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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
PTT Phone Cards, Inc.
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File No.: EB-IHD-13-00011669
NAL/Acct. No.: 201432080040
FRN: 0022611958
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: September 15, 2014 Released: September 16, 2014
By the Commission:
INTRODUCTIOn
When a company enters the telecommunications services marketplace, it subjects itself to a number of safeguards and support mechanisms that Congress and the Federal Communications Commission have established to help ensure, among other goals, rapid, efficient, and reasonably priced communications for all Americans. In this Notice of Apparent Liability for Forfeiture, we propose penalties of $493,327 against PTT Phone Cards, Inc. (PTT or Company), a prepaid calling card provider that apparently provided international telecommunications services in disregard of virtually all of its regulatory obligations for over three years. Although PTT has been aware of the Enforcement Bureau's (Bureau) investigation since last year, some of PTT's apparent violations continue to this day.
PTT's apparent violations include providing international telecommunications services without first obtaining Commission authority, a failure that prevented the Commission from timely evaluating whether PTT's provision of those services would create risks to consumers and competition. PTT also apparently failed to file the annual reports that the Administrators of the Universal Service Fund (USF), the Telecommunications Relay Service (TRS) Fund, and the cost recovery mechanisms for local number portability (LNP) and the North American Numbering Plan (NANP) use to determine service providers' contribution obligations, and that the Commission uses to assess regulatory fees. The filing failures persisted for over three years and resulted in either PTT's late payment or non-payment of required TRS and LNP contributions and regulatory fees.
Additionally, PTT was required to file periodic reports certifying its compliance with the Commission's USF contribution and customer proprietary network information (CPNI) rules, and disclosing its international traffic and revenues. PTT also apparently failed to meet these requirements, thereby undermining our ability to monitor compliance with our USF and customer privacy rules and developments in the international telecommunications market. The penalties we propose here reflect the seriousness, duration, and scope of PTT's violations.
BACKGROUND
PTT is a Pennsylvania corporation that, from January 1, 2010, through early 2014, operated under the trade name Star Pinless as a prepaid calling card services provider reselling international telecommunications services. PTT sold its prepaid calling card services through grocery stores that served as distributors to PTT's end user customers. PTT also used the Internet to market its international telecommunications services to other potential distributors and resellers. PTT's distributors helped set up each end user with a PTT account. If an end user chose to do so, the account information included the end user's phone number so that PTT's prepaid calling platform could recognize the end user's number, thereby enabling the end user to place telephone calls without having to dial a personal identification number (PIN) access code. After the authentication process, whether by PIN or PIN-less processes, PTT's platform routed telephone calls to the international destinations to which PTT end users sought to connect.
In January 2013, the Bureau learned that PTT might not be complying with the provisions of the Communications Act of 1934, as amended (Act) and the Commission's rules (Rules) applicable to prepaid calling card providers. After a preliminary investigation, the Bureau sent a Letter of Inquiry (LOI) to PTT on April 8, 2013, directing the Company to respond to questions regarding its compliance with the provisions of the Act and the Rules pertaining to PTT's authority to provide international telecommunications services, payment of regulatory obligations, and other related requirements. On April 24, 2013, PTT responded to the LOI. On July 7, 2014, and August 7, 2014, PTT supplemented its LOI Response. On December 20, 2013, PTT entered into a tolling agreement with the Bureau, which extended the applicable statute of limitations period.
Discussion
Based on the facts and circumstances before us, we find that PTT apparently willfully or repeatedly failed to: (a) obtain Commission authority prior to providing international telecommunications services, as Section 214(a) of the Act and Section 63.18 of the Rules require; (b) timely file annual Telecommunications Reporting Worksheets, as Sections 52.32, 54.711, and 64.604(c)(5)(iii) of the Rules require; (c) timely make required TRS and LNP contributions and timely pay required regulatory fees in accordance with Section 251(e)(2) of the Act and Sections 1.1154, 1.1157(b)(1), 53.32, and 64.604(c)(5)(iii) of the Rules; and (d) timely file prepaid calling card certifications, international traffic and revenue reports, and CPNI certifications in accordance with Section 222 of the Act and Sections 43.61, 64.2009(e), and 64.5001(c)(3) of the Rules.
PTT Apparently Failed to Obtain International Section 214 Authority Before Providing International Telecommunications Services
We find that PTT apparently violated Section 214(a) of the Act and Section 63.18 of the Rules by willfully or repeatedly providing international telecommunications services without international Section 214 authority from January 1, 2010, until May 9, 2013. 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 certification 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 granted the same authority for providers of international telecommunications services. Instead, a carrier must seek and obtain Section 214 authority from the Commission prior to providing international telecommunications services. The Commission has explained that the international Section 214 review process enables the Commission to screen 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.
Section 63.18 of the 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, a certification that it will comply with Commission rules, and a 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) of the Rules 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."
In its LOI Response, PTT states that it began providing international telecommunications services on January 1, 2010. PTT did not apply for international Section 214 authority until April 15, 2013, three days after acknowledging receipt of the Bureau's LOI on April 12, 2013. At the time of its application, PTT did not disclose to the Commission's International Bureau that it had been providing international telecommunications services without authorization. Nor did PTT apply for or receive special temporary authority to provide international telecommunications services while its application for permanent authority was pending. The Commission has determined that a "failure to obtain an international Section 214 authorization prior to offering international telecommunications service constitutes a continuing violation until the violation is cured." Here, PTT did not cure its continuing violation until May 10, 2013, the date the Commission's International Bureau granted PTT's application for international Section 214 authority. Based on the preponderance of the evidence, we find that PTT apparently violated Section 214(a) of the Act and Section 63.18 of the Rules by willfully or repeatedly providing international telecommunications services without Section 214 authority from January 1, 2010, through May 9, 2013.
PTT Apparently Failed to Timely File Annual Telecommunications Reporting Worksheets for 2011, 2012, and 2013
We find that PTT apparently violated Sections 52.32(b), 54.711, and 64.604(c)(5)(iii)(B) of the Rules by willfully or repeatedly failing to timely file annual Telecommunications Reporting Worksheets (FCC Forms 499-A or Worksheets) for 2011, 2012, and 2013. The Act directs the Commission to establish, administer, and maintain programs to promote universal service and TRS, and to ensure LNP and effective numbering administration more generally, among other mandates. To help accomplish these goals, the Commission has established the USF, the TRS Fund, and cost recovery mechanisms for LNP and NANP. As Congress has directed, the Commission funds these programs though assessments on telecommunications providers. To gather the data necessary to calculate the assessments, the Commission requires international telecommunications service providers, among others, to file annual Worksheets reporting the providers' revenues from various types of services during the preceding calendar year. The Administrators of the USF, TRS, LNP, and NANP programs rely upon the reported data to calculate and assess any necessary contributions. Although some providers may not need to contribute to each fund and cost recovery mechanism, all telecommunications service providers must file annual Worksheets. The Commission also uses the annual Worksheet data to calculate and assess annual regulatory fees in accordance with the Act.
PTT neglected to timely file required annual Worksheets for 2011, 2012, and 2013. These failures to timely file constituted continuing violations until the violations were cured. The Company's 2011 Worksheet was due on April 1, 2011, but it was not received by the Commission until August 5, 2013, more than 28 months past its due date. The Company's 2012 Worksheet was due on April 1, 2012, but it was not received until August 5, 2013, more than 16 months late. PTT's 2013 Worksheet was due on April 1, 2013, but it was not received until July 19, 2013, more than three months late. These three late filings were made only after PTT had acknowledged receipt of the Bureau's LOI, which had informed PTT that the Bureau was investigating the Company's compliance with the Worksheet filing requirement. Based on the preponderance of the evidence, we find that PTT apparently willfully or repeatedly violated Sections 52.32(b), 54.711, and 64.604(c)(5)(iii)(B) of the Rules by failing to timely file its 2011, 2012, and 2013 annual Worksheets.
PTT Apparently Failed to Timely Contribute to the TRS Fund
We also find that PTT apparently violated Section 225 of the Act and Section 64.604(c)(5)(iii) of the Rules by willfully or repeatedly failing to timely contribute to the TRS Fund. 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 Rules, every provider of interstate or international telecommunications services must contribute to the TRS Fund based upon its end-user revenues.
As a provider of international telecommunications services, PTT was obligated to contribute to the TRS Fund on the basis of its international end-user telecommunications revenues. The TRS Fund Administrator calculates the contribution that a carrier is required to make to the TRS Fund by applying a contribution factor (determined annually by the Commission) to the carrier's revenues for the prior calendar year as reported in the annual Worksheet due in April of each year. The TRS Fund Administrator uses a July 1 through June 30 billing year, and subject carriers must make TRS contributions on a monthly or annual basis. Failures to timely contribute to the TRS Fund constitute continuing violations until the violations are cured.
Because PTT did not timely file its annual Worksheets for 2011, 2012, and 2013, the TRS Fund Administrator did not bill PTT for mandated TRS contributions until September 13, 2013. This September 2013 Invoice included the TRS contribution amounts that PTT owed for July 1, 2011, through June 30, 2012 (the 2011 - 2012 TRS contribution period), July 1, 2012, through June 30, 2013 (the 2012 - 2013 TRS contribution period), and for July 1, 2013, through September 30, 2013 (the first three months of the 2013 - 2014 TRS contribution period). Had PTT timely filed its annual Worksheets, its payments for each of these periods would have been due in equal monthly installments beginning in August 2011, August 2012, and August 2013, respectively.
The September 2013 TRS Invoice required PTT to contribute $34,485.36 to the TRS Fund by October 11, 2013. The September 2013 TRS Invoice went unpaid, as did all subsequent monthly invoices from the TRS Fund Administrator, which included additional monthly installment obligations for the 2013 - 2014 TRS contribution period. On February 28, 2014, the TRS Fund Administrator transferred PTT's TRS debt to the U.S. Department of Treasury (Treasury Department). Effective April 7, 2014, the Treasury Department and PTT entered into a payment agreement that requires PTT to make monthly installment payments until April 2016. PTT's unpaid TRS obligations totaled $46,653.25 at the time that PTT entered into its payment agreement with the Treasury Department, an agreement that stemmed from PTT's prior failure to make any TRS contributions. We therefore conclude, based on a preponderance of the evidence, that PTT apparently violated Section 225 of the Act and Section 64.604(c)(5)(iii) or the Rules by willfully or repeatedly failing to timely make required TRS contributions for the 2011 - 2012, 2012 - 2013, and 2013 - 2014 TRS contribution periods.
PTT Apparently Failed to Timely Contribute to the LNP Cost Recovery Mechanism
We next conclude that PTT apparently violated Section 251(e)(2) of the Act and Section 52.32 of the Rules by willfully or repeatedly failing to make timely payments to the LNP cost recovery mechanism. Telecommunications number portability concerns the ability of consumers of telecommunications services to "retain, at the same location, existing telecommunications numbers without impairment of quality, reliability, or convenience when switching from one telecommunications carrier to another." The presence of this feature in the telecommunications marketplace fosters consumer choice and enhances competition. Section 251(b)(2) of the Act establishes that every telecommunications carrier has a duty to provide local number portability in accordance with requirements established by the Commission. Section 251(e)(2) mandates that "[t]he cost of establishing . . . number portability shall be borne by all telecommunications carriers on a competitively neutral basis as determined by the Commission." In implementing this statutory directive, the Commission adopted Section 52.32 of its Rules, which requires, among other things, that all telecommunications carriers contribute to the costs of LNP on the basis of their end-user telecommunications revenues for the prior calendar year. A failure to make LNP contributions constitutes a continuing violation until it is cured by payment of all monies due.
PTT's failure to timely file its annual Worksheets for 2011, 2012, and 2013 prevented the LNP Administrator from timely billing the Company for required contributions to the LNP cost-recovery mechanism. Like the TRS Fund Administrator, the LNP Administrator calculates carriers' required contributions according to a July 1 through June 30 billing year. By the time PTT filed its Worksheets, it owed approximately $14,400 in LNP contributions for the 2011 - 2012 and 2012 - 2013 billing cycles. PTT has not yet paid these required contributions. PTT also missed three monthly payment deadlines for invoices for the 2013 - 2014 billing cycle. We therefore find, based on the preponderance of the evidence, that PTT apparently violated Section 251(e)(2) of the Act and Section 52.32 of the Rules by willfully or repeatedly failing to timely make required payments to the LNP cost recovery mechanism for the 2011 - 2012, 2012 - 2013, and 2013 - 2014 billing cycles.
PTT Apparently Failed to Timely Pay Required Regulatory Fees
We further conclude that PTT apparently violated Sections 1.1154 and 1.1157(b)(1) of the Rules by willfully or repeatedly failing to timely pay required regulatory fees for fiscal years 2011 and 2012. Section 9 of the Act directs the Commission to "assess and collect regulatory fees to recover the costs" of certain enumerated Commission activities, including "enforcement activities, policy and rulemaking activities, user information services, and international activities." Consistent with this directive, the Commission has set forth in its Rules schedules of annual regulatory fees that entities regulated by the Commission must remit to the Commission, as well as requirements for when the fees must be paid. As a provider of international telecommunications services, PTT was obligated to pay regulatory fees based on its international end-user revenues as recorded on its annual Worksheets. Failures to make regulatory fee payments are continuing violations until they are cured by the payment of all monies owed.
PTT's regulatory fees for fiscal years 2011 and 2012 were due by September 15, 2011, and September 13, 2012, respectively. PTT has not paid its regulatory fees for either fiscal year. The unpaid fees and associated late penalties totaled $11,033.75 as of July 21, 2014. Based on the preponderance of the evidence, we find that PTT apparently violated Sections 1.1154 and 1.1157(b)(1) of the Rules by willfully or repeatedly failing to make regulatory fee payments for fiscal years 2011 and 2012.
PTT Apparently Failed to Timely File Prepaid Calling Card Certifications
We also find that PTT apparently violated Section 64.5001(c) of the Rules by willfully or repeatedly failing to timely file prepaid calling card certifications. That rule requires that an officer of each prepaid calling card provider submit a quarterly certification to the Commission stating, among other information, that the provider is making any required USF contributions. Each quarterly certification is due no later than the last day of the subsequent quarter. As with other forms, failures to file prepaid calling card certifications constitute continuing violations until the violations are cured.
Since commencing its operations in January 2010, PTT has late filed 15 separate quarterly prepaid calling card certifications, and the certification for a sixteenth quarter (the first quarter of 2014) has not yet been filed. Indeed, the Commission did not receive PTT's first 14 quarters of certifications until December 18, 2013. This was more than eight months after April 12, 2013, the date PTT acknowledged receipt of the Bureau's LOI investigating the Company's compliance with Section 64.5001(c). Based on the preponderance of the evidence, we therefore find that PTT apparently violated Section 64.5001(c) by willfully or repeatedly failing to timely file its prepaid calling card certifications.
PTT Apparently Failed to Timely File International Traffic and Revenue Reports
We conclude that PTT apparently violated Section 43.61(a) of the Rules by willfully or repeatedly failing to file international traffic and revenue reports. That rule requires common carriers that provide international telecommunications services to file reports with the Commission containing data on overseas traffic. These reports are due not later than July 31 of each year and must include specified traffic and revenue data pertaining to the carrier's international telecommunications services provided in the preceding calendar year. Failures to timely file international telecommunications traffic reports constitute continuing violations until the violations are cured.
The Commission's records indicate that PTT failed to file its 2011, 2012, 2013, and 2014 international telecommunications traffic reports (providing calendar year 2010, 2011, 2012, 2013 data, respectively) in a timely manner. PTT was obligated to submit these reports by July 31 of each year they were due. PTT, however, did not file its 2011, 2012, and 2013 reports until February 20, 2014, and the Company did not file its 2014 report until August 5, 2014. These respective dates are roughly 10 months and 16 months after April 12, 2013, the date PTT acknowledged receipt of the Bureau's LOI investigating the Company's compliance with Section 43.61(a). Based on a preponderance of the evidence, we therefore conclude that PTT apparently violated Section 43.61 of the Rules by willfully or repeatedly failing to timely file its 2011, 2012, 2013, and 2014 international telecommunications traffic reports.
PTT Apparently Failed to Timely File CPNI Certifications
We also conclude that PTT apparently violated Section 64.2009(e) of the Rules by willfully or repeatedly failing to timely file its annual CPNI certifications. In the course of providing prepaid calling card services, PTT collects personal information relating to its customers' calling practices, such as the number of calls a customer makes, the type of services the customer subscribes to, the destination or numbers called by a customer, the location (i.e., where the customer is calling from), and information contained in a subscriber's bills. The Act defines this information as CPNI. Section 222 of the Act imposes the general duty on all telecommunications carriers to protect the confidentiality of their subscribers' proprietary information. The Commission has promulgated rules implementing Section 222. Specifically, Section 64.2009(e) of the Rules requires, among other things, that carriers establish and maintain systems designed to ensure that they adequately protect their subscribers' CPNI and file with the Commission annually, on or before March 1, a certification of their compliance with the CPNI rules. The Commission has determined that the failure to file a CPNI certification is a continuing violation, which is not cured until the certification is filed with the Commission.
The Commission's records indicate that PTT failed to file its annual CPNI certifications for 2011, 2012, 2013, and 2014 covering PTT's CPNI policies and actions in 2010, 2011, 2012, and 2013, respectively. Although PTT's annual certification was due March 1 of each year, PTT did not file its certifications for 2011, 2012, and 2013 until April 16, 2013. This was after PTT learned that the Commission was investigating the Company's potential violation of this requirement. These three filings were respectively more than 25 months late, more than 13 months late, and 46 days late. PTT also did not file its 2014 certification, which was due March 1, 2014, until April 15, 2014. Based on a preponderance of the evidence, we therefore conclude that PTT apparently violated Section 64.2009(e) of the Rules by willfully or repeatedly failing to timely file its annual CPNI certifications.
Proposed Forfeitures
Section 503(b)(1)(B) of the Act provides that any person who willfully or repeatedly fails to comply substantially with the terms and conditions of any license, or willfully or repeatedly fails to comply with any of the provisions of the Act or of any rule, regulation, or order issued by the Commission thereunder, shall be liable 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 Section 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 or entity has violated the Act, or any rule, regulation, or order issued by the Commission.
As set forth above, we conclude that PTT is apparently liable for forfeitures for willfully or repeatedly providing international telecommunications services without authority under Section 214(a) of the Act, and for failing to timely file annual Worksheets, timely make required TRS and LNP contributions, timely pay required regulatory fees, and timely file prepaid calling card certifications, international traffic and revenue reports, and CPNI certifications. Based on the facts and circumstances before us, we therefore find that PTT is apparently liable for forfeiture penalties totaling four hundred ninety-three thousand, three hundred twenty-seven dollars ($493,327).
Providing International Telecommunications Services Without Commission Authority
We conclude that for more than 41 months, PTT apparently provided international telecommunications services without Commission authority in violation of Section 214 of the Act and Section 63.18 of the Rules. We find that this apparent violation of the Act and Rules was willful or repeated. Given the language of the Act and the Commission's Rules and decisions, further buttressed by the Commission's website, it should have been apparent to PTT that it was required to obtain Section 214 authority from the Commission prior to providing international telecommunications service.
We view PTT's apparent failure to obtain international Section 214 authority prior to providing international telecommunications services as a serious dereliction of its responsibilities under the Act and Rules. The Commission requires applications for international Section 214 authority so, among other things, the Commission can screen 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. International telecommunications carriers that operate without Section 214 authority thus may endanger important public interests. Consistent with Commission precedent, we find that PTT is apparently liable for a forfeiture of one hundred thousand dollars ($100,000) for its willful or repeated failure to obtain international Section 214 authority from the Commission prior to providing international telecommunications service.
Failure to Timely File Annual Telecommunications Reporting Worksheets
We conclude that PTT failed to timely file its annual Telecommunications Reporting Worksheets for 2011, 2012, and 2013 in apparent violation of Sections 52.32(b), 54.711, and 64.604(c)(5)(iii)(B) of the Rules. This failure constitutes a serious dereliction of PTT's responsibilities under our Rules. The fund Administrators and the Commission rely on the data in annual Worksheets to determine the amounts, if any, that telecommunications service providers, among others, owe for USF, TRS, LNP, and NANP contributions and regulatory fees. PTT's failure to timely file its annual Worksheets for 2011, 2012, and 2013 thus had serious implications for the administration of important Commission programs. In the past, the Commission has proposed a forfeiture of $50,000 for each failure to file an annual Worksheet. Accordingly, consistent with this precedent, we find that PTT is apparently liable for a forfeiture of one hundred fifty thousand dollars ($150,000) for willful or repeated failure to timely file its annual Worksheets for 2011, 2012, and 2013.
Nonpayment and Late Payment of TRS Contributions
We conclude that PTT apparently violated Section 225 of the Act and Section 64.604(c)(5)(iii) of the Rules by willfully or repeatedly failing to timely make required TRS contributions for the 2011 - 2012, 2012 - 2013, and 2013 - 2014 TRS contribution periods. Where a provider fails to meet its obligation to contribute to the TRS Fund over an extended period, it impedes the Commission's efforts 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," as Section 225(b)(1) of the Act directs. The Commission has established a base forfeiture amount of $10,000 for each instance in which a contributor fails to make required TRS Fund contributions. Thus, we propose a base forfeiture of thirty thousand dollars ($30,000) for PTT's failure to pay its TRS Fund contributions for the 2011 - 2012, 2012 - 2013, and 2013 - 2014 TRS contribution periods.
As stated above, PTT's unpaid TRS obligations totaled $46,653.25 at the time that the Company entered into its payment agreement with the Treasury Department. The Commission has previously upwardly adjusted forfeitures for failure to make TRS payments based on a percentage of one half of the Company's unpaid TRS balance. Consistent with that practice, we propose an upward adjustment of $23,327 for PTT's apparent nonpayment violations, taking into account all the factors enumerated in Section 503(b)(2)(E) of the Act. Accordingly, we find PTT apparently liable for a total proposed forfeiture of fifty-three thousand, three hundred twenty-seven-dollars ($53,327) for its apparent willful and repeated failures to timely contribute to the TRS Fund.
Late Payment of LNP Contributions
We conclude that PTT apparently violated Section 251(e)(2) of the Act and Section 52.32 of the Rules by willfully or repeatedly failing to make payments to the LNP cost recovery mechanism in both the July 2011 - June 2012 and July 2012 - June 2013 billing cycles, and by failing to timely pay its LNP contribution obligations during the July 2013 - June 2014 billing cycle. Failure to make payments to the LNP cost recovery mechanism undermines our ability to promote consumer choice and competition in the telecommunications marketplace. The Commission has established a base forfeiture of $10,000 for each year in which there is a failure to timely make required LNP contributions. We therefore find PTT apparently liable for a forfeiture of thirty thousand dollars ($30,000) for its willful or repeated LNP contribution failures in connection with the July 2011 - June 2012, July 2012 - June 2013, and July 2013 - June 2014 billing cycles.
Late Payment of Regulatory Fees
We conclude that PTT apparently violated Sections 1.1154 and 1.1157(b)(1) of the Rules by willfully or repeatedly failing to make regulatory fee payments for fiscal years 2011 and 2012. 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. The Commission has established a base forfeiture amount of $10,000 for failure to timely make required regulatory fee payments for one calendar year. Therefore, we find PTT is apparently liable for a forfeiture of twenty thousand dollars ($20,000) for its willful or repeated failure to make full regulatory fee payments for fiscal years 2011 and 2012.
Failure to Timely File Prepaid Calling Card Certifications
We conclude that PTT apparently violated Section 64.5001(c) of the Rules by willfully or repeatedly failing to timely file prepaid calling card certifications. Pursuant to Section 1.80(b)(8) of the Rules, the applicable base forfeiture amount for "failure to file required forms or information" certifications is $3,000 per violation.
The Commission's records show that PTT failed to timely file its annual prepaid calling card certifications for 16 quarters. PTT did not file the first 14 of these certifications ─ covering the first quarter of 2010 (due June 30, 2010) through the second quarter of 2013 (due September 30, 2013) ─ until December 13, 2013. PTT also late filed its certifications for the fourth quarter of 2013, and it has not yet filed its certification for the first quarter of 2014, which was due June 30, 2014. Given this filing record, we find that the Company is apparently liable for a forfeiture of forty-eight thousand dollars ($48,000) for willful or repeated failures to timely file its USF compliance certifications for 16 quarters from the first quarter of 2010 through the first quarter of 2014.
Failure to Timely File International Traffic and Revenue Reports
We conclude that PTT apparently violated Section 43.61 of the Rules by willfully or repeatedly failing to timely file its 2011, 2012, 2013, and 2014 international telecommunications traffic reports providing data for calendar years 2010, 2011, 2012, and 2013. The Commission has held that the data it receives through international telecommunications traffic reports are "invaluable" to the discharge of essential regulatory tasks, including "evaluating applications for international facilities, considering facility planning options, monitoring the development and competitiveness of each international market, formulating policies consistent with the public interest and gauging the competitive impact of [its] decisions on the market." Failure to timely file international telecommunications traffic reports impedes the work of the Commission and hampers the discharge of its obligations under the Act. The Commission's Forfeiture Policy Statement and implementing Rules prescribe a base forfeiture of $3,000 for failure to file required forms or information, and the Commission has applied that base forfeiture amount to international traffic and revenue reports. Therefore, we find PTT is apparently liable for a forfeiture of twelve thousand dollars ($12,000) for its willful or repeated failure to timely file international telecommunications traffic reports for four separate years.
Failure to Timely File CPNI Certifications
Finally, we conclude that PTT apparently violated Section 222 of the Act and Section 64.2009(e) of the Rules by willfully or repeatedly failing to timely file its annual CPNI certifications. PTT's apparent violations of Section 222(c) and Section 64.2009(e) constitute a serious breach of federal privacy protections. Failure to file the annual CPNI certification jeopardizes the Commission's ability to effectively monitor and respond to violations of consumers' privacy. The annual certification filing obligation is specifically intended to "ensure that carriers regularly focus their attention on their duty to safeguard CPNI" and allow the Commission to "monitor the industry's response to CPNI privacy issues and to take any necessary steps to ensure that carriers are managing customer CPNI securely." In prior decisions, the Commission has affirmed the Bureau's decision to assess a $20,000 forfeiture for a failure to timely file a CPNI certification.
We follow this precedent here. As stated above, PTT apparently has never timely filed a CPNI certification. This lack of timeliness encompasses the CPNI certification for 2013─which was due on March 3, 2014, but not filed until April 15, 2014─as well as the certifications for 2010, 2011, and 2012─respectively due in March 2011, March 2012, and March 2013, but not filed until April 16, 2013. Given PTT's apparent pattern of noncompliance with CPNI certification requirements and the importance of the CPNI rules to protecting the privacy of consumer personal information held by telecommunications carriers, we find that PTT is apparently liable for a forfeiture of eighty thousand dollars ($80,000) for its willful or repeated failure to timely file CPNI certifications for 2011, 2012, 2013, and 2014. This amount reflects a proposed forfeiture of $20,000 for each of PTT's four violations of the CPNI certification requirement.
Conclusion
In view of the seriousness, duration, and scope of PTT's apparent violations, we propose forfeitures totaling four hundred ninety-three thousand, three hundred twenty-seven dollars ($493,327) against PTT, consisting of one hundred thousand dollars ($100,000) for providing international telecommunications service without authorization; one hundred fifty thousand dollars ($150,000) for failure to timely file annual Telecommunications Reporting Worksheets; fifty-three thousand, three hundred twenty-seven dollars ($53,327) for nonpayment and late payment of TRS contributions; thirty thousand dollars ($30,000) for late payment of LNP contributions; twenty thousand dollars ($20,000) for failure to timely pay required regulatory fees; forty-eight thousand dollars ($48,000) for failure to timely file USF compliance certifications; twelve thousand dollars ($12,000) for failure to timely file international telecommunications traffic reports; and eighty thousand dollars ($80,000) for failure to timely file CPNI certifications.
Ordering Clauses
Accordingly, IT IS ORDERED, pursuant to Section 503(b) of the Communications Act of 1934, as amended, 47 U.S.C. § 503(b), and Section 1.80 of the Commission's rules, 47 C.F.R. § 1.80, that PTT Phone Cards, Inc. is hereby NOTIFIED of this APPARENT LIABILITY FOR FORFEITURE in the amount of four hundred ninety-three thousand, three hundred twenty-seven dollars ($493,327) for willful or repeated violations of Sections 214(a), 222, and 251(e)(2) of the Communications Act, 47 U.S.C. §§ 214(a), 222, 251(e)(2), and Sections 1.1154, 1.1157(b)(1), 43.61, 52.32, 54.711, 63.18, 64.604(c)(5)(iii), 64.2009(e), and 64.5001(c)(3) of the Commission's rules, 47 C.F.R. §§ 1.1154, 1.1157(b)(1), 43.61, 52.32, 54.711, 63.18, 64.604(c)(5)(iii), 64.2009(e), 64.5001(c)(3).
IT IS FURTHER ORDERED that pursuant to Section 1.80 of the Commission's rules, 47 C.F.R. § 1.80, within thirty (30) calendar days of the release date of this Notice of Apparent Liability for Forfeiture, PTT Phone Cards, Inc. SHALL PAY the full amount of the proposed forfeiture or SHALL FILE a written statement seeking reduction or cancellation of the proposed forfeiture.
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. PTT Phone Cards, Inc. shall send electronic notification of payment to Terry.Cavanaugh@fcc.gov and to Robert.Krinsky@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 PTT Phone Cards, Inc. should follow based on the form of payment it selects:
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 12[th] Street, SW, Room 1-A625, Washington, DC 20554. If PTT Phone Cards, Inc. has questions regarding payment procedures, it can contact the Financial Operations Group Help Desk by phone, 1-877-480-3201, or by e-mail, ARINQUIRIES@fcc.gov.
The response, if any, must be mailed both to the Office of the Secretary, Federal Communications Commission, 445 12th Street, SW, Washington, DC 20554, ATTN: Enforcement Bureau, Investigations and Hearings Division, and to Theresa Z. Cavanaugh, 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/ Account number referenced in the caption. The written statement shall also be e-mailed to Theresa Z. Cavanaugh at Terry.Cavanaugh@fcc.gov and to Robert B. Krinsky at Robert.Krinsky@fcc.gov.
The Commission will not consider reducing or canceling a forfeiture in response to a claim of inability to pay unless the petitioner submits: (1) federal tax returns for the most recent three-year period; (2) financial statements prepared according to generally accepted accounting practices; or (3) some other reliable and objective documentation that accurately reflects the petitioner's current financial status. Any claim of inability to pay must specifically identify the basis for the claim by reference to the financial documentation submitted.
IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability for Forfeiture shall be sent by Certified Mail Return Receipt Requested and First Class Mail to PTT Phone Cards, Inc.'s attorney, Mr. Raul Magallanes, Esq., Law Offices of Raul Magallanes, P.O. Box 1213, Houston, TX 77549.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary