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Before the
Federal Communications Commission
Washington, D.C. 20554
)
) File No. EB-08-SE-1077
In the Matter of
) NAL/Acct. No. 200932100014
Suddenlink Communications, Inc.
) FRN 0018147504
)
Notice OF apparent liability for forfeiture AND ORDER
Adopted: January 19, 2009 Released: January 19, 2009
By the Chief, Enforcement Bureau:
I. introduction
1. In this Notice of Apparent Liability for Forfeiture and Order ("NAL"),
we find that Suddenlink Communications, Inc. ("Suddenlink") apparently
willfully violated a Commission Order and Section 76.939 of the
Commission's Rules ("Rules") in failing to respond fully to an
Enforcement Bureau Letter of Inquiry. We conclude, pursuant to Section
503(b) of the Communications Act of 1934, as amended ("Act"), that
Suddenlink is apparently liable for a forfeiture in the amount of
twenty-five thousand dollars ($25,000). We also order Suddenlink to
respond fully to the LOI within ten (10) days of release of this NAL.
If Suddenlink again fails to submit a complete response, it will be
subject to further enforcement action.
II. background
2. In response to consumer complaints against Suddenlink, on October 30,
2008, the Enforcement Bureau ("Bureau") issued a Letter of Inquiry
("LOI") regarding the company's migration of analog programming to
digital tiers. The LOI sought information concerning instances in
which Suddenlink had migrated analog channels to a digital tier,
including the channels affected, whether and how the company notified
customers of the change, whether, in light of the change in service,
the company permitted customers to change their service tier without
charge, and the rates charged customers before and after the channel
migration. The LOI also asked about Suddenlink's charges for digital
set-top boxes as well as information regarding Suddenlink's subscriber
rates and the rates it pays to video programmers.
3. In its response to the LOI, Suddenlink fails to answer most of the
inquiries set forth in the LOI except in the most general terms. For
example, Suddenlink provides a table containing information responsive
to our inquiry in Question 1 regarding the dates and nature of its
analog-to-digital channel changes; however, it claims that it lacked
the ability to respond directly to questions regarding related changes
in rates to consumers, because it evaluates service rate changes on an
annual basis. Similarly, Suddenlink represents that it has a policy to
provide thirty (30) days written notice to subscribers before a
channel is removed from a service tier, and that this policy was
followed for each of the re-tierings at issue, but did not respond to
the related inquiry in Question 1 regarding the ability of subscribers
to change their service at no charge. In response to Question 2,
Suddenlink acknowledges that subscribers might require additional
equipment as a result of channel changes, but does not respond to the
remainder of the inquiries included in this question, including the
model numbers of equipment that subscribers could use to continue to
access newly-digitized channels, and whether equipment of a different
manufacture could also be used by subscribers. In addition, Suddenlink
fails to provide copies of any notices or other documents that were
sent to subscribers to inform them of analog-to-digital changes
(Questions 3 and 5) or copies of any explanation that Suddenlink sent
to Local Franchising Authorities (Question 4) regarding such changes.
Suddenlink also declines to provide any information in response to
Question 8, which seeks information regarding fees for each affected
channel collected from subscribers, and the per-subscriber fee related
to each affected channel paid by Suddenlink to the video programming
distributor responsible for that channel.
4. Suddenlink admits that it did not respond fully to the LOI. Although
Suddenlink states that it "has no desire to violate Commission
regulations," it claims that the two week time period allowed in which
to respond to these questions was inadequate. Suddenlink also contends
that the LOI is unenforceable because it does not comply with the
Paperwork Reduction Act ("PRA"). Suddenlink asks the Commission to
"reconsider the current LOI procedure and ... engage in a cooperative
dialog with the cable industry regarding the conversion practices now
at issue." Finally, Suddenlink requests copies of any complaints that
have been submitted to the Commission, "to understand the basis for
the LOI, facilitate our response, and enable us to more meaningfully
address potential Bureau concerns."
III. discussion
A. Failure to Respond Fully to the LOI
5. We find that Suddenlink's failure to fully respond to the Bureau's
inquiry constitutes an apparent willful violation of a Commission
Order and Section 76.939 of the Rules. The Bureau directed Suddenlink
to provide certain information related to the movement of analog
channels to digital tiers. This information was necessary to enable
the Commission to perform its enforcement function and evaluate
whether Suddenlink violated Commission rules. Suddenlink received the
LOI but has failed to provide a full and complete response.
6. The Commission has broad investigatory authority under Sections 4(i),
4(j), and 403 of the Act, its Rules, and relevant precedent. Section
4(i) authorizes the Commission to "issue such orders, not inconsistent
with this Act, as may be necessary in the execution of its functions."
Section 4(j) states that "the Commission may conduct its proceedings
in such manner as will best conduce to the proper dispatch of business
and to the ends of justice." Section 403 grants the Commission "full
authority and power to institute an inquiry, on its own motion ...
relating to the enforcement of any of the provisions of this Act."
Pursuant to Section 76.939 of the Rules, a cable operator must comply
with FCC requests for information, orders, and decisions. In carrying
out this obligation, a cable operator also must provide truthful and
accurate statements to the Commission or its staff in any
investigatory or adjudicatory matter within the Commission's
jurisdiction. Lastly, numerous FCC decisions have reaffirmed the
Commission's authority to investigate potential misconduct and punish
those that disregard FCC inquiries. The Commission delegated this
authority to the Enforcement Bureau in Section 0.111(a)(16) of the
Rules.
7. We reject Suddenlink's contentions that it was not obligated to
respond fully and completely to the Bureau's inquiry because it
believes the LOI violates the PRA and is therefore unenforceable.
According to Suddenlink and a letter submitted by NCTA, the Commission
has violated the PRA by sending similar inquiries to 10 or more
persons without first seeking notice and comment and approval by the
Office of Management and Budget. We disagree. The LOI complies with
the PRA because it is part of a targeted investigation of "specific
individuals or entities," namely those companies that have been the
subject of consumer complaints filed with the Commission.
8. Suddenlink alleges that it could not have responded fully to the LOI
because the amount of time allowed for the preparation of the
company's LOI response was too brief. Certain complaints received by
the Commission regarding the migration of analog programming to a
digital tier, however, alleged that cable operators were falsely
linking the programming changes with the digital television
transition. Because of the strong public interest in avoiding
confusion about the transition and the rapidly approaching transition
date, the Bureau determined that two weeks was an appropriate deadline
and we conclude that two weeks was a reasonable deadline. Suddenlink
does not dispute that this decision was within our discretion. Thus,
Suddenlink was obligated to provide the requested information by our
deadline. Moreover, we note that since it submitted its LOI response
and while this matter remains under investigation by the Bureau,
Suddenlink has neither contacted the Bureau about its response nor
provided any supplemental information. We find therefore that
Suddenlink's failure to fully respond to the Bureau's inquiry
constitutes an apparent willful violation of a Commission Order and
Section 76.939 of the Rules.
A. Proposed Forfeiture
9. We conclude under applicable standards set forth in the Act, that
Suddenlink is apparently liable for forfeiture for its apparent
willful violation of a Commission Order and Section 76.939 of the
Rules. Under Section 503(b)(1)(B) 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. To impose such a forfeiture penalty, the
Commission must issue a notice of apparent liability and the person
against whom such 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. We conclude under this standard that Suddenlink is
apparently liable for forfeiture for its apparent willful violation of
a Commission Order and Section 76.939 of the Rules.
10. Under Section 503(b)(2)(A) of the Act, we may assess a cable operator
a forfeiture of up to $37,500 for each violation, or for each day of a
continuing violation up to a maximum of $375,000 for a single act or
failure to act. In exercising such authority, we are required to take
into account "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."
11. Section 1.80 of the Rules and the Commission's Forfeiture Policy
Statement establish a base forfeiture amount of $4,000 for failure to
respond to Commission communications. We find that Suddenlink's
failure to respond fully to the LOI in the circumstances presented
here warrants a significant increase to this base amount. Misconduct
of this type exhibits contempt for the Commission's authority and
threatens to compromise the Commission's ability to adequately
investigate violations of its rules. Prompt and full responses to
Bureau inquiry letters are essential to the Commission's enforcement
function. In this case, Suddenlink's apparent violations have delayed
our investigation and inhibited our ability to examine allegations
raised in consumer complaints and also potentially touching on an area
of critical importance -- the DTV transition. We note that Suddenlink
failed to provide a full and complete LOI response even after
receiving a specific warning from the Commission's General Counsel
that such actions could be subject to enforcement penalties.
12. Based on these facts, we therefore propose a twenty-five thousand
dollar ($25,000) forfeiture against Suddenlink for failing to respond
fully to Commission communications. This forfeiture amount is
consistent with precedent in similar cases, where companies failed to
provide responses to Bureau inquiries concerning compliance with the
Commission's Rules despite evidence that the LOIs had been received.
13. We also direct Suddenlink to respond fully to the October 30, 2008 LOI
within ten (10) days of the release of this Notice of Apparent
Liability for Forfeiture and Order. Failure to do so may constitute an
additional violation subjecting Suddenlink to further penalties,
including potentially higher monetary forfeitures.
IV. ordering clauses
14. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the
Act, and Section 1.80 of the Rules, and the authority delegated by
Sections 0.111 and 0.311 of the Commissions Rules, Suddenlink
Communications, Inc. is NOTIFIED of its APPARENT LIABILITY FOR A
FORFEITURE in the amount of twenty-five thousand dollars ($25,000) for
its willful violation of a Commission Order and Section 76.939 of the
Rules.
15. IT IS FURTHER ORDERED that, pursuant to Section 1.80 of the Rules,
within thirty (30) days of the release date of this Notice of Apparent
Liability for Forfeiture and Order, Suddenlink SHALL PAY the full
amount of the proposed forfeiture or SHALL FILE a written statement
seeking reduction or cancellation of the proposed forfeiture.
16. IT IS FURTHER ORDERED that, pursuant to sections 1, 4(i), 4(j), 403 of
the Communications Act of 1934, as amended, 47 U.S.C. S:151, 154(i),
154(j), 403, Suddenlink shall fully respond to the October 30, 2008
Letter of Inquiry sent by the Enforcement Bureau in the manner
described by that Letter of Inquiry within ten (10) days of the
release of this Notice of Apparent Liability and Order.
17. 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 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. Suddenlink will also send electronic
notification on the date said payment is made to JoAnn Lucanik at
JoAnn.Lucanik@fcc.gov and to Deborah Broderson at
Deborah.Broderson@fcc.gov.
18. The response, if any, must be mailed to the Office of the Secretary,
Federal Communications Commission, 445 12th Street, S.W., Washington,
D.C. 20554, ATTN: Enforcement Bureau - Spectrum Enforcement Division,
and must include the NAL/Acct. No. referenced in the caption. The
response should also be e-mailed to JoAnn Lucanik, Deputy Chief,
Spectrum Enforcement Division, Enforcement Bureau, FCC, at
JoAnn.Lucanik@fcc.gov and to Deborah Broderson, Esq., Spectrum
Enforcement Division, FCC, at Deborah.Broderson@fcc.gov.
19. The Commission will not consider reducing or canceling a forfeiture in
response to a claim of inability to pay unless the petitioner submits:
(1) federal tax returns for the most recent three-year period; (2)
financial statements prepared according to generally accepted
accounting practices; or (3) some other reliable and objective
documentation that accurately reflects the petitioner's current
financial status. Any claim of inability to pay must specifically
identify the basis for the claim by reference to the financial
documentation submitted.
20. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability
for Forfeiture and Order shall be sent by first class mail and
certified mail return receipt requested to Michael J. Zarrilli, Vice
President, Government Relations and Senior Counsel, Suddenlink
Communications, Inc., 12444 Powerscourt Drive, Suite 140, St. Louis,
MO 63131.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Chief, Enforcement Bureau
47 C.F.R. S: 76.939.
47 U.S.C. S: 503(b).
Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
Enforcement Bureau, Federal Communications Commission to Michael J.
Zarrilli, Vice President, Government Relations and Senior Counsel,
Suddenlink Communications, Inc. (Oct. 30, 2008) ("LOI").
Letter from Michael J. Zarrilli, Vice President, Government Relations and
Senior Counsel, Suddenlink Communications, Inc. to Deborah Broderson,
Esq., Spectrum Enforcement Division, Enforcement Bureau, Federal
Communications Commission (Nov. 13, 2008) ("LOI Response").
Id. at 3.
Suddenlink does affirmatively state that "[n]one of the service tiers
involved in Suddenlink's analog to digital conversions are rate
regulated," and "relatively few of Suddenlink's cable systems are subject
to active rate regulation by local franchising authorities." Id.
Id. at 2.
Id.
Id., citing to Letter from Kyle McSlarrow, National Cable &
Telecommunications Assn., to Chairman Kevin J. Martin and Commissioners
Michael J. Copps, Jonathan S. Adelstein, Deborah Taylor Tate and Robert M.
McDowell (Nov. 12, 2008) ("NCTA Letter").
Id.
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. 47 U.S.C. S: 312(f)(1). The legislative history of
Section 312(f)(1) of the Act indicates that this definition of willful
applies to both Sections 312 and 503(b) of the Act, H.R. Rep. No. 97-765,
97th Cong. 2d Sess. 51 (1982), and the Commission has so interpreted the
term in the Section 503(b) context. See, e.g., Southern California
Broadcasting Co., Memorandum Opinion and Order, 6 FCC Rcd 4387, 4387-88 P:
5 (1991) ("Southern California Broadcasting").
47 U.S.C. S: 154(i).
47 U.S.C. S: 154(j).
47 U.S.C. S: 403.
47 C.F.R. S: 76.939 ("Cable operators shall comply with ... the
Commission's requests for information, orders, and decisions.").
See 47 C.F.R. S: 1.17.
See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589,
7599-7600 P:P: 23-28 (ordering $100,000 forfeiture for egregious and
intentional failure to certify the response to a Bureau inquiry) ("SBC
Forfeiture Order"); Digital Antenna, Inc., Notice of Apparent Liability
for Forfeiture and Order, 23 FCC Rcd 7600, 7602 (Spectr. Enf. Div., Enf.
Bur. 2008) (proposing $11,000 forfeiture for failure to respond to provide
a complete response to an LOI); BigZoo.Com Corporation, Forfeiture Order,
20 FCC Rcd 3954 (Enf. Bur. 2005) (ordering $20,000 forfeiture for failure
to respond to an LOI).
47 C.F.R. S:0.111(a)(16) (granting the Enforcement Bureau authority to
"[i]dentify and analyze complaint information, conduct investigations,
conduct external audits and collect information, including pursuant to
sections 218, 220, 308(b), 403 and 409(e) through (k) of the
Communications Act, in connection with complaints, on its own initiative
or upon request of another Bureau or Office."). See also 47 C.F.R.
S:S:0.111(a)(13) (Enforcement Bureau has authority to "[r]esolve
complaints regarding multichannel video and cable television service under
part 76 of the Commission's rules"); 0.311 (general delegated authority
for Enforcement Bureau).
LOI Response at 2. Prior to the due date for Suddenlink's LOI Response,
the Commission's General Counsel advised the company that the LOI complied
with the Paperwork Reduction Act, warned of enforcement action if the
company failed to comply with the LOI, and offered Suddenlink the
opportunity to submit any highly confidential information pursuant to a
protective order. See Letter from Matthew Berry, General Counsel, Federal
Communications Commission, to Michael J. Zarrilli, Vice President,
Government Relations and Senior Counsel, Suddenlink Communications, Inc.
(Nov. 12, 2008) ("Berry Letter").
Id.; NCTA Letter at 5-7.
See 44 U.S.C. S:3518(c)(1)(B)(ii); 5 C.F.R. S:1320(a)(2) (cited in Berry
Letter at 1). We do not intend to suggest that the Commission may only
commence an investigation in response to consumer complaints. As Section
403 of the Act makes clear, the Commission also may institute an
investigation on its own motion. See 47 U.S.C. S: 403 ("The Commission
shall have full authority and power at any time to institute an inquiry,
on its own motion, in any case and as to any matter or thing concerning
which complaint is authorized to be made...").
LOI Response at 2.
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. 47 U.S.C. S: 312(f)(1). The legislative history of
Section 312(f)(1) of the Act indicates that this definition of willful
applies to both Sections 312 and 503(b) of the Act, H.R. Rep. No. 97-765,
97th Cong. 2d Sess. 51 (1982), and the Commission has so interpreted the
term in the Section 503(b) context. See, e.g., Southern California
Broadcasting Co., Memorandum Opinion and Order, 6 FCC Rcd 4387, 4387-88 P:
5 (1991) ("Southern California Broadcasting").
47 U.S.C. S: 503(b)(1)(B); 47 C.F.R. S: 1.80(a)(1).
47 U.S.C. S: 503(b); 47 C.F.R. S: 1.80(f).
See, e.g., SBC Forfeiture Order, 17 FCC Rcd at 7591.
47 U.S.C. S: 503(b)(2)(A). The Commission has amended Section 1.80(b)(3)
of the Rules, 47 C.F.R. S: 1.80(b)(3), three times to increase the maximum
forfeiture amounts, in accordance with the inflation adjustment
requirements contained in the Debt Collection Improvement Act of 1996, 28
U.S.C. S: 2461. See Amendment of Section 1.80 of the Commission's Rules
and Adjustment of Forfeiture Maxima to Reflect Inflation, 23 FCC Rcd 9845
(2008) (adjusting the maximum statutory amounts for broadcasters and cable
operators from $32,500/$325,000 to $37,500/$375,000); Amendment of Section
1.80 of the Commission's Rules and Adjustment of Forfeiture Maxima to
Reflect Inflation, Order, 19 FCC Rcd 10945 (2004) (adjusting the maximum
statutory amounts for broadcasters and cable operators from
$27,500/$300,000 to $32,500/$325,000); Amendment of Section 1.80 of the
Commission's Rules and Adjustment of Forfeiture Maxima to Reflect
Inflation, Order, 15 FCC Rcd 18221 (2000) (adjusting the maximum statutory
amounts for broadcasters and cable operators from $25,000/$250,000 to
$27,500/$300,000). The most recent inflation adjustment took effect
September 2, 2008 and applies to violations that occur after that date.
See 73 Fed. Reg. 44663-5. Suddenlink's apparent violations occurred after
September 2, 2008 and are therefore subject to the higher forfeiture
limits.
47 U.S.C. S: 503(b)(2)(E). See also 47 C.F.R. S: 1.80(b)(4), Note to
paragraph (b)(4): Section II. Adjustment Criteria for Section 503
Forfeitures.
See 47 C.F.R. S: 1.80(b)(4); The Commission's Forfeiture Policy Statement
and Amendment of Section 1.80 of the Rules to Incorporate the Forfeiture
Guidelines, Report and Order, 12 FCC Rcd. 17087 (1997), recon. denied, 15
FCC Rcd. 303 (1999).
Berry Letter at 2.
See supra note 17.
We do not decide in this NAL whether the failure to respond to an LOI
constitutes a continuing violation.
(Continued from previous page)
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Federal Communications Commission DA 09-84
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Federal Communications Commission DA 09-84