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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of Conexions, LLC d/b/a Conexion Wireless ) ) ) ) ) ) File
No.: EB-IHD-13-00010793 NAL/Acct. No.: 201432080008 FRN: 0019770882
NOTICE OF APPARENT LIABILITY FOR FORFEITURE AND ORDER
Adopted: November 1, 2013 Released: November 1, 2013
By the Commission:
I. INTRODUCTION
1. In this Notice of Apparent Liability for Forfeiture and Order (NAL),
we continue our commitment to combatting waste, fraud, and abuse in
the Lifeline program (Lifeline) by taking action and proposing
monetary forfeitures against a company that apparently has ignored our
rules and exploited a program dedicated to providing low-income
Americans with basic telephone service, and also apparently has
refused to comply with the Commission's investigatory requests.
Specifically, we find that Conexions, LLC d/b/a/ Conexion Wireless
(Conexions) apparently willfully and repeatedly violated Sections
54.407, 54.409, and 54.410 of the Commission's rules^ by requesting
and/or receiving support from the Lifeline program of the Universal
Service Fund (USF or Fund) for ineligible subscriber lines for the
months of June 2012 through December 2012, and February 2013. In
addition, we find that Conexions apparently willfully and repeatedly
failed to provide timely and complete responses to Commission requests
for information.^ Based on our review of the facts and circumstances
surrounding these apparent violations, we propose a monetary
forfeiture in the amount of eighteen million, three hundred
ninety-seven thousand, eight hundred and fourteen dollars
($18,397,814). Furthermore, we direct Conexions to submit, not later
than thirty calendar days after the release of this NAL, full and
complete responses to all outstanding requests from the Commission for
information.
II. BACKGROUND
2. Lifeline Service. Lifeline is part of the USF and helps qualifying
consumers have the opportunities and security that phone service
brings, including being able to connect to jobs, family members, and
emergency services.^ Lifeline service is provided by Eligible
Telecommunications Carriers (ETCs) designated pursuant to the
Communications Act of 1934, as amended (Act).^ An ETC may seek and
receive reimbursement from the USF for revenues it forgoes in
providing the discounted services to eligible customers in accordance
with the rules.^ Section 54.403(a) of the Commission's rules specifies
that an ETC may receive $9.25 per month for each qualifying low-income
consumer receiving Lifeline service,^ and up to an additional $25 per
month if the qualifying low-income consumer resides on Tribal lands.^
ETCs are required to pass these discounts along to eligible low-income
consumers.^
3. The Commission's Lifeline rules establish explicit requirements that
ETCs must meet to receive federal Lifeline support.^ Section 54.407(a)
of the rules requires that Lifeline support "shall be provided
directly to an eligible telecommunications carrier, based on the
number of actual qualifying low-income consumers it serves."^ Pursuant
to Section 54.407(b) of the rules, an ETC may receive Lifeline support
only for qualifying low-income consumers.^ A "qualifying low-income
consumer" must meet the eligibility criteria set forth in Section
54.409 of the rules, including the requirement that he or she "must
not already be receiving a Lifeline service,"^ and must, pursuant to
Section 54.410(d) of the rules, certify his/her eligibility to receive
Lifeline service.^
4. Section 54.410(a) of the Commission's rules requires further that ETCs
have procedures in place "to ensure that their Lifeline subscribers
are eligible to receive Lifeline services."^ As explained above, such
eligibility requires that a consumer seeking Lifeline service may not
already be receiving Lifeline service. This obligation therefore
requires, among other steps, that an ETC search its own internal
records to ensure that the ETC does not provide duplicate Lifeline
service to any subscriber (an "intra-company duplicate").^
5. The Commission's rules further prohibit an ETC from seeking
reimbursement for providing Lifeline service to a subscriber unless
the ETC has confirmed the subscriber's eligibility to receive Lifeline
service.^ In accordance with Section 54.410, before an ETC may seek
reimbursement, it must receive a certification of eligibility from the
prospective subscriber that demonstrates that the subscriber meets the
income-based and program-based eligibility criteria for receiving
Lifeline service, and that the subscriber is not already receiving
Lifeline service.^ As the foregoing discussion reveals, when an ETC
seeks Lifeline service support reimbursement for a low-income consumer
who already receives Lifeline service from that same ETC, that ETC has
violated its obligation under the Commission's rules to confirm the
subscriber's eligibility for Lifeline service.
6. ETCs that provide qualifying low-income consumers with Lifeline
discounts file an FCC Form 497 with the Universal Service
Administrative Company (USAC), either quarterly or monthly, to request
support that reimburses them for providing service at the discounted
rates. An ETC's FCC Form 497 documents the number of qualifying
low-income customers served and the total amount of Lifeline support
claimed by the ETC during the specified time period. Section 54.407(d)
provides that an ETC may receive reimbursement from the Fund, however,
only if it certifies as part of its reimbursement request that it is
in compliance with the Lifeline rules.^ An ETC may revise its Form 497
data within 12 months after the data are submitted.^
7. In addition to reviewing claims submitted by ETCs, USAC conducts
in-depth data validations (IDVs) to further ensure compliance with the
Lifeline rules.^ When a company is selected for an IDV, USAC will send
the company a letter requesting subscriber data for a prior month or
months.^ Once USAC receives the company's data, it analyzes the
company's subscriber information to determine whether there are any
duplicate subscribers and sends the company another letter with its
initial results. USAC provides the company with an opportunity to
submit a revised subscriber list to correct subscriber data or to
remove subscribers that are no longer receiving service. If USAC
determines that a low-income consumer is the recipient of multiple
Lifeline benefits from that same ETC, it will send another letter to
the ETC identifying the instances of intra-company duplicative
support, seek a recovery, and notify the ETC that it must commence the
deenrollment process for those duplicates.^
8. Conexions. Conexions is a Tennessee corporation^ that provides prepaid
wireless telephone services to Lifeline customers. Conexions has been
designated as an ETC to provide wireless Lifeline service in
Maryland,^ Arkansas,^ and West Virginia.^
9. USAC conducted IDVs of the Lifeline support requested by Conexions for
its Maryland, Arkansas and West Virginia subscribers for the months of
June 2012 through December 2012 (2012 IDVs). USAC conducted an
additional IDV of the Lifeline support requested by Conexions for its
Arkansas subscribers for the month of February 2013 (February 2013
IDV). Based on USAC's analysis, Conexions apparently had 3,489
individual intra-company duplicate lines for which Conexions
improperly sought Lifeline support reimbursement.^ According to USAC,
Conexions requested $90,938 in overpayments from USAC over the months
covered by the IDVs.^
10. On May 14, 2013, the FCC Enforcement Bureau's Investigation and
Hearings Division (Bureau) sent a letter of inquiry (LOI) to Conexions
seeking documents and information, and requiring a response from
Conexions by June 18, 2013.^ Conexions provided a response to this LOI
on June 18, 2013.^ Upon reviewing Conexions's LOI Response, the Bureau
concluded that it was deficient in a number of areas and also raised
additional issues relevant to the Bureau's investigation. Accordingly,
the Bureau directed Conexions to cure the LOI Response deficiencies
and to respond to additional questions.^ Conexions committed to cure
the deficiencies in its LOI Response and provide the required
supplemental information by August 19, 2013.^
11. Conexions did not submit the revised LOI Response and the required
information by August 19, 2013, nor did Conexions seek an extension of
the August 19, 2013 deadline. ^ Indeed, Conexions still has not cured
the deficiencies in its LOI Response nor provided a response to the
Bureau's Supplemental LOI.
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) 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.^ 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, or a Commission Rule or Order.^
13. Based on the record evidence developed in this investigation, we
conclude that Conexions apparently willfully and repeatedly violated
Sections 54.407, 54.409, and 54.410^ of the rules by concurrently
requesting Lifeline support reimbursement for 3,489 individual
intra-company duplicate lines. Conexions also apparently willfully and
repeatedly failed to provide a timely and complete response to
Commission requests for information. Based on the facts and
circumstances before us, we therefore conclude that Conexions is
apparently liable for forfeiture penalties totaling $18,397,814.
IV. Proposed FORFEITURES
14. For the violations at issue here, Section 503(b)(2)(B) of the Act
authorizes the Commission to assess a forfeiture against a
telecommunications carrier of up to $150,000 for each violation or
each day of a continuing violation, 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.^
15. Lifeline Duplicates. If an ETC violates our rules and submits a
request for Lifeline support that it knew or should have known
includes ineligible subscribers, and thus requests and/or receives
more reimbursement from the Fund than the amount to which it is
properly entitled, it undermines the low-income support reimbursement
mechanism. The Commission believes that the imposition of a
significant forfeiture amount is a necessary response to Lifeline
overcollection violations. Lifeline ETCs must expend the necessary
company resources to ensure compliance with the Commission's Lifeline
rules, especially the rules and procedures requiring that providers
request and/or receive federal universal service support only for
service provided to eligible consumers. Imposing a significant
forfeiture on such rule violators should deter those service providers
that fail to devote sufficient resources to ferreting out company
practices resulting in overcollection violations. In addition, a
significant forfeiture should achieve broader industry compliance with
Lifeline rules that are critically important to the effective
functioning of the Fund.
16. To eliminate waste, fraud, and abuse, maintain the integrity of the
Fund, and protect the consumers who contribute to the Fund, the
Commission has implemented a three-part forfeiture framework for
Lifeline overcollection violations that imposes: (1) a base forfeiture
of $20,000 for each instance in which an ETC files an FCC Form 497
that includes ineligible subscribers in the line count, which is a
violation of the certification requirement contained in Section
54.407(d) of our rules;^ (2) a base forfeiture of $5,000 for each
ineligible subscriber for whom the ETC requests and/or receives
support from the Fund in violation of Sections 54.407, 54.409, and
54.410 of our rules;^ and (3) an upward adjustment of the base
forfeiture equal to three times the reimbursements requested and/or
received by the ETC for ineligible subscribers.^
17. Based on the facts and record before us, we have determined that
Conexions has apparently willfully and repeatedly violated Sections
54.407, 54.409, and 54.410 of the rules.^ As documented above, over
the course of eight months, and in connection with the submission of
nineteen FCC Form 497s, Conexions requested Lifeline support
reimbursement of $90,938 for customers who were receiving more than
one Conexions Lifeline service. Accordingly, with respect to the first
component of the structure articulated by the Commission, we propose a
base forfeiture of $380,000 for the submission of the FCC Form 497s
that included the ineligible intra-company duplicate subscribers in
the line counts. With respect to the second component, we propose a
base forfeiture of $17,445,000 based on the 3,489 individual
intra-company duplicate lines for which Conexions requested and/or
received compensation from the Fund. Finally, with respect to the
third component, we propose an upward adjustment of $272,814, which is
three times the amount of support Conexions requested and/or received
for ineligible consumers. We therefore conclude that a total proposed
forfeiture of $18,097,814 against Conexions for its apparent
violations of the Commission's Lifeline rules is warranted.
18. This NAL will in no way foreclose the Commission or any other
governmental entity from taking additional enforcement action and
imposing additional forfeitures for other violations of the Lifeline
rules. Moreover, the Commission clarifies that the penalties that
result from this NAL are separate from any amounts that an ETC may be
required to refund to USAC in order to make the Fund whole.
19. Failure to Respond. It is well established that a Commission
licensee's failure to respond to an LOI from the Bureau constitutes a
violation of a Commission order.^ Such violations do not always entail
a party's total failure to respond; numerous decisions recognize that
parties may violate Commission orders by providing incomplete or
untimely responses to Bureau LOIs, or by failing to properly certify
the accuracy of their responses.^
20. As demonstrated above, Conexions has persisted in refusing to provide
a complete response to the Bureau's LOI. It also has failed to provide
any response to the Bureau's Supplemental LOI. The information and
documents that Conexions failed to provide include documents, data,
and information that are material to the Bureau's ability to conduct a
thorough investigation. For example, in several instances, Conexions's
LOI Response either failed to provide the data and information sought
by the LOI or only provided partial responses (e.g., missing data
months, missing account and reimbursement data, and non-responses to
certain sub-parts of LOI queries). Conexions's failure to respond
unduly taxed the Commission's resources by requiring Bureau staff to
take exceptional measures in an effort to obtain the documents and
information that Conexions should have provided. Conexions's conduct
delayed and ultimately impeded the Bureau's investigation. Conexions's
responsiveness and level of cooperation with this investigation thus
fell well short of what we expect and require. Under the
circumstances, Conexions's incomplete responses to the LOI, coupled
with its utter failure to respond to the Supplemental LOI, constitute
willful and repeated violations of a Commission order.^
21. The rules also provide that base forfeitures may be adjusted based
upon consideration of the factors enumerated in Section 503(b)(2)(E)
of the Act^ and Section 1.80(b)(6) of the rules, which include "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."^
22. In view of the facts and circumstances apparent from the record, we
find that Conexions's conduct warrants a substantial increase from the
specified base forfeiture amount of $4,000 per violation for its
failure to respond fully to a Commission inquiry and its failure to
respond to further Commission inquiries (i.e., a total base forfeiture
of $8,000).^ As discussed above, the record evidence demonstrates that
Conexions's failure to cooperate with the Bureau was in many or all
cases deliberate. Conexions willfully disregarded a deadline for
submitting its response. Misconduct of this nature threatens to
compromise the Commission's ability to effectively investigate
possible violations of the Communications Act and the Commission's
rules and to maintain the integrity of the Fund. Prompt and complete
responses to Bureau LOIs are essential to the Commission's enforcement
function. Under Section 503(b)(2)(B) of the Act and its implementing
regulations, the Commission may propose a forfeiture penalty of up to
$150,000 for each violation.^ Given the circumstances of this case,
including the intentional nature of the violation and its longstanding
and continuing nature, and based on our precedent in other failure to
respond cases, we find that Conexions is apparently liable for an
additional forfeiture penalty of $300,000, the statutory maximum, for
its failures to respond to Commission directives.^
23. Accordingly, we find that Conexions is apparently liable for a total
forfeiture of $18,397,814 for its willful or repeated violations of
Sections 54.407, 54.409, and 54.410 of the rules,^ and for its willful
and repeated violations of a Commission order. We also direct
Conexions to respond fully to the outstanding requests within thirty
calendar days of the date of this NAL. Failure to do so may constitute
an additional, continuing violation subjecting Conexions to future
enforcement action, including additional forfeitures.
V. ORDERING CLAUSES
24. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the
Act, and 1.80 of the rules,^ Conexions, LLC d/b/a/ Conexion Wireless
(Conexions) is hereby NOTIFIED of this APPARENT LIABILITY FOR A
FORFEITURE in the amount of eighteen million, three hundred
ninety-seven thousand, eight hundred and fourteen dollars
($18,397,814) for apparently willfully and repeatedly violating
Sections 54.407, 54.409, and 54.410 of the rules,^ and for apparently
willfully violating Enforcement Bureau directives to respond to
Commission inquiries.^
25. IT IS FURTHER ORDERED that Conexions SHALL FULLY RESPOND, not later
than thirty calendar days from the release date of this NAL, to all
outstanding information requests.
26. IT IS FURTHER ORDERED that, pursuant to Section 1.80 of the rules,^
within thirty (30) calendar days of the release date of this Notice of
Apparent Liability for Forfeiture and Order, Conexions SHALL PAY the
full amount of the proposed forfeiture or SHALL FILE a written
statement seeking reduction or cancellation of the proposed
forfeiture.
27. Payment of the forfeiture must be made by check or similar instrument,
wire transfer, or credit card, and must include the NAL/Account number
and FRN referenced above. Conexions shall also send electronic
notification of payment to Theresa Z. Cavanaugh, at
Terry.Cavanaugh@fcc.gov and to Theodore C. Marcus at
Theodore.Marcus@fcc.gov on the date said payment is made. 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.
Any request for making full payment over time under an installment plan
should be sent to: Chief Financial Officer--Financial Operations, Federal
Communications Commission, 445 12th Street, SW, 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.
28. The written statement seeking reduction or cancellation of the
proposed forfeiture, if any, must include a detailed factual statement
supported by appropriate documentation and affidavits pursuant to
Sections 1.16 and 1.80(f)(3) of the rules,^ and may include any data
or information demonstrating that the IDV results referenced in this
NAL are materially erroneous or anomalous or that the forfeiture
proposed is otherwise inappropriate.^ The written statement must be
mailed to Theresa Z. Cavanaugh, Chief, Investigations and Hearings
Division, Enforcement Bureau, Federal Communications Commission, 445
12^th Street, SW, Washington, DC 20554, and must include the NAL/Acct.
No. referenced in the caption. The written statement shall also be
emailed to Theresa Z. Cavanaugh, at Terry.Cavanaugh@fcc.gov and to
Theodore C. Marcus at Theodore.Marcus@fcc.gov.
29. 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 principles (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.
30. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability
for Forfeiture and Order shall be sent by certified mail, return
receipt requested, and first class mail to Thomas Biddix, Chief
Operating Officer and Manager, Conexions, LLC d/b/a Conexion Wireless,
100 N. Harbor City Blvd., Melbourne, FL 32935.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
^ This investigation, initiated under file no. EB-13-IH-0203, was
subsequently assigned to file no. EB-IHD-13-00010793.
^ 47 C.F.R. SS 54.407, 54.409, 54.410.
^ See, e.g., Google Inc., Notice of Apparent Liability for Forfeiture, 27
FCC Rcd 4012, 4030, para. 12 (Enf. Bur. 2012) (Google) (proposing
forfeiture for failure to timely comply with Bureau information and
document requests); International Telecom Exchange, Inc., Order of
Forfeiture, 22 FCC Rcd 13691, 13693-94, paras. 8-9 (Enf. Bur. 2007)
(imposing forfeiture on common carrier that responded eight months late to
a Bureau letter of inquiry, and only then after repeated staff requests);
see also LDC Telecomm., Inc., Notice of Apparent Liability for Forfeiture
and Order, 27 FCC Rcd 300, 301, para. 5 (Enf. Bur. 2012) (LDC) (proposing
a forfeiture for failure to provide documents and information sought by
Enforcement Bureau via letter of inquiry within specified time constitutes
violation of a Commission order); 47 U.S.C. S 416(c).
^ Lifeline and Link Up Reform and Modernization, Report and Order and
Further Notice of Proposed Rulemaking, 27 FCC Rcd 6656, 6662-67, paras.
11-18 (2012) (Lifeline Reform Order); see also 47 C.F.R. SS 54.400-54.422.
^ 47 U.S.C. S 254(e) (providing that "only an eligible telecommunications
carrier designated under section 214(e) of this title shall be eligible to
receive specific Federal universal service support"); 47 U.S.C. S 214(e)
(prescribing the method by which carriers are designated as ETCs).
^ 47 C.F.R. S 54.403(a).
^ Lifeline provides a single discounted wireline or wireless phone service
to each qualifying low-income consumer's household. See 47 C.F.R. S
54.401; see also 47 C.F.R. S 54.400(h) (defining "household" as "any
individual or group of individuals who are living together at the same
address as one economic unit"); Lifeline Reform Order, 27 FCC Rcd at 6760,
para. 241 (noting that the costs of wireless handsets are not supported by
the Lifeline program).
^ See 47 C.F.R. S 54.403(a). Tribal lands include any federally recognized
Indian tribe's reservation, pueblo, or colony, including former
reservations in Oklahoma. See 47 C.F.R. S 54.400(e).
^ See 47 C.F.R. S 54.403(a); Lifeline Reform Order, 27 FCC Rcd at 6681,
para. 53.
^ See 47 C.F.R. SS 54.400-54.422.
^ 47 C.F.R. S 54.407(a).
^ 47 C.F.R. S 54.407(b). In 2011, the Commission took action to address
potential waste, fraud, and abuse in the Lifeline program by preventing
duplicate payments for multiple Lifeline-supported services to the same
individual. See Lifeline and Link Up Reform and Modernization, Report and
Order, 26 FCC Rcd 9022-23, 9026, para. 1 (2011) (Lifeline Duplicates
Order); see also Lifeline and Link Up Reform and Modernization, Order, 28
FCC Rcd 9057 (Wir. Comp. Bur. 2013); 47 C.F.R. S 54.410(a). Specifically,
the Commission amended Sections 54.401 and 54.405 of the rules to codify
the restriction that an eligible low-income consumer cannot receive more
than one Lifeline-supported service at a time. See Lifeline Duplicates
Order, 26 FCC Rcd at 9026, para. 7. In the Lifeline Reform Order, this
codified restriction was moved from Section 54.401(a) to revised Section
54.409(c). See Lifeline Reform Order, 27 FCC Rcd at 6689, para. 74, n.192.
The Commission reiterated this limitation in the Lifeline Reform Order.
See Lifeline Reform Order, 27 FCC Rcd at 6689, para. 74; 47 C.F.R. S
54.405.
^ 47 C.F.R. SS 54.400(a), 54.409(c).
^ 47 C.F.R. S 54.410(d).
^ 47 C.F.R. S 54.410(a).
^ See Lifeline Reform Order, 27 FCC Rcd at 6691, para. 78. In June 2013,
the Wireline Competition Bureau on delegated authority underscored these
obligations, prohibiting ETCs from activating "a service that it
represents to be Lifeline service, even on an interim basis while the
consumer's application is being processed, before verifying eligibility,"
including that a consumer's household does not already subscribe to
Lifeline service. Lifeline and Link Up Modernization and Reform, Order, 28
FCC Rcd 9057, 9059, para. 6 (Wir. Comp. Bur. 2013); see also 47 C.F.R.
S54.410(a).
^ See 47 C.F.R. S 54.410(b).
^ See 47 C.F.R. S 54.410(b), (c); see also 47 C.F.R. S 54.410(d).
^ See 47 C.F.R. S 54.407(d).
^ See Lifeline Reform Order, 27 FCC Rcd at 6788, para. 305. Subsequent
revisions, however, do not vitiate violations of an ETC's duty to verify
the eligibility of the subscribers that are reflected on any of its
previously filed Form 497s.
^ See Lifeline Duplicates Order, 26 FCC Rcd at 9026, para. 7.
^ See, e.g., Letter from Universal Service Administrative Company to
Thomas Biddix, Conexions, LLC (Feb. 7, 2013) (on file in
EB-IHD-13-00010793).
^ Although USAC recovers the duplicative support payments for the month at
issue in the IDV examination (generally a single month), it does not at
present always seek to recover the duplicative support that the ETC may
have received for the same duplicates for the preceding and following
months. We therefore direct USAC, when it determines that an ETC has
sought support from the Fund for an intra-company duplicate, to require
the ETC to report to USAC (a) the month in which the ETC began requesting
and/or receiving duplicative support for each such subscriber, and (b) the
month the ETC stopped requesting and/or receiving duplicative support for
each such subscriber. We further require that, after receiving such
information, USAC shall recover from the ETC all of the duplicative
support it has received for such subscribers.
^ See Tennessee Secretary of State, Division of Business Services,
Conexions Certificate of Existence, Control No. 000541669, available at
https://tnbear.tn.gov/ECommerce/CertOfExistence.aspx?CN=044063245212023206055197171031249222028020002099.
^ See Maryland Public Service Commission, Letter Order #29, ML# 128985,
TE-10421 (dated March 30, 2011).
^ See Arkansas Public Service Commission, Docket No. 10-099-U, Order No. 3
(dated March 8, 2011), available at
http://www.apscservices.info/pdf/10/10-099-u_6_1.pdf.
^ See Public Service Commission of West Virginia, Recommended Decision
(dated July 17, 2011), available at
http://www.psc.state.wv.us/scripts/orders/ViewDocument.cfm?CaseActivityID=325971&Source=Docket.
^ See Letter from Universal Service Administrative Company to Thomas
Biddix, Conexions, LLC (Feb. 7, 2013). An "intra-company duplicate line"
is any line for which Conexions sought and/or received reimbursement in
violation of the Commission's one line per household rule. See 47 C.F.R. S
54.409(c). For the purposes of applying the second prong of our three-part
forfeiture framework (a base forfeiture of $5,000 per duplicate), given
the unique circumstances presented by Lifeline intra-company duplicate
cases involving multiple months of duplicate service, we have counted each
intra-company duplicate line once, regardless of the number of months in
which Conexions sought and/or received reimbursement for that line. We
account for the duration of each intra-company duplicate line (i.e., the
number of months that Conexions sought compensation for each intra-company
duplicate line) in the first and third prongs of our forfeiture
calculation. See infra paras. 16-17.
^ See Letter from Universal Service Administrative Company to Thomas
Biddix, Conexions, LLC (Feb. 7, 2013).
^ See Letter from Pamela S. Kane, Deputy Chief, Investigations and
Hearings Division, FCC Enforcement Bureau, to Thomas Biddix, Conexions,
LLC (May 14, 2013) (on file in EB-IHD-13-00010793).
^ See Letter from Thomas Biddix to Marlene Dortch, Secretary, FCC (June
18, 2013) (LOI Response) (on file in EB-IHD-13-00010793).
^ See e-mail from Theodore C. Marcus, Investigations & Hearings Division,
FCC Enforcement Bureau, to L. Charles Keller, Counsel for Conexions, LLC
(July 11, 2013) (Supplemental LOI) (on file in EB-IHD-13-00010793).
^ See e-mail from L. Charles Keller to Theodore C. Marcus, Investigations
& Hearings Division, FCC Enforcement Bureau (July 18, 2013) (on file in
EB-IHD-13-00010793). The parties set the deadline for August 17, 2013, but
because that date fell on a Saturday, the official deadline for production
was Monday, August 19, 2013, pursuant to Section 1.4 of the Commission's
rules. 47 C.F.R. S 1.4.
^ See 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, 97^th Cong. 2d Sess. 51 (1982) ("This provision
[inserted in Section 312] defines the terms `willful' and `repeated' for
purposes of section 312, and for any other relevant section of the act
(e.g., Section 503) . . . . As defined[,] . . . `willful' means that the
licensee knew that he was doing the act in question, regardless of whether
there was an intent to violate the law. `Repeated' means more than once,
or where the act is continuous, for more than one day. Whether an act is
considered to be `continuous' would depend upon the circumstances in each
case. The definitions are intended primarily to clarify the language in
Sections 312 and 503, and are consistent with the Commission's application
of those terms . . . .").
^ See, e.g., So. Cal. Broad. Co., Memorandum Opinion and Order, 6 FCC Rcd
4387, 4388 (1991), recons. denied, 7 FCC Rcd 3454 (1992) (Southern
California Broadcasting).
^ See, e.g., Callais Cablevision, Inc., Notice of Apparent Liability for
Monetary Forfeiture, 16 FCC Rcd 1359, 1362, para. 10 (2001) (Callais
Cablevision) (proposing a forfeiture for, inter alia, a cable television
operator's repeated signal leakage).
^ Southern California Broadcasting, 6 FCC Rcd at 4388, para. 5; Callais
Cablevision, 16 FCC Rcd at 136, para. 9.
^ 47 U.S.C. S 503(b)(4); 47 C.F.R. S 1.80(f).
^ See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589,
7591, para. 4 (2002) (SBC).
^ 47 C.F.R. SS 54.407, 54.409, 54.410; see also supra paras. 3-6
(discussing these rules and observing that when an ETC seeks Lifeline
service support reimbursement for a low-income consumer who already
receives Lifeline service from that ETC, that ETC has failed in its
obligation to confirm the subscriber's eligibility for Lifeline service in
violation of the rules).
^ See 47 U.S.C. S 503(b)(2)(B); 47 C.F.R. S 1.80(b)(2). These amounts
reflect inflation adjustments to the forfeitures specified in Section
503(b)(2)(B) ($100,000 per violation or per day of a continuing violation
and $1,000,000 per any single act or failure to act). The Federal Civil
Penalties Inflation Adjustment Act of 1990, Pub. L. No. 101-410, 104 Stat.
890, as amended by the Debt Collection Improvement Act of 1996, Pub. L.
No. 104-134, Sec. 31001, 110 Stat. 1321 (DCIA), requires the Commission to
adjust its forfeiture penalties periodically for inflation. See 28 U.S.C.
S 2461 note (4). The Commission most recently adjusted its penalties to
account for inflation in 2013. See Amendment of Section 1.80(b) of the
Commission's Rules, Adjustment of Civil Monetary Penalties to Reflect
Inflation, DA 13-1615, 2013 WL 3963800 (Enf. Bur. 2013); see also
Inflation Adjustment of Monetary Penalties, 78 Fed. Reg. 49,370-01 (Aug.
14, 2013) (setting Sept. 13, 2013, as the effective date for the
increases). However, because the DCIA specifies that any inflationary
adjustment "shall apply only to violations which occur after the date the
increase takes effect," we apply the forfeiture penalties in effect at the
time the violation took place. 28 U.S.C. S 2461 note (6). Here, because
the violations at issue occurred before September 13, 2013, the applicable
maximum penalties are based on the Commission's previous inflation
adjustment that became effective on September 2, 2008. See Inflation
Adjustment of Maximum Forfeiture Penalties, 73 Fed. Reg. 44,663, 44,664
(July 31, 2008).
^ 47 U.S.C. S 503(b)(2)(E).
^ See 47 C.F.R. S 1.80(b)(8); Note to Paragraph (b)(8): Guidelines for
Assessing Forfeitures.
^ 47 C.F.R. S 54.407(d).
^ 47 C.F.R. SS 54.407, 54.409, 54.410. See Easy Tel. Servs. d/b/a Easy
Wireless, File No. EB-IHD-13-00010590, Notice of Apparent Liability for
Forfeiture, FCC 13-129, at 5-7, paras. 13-18 (Sept. 30, 2013) (Easy
Wireless).
^ See Easy Wireless, FCC 13-129, at 5-7, paras. 13-18.
^ 47 C.F.R. SS 54.407, 54.409, 54.410.
^ See, e.g., Google, 27 FCC Rcd at 4030, para. 42 ("It is well established
that a Commission licensee's failure to respond to an LOI from the Bureau
violates a Commission order."); Carrera Commc'ns, LP, Notice of Apparent
Liability for Forfeiture and Order, 20 FCC Rcd 13307, 13316, para. 22
(2005) (Carrera) ("Carrera's willful and repeated failures to respond to
the Bureau's LOIs constitute apparent violations of Commission orders."),
forfeiture issued, Order of Forfeiture, 22 FCC Rcd 9585 (2007); SBC, 17
FCC Rcd at 7597-98, paras. 19-20 (explaining that the Bureau's LOI to a
common carrier, which included a directive to provide a sworn statement
verifying the carrier's response to the LOI, was a Commission order that
the carrier was not permitted to ignore); LDC, 27 FCC Rcd at 301, para. 5
(holding that "[t]he Bureau's LOI directed to LDC was a legal order of the
Commission requiring LDC to produce the requested documents and
information," and that "LDC's failure to provide the documents and
information sought within the time and manner specified constitute[d] a
violation of a Commission order"); Milton Goodman, Notice of Apparent
Liability for Forfeiture, 19 FCC Rcd 18119, 18121-22, paras. 4-6 (Enf.
Bur. 2004) (proposing a $10,000 forfeiture based on an auction applicant's
failure to respond to a Bureau LOI), cancelled on grounds of extreme
financial hardship, Memorandum Opinion and Order, 20 FCC Rcd 658 (Enf.
Bur. 2005); see also 47 U.S.C. S 416(c).
^ See, e.g., Carrera, 20 FCC Rcd at 13319, para. 31 (proposing an $8,000
forfeiture penalty against a company not represented by counsel that filed
an untimely and incomplete response to a Bureau LOI); SBC, 17 FCC Rcd at
7589-91, 7600, paras. 2-3, 28 (holding that a common carrier's deliberate
failure to provide a sworn statement verifying its LOI response until
weeks after the Bureau had directed the carrier to respond warranted a
$100,000 forfeiture penalty); Digital Antenna, Inc., Notice of Apparent
Liability for Forfeiture and Order, 23 FCC Rcd 7600, 7600-02, paras. 3, 5,
7 (Enf. Bur. 2008) (Digital Antenna) (holding that a manufacturer of
cellular and PCS boosters was apparently liable for violation of a
Commission order when it failed to provide complete responses to Bureau
LOIs, including by failing to submit the required sworn statements); Int'l
Telecom Exch., Order of Forfeiture, 22 FCC Rcd 13691, 13693-94, paras. 8-9
(Enf. Bur. 2007) (ITE) (imposing a forfeiture penalty against a common
carrier that responded to the Bureau's LOI eight months late and only
after repeated requests from staff).
^ See, e.g., Carrera, 20 FCC Rcd at 13319, para. 31; SBC, 17 FCC Rcd at
7599-600, paras. 25-28; Digital Antenna, 23 FCC Rcd at 7600-02, paras. 3,
7; see also 47 U.S.C. S 416(c).
^ See 47 U.S.C. S 503(b)(2)(E).
^ 47 C.F.R. S 1.80(b)(8).
^ See 47 C.F.R. S 1.80(b)(8); Note to Paragraph (b)(8); Guidelines for
Assessing Forfeitures.
^ See 47 U.S.C. S 503(b)(2)(B); 47 C.F.R. S 1.80(b).
^ See, e.g., SBC, 17 FCC Rcd at 7600, para. 28 (affirming Enforcement
Bureau's proposal of $100,000 forfeiture).
^ 47 C.F.R. SS 54.407, 54.409, 54.410; see also supra paras. 3-6.
^ 47 U.S.C. S 503(b); 47 C.F.R. S 1.80.
^ 47 C.F.R. SS 54.407, 54.409, 54.410.
^ See supra note 50 and accompanying text.
^ 47 C.F.R. S 1.80.
^ 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.
^ 47 C.F.R. SS 1.16, 1.80(f)(3).
^ For example, the written statement could include data showing that the
months examined in the IDVs were outliers or otherwise not representative.
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Federal Communications Commission FCC 13-145
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Federal Communications Commission FCC 13-145