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

Due to the 1 year statute of limitations for proposed fines against common carriers, the release of a Notice of Apparent Liability for failing to file CPNI certifications has become an annual late-February event.  This year's order, released late on Friday, proposes fines against 10 entities for failing to file the CPNI certification due on March 1, 2010.  Despite what has been a roller coaster in CPNI fines and in CPNI settlements, the Order proposes a $25,000 fine for failing to file the certification (the same amount proposed last year).  Moreover, each of the 10 entities was accused of failing to respond to the Enforcement Bureau's Letter of Inquiry, resulting in an additional proposed fine of $4,000.

For those who have not yet filed their 2011 certifications, today is the last day.

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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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In February 2009, the FCC proposed $20,000 fines against 600 carriers for failing to file their annual CPNI certifications.   The problem with issuing 600 fines of $20,000 each?  The FCC actually has to issue orders in all 600 cases.  That process has turned into a bureaucratic quagmire, but -- finally -- there are signs that the FCC is making progress toward resolving the cases.

The Commission got off to a good start:  In the summer of 2009, it released 58 orders canceling forfeitures (based on proof that the entity either filed on time or was not required to file) or settling cases against, primarily, very small telcos.  After September 1, 2009, however, the FCC did not release another order resolving the Omnibus CPNI forfeitures for almost a year. 

Beginning in June of this year, the pace picked up again.  Since June 11, the FCC has issued over 40 orders resolving the Omnibus CPNI NALs.  One order canceled 15 NALs, again because the entities provided sufficient proof of timely filing.  The rest have been settlements of the NALs.  They follow essentially the same form:  (1) the carrier agrees to implement a Compliance Plan; (2) for two years, the carrier agrees to provide a copy of its CPNI certifications to the Enforcement Bureau; and (3) the carrier pays a small settlement amount.  Thus far, the settlements have ranged from a few hundred dollars to a few thousand dollars -- far below the $20,000 proposed.

By my count, the FCC has resolved about 110 cases.  It has just under 500 left to go.

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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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On February 24, the FCC announced its first major CPNI enforcement actions since the new CPNI rules went into effect in April 2007. In an Omnibus CPNI NAL, the Enforcement Bureau proposed fines of $20,000 each against over 600 telecommunications carriers that failed to file their annual CPNI certifications on time. Knowledgeable staffers tell us that the 600 carriers include those who filed certifications significantly after the deadline as well as those who never filed the 2008 certification. The respondents have 30 days to respond to the NAL.

The Bureau also released over a dozen smaller NALs for various deficiencies in carrier certifications. The deficiencies were hyper-technical: failures to state whether actions were taken against pretexters or failures to state whether the carrier received any CPNI complaints.

Update: It appears that a number of late-filers received citations instead of fines. Some have all the luck.

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