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Before the
Federal Communications Commission
Washington, D.C. 20554
)
In the Matter of
) File No.: EB-07-SE-310
Cardinal Broadband, LLC,
) NAL/Acct. No.:
aka Sovereign Telecommunications, 200832100069
)
a wholly owned subsidiary of Cardinal FRN: 0018035063
Communications, Inc. )
)
forfeiture ORDER
Adopted: July 13, 2012 Released: July 13, 2012
By the Chief, Enforcement Bureau:
I. introduction
1. In this Forfeiture Order, we issue a monetary forfeiture in the amount
of twenty-five thousand dollars ($25,000) to Cardinal Broadband, LLC,
aka Sovereign Telecommunications, a wholly-owned subsidiary of
Cardinal Communications, Inc., for its willful violation of Section
1.17(a)(2) of the rules (Rules) of the Federal Communication
Commission (FCC or Commission). The noted violation involved
Cardinal's provision of incorrect material factual information related
to Cardinal's failure to provide E911 service to dozens of its
customers at the Millstone condominium community in Golden, Colorado
for more than two months. We conclude that Cardinal provided the
information to the Commission without a reasonable basis for believing
that the information was correct and not misleading.
II. BACKGROUND
2. On August 15, 2008, the Enforcement Bureau (Bureau) issued a Notice of
Apparent Liability for Forfeiture to Cardinal in the amount of $25,000
for its apparent violation of Section 1.17(a)(2) of the Rules by
providing incorrect material factual information to the Commission
without a reasonable basis for believing that the information was
correct and not misleading. In a matter closely related to the Section
1.17 NAL, the Bureau issued a Notice of Apparent Liability for
Forfeiture to Cardinal in the amount of $25,000 for its apparent
failure to provide E911 service in willful and repeated violation of
Section 9.5(b) of the Commission's Rules. In the VoIP E911 NAL, the
Bureau determined that Cardinal was subject to the requirements of
Section 9.5 as a provider of interconnected VoIP services and that
Cardinal failed to provide compliant E911 service.
3. In the Section 1.17 NAL, the Bureau concluded that Cardinal's
statement in the company's response to the Bureau's initial letter of
inquiry that "[t]he service Cardinal resells does not `require a
broadband connection from the user's location' ... [or] `Internet
protocol-compatible customer premises equipment'" (CPE), and thus does
not meet two of the four criteria for interconnected VoIP service, was
incorrect material factual information. Specifically, the Bureau found
that, based on Cardinal's publicly available marketing material and
its subsequent admission that it provides interconnected VoIP service,
Cardinal failed to exercise reasonable diligence to determine the
accuracy of the information it provided, and therefore, at the time it
made the representations to the Bureau, Cardinal did not have a
reasonable basis for believing that the information was correct and
not misleading.
4. On October 10, 2008, Cardinal filed a single response to both the
Section 1.17 NAL and the VoIP E911 NAL. In this Consolidated NAL
Response, Cardinal disputes the conclusion that it violated Section
1.17(a)(2) of the Rules. Alternatively, Cardinal requests cancellation
or reduction of the proposed forfeiture on the ground that payment
would pose a financial hardship.
III. Discussion
5. The proposed forfeiture amount in this case was assessed in accordance
with Section 503(b) of the Communications Act of 1934, as amended
(Act), Section 1.80 of the Rules, and the Forfeiture Policy Statement.
In examining Cardinal's Consolidated NAL Response, Section 503(b) of
the Act requires that the Commission 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 other such matters as justice may
require. As discussed below, we have considered Cardinal's response in
light of these statutory factors and find that neither cancellation
nor reduction of the proposed forfeiture amount is warranted.
A. Provision of incorrect material factual information
6. Section 1.17(a) of the Rules provides, in pertinent part, that in any
investigation, no person shall:
(1) In any written or oral statement of fact, intentionally provide
material factual information that is incorrect or intentionally omit
material information that is necessary to prevent any material factual
statement that is made from being incorrect or misleading; and
(2) In any written statement of fact, provide material factual information
that is incorrect or omit material information that is necessary to
prevent any material factual statement that is made from being incorrect
or misleading without a reasonable basis for believing that any such
material factual statement is correct and not misleading.
7. Any person who has received a letter of inquiry from the Commission or
its staff or is otherwise the subject of a Commission investigation
must comply with the requirements of Section 1.17 of the Rules. In
expanding the scope of Section 1.17 in 2003 to include written
statements made without a reasonable basis for believing the
statements are correct and not misleading, the Commission explained
that it intended this requirement to clarify the obligations of
persons dealing with the Commission, ensure that they exercised due
diligence in preparing written submissions, and enhance the
effectiveness of the Commission's enforcement efforts. Thus, even
absent an intent to deceive, a false statement may constitute an
actionable violation of Section 1.17 of the Rules if provided without
a reasonable basis for believing that the material factual information
it contains is correct and not misleading.
8. In its Consolidated NAL Response, Cardinal argues that no forfeiture
should be imposed because the company's statement in its Initial LOI
response that "[t]he service Cardinal resells does not `require a
broadband connection from the user's location' ... [or] `Internet
protocol-compatible [CPE]'" was accurate in light of the way that
Cardinal provides service to its customers. Although Cardinal's
Consolidated NAL Response does not explain the basis for this claim,
we can glean the company's apparent rationale from prior filings. In
its January 7 LOI Response, for example, Cardinal reiterated that the
service it resells does not require either a broadband connection or
Internet Protocol-compatible CPE, noting that what it "did not make
clear" in its Initial LOI Response was that the "service" the company
resells includes both interconnected VoIP and conventional analog
telephone service and that customers who elect to use conventional
analog telephone service do not need either a broadband connection or
Internet Protocol-compatible CPE.
9. At the outset, we note that the Bureau previously considered and
properly rejected Cardinal's argument that it is not an interconnected
VoIP service provider because it also sells Qwest analog telephone
service, a service that does not require either a broadband connection
or Internet Protocol-compatible CPE. In the VoIP E911 NAL, the Bureau
stated that "[c]onventional analog telephone service and
interconnected VoIP service are distinct services[,]" and that
"Cardinal's status as an interconnected VoIP service provider is
unaffected by the fact that it also offers conventional analog
telephone service."
10. Moreover, we find that Cardinal's unqualified statement in its Initial
LOI Response that the service Cardinal resells does not "require" a
broadband connection or Internet Protocol-compatible CPE was both
inaccurate and misleading. The critical question at issue in the LOI
was whether Cardinal's VoIP offering met the thresholds in Section
9.5(a), specifically, whether a broadband connection and Internet
Protocol-compatible CPE were required in order to utilize Cardinal's
VoIP service. Cardinal subsequently admitted that its VoIP service
requires these capabilities. For the reasons set forth in the Section
1.17 NAL, we affirm the finding that Cardinal did not have a
reasonable basis for claiming otherwise or for believing that the
information it initially provided was correct and not misleading.
11. Cardinal appears to rely on the fact that it resells two different
services (interconnected VoIP and conventional analog telephone) and
that one of those services (conventional analog telephone) does not
require a broadband connection or Internet Protocol-compatible CPE.
However, the ability of Cardinal's customers to choose a non-VoIP
offering is not relevant to the nature and requirements of its VoIP
service. Indeed, to find for Cardinal we would have to conclude that
Cardinal's customers who chose the VoIP offering were not "required"
to have the broadband connection or Internet Protocol-compatible CPE
necessary to that service because they could have chosen analog
service instead. This argument is counterintuitive. In addition, if
Cardinal had exercised even a minimum of diligence, such as by
reviewing its own marketing materials, the VoIP E911 Order or Section
9.3 of the Rules, it could have avoided the inaccuracies in its
statement. By failing to either perform reasonable due diligence or to
adequately explain its statement, Cardinal omitted from its initial
LOI Response "information that is necessary to prevent any material
factual statement that is made from being incorrect or misleading,"
precisely the outcome that Section 1.17 was intended to prevent.
12. Further, we disagree with Cardinal's contention that that the proposed
forfeiture should be cancelled or reduced because Ronald Bass, the
Cardinal employee who submitted the company's Initial LOI Response,
believed at that time that the response was accurate. As noted in the
Section 1.17 NAL, even absent intent to deceive, a false statement may
constitute an actionable violation of Section 1.17 of the Rules if
provided without a reasonable basis for believing that the material
factual information it contains is correct and not misleading. As a
consequence, the assertion that Mr. Bass believed the response to be
truthful, even if accurate, is not enough for Cardinal to avoid
liability under Section 1.17. In this regard, we note that Cardinal's
acknowledgment in the Consolidated NAL Response that Mr. Bass,
Cardinal Communications, Inc.'s Principal Accounting Officer, was
"probably not the best person to handle the response since Mr. Bass is
an accountant and not a telecom employee" underscores the Bureau's
previous finding that Cardinal failed to exercise reasonable due
diligence to ensure that the statements the company made in its
Initial LOI Response were truthful, accurate, and not misleading.
13. Cardinal's provision of incorrect material factual information is
especially egregious given the vital public safety matter at issue.
The Commission has found that violations of E911 requirements are
serious, noting the critical function these requirements serve in
promoting and safeguarding life and property. As the Commission has
stated, "E911 service saves lives and property by helping emergency
services personnel do their jobs more quickly and efficiently."
Moreover, according to the complainant, local emergency officials
considered the situation so dire that they distributed flyers warning
of the lack of 911 service and directing residents to use the police
department's regular number in case of emergency. Given the critical
importance of providing consumers the ability to call 911, Cardinal
should have exercised greater due diligence in preparing its written
submissions regarding its provision of E911.
B. Lack of a basis for reduction of the proposed forfeiture
14. Finally, Cardinal asserts that payment of the proposed forfeiture
would pose a financial hardship. The Commission has determined that,
in general, gross revenues are the best indicator of an ability to pay
a forfeiture. In addition, and as detailed in the instructions
provided in the Section 1.17 NAL, "[c]laims of inability to pay should
be supported by tax returns or other financial statements prepared
under generally accepted accounting procedures for the most recent
three year period." Cardinal only submitted financial statements
covering the eight-month period January through August 2008. Moreover,
Cardinal's revenues, as reflected in the limited financial statements
it did submit, would not warrant a reduction of the forfeiture amount.
iV. ordering clauses
15. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the
Act, and Sections 0.111, 0.311, and 1.80 of the Rules, Cardinal
Broadband, LLC IS LIABLE FOR A FORFEITURE in the amount of twenty-five
thousand dollars ($25,000) for providing incorrect material factual
information to the Commission in willful violation of Section
1.17(a)(2) of the Rules.
16. Payment of the forfeiture shall be made in the manner provided for in
Section 1.80 of the Rules within ten (10) calendar days after the
release date of this Forfeiture Order. If the forfeiture is not paid
within the period specified, the case may be referred to the U.S.
Department of Justice for enforcement of the forfeiture pursuant to
Section 504(a) of the Act. Cardinal shall send electronic
notification of payment to Josh Zeldis at Josh.Zeldis@fcc.gov and
Samantha Peoples at Sam.Peoples@fcc.gov on the date said payment is
made.
17. The payment must be made by check or similar instrument, wire
transfer, or credit card, and must include the NAL/Account number and
FRN referenced above. Regardless of the form of payment, a completed
FCC Form 159 (Remittance Advice) must be submitted. When completing
the FCC Form 159, enter the Account Number in block number 23A (call
sign/other ID) and enter the letters "FORF" in block number 24A
(payment type code). Below are additional instructions you should
follow based on the form of payment you select:
* Payment by check or money order must be made payable to the order of
the Federal Communications Commission. Such payments (along with the
completed Form 159) must be mailed to Federal Communications
Commission, P.O. Box 979088, St. Louis, MO 63197-9000, or sent
via overnight mail to U.S. Bank - Government Lockbox #979088,
SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO 63101.
* Payment by wire transfer must be made to ABA Number 021030004,
receiving bank TREAS/NYC, and Account Number 27000001. To complete
the wire transfer and ensure appropriate crediting of the wired funds,
a completed Form 159 must be faxed to U.S. Bank at (314) 418-4232 on
the same business day the wire transfer is initiated.
* Payment by credit card must be made by providing the required credit
card information on FCC Form 159 and signing and dating the Form 159
to authorize the credit card payment. The completed Form 159 must then
be mailed to Federal Communications Commission, P.O. Box 979088, St.
Louis, MO 63197-9000, or sent via overnight mail to U.S. Bank -
Government Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St.
Louis, MO 63101.
18. Any request for full payment 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. If you have questions regarding payment
procedures, please contact the Financial Operations Group Help Desk by
phone, 1-877-480-3201, or by e-mail, ARINQUIRIES@fcc.gov.
19. IT IS FURTHER ORDERED that a copy of this Forfeiture Order shall be
sent by first class mail and certified mail return receipt requested
to Jon Bartlett, President, Cardinal Broadband, LLC, 2150 West 6th
Avenue, Suite H, Broomfield, CO 80020 and to Michael Wasik, Chairman
and CEO, Roomlinx, Inc., 2150 West 6th Avenue, Suite H, Broomfield, CO
80020.
FEDERAL COMMUNICATIONS COMMISSION
P. Michele Ellison
Chief, Enforcement Bureau
Cardinal Broadband, LLC (Cardinal) was formed in 2005 as a Colorado
limited liability company. On October 1, 2010, pursuant to an acquisition
by Roomlinx, Inc. of Cardinal's parent, Roomlinx, Inc. became the sole
member of Cardinal. See Roomlinx, Inc., Annual Report (Form 10-K), at 50
(Mar. 30, 2012).
47 C.F.R. S: 1.17(a)(2).
Cardinal Broadband, LLC, Notice of Apparent Liability for Forfeiture, 23
FCC Rcd 12233 (Enf. Bur. 2008) (Section 1.17 NAL).
Cardinal Broadband, LLC, Notice of Apparent Liability for Forfeiture and
Order, 23 FCC Rcd 12224 (Enf. Bur. 2008) (VoIP E911 NAL). Section
9.5(b)(1) of the Rules provides, in relevant part, that providers of
interconnected Voice over Internet Protocol (VoIP) service "must, as a
condition of providing service to a consumer, provide that consumer with
E911 service as described in this section." 47 C.F.R. S: 9.5(b)(1). See
IP-Enabled Services and E911 Requirements for IP-Enabled Service
Providers, First Report and Order and Notice of Proposed Rulemaking, 20
FCC Rcd 10245, 10266, para. 37 (2005) (VoIP E911 Order), aff'd sub nom.
Nuvio v. FCC, 473 F.3d 302 (D.C. Cir. 2006). See also, 47 C.F.R. S: 9.5(a)
(making the E911 service requirements "applicable to providers of
interconnected VoIP services"). An interconnected VoIP service is a
service that: (1) enables real-time, two-way voice communications; (2)
requires a broadband connection from the user's location; (3) requires
Internet Protocol-compatible customer premises equipment; and (4) permits
users generally to receive calls that originate on the public switched
telephone network (PSTN) and to terminate calls to the PSTN. See 47 C.F.R.
S: 9.3; see also VoIP E911 Order, 20 FCC Rcd at 10257-58, para. 24.
VoIP E911 NAL, 23 FCC Rcd at 12227-12228, paras. 9, 12. In a companion
decision issued concurrently with this Forfeiture Order, we affirm the
VoIP E911 NAL.
See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
FCC Enforcement Bureau, to Cardinal Communications, Inc. (Sept. 10, 2007)
(Initial LOI).
Letter from Edward A. Garneau, Chief Executive Officer, Cardinal
Communications, Inc., and Ronald S. Bass, Principal Accounting Officer,
Cardinal Communications, Inc., to Kathryn S. Berthot, Chief, Spectrum
Enforcement Division, FCC Enforcement Bureau, and Thomas D. Fitz-Gibbon,
Esq., Spectrum Enforcement Division, FCC Enforcement Bureau (Oct. 9, 2007)
(Initial LOI Response) at 3 (emphasis in original).
Section 1.17 NAL, 23 FCC Rcd at 12235, para. 7.
Id. at 12235, para. 8.
See Cardinal Broadband, LLC, Opposition to Notices of Apparent Liability
for Forfeiture (filed Oct. 10, 2008) (Consolidated NAL Response). Cardinal
requested and was granted an extension of time to respond.
Id. at 2.
Id.
47 U.S.C. S: 503(b).
47 C.F.R. S: 1.80.
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) (Forfeiture
Policy Statement).
47 U.S.C. S: 503(b)(2)(E).
47 C.F.R. S: 1.17(a).
Id. S: 1.17(b)(4).
In the Matter of Amendment of Section 1.17 of the Commission's Rules
Concerning Truthful Statements to the Commission, Report and Order, 18 FCC
Rcd 4016, 4016-17, paras. 1-2, 4021, para. 12 (2003) ("Amendment of
Section 1.17"), recon. denied, Memorandum Opinion and Order, 19 FCC Rcd
5790, further recon. denied, Memorandum Opinion and Order, 20 FCC Rcd 1250
(2004).
See Amendment of Section 1.17, 18 FCC Rcd at 4017, para. 2 (stating that
the revision to Section 1.17 is intended to "prohibit incorrect statements
or omissions that are the result of negligence, as well as an intent to
deceive").
Consolidated NAL Response at 2.
See Letter from Ronald S. Bass, Principal Accounting Officer, Cardinal
Communications, Inc., to Thomas D. Fitz-Gibbon, Esq., Spectrum Enforcement
Division, FCC Enforcement Bureau (Jan. 7, 2008) (January 7 LOI Response)
at 3, 7, 15, 19.
Id. at 7 (stating that "[w]hat we did not make clear is we offer digital
service side-by-side with Qwest analog service so no internet related
equipment is required. If a customer wants analog phone we get it for them
through Qwest hence, there is no requirement for a broadband connection
nor is there a requirement for customer premises equipment.").
VoIP E911 NAL, 23 FCC Rcd at 12228, para. 11.
Id.
See Initial LOI. The second inquiry in the Initial LOI directed Cardinal
to respond to the following question regarding Cardinal's VoIP service
offering: "State whether Cardinal currently provides interconnected VoIP
service to the public." Id at 1.
January 7 LOI Response at 17-18. The record indicates that the service
Cardinal resold uses an integrated access device (IAD) to connect through
a T1 to the provider's server, which then connected with the PSTN. Id. at
17.
Both the VoIP E911 Order and Section 9.3 of the Rules clearly define
interconnected VoIP as a service that, inter alia, requires a broadband
connection from the user's location and Internet Protocol-compatible CPE.
See supra note 4.
Section 1.17 NAL, 23 FCC Rcd at 12236, para. 8. As the Commission has
stated, parties must "use due diligence in providing information that is
correct and not misleading to the Commission, including taking appropriate
affirmative steps to determine the truthfulness of what is being
submitted. A failure to exercise such reasonable diligence would mean that
the party did not have a reasonable basis for believing in the
truthfulness of the information." See Amendment of Section 1.17 of the
Commission's Rules Concerning Truthful Statements to the Commission,
Report and Order, 18 FCC Rcd 4016, 4021, para. 12 (2003).
47 C.F.R. S: 1.17(a). See Invision Industries, Inc., Notice of Apparent
Liability for Forfeiture, 23 FCC Rcd 13095, 13103-04, para. 25 (2008),
response pending (finding that a television importer's failure to exercise
due diligence to ensure that the information provided in its LOI Response
was not misleading constituted a violation of Section 1.17(a)).
Consolidated NAL Response at 2.
See Section 1.17 NAL, 23 FCC Rcd at 12235, para. 6.
Consolidated NAL Response at 2.
See Section 1.17 NAL, 23 FCC Rcd at 12236, para. 8.
See Revision of the Commission's Rules to Ensure Compatibility with
Enhanced 911 Emergency Calling Systems, Second Memorandum Opinion and
Order, 14 FCC Rcd 20850, 20852, para. 2 (1999), clarified, 16 FCC Rcd
18982 (2001); see also Sprint Nextel, 22 FCC Rcd at 16418, para. 10;
T-Mobile USA, Inc., Notice of Apparent Liability for Forfeiture, 18 FCC
Rcd 3501, 3504, para. 7 (2003) (forfeiture paid).
Revision of the Commission's Rules to Ensure Compatibility with Enhanced
911 Emergency Calling Systems, Report and Order and Further Notice of
Proposed Rulemaking, 11 FCC Rcd 18676, 18679, para. 5 (1996) (subsequent
history omitted).
VoIP E911 NAL, 23 FCC Rcd at 12229, para. 17.
Consolidated NAL Response at 3.
See PJB Communications of Virginia, Inc., Forfeiture Order, 7 FCC Rcd
2088, 2089, para. 8 (1992) (forfeiture not deemed excessive where it
represented approximately 2.02 percent of the violator's gross revenues);
Local Long Distance, Inc., Forfeiture Order, 16 FCC Rcd 24385 (2000)
(forfeiture not deemed excessive where it represented approximately 7.9
percent of the violator's gross revenues); Hoosier Broadcasting
Corporation, Forfeiture Order, 15 FCC Rcd 8640 (2002) (forfeiture not
deemed excessive where it represented approximately 7.6 percent of the
violator's gross revenues).
See Section 1.17 NAL, 23 FCC Rcd at 12235, para. 15.
Based on established precedent, the $25,000 forfeiture proposed in the
Section 1.17 NAL is not excessive in comparison to Cardinal's reported
gross revenues. See supra note 39.
47 U.S.C. S: 503(b).
47 C.F.R. S:S: 0.111, 0.311, 1.80.
Id. S: 1.80.
47 U.S.C. S: 504(a).
An FCC Form 159 and detailed instructions for completing the form may be
obtained at http://www.fcc.gov/Forms/Form159/159.pdf.
See 47 C.F.R. S: 1.1914.
(Continued from previous page)
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Federal Communications Commission DA 12-1124
Federal Communications Commission DA 12-1124