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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of ) File No. EB-00-IH-0055
)
INTELLICALL OPERATOR SERVICES ) NAL/Acct. No. X32080023
FORFEITURE ORDER
Adopted: October 27, 2000 Released: November
1, 2000
By the Commission:
I. INTRODUCTION
1. In this Forfeiture Order, we find that Intellicall
Operator Services (``Intellicall'') has violated Section
254(d) of the Communications Act of 1934, as amended (the
``Communications Act'' or the ``Act''), 47 U.S.C. § 254(d),
and Section 54.706 of the Commission's rules, 47 C.F.R.
§ 54.706, by willfully failing to make a required
contribution to universal service support programs. Based
on our review of the facts and circumstances in this case
and after considering Intellicall's response to our Notice
of Apparent Liability (``NAL'') in this matter,1 we conclude
that Intellicall is liable for a forfeiture in the amount of
ninety-nine thousand dollars ($99,000).
II. BACKGROUND
2. In the NAL, we briefly described the universal
service program, including the mechanisms established by the
Commission in response to Congress' 1996 amendments to the
Communications Act creating the universal service program.
In particular, Section 254 of the Act requires that:
Every telecommunications carrier that provides
interstate telecommunications services shall
contribute, on an equitable and nondiscriminatory
basis, to the specific, predictable, and
sufficient mechanisms established by the
Commission to preserve and advance universal
service.2
In implementing Section 254, the Commission authorized the
Universal Service Administrative Company (``USAC'') to
administer universal service support mechanisms and to
perform billing and collection functions.3 The Commission
gave USAC the authority to bill carriers monthly, starting
in February 1998, for their contributions.4
3. Intellicall, an interstate telecommunications
service provider, does not dispute its liability for
universal service contributions. Since it began receiving
invoices, Intellicall has paid approximately four million
dollars in contributions, which is a substantial portion of
the amount it owes for universal service. Intellicall has,
however, missed payments, underpaid its monthly invoices and
failed to cure its arrearages. As a result, Intellicall
owed over $2 million in universal service payments as of
April 2000.
4. In February 2000, the Enforcement Bureau sent a
letter to Intellicall explaining that it was the subject of
a potential enforcement action. 5 In its response,
Intellicall stated that it is in ``complete understanding of
the potential enforcement action for failure to pay
outstanding balances due....''6 In the same letter,
Intellicall indicated that it was committed to ``remedy the
current situation.'' After it received the Bureau's letter,
Intellicall contacted USAC and presented USAC with a payment
plan designed to cure its arrearage in twenty-one months.
Intellicall committed to pay each month an amount equal to
its then current monthly obligation and an additional
$75,000 toward the amount it is in arrears. USAC's records
reflect that Intellicall commenced payments on this plan in
April 2000.
III. DISCUSSION
5. In the NAL, we found Intellicall apparently liable
for a forfeiture of $198,000 based on its failure to make
required universal service contributions in January and
February, 2000. In its response, Intellicall argues that
there was no violation with respect to the February 2000
invoice because it paid that invoice. With respect to the
January 2000 invoice, Intellicall argues that it has not
violated the Commission's rules because the January 2000
invoice is being paid pursuant to an agreement with USAC.
Finally, Intellicall argues that even if it did violate the
Commission's rules with respect to the January 2000 invoice,
the $99,000 forfeiture for that violation exceeds the
statutory limit because the proposed base forfeiture amount
(prior to downward adjustment) allegedly exceeded the
$110,000 statutory maximum for a single violation or each
day of a continuing violation. 7
6. With respect to Intellicall's contention that it
satisfied its obligation to pay the February 2000 invoice,
we note that USAC's practice prior to May 2000 was to credit
payments made towards the oldest outstanding invoice unless
the carrier requested different treatment.8 In this case,
Intellicall informed USAC that it intended to cure its
arrearages by paying its current invoice amounts beginning
with the February 2000 invoice.9 Intellicall has
demonstrated that USAC accepted its payment of $299,861.31,
which USAC received on April 3, 2000, as payment in full of
the February 2000 invoice. Under these circumstances, we
will not impose a forfeiture with respect to the February
invoice, and we reduce the proposed forfeiture amount by
$99,000.
7. We reject Intellicall's argument that it should
not be fined for its failure to pay the January 2000 invoice
in a timely fashion simply because it has begun paying down
its delinquency under its payment plan since April 2000. The
fact that Intellicall has agreed to pay the amount owed and
has begun doing so does not alter the fact that Intellicall
did not timely make the contributions it was directed to
make in the January 2000 invoice in violation of Section 254
of the Act and Section 54.706 of the Commission's rules.
8. Finally, we reject Intellicall's argument that a
$99,000 forfeiture amount for the January non-payment
exceeds the statutory maximum of $110,000 for a single
violation or each day of a continuing violation because
intermediate Commission calculations exceeded $110,000 prior
to downward adjustments made in the NAL. Even accepting,
arguendo, that Intellicall is correct that failure to pay a
universal service obligation is not a continuing violation,
a $99,000 forfeiture for its January 2000 violation does not
exceed the $110,000 statutory limit for a single violation
forfeiture. The nature of calculations is irrelevant to
issues of statutory compliance. We continue to believe a
$99,000 forfeiture is appropriate for that violation based
on all the facts and circumstances at issue.
IV. ORDERING CLAUSES
9. Accordingly, IT IS ORDERED THAT, pursuant to
Section 503(b) of the Act,10 and Section 1.80(f)(4) of the
Commission's rules,11 Intellicall Operator Services IS
LIABLE FOR A FORFEITURE in the amount of ninety nine
thousand dollars ($99,000) for willfully and repeatedly
violating Section 254 of the Act, 47 U.S.C. § 254, and
Section 54.706 of the Commission's rules, 47 C.F.R. §
54.706.
10. Payment of the forfeiture shall be made in the
manner provided for in Section 1.80 of the Commission's
rules within 30 days of the release of this Forfeiture
Order. If the forfeiture is not paid within the period
specified, the case may be referred to the Department of
Justice for collection pursuant to Section 504(a) of the
Act, 47 U.S.C. § 504(a). Intellicall may pay the forfeiture
by mailing a check or similar instrument, payable to the
order of the Federal Communications Commission, to the
Federal Communications Commission, P.O. Box 73482, Chicago,
Illinois 60673-7482. The payment should note the NAL/Acct.
No. referenced above. Requests for full payment under an
installment plan should be sent to: Chief, Credit and Debt
Management Center, 445 12th Street, S.W., Washington, D.C.
20554. See 47 C.F.R. § 1.1914.
11. IT IS FURTHER ORDERED THAT a copy of the
Forfeiture Order shall be sent by Certified Mail Return
Receipt Requested to Intellicall's counsel, Judith St.
Ledger-Roty Esq. and Steve A. Augustino, Esq., Kelley Drye &
Warren LLP, 1200 19th St NW, Suite 500, Washington, D.C.
20036.
FEDERAL COMMUNICATIONS COMMISSION
Magalie Roman Salas
Secretary
_________________________
1 Intellicall Operator Services, Notice of Apparent
Liability for Forfeiture, FCC 00-261 (released July 27,
2000).
2 47 U.S.C. § 254(d).
3 See Amendment of Parts 54 and 69 - Changes to Board of
NECA, Inc., 12 FCC Rcd 18400, 18415 (1997); 47 C.F.R. §
54.702(b).
4 See Amendment of Part 54 - Universal Service, 12 FCC Rcd
22423, 22425 (1997); 47 C.F.R. §§ 54.709(a)(4), 54.709(d).
5 Letter from David H. Solomon, Chief, Enforcement Bureau,
to Intellicall Operator Services dated February 16, 2000.
6 Letter from George M. Trevino, Corporate Controller, to
James W. Shook, Investigations and Hearings Division,
Enforcement Bureau dated March 10, 2000.
7 The limit contained in the text of the statute for each
violation or each day of a continuing violation is $100,000,
and the limit for a continuing violation is $1,000,000. 47
U.S.C. § 503(b) (2). Pursuant to the Debt Collection
Improvement Act of 1996, Public Law 104-134 (110 Stat. 1321-
358), the maximums have been adjusted for inflation up to
$110,000 and $1,100,000, respectively. See Section
1.80(b)(5)(iii) of the Commission's rules, 47 C.F.R. §
1.80(b)(5)(iii).
8 USAC's current policy is to uniformly credit payments to
the oldest outstanding invoice.
9 Letter from George M. Trevino, Corporate Controller, to
Beverly McLaughlin, USAC, dated March 22, 2000.
10 47 U.S.C. § 503.
11 47 C.F.R. § 1.80(f)(4).