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Before the
Federal Communications Commission
Washington, D.C. 20554
)
) File No. EB-08-SE-1078
In the Matter of
) NAL/Acct. No. 200932100010
Time Warner Cable, Inc.
) FRN 0016618670
)
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 Time Warner Cable, Inc. ("TWC") 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 TWC is apparently
liable for a forfeiture in the amount of twenty-five thousand dollars
($25,000). We also order TWC to respond fully to the LOI within ten
(10) days of release of this NAL. If TWC again fails to submit a
complete response, it will be subject to further enforcement action.
II. background
2. In response to consumer complaints against TWC, 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 TWC
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 TWC's charges for digital set-top boxes as
well as information regarding TWC's subscriber rates and the rates it
pays to video programmers.
3. Although TWC states that it "always strives to cooperate fully with
Commission inquiries," it claims that the two week time period allowed
in which to respond to these questions was inadequate. TWC cites this
explanation for its LOI Response, which provides some of the
information requested but fails to answer most of the LOI's questions
except in the most general terms. For example, TWC notes that it
generally does not track its analog-to-digital conversions at the
national level. With respect to Question 1, therefore, TWC identifies
some but not all of the channels migrated from the analog to the
digital tier. Nor does the company explain when those migrations took
place or the specific cable systems involved. The company also
explains that it has migrated all of its cable programming services
tier ("CPST") channels to digital in certain markets, and provides
examples of its movement of some basic service tier programming
("BST") to digital in those markets and others, but fails to provide
any specifics about these actions. TWC identifies the manufacturers of
the digital set-top boxes it distributes (Question 2), but does not
provide pricing information or details about each box's features. TWC
generally describes its customer and local franchise authority
notification policies (Question 3-5), but does not give any details
about specific notices. Regarding Question 6 and 7, which seek
information about consumer complaints, the company describes some of
the complaints it has received about the migration of analog
programming to a digital tier, but fails to provide them, as required
by the LOI.
4. Finally, with respect to Question 8, which seeks per-subscriber
pricing and cost information for each migrated channel, TWC claims it
does not charge its customers on a per-channel basis. TWC states that
it is unable to respond to Question 8.b. of the Bureau's LOI-which
seeks information about cable programming fees-as doing so would
violate confidentiality agreements made between TWC and its
programmers. According to TWC, the LOI is unenforceable because it
does not comply with the Paperwork Reduction Act ("PRA"). TWC contends
that the LOI directed to the company "is manifestly not an
individualized inquiry directed to TWC based on any particular
complaints or allegations." In its view, the LOIs issued by the Bureau
to several cable companies "do not set forth any compelling legal
justification for an investigation in this context, as the services
about which the LOIs seek information are beyond the Commission's
authority to regulate in any event." Because TWC takes the position
that the LOI is unenforceable, it contends that it would be without
any defense to a claim of "unauthorized disclosure" of confidential
information.
III. discussion
A. Failure to Respond Fully to the LOI
5. We find that TWC'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 TWC 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 TWC violated
Commission rules. TWC 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 TWC'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 TWC
and a letter submitted by the National Cable & Telecommunications
Association, 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 Paperwork Reduction Act 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. TWC 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. TWC does not dispute that this
decision was within our discretion. Thus, TWC 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, TWC has neither contacted the
Bureau about its response nor provided any supplemental information.
9. Finally, we reject TWC's contention that the confidential nature of
some of the information responsive to the Bureau's LOI absolved TWC of
its obligation to respond. Though TWC did not request confidential
treatment of such material pursuant to the Commission's
well-established, long-standing rules regarding the treatment of
material routinely considered confidential, the Commission issued a
Protective Order in this investigation specifically to address any
concerns regarding the potentially confidential nature of certain
information. Thus, TWC had the option, as set forth by the
Commission's General Counsel in his letter directed to TWC, of
providing the information under that Protective Order. We find
therefore that TWC'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
10. We conclude under applicable standards set forth in the Act, that TWC
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 TWC is apparently liable for forfeiture for
its apparent willful violation of a Commission Order and Section
76.939 of the Rules.
11. 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."
12. Section 1.80 of the Rules and the Commission's Forfeiture Policy
Statement establish a base forfeiture amount of four thousand dollars
($4,000) for failure to respond to Commission communications. We find
that TWC'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, TWC'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 TWC 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.
13. Based on these facts, we therefore propose a twenty-five thousand
dollar ($25,000) forfeiture against TWC 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.
14. We also direct TWC 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 TWC to further penalties, including potentially
higher monetary forfeitures.
IV. ordering clauses
15. 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, Time Warner Cable,
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.
16. 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, TWC SHALL PAY the full amount of
the proposed forfeiture or SHALL FILE a written statement seeking
reduction or cancellation of the proposed forfeiture.
17. 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, TWC 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.
18. 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. TWC will also send electronic
notification on the date said payment is made to JoAnn.Lucanik@fcc.gov
and Kevin.Pittman@fcc.gov.
19. 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 Kevin M. Pittman, Esq., Spectrum Enforcement
Division, FCC, at Kevin.Pittman@fcc.gov.
20. 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.
21. 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 counsel for Time Warner
Cable, Inc., Matthew A. Brill, Esq., Latham & Watkins LLP, 555 11th
Street, NW, Suite 1000, Washington, DC, 20004.
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 Matthew A. Brill,
Counsel for Time Warner Cable, Inc. (Oct. 30, 2008) ("LOI").
Letter from Matthew A. Brill, Counsel for Time Warner Cable, Inc., to
Marlene H. Dortch, Secretary, Federal Communications Commission at 2 (Nov.
13, 2008) ("LOI Response").
Id. at 2.
Id. at 5.
Id. at 5-6.
Id. at 6-7.
Id. at 7-8.
Id. at 8.
Id. at 9.
Id. at 10.
Id. at 11.
Id.
Id. at 9-10.
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 (2002) (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 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 11.
Id. at 10 (citing 44 U.S.C. S:3512); Letter from Kyle McSlarrow, President
and CEO, National Cable & Telecommunications Association, to Chairman
Kevin J. Martin and Commissioners Michael J. Copps, Jonathan S. Adelstein,
Deborah Taylor Tate, and Robert M. McDowell, Federal Communications
Commission at 5-7 (Nov. 12, 2008).
See 44 U.S.C. S:3518(c)(1)(B)(ii); 5 C.F.R. S:1320.4(a)(2) (cited in
Letter from Matthew Berry, General Counsel, Federal Communications
Commission, to Matthew A. Brill, Counsel for Time Warner Cable, Inc. at 1
(Nov. 12, 2008) ("Berry Letter")). 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 2-3.
Id. at 9.
See LOI Attachment, Request for Confidential Treatment, referencing the
Commission's Rules at 47 C.F.R. S: 0.459.
See Berry Letter at 2.
See Time Warner Cable, Inc., Protective Order, DA 08-2498 (Enf. Bur. rel.
Nov. 13, 2008).
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. TWC'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 21.
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 09-85
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Federal Communications Commission DA 09-85