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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
) File No. EB-10-IH-4243
In the Matter of
) NAL/Acct. No. 201132080037
FTTH Communications, LLC
) FRN 0007719230
)
)
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: September 14, 2011 Released: September 14, 2011
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
that FTTH Communications, LLC ("FTTH") apparently violated section
214(a) of the Communications Act of 1934, as amended ("Act"), and
section 63.18 of the Commission's rules ("Rules") by willfully and
repeatedly failing to obtain an international section 214
authorization before providing international telecommunications
service. Based on our review of the facts and circumstances
surrounding this matter, and for the reasons discussed below, we find
that FTTH is apparently liable for a forfeiture of $100,000.
II. BACKGROUND
2. FTTH is a Minnesota limited liability company that provides
telecommunications services. FTTH is owned by FTTH Acquisition, LLC
("Everest"), a Delaware limited liability company based in New Jersey.
In 2010, Everest acquired FTTH from Rudder Capital Corporation
("Rudder"), a Minnesota corporation.
3. Prior to Everest's acquisition of FTTH from Rudder, FTTH was
authorized pursuant to section 214(a) of the Act and section 63.01 of
the Rules to provide domestic telecommunications services. FTTH
provided interstate and intrastate telecommunications services,
including facilities-based service, to several hundred customers in
Minnesota, resold local exchange service in the Minneapolis-St. Paul
metropolitan area, and provided interexchange service throughout
Minnesota.
4. On January 27, 2010, Rudder informed FTTH that it intended to
liquidate FTTH's assets absent full payment by February 1, 2010 of
outstanding debt that FTTH owed Rudder. Everest and Rudder thereafter
entered into a securities purchase agreement for Everest to acquire
FTTH. During the course of the acquisition process, but prior to
consummation of the transfer of control of FTTH from Rudder to
Everest, Everest and FTTH discovered that FTTH had provided
international telecommunications services to its customers in
Minnesota without having obtained Commission authority to do so, as
required by section 214(a) of the Act and section 63.18 of the Rules.
5. On January 29, 2010, FTTH filed an application with the Commission's
International Bureau for authority to provide facilities-based and
resale international telecommunications services. On the same day,
FTTH and Everest jointly filed applications with the Wireline
Competition Bureau and International Bureau for Special Temporary
Authority ("STA") permitting FTTH to provide international section 214
services and for the transfer of control of domestic and international
section 214 authority that would permit Everest to consummate its
acquisition of FTTH from Rudder. Simultaneously, Rudder, FTTH and
Everest also jointly filed an application for the permanent transfer
of control of domestic section 214 authority. On February 1, 2010,
Rudder, FTTH and Everest jointly filed an application for the
permanent transfer of control of international section 214 authority.
FTTH also supplemented its section 214 authorization application with
additional ownership information requested by the International
Bureau.
6. On February 1, 2010, the Wireline Competition Bureau granted an STA
for the transfer of control of domestic section 214 authority. On
February 2, 2010, the International Bureau granted an STA providing
FTTH with international section 214 authority. On that same day, the
International Bureau granted an STA allowing the transfer of FTTH's
international section 214 authority from Rudder to Everest. On March
5, 2010, the International Bureau granted FTTH's application for
permanent authority to provide international section 214
facilities-based and resale services, and the application for Rudder
to transfer control of section 214 authority held by FTTH to Everest.
The International Bureau granted FTTH international section 214
authority "without prejudice to any enforcement action by the
Commission for non-compliance" with the Act or the Rules. On March 19,
2010, the Wireline Competition Bureau granted the application for the
transfer of control of domestic section 214 authority held by FTTH
from Rudder to Everest. Thereafter, the matter was referred to the
Enforcement Bureau, which commenced its investigation. On November 1,
2010, the Enforcement Bureau issued a Letter of Inquiry to Everest
regarding the matters recited above.
III. DISCUSSION
7. Under section 503(b)(1) of the Act, "[a]ny person who is determined by
the Commission ... to have ... willfully or repeatedly failed to
comply with any of the provisions of this Act or of any rule,
regulation, or order issued by the Commission under this Act ... 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 any provision of this Act or any rule or regulation
by the Commission authorized by this Act...." 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.
To impose a forfeiture penalty, the Commission must issue a notice of
apparent liability, and the person against whom the notice has been
issued must have an opportunity to show, in writing, why no such
forfeiture penalty should be imposed. The Commission will then issue a
forfeiture if it finds, based on the evidence, that the person has
violated the Act, a Rule, or a Commission Order.
8. Section 214(a) of the Act prohibits any carrier from constructing,
extending or operating any line, and from engaging in transmission
through any such line, "unless and until there shall first have been
obtained from the Commission a certificate that the present or future
public convenience and necessity" require, or will require, the
construction, extension, or operation of the line. While the
Commission has granted "blanket" authority to carriers providing
domestic service, allowing such carriers to provide domestic service
without first applying to the Commission for such authority to do so,
the Commission has not done the same for providers of international
telecommunications services. Section 63.18 of the Rules requires that
any carrier that seeks section 214 authority "for provision of common
carrier communication services between the United States, its
territories or possessions, and a foreign point shall request such
authority by application." The application requirement applies to both
international facilities-based and resale services.
9. We conclude that it is apparent that FTTH willfully violated section
214(a) of the Act and section 63.18 of the Rules because it failed to
obtain Commission approval before providing international
telecommunications service. The Commission has consistently imposed
forfeiture penalties in the amount of $100,000 for failing to obtain
an international section 214 authorization before providing
international telecommunications service. In determining the amount of
a forfeiture penalty, section 503(b)(2)(E) of the Act and section
1.80(a)(4) of the Rules direct the Commission to take into account
"the nature, circumstances, extent, and gravity of the violation . . .
and the degree of culpability, any history of prior offenses, ability
to pay, and such other matters as justice may require." There is no
evidence before us to suggest that the base amount should be adjusted
in any way based on these factors.
10. The Commission has stated that a carrier's failure to obtain
international section 214 authorization "undermines the Commission's
ability to accomplish Congress's objectives in section 214 of the
Act." It has explained that given the "clear requirements and the
important public interest considerations involving national security,
law enforcement, foreign policy and trade, the failure to obtain
section 214 authority from the Commission prior to providing
international telecommunications services [is] egregious." Given these
considerations and consistent with precedent, we conclude that a
forfeiture of $100,000 is warranted for FTTH's apparent willful and
repeated failure to obtain section 214 authority from the Commission
prior to providing international telecommunications service.
IV. ORDERING CLAUSES
11. ACCORDINGLY, IT IS ORDERED that, pursuant to section 503(b) of the Act
and sections 0.111, 0.311, 0.314 and 1.80 of the Rules, FTTH
Communications LLC, is hereby NOTIFIED of its APPARENT LIABILITY FOR A
FORFEITURE in the amount of one hundred thousand dollars ($100,000)
for apparently willfully and repeatedly violating section 214(a) of
the Act and section 63.18 and 63.04 of the Rules.
12. 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/Acct. No. and FRN 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. Payments by wire transfer may be made to ABA Number 021030004,
receiving bank Federal Reserve Bank of New York, 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). FTTH will
also send electronic notification within forty-eight (48) hours of the
date said payment is made to Terry.Cavanaugh@fcc.gov,
Pamela.Kane@fcc.gov, and Robert.Krinsky@fcc.gov.
13. The written statement seeking reduction or cancellation of the
proposed forfeitures, if any, must include a detailed factual
statement supported by appropriate documentation and affidavits
pursuant to sections 1.80(f)(3) and 1.16 of the Commission's Rules.
The written statement must be mailed to Theresa Z. Cavanaugh, Acting
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. The written statement should also be emailed to Terry Cavanaugh
at Terry.Cavanaugh@fcc.gov, Pamela Kane at Pamela.Kane@fcc.gov, and
Robert.Krinsky at Robert.Krinsky@fcc.gov.
14. 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.
15. Requests for payment of the full amount of this Notice of Apparent
Liability for Forfeiture under an installment plan should be sent to:
Chief Financial Officer -- Financial Operations, Federal
Communications Commission, 445 12th Street, S.W., Room 1-A625,
Washington, D.C. 20554. For answers to questions regarding payment
procedures, please contact the Financial Operations Group Help Desk at
1-877-480-3201 or Email: ARINQUIRIES@fcc.gov.
16. 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 counsel for Everest FTTH Acquisition LLC, the parent
company of FTTH Communications LLC: Jean L. Kiddoo, Esq. and Danielle
Burt, Esq., Bingham McCutchen LLP, 2020 K Street, N.W., Washington,
D.C. 20006-1806.
FEDERAL COMMUNICATIONS COMMISSION
P. Michele Ellison
Chief, Enforcement Bureau
47 U.S.C. S: 214(a).
47 C.F.R. S: 63.18.
Id.
Application for Global Authority Pursuant to Section 214 of the
Communications Act of 1934, as amended, to Operate as an International
Facilities-Based and Resale Carrier Between the United States and Various
International Points, Int'l. Bur. Filing System ("IBFS") Application No.
ITC-214-20100129-00025 (filed Jan. 29, 2010) at 2 ("FTTH International
Sec. 214 Authorization Application").
Application of FTTH Communications, LLC and Everest FTTH Acquisition LLC
for Transfer of Control of International Section 214 Authorization, IBFS
Application No. ITC-T/C-20100201-00073 (filed Feb. 1, 2010) at 2 ("FTTH
International Transfer of Control Application").
Id. at 3, 6.
47 U.S.C. S: 214(a), 47 C.F.R. S: 63.01, FTTH International Sec. 214
Authorization Application at 2.
Id. FTTH also holds authority from the Minnesota Public Utilities
Commission to provide facilities-based and resold local exchange
telecommunications services in the St. Paul Minneapolis metropolitan area
and interexchange telecommunications service throughout Minnesota. Id.
Declaration of Patrick J. Engels, President, FTTH Communications, LLC,
accompanying Application for Special Temporary Authority for International
Section 214 Authorization, IBFS File No. ITC-STA-20100129-00024 (filed
Jan. 29, 2010) at P: 6 ("FTTH International Sec. 214 STA Application").
Id. at P: 5, FTTH Sec. 214 Authorization Application at 1 n. 1, 2; 47
U.S.C. S: 214(a); 47 C.F.R. S: 63.18.
FTTH Sec. 214 Authorization Application at 1 n. 1, Letter from Jean L.
Kidoo and Danielle Burt, Counsel for Everest Acquisition, LLC, to Marlene
H. Dortch, Secretary, Federal Communications Commission (Jan. 29, 2010)
(Letter accompanying FTTH International Sec. 214 STA Application).
FTTH Sec. 214 Authorization Application.
FTTH International Sec. 214 STA Application, Request for Special
Temporary Authority (Transfer of Control of Domestic Section 214
Authorization), WC Docket No. 10-38, (filed Jan. 29, 2010) ("FTTH Domestic
Sec. 214 STA Application").
Joint Application of Rudder Capital Corp. ("Transferor") and Everest FTTH
Acquisition LLC ("Transferee") for Authority Pursuant to Section 214 of
the Communications Act of 1934, as amended, to Transfer Control of FTTH
Communications, LLC ("Licensee"), WC Docket No. 10-35,(filed Jan. 29,
2010) ("FTTH Domestic Sec. 214 Transfer of Control Application").
FTTH International Transfer of Control Application, supra note 5.
See IBFS Application File No. ITC-AMD-20100201-00072 (supplementing FTTH
International Sec. 214 Authorization Application).
See Domestic Section 214 Application Filed for the Transfer of Control of
FTTH Communications, LLC From Rudder Capital Corporation to Everest FTTH
Acquisition LLC, Streamlined Pleading Cycle Established, Public Notice, WC
Docket No. 10-38, 25 FCC Rcd 1349 (Wireline Comp. Bur. 2010) at n.1.
Record of action by Int'l Bur. in FTTH STA Application available through
IBFS at http://licensing.fcc.gov/myibfs/.
See International Authorizations Granted, Section 214 Applications, DA No.
10-412, Public Notice, 25 FCC Rcd 2337 (FCC/Int'l Bur. 2010)("Int'l Bur.
Grant PN").
Id.
Notice of Domestic Section 214 Authorization Granted, WC Docket No. 10-38,
Public Notice, 25 FCC Rcd 2727 (Wireline Comp. Bur. 2010).
47 U.S.C. S: 503(b)(1)(B); 47 C.F.R. S: 1.80(a)(1).
47 U.S.C. S: 312(f)(1).
H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51 (1982).
See, e.g., Southern California Broadcasting Co., Memorandum Opinion and
Order, 6 FCC Rcd 4387, 4388, P: 5 (1991), recon. denied, 7 FCC Rcd 3454
(1992).
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: 214(a).
47 C.F.R. S: 63.01(a) ("Any party that would be a domestic interstate
communications common carrier is authorized to provide domestic,
interstate services to any domestic point and to construct or operate any
domestic transmission line as long as it obtains all necessary
authorizations from the Commission for use of radio frequencies.").
Implementation of Section 402(b)(2)(A) of the Telecomm. Act of 1996,
Report and Order, CC Docket No. 97-11, Second Memorandum Opinion & Order
in AAD File No. 98-43, 14 FCC Rcd 11364, 11366 n. 8 (1999) (grant of
blanket authority is only for domestic services and does not extend to the
provision of international services).
47 C.F.R. S: 63.18.
47 C.F.R. S: 63.18(e)(1)-(2).
FTTH Sec. 214 Authorization Application at 1 n. 1.
See, e.g., ADMA Telecom, Inc., Forfeiture Order, 26 FCC Rcd 4152, 4161
P:P: 26-27 (2011) (assessing a $100,000 forfeiture for unauthorized
international telecommunications service); InPhonic, Inc., Notice of
Apparent Liability of Forfeiture and Order, 20 FCC Rcd 13277, 8706 P: 41
(2007) ("InPhonic NAL") (same); Omniat International Telecom, LLC d/b/a
Omniat Telecom, Notice of Apparent Liability for Forfeiture, 24 FCC Rcd
4254, 4264 P: 25 (2009) ("Omniat NAL") (same); Teleplus, LLC, Notice of
Apparent Liability for Forfeiture, 24 FCC Rcd 7666, 7670-71 P: 12 (Enf.
Bur. 2009) ("Teleplus NAL") (same).
47 U.S.C. S: 503(b)(2)(E).
47 C.F.R. S: 1.80(a)(4).
Omniat NAL, 24 FCC Rcd at 4264 P: 25.
Id.; Teleplus NAL, LLC, Notice of Apparent Liability for Forfeiture, 24
FCC Rcd at 7670-71 P: 12; InPhonic NAL, 20 FCC Rcd at 8706 P: 41 (2007).
See Note 34, supra.
See 47 U.S.C. S: 503; 47 C.F.R. S:S: 0.111, 0.311, 0.314, 1.80.
See 47 U.S.C. S: 214(a); 47 C.F.R. S:S: 63.18, 63.04.
See 47 C.F.R. S:S: 1.80(f)(3), 1.16.
See 47 C.F.R. S: 1.1914.
Federal Communications Commission DA 11-1529
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Federal Communications Commission DA 11-1529