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Before the
Federal Communications Commission
Washington, D.C. 20554
)
In the Matter of )
File No. EB-06-IH-0902
Compass, Inc. d/b/a Compass Global, )
Inc. f/k/a Forva, Inc. NAL/Acct. No. 200732080006
)
Apparent Liability for Forfeiture FRN No. 0010611416
)
)
NOTICE OF APPARENT LIABILITY
FOR FORFEITURE AND ORDER
Adopted: December 22, 2006 Released: December 27, 2006
By the Commission:
I. INTRODUCTION
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
that Compass, Inc., d/b/a Compass Global, Inc. ("Compass Global"), has
apparently failed to meet its statutory and regulatory obligations
related to payphone compensation. Based upon our review of the facts
and circumstances in this matter, we find that Compass Global is
apparently liable for a total forfeiture of $466,000.
2. Specifically, as discussed in detail below, we find that Compass
Global has apparently violated: (1) sections 64.1310(a)(1) and
64.1320(c)(1) of the Commission's rules, by willfully and repeatedly
failing to establish, on a timely basis, a call tracking system that
accurately tracks coinless access code or subscriber toll-free
payphone calls to completion; (2) section 64.1320 of the rules, by
willfully and repeatedly failing to have its call tracking system
audited, to file a System Audit Report, or to comply with any of the
Commission's audit-related requirements in the payphone rules; (3)
sections 64.1300 and 64.1310(a)(2) of the rules, by willfully and
repeatedly failing to compensate payphone service providers ("PSPs")
for each completed payphone call; (4) section 64.1310(a)(4) of the
rules, by willfully and repeatedly failing to provide to PSPs call
data reports that satisfy the Commission's requirements; and (5)
section 64.1310(a)(3) of the rules, by willfully and repeatedly
failing to make available to PSPs a sworn statement from its Chief
Financial Officer certifying payment accuracy and completeness. In
addition, we find that Compass Global apparently violated a Commission
order by willfully failing to respond on a timely basis to a directive
of the Enforcement Bureau to provide certain information and
documents.
3. We order Compass Global to submit a report within thirty (30) days,
either as part of its response to this NAL or separately. Compass
Global's report must be supported by a sworn statement or declaration
under penalty of perjury of a corporate officer, and must set forth in
detail its plan to come into compliance promptly with the relevant
payphone compensation rules discussed herein. We also order Compass
Global to correct its past failures by having its call tracking system
audited in compliance with Commission rules, by compensating each PSP
for each payphone call it has completed and for which payment was
already due, by filing with each PSP any overdue call data reports for
payphone calls it has completed, and for providing each PSP any
overdue statements of an officer certifying payment accuracy and
completeness.
II. BACKGROUND
A. Payphone Compensation Regime
4. In the Telecommunications Act of 1996, Congress added section 276,
captioned "Provision of Payphone Service," to the Communications Act
of 1934, as amended (the "Act"). Section 276(b) directed the
Commission to adopt implementing regulations "[i]n order to promote
competition among payphone service providers and promote the
widespread deployment of payphone services to the benefit of the
general public." In particular, section 276(b)(1) directed the
Commission to "establish a per call compensation plan to ensure that
all payphone service providers are fairly compensated for each and
every completed intrastate and interstate call using their payphone."
5. The Commission adopted its current rules in 2003, with some
modifications on reconsideration in 2004, and they became effective on
July 1, 2004. As envisioned in section 276, the rules govern the
manner in which a PSP is compensated for a "subscriber toll-free
call," (e.g., 800-FLOWERS), and a "coinless access code call," (e.g.,
800-CALL-ATT).
6. As a general matter, the rules require "Completing Carriers" to
compensate PSPs for completed payphone calls at a rate agreed upon by
contract," or in the absence of such an agreement, "at a per-call rate
of $.494." A "Completing Carrier" is defined as "a long distance
carrier or switch-based long distance reseller that completes a
coinless access code or subscriber toll-free payphone call or a local
exchange carrier that completes a local, coinless access code or
subscriber toll-free payphone call." In other words, a Completing
Carrier is a facilities-based long distance carrier, including a
switch-based reseller ("SBR"), or a local exchange carrier that
completes a toll-free payphone call. The Commission imposed the
compensation obligation on Completing Carriers and SBRs because they
"are the primary economic beneficiaries of coinless payphone calls
transferred to their switch and because they possess the most accurate
call completion information for such calls."
7. To ensure that Completing Carriers compensate PSPs for each and every
completed payphone call, a Completing Carrier must establish a call
tracking system that (among other requirements) accurately tracks all
toll-free payphone calls to completion. The deadline for establishing
such a call tracking system was July 1, 2004.
8. As an additional safeguard, the call tracking system must be audited
and verified to comply with the Commission's defined requirements. A
"System Audit Report" regarding the Completing Carrier's compliance
with the call tracking system requirements must conform to certain
standards, and was to be filed with the Commission, PSPs, and
Intermediate Carriers by the effective date of the rules. At the same
time it filed its System Audit Report, a Completing Carrier was also
required to file a statement that includes its name, as well as the
name, address, and phone number of the persons responsible for
handling its payphone compensation and for resolving disputes with
PSPs; any change must be updated within sixty days of the change. The
call tracking system must be audited, and corresponding reports must
be filed, at annual intervals thereafter. Completing carriers must
permit PSPs to inspect documents, including workpapers, underlying a
System Audit Report.
9. Central to implementing the core and express requirement of section
276(b), the rules require each Competing Carrier, on a quarterly
basis, to compensate all PSPs for each completed coinless access code
or subscriber toll-free payphone call. To ensure that the payment
tendered is accurate and complete, Completing Carriers must, on a
quarterly basis, submit to each PSP a call data report that contains
certain information about the calls the Completing Carrier completed
from that PSP's payphone(s) during the quarter. Each Completing
Carrier also must, on a quarterly basis, provide a sworn statement of
its Chief Financial Officer certifying that the compensation paid for
a quarter is accurate and complete.
10. As an additional measure to ensure that all payphone call activity is
traced and accounted for, the Commission's rules also impose
requirements on carriers that carry payphone traffic but do not
themselves complete those calls. An "Intermediate Carrier" is defined
as a "facilities-based long distance carrier that switches payphone
calls to other facilities-based long distance carriers." An
Intermediate Carrier also must, on a quarterly basis, submit a call
data report to each PSP that contains certain information about the
calls that the Intermediate Carrier switched to other long distance
carriers. The quarterly reports provided by Intermediate Carriers, if
accurate and complete, help PSPs ensure that they are getting
appropriate compensation from Completing Carriers.
11. The current payphone compensation regime thus is an interdependent one
that relies on the cooperation of Completing and Intermediate Carriers
with PSPs to ensure that the goals of section 276 are realized. In
adopting its current rules, the Commission expressly warned that
noncompliance could result in "substantial forfeitures," and that
egregious cases could lead to "an Order to Show Cause why we should
not revoke a[n] SBR's section 214 authority, and possibly bar the
company's principals from participation in interstate
telecommunications business activities without first obtaining
explicit permission from the Commission." In a recent Public Notice,
we again warned carriers about the consequences of noncompliance,
stating that we "reiterate that the Commission will not hesitate to
take enforcement action, including forfeitures, should Completing
Carriers and Intermediate Carriers fail to comply with their
compensation and reporting obligations under the payphone rules."
Today's action against Compass Global is the first enforcement action
the Commission will take to address noncompliance with the payphone
compensation rules. We intend it to serve as an example of the
Commission's resolve to fully enforce compliance with its payphone
compensation rules.
B. Compass Global and the FCC Investigation
12. Compass Global is a privately held New Jersey-based telecommunications
provider that describes itself as "predominantly a switch based
international wholesale reseller." It began completing "long distance
subscriber toll free calls" in August 2003.
13. In 2005, after the current payphone rules had been in effect for a
number of months, Commission staff became concerned about potential
noncompliance of certain carriers with the payphone rules. The
Commission's Enforcement Bureau ("Bureau") initiated investigations of
a number of carriers.
14. On March 6, 2006 the Bureau sent Compass Global a Letter of Inquiry
("LOI") seeking certain documents and information related to the
company's compliance with the payphone rules. The LOI directed Compass
Global, within 30 days, to submit (among other things) a sworn written
response to a series of questions relating to its apparent failure to
comply with the payphone rules. Compass Global did not respond in any
way within the applicable time period. On April 19, 2006, Bureau staff
contacted Compass Global by telephone, and its principal stated that
the company had never received the LOI. Later that same day, the
Bureau reissued the LOI to Compass Global. After receipt, Compass
Global's principal contacted Bureau staff by telephone and reported
that the company had, in fact, received the March 6 LOI, but had set
it aside to address other priorities. Bureau staff then sent Compass
Global a letter on April 20, 2006 noting this course of events,
reminding the company that "failure to respond to an LOI in and of
itself constitutes a violation of the Act and the Commission's rules,"
and stating that "failure to respond to the March 6, 2006 LOI has
already exposed [Compass Global] to potential enforcement action,
including a forfeiture." On May 6, 2006, Compass Global responded
fully to the LOI.
15. As explained below, Compass Global's LOI Response indicates that the
company is a Completing Carrier for payphone calls; that it has, after
nearly three years of service, only recently established a call
tracking system that reliably tracks calls to completion; that it has
not engaged any third party auditor or filed initial or annual audit
reports or otherwise complied with any of the Commission's audit
requirements; that it has made only partial compensation to the PSPs
for which it has completed the highest volume of calls, and has made
no compensation whatsoever to other PSPs; that it has failed to submit
to each PSP the quarterly call data reports required by the
Commission's rules; and that it has never provided a sworn statement
of an officer certifying to payment accuracy and completeness.
C. Forfeiture Authority
16. Under section 503(b)(1)(B) 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. To impose such a forfeiture penalty, the Commission must
issue a notice of apparent liability, the notice must be received, 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 order if it
finds by a preponderance of the evidence that the person has violated
the Act or a Commission rule.
1. For the apparent violations in this case, section 503(b)(2)(B) of the
Act authorizes the Commission to assess a forfeiture of up to $130,000
for each violation or each day of a continuing violation, up to a
statutory maximum of $1.325 million for a single act or failure to
act. In determining the appropriate forfeiture amount, we consider the
factors enumerated in section 503(b)(2)(D) 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."
17. Under section 503(b)(6) of the Act, we may propose forfeitures only
for apparent violations that accrued within one year of the date of
the NAL. Nevertheless, section 503 does not bar us from assessing
whether conduct occurring prior to that time period apparently
violated the Act or our rules in determining the appropriate
forfeiture amount for those violations within the statute of
limitations.
III. DISCUSSION
18. As explained below, we find that Compass Global has apparently failed
to comply with our payphone compensation rules. Based on its conduct,
we find that Compass Global is apparently liable for a total
forfeiture of $466,000.
A. Compass Global's Payphone Rule and Other Violations
2. As a preliminary matter, we conclude that Compass Global is a
Completing Carrier under the Commission's rules - indeed, Compass
Global acknowledges as much. In its LOI Response, Compass Global
states that it is "predominantly a switch based international
wholesale reseller," and that it completes "long distance subscriber
toll free calls." Compass Global further states that it began
completing such calls in August 2003, and that it has continuously
completed these types of call since that time. As a result, Compass
Global, as a Completing Carrier, is required to establish a call
tracking system; to have that system audited in compliance with the
Commission's rules; to compensate PSPs, on a quarterly basis, for each
payphone call it completes; to file with PSPs, on a quarterly basis,
call data reports for the payphone calls it completes; and to provide
PSPs, on a quarterly basis, with a statement of its Chief Financial
Officer certifying payment accuracy and completeness. As set forth in
detail below, Compass Global has failed to satisfy any of these
requirements.
1. Failure to Establish Call Tracking System
3. We first conclude that Compass Global has apparently violated sections
64.1310(a)(1) and 64.1320(c)(1) of the Commission's rules by failing
to establish, on a timely basis, a call tracking system that
accurately tracks calls to completion. Compass Global has created a
call tracking system, but admits that the system was not reliable
until very recently. In its LOI Response, Compass Global explained
that it "began creating the Toll Free Call Tracking System in October
of 2004," and that the software evolved through different phases
"until it reached the final version completed just last month" (April
2006). Compass Global further stated that the software "has only
recently been completed to the point where the company is confident
with the software's accuracy," and that previously "Compass Global did
not have a Call Tracking Software in place that was sufficiently
reliable or accurate enough to provide firm data to payphone service
providers in the form of a report."
4. Compass Global's conduct falls far short of the Commission's
requirement to establish an accurate call tracking system by July 1,
2004. Indeed, Compass Global did not even begin to create a call
tracking system until October 2004, and in the absence of filing the
Commission-required audit of the call tracking system (discussed
separately below) it is still not clear that Compass Global has
fulfilled its obligation. As a result, we find that Compass Global
apparently violated sections 64.1310(a)(1) and 64.1320(c)(1) of the
Commission's rules by failing to establish by July 1, 2004 a call
tracking system that accurately tracks coinless access code or
subscriber toll-free payphone calls to completion, and that it has
presented no reliable evidence that its violation does not continue to
the present.
2. Failure to Satisfy Audit-Related Requirements
5. We next conclude that Compass Global has apparently violated each
provision of section 64.1320 of our rules by failing to satisfy any of
the audit-related requirements for its call tracking system. Section
64.1320 sets forth a comprehensive, detailed scheme for auditing the
call tracking system. As a Completing Carrier, Compass Global had an
obligation to comply with all of these audit-related requirements. To
date, it has complied with none. In its LOI Response, Compass Global
stated that due to the difficulties with its call tracking system,
"the company has not yet finalized an agreement with an independent,
third-party auditor to verify the accuracy and reliability of its call
tracking system." Nearly two years after Compass Global was required
to have its call tracking system audited and to have filed the System
Audit Report that addressed specific requirements, Compass Global
explains that "the company is researching such entities, and has
[been] engaging in conversations with several entities to perform this
audit." To date, Compass Global has not filed its System Audit Report
with the Commission - or presumably with the PSPs for which it
completes calls, or the long distance carriers from which it receives
payphone calls. As a result, we conclude that Compass Global has
apparently violated section 64.1320 by failing to satisfy any
audit-related requirements for its call tracking system, and that its
violation continues to this day.
3. Failure to Compensate PSPs for Each Completed Call
6. We further conclude that Compass Global has apparently violated
sections 64.1300 and section 64.1310(a)(2) of our rules by willfully
and repeatedly failing to compensate PSPs for each toll-free payphone
call that it has completed. Compass Global acknowledges as much. Due
to problems with the accuracy of its call tracking system, Compass
Global stated as of the date of its LOI Response that it had only made
"good faith estimated payments" of approximately $125,000 to PSPs that
Compass Global says are associated with 90% of the toll-free payphone
calls it completed. Compass Global has also stated, however, that
these PSPs have submitted claims for additional compensation, that
"[t]he company is currently behind by approximately one or two
quarters in those payments," and that it is "in the process of making
payments . . . to these largest providers for the remaining balances
just as soon as it possibly can." With respect to the PSPs associated
with smaller call volume, Compass Global plainly admits that "the
company has not yet made payments to these service providers." These
admissions establish that Compass Global has not compensated each PSP
for each completed call. Indeed, it appears that the degree of Compass
Global's misconduct may be greater than it has described. Call data
provided with Compass Global's LOI Response suggests the traffic
carried by the two carriers to which it has made occasional and
partial payment does not appear to comprise 90% of traffic for which
Compass Global owes compensation, and payment to these and the other
carriers appears to be much more than "a quarter or two" overdue. In
light of Compass Global's LOI Response, we find that Compass Global
has apparently violated sections 64.1300 and 64.1310(a)(2) of the
Commission's rules by failing to compensate each PSP for each
toll-free payphone call it completed, since the July 1, 2004 effective
date of the current rules.
4. Failure to Provide Quarterly Reports
7. Compass Global has also apparently violated section 64.1320(a)(4) of
our rules by willfully and repeatedly failing to submit call data
reports to PSPs that satisfy the Commission's requirements. By its own
admission, Compass Global has not complied with the quarterly
reporting requirement: in its LOI response, the company stated that
"Compass Global has not made available or provided to payphone service
providers the reports of completed calls required by section
64.1310(a)(4) of the Commission's rules." The company explained that
it has not provided these reports due to the problems associated with
the accuracy and reliability of its call tracking system, but that now
it "is in the process of providing these payphone service providers
with these reports, as well as CDRs (call detail records) for all
completed calls originated from the ANI's they identified as belonging
to them." Thus, we find that Compass Global has apparently violated
section 64.1320(a)(4) of our rules by failing to submit to each PSP
call data reports that satisfy the Commission's requirements since the
effective date of the rules, and that its violation continues to this
day.
5. Failure to Provide CFO Sworn Statement
8. Compass Global has also apparently violated section 64.1310(a)(3) of
the Commission's rules by willfully and repeatedly failing to provide
to PSPs a sworn statement by its Chief Financial Officer (CFO)
certifying payment accuracy and completeness. As with Compass Global's
other apparent violations, there can be no dispute, and Compass Global
itself acknowledges, that the company failed to comply with the
requirement to provide a sworn statement certifying payment accuracy
and completeness. In its LOI Response, Compass Global admits that
"[t]he company has not provided to all payphone service provider [sic]
a sworn statement from the company's Chief Financial Officer that the
amount for that quarter is accurate and is based on 100% of all
completed calls that originated from that payphone service provider's
payphones." As with its other violations, Compass Global explains that
its failure to comply with this requirement is a result of its
inadequate call tracking system. We find that Compass Global has
apparently violated section 64.1310(a)(3) by failing to submit to any
PSP a sworn statement certifying that the payment is accurate and
based on 100% of calls that Compass Global completed from that PSP's
payphones.
6. Failure to Provide Timely Response
9. Finally, we also conclude that Compass Global has apparently violated
a Commission order by willfully failing to respond on a timely basis
to a directive of the Enforcement Bureau to provide certain documents
and information. As indicated above, Compass Global failed to respond
in any way to the Bureau's March 6 LOI within the time frame allotted.
When the Bureau had not received a response several days after that
time frame closed, staff contacted Compass Global. The company denied
having received the LOI, and staff directed another LOI to it again on
April 19, 2006. After receiving the LOI again, Compass Global
acknowledged that it had actually received the March 6 LOI, but had
decided to prioritize other matters over responding to the LOI. It was
only on May 6, 2006, nearly one month after the original due date,
that Compass Global responded to the LOI. As a result, we find that
Compass Global has apparently violated a Commission order by willfully
failing to respond on a timely basis to the Bureau's March 6 LOI,
which directed it to provide certain documents and information within
thirty days.
B. Proposed Forfeiture
10. Although the Commission has acted on numerous formal complaints in the
payphone compensation arena, we have not issued an NAL against a
carrier for a violation of our current payphone compensation rules,
which became effective July 1, 2004. As such, in calculating the
appropriate penalty for Compass Global's violations of these rules, we
consider the factors set forth in section 503(b)(2)(D), and our
forfeiture guidelines.
11. The misconduct for which the forfeiture guidelines establish a base
forfeiture that most closely approximates Compass Global's is failure
to file required forms or information. The base forfeiture is $3,000
for this conduct. The guidelines explicitly state, however, that
"[t]he Commission and its staff retain the discretion to issue a
higher or lower forfeiture than provided in the guidelines." The
guidelines explicitly identify several factors to adjust a base
forfeiture upward, and among these are "egregious misconduct,"
"substantial harm," "substantial economic gain," and "repeated or
continuous violation." When it adopted its current payphone rules, the
Commission explicitly warned that it would consider aggravating
factors and fully utilize its enforcement power in penalizing
violations: "We note that the current base penalty for failure to file
required forms or information with the Commission is $3,000; however,
we have the discretion to impose substantially higher forfeitures
based on the factors listed in our rules." The Commission explained
that "late payment or non-payment to PSPs could result in substantial
forfeitures: up to $120,000 for a single non-payment and up to $1.2
million for a continuing violation." (These figures were then the
statutory maximums.) The Commission further warned that "[i]n
egregious cases, we may issue an Order to Show Cause why we should not
revoke a SBR's section 214 authority, and possibly bar the company's
principals from participating in interstate telecommunications
business activities without first obtaining explicit permission from
the Commission." In short, the Commission clearly indicated that it
would not tolerate noncompliance with its rules, and would use the
full range of its enforcement powers to penalize violators.
12. Although we acknowledge and encourage Compass Global's reported
efforts to implement its tracking system and settle past-due accounts
with its PSPs, we find that each of Compass Global's violations of
our payphone rules discussed above - failure to establish a call
tracking system, failure to comply with audit-related requirements,
failure to compensate PSPs for each and every completed call, failure
to submit call data reports to PSPs, and failure to submit a sworn
statement attesting to the compeleteness of payment - warrants upward
adjustment from the base forfeiture of $3,000. Our conclusion is based
on the determination that each of the violations involves egregious
misconduct, has been continuous or repeated since our current payphone
rules became effective, and involves substantial harm to each of the
PSPs who have been deprived of compensation from Compass Global. The
rules required Compass Global to have established a call tracking
system, to have that system audited and to have filed a System Audit
Report in accordance with certain defined standards, all by no later
than July 1, 2004. As discussed above, Compass Global only recently
established a call tracking system that appears to be reliable, and
has not yet subjected that system to audit. In addition, although
Compass Global states that it has paid the PSPs that deliver the
highest call volume to the company, it acknowledges that it is behind
in its payments to those PSPs, and has never paid the PSPs that
deliver smaller call volume. Compass Global further admits that it has
failed to submit to each PSP the quarterly call data reports required
by the Commission's rules, and has never made available a sworn
statement attesting to the accuracy of the payments it has tendered.
As a result, Compass Global's violations of the payphone rules are
egregious, have been continuous or repeated, and have caused
substantial harm to PSPs. A substantial upward adjustment of the
forfeiture amounts is therefore warranted.
13. As explained below, the rules Compass Global apparently violated are
fundamental and necessary to the Commission's payphone compensation
regime, which rests on intercarrier cooperation. Failures to comply
with these requirements thwart realization of the statutory command of
section 276 of the Act that PSPs be compensated "for each and every
completed intrastate and interstate call using their payphone." Thus,
we propose base forfeiture amounts consistent with the overarching
import of the rule violations. We also find that the forfeitures
proposed are reasonable when compared to similar forfeitures in our
Universal Service Fund ("USF") enforcement actions. Finally, we warn
carriers that we may impose harsher fines in future enforcement
actions if we determine that those proposed here are insufficient to
deter others from engaging in the same misconduct.
1. Failure to Establish Call Tracking System
14. We find that an appropriate penalty for the failure to establish, on a
timely basis, a call tracking system that accurately tracks calls to
completion is $50,000. This requirement is a fundamental and necessary
precursor to compliance with the Commission's compensation and other
payphone requirements; indeed the entire payphone compensation regime
rests on inter-carrier compliance and cooperation. The Commission's
rules do not require carriers to report to, or even file with, the
Commission; instead, they provide to each other the information and
compensation required by our rules. Failure to establish an accurate
call tracking system on a timely basis is , thus, a serious
dereliction of a Completing Carrier's responsibilities because it
prevents the carrier from fulfilling any of the other payphone
requirements, including the core statutory requirement of compensating
PSPs for each and every payphone call the carrier completes. Indeed,
as Compass Global itself explains, it is the failure to establish an
accurate and reliable call tracking system that has rendered it
difficult if not impossible for the company to comply with any of the
other payphone requirements. As a result, this failure should be
associated with a significant penalty.
2. Failure to Satisfy Audit-Related Requirements
15. We also find that $50,000 is an appropriate penalty for Compass
Global's failure to have its call tracking system audited in
compliance with the requirements of section 64.1320. Failure to
complete an audit in conformity with section 64.1320 is another
element of the fundamental requirements in the payphone rules that are
designed to ensure the accuracy and reliability of a Completing
Carrier's call tracking system (and, consequently, the amount of
compensation paid to each PSP). Although this $50,000 fine relates to
Compass Global's failure to comply with any provision of section
64.1320 in the Commission's rules, we warn carriers that compliance
with some but not all of the provisions of that section will still
result in forfeitures. For example, a Completing Carrier that has had
its call tracking system audited and filed a System Audit Report but
fails to file a statement identifying the person responsible for
handling its payphone compensation - or fails to update the statement
if any change occurs - violates section 64.1320(e) and is potentially
subject to forfeiture. Likewise, a Completing Carrier that fails to
engage an auditor to evaluate its call tracking system annually
violates section 64.1320(f) and is also subject to forfeiture. All
components of the audit requirements are critical and must be
satisfied. We also find that a $50,000 proposed forfeiture for Compass
Global's failure to establish a call tracking system in a timely
fashion and a $50,000 proposed forfeiture for its failure to have the
call tracking system audited in compliance with Commission
requirements are appropriate penalties, particularly when compared to
the Commission's treatment of a carrier's failure to register in our
USF enforcement cases, given that these specific payphone rules, like
a carrier's failure to register, impose such fundamental requirements.
3. Failure to Compensate PSPs for Each Completed Call
16. With respect to the failure of a Completing Carrier to compensate PSPs
for each and every toll-free payphone call it completes, we find an
appropriate penalty to be $50,000 per quarter. A Completing Carrier's
failure to pay PSPs violates the fundamental goal of section 276 of
the Act that all PSPs be "fairly compensated for each and every
completed intrastate and interstate call using their payphone," just
as a carrier's failure to contribute to the USF violates the
requirement in section 254(d) that "[e]very telecommunications carrier
that provides interstate services shall contribute, on an equitable
and nondiscriminatory basis, to the specific, predictable, and
sufficient mechanisms established by the Commission." We also note
that this violation is similar to the failure to contribute to the
USF. We therefore propose a forfeiture of $50,000 for each of the four
quarters within the past twelve months that Compass Global failed to
compensate PSPs for each and every toll-free payphone call it
completed, for a total forfeiture of $200,000.
4. Failure to Provide Call Data Reports
17. We find that an appropriate penalty for Compass Global's failure to
provide call data reports that satisfy the Commission's requirements
is $20,000 per quarter. A Completing Carrier's provision of call data
reports is an important obligation, the failure of which is
correspondingly important. This violation is similar to the failure to
file Telecommunications Reporting Worksheets in the USF context, which
results in a proposed forfeiture of $50,000 for each missed filing
with the Commission. The impact of the failure to file the call data
reports upon which payphone compensation is based, however, is less
than the failure to file Worksheets, on which a carrier's contribution
to multiple regulatory programs is based. In addition, other
requirements in the payphone context, such as the audit, serve as
additional safeguards to ensure the accuracy of reports. We therefore
propose a forfeiture of $20,000 for each quarter within the past
twelve months that Compass Global failed to submit call data reports
to PSPs. The total proposed forfeiture is therefore $80,000.
5. Failure to Provide CFO Sworn Statement
18. We likewise find that an appropriate penalty for Compass Global's
failure to provide a sworn statement of an officer attesting to the
accuracy of the compensation it tenders to PSPs is $20,000 per
violation. This failure is similar to the failure to file a
Telecommunications Reporting Worksheet that is accurate and complete
in all material respects. The Commission has assessed a $50,000
penalty for the misreporting by a carrier of its revenues on a
Worksheet, which as noted above is the same penalty as the Commission
has assessed for failure to file a Worksheet at all. The penalty for
failure to file the sworn statement pursuant to the payphone rules,
however, should be less than the failure to file an accurate
Worksheet, given that failure to file the sworn statement impacts only
PSPs rather than an industry-wide fund like the USF. In addition,
there are other requirements in the payphone context, such as the call
data reports, that serve to reinforce the accuracy of the payment. We
therefore propose a penalty of $20,000 for each of the four quarters
within the past twelve months that Compass Global failed to provide
the sworn statement of an officer attesting to the accuracy of the
compensation it tendered to PSPs. The total proposed forfeiture is
therefore $80,000.
6. Failure to Provide Timely Response
19. Finally, we find that Compass Global's failure to respond to the
Bureau's March 6, 2006 LOI warrants a penalty of $6,000. The base
forfeiture for failure to respond to Commission communications is
$4,000. We have imposed higher penalties, however, for failure to
respond to LOIs at all ($20,000), and for incomplete and untimely
responses to LOIs (e.g., $8,000). Since Compass Global ultimately
responded in full to the LOI when the Bureau reissued it, we find its
conduct less egregious than the failure to respond at all or both
incompletely and untimely, and therefore propose a smaller upward
adjustment of $2,000 to the base forfeiture of $4,000 for failure to
respond to Commission communications.
IV. CONCLUSION
20. In light of the seriousness, duration and scope of the apparent
violations, we find that a proposed forfeiture in the amount of
$466,000 is warranted. This proposed forfeiture amount includes: (1)
$50,000 for failure, in apparent violation of sections 64.1310(a)(1)
and 64.1320(c)(1) of the Commission's rules, to establish, on a timely
basis, a call tracking system that accurately tracks calls to
completion; (2) $50,000 for failure, in apparent violation of section
64.1320 of the rules, to undergo a system audit and comply with other
audit-related requirements; (3) $200,000 for failure, in apparent
violation of section 64.1310(a)(2) of the rules, to compensate PSPs
for each and every payphone call completed for the four quarters
within the last year; (4) $80,000 for failure, in apparent violation
of section 64.1310(a)(4) of the rules, to submit to each PSP the
required call data reports for the four quarters within the last year;
(5) $80,000 for failure, in apparent violation of section
64.1310(a)(3), to make available sworn statements from an officer
attesting to accuracy of payments tendered to PSPs for the four
quarters within the last year, and (6) $6,000 for failure to respond
to the Bureau's March 6 LOI.
19. We caution that additional violations of the Act or the Commission's
rules could subject Compass Global to further enforcement action. Such
action could take the form of higher monetary forfeitures and/or
possible revocation of Compass Global's operating authority, including
disqualification of Compass Global's principals from the provision of
any interstate common carrier services without the prior consent of
the Commission. In addition, we note that, to the extent Compass
Global is found to be delinquent on any debt owed to the Commission,
the Commission will not act on, and may dismiss, any application or
request for authorization filed by Compass Global, in accordance with
the agency's "red light" rules. We order Compass Global to submit
within thirty (30) days, either as part of its response to this NAL or
separately, a report, supported by a sworn statement or declaration
under penalty of perjury of a corporate officer, stating its plan to
come into compliance promptly with the relevant payment and reporting
rules discussed herein. We also order Compass Global to correct its
past failures by having its call tracking system audited in compliance
with Commission rules, by compensating each PSP for each payphone call
it has completed and for which payment was already due, by filing with
each PSP any overdue call data reports for payphone calls it has
completed, and for providing each PSP any overdue statements of an
officer certifying payment accuracy and completeness.
V. ORDERING CLAUSES
21. ACCORDINGLY, IT IS ORDERED THAT, pursuant to section 503(b) of the
Communications Act of 1934, as amended, and section 1.80 of the
Commission's rules, that Compass Global, Inc. is hereby NOTIFIED of
its APPARENT LIABILITY FOR A FORFEITURE in the amount of $466,000 for
willfully and repeatedly violating the Act and the Commission's rules.
22. 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, Compass Global, Inc. SHALL PAY the full
amount of the proposed forfeiture or SHALL FILE a written statement
seeking reduction or cancellation of the proposed forfeiture.
20. IT IS FURTHER ORDERED THAT, pursuant to section 4(i) of the Act, 47
U.S.C. S 4(i), within thirty days of the release of this NOTICE OF
APPARENT LIABILITY AND ORDER, Compass Global, Inc. SHALL SUBMIT a
report, supported by a sworn statement or declaration under penalty of
perjury by a corporate officer, stating its plan to come into
compliance promptly with the payment and reporting rules discussed
herein. Compass Global, Inc. also SHALL HAVE its call tracking system
audited in compliance with Commission rules, SHALL PAY overdue
compensation to PSPs, SHALL FILE overdue call reports to PSPs, and
SHALL PROVIDE to PSPs overdue statements of an officer certifying
payment accuracy and completeness.
23. 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 Federal
Communications Commission, P.O. Box 358340, Pittsburgh, PA
15251-8340. Payment by overnight mail may be sent to Mellon
Bank /LB 358340, 500 Ross Street, Room 1540670, Pittsburgh, PA
15251. Payment by wire transfer may be made to ABA Number 043000261,
receiving bank Mellon Bank, and account number 911-6229.
24. The response, if any, to this NOTICE OF APPARENT LIABILITY must be
mailed to William H. Davenport, Chief, Investigations and Hearings
Division, Enforcement Bureau, Federal Communications Commission, 445
12^th Street, S.W., Washington, D.C. 20554 and must include the
NAL/Acct. No. referenced above.
25. 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 (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.
26. Requests for payment of the full amount of this NAL under an
installment plan should be sent to: Federal Communications Commission,
Deputy Chief Financial Officer, Room 1-A637, 445 12^th Street, S.W.,
Washington, D.C. 20554.
27. IT IS FURTHER ORDERED that a copy of this NOTICE OF APPARENT LIABILITY
AND ORDER shall be sent by certified mail, return receipt requested,
to Dean Cary, President/CEO, Compass Global, Inc., 50 Tice Blvd.,
Woodcliff Lake, NJ 07677.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
47 C.F.R. SS 64.1310(a)(1), 64.1320(c)(1).
47 C.F.R. S 64.1320.
47 C.F.R. SS 64.1300, 64.1310(a)(2).
47 C.F.R. 64.1310(a)(4).
47 C.F.R. S 64.1310(a)(3).
Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996).
47 U.S.C. S 276.
47 U.S.C. S 276. See Conf. Rep. No. 104-458 at 158. The Conference Report
explains: "In place of the existing regulatory structure, the Commission
is directed to establish a new system whereby all payphone service
providers are fairly compensated for every interstate and intrastate call
made using their payphones, including, for example, "toll-free" calls to
subscribers to 800 and new 888 services and calls dialed by means of
carrier access codes. In crafting implementing rules, the commission is
not bound to adhere to existing mechanisms or procedures established for
general regulatory purposes in other provisions of the Communications
Act." The quoted language comes from the House amendment to the Senate
bill. The Conference agreement indicates that Congress adopted the House
provision with some changes.
See Implementation of the Pay Telephone Reclassification and Compensation
Provisions of the Telecommunications Act of 1996, Second Report and Order,
18 FCC Rcd 19975 (2003), (subsequent history omitted) (Second Payphone
Order). The Commission had earlier adopted different rules,
Implementation of the Pay Telephone Reclassification and Compensation
Provisions of the Telecommunications Act of 1996, Report and Order, 11 FCC
Rcd 20541 (1996) (subsequent history omitted).
See Implementation of the Pay Telephone Reclassification and Compensation
Provisions of the Telecommunications Act of 1996, Order on
Reconsideration, 19 FCC Rcd 21457 (2004) (subsequent history omitted).
60 Fed. Reg. 26825 (May 14, 2004); 69 Fed. Reg. 71383 (Dec. 9, 2004).
47 C.F.R. S 64.1300(b).
47 C.F.R. S 64.1300(c).
47 C.F.R. S 64.1300(a).
Second Payphone Order, 18 FCC Rcd at 19988, P 26.
47 C.F.R. SS 64.1310(a)(1), 64.1320(c)(1). Section 64.1320(c) sets forth
nine specific requirements with which the call tracking system must
comply, and for which an independent third-party auditor must verify
compliance.
The Commission's current rules became effective July 1, 2004. See supra at
P 5. Because, as discussed below, the rules explicitly required a
Completing Carrier to file an audit report regarding its compliance with
section 64.1310(a)(1) by the effective date of the rules, a Completing
Carrier needed to establish a call tracking system that satisfies the
Commission's requirements by the effective date.
47 C.F.R. SS 64.1320(a), 64.1320(c).
47 C.F.R. SS 64.1320(b), 64.1320(d).
47 C.F.R. S 64.1320(e).
47 C.F.R. S 64.1320(f).
47 C.F.R. S 64.1320(g).
47 C.F.R. S 64.1310(a)(2).
47 C.F.R. S 64.1320(a)(4). Each quarterly report must be in computer
readable format and include: (1) a list of the coinless access code and
subscriber toll-free calls dialed and completed by the Completing Carrier
from the PSP's payphone, and the Automatic Number Identification (ANI) for
each payphone; (2) the total volume of calls completed for each of these
numbers; (3) the name, address, and phone number of the individuals
responsible for handling the Completing Carrier's payphone compensation;
and (4) the carrier identification code ("CIC") of all facilities-based
long distance carriers that routed calls to the Completing Carrier,
organized by access code and toll-free number.
47 C.F.R. S 64.1320(a)(3). In lieu of providing such a statement to each
PSP, a Completing Carrier may instead provide a single statement addressed
to all PSPs to which compensation is tendered, and may electronically
notify PSPs of the existence of the statement by either sending the report
or posting it on the website of the Completing Carrier or a clearinghouse.
Id.
47 C.F.R. S 64.1310(b).
47 C.F.R. S 64.1310(c). Each quarterly report must be in computer readable
format and include: (1) a list of all facilities-based long distance
carriers to which the Intermediate Carrier switched access code and
toll-free calls dialed from the PSP's payphone; (2) a list of all access
code and toll-free numbers dialed from each PSP's payphones that local
exchange carriers delivered to the Intermediate Carrier and the
Intermediate Carrier switched to the identified long distance carrier; (3)
the total volume of calls switched to each of these numbers; and (4) the
name, address, and phone number of the individuals for each identified
long distance carrier who serves as the Intermediate Carrier's contact at
the identified carrier. Id.
Second Payphone Order, 18 FCC Rcd at 19998, P 44.
Wireline Competition Bureau Reminds Carriers of Their Obligations Under
the Payphone Compensation Rules, Public Notice, DA 06-1862, rel'd Sept.
13, 2006.
Letter from Dean Cary, President/CEO Compass Global, to Raelyn Tibayan
Remy, Attorney, Investigations and Hearings Division, Enforcement Bureau,
FCC, dated May 6, 2006, at 1 ("LOI Response").
Id.
Letter from Hilary S. DeNigro, Deputy Chief, Investigations and Hearings
Division, Enforcement Bureau, FCC, to Dean Cary, President, Compass
Global, Inc., dated March 6, 2006 ("LOI" or "March 6 LOI").
Letter from Hillary S. DeNigro, Deputy Chief, Investigations & Hearings
Division, Enforcement Bureau, FCC, to Dean Cary, President, Compass
Global, Inc., dated April 19, 2006 ("April 19 LOI").
Letter from Hillary S. DeNigro, Deputy Chief, Investigations and Hearings
Division, Enforcement Bureau, FCC, to Dean Cary, President/CEO Compass
Global, dated April 20, 2006.
See LOI Response, supra note 30. This response was filed within the new
time frame established in the April 19 LOI.
Compass Global LOI Response at Inquiry 5.
Id. at Inquiries 7, 8.
Id. at Inquiry 8 b.
Id. at Inquiry 13.
Id. at Inquiry 9.
Id. at Inquiry 13 b.
47 U.S.C. S 503(b)(1)(B); 47 C.F.R. S 1.80(a)(1). 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. 47
U.S.C. S 312(f)(1). 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, H.R. Rep. No. 97-765, 97^th Cong. 2d Sess. 51
(1982), and the Commission has so interpreted the term in the section
503(b) context. See, e.g., Application for Review of Southern California
Broadcasting Co., Memorandum Opinion and Order, 6 FCC Rcd 4387, 4388
(1991) ("Southern California Broadcasting Co."). The Commission may also
assess a forfeiture for violations that are merely repeated, and not
willful. See, e.g., Callais Cablevision, Inc., Grand Isle, Louisiana,
Notice of Apparent Liability for Monetary Forfeiture, 16 FCC Rcd 1359
(2001) (issuing a Notice of Apparent Liability for, inter alia, a cable
television operator's repeated signal leakage). "Repeated" means that the
act was committed or omitted more than once, or lasts more than one day.
Callais Cablevision, Inc., 16 FCC Rcd at 1362, P 9; Southern California
Broadcasting Co., 6 FCC Rcd at 4388, P 5.
47 U.S.C. S 503(b); 47 C.F.R. S 1.80(f).
See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589,
7591, P 4 (2002) (forfeiture paid).
47 U.S.C. S 503(b)(2)(B); see also 47 C.F.R. S 1.80(b)(2).
47 U.S.C. S 503(b)(2)(D); see also Forfeiture Policy Statement, 12 FCC Rcd
at 17100, P 27; 47 C.F.R. S 1.80(b).
47 U.S.C. S 503(b)(6)(B); see also 47 C.F.R. S 1.80(c)(3).
See 47 C.F.R. S 1.80(b)(4).
LOI Response to Inquiries 3, 4.
LOI Response to Inquiry 6.
47 C.F.R. SS 64.1310(a)(1), 64.1320(c)(1).
47 C.F.R. S 64.1320(c).
47 C.F.R. S 64.1310(a)(2).
47 C.F.R. S 64.1310(a)(4).
47 C.F.R. S 64.1310(a)(3).
LOI Response to Inquiry 8.
LOI Reponse to Inquiry 9.
47 C.F.R. S 64.1320.
See supra n.14.
LOI Response to Inquiry 8.
Id.
See LOI Response to Inquiries 9 and 13.
Id.
LOI Response to Inquiry 13.
LOI Response to Inquiry 13.
As part of its LOI Response, Compass Global attached a chart that appears
to show amounts due and payments made for the last two quarters of 2004
and all four quarters of 2005 (no data for 2006). The chart suggests that
Compass Global made at least partial payments to APCC in March and July
2005, and to Verizon in September 2005. These two entities, of seven named
by Compass Global, comprise some $376,000 due (before any payment), while
the other five named, and some unnamed (set forth as "No ANI Ownership
Information"), total some $181,000 due. See Compass Global LOI Response at
Attachment. Thus it appears that the two entities to which some payment
has been made account for about two thirds of the traffic for which
Compass Global owes payphone compensation, and that the last time Compass
Global made any payment was about a year ago.
Since it filed its LOI Response, Compass Global has not provided any
information indicating that it has made any additional payments to PSPs.
Given the company's continuing obligation to produce additional
information responsive to the LOI as it becomes available, see LOI at 3,
the absence of any such additional information suggests that Compass
Global's only payments to PSPs are those partial payments noted above, in
March, July, and September 2005. In addition, in recent conversations
between Bureau staff and Compass Global, the principal confirmed that the
company had not made any payments other than those described in the LOI
Response.
LOI Response to Inquiry 9.
Id. Since it filed its LOI Response, Compass Global has not provided any
information indicating that it has submitted reports. Given the company's
continuing obligation to produce additional information responsive to the
LOI as it becomes available, see LOI at 3, the absence of any such
additional information suggests that Compass Global still has not
submitted any reports to PSPs. In a recent telephone conversation with
staff, Compass Global's principal stated that the company has recently
provided certain call data to some of its major PSPs, but did not
characterize this data as the quarterly report required by our rules.
LOI Response to Inquiry 13.
See supra P 14.
47 C.F.R. S 1.80 (b)(4), Note, Guidelines for Assessing Forfeitures.
Id., Section II., Adjustment Criteria for Section 503 Forfeitures
(criteria (1), (4), (6) and (7)).
Second Payphone Order, 18 FCC Rcd at 19998, P 44.
Id.
Id.
As explained below, we impose a forfeiture of $6,000 for Compass Global's
failure to respond to the March 6 LOI on a timely basis.
See, e.g., Global Teldata II, Inc., Notice of Apparent Liability for
Forfeiture & Order, 20 FCC Rcd 17264 (2005) ("Global Teldata NAL");
InPhonic, Inc., Notice of Apparent Liability for Forfeiture & Order, 20
FCC Rcd 13277 (2005); Telecom House, Inc., Notice of Apparent Liability
for Forfeiture & Order, 20 FCC Rcd 15131 (2005); Teletronics, Inc., Notice
of Apparent Liability for Forfeiture & Order, 20 FCC Rcd 13291 (2005).
See para. 11, supra.
47 C.F.R. S 64.1195(a).
See, e.g., id. at 17275, PP 26-27.
See, e.g., id. at 17274-75, P 25.
See Globcom Inc. d/b/a Globcom Global Communications, Notice of Apparent
Liability for Forfeiture and Order, 18 FCC Rcd 19893 (2003), Globcom Inc.,
Order of Forfeiture, FCC 06-49.
47 C.F.R. S 1.80(b).
See, e.g., BigZoo.com Corp., Order of Forfeiture, 20 FCC Rcd 3954 (2005);
QuickLink Telecom, Inc., Order of Forfeiture, 20 FCC Rcd 14464 (2005).
Carrera Communications, LP, Notice of Apparent Liability for Forfeiture &
Order, 20 FCC Rcd 13307 (2005).
See Business Options, Inc., Consent Decree, 19 FCC Rcd 2916 (2003); NOS
Communications, Inc., Affinity Network Incorporated and NOSVA Limited
Partnership, Consent Decree, 2003 WL 22439710 (2003).
47 C.F.R. S 1.1910.
47 U.S.C. S 503(b).
47 C.F.R. S 1.80,
See 47 C.F.R. S 1.80(f)(3).
See 47 C.F.R. S 1.1914.
Federal Communications Commission FCC 06-186
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Federal Communications Commission FCC 06-186