (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., Forfeiture Order, 17 FCC Rcd 7589,
7591, P: 4 (2002).
47 U.S.C. S: 159, 225, 251(e)(2), and 254; 47 C.F.R. S: 1.1154, 1.1157,
52.17(a), 52.32, 54.706(a), 64.604(c)(5)(iii)(A).
47 U.S.C. S: 153(46).
47 U.S.C. S: 153(43).
LOI Response at 3 inquiry 5.
See supra. para. 8,
Supplemental Response at 3-4.
See, e.g., Implementation of the Non-Accounting Safeguards of Sections 271
and 272 of the Communications Act of 1934, as Amended, First Report and
Order and Further Notice of Proposed Rulemaking, 11 FCC Rcd 21905, 22033,
para. 264 (1996) (subsequent history omitted) (Non-Accounting Safeguards
Order)
Iowa v. FCC, 218 F.3d 756, 759 (D.C. Cir. 2000).
NARUC v. FCC, 525 F.2d 630, 642 (D.C. Cir. 1976). Non-Accounting
Safeguards Order, 11 FCC Rcd at 22033, para. 265 (finding that the
inclusion of the term "to the public" reflected the distinction between
common and private carriage, and thus did not limit "telecommunications
service" to services offered to retail, and not wholesale, customers).
Time Warner Cable Request for Declaratory Ruling That Competitive Local
Exchange Carriers May Obtain Interconnection Under Section 251 of the
Communications Act Of 1934, as Amended, to Provide Wholesale
Telecommunications Services to VoIP Providers, Memorandum Opinion and
Order, 22 FCC Rcd 3513, 3517-18, P:P: 11-12 (2007).
NARUC v. FCC, 533 F.2d 601, 608 (D.C. Cir. 1976).
APCC Services, Inc. et al. v. Network IP, LLC et al., LLP., Memorandum
Opinion and Order, 20 FCC Rcd 2073 (Enf. Bur. 2005).
See 47 C.F.R. S: 64.1300.
Supplemental Response at 4.
See APCC Services v. Network IP, 20 FCC Rcd at 2074 P: 2, 2077 P: 10.
Supplemental Response at 3.
Supplemental Response at 2-3.
Supplemental Response at 3.
47 U.S.C. S: 153(20).
Inquiry Concerning High-Speed Access To The Internet Over Cable And Other
Facilities, Declaratory Ruling and Notice of Proposed Rulemaking, 17 FCC
Rcd 4798, 4821 P:35 (2002) (subsequent history omitted) (Cable Modem
Declaratory Ruling and NPRM).
Appropriate Framework for Broadband Access to the Internet Over Wireline
Facilities; Universal Service Obligations of Broadband Providers Review of
Regulatory Requirements for Incumbent LEC Broadband Telecommunications
Services; Computer III Further Remand Proceedings; Bell Operating Company
Provision of Enhanced Services; 1998 Biennial Regulatory Review - Review
of Computer III and ONA Safeguards and Requirements; Conditional Petition
of Verizon Telephone Companies for Forbearance Under 47 U.S.C. S: 160 (C)
With Regard to Broadband Services Provided via Fiber to the Premises;
Petition of the Verizon Telephone Companies for Declaratory Ruling or,
Alternatively, for Interim Waiver with Regard to Broadband Services
Provided via Fiber to the Premises; Consumer Protection in the Broadband
Era; Report and Order and Notice of Proposed Rulemaking, 20 FCC Rcd 14853,
14860-61, P: 9 (2005).
Petition for Declaratory Ruling that AT&T's Phone-to-Phone IP Telephony
Services are Exempt from Access Charges, Order, 19 FCC Rcd 7457, 7460
(2004) ("AT&T IP Telephony Services") (citations omitted).
Id.
Id. at 7465.
Supplemental Response at 3. For the reasons discussed above, we determine
the fact that Compass provides wholesale rather than retail service does
not determine if the service is a telecommunications service.
Supplemental Response at 2.
AT&T IP Telephony Services, 19 FCC Rcd at 7465.
Non-Accounting Safeguards Order, 11 FCC Rcd at 21957 P: 106. Although the
term "internetworking conversions" as used by the Commission in the
Non-Accounting Safeguards Order and the AT&T IP Telephony Services Order
refers to conversions occurring solely within a carrier's network to
facilitate the provision of a basic network service, we find it equally
applicable to the arrangement Compass describes involving multiple
carriers on a single call path.
Regulation of Prepaid Calling Card Services, Declaratory Ruling and Report
and Order, 21 FCC Rcd 7290 ("2006 Prepaid Calling Card Order").
Deployment of Wireline Services Offering Advanced Telecommunications
Capacity, Memorandum Opinion and Order and Notice of Proposed Rulemaking,
13 FCC Rcd 24012.
47 C.F.R. S: 54.706(a).
LOI Response at Attachment 7 shows no payments in 2006. USAC did not
receive payments from Compass prior to February 16, 2007. See Email from
Tracey Beaver, USAC, to Elizabeth Mumaw, Investigations and Hearings
Division, FCC, July 13, 2007.
Globcom, Inc. d/b/a Globcom Global Communications, Notice of Apparent
Liability for Forfeiture and Order, 18 FCC Rcd 19893,19903, P: 26 (2003)
("Globcom NAL"); See e.g., Globcom, Inc., Order of Forfeiture, 21 FCC Rcd
4710, 4724, P: 37 (2006) ("Globcom Forfeiture Order").
47 C.F.R. S: 64.604(c)(5)(iii)(B).
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.
See Marina Aparicio, NECA, Email to Evelyn Lombardo, Investigations and
Hearings Division, Enforcement Bureau, FCC, 16 July 2007.
Despite the fact that Compass consistently failed to remit full and timely
payments for monthly TRS invoices, we exercise our discretion in finding
that Compass apparently violated section 225 of the Act and section 64.604
of the Commission's rules only twice because the TRS obligation is an
annual assessment which can, and was in the instant matter, divided into
equal monthly payments for the 2005 and 2006 billing cycles. See e.g.,
Globcom Forfeiture Order, 21 FCC Rcd at 4721, P: 31 (assessing forfeiture
based on carrier's failure to pay monthly invoices for USF and TRS).
47 C.F.R. 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. NANP administration contributions are due on an
annual basis, with certain exceptions.
Email from Heather Bambrough, Welch and Company, to Elizabeth Mumaw,
Investigations and Hearings Division, July 17, 2007.
47 C.F.R. 52.32(a).
LOI Response at Exh. 7. The NANP Administrator confirms this record of
non-compliance. See Email from Ahita Vessali, Neustar, to Elizabeth Mumaw,
Investigations and Hearings Division, July 19, 2007.
Email from Ahita Vessali, Neustar, to Elizabeth Mumaw, Investigations and
Hearings Division, FCC, July 23, 2007.
See 47 C.F.R. S:S: 1.1154, 1.1157(b)(1). Regulatory fees are paid in
arrears for the previous calendar year.
LOI Response at 7 inquiry 11.
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, Order, 19 FCC Rcd
10945 (2004).
47 U.S.C. S: 503(b)(2)(E).
Globcom Forfeiture Order, 21 FCC Rcd at 4721 n.83 ("[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 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 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.
Globcom Forfeiture Order, 21 FCC Rcd 4723 P: 35.
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, e.g., id. 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 supra para. 22.
In light of our determination here that Compass' services are
telecommunications services and concerns with the accuracy of the recently
submitted revised Form 499-As (see paragraph 9), we are calculating the
upward adjustment based on revenue reported on Compass' 2007 FCC Form
499-A filed March 27, 2007, reporting revenue realized in 2006, and
Compass' 2006 FCC Form 499-A filed September 7, 2006, reporting 2005
revenue. If it is determined that the revenue reported on any revised
Forms causes an adjustment to Compass' contribution amount, we will adjust
the forfeiture amount accordingly.
As noted previously, we could propose as much as $1,325,000 for each
continuing violation. Thus, if we proposed the maximum forfeiture
permitted under the Act, Compass could face a forfeiture of more than
$34,450,000 for its failures to contribute to the USF.
See LOI Response at 4 and attachment 7 (shows one invoice dated 11-5-7).
47 U.S.C. S: 225(b)(1).
See Globcom NAL, 18 FCC Rcd at 19904, P: 29.
See supra para. 31.
47 U.S.C. S: 251(e)(2).
See e.g., 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).
Id.
See Telecom Management Inc., Notice of Apparent Liability for Forfeiture
and Order, 20 FCC Rcd. 14151, 14158 P: 22 (rel. Aug. 12, 2005);
Teletronics, Inc., Notice of Apparent Liability for Forfeiture and Order,
20 FCC Rcd 13291, 13304, P: 36 (rel. Jul. 25, 2005); Carrera
Communications, LP, Notice of Apparent Liability for Forfeiture and Order,
20 FCC Rcd 13307, 13318 P: 36 (rel. Jul. 25, 2005).
See 47 C.F.R. S: 1.80.
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