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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
)
In the Matter of
) File No. EB-06-TC-4111
Audio-Video Corporation
) NAL/Acct. No. 200732170017
d/b/a A-1 Communications
) FRN: 0003765740
Apparent Liability for Forfeiture
)
)
)
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: July 19, 2007 Released: July 19, 2007
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
that Audio-Video Corporation d/b/a/ A-1 Communications ("Audio-Video" )
apparently violated section 64.2009(e) of the Commission's rules by
failing to have a corporate officer execute an annual certificate stating
that he has personal knowledge that the company has established operating
procedures adequate to ensure compliance with the Commission's rules
governing protection and use of customer proprietary network information
("CPNI"). Protection of CPNI is a fundamental obligation of all
telecommunications carriers as provided by section 222 of the
Communications Act of 1934, as amended ("Communications Act" or "Act").
Based upon our review of the facts and circumstances surrounding this
apparent violation, and in particular, the serious consequences that may
flow from inadequate concern for and protection of CPNI, we propose a
monetary forfeiture of $100,000 against Audio-Video for its apparent
failure to comply with section 64.2009(e) of the Commission's rules.
II. BACKGROUND
2. The Enforcement Bureau ("Bureau") has been investigating the adequacy
of procedures implemented by telecommunications carriers to ensure
confidentiality of their subscribers' CPNI, based on concerns regarding
the apparent availability to third parties of sensitive, personal
subscriber information. For example, some companies, known as "data
brokers," have advertised the availability of records of wireless
subscribers' incoming and outgoing telephone calls for a fee. Data brokers
have also advertised the availability of call information that relates to
certain landline toll calls.
3. As part of our inquiry into these issues, the Bureau sent a Letter of
Inquiry ("LOI") to Audio-Video on January 4, 2007, directing it to produce
the compliance certificates for the previous five (5) years that it had
prepared pursuant to section 64.2009(e) of the Commission's rules. On
January 5, 2007, Audio-Video submitted a document in response to the
Bureau's LOI. The document submitted by Audio-Video does not satisfy the
requirements set forth in the rule. Accordingly, we issue this proposed
forfeiture.
III. DISCUSSION
4. Section 222 imposes the general duty on all telecommunications carriers
to protect the confidentiality of their subscribers' proprietary
information. The Commission has issued rules implementing section 222 of
the Act. The Commission required carriers to establish and maintain a
system designed to ensure that carriers adequately protected their
subscribers' CPNI. Section 64.2009(e) is one such requirement. Pursuant to
section 64.2009(e):
A telecommunications carrier must have an officer, as an agent of the
carrier, sign a compliance certificate on an annual basis stating that the
officer has personal knowledge that the company has established operating
procedures that are adequate to ensure compliance with the rules in this
subpart. The carrier must provide a statement accompanying the certificate
explaining how its operating procedures ensure that it is or is not in
compliance with the rules in this subpart.
5. The Bureau's January 4 LOI directed Audio-Video to produce the
company's compliance certificates for the previous five (5) years that it
had prepared in compliance with section 64.2009(e) of the Commission's
rules. On January 5, 2007, Audio-Video submitted its response. The
response includes a general certification of CPNI compliance for each of
the last five years. The document, however, does not contain a statement
by an officer "that the officer has personal knowledge that [Audio-Video]
has established operating procedures that are adequate to ensure
compliance with the [CPNI] rules..." Accordingly, Audio-Video's
submission, on its face, does not comply with section 64.2009(e) of the
Commission's rules. Further, Audio-Video has not provided any additional
information in response to our request demonstrating that it has otherwise
complied with the Commission's CPNI rules by preparing and maintaining a
certificate that satisfies the requirements of section 64.2009(e).
6. We conclude that Audio-Video has apparently failed to comply with the
requirement that it have an officer certify on an annual basis that the
officer has personal knowledge that Audio-Video has established operating
procedures adequate to ensure compliance with the Commission's CPNI rules.
For this apparent violation, we propose a forfeiture.
IV. FORFEITURE AMOUNT
7. Section 503(b) of the Communications Act authorizes the Commission to
assess a forfeiture of up to $130,000 for each violation of the Act or of
any rule, regulation, or order issued by the Commission under the Act. The
Commission may assess this penalty if it determines that the carrier's
noncompliance is "willful or repeated." For a violation to be willful, it
need not be intentional. In exercising our forfeiture authority, we are
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." In addition, the Commission has
established guidelines for forfeiture amounts and, where there is no
specific base amount for a violation, retained discretion to set an amount
on a case-by-case basis.
8. The Commission's forfeiture guidelines do not address the specific
violation at issue in this proceeding. In determining the proper
forfeiture amount in this case, however, we are guided by the principle
that there may be no more important obligation on a carrier's part than
protection of its subscribers' proprietary information. Consumers are
increasingly concerned about the security of their sensitive, personal
data that they must entrust to their various service providers, whether
they are financial institutions or telephone companies. Given consumers'
increasing concern about the security of this data, and evidence that the
data appears to be widely available to third parties, we must take
aggressive, substantial steps to ensure that carriers implement necessary
and adequate measures to protect their subscribers' CPNI, as required by
the Commission's existing CPNI rules. Additionally, in three recent
actions, the Commission has issued Notices of Apparent Liability for
Forfeiture in the amount of $100,000 against carriers for failure to
maintain certifications in compliance with section 64.2009(e) of the
Commission's rules. In this case, Audio-Video has apparently failed to
implement necessary and adequate measures as required to protect the
subscribers' CPNI data entrusted to it, as evidenced by the apparent
insufficiency of the required compliance certification. Based on all the
facts and circumstances present in this case, we believe the proposed
forfeiture of $100,000 is warranted.
9. Audio-Video will have the opportunity to submit further evidence and
arguments in response to this NAL to show that no forfeiture should be
imposed or that some lesser amount should be assessed. For example,
Audio-Video may present evidence that it has compelling, financial
arguments to reduce the proposed forfeiture or that it has maintained a
history of overall compliance. To support a claim of inability to pay, the
petitioner must submit: (1) federal tax returns for the most recent
three-year period; (2) financial statements prepared according to
generally accepted accounting practices (GAAP); or (3) some other reliable
and objective documentation that accurately reflects the petitioner's
current financial status. Any claim of inability to pay must specifically
identify the basis for the claim by reference to the financial
documentation submitted. The Commission will fully consider any such
arguments made by Audio-Video in its response to this NAL.
V. CONCLUSION AND ordering clauses
10. We have determined that Audio-Video Corporation d/b/a A-1
Communications has apparently violated Section 64.2009(e) of the
Commission's rules by failing to prepare and maintain a certification in
compliance with the rule. We find Audio-Video Corporation d/b/a A-1
Communications apparently liable for $100,000.
11. ACCORDINGLY, IT IS ORDERED THAT, pursuant to Section 503(b) of the
Communications Act of 1934, as amended, Section 1.80(f)(4) of the
Commission's rules, and authority delegated by Sections 0.111 and 0.311 of
the Commission's rules, AUDIO-VIDEO CORPORATION D/B/A A-1 COMMUNICATIONS
IS LIABLE FOR A MONETARY FORFEITURE in the amount of one hundred thousand
dollars ($100,000) for willfully or repeatedly violating Section 64.2009
of the Commission's rules, by failing to prepare and maintain a
certificate that complies with 64.2009(e).
12. IT IS FURTHER ORDERED THAT, pursuant to section 1.80 of the
Commission's rules, within thirty days of the release date of this NOTICE
OF APPARENT LIABILITY, AUDIO-VIDEO CORPORATION D/B/A A-1 COMMUNICATIONS
SHALL PAY the full amount of the proposed forfeiture or SHALL FILE a
written statement seeking reduction or cancellation of the proposed
forfeiture.
13. Payment of the forfeiture must be made by check or similar instrument,
payable to the order of the Federal Communications Commission. The payment
must include the NAL/Acct. No. and FRN No. referenced above. Payment by
check or money order may be mailed to Forfeiture Collection Section,
Finance Branch, Federal Communications Commission, P.O. Box 358340,
Pittsburgh, PA 15251. Payment by overnight mail may be sent to Mellon
Client Service Center, 500 Ross Street, Room 670, Pittsburgh, PA
15262-0001. Attn: FCC Module Supervisor. Payment by wire transfer may be
made to ABA Number 043000261, receiving bank Mellon Bank, and account
number 911-6229. Please include your NAL/Acct. No. with your wire transfer
remittance. Requests for payment of the full amount of this NAL under an
installment plan should be sent to Chief, Credit and Management Center,
445 12th Street, S.W., Washington, D.C. 20554.
14. IT IS FURTHER ORDERED that a copy of this Order shall be sent by
Certified Mail, Return Receipt Requested to Audio-Video Corporation d/b/a/
A-1 Communications to its address of record, Mt. James Beckham, President,
1500 W. 8th, Amarillo, Texas 79101 and Loretta Tobin, Brown Nietert &
Kaufman, Chartered, 1301 Connecticut Ave., N.W. Suite 450, Washington,
D.C. 20036.
FEDERAL COMMUNICATIONS COMMISSION
Kris A. Monteith
Chief, Enforcement Bureau
See 47 C.F.R. S:64.2009(e).
CPNI is defined as information that relates to the quantity, technical
configuration, type, destination, location, and amount of use of a
telecommunications service subscribed to by any customer of a
telecommunications carrier, and that is made available to the carrier by
the customer solely by virtue of the customer-carrier relationship. See 47
U.S.C. S: 222(h)(1)(A); 47 C.F.R. S: 64.2003(d).
See, e.g. http://www.epic.org/privacy/iei/.
See id.
Letter from Marcy Greene, Deputy Division Chief, Telecommunications
Consumers Division, Enforcement Bureau, Federal Communications Commission,
to James Beckham, President, Audio-Video Corporation d/b/a/ A-1
Communications (January 4, 2007) ("January 4 LOI").
Section 222 of the Communications Act provides that: "Every
telecommunications carrier has a duty to protect the confidentiality of
proprietary information of, and relating to, other telecommunications
carriers, equipment manufacturers, and customers, including
telecommunication carriers reselling telecommunications services provided
by a telecommunications carrier." 47 U.S.C S: 222.
In the Matter of Implementation of the Telecommunications Act of 1996:
Telecommunications Carriers' Use of Customer Proprietary Network
Information and Other Customer Information and Implementation of the
Non-Accounting Safeguards of Sections 271 and 272 of the Communications
Act of 1934, as amended, Order and Further Notice of Proposed Rulemaking,
13 FCC Rcd 8061 (1998) ("CPNI Order"); see also In the Matter of
Implementation of the Telecommunications Act of 1996: Telecommunications
Carriers' Use of Customer Proprietary Network Information and Other
Customer Information and Implementation of the Non-Accounting Safeguards
of Sections 271 and 272 of the Communications Act of 1934, as amended,
Order on Reconsideration and Petitions for Forbearance, 14 FCC Rcd 14409
(1999); In the Matter of Implementation of the Telecommunications Act of
1996: Telecommunications Carriers' Use of Customer Proprietary Network
Information and Other Customer Information and Implementation of the
Non-Accounting Safeguards of Sections 271 and 272 of the Communications
Act of 1934, as amended; 2000 Biennial Regulatory Review -- Review of
Policies and Rules Concerning Unauthorized Changes of Consumers' Long
Distance Carriers, Third Report and Order and Third Further Notice of
Proposed Rulemaking, 17 FCC Rcd 14860 (2002).
47 C.F.R. S: 64.2009(e).
47 C.F.R. S:64.2009(e); see also supra note 5, at 2.
See Response from James Beckham, President, Audio-Video Corporation to
Marcy Greene, Deputy Division Chief, Telecommunications Consumers
Division, Enforcement Bureau, Federal Communications Commission (January
5, 2007) ("January 5 response").
Section 503(b)(2)(B) provides for forfeitures against common carriers of
up to $130,000 for each violation or each day of a continuing violation up
to a maximum of $1,325,000 for each continuing violation. 47 U.S.C. S:
503(b)(2)(B). See Amendment of Section 1.80 of the Commission's Rules and
Adjustment of Forfeiture Maxima to Reflect Inflation, 15 FCC Rcd 18221
(2000); Amendment of Section 1.80 of the Commission's Rules and Adjustment
of Forfeiture Maxima to Reflect Inflation, 19 FCC Rcd 10945 (2004)
(increasing maximum forfeiture amounts to account for inflation).
47 U.S.C. S: 503(b)(1)(B) (the Commission has authority under this section
of the Act to assess a forfeiture penalty against a common carrier if the
Commission determines that the carrier has "willfully or repeatedly"
failed to comply with the provisions of the Act or with any rule,
regulation, or order issued by the Commission under the Act); see also 47
U.S.C. S: 503(b)(4)(A) (providing that the Commission must assess such
penalties through the use of a written notice of apparent liability or
notice of opportunity for hearing). Here, as described above,
Audio-Video's actions were willful as it apparently failed to prepare the
required compliance certification.
Southern California Broadcasting Co., 6 FCC Rcd 4387 (1991).
See 47 U.S.C. S: 503(b)(2)(D); see also The Commission's Forfeiture Policy
Statement and Amendment of Section 1.80 of the Commission's Rules, 12 FCC
Rcd 17087 (1997) ("Forfeiture Policy Statement"); recon. denied, 15 FCC
Rcd 303 (1999).
Forfeiture Policy Statement, 12 FCC Rcd 17098-99, P: 22.
AT&T, Inc., Notice of Apparent Liability for Forfeiture, 21 FCC Rcd 751
(Enf. Bur. rel. Jan. 30, 2006); Alltel Corp., Notice of Apparent Liability
for Forfeiture, 21 FCC Rcd 746 (Enf. Bur. rel. Jan 30, 2006); Cbeyond
Communications LLC, Notice of Apparent Liability for Forfeiture, 21 FCC
Rcd 4316 (Enf. Bur. rel. April 21, 2006).
47 U.S.C. S: 503(b)(4)(A).
47 U.S.C. S: 503(b)(4)(C); 47 C.F.R. S: 1.80(f)(3).
47 C.F.R. S: 1.80(b)(4) (discussing factors the Commission or its designee
will consider in deciding appropriate forfeiture amount).
47 U.S.C. S: 503(b).
47 C.F.R. S: 1.80(f)(4).
47 C.F.R. S:S: 0.111, 0.311.
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Federal Communications Commission DA 07-3291
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Federal Communications Commission DA 07-3291