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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of ) File No. EB-05-IH-0189
)
)
Communication Services ) NAL/Acct. No. 200632080004
Integrated, Inc. )
) FRN No. 0012390167
)
Apparent Liability for )
Forfeiture
NOTICE OF APPARENT LIABILITY
FOR FORFEITURE AND ORDER
Adopted: October 31, 2005 Released:
October 31, 2005
By the Commission:
I. INTRODUCTION
1. In this Notice of Apparent Liability for Forfeiture
(``NAL''), we find that a telecommunications provider,
Communication Services Integrated, Inc. (``CSII''), operating
since 2001 and at least indirectly benefiting from the federal
programs supporting the telecommunications industry since that
time, apparently failed to meet its statutory and regulatory
obligations relating to the universal service program. Based
upon the facts and circumstances surrounding this matter we
conclude that this carrier is apparently liable for a total
forfeiture of $462,638.
2. We specifically find that CSII has apparently violated
section 64.1195 of the Commission's rules by willfully and
repeatedly failing to register with the Commission until February
2005.1 We also find that CSII has apparently violated section
54.711(a) of the Commission's rules by failing to submit certain
Telecommunications Reporting Worksheets (``Worksheets'') from
2002 to 2005.2 Finally, we find that CSII has apparently
violated section 254(d) of the Communications Act of 1934, as
amended (the ``Act''),3 and section 54.706(a) of the Commission's
rules by willfully and repeatedly failing to contribute to the
Universal Service Fund (``USF'').4
3. We are resolved to ensure a level playing field for all
companies that are required to contribute to the maintenance of
Congressionally mandated programs, including the federal
universal service program. The failure of a carrier to fulfill
its obligation to contribute to these programs has a direct and
significant detrimental impact on the programs and on other
industry participants because that failure removes from the base
of contributions telecommunications revenues that otherwise
should be included, thereby forcing other telecommunications
carriers to shoulder additional costs associated with the
programs. Thus, this NAL and others like it represent one
element in a comprehensive approach to improving the efficacy and
fairness of the universal service program as well as reducing
waste, fraud and abuse in the program.
4. We order CSII to file with the Universal Service
Administrative Company (``USAC'') within thirty days all annual
Telecommunications Reporting Worksheets required under the
Commission's rules from the date that CSII commenced providing
telecommunications services in the United States to the date of
this NAL.5
II. BACKGROUND
5. The Commission is charged by Congress with regulating
interstate and international telecommunications and ensuring that
providers of such telecommunications comply with the requirements
imposed on them by the Act and our rules.6 The Commission also
has been charged by Congress to establish, administer and
maintain various telecommunications regulatory programs, and to
fund these programs through assessments on the telecommunications
providers that benefit from them. To accomplish these goals, the
Commission established ``a central repository of key facts about
carriers'' through which it could monitor the entry and operation
of interstate telecommunications providers to ensure, among other
things, that they are qualified, do not engage in fraud, and do
not evade oversight.7 Commission rules require that, upon entry
or anticipated entry into interstate telecommunications markets,
telecommunications carriers register by submitting information on
FCC Form 499-A, also known as the annual Telecommunications
Reporting Worksheet.8 The Commission also requires
telecommunications providers to submit financial information on
annual and, with some exceptions not applicable to CSII since
2003,9 quarterly short-form Worksheets to enable the Commission
to determine and collect the statutorily mandated program
assessments.10
6. The Telecommunications Act of 1996 codified Congress'
historical commitment to promote universal service to ensure that
consumers in all regions of the nation have access to affordable,
quality telecommunications services.11 In particular, section
254(d) of the Act requires, among other things, that ``[e]very
telecommunications carrier [providing] interstate
telecommunications services . . . contribute, on an equitable and
nondiscriminatory basis, to the specific, predictable, and
sufficient mechanisms established by the Commission to preserve
and advance universal service.''12 In implementing this
Congressional mandate, the Commission directed all
telecommunications carriers providing interstate
telecommunications services and certain other providers of
interstate telecommunications to contribute to the Universal
Service Fund based upon their interstate and international end-
user telecommunications revenues.13 Failure by some providers to
pay their share into the USF skews the playing field by providing
non-paying providers an economic advantage over their competitors
who must shoulder more than their fair share of the costs of the
Fund.
7. The Commission has established specific procedures to
administer the universal service program. A carrier must file
Worksheets for the purpose of determining its USF payments.14
These periodic filings trigger a determination of liability, if
any, and subsequent billing and collection by USAC. USAC uses
the revenue projections submitted on the quarterly filings to
determine each carrier's universal service contribution amount.15
Carriers are required to pay their monthly USF contribution by
the date shown on their invoice.16 The Commission's rules
explicitly warn contributors that failure to file their forms or
submit their payments potentially subjects them to enforcement
action.17 Further, under the Commission's ``red light rule,''
action will be withheld on any application to the Commission or
request for authorization made by any entity that has failed to
pay when due its regulatory program payments, such as USF
contributions, and if payment or payment arrangements are not
made within 30 days from notice to the applicant, such
applications or requests will be dismissed.18
8. CSII is a Georgia-based telecommunications carrier that
began providing interstate telecommunications service in the
United States in 2001.19 In 2004, the Enforcement Bureau
(``Bureau'') audit staff sought to identify resellers of
telecommunications service that failed to register as
telecommunications service providers with the Commission, and
thus may also have failed to satisfy various Commission program
requirements.20 In order to identify such resellers, the Bureau
audit staff compared lists of resellers provided by wholesale
service providers against the Commission's central repository of
registered telecommunications service providers with filer
identification numbers. If a reseller did not appear to have an
identification number, the audit staff sent an inquiry to that
reseller. On March 30 and June 18, 2004, the Bureau's audit
staff sent letters to CSII requesting information pertaining to
CSII's compliance with section 64.1195 of the Commission's
rules.21 On January 5, 2005, CSII sent an e-mail to Bureau audit
staff, claiming that the carrier was ``under the impression'' it
was de minimis.22 In response, Bureau audit staff informed CSII
that the carrier was nonetheless required to register with the
Commission.23 Shortly thereafter, on February 23, 2005, several
years after it began providing service and more than 10 months
after the Bureau sent CSII its first letter, CSII registered
pursuant to section 64.1195 of the Commission's rules24 and
untimely filed its 2004 annual Worksheet (reporting 2003
revenues).
9. On March 10, 2005, the Bureau issued a letter of
inquiry (``LOI'') to CSII.25 The LOI directed CSII, among other
things, to submit a sworn written response to a series of
questions relating to CSII's apparent failure to register and
file Telecommunications Reporting Worksheets in a timely manner
and to make mandated federal telecommunications regulatory
program payments. CSII responded to the LOI on March 28, 200526
and provided supplemental revenue information on March 30,
2005.27
10. Subsequently, on April 30 and July 27, 2005, CSII
timely-filed its 2005 annual Worksheet (reporting 2004 actual
revenues) and its quarterly Worksheet due on August 1, 2005
(reporting projected revenues to calculate monthly assessments
for the fourth quarter 2005). Notwithstanding its e-mail to the
Bureau claiming it was de minimis, CSII projected interstate and
international telecommunications revenues for the fourth quarter
of 2005 alone that surpassed the de minimis threshold for all of
2005. CSII still failed to file annual Worksheets due in the
years 2002 and 2003, and quarterly Worksheets due November 1,
2004, February 1, 2005, and May 1, 2005. In July 2005, USAC sent
CSII an invoice for $10,359 reflecting one-third of the debt owed
for the limited period that CSII reported, which CSII timely
paid.
III. DISCUSSION
11. 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.28 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.29 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,30 and the
Commission has so interpreted the term in the section 503(b)
context.31 The Commission may also assess a forfeiture for
violations that are merely repeated, and not willful.32
``Repeated'' means that the act was committed or omitted more
than once, or lasts more than one day.33 To impose such a
forfeiture penalty, the Commission must issue a notice of
apparent liability and the person against whom the notice has
been issued must have an opportunity to show, in writing, why no
such forfeiture penalty should be imposed.34 The Commission will
then issue a forfeiture if it finds by a preponderance of the
evidence that the person has violated the Act or a Commission
rule.35 As set forth below, we conclude under this standard that
CSII is apparently liable for a forfeiture for its apparent
willful and repeated violations of section 254(d) of the Act36
and sections 54.706(a), 54.711(a), and 64.1195 of the
Commission's rules.37
12. The fundamental issues in this case are whether CSII
apparently violated the Act and the Commission's rules by: (1)
willfully or repeatedly failing to register pursuant to section
64.1195 of the Commission's rules;38 (2) willfully or repeatedly
failing to file Telecommunications Reporting Worksheets; and (3)
willfully or repeatedly failing to make requisite contributions
toward the Universal Service Fund. We answer these questions
affirmatively. Based on a preponderance of the evidence, we
conclude that CSII is apparently liable for a forfeiture of
$462,638 for apparently willfully and repeatedly violating
section 254(d) of the Act,39 and sections 54.706(a), 54.711(a),
and 64.1195 of the Commission's rules.40
13. Specifically, we propose the following forfeitures for
apparent violations within the last year: (1) $100,000 for
failure to register pursuant to section 64.1195 of the
Commission's rules;41 (2) $150,000 for failure to file three
Telecommunications Reporting Worksheets; and (3) $212,638 for
failure to make nine monthly USF contributions on a timely basis.
Although we propose forfeitures only for apparent violations
within the last year, we discuss below CSII's noncompliance in
prior years to demonstrate the scope of CSII's misconduct and
provide context to the misconduct that is within the statute of
limitations period.
A. Registration with the Commission
14. We conclude that CSII has apparently violated section
64.1195(a) of the Commission's rules by failing to register with
the Commission from 2001 until February 23, 2005.42 CSII's
failure to register constitutes a clear violation of a vital
Commission rule. Section 64.1195(a) of the Commission's rules
unambiguously requires that all carriers that provide, or plan to
provide, interstate telecommunications services register with the
Commission by submitting specified information.43 Although CSII
has been providing interstate telecommunications services since
2001, it failed to register in accordance with section 64.1195(a)
until February 23, 2005, many months after the Bureau sent CSII
the Audit Letters. As a result of its misconduct, CSII operated
for over three years without participation in any of the programs
tied to registration. As an interstate telecommunications
carrier, CSII had a clear and affirmative duty to apprise itself
of, and satisfy, its federal obligations.44
15. We view CSII's apparent failure to register for over
three years as a serious dereliction of its responsibilities
under the Act and our rules. A carrier's compliance with the
Commission's registration requirement is critical to the
administration of the USF and TRS programs, and to fulfilling
Congress' objectives in sections 254(d) and 225(b)(1) of the Act.
As we noted above, a carrier's duty to register upon entry, or
anticipated entry, into interstate telecommunications markets is
essential to the fulfillment of the USF, TRS, and other
regulatory program missions because it identifies the company to
the various program administrators and brings the carrier within
the purview and oversight of those administrators. If a carrier
never identifies itself as a telecommunications provider by
properly registering under the Commission's rules, then neither
the Commission nor the various program administrators can
ascertain whether that carrier has fulfilled other regulatory
obligations, including the requirement that carriers file
Worksheets and contribute to USF, TRS, and other regulatory
programs. Moreover, the program administrators have no basis
upon which to invoice the carrier for contributions. A
telecommunications carrier that fails to register thus can
operate outside of the Commission's oversight and evade its
federal obligations to contribute toward the vital programs
linked to registration.
16. The impact of a carrier's failure to register is no
less severe where, as here, that carrier ultimately registers
with the Commission. Although CSII registered on February 23,
2005, and has apparently filed some of the required Worksheets in
the last few months, CSII delayed its registration for an
extended period of time and took no action until long after
receiving letters from the Bureau.45 The Commission has
repeatedly stated that post-investigation corrective measures to
address a violation do not eliminate a licensee's responsibility
for the period during which the violation occurred.46 Based on a
preponderance of the evidence, therefore, we find that CSII
apparently has violated section 64.1195(a) of the Commission's
rules by willfully and repeatedly failing to register from 2001
until February 23, 2005.47
B. Submission of Telecommunications Reporting Worksheets
17. We also conclude that CSII apparently has violated
section 54.711(a) of the Commission's rules by willfully and
repeatedly failing to file certain Telecommunications Reporting
Worksheets on a timely basis from 2002 through February 2005.
Section 54.711(a) of the Commission's rules clearly establishes a
carrier's obligation to file periodic Telecommunications
Reporting Worksheets.48 A carrier's failure to file these
Worksheets as required has serious implications for the USF. As
discussed above, the filing of a Telecommunications Reporting
Worksheet prompts a determination of liability for, and
subsequent billing and collection of, payments by the
administrators of the Universal Service contributions. The
failure of a carrier such as CSII to abide by its federal filing
obligation has a direct and profound detrimental impact by
removing from the base of USF contributions telecommunications
revenues that otherwise should be included, thereby shifting to
compliant carriers additional economic burdens associated with
the federal universal service program.49 Consequently, a
carrier's failure to file required Worksheets frustrates the very
purpose for which Congress enacted section 254(d) - to ensure
that every interstate carrier ``contribute, on an equitable and
nondiscriminatory basis, to the specific, predictable, and
sufficient mechanisms established by the Commission to preserve
and advance universal service.''50 Viewed in this context, the
Telecommunications Reporting Worksheet is not only an
administrative tool, but also a fundamental and critical
component of the Commission's Universal Service program.
18. CSII had repeatedly failed to comply with its filing
obligation prior to the Bureau's investigation. Although CSII
has been providing telecommunication services since 2001, it had
not filed annual Worksheets in 2002 or 2003, and filed its 2004
annual Worksheet almost one year late. While it did file its
2005 annual Worksheet on time, it did so only after the Bureau's
inquiries. Moreover, even within the past year, CSII failed to
file the quarterly Worksheets due November 1, 2004, and February
1 and May 1, 2005.
19. Based on a preponderance of the evidence, we find that
CSII apparently has violated section 254 of the Act51 and section
54.711 of the Commission's rules52 by willfully and repeatedly
failing to timely file required information with the Commission
on multiple occasions since 2002, including its failure to make
three quarterly Worksheet filings within the last year. We
therefore propose a forfeiture for CSII's failure to file the
quarterly Worksheets due November 1, 2004, and February 1 and May
1, 2005.
C. Universal Service Contributions
20. We further conclude that CSII apparently violated
section 254(d) of the Act and section 54.706 of the Commission's
rules by willfully and repeatedly failing to contribute to
universal service support mechanisms.53 Section 54.706(c) of the
Commission's rules unambiguously directs that ``entities
[providing] interstate telecommunications to the public . . . for
a fee . . . contribute to the universal service support
programs.''54 Since 2003, CSII was required, pursuant to section
54.706(b) of the Commission's rules, to contribute to universal
service mechanisms based upon either its historical or projected
revenues.55 Despite this requirement, CSII made no universal
service contributions until August 8, 2005.56 As we previously
have stated,
[c]arrier nonpayment of universal service
contributions undermines the efficiency and
effectiveness of the universal service support
mechanisms. Moreover, delinquent carriers may
obtain a competitive advantage over carriers
complying with the Act and our rules. We consider
universal service nonpayment to be a serious threat
to a key goal of Congress and one of the
Commission's primary responsibilities.57
Based on a preponderance of the evidence, we find that CSII
apparently has violated sections 254(d) of the Act and 54.706 of
the Commission's rules by willfully and repeatedly failing to
make its monthly universal service contribution payments since
2003, including nine such failures within the past year, i.e.,
the payments due November 15 and December 15, 2004, and January
14, February 15, March 15, April 15, May 13, June 15, and July
15, 2005.
D. Proposed Forfeiture
21. Section 503(b)(1)(B) of the Act provides that any
person that willfully or repeatedly fails 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.58 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.59 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.''60
22. Under section 503(b)(6) of the Act, we may only propose
forfeitures for apparent violations that occurred within one year
of the date of this NAL.61 Nevertheless, section 503(b) does not
bar us from assessing whether CSII's conduct 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.62 Therefore, although we find that CSII
apparently violated the Act and our rules for over three years,
we propose forfeitures here only for violations that occurred
within the last year.
23. This case involves a carrier's failure both to register
and submit any Telecommunications Reporting Worksheets from the
time it commenced providing telecommunications services until
after it received a letter from the Bureau63 - in this case, a
period of over three years. We find CSII's failure to discharge
its federal reporting obligations to be particularly egregious.
The registration and filing of Telecommunications Reporting
Worksheets are fundamental to the implementation of our central
repository of carriers and to the administration of multiple
statutorily derived programs - including the USF. Where, as
here, a carrier ignores its obligations by wholly failing to
register - thereby affecting the time and manner in which these
important federal programs are funded - it undermines the
programs and thwarts the purposes for which Congress and the
Commission established them.
24. Recently, we have held that a substantial forfeiture of
$100,000 is warranted for a carrier's failure to register with
the Commission.64 We explained that ``[t]his egregious behavior
strikes at the core of our ability to implement and enforce the
Act and our rules effectively, thus warranting a substantial
forfeiture.''65 A carrier that fails to register hampers
``efficient and effective Commission enforcement by delaying
detection of, and action against, its behavior . . . and imposes
a substantial burden on the Commission, which can only identify
such carriers through compliance review programs that require
significant amounts of staff time and resources.''66 CSII failed
to register until February 23, 2005. Taking into account all of
the factors enumerated in section 503(b)(2)(D) of the Act, we
therefore conclude that a proposed forfeiture of $100,000 is
warranted.
25. Similarly, in the past, we have held that a substantial
forfeiture of $50,000 is warranted for a carrier's failure to
file a Telecommunications Reporting Worksheet for revenue
reporting purposes.67 We find that CSII's willful and repeated
failure to file periodic Telecommunications Reporting Worksheets
is egregious. As we noted above, a carrier's obligation to file
these Worksheets is directly linked to, and thus has serious
implications for, administration of the USF and other regulatory
programs. By ignoring its reporting obligations, CSII has
unilaterally shifted to compliant carriers and their customers
the economic costs associated with the universal service and
other regulatory programs. Therefore, we find that CSII is
apparently liable for a $150,000 forfeiture for its failure to
file three Worksheets within the last year. As discussed above,
CSII failed to file three quarterly Worksheets due November 1,
2004 and February 1 and May 1, 2005.
26. Based on the facts above, it also appears that CSII has
failed to make the requisite contributions into the Universal
Service Fund for a period of over two years. Nonpayment of
universal service contributions is an egregious offense that
bestows on delinquent carriers an unfair competitive advantage by
shifting to compliant carriers the economic costs and burdens
associated with universal service. A carrier's failure to make
required universal service contributions frustrates Congress'
policy objective in section 254(d) of the Act to ensure the
equitable and non-discriminatory distribution of universal
service costs among all telecommunications providers.68 The
Commission has established a base forfeiture amount of $20,000
for each month in which a carrier has failed to make required
universal service contributions.69 CSII, as detailed above,
failed to make contributions from 2003 until July 2005. Nine of
those violations occurred within the last year. Consequently, we
find CSII apparently liable for a base forfeiture of $180,000 for
its willful and repeated failure to make universal service
contributions for the period of November 2004 through July 2005.
27. We also conclude that an upward adjustment to the base
forfeiture associated with CSII's failure to pay USF is
appropriate. In the past, we have calculated upward adjustments
to forfeitures for failure to make USF payments based on half of
the company's unpaid contributions.70 In situations such as this
one, however, the Commission has held previously,71 where the
subject company has failed to file timely and accurate
information, we cannot determine the full amount owed to the
funds until and unless the subject company provides complete and
accurate information to the fund administrators. Thus, our
ability to calculate and assess accurately an upward adjustment
based on a percentage of unpaid contribution amounts can be
inhibited by the violator. In this regard, Commission
enforcement action can be delayed pending the company's full
revenue disclosures, or foreclosed altogether if the statute of
limitations expires during the period of delay. In such
circumstances, companies that comply with our registration and
filing requirements might be worse off than those, like CSII,
that appear to ignore them. Such a result is not only unfair,
but is bad public policy.
28. As of July 15, 2005, USAC records show that CSII owed
approximately $33,776 in USF contributions for the limited period
that it has reported revenue, 2003 and 2004. USF assessments
have not been assigned for other periods only because CSII did
not properly file the Worksheets for other periods. During the
course of the investigation, however, the Bureau received certain
revenue information. We have used that revenue information to
estimate the amount that CSII should have paid during the periods
since it began operations for which it has not filed
(approximately $31,500) for purposes of calculating an upward
adjustment of one-half that amount. In total, we estimate CSII
owes $65,276 to the USF. Therefore, taking into account all of
the factors enumerated in section 503(b)(2)(D) of the Act, we
propose an upward adjustment of $32,638 for CSII's apparent
failure to make universal service contributions. We thus find
CSII liable for a proposed forfeiture of $212,638 for its
apparent willful and repeated failure to make contributions into
the Universal Service Fund.
IV. CONCLUSION
29. In light of the seriousness, duration and scope of the
apparent violations, and to ensure that a company with
substantial revenues such as CSII does not consider the proposed
forfeiture merely ``an affordable cost of doing business,''72 we
find that a proposed forfeiture in the amount of $462,638 is
warranted. As discussed above, this proposed forfeiture amount
includes: (1) a total proposed penalty of $100,000 for failing
to register pursuant to section 64.1195 of the Commission's
rules;73 (2) a total proposed penalty of $150,000 for failing to
file three Telecommunications Reporting Worksheets within the
past year; and (3) a total proposed penalty of $212,638 for
failing to make nine monthly universal service contributions
within the past year.
30. We caution that additional violations of the Act or the
Commission's rules could subject CSII to further enforcement
action. Such action could take the form of higher monetary
forfeitures and/or possible revocation of CSII's operating
authority, including disqualification of CSII's principals from
the provision of any interstate common carrier services without
the prior consent of the Commission.74 In addition, we note
that, to the extent CSII is ever found to be delinquent on any
debt owed to the Commission (e.g., has failed to pay all of its
USF contributions), the Commission will not act on, and may
dismiss, any application or request for authorization filed by
CSII, in accordance with the agency's ``red light'' rules.75 We
order CSII to file with USAC within thirty days all annual
Telecommunications Reporting Worksheets required under the
Commission's rules from the date that CSII commenced providing
telecommunications services in the United States to the date of
this NAL.
V. ORDERING CLAUSES
31. ACCORDINGLY, IT IS ORDERED THAT, pursuant to section
503(b) of the Communications Act of 1934, as amended,76 and
section 1.80 of the Commission's rules,77 that CSII is hereby
NOTIFIED of its APPARENT LIABILITY FOR A FORFEITURE in the amount
of $462,638 for willfully and repeatedly violating the Act and
the Commission's rules.
32. IT IS FURTHER ORDERED THAT, pursuant to section 1.80 of
the Commission's Rules,78 within thirty days of the release date
of this NOTICE OF APPARENT LIABILITY, CSII SHALL PAY the full
amount of the proposed forfeiture or SHALL FILE a written
statement seeking reduction or cancellation of the proposed
forfeiture.
33. IT IS FURTHER ORDERED THAT, pursuant to sections 4(i),
219(b), and 254(d) of the Act,79 and sections 54.706(a) and
54.711(a) of the Commission's rules,80 within thirty days of the
release of this NOTICE OF APPARENT LIABILITY AND ORDER, CSII
SHALL SUBMIT to USAC all annual Telecommunications Reporting
Worksheets required under the Commission's rules from the date
that CSII commenced providing telecommunications services in the
United States to the date of this NAL.
34. 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 911-6106.
35. 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, Room 4-A237, 445 12th Street, S.W.,
Washington, D.C. 20554 and must include the NAL/Acct. No.
referenced above.
36. 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.
37. 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.
20554.81
38. 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 Gary E. Middlebrooks, Chief
Executive Officer, Communication Services Integrated, Inc., 105
Park Place Way, Carrollton, GA 30117.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
_________________________
1 47 C.F.R. § 64.1195.
2 47 C.F.R. § 54.711(a).
3 47 U.S.C. § 254(d).
4 47 C.F.R. § 54.706(a).
5 The Commission has appointed USAC as the administrator of
federal universal service support mechanisms and has made it
responsible for billing and collection of USF contributions. 47
C.F.R. §§ 54.701(a), 54.702(b).
6 See, e.g., 47 U.S.C. § 151.
7 See Implementation of the Subscriber Carrier Selection
Provisions of the Telecommunications Act of 1996, Third Report
and Order and Second Order on Reconsideration, 15 FCC Rcd 15996,
16024 (2000) (``Carrier Selection Order'').
8 47 C.F.R. § 64.1195.
9 Based on CSII's reported revenue for 2002, CSII was a de
minimis carrier in 2002, and therefore was not required to file
quarterly Worksheets in 2002. See Letter from Hillary S.
DeNigro, Deputy Chief, Investigations and Hearings Division,
Enforcement Bureau, Federal Communications Commission, to Gary
Middlebrooks, Chief Executive Officer, Communication Services
Integrated, Inc., dated March 10, 2005; Letter from Communication
Services Integrated, Inc., to Diana Lee, Investigations and
Hearings Division, Enforcement Bureau, FCC, dated March 30, 2005
(attaching supplemental long distance revenue information)
(``CSII Supplemental Response'').
10 See 47 U.S.C. §§ 225(d)(3); 254(d). In 1999, to streamline
the administration of the programs and to ease the burden on
regulatees, the Commission consolidated the information filing
requirements for multiple telecommunications regulatory programs
into the annual Telecommunications Reporting Worksheet. See 1998
Biennial Regulatory Review, Report and Order, 14 FCC Rcd 16602
(1999). The next year the Commission revised the
Telecommunications Reporting Worksheet slightly to collect the
additional information necessary to achieve its goal of
establishing a central repository for interstate
telecommunications providers by the least provider-burdensome
method. Carrier Selection Order, 15 FCC Rcd at 16026.
11 The Telecommunications Act of 1996 amended the Communications
Act of 1934. See Telecommunications Act of 1996, Pub. L. No.
104-104, 110 Stat. 56 (1996).
12 47 U.S.C. § 254(d).
13 47 C.F.R. § 54.706(b). Since April 1, 2003, carrier
contributions have been based on a carrier's projected, rather
than historical, revenues. Id.
14 Upon submission of a Form 499-A registration, the carrier is
issued a filer identification number by USAC. The filer
identification number is then to be included on all further
filings by the company and is used by the Commission and its
administrators to track the carrier's contributions and invoices.
15 Individual universal service contribution amounts that are
based upon quarterly filings are subject to an annual true-up.
See Federal-State Joint Board on Universal Service, Petition for
Reconsideration filed by AT&T, Report and Order and Order on
Reconsideration, 16 FCC Rcd 5748 (2001); 47 C.F.R. § 54.709(a).
16 See Globcom, Inc., Notice of Apparent Liability for Forfeiture
and Order, 18 FCC Rcd 19893, 19896, ¶ 5 (2003); 47 C.F.R. §
54.711(a) (``The Commission shall announce by Public Notice
published in the Federal Register and on its website the manner
of payment and the dates by which payments must be made.'').
See, e.g., ``Proposed Third Quarter 2003 Contribution Factor,''
Public Notice, 18 FCC Rcd 11442 (WCB 2003) (``Contribution
payments are due on the date shown on the [USAC] invoice.'') The
Act and our rules, however, do not condition payment on receipt
of an invoice or other notice from USAC. See 47 U.S.C. § 254(d);
47 C.F.R. § 54.706(b). A carrier that does not file may not
receive an invoice from USAC, but is nonetheless required to
contribute to the universal service fund, unless its revenues are
considered de minimis. Globcom, Inc., 18 FCC Rcd at 19896, ¶ 5 &
n.22. The instructions for the Telecommunications Reporting
Worksheet include tables for carriers to determine their
approximate annual contributions based on their projected
telecommunications revenues. Providers whose annual contribution
is less than $10,000 are considered de minimis and exempted from
contributing to the USF. 47 C.F.R. § 54.708. CSII has not
qualified for the de minimis exemption since 2003.
17 47 C.F.R. § 54.713.
18 47 C.F.R. § 1.1910. The rule went into effect on November 1,
2004. See ``FCC Announces Brief Delay in Enforcement of Red
Light Rule,'' Public Notice, 19 FCC Rcd 19452 (2004).
19 See Response to Data Requests/Request for Documents, EB-05-IH-
0189, at 4, dated March 28, 2005 (``March 28, 2005 LOI
Response''); http://www.csii.net/index2.html (last accessed on
October 27, 2005).
20 See 47 C.F.R. § 64.1195(a).
21 See Letter from Hugh Boyle, Chief Auditor, Investigations and
Hearings Division, Enforcement Bureau, to Communication Services
Integrated, Inc., dated March 30, 2004 (``March 30, 2004 Audit
Letter''); Letter from Hugh Boyle, Chief Auditor, Investigations
and Hearings Division, Enforcement Bureau, to Communication
Services Integrated, Inc., dated June 18, 2004 (``June 18, 2004
Audit Letter'') (collectively, ``Audit Letters'').
22 See e-mail from Sherry Holt, Communication Services
Integrated, Inc., to Nand Gupta, Investigations and Hearings
Division, January 5, 2005, 12:04 p.m. E.S.T. Providers whose
annual contribution is less than $10,000 are covered by the
Commission's ``de minimis rule'' and are exempted from
contributing to the USF. 47 C.F.R. § 54.708.
23 See e-mail from Nand Gupta, Investigations & Hearings
Division, to Sherry Holt, Communication Services Integrated,
Inc., January 05, 2005, 16:13 p.m. E.S.T.
24 47 C.F.R. § 64.1195.
25 See supra n. 9.
26 See supra n. 19.
27 See CSII Supplemental Response.
28 47 U.S.C. § 503(b)(1)(B); 47 C.F.R. § 1.80(a)(1).
29 47 U.S.C. § 312(f)(1).
30 H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51 (1982).
31 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.'').
32 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).
33 Callais Cablevision, Inc., 16 FCC Rcd at 1362, ¶ 9; Southern
California Broadcasting Co., 6 FCC Rcd at 4388, ¶ 5.
34 47 U.S.C. § 503(b); 47 C.F.R. § 1.80(f).
35 See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC
Rcd 7589, 7591, ¶ 4 (2002) (``SBC Forfeiture Order'') (forfeiture
paid).
36 47 U.S.C. § 254(d).
37 47 C.F.R. §§ 54.706(a), 54.711(a), and 64.1195.
38 47 C.F.R. § 64.1195.
39 47 U.S.C. § 254(d).
40 47 C.F.R. §§ 54.706(a), 54.711(a), 64.1195.
41 47 C.F.R. § 64.1195.
42 47 C.F.R. § 64.1195(a); Carrier Selection Order, 15 FCC Rcd
15996, 16025 (requiring existing carriers like CSII to register
on the date the new registration requirement becomes effective by
means of certain information in FCC Form 499-A); 66 FR 17083
(2001) (announcing that OMB-approved information collection
requirement in section 64.1195 would take effect on April 2,
2001).
43 Id. The Commission adopted the registration requirement in
section 64.1195(a) after finding that such a requirement would
enable it to better monitor the entry of carriers into the
interstate telecommunications market and any associated increases
in slamming activity, and, among other things, would enhance the
Commission's ability to take appropriate enforcement action
against carriers that have demonstrated a pattern or practice of
slamming. See Carrier Selection Order, 15 FCC Rcd at 16024 ¶ 62.
44 See The Commission's Forfeiture Policy Statement and Amendment
of Section 1.80 of the Commission's Rules, Report and Order, 12
FCC Rcd 17087, 17099, ¶ 22 (1997) (``Forfeiture Policy
Statement''), recon. denied, 15 FCC Rcd 303 (1999) (``[t]he
Commission expects, and it is each licensee's obligation, to know
and comply with all of the Commission's rules.''); Telecom House,
Inc., Notice of Apparent Liability for Forfeiture and Order, FCC
05-168, 2005 WL 2233570 (F.C.C.) at ¶ 29 (released Sept. 13,
2005); InPhonic, Inc., Notice of Apparent Liability for
Forfeiture and Order, FCC 05-145, 2005 WL 1750418 (F.C.C.) at ¶
24 (released July 25, 2005); Teletronics, Inc., Notice of
Apparent Liability for Forfeiture and Order, FCC 05-146, 2005 WL
1750420 (F.C.C.) at ¶ 28 (released July 25, 2005).
45 See March 30, 2004 Audit Letter, June 18, 2004 Audit Letter.
46 AT&T Wireless Services, Inc., Forfeiture Order, 17 FCC Rcd
21866, 21870-71, (2002); America's Tele-Network Corp., Order of
Forfeiture, 16 FCC Rcd 22350, 22355, ¶ 15 (2001); Coleman
Enters., Inc. d/b/a/ Local Long Distance, Inc., Order of
Forfeiture, 15 FCC Rcd 24385, 24388, ¶ 8 (2000).
47 The proposed forfeitures in this NAL relate only to violations
occurring within a year of this NAL.
48 47 C.F.R. § 54.711(a).
49 Sixty days prior to the start of each quarter, USAC is
required to provide the Commission with a projection of the high
cost, low income, schools and libraries, and rural health care
funding requirements for the following quarter. See
www.universalservice.org/overview/filings. Based on USAC's
projection of the needs of the USF, and revenue projections from
the registered carriers subject to universal service
requirements, the Commission establishes a specific percentage of
interstate and international end-user revenues that each subject
telecommunications provider must contribute toward the USF. This
percentage is called the contribution factor. The contribution
factor, and, consequently, the amount owed to the USF by each
affected telecommunications company, changes each quarter,
depending on the needs of the USF and carrier-provided revenue
projections. See www.fcc.gov/wcb/universal_service/quarter.
Thus, in cases where a carrier, such as CSII, fails to file
required Worksheets reporting its revenue projections in a timely
fashion, its revenues are excluded from the contribution base
from which universal assessments are derived, and the economic
burden of contributing falls disproportionately on carriers that
have satisfied their reporting obligations.
50 47 U.S.C. § 254(d).
51 47 U.S.C. § 254.
52 47 C.F.R. §§ 54.711, 64.604.
53 47 U.S.C. § 254(d); 47 C.F.R. § 54.706.
54 47 C.F.R. § 54.706(c).
55 See 47 C.F.R. § 54.706(b).
56 See USAC August 2005 billing to CSII. USAC assessed the
amount due in August 2005 solely based on the 2004 and 2005
annual Worksheets, and the payment thus represented only a
partial assessment of CSII's total USF contribution obligation
for the month.
57 Globcom, Inc., 18 FCC Rcd at 19903, ¶ 26 (2003).
58 47 U.S.C. § 503(b)(1)(B); see also 47 C.F.R. § 1.80(a)(2).
59 47 U.S.C. § 503(b)(2)(B); see also 47 C.F.R. § 1.80(b)(2).
Effective September 7, 2004, the Commission amended its rules to
increase the maximum penalties to account for inflation since the
last adjustment of the penalty rates. See Amendment of Section
1.90 of the Commission's Rules, Order, 19 FCC Rcd 10945, 10946 ¶
6 (2004).
60 47 U.S.C. § 503(b)(2)(D); see also Forfeiture Policy
Statement, 12 FCC Rcd at 17100, ¶ 27; 47 C.F.R. § 1.80(b).
61 47 U.S.C. § 503(b)(6)(B); see also 47 C.F.R. § 1.80(c)(3).
62 See, e.g., Carrera Communications, LP, Notice of Apparent
Liability for Forfeiture and Order, FCC 05-147, 2005 WL 1750417
(F.C.C.) at ¶ 24 (released July 25, 2005); InPhonic, Inc., 2005
WL 1750418 (F.C.C.) at ¶ 24; Teletronics, Inc., 2005 WL 1750420
(F.C.C.) at ¶ 28; Globcom, Inc., 18 FCC Rcd at 19903; Roadrunner
Transp., Inc., Forfeiture Order, 15 FCC Rcd 9669, 9671 (2000);
Liab. of E. Broad. Corp., Memorandum Opinion and Order, 10 F.C.C.
2d 37 (1967).
63 See InPhonic, Inc., 2005 WL 1750418 (F.C.C.) at ¶ 25;
Teletronics, Inc., 2005 WL 1750420 (F.C.C.) at ¶ 29.
64 See Telecom House, Inc, 2005 WL 2233570 (F.C.C.) at ¶ 29;
InPhonic, Inc., 2005 WL at 1750418 (F.C.C.) at ¶ 26; Teletronics,
Inc., 2005 WL 1750420 (F.C.C.) at ¶ 30.
65 InPhonic, Inc., 2005 WL 1750418 (F.C.C.) at ¶ 26; Teletronics,
Inc., 2005 WL 1750420 (F.C.C.) at ¶ 30.
66 InPhonic, Inc., 2005 WL 1750418 (F.C.C.) at ¶ 26; Teletronics,
Inc., 2005 WL 1750420 (F.C.C.) at ¶ 30.
67 Globcom, Inc., 18 FCC Rcd at 19905. See also Carrera
Communications, Inc., 2005 WL 1750417 (F.C.C.) at ¶ 25; InPhonic,
Inc., 2005 WL 1750418 (F.C.C.) at ¶ 27; Teletronics, Inc., 2005
WL 1750420 (F.C.C.) at ¶ 31.
68 See 47 U.S.C. § 254(d).
69 See Globcom, Inc., 18 FCC Rcd at 19903-19904, ¶¶ 25-27. See
also Carrera Communications, Inc., 2005 WL 1750417 (F.C.C.) at ¶
26; InPhonic, Inc., 2005 WL 1750418 (F.C.C.) at ¶ 28; Telecom
Mgmt., Inc., 2005 WL 1949643 (F.C.C.) at ¶ 17; Teletronics, Inc.,
2005 WL 1750420 (F.C.C.) at ¶ 32.
70 See, e.g., Globcom, Inc., 18 FCC Rcd at 19903-19904, ¶¶ 25-27.
See also Carrera Communications, Inc., 2005 WL 1750417 (F.C.C.)
at ¶ 27; InPhonic, Inc., 2005 WL 1750418 (F.C.C.) at ¶ 29; OCMC,
Inc., 2005 WL 1949644 (F.C.C.) at Telecom Mgmt., Inc., 2005 WL
1949643 (F.C.C.) at ¶ 18; Telectronics, Inc., 2005 WL 1750420
(F.C.C.) at ¶ 32.
71 See, e.g,, Carrera Communications, Inc., 2005 WL 1750417
(F.C.C.) at ¶ 27; Telectronics, Inc., 2005 WL 1750420 (F.C.C.) at
¶ 33.
72 Forfeiture Policy Statement, 12 FCC Rcd at 17099; see also 47
C.F.R. § 1.80(b)(4).
73 47 C.F.R. § 64.1195.
74 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).
75 47 C.F.R. § 1.1910.
76 47 U.S.C. § 503(b).
77 47 C.F.R. § 1.80.
78 See 47 C.F.R. § 1.80(f)(3).
79 47 U.S.C. §§ 4(i), 219(b), and 254(d).
80 47 C.F.R. §§ 54.706(a) and 54.711(a).
81 See 47 C.F.R. § 1.1914.