**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | *  | File No. EB-05-IH-0189       |
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| Communication Services           | ** | NAL/Acct. No. 200632080004   |
| Integrated, Inc.                 |    |                              |
|                                  | *  | FRN No. 0012390167           |
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**NOTICE OF APPARENT LIABILITY**

**FOR FORFEITURE AND ORDER**

**Adopted: October 31, 2005** **Released: October 31, 2005**

By the Commission:

# 

# I. INTRODUCTION 

1.  In this *Notice of Apparent Liability for Forfeiture* ("*NAL*"), we
    find that a telecommunications provider, Communication Services
    Integrated, Inc. ("CSII"), operating since 2001 and at least
    indirectly benefiting from the federal programs supporting the
    telecommunications industry since that time, apparently failed to
    meet its statutory and regulatory obligations relating to the
    universal service program. Based upon the facts and circumstances
    surrounding this matter we conclude that this carrier is apparently
    liable for a total forfeiture of \$462,638.

2.  We specifically find that CSII has apparently violated section
    64.1195 of the Commission's rules by willfully and repeatedly
    failing to register with the Commission until February 2005.[^1] We
    also find that CSII has apparently violated section 54.711(a) of the
    Commission's rules by failing to submit certain Telecommunications
    Reporting Worksheets ("Worksheets") from 2002 to 2005.[^2] Finally,
    we find that CSII has apparently violated section 254(d) of the
    Communications Act of 1934, as amended (the "Act"),[^3] and section
    54.706(a) of the Commission's rules by willfully and repeatedly
    failing to contribute to the Universal Service Fund ("USF").[^4]

3.  We are resolved to ensure a level playing field for all companies
    that are required to contribute to the maintenance of
    Congressionally mandated programs, including the federal universal
    service program. The failure of a carrier to fulfill its obligation
    to contribute to these programs has a direct and significant
    detrimental impact on the programs and on other industry
    participants because that failure removes from the base of
    contributions telecommunications revenues that otherwise should be
    included, thereby forcing other telecommunications carriers to
    shoulder additional costs associated with the programs. Thus, this
    *NAL* and others like it represent one element in a comprehensive
    approach to improving the efficacy and fairness of the universal
    service program as well as reducing waste, fraud and abuse in the
    program.

4.  We order CSII to file with the Universal Service Administrative
    Company ("USAC") within thirty days all annual Telecommunications
    Reporting Worksheets required under the Commission's rules from the
    date that CSII commenced providing telecommunications services in
    the United States to the date of this *NAL*.[^5]

# II. BACKGROUND

5.  The Commission is charged by Congress with regulating interstate and
    international telecommunications and ensuring that providers of such
    telecommunications comply with the requirements imposed on them by
    the Act and our rules.[^6] The Commission also has been charged by
    Congress to establish, administer and maintain various
    telecommunications regulatory programs, and to fund these programs
    through assessments on the telecommunications providers that benefit
    from them. To accomplish these goals, the Commission established "a
    central repository of key facts about carriers" through which it
    could monitor the entry and operation of interstate
    telecommunications providers to ensure, among other things, that
    they are qualified, do not engage in fraud, and do not evade
    oversight.[^7] Commission rules require that, upon entry or
    anticipated entry into interstate telecommunications markets,
    telecommunications carriers register by submitting information on
    FCC Form 499-A, also known as the annual Telecommunications
    Reporting Worksheet.[^8] The Commission also requires
    telecommunications providers to submit financial information on
    annual and, with some exceptions not applicable to CSII since
    2003,[^9] quarterly short-form Worksheets to enable the Commission
    to determine and collect the statutorily mandated program
    assessments.[^10]

6.  The Telecommunications Act of 1996 codified Congress' historical
    commitment to promote universal service to ensure that consumers in
    all regions of the nation have access to affordable, quality
    telecommunications services.[^11] In particular, section 254(d) of
    the Act requires, among other things, that "\[e\]very
    telecommunications carrier \[providing\] interstate
    telecommunications services . . . contribute, on an equitable and
    nondiscriminatory basis, to the specific, predictable, and
    sufficient mechanisms established by the Commission to preserve and
    advance universal service."[^12] In implementing this Congressional
    mandate, the Commission directed all telecommunications carriers
    providing interstate telecommunications services and certain other
    providers of interstate telecommunications to contribute to the
    Universal Service Fund based upon their interstate and international
    end-user telecommunications revenues.[^13] Failure by some providers
    to pay their share into the USF skews the playing field by providing
    non-paying providers an economic advantage over their competitors
    who must shoulder more than their fair share of the costs of the
    Fund.

7.  The Commission has established specific procedures to administer the
    universal service program. A carrier must file Worksheets for the
    purpose of determining its USF payments.[^14] These periodic filings
    trigger a determination of liability, if any, and subsequent billing
    and collection by USAC. USAC uses the revenue projections submitted
    on the quarterly filings to determine each carrier's universal
    service contribution amount.[^15] Carriers are required to pay their
    monthly USF contribution by the date shown on their invoice.[^16]
    The Commission's rules explicitly warn contributors that failure to
    file their forms or submit their payments potentially subjects them
    to enforcement action.[^17] Further, under the Commission's "red
    light rule," action will be withheld on any application to the
    Commission or request for authorization made by any entity that has
    failed to pay when due its regulatory program payments, such as USF
    contributions, and if payment or payment arrangements are not made
    within 30 days from notice to the applicant, such applications or
    requests will be dismissed.[^18]

8.  CSII is a Georgia-based telecommunications carrier that began
    providing interstate telecommunications service in the United States
    in 2001.[^19] In 2004, the Enforcement Bureau ("Bureau") audit staff
    sought to identify resellers of telecommunications service that
    failed to register as telecommunications service providers with the
    Commission, and thus may also have failed to satisfy various
    Commission program requirements.[^20] In order to identify such
    resellers, the Bureau audit staff compared lists of resellers
    provided by wholesale service providers against the Commission's
    central repository of registered telecommunications service
    providers with filer identification numbers. If a reseller did not
    appear to have an identification number, the audit staff sent an
    inquiry to that reseller. On March 30 and June 18, 2004, the
    Bureau's audit staff sent letters to CSII requesting information
    pertaining to CSII's compliance with section 64.1195 of the
    Commission's rules.[^21] On January 5, 2005, CSII sent an e-mail to
    Bureau audit staff, claiming that the carrier was "under the
    impression" it was *de minimis*.[^22] In response, Bureau audit
    staff informed CSII that the carrier was nonetheless required to
    register with the Commission.[^23] Shortly thereafter, on February
    23, 2005, several years after it began providing service and more
    than 10 months after the Bureau sent CSII its first letter, CSII
    registered pursuant to section 64.1195 of the Commission's
    rules[^24] and untimely filed its 2004 annual Worksheet (reporting
    2003 revenues).

9.  On March 10, 2005, the Bureau issued a letter of inquiry ("LOI") to
    CSII.[^25] The LOI directed CSII, among other things, to submit a
    sworn written response to a series of questions relating to CSII's
    apparent failure to register and file Telecommunications Reporting
    Worksheets in a timely manner and to make mandated federal
    telecommunications regulatory program payments. CSII responded to
    the LOI on March 28, 2005[^26] and provided supplemental revenue
    information on March 30, 2005.[^27]

10. Subsequently, on April 30 and July 27, 2005, CSII timely-filed its
    2005 annual Worksheet (reporting 2004 actual revenues) and its
    quarterly Worksheet due on August 1, 2005 (reporting projected
    revenues to calculate monthly assessments for the fourth quarter
    2005). Notwithstanding its e-mail to the Bureau claiming it was *de
    minimis*, CSII projected interstate and international
    telecommunications revenues for the fourth quarter of 2005 alone
    that surpassed the *de minimis* threshold for all of 2005. CSII
    still failed to file annual Worksheets due in the years 2002 and
    2003, and quarterly Worksheets due November 1, 2004, February 1,
    2005, and May 1, 2005. In July 2005, USAC sent CSII an invoice for
    \$10,359 reflecting one-third of the debt owed for the limited
    period that CSII reported, which CSII timely paid.

# III. DISCUSSION

11. Under section 503(b)(1)(B) of the Act, any person who is determined
    by the Commission to have willfully or repeatedly failed to comply
    with any provision of the Act or any rule, regulation, or order
    issued by the Commission shall be liable to the United States for a
    forfeiture penalty.[^28] Section 312(f)(1) of the Act defines
    willful as "the conscious and deliberate commission or omission of
    \[any\] act, irrespective of any intent to violate" the law.[^29]
    The legislative history to section 312(f)(1) of the Act clarifies
    that this definition of willful applies to both sections 312 and
    503(b) of the Act,[^30] and the Commission has so interpreted the
    term in the section 503(b) context.[^31] The Commission may also
    assess a forfeiture for violations that are merely repeated, and not
    willful.[^32] "Repeated" means that the act was committed or omitted
    more than once, or lasts more than one day.[^33] To impose such a
    forfeiture penalty, the Commission must issue a notice of apparent
    liability and the person against whom the notice has been issued
    must have an opportunity to show, in writing, why no such forfeiture
    penalty should be imposed.[^34] The Commission will then issue a
    forfeiture if it finds by a preponderance of the evidence that the
    person has violated the Act or a Commission rule.[^35] As set forth
    below, we conclude under this standard that CSII is apparently
    liable for a forfeiture for its apparent willful and repeated
    violations of section 254(d) of the Act[^36] and sections 54.706(a),
    54.711(a), and 64.1195 of the Commission's rules.[^37]

12. The fundamental issues in this case are whether CSII apparently
    violated the Act and the Commission's rules by: (1) willfully or
    repeatedly failing to register pursuant to section 64.1195 of the
    Commission's rules;[^38] (2) willfully or repeatedly failing to file
    Telecommunications Reporting Worksheets; and (3) willfully or
    repeatedly failing to make requisite contributions toward the
    Universal Service Fund. We answer these questions affirmatively.
    Based on a preponderance of the evidence, we conclude that CSII is
    apparently liable for a forfeiture of \$462,638 for apparently
    willfully and repeatedly violating section 254(d) of the Act,[^39]
    and sections 54.706(a), 54.711(a), and 64.1195 of the Commission's
    rules.[^40]

13. Specifically, we propose the following forfeitures for apparent
    violations within the last year: (1) \$100,000 for failure to
    register pursuant to section 64.1195 of the Commission's
    rules;[^41] (2) \$150,000 for failure to file three
    Telecommunications Reporting Worksheets; and (3) \$212,638 for
    failure to make nine monthly USF contributions on a timely basis.
    Although we propose forfeitures only for apparent violations within
    the last year, we discuss below CSII's noncompliance in prior years
    to demonstrate the scope of CSII's misconduct and provide context to
    the misconduct that is within the statute of limitations period.

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A.  **Registration with the Commission**

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14. We conclude that CSII has apparently violated section 64.1195(a) of
    the Commission's rules by failing to register with the Commission
    from 2001 until February 23, 2005.[^42] CSII's failure to register
    constitutes a clear violation of a vital Commission rule. Section
    64.1195(a) of the Commission's rules unambiguously requires that all
    carriers that provide, or plan to provide, interstate
    telecommunications services register with the Commission by
    submitting specified information.[^43] Although CSII has been
    providing interstate telecommunications services since 2001, it
    failed to register in accordance with section 64.1195(a) until
    February 23, 2005, many months after the Bureau sent CSII the Audit
    Letters. As a result of its misconduct, CSII operated for over three
    years without participation in any of the programs tied to
    registration. As an interstate telecommunications carrier, CSII had
    a clear and affirmative duty to apprise itself of, and satisfy, its
    federal obligations.[^44]

15. We view CSII's apparent failure to register for over three years as
    a serious dereliction of its responsibilities under the Act and our
    rules. A carrier's compliance with the Commission's registration
    requirement is critical to the administration of the USF and TRS
    programs, and to fulfilling Congress' objectives in sections 254(d)
    and 225(b)(1) of the Act. As we noted above, a carrier's duty to
    register upon entry, or anticipated entry, into interstate
    telecommunications markets is essential to the fulfillment of the
    USF, TRS, and other regulatory program missions because it
    identifies the company to the various program administrators and
    brings the carrier within the purview and oversight of those
    administrators. If a carrier never identifies itself as a
    telecommunications provider by properly registering under the
    Commission's rules, then neither the Commission nor the various
    program administrators can ascertain whether that carrier has
    fulfilled other regulatory obligations, including the requirement
    that carriers file Worksheets and contribute to USF, TRS, and other
    regulatory programs. Moreover, the program administrators have no
    basis upon which to invoice the carrier for contributions. A
    telecommunications carrier that fails to register thus can operate
    outside of the Commission's oversight and evade its federal
    obligations to contribute toward the vital programs linked to
    registration.

16. The impact of a carrier's failure to register is no less severe
    where, as here, that carrier ultimately registers with the
    Commission. Although CSII registered on February 23, 2005, and has
    apparently filed some of the required Worksheets in the last few
    months, CSII delayed its registration for an extended period of time
    and took no action until long after receiving letters from the
    Bureau.[^45] The Commission has repeatedly stated that
    post-investigation corrective measures to address a violation do not
    eliminate a licensee's responsibility for the period during which
    the violation occurred.[^46] Based on a preponderance of the
    evidence, therefore, we find that CSII apparently has violated
    section 64.1195(a) of the Commission's rules by willfully and
    repeatedly failing to register from 2001 until February 23,
    2005.[^47]

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B.  **Submission of Telecommunications Reporting Worksheets**

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17. We also conclude that CSII apparently has violated section 54.711(a)
    of the Commission's rules by willfully and repeatedly failing to
    file certain Telecommunications Reporting Worksheets on a timely
    basis from 2002 through February 2005. Section 54.711(a) of the
    Commission's rules clearly establishes a carrier's obligation to
    file periodic Telecommunications Reporting Worksheets.[^48] A
    carrier's failure to file these Worksheets as required has serious
    implications for the USF. As discussed above, the filing of a
    Telecommunications Reporting Worksheet prompts a determination of
    liability for, and subsequent billing and collection of, payments by
    the administrators of the Universal Service contributions. The
    failure of a carrier such as CSII to abide by its federal filing
    obligation has a direct and profound detrimental impact by removing
    from the base of USF contributions telecommunications revenues that
    otherwise should be included, thereby shifting to compliant carriers
    additional economic burdens associated with the federal universal
    service program.[^49] Consequently, a carrier's failure to file
    required Worksheets frustrates the very purpose for which Congress
    enacted section 254(d) -- to ensure that every interstate carrier
    "contribute, on an equitable and nondiscriminatory basis, to the
    specific, predictable, and sufficient mechanisms established by the
    Commission to preserve and advance universal service."[^50] Viewed
    in this context, the Telecommunications Reporting Worksheet is not
    only an administrative tool, but also a fundamental and critical
    component of the Commission's Universal Service program.

18. CSII had repeatedly failed to comply with its filing obligation
    prior to the Bureau's investigation. Although CSII has been
    providing telecommunication services since 2001, it had not filed
    annual Worksheets in 2002 or 2003, and filed its 2004 annual
    Worksheet almost one year late. While it did file its 2005 annual
    Worksheet on time, it did so only after the Bureau's inquiries.
    Moreover, even within the past year, CSII failed to file the
    quarterly Worksheets due November 1, 2004, and February 1 and May 1,
    2005.

19. Based on a preponderance of the evidence, we find that CSII
    apparently has violated section 254 of the Act[^51] and section
    54.711 of the Commission's rules[^52] by willfully and repeatedly
    failing to timely file required information with the Commission on
    multiple occasions since 2002, including its failure to make three
    quarterly Worksheet filings within the last year. We therefore
    propose a forfeiture for CSII's failure to file the quarterly
    Worksheets due November 1, 2004, and February 1 and May 1, 2005.

    **C. Universal Service Contributions**

20. We further conclude that CSII apparently violated section 254(d) of
    the Act and section 54.706 of the Commission's rules by willfully
    and repeatedly failing to contribute to universal service support
    mechanisms.[^53] Section 54.706(c) of the Commission's rules
    unambiguously directs that "entities \[providing\] interstate
    telecommunications to the public . . . for a fee . . . contribute to
    the universal service support programs."[^54] Since 2003, CSII was
    required, pursuant to section 54.706(b) of the Commission's rules,
    to contribute to universal service mechanisms based upon either its
    historical or projected revenues.[^55] Despite this requirement,
    CSII made no universal service contributions until August 8,
    2005.[^56] As we previously have stated,

    \[c\]arrier nonpayment of universal service contributions undermines
    the efficiency and effectiveness of the universal service support
    mechanisms. Moreover, delinquent carriers may obtain a competitive
    advantage over carriers complying with the Act and our rules. We
    consider universal service nonpayment to be a serious threat to a
    key goal of Congress and one of the Commission's primary
    responsibilities.[^57]

    Based on a preponderance of the evidence, we find that CSII
    apparently has violated sections 254(d) of the Act and 54.706 of the
    Commission's rules by willfully and repeatedly failing to make its
    monthly universal service contribution payments since 2003,
    including nine such failures within the past year, *i.e.*, the
    payments due November 15 and December 15, 2004, and January 14,
    February 15, March 15, April 15, May 13, June 15, and July 15, 2005.

    **D. Proposed Forfeiture**

21. Section 503(b)(1)(B) of the Act provides that any person that
    willfully or repeatedly fails to comply with any provision of the
    Act or any rule, regulation, or order issued by the Commission,
    shall be liable to the United States for a forfeiture penalty.[^58]
    Section 503(b)(2)(B) of the Act authorizes the Commission to assess
    a forfeiture of up to \$130,000 for each violation or each day of a
    continuing violation, up to a statutory maximum of \$1.325 million
    for a single act or failure to act.[^59] In determining the
    appropriate forfeiture amount, we consider the factors enumerated in
    section 503(b)(2)(D) of the Act, including "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."[^60]

22. Under section 503(b)(6) of the Act, we may only propose forfeitures
    for apparent violations that occurred within one year of the date of
    this *NAL*.[^61] Nevertheless, section 503(b) does not bar us from
    assessing whether CSII's conduct prior to that time period
    apparently violated the Act or our rules in determining the
    appropriate forfeiture amount for those violations within the
    statute of limitations.[^62] Therefore, although we find that CSII
    apparently violated the Act and our rules for over three years, we
    propose forfeitures here only for violations that occurred within
    the last year.

23. This case involves a carrier's failure both to register and submit
    any Telecommunications Reporting Worksheets from the time it
    commenced providing telecommunications services until after it
    received a letter from the Bureau[^63] -- in this case, a period of
    over three years. We find CSII's failure to discharge its federal
    reporting obligations to be particularly egregious. The registration
    and filing of Telecommunications Reporting Worksheets are
    fundamental to the implementation of our central repository of
    carriers and to the administration of multiple statutorily derived
    programs -- including the USF. Where, as here, a carrier ignores its
    obligations by wholly failing to register -- thereby affecting the
    time and manner in which these important federal programs are funded
    -- it undermines the programs and thwarts the purposes for which
    Congress and the Commission established them.

24. Recently, we have held that a substantial forfeiture of \$100,000 is
    warranted for a carrier's failure to register with the
    Commission.[^64] We explained that "\[t\]his egregious behavior
    strikes at the core of our ability to implement and enforce the Act
    and our rules effectively, thus warranting a substantial
    forfeiture."[^65] A carrier that fails to register hampers
    "efficient and effective Commission enforcement by delaying
    detection of, and action against, its behavior . . . and imposes a
    substantial burden on the Commission, which can only identify such
    carriers through compliance review programs that require significant
    amounts of staff time and resources."[^66] CSII failed to register
    until February 23, 2005. Taking into account all of the factors
    enumerated in section 503(b)(2)(D) of the Act, we therefore conclude
    that a proposed forfeiture of \$100,000 is warranted.

25. Similarly, in the past, we have held that a substantial forfeiture
    of \$50,000 is warranted for a carrier's failure to file a
    Telecommunications Reporting Worksheet for revenue reporting
    purposes.[^67] We find that CSII's willful and repeated failure to
    file periodic Telecommunications Reporting Worksheets is egregious.
    As we noted above, a carrier's obligation to file these Worksheets
    is directly linked to, and thus has serious implications for,
    administration of the USF and other regulatory programs. By ignoring
    its reporting obligations, CSII has unilaterally shifted to
    compliant carriers and their customers the economic costs associated
    with the universal service and other regulatory programs. Therefore,
    we find that CSII is apparently liable for a \$150,000 forfeiture
    for its failure to file three Worksheets within the last year. As
    discussed above, CSII failed to file three quarterly Worksheets due
    November 1, 2004 and February 1 and May 1, 2005.

26. Based on the facts above, it also appears that CSII has failed to
    make the requisite contributions into the Universal Service Fund for
    a period of over two years. Nonpayment of universal service
    contributions is an egregious offense that bestows on delinquent
    carriers an unfair competitive advantage by shifting to compliant
    carriers the economic costs and burdens associated with universal
    service. A carrier's failure to make required universal service
    contributions frustrates Congress' policy objective in section
    254(d) of the Act to ensure the equitable and non-discriminatory
    distribution of universal service costs among all telecommunications
    providers.[^68] The Commission has established a base forfeiture
    amount of \$20,000 for each month in which a carrier has failed to
    make required universal service contributions.[^69] CSII, as
    detailed above, failed to make contributions from 2003 until
    July 2005. Nine of those violations occurred within the last year.
    Consequently, we find CSII apparently liable for a base forfeiture
    of \$180,000 for its willful and repeated failure to make universal
    service contributions for the period of November 2004 through July
    2005.

27. We also conclude that an upward adjustment to the base forfeiture
    associated with CSII's failure to pay USF is appropriate. In the
    past, we have calculated upward adjustments to forfeitures for
    failure to make USF payments based on half of the company's unpaid
    contributions.[^70] In situations such as this one, however, the
    Commission has held previously,[^71] where the subject company has
    failed to file timely and accurate information, we cannot determine
    the full amount owed to the funds until and unless the subject
    company provides complete and accurate information to the fund
    administrators. Thus, our ability to calculate and assess accurately
    an upward adjustment based on a percentage of unpaid contribution
    amounts can be inhibited by the violator. In this regard, Commission
    enforcement action can be delayed pending the company's full revenue
    disclosures, or foreclosed altogether if the statute of limitations
    expires during the period of delay. In such circumstances, companies
    that comply with our registration and filing requirements might be
    worse off than those, like CSII, that appear to ignore them. Such a
    result is not only unfair, but is bad public policy.

28. As of July 15, 2005, USAC records show that CSII owed approximately
    \$33,776 in USF contributions for the limited period that it has
    reported revenue, 2003 and 2004. USF assessments have not been
    assigned for other periods only because CSII did not properly file
    the Worksheets for other periods. During the course of the
    investigation, however, the Bureau received certain revenue
    information. We have used that revenue information to estimate the
    amount that CSII should have paid during the periods since it began
    operations for which it has not filed (approximately \$31,500) for
    purposes of calculating an upward adjustment of one-half that
    amount. In total, we estimate CSII owes \$65,276 to the USF.
    Therefore, taking into account all of the factors enumerated in
    section 503(b)(2)(D) of the Act, we propose an upward adjustment of
    \$32,638 for CSII's apparent failure to make universal service
    contributions. We thus find CSII liable for a proposed forfeiture of
    \$212,638 for its apparent willful and repeated failure to make
    contributions into the Universal Service Fund.

# IV. CONCLUSION

29. In light of the seriousness, duration and scope of the apparent
    violations, and to ensure that a company with substantial revenues
    such as CSII does not consider the proposed forfeiture merely "an
    affordable cost of doing business,"[^72] we find that a proposed
    forfeiture in the amount of \$462,638 is warranted. As discussed
    above, this proposed forfeiture amount includes: (1) a total
    proposed penalty of \$100,000 for failing to register pursuant to
    section 64.1195 of the Commission's rules;[^73] (2) a total proposed
    penalty of \$150,000 for failing to file three Telecommunications
    Reporting Worksheets within the past year; and (3) a total proposed
    penalty of \$212,638 for failing to make nine monthly universal
    service contributions within the past year.

30. We caution that additional violations of the Act or the Commission's
    rules could subject CSII to further enforcement action. Such action
    could take the form of higher monetary forfeitures and/or possible
    revocation of CSII's operating authority, including disqualification
    of CSII's principals from the provision of any interstate common
    carrier services without the prior consent of the Commission.[^74]
    In addition, we note that, to the extent CSII is ever found to be
    delinquent on any debt owed to the Commission (*e.g.,* has failed to
    pay all of its USF contributions), the Commission will not act on,
    and may dismiss, any application or request for authorization filed
    by CSII, in accordance with the agency's "red light" rules.[^75] We
    order CSII to file with USAC within thirty days all annual
    Telecommunications Reporting Worksheets required under the
    Commission's rules from the date that CSII commenced providing
    telecommunications services in the United States to the date of this
    *NAL*.

# V. ORDERING CLAUSES

31. ACCORDINGLY, IT IS ORDERED THAT, pursuant to section 503(b) of the
    Communications Act of 1934, as amended,[^76] and section 1.80 of the
    Commission's rules,[^77] that CSII is hereby NOTIFIED of its
    APPARENT LIABILITY FOR A FORFEITURE in the amount of \$462,638 for
    willfully and repeatedly violating the Act and the Commission's
    rules.

32. IT IS FURTHER ORDERED THAT, pursuant to section 1.80 of the
    Commission's Rules,[^78] within thirty days of the release date of
    this NOTICE OF APPARENT LIABILITY, CSII SHALL PAY the full amount of
    the proposed forfeiture or SHALL FILE a written statement seeking
    reduction or cancellation of the proposed forfeiture.

33. IT IS FURTHER ORDERED THAT, pursuant to sections 4(i), 219(b), and
    254(d) of the Act,[^79] and sections 54.706(a) and 54.711(a) of the
    Commission's rules,[^80] within thirty days of the release of this
    NOTICE OF APPARENT LIABILITY AND ORDER, CSII SHALL SUBMIT to USAC
    all annual Telecommunications Reporting Worksheets required under
    the Commission's rules from the date that CSII commenced providing
    telecommunications services in the United States to the date of this
    *NAL*.

34. Payment of the forfeiture must be made by check or similar
    instrument, payable to the order of the Federal Communications
    Commission.  The payment must include the NAL/Acct. No. and FRN No.
    referenced above.  Payment by check or money order may be mailed to
    Federal Communications Commission, P.O. Box 358340, Pittsburgh, PA
    15251-8340.  Payment by overnight mail may be sent to Mellon
    Bank /LB 358340, 500 Ross Street, Room 1540670, Pittsburgh, PA
    15251.  Payment by wire transfer may be made to ABA
    Number 043000261, receiving bank Mellon Bank, and account
    number 911-6106.

35. The response, if any, to this NOTICE OF APPARENT LIABILITY must be
    mailed to William H. Davenport, Chief, Investigations and Hearings
    Division, Enforcement Bureau, Federal Communications Commission,
    Room 4-A237, 445 12^th^ Street, S.W., Washington, D.C. 20554 and
    must include the NAL/Acct. No. referenced above.

36. The Commission will not consider reducing or canceling a forfeiture
    in response to a claim of inability to pay unless the petitioner
    submits: (1) federal tax returns for the most recent three-year
    period; (2) financial statements prepared according to generally
    accepted accounting practices (GAAP); or (3) some other reliable and
    objective documentation that accurately reflects the petitioner's
    current financial status. Any claim of inability to pay must
    specifically identify the basis for the claim by reference to the
    financial documentation submitted.

37. Requests for payment of the full amount of this *NAL* under an
    installment plan should be sent to Chief, Credit and Management
    Center, 445 12^th^ Street, S.W., Washington, D.C. 20554.[^81]

38. IT IS FURTHER ORDERED that a copy of this NOTICE OF APPARENT
    LIABILITY AND ORDER shall be sent by certified mail, return receipt
    requested, to Gary E. Middlebrooks, Chief Executive Officer,
    Communication Services Integrated, Inc., 105 Park Place Way,
    Carrollton, GA 30117.

    FEDERAL COMMUNICATIONS COMMISSION

    Marlene H. Dortch

    Secretary

[^1]: 47 C.F.R. § 64.1195.

[^2]: 47 C.F.R. § 54.711(a).

[^3]: 47 U.S.C. § 254(d).

[^4]: 47 C.F.R. § 54.706(a).

[^5]: The Commission has appointed USAC as the administrator of federal
    universal service support mechanisms and has made it responsible for
    billing and collection of USF contributions. 47 C.F.R. §§ 54.701(a),
    54.702(b).

[^6]: *See, e.g.,* 47 U.S.C. § 151.

[^7]: *See* *Implementation of the Subscriber Carrier Selection
    Provisions of the Telecommunications Act of 1996*, Third Report and
    Order and Second Order on Reconsideration, 15 FCC Rcd 15996, 16024
    (2000) ("*Carrier Selection Order*").

[^8]: 47 C.F.R. § 64.1195.

[^9]: Based on CSII's reported revenue for 2002, CSII was a *de minimis*
    carrier in 2002, and therefore was not required to file quarterly
    Worksheets in 2002. *See* Letter from Hillary S. DeNigro, Deputy
    Chief, Investigations and Hearings Division, Enforcement Bureau,
    Federal Communications Commission, to Gary Middlebrooks, Chief
    Executive Officer, Communication Services Integrated, Inc., dated
    March 10, 2005; Letter from Communication Services Integrated, Inc.,
    to Diana Lee, Investigations and Hearings Division, Enforcement
    Bureau, FCC, dated March 30, 2005 (attaching supplemental long
    distance revenue information) ("CSII Supplemental Response").

[^10]: *See* 47 U.S.C. §§ 225(d)(3); 254(d). In 1999, to streamline the
    administration of the programs and to ease the burden on regulatees,
    the Commission consolidated the information filing requirements for
    multiple telecommunications regulatory programs into the annual
    Telecommunications Reporting Worksheet. *See* *1998 Biennial
    Regulatory Review,* Report and Order, 14 FCC Rcd 16602 (1999). The
    next year the Commission revised the Telecommunications Reporting
    Worksheet slightly to collect the additional information necessary
    to achieve its goal of establishing a central repository for
    interstate telecommunications providers by the least
    provider-burdensome method. *Carrier Selection Order*, 15 FCC Rcd at
    16026.

[^11]: The Telecommunications Act of 1996 amended the Communications Act
    of 1934. *See* Telecommunications Act of 1996, Pub. L. No. 104-104,
    110 Stat. 56 (1996).

[^12]: 47 U.S.C. § 254(d).

[^13]: 47 C.F.R. § 54.706(b). Since April 1, 2003, carrier contributions
    have been based on a carrier's projected, rather than historical,
    revenues. *Id.*

[^14]: Upon submission of a Form 499-A registration, the carrier is
    issued a filer identification number by USAC. The filer
    identification number is then to be included on all further filings
    by the company and is used by the Commission and its administrators
    to track the carrier's contributions and invoices.

[^15]: Individual universal service contribution amounts that are based
    upon quarterly filings are subject to an annual true-up. *See
    Federal-State Joint Board on Universal Service, Petition for
    Reconsideration filed by AT&T,* Report and Order and Order on
    Reconsideration, 16 FCC Rcd 5748 (2001); 47 C.F.R. § 54.709(a).

[^16]: *See Globcom, Inc.*, Notice of Apparent Liability for Forfeiture
    and Order, 18 FCC Rcd 19893, 19896, ¶ 5 (2003); 47 C.F.R. §
    54.711(a) ("The Commission shall announce by Public Notice published
    in the Federal Register and on its website the manner of payment and
    the dates by which payments must be made."). *See, e.g.,* "Proposed
    Third Quarter 2003 Contribution Factor," *Public Notice*, 18 FCC Rcd
    11442 (WCB 2003) ("Contribution payments are due on the date shown
    on the \[USAC\] invoice.") The Act and our rules, however, do not
    condition payment on receipt of an invoice or other notice from
    USAC. *See* 47 U.S.C. § 254(d); 47 C.F.R. § 54.706(b). A carrier
    that does not file may not receive an invoice from USAC, but is
    nonetheless required to contribute to the universal service fund,
    unless its revenues are considered *de minimis.* *Globcom, Inc.*, 18
    FCC Rcd at 19896, ¶ 5 & n.22. The instructions for the
    Telecommunications Reporting Worksheet include tables for carriers
    to determine their approximate annual contributions based on their
    projected telecommunications revenues. Providers whose annual
    contribution is less than \$10,000 are considered *de minimis* and
    exempted from contributing to the USF. 47 C.F.R. § 54.708. CSII has
    not qualified for the *de minimis* exemption since 2003.

[^17]: 47 C.F.R. § 54.713.

[^18]: 47 C.F.R. § 1.1910. The rule went into effect on November 1,
    2004. *See* "FCC Announces Brief Delay in Enforcement of Red Light
    Rule," *Public Notice,* 19 FCC Rcd 19452 (2004).

[^19]: *See* Response to Data Requests/Request for Documents,
    EB-05-IH-0189, at 4, dated March 28, 2005 ("March 28, 2005 LOI
    Response"); <http://www.csii.net/index2.html> (last accessed on
    October 27, 2005).

[^20]: *See* 47 C.F.R. § 64.1195(a).

[^21]: *See* Letter from Hugh Boyle, Chief Auditor, Investigations and
    Hearings Division, Enforcement Bureau, to Communication Services
    Integrated, Inc., dated March 30, 2004 ("March 30, 2004 Audit
    Letter"); Letter from Hugh Boyle, Chief Auditor, Investigations and
    Hearings Division, Enforcement Bureau, to Communication Services
    Integrated, Inc., dated June 18, 2004 ("June 18, 2004 Audit Letter")
    (collectively, "Audit Letters").

[^22]: *See* e-mail from Sherry Holt, Communication Services Integrated,
    Inc., to Nand Gupta, Investigations and Hearings Division, January
    5, 2005, 12:04 p.m. E.S.T. Providers whose annual contribution is
    less than \$10,000 are covered by the Commission's "*de minimis*
    rule" and are exempted from contributing to the USF. 47 C.F.R.
    § 54.708.

[^23]: *See* e-mail from Nand Gupta, Investigations & Hearings Division,
    to Sherry Holt, Communication Services Integrated, Inc., January 05,
    2005, 16:13 p.m. E.S.T.

[^24]: 47 C.F.R. § 64.1195.

[^25]: *See supra* n. Error: Reference source not found.

[^26]: *See supra* n. Error: Reference source not found.

[^27]: *See* CSII Supplemental Response.

[^28]: 47 U.S.C. § 503(b)(1)(B); 47 C.F.R. § 1.80(a)(1).

[^29]: 47 U.S.C. § 312(f)(1).

[^30]: H.R. Rep. No. 97-765, 97^th^ Cong. 2d Sess. 51 (1982).

[^31]: *See, e.g., Application for Review of Southern California
    Broadcasting Co.*, Memorandum Opinion and Order, 6 FCC Rcd 4387,
    4388 (1991) ("*Southern California Broadcasting Co.*").

[^32]: *See, e.g.,* *Callais Cablevision, Inc., Grand Isle, Louisiana*,
    Notice of Apparent Liability for Monetary Forfeiture, 16 FCC Rcd
    1359 (2001) (issuing a Notice of Apparent Liability for, *inter
    alia*, a cable television operator's repeated signal leakage).

[^33]: *Callais Cablevision, Inc.,* 16 FCC Rcd at 1362, ¶ 9; *Southern
    California Broadcasting Co.,* 6 FCC Rcd at 4388, ¶ 5.

[^34]: 47 U.S.C. § 503(b); 47 C.F.R. § 1.80(f).

[^35]: *See, e.g., SBC Communications, Inc*., Forfeiture Order, 17 FCC
    Rcd 7589, 7591, ¶ 4 (2002) ("*SBC Forfeiture Order*") (forfeiture
    paid).

[^36]: 47 U.S.C. § 254(d).

[^37]: 47 C.F.R. §§ 54.706(a), 54.711(a), and 64.1195.

[^38]: 47 C.F.R. § 64.1195.

[^39]: 47 U.S.C. § 254(d).

[^40]: 47 C.F.R. §§ 54.706(a), 54.711(a), 64.1195.

[^41]: 47 C.F.R. § 64.1195.

[^42]: 47 C.F.R. § 64.1195(a); *Carrier Selection Order*, 15 FCC Rcd
    15996, 16025 (requiring existing carriers like CSII to register on
    the date the new registration requirement becomes effective by means
    of certain information in FCC Form 499-A); 66 FR 17083 (2001)
    (announcing that OMB-approved information collection requirement in
    section 64.1195 would take effect on April 2, 2001).

[^43]: *Id*. The Commission adopted the registration requirement in
    section 64.1195(a) after finding that such a requirement would
    enable it to better monitor the entry of carriers into the
    interstate telecommunications market and any associated increases in
    slamming activity, and, among other things, would enhance the
    Commission's ability to take appropriate enforcement action against
    carriers that have demonstrated a pattern or practice of slamming.
    *See Carrier Selection Order,* 15 FCC Rcd at 16024 ¶ 62.

[^44]: *See The Commission's Forfeiture Policy Statement and Amendment
    of Section 1.80 of the Commission's Rules*, Report and Order, 12 FCC
    Rcd 17087, 17099, ¶ 22 (1997) ("*Forfeiture Policy Statement*"),
    *recon. denied*, 15 FCC Rcd 303 (1999) ("\[t\]he Commission expects,
    and it is each licensee's obligation, to know and comply with all of
    the Commission's rules."); *Telecom House, Inc*., Notice of Apparent
    Liability for Forfeiture and Order, FCC 05-168, 2005 WL 2233570
    (F.C.C.) at ¶ 29 (released Sept. 13, 2005); *InPhonic, Inc*., Notice
    of Apparent Liability for Forfeiture and Order, FCC 05-145, 2005 WL
    1750418 (F.C.C.) at ¶ 24 (released July 25, 2005); *Teletronics,
    Inc*., Notice of Apparent Liability for Forfeiture and Order, FCC
    05-146, 2005 WL 1750420 (F.C.C.) at ¶ 28 (released July 25, 2005).

[^45]: *See* March 30, 2004 Audit Letter, June 18, 2004 Audit Letter.

[^46]: *AT&T Wireless Services, Inc.,* Forfeiture Order, 17 FCC Rcd
    21866, 21870-71, (2002); *America's Tele-Network Corp.*, Order of
    Forfeiture, 16 FCC Rcd 22350, 22355, ¶ 15 (2001); *Coleman Enters.,
    Inc. d/b/a/ Local Long Distance, Inc.*, Order of Forfeiture, 15 FCC
    Rcd 24385, 24388, ¶ 8 (2000).

[^47]: The proposed forfeitures in this *NAL* relate only to violations
    occurring within a year of this *NAL*.

[^48]: 47 C.F.R. § 54.711(a).

[^49]: Sixty days prior to the start of each quarter, USAC is required
    to provide the Commission with a projection of the high cost, low
    income, schools and libraries, and rural health care funding
    requirements for the following quarter. *See*
    [www.universalservice.org/overview/filings](http://www.universalservice.org/overview/filings).
    Based on USAC's projection of the needs of the USF, and revenue
    projections from the registered carriers subject to universal
    service requirements, the Commission establishes a specific
    percentage of interstate and international end-user revenues that
    each subject telecommunications provider must contribute toward the
    USF. This percentage is called the contribution factor. The
    contribution factor, and, consequently, the amount owed to the USF
    by each affected telecommunications company, changes each quarter,
    depending on the needs of the USF and carrier-provided revenue
    projections. *See*
    [www.fcc.gov/wcb/universal_service/quarter](http://www.fcc.gov/wcb/universal_service/quarter).
    Thus, in cases where a carrier, such as CSII, fails to file required
    Worksheets reporting its revenue projections in a timely fashion,
    its revenues are excluded from the contribution base from which
    universal assessments are derived, and the economic burden of
    contributing falls disproportionately on carriers that have
    satisfied their reporting obligations.

[^50]: 47 U.S.C. § 254(d).

[^51]: 47 U.S.C. § 254.

[^52]: 47 C.F.R. §§ 54.711, 64.604.

[^53]: 47 U.S.C. § 254(d); 47 C.F.R. § 54.706.

[^54]: 47 C.F.R. § 54.706(c).

[^55]: *See* 47 C.F.R. § 54.706(b).

[^56]: *See* USAC August 2005 billing to CSII. USAC assessed the amount
    due in August 2005 solely based on the 2004 and 2005 annual
    Worksheets, and the payment thus represented only a partial
    assessment of CSII's total USF contribution obligation for the
    month.

[^57]: *Globcom, Inc.*, 18 FCC Rcd at 19903, ¶ 26 (2003).

[^58]: 47 U.S.C. § 503(b)(1)(B); *see also* 47 C.F.R. § 1.80(a)(2).

[^59]: 47 U.S.C. § 503(b)(2)(B); *see also* 47 C.F.R. § 1.80(b)(2).
    Effective September 7, 2004, the Commission amended its rules to
    increase the maximum penalties to account for inflation since the
    last adjustment of the penalty rates*. See Amendment of Section 1.90
    of the Commission's Rules*, Order, 19 FCC Rcd 10945, 10946 ¶ 6
    (2004).

[^60]: 47 U.S.C. § 503(b)(2)(D); *see also Forfeiture Policy Statement*,
    12 FCC Rcd at 17100, ¶ 27; 47 C.F.R. § 1.80(b).

[^61]: 47 U.S.C. § 503(b)(6)(B); *see also* 47 C.F.R. § 1.80(c)(3).

[^62]: *See, e.g.,* *Carrera Communications, LP*, Notice of Apparent
    Liability for Forfeiture and Order, FCC 05-147, 2005 WL 1750417
    (F.C.C.) at ¶ 24 (released July 25, 2005); *InPhonic, Inc*., 2005 WL
    1750418 (F.C.C.) at ¶ 24; *Teletronics, Inc*., 2005 WL 1750420
    (F.C.C.) at ¶ 28; *Globcom, Inc*., 18 FCC Rcd at 19903; *Roadrunner
    Transp., Inc.,* Forfeiture Order, 15 FCC Rcd 9669, 9671 (2000);
    *Liab. of E. Broad. Corp.*, Memorandum Opinion and Order, 10 F.C.C.
    2d 37 (1967).

[^63]: *See* *InPhonic, Inc.,* 2005 WL 1750418 (F.C.C.) at ¶ 25;
    *Teletronics, Inc.*, 2005 WL 1750420 (F.C.C.) at ¶ 29.

[^64]: *See Telecom House, Inc*, 2005 WL 2233570 (F.C.C.) at ¶ 29;
    *InPhonic, Inc.,* 2005 WL at 1750418 (F.C.C.) at ¶ 26; *Teletronics,
    Inc*., 2005 WL 1750420 (F.C.C.) at ¶ 30.

[^65]: *InPhonic, Inc.,* 2005 WL 1750418 (F.C.C.) at ¶ 26; *Teletronics,
    Inc*., 2005 WL 1750420 (F.C.C.) at ¶ 30.

[^66]: *InPhonic, Inc.,* 2005 WL 1750418 (F.C.C.) at ¶ 26; *Teletronics,
    Inc*., 2005 WL 1750420 (F.C.C.) at ¶ 30.

[^67]: *Globcom, Inc*., 18 FCC Rcd at 19905. *See also* *Carrera
    Communications, Inc*., 2005 WL 1750417 (F.C.C.) at ¶ 25; *InPhonic,
    Inc*., 2005 WL 1750418 (F.C.C.) at ¶ 27; *Teletronics, Inc*., 2005
    WL 1750420 (F.C.C.) at ¶ 31.

[^68]: *See* 47 U.S.C. § 254(d).

[^69]: *See Globcom, Inc.,* 18 FCC Rcd at 19903-19904, ¶¶ 25-27. *See
    also* *Carrera Communications, Inc*., 2005 WL 1750417 (F.C.C.) at ¶
    26; *InPhonic, Inc*., 2005 WL 1750418 (F.C.C.) at ¶ 28; *Telecom
    Mgmt., Inc*., 2005 WL 1949643 (F.C.C.) at ¶ 17; *Teletronics, Inc*.,
    2005 WL 1750420 (F.C.C.) at ¶ 32.

[^70]: *See, e.g., Globcom, Inc.*, 18 FCC Rcd at 19903-19904, ¶¶ 25-27.
    *See also* *Carrera Communications, Inc*., 2005 WL 1750417 (F.C.C.)
    at ¶ 27; *InPhonic, Inc*., 2005 WL 1750418 (F.C.C.) at ¶ 29; OCMC,
    Inc., 2005 WL 1949644 (F.C.C.) at *Telecom Mgmt., Inc*., 2005 WL
    1949643 (F.C.C.) at ¶ 18; *Telectronics, Inc*., 2005 WL 1750420
    (F.C.C.) at ¶ 32.

[^71]: *See*, *e.g,*, *Carrera Communications, Inc*., 2005 WL 1750417
    (F.C.C.) at ¶ 27; *Telectronics, Inc*., 2005 WL 1750420 (F.C.C.) at
    ¶ 33.

[^72]: *Forfeiture Policy Statement*, 12 FCC Rcd at 17099; *see also* 47
    C.F.R. § 1.80(b)(4).

[^73]: 47 C.F.R. § 64.1195.

[^74]: *See Business Options, Inc.,* Consent Decree, 19 FCC Rcd 2916
    (2003); *NOS Communications, Inc., Affinity Network Incorporated and
    NOSVA Limited Partnership,* Consent Decree, 2003 WL 22439710 (2003).

[^75]: 47 C.F.R. § 1.1910.

[^76]: 47 U.S.C. § 503(b).

[^77]: 47 C.F.R. § 1.80.

[^78]: *See* 47 C.F.R. § 1.80(f)(3).

[^79]: 47 U.S.C. §§ 4(i), 219(b), and 254(d).

[^80]: 47 C.F.R. §§ 54.706(a) and 54.711(a).

[^81]: *See* 47 C.F.R. § 1.1914.