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Federal Communications Commission
Washington, D.C. 20554
In the Matter of ) File No. EB 00-IH-0053
America's Tele-Network Corp. ) NAL/Acct. No. x32080024
Adopted: November 30, 2000 Released: December
By the Commission:
1. In this Forfeiture Order, we find that America's
Tele-Network Corp. (``ATNC'') has violated section 254(d) of
the Communications Act of 1934, as amended (the
``Communications Act'' or the ``Act''), and section 54.706
of the Commission's rules by willfully and repeatedly
failing to make required contributions to universal service
support programs.1 Based on our review of the facts and
circumstances of this case and after considering ATNC's
response to our Notice of Apparent Liability (``NAL'') in
this matter,2 we conclude that ATNC is liable for a
forfeiture in the amount of one hundred fifty-four thousand
2. In the NAL, we briefly described the universal
service program, including the mechanisms established by the
Commission in response to Congress' 1996 amendments to the
Communications Act creating the universal service program.
In particular, section 254 of the Act requires that:
Every telecommunications carrier that provides
interstate telecommunications services shall
contribute, on an equitable and nondiscriminatory
basis, to the specific, predictable, and
sufficient mechanisms established by the
Commission to preserve and advance universal
In implementing section 254, the Commission authorized the
Universal Service Administrative Company (``USAC'') to
administer universal service support mechanisms and to
perform billing and collection functions.4 The Commission
gave USAC the authority to bill carriers monthly, starting
in February 1998, for their contributions.5
3. In accordance with its authority, USAC began
billing ATNC in February 1998. Notwithstanding its receipt
of monthly bills and despite repeated contacts from USAC,
ATNC failed to submit any of its required contributions
through 1999. In February 2000, the Enforcement Bureau sent
a letter to ATNC explaining that it was the subject of a
potential enforcement action.6 In its response to the
Bureau's letter, ATNC stated that it had withheld payments
based on its belief that ``universal service support
programs and contribution assessments are unconstitutional
and invalid,'' ``notwithstanding the decision of the Fifth
Circuit Court of Appeals in Texas Office of Public Utility
Counsel v. FCC.''7 Nevertheless, ATNC stated that it sought
``to evaluate the potential of a settlement,'' which would
result in payment of current invoices and retirement of
``verified'' arrearages over a 24-month period.8 In
responding to a staff inquiry,9 ATNC subsequently stated
that it did not pay its universal service contributions
because its customers failed to pay line item charges for
universal service.10 Finally, in response to a further
staff inquiry in May 2000,11 ATNC explained its billing
arrangements and reiterated its belief that its customers
did not pay universal service charges. Nonetheless, ATNC
acknowledged that it regularly received from its billing
agent approximately 63 percent of the amounts billed to
customers and that the billed amounts included universal
4. In May 2000, ATNC began making universal service
contributions. As of July 18, 2000, ATNC had paid more than
$320,000 to USAC. Accounting for those payments, ATNC still
owed more than $1 million as of the July 2000 invoice. ATNC
has made no contributions toward universal service since
5. We concluded in the NAL that ATNC had apparently
violated the Act and our rules by willfully and repeatedly
failing to pay universal service contributions. We further
concluded that ATNC's apparent violations were both
egregious and intentional. Consequently, the proposed
forfeiture contained an upward adjustment.13
6. In its response to the NAL, ATNC challenges the
NAL's upward adjustment of the proposed forfeiture. ATNC
claims that the NAL mischaracterized its arguments
concerning the constitutionality of the universal service
program and erroneously found that that it had ``shifted''
its defense to justify its failure to pay. ATNC further
disputes the NAL's finding that it had received
``substantial'' income from its billing agent and failed to
make a commitment to pay arrearages. Finally, ATNC contends
that imposing an upward adjustment is inconsistent with
Commission precedent. In this regard, ATNC believes it is
being treated more harshly than similarly situated carriers.
7. In determining the amount of a forfeiture penalty,
we take into account ``the nature, circumstances, extent,
and gravity of the violation and, with respect to the
violator, the degree of culpability, any history of prior
offenses, ability to pay, and such other matters as justice
may require.''14 The NAL proposed a forfeiture of $154,000
based on three components. First, consistent with
Commission precedent, we assessed a base figure of $40,000
as a general penalty of $20,000 for each of the two
violations at issue. Second, we added to the base amount of
$40,000 an amount equal to one-half of the contributions due
for the months of November and December 1999, or $62,671.15
Finally, we applied an upward adjustment of nearly 50% of
the sum of the first two components, or $51,329, to account
for the apparent egregious and intentional nature of the
8. After considering ATNC's arguments, we decline to
reduce or eliminate the upward adjustment. ATNC does not
dispute that for more than two years, it paid nothing into
the universal service fund. In response to the Bureau's
February 2000 letter, ATNC clearly stated that it withheld
payments due to its belief that the universal service
program was unconstitutional, notwithstanding a contrary
finding by the U.S. Court of Appeals for the Fifth
Circuit.16 ATNC then argued that its failure to pay
resulted from a notice appearing on local exchange carrier
(``LEC'') bills stating that nonpayment of long distance
charges would not result in interruption of local service,
and encouraging customers either to withhold or seek refunds
of universal service charges. In this regard, we note that
a customer's failure to pay does not excuse a carrier from
contributing to universal service. The Commission's rules
permit carriers to pass through all or part of their
universal service contributions to their end-users in
customer bills. However, the statutory requirement to
contribute is not dependent on a carrier's ability
successfully to do so.17 While some customers may have
withheld payments or sought refunds, the fact is that ATNC
regularly received from its billing agent approximately 63%
of the total amount billed to customers, including line item
charges for universal service.
9. Although ATNC stated in its February 2000 letter
that it sought ``to evaluate the potential of a
settlement,'' ATNC has made no commitment of any kind to
USAC to pay off its arrearage within a specified timeframe.
In this regard, although ATNC has paid more than $436,000
toward universal service to date, its total indebtedness
according to USAC still stands at more than $1,000,000.
Further, since July 2000, ATNC has made no contributions
toward universal service.
10. We disagree that imposing an upward adjustment is
inconsistent with Commission precedent or results in harsher
treatment for ATNC than that meted out to similarly situated
carriers. In both Intellicall Operator Services18 and
Matrix Telecom, Inc.,19 the Commission applied a downward
adjustment after finding that each carrier had made efforts
to satisfy its universal service obligation prior to receipt
of a letter from the Enforcement Bureau, and had committed
to pay off its indebtedness by a date certain. In North
American Telephone Network, L.L.C.,20 the Enforcement Bureau
proposed a forfeiture that contained neither an upward nor a
downward adjustment after finding that the carrier had made
a few payments before notification of potential enforcement
action. By contrast, ATNC made no payments prior to the
Enforcement Bureau's letter, and still has never committed
to pay off its arrearage within a specified timeframe.
IV. ORDERING CLAUSES
11. Accordingly, IT IS ORDERED THAT, pursuant to
section 503(b) of the Act,21 and section 1.80(f)(4) of the
Commission's rules,22 America's Tele-Network Corp. is LIABLE
FOR A FORFEITURE in the amount of one hundred fifty-four
thousand dollars ($154,000) for willfully and repeatedly
violating section 254 of the Act,23 and section 54.706 of
the Commission's rules.24
12. Payment of the forfeiture shall be made in the
manner provided for in section 1.80 of the Commission's
rules,25 within thirty days of the release of this
Forfeiture Order. If the forfeiture is not paid within the
period specified, the case may be referred to the Department
of Justice for collection pursuant to section 504(a) of the
Act.26 America's Tele-Network Corp. may pay the forfeiture
by mailing a check or money order, payable to the order of
the Federal Communications Commission, to the Forfeiture
Collection Section, Finance Branch, Federal Communications
Commission, P.O. Box 73482, Chicago, Illinois 60673-7482.
The payment should note the NAL/Acct. No. referenced above.
A request for payment of the full amount of this Forfeiture
Order under an installment plan should be sent to: Chief,
Credit and Debt Management Center, 445 12th Street, S.W.,
Washington, D.C. 20554.27
13. IT IS FURTHER ORDERED THAT a copy of this
Forfeiture Order shall be sent by Certified Mail Return
Receipt Requested to America's Tele-Network Corp. in care of
Charles H. Helein, Esq., The Helein Law Group, P.C., 8180
Greensboro Drive, Suite 700, McLean, Virginia 22102, and to
720 Hembree Place, Roswell, Georgia 30076, attention: John
FEDERAL COMMUNICATIONS COMMISSION
Magalie Roman Salas
1 47 U.S.C. § 254(d); 47 C.F.R. § 54.706.
2 America's Tele-Network Corp., Notice of Apparent
Liability for Forfeiture, FCC 00-276 (released August 1,
3 47 U.S.C. § 254(d).
4 See Amendment of Parts 54 and 69 - Changes to Board of
NECA, Inc., 12 FCC Rcd 18400, 18415 (1997) (``NECA Changes
Order''); 47 C.F.R. § 54.702(b).
5 See Amendment of Part 54 - Universal Service, 12 FCC Rcd
22423, 22425 (1997); 47 C.F.R. §§ 54.709(a)(4-5).
6 Letter from David H. Solomon, Chief, Enforcement Bureau,
to America's Tele-Network Corp. dated February 16, 2000
(``Bureau's February 2000 letter'').
7 Letter from Charles H. Helein, Esq., counsel for ATNC, to
James W. Shook, Investigations and Hearings Division,
Enforcement Bureau, dated February 25, 2000, citing Texas
Office of Public Utility Counsel v. FCC, 183 F.3d 393 (5th
Cir. 1999) (subsequent history omitted) (``ATNC February
2000 letter''). In that decision, the court, inter alia,
denied constitutional challenges to the universal service
8 ATNC February 2000 letter, supra note 7.
9 Letter from David H. Solomon, Chief, Enforcement Bureau,
to America's Tele-Network Corp. dated April 20, 2000.
10 Letter from John W. Little, President, ATNC, to Charles
W. Kelley, Chief, Investigations and Hearings Division,
Enforcement Bureau, dated April 28, 2000. In this regard,
we note that a customer's failure to pay universal service
line item charges has no bearing on a carrier's obligation
to contribute to universal service. See Federal-State Board
on Universal Service, 14 FCC Rcd 8030, 8038 (1999).
11 Letter from David H. Solomon, Chief, Enforcement Bureau,
to America's Tele-Network Corp. dated May 3, 2000.
12 Letter from Charles H. Helein, Esq., counsel for ATNC,
to Charles W. Kelley, Chief, Investigations and Hearings
Division, Enforcement Bureau, dated May 15, 2000.
13 See 47 C.F.R. § 1.80(b)(4). See also The Commission's
Forfeiture Policy Statement and Amendment of Section 1.80 of
the Rules to Incorporate the Forfeiture Guidelines, 12 FCC
Rcd 17087, 17100-01 (1997), recon. denied, 15 FCC Rcd 303
(1999) (``Forfeiture Guidelines'').
14 47 U.S.C. § 503(b)(2)(D). See also Forfeiture
Guidelines, 12 FCC Rcd at 17100-01.
15 For a more complete discussion of our system for
determining forfeitures for failures to contribute universal
service payments, see the NAL at ¶¶ 8 and 9 and the cases
16 We note that ATNC's failure to pay continued until May
2000, nearly ten months after the court rendered its
decision, and nearly three months after ATNC acknowledged
the court's decision.
17 See Federal-State Board on Universal Service, supra note
10, 14 FCC Rcd at 8038.
18 Intellicall Operator Services, Notice of Apparent
Liability for Forfeiture, 15 FCC Rcd 13539 (2000)
(subsequent history omitted).
19 Matrix Telecom, Inc., Notice of Apparent Liability for
Forfeiture, 15 FCC Rcd 13544 (2000).
20 North American Telephone Network, L.L.C., Notice of
Apparent Liability for Forfeiture, 15 FCC Rcd 14022 (Enf.
21 47 U.S.C. § 503.
22 47 C.F.R. § 1.80(f)(4).
23 47 U.S.C. § 254.
24 47 C.F.R. § 54.706.
25 47 C.F.R. § 1.80.
26 47 U.S.C. § 504(a).
27 See 47 C.F.R. § 1.1914.