Telecom Law Monitor : Washington D.C. Telecom Lawyer & Attorney : Kelley Drye & Warren Law Firm : New York, Chicago, Connecticut, New Jersey, Brussels

This order stands in stark contrast to the nominal CPNI settlements, odd refund provisions and low-ball forfeiture penalties we've discussed in this blog.  Today, the FCC announced an eye-popping $25 million settlement with Verizon Wireless in its investigation of Verizon's unauthorized billing of wireless data charges.  The so-called "mystery fees" investigation stemmed from allegations that Verizon Wireless was charging customers $1.99 per megabyte usage charges for data sessions that consumers did not initiate or were not aware of.  According to the FCC, many of the charges were caused by mobile applications accessing the Internet, third party-initiated data transfers and failures of Verizon's Internet access and billing.  The FCC boasts that this is its largest-ever settlement and consumer refund action. 

A few weeks ago, Verizon announced $50 million in customer credits related to the "mystery fee" charges.  At the time, the FCC confirmed it was investigating, but it withheld its powder about its own enforcement action.  Today, the FCC announced a settlement and the $25 million "voluntary payment" by Verizon Wireless.  Click here for the press release and text of the consent decree. 

The FCC highlighted the following provisions in its press release:

• $25 million voluntary contribution to the federal treasury;
• minimum $52 million in consumer refunds;
• cessation of billing for "unauthorized charges";
• revised consumer disclosures and a "data block" service option.

In addition, the consent decree contains training and compliance monitoring provisions over two years. 

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What are the ramifications of the FCC's refusal to classify interconnected VoIP?  For one, it complicates the job of the FCC's Enforcement Bureau.  As a recent Citation to Vantage Communications shows, the failure to classify interconnected VoIP as either telecom or non-telecom has allowed interconnected VoIP providers to get one "free violation" before the FCC imposes fines for violations of the Act or FCC rules.

In Vantage Communications, the Enforcement Bureau found that Vantage failed to provide 911 calling capability to at least three customers.  This is a clear violation of Section 9.5(b) of the FCC rules, which requires interconnected VoIP providers, "as a condition to providing service to a consumer," to provide E911 calling capability.  The FCC issued a Citation to Vantage -- a warning -- and stated that future violations could subject it to fines or other enforcement action.  So why does Vantage get a warning when other telecommunications carriers would get fined?  Keep reading to learn why.

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In a recent USF appeal, the FCC agreed with a prepaid card "platform provider" that each of its customers, not the platform provider, is the "carrier" for Universal Service purposes.  The FCC ruled, however, that the platform provider may owe USF on transport services it provided, unless it properly qualified the customers as resellers under the USF rules.  The case, Network Enhanced Telecom LLP, is discussed after the jump.

Prepaid card providers should take note.  This decision carries implications for all "carrier" responsibilities, including 214 authorizations, tariffing, CPNI obligations and responsibility for marketing claims, not just for USF contributions.

Wholesale carriers and resellers also should take note.  This represents the first time since Global Crossing that the FCC has addressed the obligations of wholesale carriers to qualify their resellers -- a persistent point of contention in USF auditing and reporting. 

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As we noted, the FCC is working its way through the 600+ proposed fines included in the Omnibus CPNI NAL.  Virtually every day, the Enforcement Bureau releases a handful of consent decrees resolving several proposed fines.  This one contained an unusual feature, and therefore, caught our eye.

On October 5, the Bureau settled two investigations of Global Information Technologies.  One investigation involved the failure to file a CPNI certification, for which GIT received a $20,000 proposed fine.  The other investigation involved whether GIT overcharged customers for the USF owed as a result of the services they received.  (FCC rules prohibit carriers from collecting more than the contribution factor times the end user's interstate telecom revenues). 

In this Consent Decree, GIT agrees to a $23,500 voluntary contribution to resolve the investigations. They get to pay it over 24 months (less than $1,000 per month).  In addition, however, GIT agreed to notify the customers it may have overcharged for USF contributions.  If GIT refunds the USF overcharges to any of the customers, it gets to deduct that amount from its voluntary contribution to the FCC.  In other words, GIT must pay its customers or the FCC, but not both.  In our experience, that is the first time the FCC has agreed to a provision like that.

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