******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D. C. 20554 In the Matter of ) ) File No. ENF-98-07 Operator Communications, Inc. ) ) NAL/Acct. No. 816EF0005 Apparent Liability for Forfeiture) NOTICE OF APPARENT LIABILITY FOR FORFEITURE Adopted: August 11, 1998 : Released: August 14, 1998 By the Commission: 1. By this Notice of Apparent Liability for Forfeiture ("NAL"), we initiate enforcement action against Operator Communications, Inc. ("OCI"). For the reasons set forth below, we find that OCI apparently willfully or repeatedly violated Section 254 of the Communications Act of 1934 (the "Act"), as amended by the Telecommunications Act of 1996 (the "1996 Act"), and Commission rules and orders issued pursuant thereto, by failing to pay its universal service contribution. Based upon our review of the facts and circumstances surrounding the violations, we find that OCI is apparently liable for a forfeiture in the amount of eighty-three thousand four hundred and five dollars ($83,405). 2. Ensuring universal service throughout the country represents one of the primary goals of the 1996 Act. This important congressional objective is embodied in Section 254: Consumers in all regions of the Nation, including low-income consumers and those in rural, insular, and high cost areas, should have access to telecommunications and information services, including interexchange services and advanced telecommunications and information services, that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas. To ensure the realization of this goal, the statute provides: 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. The statute further requires that, within 15 months of the enactment of the 1996 Act, the Commission implement the changes to its regulations necessary to achieve the statutory goal of universal service. The Commission issued a series of orders to comply with this important portion of the 1996 Act. 3. Our regulations restate the statutory requirement that telecommunication carriers "must contribute to the universal service support programs." In the Universal Service Order, we named the National Exchange Carrier Association ("NECA") as the temporary administrator of the universal service support mechanisms. Subsequently, we directed NECA to create, as a condition of serving as temporary universal service administrator, an independent, not-for-profit subsidiary, the Universal Service Administrative Company ("USAC"), to administer temporarily the universal service support mechanisms for high cost areas and low-income consumers, and to perform billing and collection functions for the universal service support mechanisms for schools and libraries and rural health care providers. In that connection, we directed that USAC distribute, receive, and process the Universal Service Worksheet on which carriers are required to report certain categories of revenue used to calculate their universal service contribution; we further directed that USAC adjust carriers' contributions in accordance with contribution factors established by the Commission. Given the importance of ensuring universal service, our regulations provide that the failure "to submit the required . . . contributions may subject the contributor to the enforcement provisions of the Act and any other applicable law." 4. USAC received OCI's Universal Service Worksheet on or about September 2, 1997. Based on the information reflected in the worksheet, the accuracy of which was certified by OCI's treasurer, Marvin L. Mason, Jr., USAC sent OCI an invoice for its first universal service monthly contribution. The invoice was dated January 15, 1998 and set out OCI's liability to the high cost, low income, schools and libraries, and rural health care funds. The invoice stated that payment of the requested amount was due by February 16, 1998. OCI failed to submit its contribution by the due date stated in the invoice. 5. On February 26, 1998, Nancy Thomas, USAC's Billing and Collection Manager, wrote to OCI at the address included on OCI's worksheet, requesting payment by March 4, 1998. Subsequently, on March 6, 1998, USAC personnel called and left a message for Thomas Keim, the contact person listed on OCI's worksheet. On March 6, 1998, USAC also wrote to Mr. Keim again requesting payment of the contribution. On March 10, and March 13, 1998, USAC personnel again contacted Mr. Keim to discuss OCI's overdue contribution. In the conversation on March 13, Mr. Keim indicated that he had been directed by OCI's officers not to discuss the matter of OCI's universal service contribution and provided no information as to when, or even whether, OCI would make the payment required by law. 6. With a letter dated April 1, 1998, OCI filed a revised Universal Service Worksheet, which was dated April 2, 1998 and again was certified as accurate by Mr. Mason. The letter accompanying the new worksheet was signed by Mr. Keim, and it stated that OCI's first filing had "inadvertently included revenues that actually relate to the Universal Service liability of other entities such as payphone aggregators"; in light of its mistake, OCI requested that USAC recalculate its universal service contribution. Based on the revenue figures in OCI's revised worksheet, USAC recalculated OCI's monthly universal service liability. On April 20, 1998, USAC transmitted to OCI a revised statement of account reflecting an adjusted contribution applied retroactively to January 1998. On May 1, 1998, OCI's Vice President, John Arena, wrote to USAC asserting that USAC had failed to make the account adjustments retroactive to January, 1998. Mr. Arena's letter was incorrect; the April 20, 1998 statement made the appropriate revisions to OCI's account, retroactive to January 1998. On May 19, 1998, USAC personnel again contacted OCI by telephone to request payment of the substantial outstanding liability. As of the date of this NAL, although it has corresponded with USAC repeatedly, OCI has paid no portion of the amount that it owes for January 1998, nor has it provided any explanation for its failure to make payment. USAC's records also indicate that OCI has failed to pay its assessed contributions of the same or substantially similar amounts for February, March, April, May and June 1998. 7. Based on the foregoing, we conclude that OCI is apparently liable for forfeiture for willful or repeated violation of Section 254 of the Act and the Commission's rules governing universal service contributions. Since February 16, 1998, OCI has failed to pay any portion of the amount that it owes for its January universal service contribution. Indeed, it waited for six weeks after the due date for its contribution before it even submitted its revised Universal Service Worksheet and requested a recalculation of its liability. Furthermore, at the time that it requested this recalculation, OCI declined to submit any payment to cover even a portion of the recalculated contribution, which it has never contested was due and owing. As explained above, Section 254(d) of the Act, as well as our Rule 54.703(a), require that telecommunication carriers make universal service contributions in the amount prescribed by USAC. In the absence of any evidence indicating that OCI is unable to pay the assessed contribution, it appears that its failure to make the required contribution amounts to a willful or repeated violation of the Act and the Commission's rules. As we note above, it appears that OCI is currently also in arrears for its assessed universal service contributions for February through June 1998. The failure to make timely payment of its contributions for each of these months represents an independent violation of the Act and our rules; however, we do not currently find apparent liability for these violations. Nevertheless, we note that these added violations could form the basis for additional notices of apparent liability in the future. 8. Section 503(b)(2)(B) of the Act authorizes the Commission to assess a forfeiture of up to one hundred ten thousand dollars ($110,000) for each violation, or each day of a continuing violation, up to a statutory maximum of one million, one hundred thousand dollars ($1,100,000) for a single act or failure to act. In exercising this forfeiture authority, the Commission is required to take into account "the nature, circumstances, extent, and gravity of the violation and, with respect to the violator, the degree of culpability, any history of prior offenses, ability to pay, and such other matters as justice may require." For purposes of determining an appropriate forfeiture penalty in this case, we view OCI's delinquency as a single, continuing violation, which began on February 17, 1998, the day after its universal service contribution was due, and is currently of 175 days in duration. After weighing the circumstances surrounding the violation, and the central importance of universal service to the goals of the 1996 Act, we find that OCI is apparently liable for a forfeiture of eighty-three thousand four hundred and five dollars ($83,405) for failure to make its universal service contribution in a timely manner. This forfeiture figure is based in part on OCI's universal service liability, which, in turn, was based on revenue figures that it reported in its Universal Service Worksheet. Accordingly, the calculation of the forfeiture amount is set out in Appendix 2 to this notice, which will remain under seal. OCI will have the opportunity to submit evidence and arguments in response to this NAL to show that no forfeiture should be imposed or that some lesser amount should be assessed. VI. CONCLUSIONS AND ORDERING CLAUSES 9. We have evaluated the information relating to OCI's obligation to pay its universal service contribution and find that OCI apparently has failed to pay its contribution in a timely manner. We conclude that OCI thereby apparently willfully or repeatedly violated Section 254 of the Act and Commission rules and orders governing universal service contributions, and that OCI's conduct warrants a forfeiture in the amount of eighty-three thousand four hundred and five dollars ($83,405). We further note that OCI remains liable to USAC for the full amount of the assessed universal service contribution. Payment of this forfeiture in no way relieves OCI of its obligation to pay the previously assessed contribution amount. 10. Accordingly, IT IS ORDERED, pursuant to Section 503(b) of 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 Operator Communications, Inc. IS HEREBY NOTIFIED of an Apparent Liability for Forfeiture in the amount of eighty-three thousand four hundred and five dollars ($83,405) for willful or repeated violation of Section 254 of the Act and the Commission's universal service rules and orders. 11. IT IS FURTHER ORDERED, pursuant to Section 1.80 of the Commission's rules, 47 C.F.R.  1.80, that within thirty days of the release of this Notice, Operator Communications, Inc. SHALL PAY the full amount of the proposed forfeiture OR SHALL FILE a response showing why the proposed forfeiture should not be imposed or should be reduced. 12. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability for Forfeiture SHALL BE SENT by certified mail to John Jelinek, President, Operator Communications, Inc., 5302 Avenue Q, Lubbock, Texas, 79412. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas, Secretary.