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Before the
Federal Communications Commission
Washington, D.C. 20554
)
) File No. EB-08-SE-1075
In the Matter of
) NAL/Acct. No. 200932100011
Midcontinent Communications, Inc.
) FRN 0009713678
)
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 Midcontinent Communications, Inc. ("Midcontinent")
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
Midcontinent is apparently liable for a forfeiture in the amount of
twenty-five thousand dollars ($25,000). We also order Midcontinent to
respond fully to the LOI within ten (10) days of release of this NAL.
If Midcontinent again fails to submit a complete response, it will be
subject to further enforcement action.
II. background
2. In response to consumer complaints against Midcontinent, 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 Midcontinent 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 Midcontinent's charges for digital
set-top boxes as well as information regarding Midcontinent's
subscriber rates and the rates it pays to video programmers.
3. In its response to the LOI, Midcontinent states that it made a good
faith effort to respond to the Bureau's LOI. Midcontinent admits,
however, that it did not respond fully to the LOI. For example,
Midcontinent fails to answer Question 1.d. which requests information
about the number of overall subscribers in each affected cable system
at the time of the analog-to-digital channel change. In its response
to Question 7, which seeks information about oral complaints from
subscribers, Midcontinent fails to identify the number of inquiries or
comments it received from subscribers regarding the analog-to-digital
migration of channels. Midcontinent claims that the two week time
period allowed in which to respond to these questions was inadequate.
4. More troubling, Midcontinent refuses to answer Question 8.b., which
asks it to provide the per-subscriber fees it pays to video
programming distributors for those channels subject of the inquiry.
Midcontinent alleges that the disclosure of the requested information
would subject it to potential liability for breach of contract,
injunction, damages and termination of contract rights. While
Midcontinent acknowledges that the Bureau issued a Protective Order
with respect to this information, Midcontinent states that the
Protective Order fails to protect or indemnify Midcontinent from this
potential liability. Moreover, Midcontinent states that the Bureau
failed to explain or justify the demand for information concerning
programming contracts and decisions, and that the Bureau failed to
demonstrate that the request is rationally related to the alleged
complaint or that the request is within the Commission's jurisdiction.
III. discussion
A. Failure to Respond Fully to the LOI
5. We find that Midcontinent'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
Midcontinent 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 Midcontinent violated Commission rules. Midcontinent 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 Midcontinent's contentions that it was not obligated to
respond fully and completely to the Bureau's inquiry, because it
believes the Commission lacks the authority to seek the information in
the LOI. As stated above, the Commission has broad investigatory
authority, and Midcontinent is obligated to respond to our inquiries,
even if it believes them to be outside the Commission's authority.
8. Midcontinent 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, allege that cable operators are 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 for the cable
operators' responses and we conclude that two weeks was a reasonable
deadline. Midcontinent does not dispute that this decision was within
our discretion. Thus, Midcontinent 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, Midcontinent has neither contacted the
Bureau about its response nor provided any supplemental information.
9. Finally, we reject Midcontinent's contention that the confidential
nature of some of the information responsive to the Bureau's LOI
absolved Midcontinent of its obligation to respond. In addition to
requesting confidential treatment of such material pursuant to the
Commission's well-established, long-standing rules regarding the
treatment of material routinely considered confidential, the Bureau
issued a Protective Order in this investigation specifically to
address any concerns regarding the potentially confidential nature of
certain information. Thus, Midcontinent had the option, as set forth
by the Commission's General Counsel in his letter directed to
Midcontinent, of providing the information under that Protective
Order. We find therefore that Midcontinent'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
Midcontinent 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 Midcontinent
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 Midcontinent'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, Midcontinent'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 further note that Midcontinent 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 Midcontinent for failing to
respond fully to Commission communications. This forfeiture amount is
consistent with precedent in similar cases, where companies failed to
provide complete responses to Bureau inquiries concerning compliance
with the Commission's Rules despite evidence that the LOIs had been
received.
14. We also direct Midcontinent 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 Midcontinent 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, Midcontinent
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.
16. IT IS FURTHER ORDERED that, pursuant to Section 1.80 of the Rules,
within thirty days (30) days of the release date of this Notice of
Apparent Liability for Forfeiture and Order, Midcontinent 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, Midcontinent 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. Midcontinent will also send electronic
notification on the date said payment is made to JoAnn.Lucanik@fcc.gov
and nissa.laughner@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 Nissa Laughner, Esq., Spectrum Enforcement
Division, FCC, at nissa.laughner@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 Midcontinent
Communications, Inc., J. Christopher Redding, Esq., Dow Lohnes PLLC,
1200 New Hampshire Avenue, NW, Suite 800, Washington, D.C. 20036-6802.
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 J.G. Harrington,
Esq., Counsel for Midcontinent Communications, Inc., Dow Lohnes PLLC (Oct.
30, 2008) ("LOI").
Letter from J. Christopher Redding, Counsel for Midcontinent
Communications, Inc., Dow Lohnes PLLC to Nissa Laughner, Attorney Advisor,
Spectrum Enforcement Division, Enforcement Bureau, Federal Communications
Commission (Nov. 13, 2008) ("LOI Response"). We note that Midcontinent
seeks confidential treatment of certain portions of its LOI Response. See
Letter from J. Christopher Redding, Counsel for Midcontinent
Communications, Inc., Dow Lohnes PLLC to Marlene H. Dortch, Secretary,
Federal Communications Commission (Nov. 13, 2008). We do not rule on
Midcontinent's request for confidentiality at this time.
Id. at 2.
Id. at 2-3.
Id. at 15.
Id. at 16.
Midcontinent Communications, Inc., Protective Order, DA 08-2495 (Enf. Bur.
rel. Nov. 13, 2008).
LOI Response at 16.
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 (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).
See LOI Response at 16.
See SBC Forfeiture Order, 17 FCC Rcd at 7591 P: 5. See also 47 U.S.C.
S:408 (Commission orders "shall continue in force for the period of time
specified in the order or until the Commission or a court of competent
jurisdiction issues a superseding order."); 47 U.S.C. S: 416(c) ("It shall
be the duty of every person, its agent and employees ... to observe and
comply with such orders so long as the same shall remain in effect");
Peninsula Communications, Inc., Forfeiture Order, 17 FCC Rcd 2832, 2834 P:
5 (2002) (subsequent history omitted) (a regulatee "cannot ignore a
Commission order simply because it believes such order to be unlawful");
World Communications Forfeiture Order, 19 FCC Rcd at 2719-2720 (issuing
forfeiture against regulatee who failed to respond to an LOI because it
believed the LOI to be beyond the Commission's jurisdiction).
See LOI response at 2-3.
Id. at 16.
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 Midcontinent Communications, Inc., Protective Order, DA 08-2495 (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 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, Order, 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. Midcontinent'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).
See 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 09-95