**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | *  | Fee Control No.              |
|                                  | *) | 0409238340480001             |
| NTT America, Inc.                | ** |                              |
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**MEMORANDUM OPINION AND ORDER**

**Adopted:** **July 11, 2006 Released: July 13, 2006**

By the Commission:

# Introduction

1.  The Commission has before it an Application for Review filed by NTT
    America, Inc. (NTTA). NTTA seeks review of a decision of the Office
    of Managing Director (OMD or Managing Director) denying NTTA's
    request for a waiver of the 25 percent penalty charged to it for
    late payment of its Fiscal Year (FY) 2004 regulatory fee. For the
    reasons below, we deny the Application for Review.

# BACKGROUND 

2.  On September 22, 2004, NTTA requested a waiver of the \$69,010.83
    penalty for late payment of its \$276,043.32 FY 2004 regulatory fee,
    which was due August 19, 2004. NTTA stated that the untimely payment
    was the result of a computer error caused when NTTA changed its
    software system "early in the week of August 16, 2004." NTTA
    asserted that the new software system contained a defect preventing
    the proper execution of an appropriate check at the correct time and
    that the check could not be issued until the defect was corrected.
    NTTA stated that once the defect was corrected, the check was issued
    and then picked up by FedEx at 3:38 p.m. on August 19, 2004. FedEx
    delivered the check to the Commission's depository in Pittsburgh at
    9:37 a.m. on August 20, 2004, which was past the FY 2004 payment
    deadline of 11:59 p.m. on August 19, 2004. NTTA argued that the
    delay was *de minimis* and did not cause any harm or prejudice to
    the FCC in the form of loss of interest. NTTA claimed that the size
    of the penalty was out of proportion to the minor delay and that
    NTTA made every effort to pay the fee on time.

3.  On December 14, 2004, OMD denied NTTA's request for waiver of the
    late payment penalty.[^1] OMD stated that the Communications Act of
    1934, as amended, requires the Commission to assess a late payment
    penalty of 25 percent on any regulatory fee not paid in a timely
    manner. OMD pointed out that it is the obligation of the licensees
    responsible for regulatory fee payments to ensure that the
    Commission receives the fee payment no later than the final date on
    which regulatory fees are due for the year. OMD noted that the
    Commission informs its licensees of the due dates, amounts of the
    fees, and payment methods on its website and that the Commission
    specifically and repeatedly informed licensees of the August 19,
    2004 deadline for the FY 2004 regulatory fees. Moreover, OMD stated,
    the Commission advised licensees of the availability of the online
    Fee Filer payment system.[^2] Thus, OMD found that NTTA had notice
    as early as the *July 2, 2004 Public Notice* of the August 19, 2004
    payment deadline and had "ample time to remit a check before the
    filing window closed on August 19, 2004." Finally, OMD determined
    that the fee waiver cases NTTA cited were not comparable to NTTA's
    situation and did not support its waiver request.[^3]

4.  In its Application for Review, NTTA largely repeats the arguments
    raised in its initial waiver request. NTTA asserts that the
    *December 14 Letter Decision "*fail\[ed\] properly to weigh the
    merits of this case, especially the very minor payment delay, the
    grossly large penalty, the computer software error . . . , NTTA's
    diligence and good faith in attempting to meet the payment deadline.
    . ., and NTTA's prior history of on-time payment of its regulatory
    fee." NTTA also claims that its "problem is quite analogous to the
    banking error situation that the Communications Act and FCC Rules
    recognize as an excuse to late payment."

# DISCUSSION 

5.  We conclude that the Managing Director's decision is correct. As OMD
    stated, Section 9(c)(1) of the Communications Act of 1934, as
    amended, requires the Commission to assess a late payment penalty of
    25 percent on any regulatory fee not paid in a timely manner.[^4]
    The Commission's rules provide that a timely payment is one received
    at the Commission's lockbox bank by the due date.[^5] We find that
    NTTA's reliance on the software difficulties it encountered in
    attempting to issue a check to cover the FY 2004 regulatory fee
    fails to establish the extraordinary circumstances that would
    justify a waiver of the late payment penalty. The untimely payment
    of NTTA's regulatory fee was the direct result of NTTA's decision to
    change its software system "early in the week of August 16, 2004"
    (*i.e*., three days before the regulatory fee was due) and therefore
    the direct result of its failure to allot sufficient time to detect
    and correct potential software problems. In essence, the problems
    that led to the untimely payment of NTTA's regulatory fee were
    entirely within NTTA's control and the consequence of its own
    business decisions. Furthermore, as OMD pointed out, the Commission
    has repeatedly advised licensees that they may submit regulatory fee
    payments electronically, thereby allowing them to account for
    individual circumstances. *See* 47 C.F.R. §1.1158; *Aerco
    Broadcasting Corp.*, 16 FCC Rcd 15042 (2001).[^6] We also reject the
    contention that the size of the penalty was disproportionate to the
    lateness. Congress mandated that an additional charge of 25 percent
    would be assessed as a penalty for all late payments of fees
    required by Section 9. *See* 47 U.S.C. §159(C)(1). And the
    Commission recently upheld OMD's refusal to waive the 25 percent
    penalty in analogous circumstances. *See McLeod/USA
    Telecommunications Services, Inc*., 19 FCC Rcd 6587 (2004) (fee was
    received one day late and no extraordinary circumstances existed to
    justify lateness). Moreover, the penalty amount imposed in
    *McLeod/USA* was larger than that at issue in this case. *Id*. at
    6590.

6.  Further, we disagree with NTTA's assertion that a waiver of the late
    payment penalty would be consistent with section 1.1164(b) of the
    Commission's rules, 47 C.F.R. §1.1164(b), which provides that if "a
    fee payment fails due to error by the payor\'s bank, as evidenced by
    an affidavit of an officer of the bank, the date of the original
    submission will be considered the date of filing." Bank errors that
    cause untimely payment of regulatory fees involve circumstances
    entirely outside the regulatee's ability to control. In contrast,
    the untimely payment of NTTA's regulatory fee was the direct result
    of NTTA's decision to change its software system shortly before the
    regulatory fee was due, which was a matter completely within its own
    control.

7.  Finally, we agree with OMD that the facts in the instant case are in
    no way comparable to those in *Northeast Radio, Kidd
    Communications,* and *Harlan Municipal,* which are relied on by
    NTTA. *Northeast Radio* and *Kidd Communications* both involved
    waivers based on documented showings of financial hardship. The
    Commission will waive fees where a "petitioner presents a compelling
    case of financial hardship\"[^7] and makes a showing "that it lacks
    sufficient funds to pay the regulatory fees and to maintain its
    service to the public."[^8] Unlike the regulatees in *Northeast
    Radio* and *Kidd Communications*, NTTA has made no claim, let alone
    submitted evidence, of hardship or shown that payment of the
    regulatory fee and the associated late payment penalty would affect
    its ability to serve the public. In *Harlan Municipal*, the Managing
    Director found that the untimely receipt of the regulatory fee was
    the direct result of the "clearly unforeseeable" events of September
    11, 2001 (including the ensuing interruption of mail and air courier
    service), "that even the best of planning could not have avoided."
    In contrast to the situation in *Harlan Municipal*, NTTA's untimely
    regulatory fee payment was a consequence of NTTA's decision to
    change software systems three days before the payment due date.
    These circumstances are hardly comparable to the extraordinary
    events of September 11, 2001. We therefore reject NTTA's contention
    that *Northeast Radio, Kidd Communications,* and *Harlan Municipal*
    provide support for a waiver of the late payment penalty.

8.  We find that NTTA failed to meet its obligation to file its FY 2004
    regulatory fee to be received by the Commission no later than August
    19, 2004, the final date of the regulatory fee filing window for FY
    2004, and that no extraordinary circumstances existed that would
    warrant waiver of the penalty for late payment of the FY 2004
    regulatory fee.

# ordering clausE

9.  ACCORDINGLY, IT IS ORDERED that the Application for Review filed on
    January 5, 2005 by NTT America, Inc. IS DENIED.

    FEDERAL COMMUNICATIONS COMMISSION

    Marlene H. Dortch

    Secretary

[^1]: *See* Letter from Mark A. Reger, Chief Financial Officer (CFO),
    OMD, FCC to Stuart A. Shorenstein, Esq. (dated Dec. 14, 2004)
    (*December 14 Letter Decision*). The *December 14 Letter Decision*
    erroneously indicated that NTTA did not pay the late payment
    penalty, but the Commission's records confirm that payment was made
    at the time of the waiver request.

[^2]: OMD cited *Assessment and Collection of Regulatory Fees for Fiscal
    Year 2004, Report and Order*, 19 FCC Rcd 11662, 11680 (2004) (*FY
    2004 Fee Order*) (stating Fee Filer is "easy and convenient way to
    make fee payments on a timely basis"); Public Notice*, FY 2004
    Regulatory Fees Due No Later Than August 19, 2004,* (July 2, 2004)
    (*July 2, 2004 Public Notice)*; Public Notice, *Payment Methods and
    Procedures for Fiscal Year 2004 Regulatory Fees*, 19 FCC Rcd 20428,
    20430 (July 21, 2004) (stating easiest and quickest way to pay
    regulatory fees is through Fee Filer); *Fee Filer Available August 1
    for 2004 Regulatory Fees,* 19 FCC Rcd 13841 (July 23, 2004); FCC
    News, *Official FY 2004 Regulatory Fee Payment Window Opens Tomorrow
    -- Fees Due No Later than August 19* (Aug. 9, 2004) (reminding of
    filing deadline and stating that Commission would begin an
    aggressive effort to collect fees, including 25 percent penalty,
    beginning August 20, 2004); Public Notice, *Deadline for Filing FY
    2004 Regulatory Fees*, 19 FCC Rcd 15635 (Aug. 18, 2004) (reminding
    of deadline).

[^3]: NTTA cited Letter from Mark A. Reger, CFO, OMD, FCC to Maurice
    Cohen, President of Northeast Radio (dated July 14, 2003)
    (*Northeast Radio*), Letter from Mark A. Reger, CFO, OMD, FCC to
    Chris Kidd of Kidd Communications (dated June 2, 2003) (*Kidd
    Communications*), and Letter from Mark A. Reger, CFO, OMD, FCC to
    Larry G. Link, CFO of Harlan Municipal Utilities (dated Nov. 19,
    2002) (*Harlan Municipal*).

[^4]: 47 U.S.C. §159(c)(1).

[^5]: 47 C.F.R. §1.1164.

[^6]: NTTA asserted to OMD that its own credit limit precluded use of
    Fee Filer, but even if so, NTTA could have sought expansion of its
    limit in anticipation of making its fee payment or made plans
    earlier to use an alternative form of payment in view of its credit
    limitation. As OMD noted, the Commission widely disseminated public
    notice of the August 19 due date as early as July 2, which afforded
    all licensees sufficient time to make timely payment.

[^7]: *See Implementation of Section 9 of the Communications Act*, 9 FCC
    Rcd 5333, 5346 (1994), *recon. granted*, 10 FCC Rcd 12759 (1995)
    (*Implementation of Section 9 on Reconsideration*).

[^8]: *Implementation of Section 9 on Reconsideration,* 10 FCC Rcd at
    12762; *see also id*. at 12761-62 ("we will grant a waiver only when
    the impact of the regulatory fee will affect a regulatee's ability
    to serve the public").