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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
In the Matter of )
File No. EB-08-IH-5303
RB Communications, Inc., d/b/a )
Starfone NAL/Acct. No. 201232080018
)
Apparent Liability for Forfeiture FRN 0012951612
)
)
)
NOTICE OF APPARENT LIABILITY FOR FORFEITURE AND ORDER
Adopted: April 13, 2012 Released: April 16, 2012
By the Commission:
I. INTRODUCTION
1. In this Notice of Apparent Liability for Forfeiture and Order (NAL),
we find that RB Communications, Inc., d/b/a Starfone, apparently
violated Section 214 of the Communications Act of 1934, as amended
(the "Act"), and Sections 1.1154, 1.1157(b)(1), 63.18,
64.604(c)(5)(iii)(A), and 64.1195 of the Commission's rules, by
willfully and repeatedly failing to: (1) apply for and obtain
authorization from the Commission to provide international
telecommunications service; (2) register with the Commission; (3)
contribute to the Telecommunications Relay Service (TRS) Fund; and (4)
pay regulatory fees to the Commission. Based on our review of the
facts and circumstances surrounding this matter, and for the reasons
discussed below, we find that Starfone is apparently liable for a
total forfeiture of $408,668.
II. BACKGROUND
2. Section 214(a) of the Act prohibits any carrier from constructing,
extending, acquiring, or operating any line, and from engaging in
transmission through any such line, without first obtaining a
certificate of authorization from the Commission. While the Commission
has granted "blanket" authority to carriers providing domestic
service, meaning that such carriers need not apply to the Commission
for such authority before providing domestic service, the Commission
has not done the same for providers of international
telecommunications services. Instead, a carrier must seek and obtain
Section 214 approval from the Commission prior to providing such
services. The Commission has explained that the international Section
214 review process enables the Commission to review applications for
risks to competition, particularly in situations where the applicant
has an affiliation with a foreign carrier with market power on the
foreign end of the route that may be able to leverage that market
power to discriminate against U.S. competitors to the detriment of
U.S. consumers. The review process also includes consultation with
Executive Branch agencies regarding national security, law
enforcement, foreign policy and trade concerns that may be unique to
the provision of international service.
3. Section 63.18 of the Commission's rules requires that any carrier that
seeks Section 214 authority "for the provision of common carrier
communications services between the United States, its territories or
possessions, and a foreign point shall request such authority by
formal application." Through this process the applicant provides the
Commission with, among other things, contact information, ownership
information, information on any affiliations it may have with foreign
carriers, certification that it will comply with Commission rules, and
certification that the applicant is not subject to denial of Federal
benefits pursuant to the Anti-Drug Abuse Act of 1988. Section
63.18(e)(2) establishes specific requirements for parties "applying
for authority to resell the international services of authorized
common carriers," and Section 63.23 of the rules, in turn, identifies
the conditions that apply to "carriers authorized to resell the
international services of other authorized carriers."
4. Congress has charged the Commission to establish, administer, and
maintain various telecommunications regulatory programs, and to fund
these programs through assessments on the telecommunications providers
that benefit from them. To accomplish these goals, the Commission
established "a central repository of key facts about carriers" through
which it could monitor the entry and operation of interstate
telecommunications providers to ensure, among other things, that they
are qualified to provide telecommunications service, do not engage in
fraud, and do not evade oversight. Section 64.1195 of the Commission's
rules requires that upon entry or anticipated entry into interstate
telecommunications markets, telecommunications carriers register by
submitting information on FCC Form 499-A, also known as the annual
Telecommunications Reporting Worksheet (annual Worksheet or Form
499-A).
5. Section 225(b)(1) of the Act, which codifies Title IV of the Americans
with Disabilities Act of 1990, directs the Commission to "ensure that
interstate and intrastate telecommunications relay services are
available, to the extent possible and in the most efficient manner, to
hearing-impaired and speech-impaired individuals in the United
States." To that end, the Commission established the TRS Fund to
reimburse TRS providers for the costs of providing interstate
telecommunications relay services. Pursuant to Section
64.604(c)(5)(iii)(A) of the Commission's rules, every provider of
interstate or international telecommunications services must
contribute to the TRS Fund based upon its end-user revenues.
6. The Commission has established specific procedures for administration
of the TRS Fund and other associated federal regulatory programs.
These include the requirement that each telecommunications provider
file, pursuant to Section 54.711(a) of the Commission's rules,
accurate company-specific revenue data on Form 499-A annually. The
information reported on Form 499-A is used to determine the
telecommunications provider's payment obligations to the TRS Fund and
other regulatory programs. These periodic filings trigger a
determination of liability, if any, and subsequent billing and
collection by the entities that administer the regulatory programs.
Providers must timely pay their contribution invoices, and the
Commission's rules explicitly warn contributors that failure to file
forms or submit payments potentially subjects them to enforcement
action.
7. Pursuant to Section 9(a)(1) of the Act, Section 1.1151 of the
Commission's rules requires providers of interstate telecommunications
services and other providers to pay regulatory fees to the Commission
to cover the costs of certain regulatory activities. In particular,
Sections 1.1154 and 1.1157 of the Commission's rules require that
interstate telecommunications carriers pay regulatory fees on the
basis of their interstate and international end-user revenues. Such
fees must be paid on an annual basis, and failure to do so subjects a
carrier to late payment penalties, as well as possible revocation of
its operating authority.
8. RB Communications, Inc. is a California corporation that does business
under the trade name "Starfone." Beginning in 2003, Starfone has
resold interstate and international telecommunications services to end
users. On October 6, 2008, the Universal Service Administrative
Company (USAC) referred Starfone to the Enforcement Bureau (Bureau)
for potential enforcement action related to its apparent failures to
register and to comply with other regulatory requirements.
9. On March 9, 2009, the Bureau issued a letter of inquiry (LOI) to
Starfone seeking information about its compliance with the
Commission's rules governing, among other things, the provision of
international telecommunications service and contributions to the TRS
Fund. The Bureau issued a further letter of inquiry to Starfone on
September 4, 2009.
10. In its response to the LOI, Starfone admitted that it had not
previously applied for an international Section 214 authorization.
Starfone also admitted that it had failed to timely register with the
Commission, and that it had never contributed to the TRS Fund.
11. On July 23, 2009, USAC received for the first time a signed
"registration-only" Form 499-A from Starfone. On February 1, 2010,
Starfone submitted an application for international Section 214
authority, which was granted on March 5, 2010. On April 1, 2010,
Starfone provided annual revenue data to USAC for the first time,
reporting its calendar year 2009 revenue on Form 499-A. It made a
timely 499-A filing in April of 2011. In December 2011, Starfone filed
the Forms 499-A that had been due in 2007, 2008, and 2009. Starfone
made no payments to the TRS Administrator for 2007, 2008, or 2009.
Further, with the exception of a small payment made in 2011, Starfone
has not paid any regulatory fees due to the Commission for the period
2007 to 2011.
III. DISCUSSION
12. Under Section 503(b)(1) 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. 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. The legislative
history to Section 312(f)(1) 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. The
Commission may also assess a forfeiture for violations that are merely
repeated, and not willful. "Repeated" means that the act was
committed or omitted more than once, or lasts more than one day. To
impose such 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. As set forth below,
we conclude that Starfone is apparently liable for forfeiture for its
apparent willful and repeated violations of Section 214 of the Act and
Sections 1.1154, 1.1157(b)(1), 63.18, 64.604(c)(5)(iii)(A), and
64.1195 of the Commission's rules.
13. The fundamental issues in this case are whether Starfone apparently
violated the Act and the Commission's rules by willfully or repeatedly
failing to apply for and obtain authorization from the Commission to
provide international telecommunications service, register with the
Commission, contribute to the TRS Fund, and pay regulatory fees to the
Commission. We answer these questions in the affirmative. Based on the
facts and circumstances before us, we therefore conclude that Starfone
is apparently liable for a forfeiture of $408,668.
A. Starfone Apparently Failed to Obtain an International Section 214
Authorization Before Providing International Telecommunications
Service
14. We find that Starfone provided international telecommunications
service without an international Section 214 authorization from
November 1, 2003 until March 5, 2010. In its LOI Response, Starfone
stated that it began providing international telecommunications
service on November 1, 2003. Starfone did not apply for international
Section 214 authority until February 3, 2010, nearly a year after
receiving a letter of inquiry from the Bureau, and was not granted
such authority until March 5, 2010. Starfone stated in the LOI
Response, and again in its Section 214 application, that it had not
previously been granted international Section 214 authority. Thus,
Starfone apparently provided international telecommunications service
without Commission-granted international Section 214 authority from
November 1, 2003 to March 5, 2010. We therefore conclude based on a
preponderance of the evidence that Starfone has apparently willfully
and repeatedly violated Section 214 of the Act and Section 63.18 of
the Commission's rules.
B. Starfone Apparently Failed to Register with the Commission
15. We conclude that Starfone has apparently violated Section 64.1195(a)
of our rules by failing to register with the Commission from the time
it began providing interstate telecommunications services until July
23, 2009. Starfone's failure to register constitutes an apparent
violation of a vital Commission rule. Section 64.1195(a) unambiguously
requires that all carriers that provide, or plan to provide,
interstate telecommunications services register with the Commission by
submitting specified information on Form 499-A. Although Starfone had
provided interstate telecommunications services for several years, it
failed to register in accordance with Section 64.1195(a) until July
23, 2009. As a result of its misconduct, Starfone operated for a
significant period of time without participation in any of the
programs tied to registration. As an interstate telecommunications
carrier, Starfone had a clear and affirmative duty to satisfy this
federal obligation.
16. We view Starfone's apparent failure to register for a significant
period as a serious dereliction of its responsibilities under the Act
and our rules. A carrier's compliance with the Commission's
registration requirement is critical to the administration of the TRS
and other programs, and to fulfilling Congress' objectives in Section
225(b)(1) of the Act, because registration identifies the company to
the various program administrators and brings the company within the
purview and oversight of those administrators. If a carrier never
identifies itself as a telecommunications provider by properly
registering under the Commission's rules, then neither the Commission
nor the various program administrators can ascertain whether that
carrier has fulfilled its regulatory obligations, including the
requirement that carriers file Worksheets and contribute to TRS and
other regulatory programs. Moreover, the program administrators have
no basis upon which to invoice the carrier for contributions. A
telecommunications carrier that fails to register thus can operate
outside of the Commission's oversight and evade its federal
obligations to contribute toward the vital programs.
17. The impact of a carrier's failure to register is no less severe where,
as here, that carrier ultimately registers with the Commission.
Although Starfone registered on July 23, 2009, Starfone delayed its
registration for a substantial period of time and did not complete its
registration until several months after receiving a letter of inquiry
from the Bureau. The Commission has repeatedly stated that
post-investigative corrective measures to address a violation do not
eliminate a licensee's responsibility for the period during which the
violation occurred. Based on a preponderance of the evidence,
therefore, we find that Starfone apparently has violated Section
64.1195(a) of the Commission's rules by willfully and repeatedly
failing to register until July 23, 2009.
C. Starfone Apparently Failed to Make TRS Fund Contributions
18. As a provider of interstate and international telecommunications
services, Starfone was obligated to contribute to the TRS Fund on the
basis of its interstate and international end-user telecommunications
revenues reported on its annual Worksheet. A carrier's contribution to
the TRS Fund is based upon its revenues for the prior calendar year
and a contribution factor determined annually by the Commission.
Subject carriers must make TRS contributions on an annual basis, with
certain exceptions that are not applicable to Starfone. Records of the
TRS administrators indicate that Starfone made no payment towards its
TRS Fund obligations prior to 2010. We therefore conclude, based on a
preponderance of the evidence, that Starfone has apparently violated
Section 64.604(c)(5)(iii)(A) of the Commission's rules by willfully
and repeatedly failing, up to the date of this NAL, to make all
required TRS contributions due to the TRS Administrator in 2007, 2008,
and 2009.
D. Starfone Apparently Failed to Pay its Regulatory Fees
19. As an interstate telecommunications service provider, Starfone is
required to pay regulatory fees on the basis of its interstate and
international end-user revenues as reported on its Form 499-A. The
Commission's records indicate that, with the exception of a very small
payment made in September 2011, Starfone has failed to make any
regulatory fee payments to date. We therefore conclude, based on a
preponderance of the evidence, that Starfone apparently violated
Sections 1.1154 and 1.1157(b)(1) of the Commission's rules by
willfully and repeatedly failing to pay regulatory fees due to the
Commission for each year from 2007 to 2011.
E. Proposed Forfeiture Amount
20. Section 503(b)(1) of the Act provides that any person who willfully or
repeatedly fails 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. Section 503(b)(2)(B) of the
Act authorizes the Commission to assess a forfeiture of up to $150,000
for each violation or each day of a continuing violation by a common
carrier, up to a statutory maximum of $1,500,000 for a single act or
failure to act. In determining the appropriate forfeiture amount, we
consider the factors enumerated in Section 503(b)(2)(E) of the Act,
including "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," as well as our forfeiture
guidelines.
21. We conclude that Starfone apparently failed to obtain an international
Section 214 authorization from the Commission prior to providing
international telecommunications service. Starfone apparently operated
as an international telecommunications service provider from November
2003 until March 5, 2010 without authorization from the Commission. We
therefore find that this apparent violation of the Act and the
Commission's rules was both willful and repeated. Given the
unambiguous language of the Act, the Commission's rules and decisions,
and even the Commission's website, it should have been apparent to
Starfone that it was required to obtain Section 214 authority from the
Commission to provide international telecommunications service.
22. In light of the clear statutory and Commission requirements, we find
that Starfone's failure to obtain Section 214 authority from the
Commission prior to providing international telecommunications service
was also egregious. Just as a telecommunications carrier that fails to
register can operate outside of the Commission's oversight and evade
its federal obligations to contribute toward the vital programs linked
to registration, international telecommunications carriers that fail
to obtain Section 214 authority may endanger important public interest
considerations involving national security, law enforcement, foreign
policy and trade policy. We also find that a proposed forfeiture must
be large enough to have a deterrent effect on companies with gross
revenues commensurate with those of Starfone. Pursuant to the
Commission's mandate from Congress to consider "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," we find, consistent with prior precedent for entities
failing to receive prior authorization from the International Bureau,
that a proposed forfeiture of $100,000 is warranted for Starfone's
apparent willful and repeated failure to obtain Section 214 authority
from the Commission prior to providing international
telecommunications service.
23. Starfone failed to register with the Commission until July 23, 2009,
in apparent willful and repeated violation of Section 64.1195(a) of
our rules. Registration with the Commission through filing of
Telecommunications Reporting Worksheets is fundamental to the
implementation of our central repository of carriers and to the
administration of multiple statutorily derived programs - including
the TRS Fund. Where, as here, a carrier ignores its obligations by
wholly failing to register for a long period - thereby affecting the
time and manner in which these important federal programs are funded -
it undermines the programs and thwarts the purposes for which Congress
and the Commission established them.
24. We have previously established $100,000 as the base forfeiture for a
carrier's failure to register with the Commission. We explained that
"[t]his egregious behavior strikes at the core of our ability to
implement and enforce the Act and our rules effectively, thus
warranting a substantial forfeiture." A carrier that fails to register
hampers "efficient and effective Commission enforcement by delaying
detection of, and action against, its behavior . . . [and] imposes a
substantial burden on the Commission, which can only identify such
carriers through compliance review programs that require significant
amounts of staff time and resources." Taking into account all of the
factors enumerated in Section 503(b)(2)(E) of the Act, we conclude
that this same reasoning accurately describes the impact of Starfone's
misconduct, and that a proposed forfeiture of $100,000 is therefore
warranted.
25. We also find that Starfone has failed to make TRS contributions for
2007 to 2009. Where a provider fails to satisfy its TRS obligations
for an extended period of time, it thwarts the purpose for which
Congress established Section 225(b)(1) of the Act and its implementing
regulations - to ensure that "telecommunications relay services are
available, to the extent possible and in the most efficient manner, to
hearing-impaired and speech-impaired individuals in the United
States." We have previously stated that nonpayment of TRS and other
contributions constitute continuing violations because they are cured
only by payment of all monies owed. To effectively deter companies
like Starfone from violating our rules governing payment into the TRS
and other programs, our forfeiture calculations will reflect not only
the violations that began within the last twelve months, but all such
continuing violations.
26. The Commission has generally established a base forfeiture amount of
$10,000 for each instance in which a contributor fails to make
required TRS contributions. Thus, we propose a $30,000 forfeiture for
Starfone's failure to pay its TRS Fund contributions for each year
from 2007 to 2009. In the past, we have also calculated upward
adjustments to forfeitures for failure to make TRS payments based on a
percentage of one half of the company's unpaid balance. As described
above, Starfone currently owes $257,336 to the TRS Fund for 2007 to
2009. Thus, under this formula, we propose an upward adjustment of
$128,668 for Starfone's apparent nonpayment violations, taking into
account all the factors enumerated in Section 503(b)(2)(E) of the Act.
Accordingly, we find Starfone liable for a total proposed forfeiture
of $158,668 for its apparent willful and repeated failure to make
contributions into the TRS Fund.
27. Finally, we find that, with the exception of a small payment in 2011,
Starfone has apparently failed to make regulatory fee payments due to
the Commission on the basis of its actual interstate and international
end-user telecommunications revenues for each year from 2007 to 2011.
A carrier's failure to contribute toward the costs of certain
regulatory activities from which it benefits undermines the
efficiency, equitability, and effectiveness of the regulatory fee
program and accomplishment of Congress' objectives in Section 9(a)(1)
of the Act. As with the failure to make TRS contributions, failures to
make regulatory fee payments are continuing violations until they are
cured by the payment of all monies owed. The Commission has
established a base forfeiture amount of $10,000 for failure to make
required regulatory fee payments. Therefore, we find Starfone is
apparently liable for a forfeiture of $50,000 for its willful and
repeated failure to make regulatory fee payments from 2007 to 2011.
IV. CONCLUSION
28. In light of the seriousness, duration, and scope of the apparent
violations, we propose a forfeiture in the amount of $408,668 for
Starfone's failure to apply for and obtain authorization from the
Commission to provide international telecommunications service,
register with the Commission, contribute to the TRS Fund, and make
regulatory fee payments. We caution that additional violations of the
Act or the Commission's rules could subject Starfone to further
enforcement action. Such action could take the form of higher monetary
forfeitures and/or possible revocation of Starfone's operating
authority, including disqualification of Starfone's principals from
the provision of any interstate or international common carrier
services without the prior consent of the Commission.
V. ORDERING CLAUSES
29. ACCORDINGLY, IT IS ORDERED THAT, pursuant to Section 503(b) of the
Communications Act of 1934, as amended, 47 U.S.C. S: 503(b), and
Section 1.80 of the Commission's rules, 47 C.F.R. S: 1.80, that RB
Communications, Inc. is hereby NOTIFIED of its APPARENT LIABILITY FOR
A FORFEITURE in the amount of $408,668 for willfully and repeatedly
violating the Act and the Commission's rules.
30. IT IS FURTHER ORDERED THAT, pursuant to Section 1.80 of the
Commission's rules, within thirty days of the release date of this
NOTICE OF APPARENT LIABILITY FOR FORFEITURE AND ORDER, RB
Communications, Inc. SHALL PAY the full amount of the proposed
forfeiture or SHALL FILE a written statement seeking reduction or
cancellation of the proposed forfeiture.
31. IT IS FURTHER ORDERED THAT RB Communications, Inc. shall submit within
thirty days of the release date of this NOTICE OF APPARENT LIABILITY
FOR FORFEITURE AND ORDER, a report supported by a sworn statement or
declaration under penalty of perjury of a corporate officer setting
forth in detail its plan to come into compliance with the reporting
and payment obligations discussed herein. The report must be mailed to
Theresa Z. Cavanaugh, Acting Chief, Investigations and Hearings
Division, Enforcement Bureau, Federal Communications Commission, 445
12th Street, S.W., Suite 4-C330, Washington, D.C. 20554. RB
Communications, Inc. shall also transmit a copy of the report via
email to terry.cavanaugh@fcc.gov.
32. 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 No. 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 TREAS NYC, and account number 27000001. An FCC Form 159
(Remittance Advice) must be submitted with the payment. 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). RB Communications, Inc. will also send
electronic notification within forty-eight (48) hours of the date said
payment is made to margaret.dailey@fcc.gov.
33. The response, if any, to this NOTICE OF APPARENT LIABILITY FOR
FORFEITURE AND ORDER 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.
34. 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.
35. Requests for payment of the full amount of this Notice of Apparent
Liability for Forfeiture and Order 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, please contact the
Financial Operations Group Help Desk at 1-877-480-3201 or Email:
ARINQUIRIES@fcc.gov.
36. 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 RB Communications, Inc., Renzo Biogeti, Owner, 444 West
Ocean Blvd., Suite 1515, Long Beach, CA 90802.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
47 U.S.C. S: 214.
47 C.F.R. S:S: 1.1154, 1.1157(b)(1), 63.18, 64.604(c)(5)(iii)(A), 64.1195.
47 U.S.C. S: 214(a).
47 C.F.R. S: 63.01(a) (authorizing "[a]ny party that would be a domestic
interstate communications common carrier . . . 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 in CC Docket No. 97-11, Second Memorandum Opinion and
Order in AAD File No. 98-43, 14 FCC Rcd 11364, 11365-66, para. 2 & 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; see also 47 U.S.C. S: 214(a).
See 1998 Biennial Regulatory Review - Review of International Common
Carrier Regulations, Report and Order, 14 FCC Rcd 4909, 4914-16, paras.
14-16 (1999) (1998 International Biennial Review Order); Personal
Communications Industry Ass'n's Broadband Personal Communications Services
Alliance's Petition for Forbearance for Broadband Personal Communications
Services, Memorandum Opinion and Order and Notice of Proposed Rulemaking,
13 FCC Rcd 16857, 16882-83, para. 50 (1998) (PCIA Forbearance Order).
See 1998 International Biennial Review Order, 14 FCC Rcd at 4915, para.
15; PCIA Forbearance Order, 13 FCC Rcd at 16882, para. 50.
47 C.F.R. S: 63.18.
See id.
Id. S:S: 63.18(e)(2), 63.23.
See Implementation of the Subscriber Carrier Selection Changes Provisions
of the Telecommunications Act of 1996, Third Report and Order and Second
Order on Reconsideration, 15 FCC Rcd 15996, 16024-26, paras. 59-62 (2000)
(Carrier Selection Order).
47 C.F.R. S: 64.1195; see Telecommunications Reporting Worksheet, FCC Form
499-A, available at
http://transition.fcc.gov/Forms/Form499-A/499a2-2011.pdf (Oct. 2011).
47 U.S.C. S: 225(b)(1).
See Telecommunications Relay Services and the Americans with Disabilities
Act of 1990, Third Report and Order, 8 FCC Rcd 5300, para. 3 (1993).
Telecommunications relay services enable persons with hearing and speech
disabilities to communicate by telephone with voice-telephone users. Such
services provide telephone access to a significant number of Americans
who, without it, might not be able to make calls to or receive calls from
voice-telephone users. See Telecommunications Relay Services and
Speech-to-Speech Services for Individuals with Hearing and Speech
Disabilities, Report and Order, 15 FCC Rcd 5140, 5141, 5143, paras. 2, 5
(2000). Rolka Loube Salter Associates currently is responsible for
administering the TRS Fund.
47 C.F.R. S: 64.604(c)(5)(iii)(A) (requiring every carrier that provides
"interstate services, including . . . international . . . services" to
contribute to the TRS Fund).
47 C.F.R. S: 54.711(a); see also 47 C.F.R. S: 64.604(c)(5)(iii)(A).
See 47 C.F.R. S: 64.604(c)(5)(iii)(A), (B). Our rules, however, do not
condition payment on receipt of an invoice or other notice from the TRS
Fund administrator. See id.
See 47 C.F.R. S: 54.713(c).
Section 9(a)(1) of the Act directs the Commission to "assess and collect
regulatory fees to recover the costs of the following regulatory
activities of the Commission: enforcement activities, policy and
rulemaking activities, user information services, and international
activities." 47 U.S.C. S: 159(a)(1); see also 47 C.F.R. S:S: 1.1151,
1.1154, 1.1157 Interstate telecommunications service providers (ITSPs) are
subject to regulatory fees based on billed interstate and international
end-user revenues for local and most toll services. Carriers whose total
regulatory fee payment obligation is less than $10 are exempt; however,
the vast majority of FCC Form 499-A filers are required to pay ITSP
regulatory fees. See Regulatory Fees Fact Sheet: What You Owe - Interstate
Telecommunications Service Providers (ITSP) for FY 2011 at 6,
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-309146A1.doc (rel.
Aug. 2011).
See 47 C.F.R. S:S: 1.1154, 1.1157.
See 47 C.F.R. S: 1.1157(b)(1).
See 47 U.S.C. S: 159(c)(1), (3).
Response of RB Communications, Inc., d/b/a Starfone to the Enforcement
Bureau's March 9, 2009 Letter of Inquiry, dated April 9, 2009, Responses
to Inquiries 1, 5 (LOI Response).
Id., Response to Inquiry 2; Response of RB Communications, Inc., d/b/a
Starfone to the Enforcement Bureau's September 4, 2009 Letter of Inquiry,
dated September 29, 2009, Responses to Inquiry 19 (FLOI Response).
Id. Starfone advertises itself as "a value added provider of Long Distance
(International), prepaid and postpaid calling services based on an online
pinless calling card system" that allows users global access to over 300
countries. See Starfone web site at http://www.starfone.net/aboutus.aspx
(visited April 9, 2012). Starfone states that "although the company's
business model is to provide international calls only, the configuration
of its switches does give its end-users the ability to make interstate
calls which comprise a very small percentage of the company's overall
traffic." FLOI Response, Response to Inquiry 20(a). In 2004, the company
received a certificate of public convenience and necessity in California
to operate as a nondominant interexchange carrier providing inter- and
intra-LATA services. LOI Response, Response to Inquiry 6.
FLOI Response, Response to Inquiry 20(c).
USAC administers the federal Universal Service Fund. 47 C.F.R. S:
54.701(a).
Letter from Trent B. Harkrader, Deputy Chief, Investigations and Hearings
Division, Enforcement Bureau, FCC, to Mr. Lyle Watkins, General Manager,
Starfone, dated Mar. 9, 2009 (LOI).
Letter from Trent B. Harkrader, Deputy Chief, Investigations and Hearings
Division, Enforcement Bureau, FCC, to Mr. Lyle Watkins, General Manager,
RB Communications, Inc., dated Sept. 4, 2009 (FLOI).
LOI Response, Response to Inquiry 18.
See id., Response to Inquiry 8.
Id., Response to Inquiry 12. TRS contributions are due annually on July
26.
See International Authorizations Granted, Public Notice, 25 FCC Rcd 2337,
2339 (2010) (File No. ITC-214-20100203-00075).
47 U.S.C. S: 503(b)(1)(B); see also 47 C.F.R. S: 1.80(a)(2).
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, para. 5 (1991) (Southern California
Broadcasting Co.).
See, e.g., Callais Cablevision, Inc., Grand Isle, Louisiana, Notice of
Apparent Liability for Monetary Forfeiture, 16 FCC Rcd 1359, 1362, para.
10 (2001) (Callais Cablevision) (issuing a Notice of Apparent Liability
for, inter alia, a cable television operator's repeated signal leakage),
forfeiture issued, Forfeiture Order, 17 FCC Rcd 22626 (2002).
See Callais Cablevision, 16 FCC Rcd at 1362, para. 9; Southern California
Broadcasting Co., 6 FCC Rcd at 4388, para. 5.
47 U.S.C. S: 503(b); 47 C.F.R. S: 1.80(f).
See, e.g., SBC Communications, Inc., Apparent Liability for Forfeiture,
Forfeiture Order, 17 FCC Rcd 7589, 7591, para. 4 (2002).
47 U.S.C. S: 214.
47 C.F.R. S:S: 1.1154, 1.1157(b)(1), 63.18, 64.604(c)(5)(iii)(A), 64.1195.
FLOI Response, Response to Inquiry 19.
See International Authorizations Granted, Public Notice, 25 FCC Rcd at
2339.
LOI Response, Response to Inquiry 18; File No. ITC-214-20100203-00075 at
Attach. 2.
Starfone's recent Form 499-A filings reflect that it has been providing
interstate telecommunications service at least since sometime in 2004.
47 C.F.R. S: 64.1195(a). The Commission adopted the registration
requirement in Section 64.1195(a) after finding that such a requirement
would enable it to better monitor the entry of carriers into the
interstate telecommunications market and any associated increases in
slamming activity, and, among other things, would enhance the Commission's
ability to take appropriate enforcement action against carriers that have
demonstrated a pattern or practice of slamming. See Carrier Selection
Order, 15 FCC Rcd at 16025, para. 62.
See 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, 17099, para. 22 (1997)("it is each licensee's
obligation ... to know and comply with all of the Commission's rules").
E.g., ADMA Telecom, Inc., Notice of Apparent Liability for Forfeiture, 24
FCC Rcd 838, 846, para. 15 (2009) (ADMA NAL)(citing AT&T Wireless
Services, Inc., Forfeiture Order, 17 FCC Rcd 21866, 21870-71, paras. 12-14
(2002); America's Tele-Network Corp., Order of Forfeiture, 16 FCC Rcd
22350, 22355, para. 15 (2001); Coleman Enters., Inc. d/b/a/ Local Long
Distance, Inc., Order of Forfeiture, 15 FCC Rcd 24385, 24388, para. 8
(2000)), forfeiture issued, Forfeiture Order, 26 FCC Rcd 4152 (2011) (ADMA
Forfeiture Order).
47 C.F.R. S: 64.604(c)(5)(iii)(A); see also id. at (c)(5)(iii)(B) (setting
forth methods of computation and payment of contributions to TRS Fund).
Id. at (c)(5)(iii)(B).
Id. Under the Commission's rules, each subject carrier must contribute at
least $25 per year, and providers whose annual contributions are less than
$1,200 must pay the entire amount at the beginning of the contribution
period. Otherwise, providers may divide their contributions into equal
monthly payments. Id. The billing cycle for TRS assessments runs from July
1 to June 30 of each year, with assessments made based on carriers'
reported revenue information for the corresponding FCC Form 499-A.
Because the contributions remain unpaid, these constitute continuing
violations. See Omniat International Telecom, LLC d/b/a Omniat Telecom,
Notice of Apparent Liability for Forfeiture and Order, 24 FCC Rcd 4254,
4265-66, paras. 27, 29 (2009) (Omniat NAL).
See 47 C.F.R. S:S: 1.1154, 1.1157(b)(1).
47 C.F.R. S:S: 1.1154, 1.1157(b)(1); see also 47 U.S.C. S: 159(a)(1).
Because the fees remain unpaid, these constitute continuing violations.
See Omniat NAL, 24 FCC Rcd at 4266, para. 29; Telrite Corporation, Notice
of Apparent Liability for Forfeiture and Order, 23 FCC Rcd 7231, 7245,
para. 35 (2008) (Telrite NAL).
47 U.S.C. S: 503(b)(1)(B).
47 U.S.C. S: 503(b)(2)(B); see also 47 C.F.R. S: 1.80(b)(2). The
Commission has amended Section 1.80(b)(2) of the Rules three times to
increase the maximum forfeiture amounts, in accordance with the inflation
adjustment requirements contained in the Federal Civil Penalties Inflation
Adjustment Act of 1990, 28 U.S.C. S: 2461 note, as amended by the Debt
Collection Improvement Act of 1996, 31 U.S.C. S: 3701 note. The most
recent inflation adjustment took effect September 2, 2008 and applies to
violations that occur after that date. See Amendment of Section 1.80(b) of
the Commission's Rules, Adjustment of Forfeiture Maxima to Reflect
Inflation, Order, 23 FCC Rcd 9845 (2008) (adjusting the maximum statutory
amounts for common carriers from $130,000/$1,325,000 to
$150,000/$1,500,000).
47 U.S.C. S: 503(b)(2)(E); see also 47 C.F.R. S: 1.80(b)(6), Note to
paragraph (b)(6): Guidelines for Assessing Forfeitures.
47 U.S.C. S: 214(a).
See, e.g., 47 C.F.R. S:S: 63.12, 63.18, 63.20, 63.21, 63.23; see also 1998
International Biennial Review Order, 14 FCC Rcd 4909; Regulation of
International Common Carrier Services, Report and Order, 7 FCC Rcd 7331
(1992).
For example, the Commission's website has a list of frequently asked
questions about Section 214 applications for providers of international
telecommunications services. See
http://transition.fcc.gov/ib/pd/pf/214faq.html. Among the questions and
answers are the following: "Question: If I am merely reselling the
international services of another carrier, do I have to file a section 214
application? Answer: Yes, including in the case of mobile international
services. Refer to 47 CFR S: 63.18(e)(2), global resale service."
See supra para. 16.
See 1998 International Biennial Review Order, 14 FCC Rcd at 4915-17,
paras. 15-18; id. at 4939-40, paras. 72-74.
See LOI Response, Response to Inquiry 7 (submitting annual revenue
information for 2006-2007); see also email from William W. Holcomb, Esq.,
Counsel for Starfone, to Margaret Dailey, Attorney, Investigations and
Hearing Division, Enforcement Bureau, FCC, dated January 9, 2012
(submitting updated annual revenue information for 2008-2010).
47 U.S.C. S: 503(b)(2)(E).
ADMA Forfeiture Order, 26 FCC Rcd at 4161-62, para. 27 (assessing a
$100,000 forfeiture against a prepaid calling card company for
unauthorized international telecommunications service); Teleplus, LLC,
Notice of Apparent Liability for Forfeiture, 24 FCC Rcd 7666, 7670-71,
para. 12 (2009) (same); Omniat NAL, 24 FCC Rcd at 4264, para. 25 (same);
InPhonic, Inc., Order of Forfeiture and Further Notice of Apparent
Liability for Forfeiture, 22 FCC Rcd 8689, 8706, para. 41 (2007) (same).
See Telecom House, Inc., Notice of Apparent Liability for Forfeiture and
Order; 20 FCC Rcd 15131, 15142, para. 29 (2005), proceeding terminated, 21
FCC Rcd 10883 (2006); InPhonic, Inc., Notice of Apparent Liability for
Forfeiture and Order, 20 FCC Rcd 13277, 13287, para. 26 (2005) (InPhonic
NAL), forfeiture issued, 22 FCC Rcd 8689; Teletronics, Inc., Notice of
Apparent Liability for Forfeiture and Order, 20 FCC Rcd 13291, 13302,
para. 30 (2005), proceeding terminated, 22 FCC Rcd 8681 (2007).
See, e.g., InPhonic NAL, 20 FCC Rcd at 13287, para. 26.
Id.
47 U.S.C. S: 225(b)(1).
See Omniat NAL, 24 FCC Rcd at 4265, 66, paras. 27, 29.
See Telrite NAL, 23 FCC Rcd at 7243, para. 27.
See ADMA NAL, 24 FCC Rcd at 853, para. 35; Globcom, Inc. d/b/a Globcom
Global Communications, Notice of Apparent Liability for Forfeiture and
Order, 18 FCC Rcd 19893, 19904, para. 29 (2003) (Globcom NAL), forfeiture
issued, Order of Forfeiture, 21 FCC Rcd 4710, 4721, para. 31 (2006).
See, e.g., ADMA NAL, 24 FCC Rcd at 853, para. 35; Globcom NAL, 18 FCC Rcd
at 19904, para. 29.
See Omniat NAL, 24 FCC Rcd at 4266, para. 29; Telrite NAL, 23 FCC Rcd at
7245, para. 35.
See Omniat NAL, 24 FCC Rcd at 4266, para. 29; Telrite NAL, 23 FCC Rcd at
7245, para. 35; Compass Global Inc., Notice of Apparent Liability for
Forfeiture, 23 FCC Rcd 6125, 6141-42, para. 38 (2008).
See Business Options, Inc., Consent Decree, 19 FCC Rcd 2916 (2004); NOS
Communications, Inc., Affinity Network Incorporated and NOSVA Limited
Partnership, Consent Decree, 2003 WL 22439710 (2003).
See 47 C.F.R. S: 1.80(f)(3).
See 47 C.F.R. S: 1.1914.
Federal Communications Commission FCC 12-38
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Federal Communications Commission FCC 12-38