International Carrier Settles Transfer of Control Violations with FCC

Posted on December 12, 2011 by Steve Augustino

 On December 7, the FCC adopted a consent decree with an international carrier resolving several alleged transfers of FCC authorizations without prior approval.  This marks the latest in a series of enforcement actions in the area of ownership violations.  Many of these involve carriers providing foreign terminations.   The consent decree underscores the importance for all regulated carriers to monitor changes in ownership, even pro forma changes, and to seek prior FCC approval for the changes. 

The latest consent decree involves Tricom USA, Inc., a carrier that provided long distance international telecommunications primarily to resellers and other carriers.  Tricom held a domestic 214, an international 214 and submarine cable landing licenses in order to provide these services.  As explained in the consent decree, Tricom filed for Chapter 11 bankruptcy in 2008, leading to a reorganization of the carrier.  The carrier properly filed for approval to transfer its authorizations during the bankruptcy and following its expected transition from bankruptcy.  

However, upon emergence from bankruptcy, its largest shareholder received substantially more shares than initially anticipated, resulting in the shareholder holding a majority stake in the carrier, rather than a minority stake.  Further, this shareholder than transferred ownership in Tricom to a subsidiary of the shareholder, without seeking the FCC's approval to do so.  None of the violations appeared to be intentional, and all involved pro forma transfers of control of Tricom.

The Enforcement Bureau settled these proposed violations for a total payment of $20,000.  The adopting order and consent decree are provided in the attached links.
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FCC Proposes $100,000 Fine for Failure to Obtain a 214

Posted on June 4, 2009 by Steve Augustino

With the new chairman still awaiting Senate confirmation, it has been fairly quiet on the enforcement front the past few months. Yesterday was an exception, when the the FCC released an NAL proposing to fine a carrier $100,000 for failing to obtain a 214 from the FCC.  Although this order is significant, its timing most likely reflects the operation of the FCC's statute of limitations, rather than a revival of carrier enforcement activity. Absent a tolling agreement (which the Bureau apparently did not seek in this instance), the statute of limitations would have expired on June 18, one year after the carrier received its 214 in this instance. The Bureau thus had to release this order or lose the ability to fine the carrier for its action.

On the merits, the order is not surprising. The Enforcement Bureau proposed to fine a carrier $100,000 for initiating international service before obtaining FCC authorization pursuant to section 214 of the Communications Act. This marks the third time that the FCC has proposed a $100,000 forfeiture for failing to obtain a 214, indicating the FCC considers this the "base forfeiture" for such a violation.  However, the Bureau still has not explained why it is consistent with the statute to penalize a carrier $8,000 for an unauthorized transfer of control but 12 times that amount for the unauthorized operation of a carrier (which is like an unauthorized acquisition of a carrier). Until a carrier challenges the FCC's approach in court, we can expect to see more orders using the $100,000 base forfeiture for this type of violation.

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