Cable and phone company trade groups have teamed up to call a foul on the FCC for what they said was deciding to triple the damages for violating federal program payment rules (for Universal Service Fund and other fees), a move they say came without notice in violation of the Administrative Procedures Act. They call the move to a flat treble damages approach a one-size-fits-all model with potentially draconian results.
The APA requires the FCC to give regulated entities notice about substantive changes. The groups argue the change (discussed in this FCC document) was substantive and that notice was not provided.
USTelecom, CTIA, NCTA and CompTel have filed a joint petition asking the FCC to stay its decision and reconsider its policy statement, according to USTelecom, which blogged about the petition Friday. "Not only was proper notice and comment not observed, the treble damages methodology is “arbitrary and capricious” and appears aimed at driving increased forfeiture amounts without taking into account the [requisite] range of factors," USTelecom said.
They also argue the new policy appears to ignore the one-year statute of limitations.
Billing it as part of its ongoing process-reform effort, the FCC said in a Feb. 3 policy statement that it was replacing current, cumbersome methodologies for calculating forfeitures for violations with a treble damages methodology it billed as a more "straight-forward" basis for fines and a way to resolve investigations more quickly and thereby promote increased compliance with the federal program payment rules.
The monies at issue involve the Universal Service Fund, Telecommunications Relay Service Fund, local number portability (LNP), North American Numbering Plan and regulatory fees.
Previously, the commission had assessed fines based on "the number of monthly bills that remain unpaid within the one-year statute of limitations; and for USF and TRS payment violations, we have added 50 percent of the highest debts owed by delinquent companies for these programs, taking into account the timing of assessments, payments, collection transfers and reversals, and installment plan activities. To determine a delinquent contributor’s forfeiture liability."
The FCC said that is a time- and resource-consuming method, with staff having to engage in a "resource-intensive process similar to forensic accounting, gathering and analyzing large amounts of data that are difficult to track, and usually involve multiple entities over multiple years."
Now, it says, the forfeiture will simply be three times what it owes in fees and contribution. "By assessing forfeitures on this basis, we anticipate that we will be able to resolve payment investigations more quickly, which will lead to swifter penalties for delinquent contributors, and to perform significantly more investigations, resulting in increased compliance with the payment requirements."
The smarter way to stay on top of broadcasting and cable industry. Sign up below.
Thank you for signing up to Broadcasting & Cable. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.