**Before the**

**FEDERAL COMMUNICATIONS COMMISSION**

**Washington, D.C. 20554**

In re Applications of ) WT Docket No. 96-41

)

LIBERTY CABLE CO., INC. )

) File Nos:

For Private Operational Fixed ) 708777 WNTT370

Microwave Service Authorization ) 708778, 713296 WNTM210

and Modifications ) 708779 WNTM385 ) 708780 WNTT555

New York, New York ) 708781, 709426, 711937 WNTM212

) 708332 (NEW)

) 712203 WNTW782

) 712218 WNTY584

) 712219 WNTY605

) 713295 WNTX889

) 713300 (NEW)

) 717325 (NEW)

**Appearances**

[Robert L. Begleiter]{.underline}, [Eliot Spitzer]{.underline}, [Yang
Chen]{.underline}, [Robert L. Pettit]{.underline}, and [Bryan N.
Tramont]{.underline} on behalf of Liberty Cable Co., Inc.; [Arthur H.
Harding]{.underline}, [R. Bruce Beckner]{.underline}, [Jill Kleppe
McClelland]{.underline}, and [Debra A. McGuire]{.underline} on behalf of
Time Warner Cable of New York City and Paragon Communications; [James A.
Kirkland]{.underline} and [Christopher A. Holt]{.underline} on behalf of
Cablevision of New York City - Phase I; and [Katherine C.
Power]{.underline} and [Mark L. Keam]{.underline} on behalf of the
Wireless Telecommunications Bureau.

**DECISION**

Adopted: November 24, 2000 ; Released: December 13, 2000

By the Commission:

**I. INTRODUCTION**

1\. In this decision, the Commission affirms, with modifications, the
[Initial Decision]{.underline} ([I.D.]{.underline}), 13 FCC Rcd 10716
(ALJ 1998), of Administrative Law Judge Richard L. Sippel (ALJ), which
denied the fifteen captioned applications of Liberty Cable Co., Inc.
(\"Liberty\") for private operational fixed microwave service (\"OFS\")
facilities in New York City.[^1] We do so because of Liberty\'s
extensive record of unlicensed OFS operations and its untruthfulness
before the Commission in connection with its applications. In addition,
we impose a monetary forfeiture of \$1,425,000 for Liberty\'s admitted
violations of Section 301 of the Communications Act.

2\. Liberty uses OFS paths to provide multi-channel video programming to
approximately 30,000 subscribers in apartment buildings in the New York
metropolitan area. The Commission has granted Liberty forty-three OFS
licenses since 1991. The fifteen applications for new licenses that are
the subject of this proceeding cover nineteen facilities. Time Warner
Cable of New York City and Paragon Communications (\"Time Warner\") and
Cablevision of New York City - Phase I (\"Cablevision\") filed petitions
to deny the instant applications, wherein they alleged that Liberty
interconnected by hard wire non-commonly owned buildings in violation of
the cable franchise requirement, that Liberty initiated OFS service to
certain buildings prior to obtaining Commission authorization, and that
Liberty lacked candor before the Commission. With specific regard to the
unauthorized OFS service, Time Warner filed a pleading on May 5, 1995,
in which it identified two buildings to which Liberty was providing
service without prior authorization, and Liberty filed a response on May
17, 1995, in which it admitted the premature activations and disclosed
an additional thirteen buildings to which it was also providing OFS
service without having obtained Commission authorization.

3\. In light of the disclosed violations, the Wireless
Telecommunications Bureau on June 9, 1995 requested that Liberty supply
additional information concerning its unlicensed operations. On June 16,
1995 Liberty submitted a response providing the information regarding
the fifteen buildings that received unauthorized service. Liberty also
informed the Bureau that its counsel was conducting a complete
investigation of the matter. On July 24, 1995 Liberty disclosed four
additional buildings that were activated without authorization, bringing
to nineteen the number of buildings that it admitted were prematurely
activated. In light of these revelations, on August 4, 1995 the Bureau
directed Liberty to submit the results of the company\'s internal audit,
including, [inter alia]{.underline}, a listing of all OFS paths
constructed or operated without authority, which ones were not disclosed
in its June 16 response, the dates of construction and operation, and
the number of subscribers being served. Liberty submitted its Internal
Audit Report (\"IAR\" or \"Report\") to the Bureau on August 14, 1995
with a request for confidentiality under 47 C.F.R. §§ 0.457 and 0.459,
which the Bureau denied, a decision to which Liberty sought further
review. On September 7, 1995, at Liberty\'s request, the Bureau granted
Special Temporary Authority (\"STA\") to Liberty to operate the nineteen
admittedly unlicensed facilities.

4\. Thereafter, the Commission designated for hearing issues to
determine: (1) the facts and circumstances surrounding Liberty\'s
operation of hardwired interconnected, non-commonly owned buildings,
without first obtaining a franchise, and whether Liberty has violated
Section 1.65 of the Commission\'s Rules by failing to notify the
Commission of its provision of service in these buildings; (2) the facts
and circumstances surrounding Liberty\'s admitted violations of Section
301 of the Communications Act and Section 94.23 of the Commission\'s
Rules by operating certain OFS facilities without first obtaining
Commission authorization, and whether Liberty has violated Section 1.65
of the Commission\'s Rules by failing to notify the Commission of its
premature operation of service in either its underlying applications or
its STA requests; (3) whether Liberty has misrepresented facts to the
Commission, lacked candor in its dealings with the Commission, or
attempted to mislead the Commission, and in this regard, whether Liberty
has violated Section 1.17 of the Commission\'s Rules; and (4) whether
Liberty possesses the requisite character qualifications to be granted
the subject OFS applications. [Hearing Designation Order and Notice of
Opportunity for Hearing]{.underline}, 11 FCC Rcd 14133 (1996)
(\"[HDO]{.underline}\"). The [HDO]{.underline} also called for a
determination of whether an order of forfeiture should be issued against
Liberty pursuant to Section 503(b) of the Act for violations of Section
301 of the Act and Sections 1.17, 1.65, and 94.23 of the Rules. Finally,
noting that the STAs previously granted to Liberty to operate the
subject microwave facilities were due to expire, the [HDO]{.underline}
stated that, to preserve continuity of service, the Commission would
grant Liberty further interim operating authority pending a final
resolution of this proceeding.

**II. PROCEDURAL HISTORY**

5\. On July 15, 1996, following completion of discovery, Liberty and the
Bureau filed a Joint Motion for Summary Decision which sought to resolve
the designated issues without disqualification and to impose a
substantial monetary forfeiture against Liberty. With regard to the
cause of Liberty\'s premature activations, the Joint Motion argued that
the unauthorized operations were the result of engineering negligence
and management\'s failure to supervise properly, but did not involve
intentional misconduct by Liberty. Thereafter, however, based in part on
the discovery of a 1995 memorandum from counsel to Liberty\'s president,
the ALJ determined that a hearing was necessary to examine Liberty\'s
\"credibility and candor\" regarding when Liberty had first learned that
it activated microwave paths without Commission authorization.
[See]{.underline} [Memorandum Opinion and Order]{.underline}, FCC
96M-265, released December 10, 1996. The hearing was held in January
1997 and the parties filed proposed findings in February 1997. Following
other developments, including the additional disclosure at the January
1997 hearing of an advisory letter written by counsel to Liberty
management in 1993, the ALJ subsequently ordered another hearing session
to explore Liberty\'s candor and the circumstances surrounding the
premature activations. [See]{.underline} [Memorandum Opinion and
Order]{.underline}, FCC 97M-63, released April 21, 1997. This hearing
was held in May 1997 and supplemental findings were filed in June 1997.

6\. On September 11, 1997, the ALJ issued a partial summary decision, in
which he granted the Joint Motion to the extent of resolving the issues
pertaining to Liberty\'s failure to obtain a franchise for its hard wire
interconnections by imposing a forfeiture of \$80,000. The ALJ concluded
that Liberty\'s infractions were not intentional, that it had not
deceived the Commission, and that it had admitted violating the
franchising requirement and Section 1.65. [See]{.underline} [Memorandum
Opinion and Order]{.underline}, FCC 97M-154, released September 11,
1997. No appeal of this ruling has been received.

7\. On September 16, 1997, following an adverse court ruling on
Liberty\'s request that its IAR be kept confidential, Liberty produced
its IAR, dated August 14, 1995, which contained relevant information
describing Liberty\'s licensing operations and its knowledge with regard
to the premature OFS operations. Liberty had withheld the Report from
the hearing proceeding and had obtained an emergency stay from the court
pending its appeal of the Commission\'s denial of its claim that the
Report was entitled to confidential treatment. [See]{.underline}
[Liberty Cable Co., Inc.]{.underline}, 11 FCC Rcd 2475 (1996), [aff\'d
sub nom. Bartholdi Cable Co., Inc. v. FCC]{.underline}, 114 F.3d 274
(D.C. Cir. 1997); [see also]{.underline} [Liberty Cable Co., Inc. v.
FCC]{.underline}, No. 96-1030 (D.C. Cir. April 24, 1996) (granting stay
request). After receiving the Report in evidence, the ALJ permitted the
filing of further supplemental findings related to the Report in
November 1997.

8\. In his [I.D.]{.underline}, released March 6, 1998, the ALJ concluded
that, with regard to the remaining issues concerning Liberty\'s OFS
microwave facilities, after multiple hearing sessions it was clear that
summary decision was no longer suitable for terminating the case. The
ALJ stated:

The issues on premature OFS microwave activations and related
misrepresentations cannot be summarily decided because of their
dependency on credibility and candor issues that permeate Liberty\'s
non-disclosures, inadequate disclosures and the explanations made in
related testimony. But the Joint Motion\'s record will be used in this
Initial Decision when uncontested or basic fact findings can be made.

[I.D.]{.underline}, ¶ 17. Under the remaining designated issues, the ALJ
found that Liberty operated OFS facilities in \"reckless disregard\" of
its licensing obligations under Section 301, that Liberty lacked candor
in its disclosure of illegally activated pathways, that it deliberately
violated the reporting provisions of Section 1.65, 47 C.F.R. §1.65, and
that it made misrepresentations in support of its STA and license
applications in derogation of Section 1.17, 47 C.F.R. §1.17.
Accordingly, he concluded that Liberty was not qualified to receive the
OFS licenses at issue.

9\. Liberty excepts to the [I.D.]{.underline}\'s adverse conclusions and
argues that the ALJ erred in disqualifying Liberty rather than imposing
the monetary forfeiture proposed by Liberty and the Bureau in their
Joint Motion. Time Warner and Cablevision support the [I.D.]{.underline}
in all respects, as does the Bureau.[^2]

**III. PROCEDURAL RULINGS**

10\. Liberty seeks oral argument in this proceeding. In this regard,
Liberty asserts that such argument would permit \"clarification of the
Bureau\'s position,\" and notes that the Bureau did not withdraw its
support for the Joint Motion until its reply to exceptions. This request
is denied because we do not believe oral argument would materially
assist our resolution of this proceeding. As for the Bureau\'s avowed
change in position, the Bureau has adequately explained the reasons it
supports the [I.D.]{.underline} in its reply brief and opposition to
request for oral argument, and we do not think argument would provide
further illumination on this point.

11\. On July 24, 1998, more than three months after reply briefs were
filed by the parties, Liberty initiated a new round of pleadings by
filing a Motion to Strike the Bureau\'s reply brief, based once again on
the Bureau\'s reversal of position. We deny the Motion. Our resolution
of this proceeding is not dependent upon the Bureau\'s particular view
of the case, changed or otherwise, but upon our own review of the
[I.D.]{.underline} in light of the hearing record and the pleadings of
all the parties. Consequently, we perceive no reason to strike the
Bureau\'s pleading.

**IV. UNAUTHORIZED OPERATION OF OFS FACILITIES**

[A.]{.underline} [Factual Background]{.underline}

[1.]{.underline} [Liberty\'s Unauthorized Operations]{.underline}

12\. Between July 11, 1994 and April 24, 1995, Liberty activated
nineteen OFS microwave paths without receiving authority from the
Commission. [I.D.]{.underline}, ¶ 44. These are the unlicensed
operations identified in the [HDO]{.underline}. Furthermore, the record
establishes that from June 1992 to January 1995, there were an
additional seventy-four premature activations \-- these paths
subsequently received Commission licenses \-- for a total of
ninety-three unauthorized activations. [Id.]{.underline} at ¶ 63. Peter
Price, Liberty\'s President and Chief Executive Officer, the individual
responsible for day-to-day operations, testified that he did not learn
of any unauthorized activations until April 27, 1995, the day he
received an April 26, 1995 memorandum from Behrooz Nourain, Liberty\'s
Director of Engineering, who was in charge of activations. The
memorandum listed the sites for which STAs were being filed. At the
time, all but two of these facilities were receiving service without
authorization. Price stated that he concluded from the memorandum that
\"there was a gap there between the turning on of service and the
obtaining of authority.\" [Id.]{.underline} at ¶¶ 33, 73; Time
Warner/Cablevision Exh. 35;[^3] tr. 826-29, 1363-64. The ALJ found,
however, that substantial record evidence, which we summarize below,
undermined Price\'s testimony regarding Liberty\'s claimed lack of
knowledge of the illegal operations prior to the April memorandum.

13\. After he began his employment with Liberty in April 1992, Nourain
received a memorandum of instruction dated June 16, 1992, entitled FCC
Licensing - Transfer of Information, from Joseph Stern, a consultant who
preceded Nourain as the person responsible for the engineering aspect of
Liberty\'s licensing. The memorandum recited that Stern had reviewed
with Nourain Liberty\'s history of licensing activities and \"the
process of coordination and license applications,\" including using a
technical firm to provide interference clearance and a strong
recommendation to \"continue to use a Washington-based attorney for
submittal and follow-up.\" Stern advised that \"coordination . . . is
required for adding frequencies\" and \"details should be checked with
your attorney with each case.\" [I.D.]{.underline}, ¶¶ 42, 50, 106; Time
Warner/Cablevision Exh. 67, Att. E.

14\. In March 1993, Jennifer Richter, an attorney at Pepper & Corazzini,
Liberty\'s licensing law firm, prepared an inventory of Liberty\'s
microwave licenses that listed paths that were already licensed or for
which applications were pending. She sent a final version of her
inventory of current authorizations to Nourain on April 6, 1993.
[I.D.]{.underline}, ¶¶ 65, 67; Time Warner/Cablevision Exhs. 3, 58. On
April 3 and 13, 1993, Richter had telephone conversations with Nourain
on the subject of the \"construction and operation of paths that \[had\]
not been granted.\" They discussed the problem presented by lengthy
Commission processing times, Liberty\'s need \"to get going with its
business,\" and whether Nourain could construct and operate a path
without an authorization. These conversations prompted her to write a
letter on April 20, 1993, entitled Construction and Operation of New
Microwave Paths, to Bruce McKinnon, Liberty\'s Executive Vice President
and Chief Operating Officer from 1991 to May 1993, who was in charge of
installation of buildings that contracted with Liberty for OFS service.
She wrote that her discussions with Nourain as to \"when it is
permissible for Liberty to construct and operate new microwave paths and
stations, and when it is not,\" and \"some things . . . revealed during
these conversations,\" gave both persons \"pause.\" [I.D.,]{.underline}
¶ 69; Time Warner/Cablevision Exh. 51; tr. 2037-38, 2259-61. She further
stated:

In order to ensure that everything Liberty does is in strict accordance
with the rules, and to ensure that your competitors are given no
ammunition against you, I am writing this letter to detail the
parameters within which construction and operation of new paths and new
stations is permissible.

[I.D.]{.underline}, ¶ 72; Time Warner/Cablevision Exh. 51. The letter
stated that \"there is a difference between construction and
operation,\" and advised that equipment could be installed prior to
grant but that the operation of microwave paths is \"only permissible
when the FCC has granted \[Liberty\] authorization to do so.\"
[Id.]{.underline} Richter also provided detailed information on the
number of days usually required to prepare and process various types of
applications. Richter stated that it took about thirty days for Nourain,
the interference clearance firm, and counsel to prepare an application,
and that it took from sixty to 120 days to process applications at the
Commission. She stated that, if Liberty was \"desperate\" to commence
operation sooner, it could request an STA. [Id.]{.underline};
[I.D.]{.underline}, ¶¶ 48, 69.

15\. Richter testified that in her conversations with Nourain, she had
become concerned about his lack of understanding of OFS licensing
procedures. [Id.]{.underline} at ¶ 48. She believed Nourain\'s confusion
could lead to activation of an unauthorized path. Tr. 2048. Richter
stated that she hoped her letter \"would concern somebody\" at Liberty
and that she wanted to receive a reaction to her letter. Richter
testified that no one at Liberty expressed any concern about inadvertent
activations. [Id.]{.underline} at ¶¶ 60, 69. Nourain sent a copy of
Richter\'s letter to Price with the notation, \"Peter: Pls. review and
advise.\" [Id.]{.underline} Price spoke to Richter after he received the
letter, but they only talked about the portion of her letter that
mentioned the possible use of STAs to deal with perceived lengthy
processing times at the Commission and did not discuss activation
compliance. He did not speak to Nourain. Price testified that he
understood Richter\'s use of the word \"pause\" as reflecting only her
concern over the time lags in getting licenses, and that her letter did
not alert or warn him that there were or might be illegal activations.
[Id.]{.underline} at ¶¶ 60, 70-72; tr. 2192-95.

16\. Nourain activated paths rapidly as customers were signed up by
Liberty for video services. He spent most of his time on activations and
very little on licensing. The application process began with Nourain
contacting Comsearch, Liberty\'s technical consultant, with location
coordinates. Comsearch then checked for interference from other
microwave systems on the paths identified for licensing. When Comsearch
notified Michael Lehmkuhl, a Pepper & Corazzini attorney who succeeded
Richter, that it had completed its interference study and there were no
objections, Lehmkuhl prepared a license application. Lehmkuhl\'s filings
were made within two weeks of receipt of the final Comsearch report.
Lehmkuhl coordinated with Nourain only to the extent of assuring the
accuracy of the technical data. To expedite matters, Pepper & Corazzini
arranged to receive presigned blank applications from Nourain. At least
thirty-five and possibly as many as 100 applications were received and
filed in this manner. Nourain assumed that applications would be filed
as soon as possible after Comsearch clearance was obtained. In addition,
Nourain assumed that Lehmkuhl simultaneously filed STA requests with
license applications and that the Bureau acted on the STA applications
\"within a few days.\" He testified that he acted \"under the assumption
that all these STAs were granted,\" and he assumed further that STAs
were in place at the time of activation. Based on these assumptions, and
without factual verification, he activated the buildings.
[I.D.]{.underline} at ¶¶ 43, 49, 54-57.

17\. Although Richter filed some STA requests after her letter to Price,
Lehmkuhl and Howard Barr, a senior attorney at Pepper & Corazzini, both
testified that there was no standing instruction to file STA requests
for Liberty as a matter of course. In fact, counsel informed Liberty in
October 1993 that the FCC disfavored the routine filing of STA requests
and counsel ceased filing them at that time. [Id.]{.underline} at ¶¶
86-87; tr. 1097, 1188-90, 1514-15, 1795-96, 2064-65; Time
Warner/Cablevision Exh. 67, p. 13. In addition, the record shows that
activations of the nineteen buildings referenced in the
[HDO]{.underline} occurred within a range of four to 198 days after
finalization of the Comsearch reports, with no pattern of similar
activation times corresponding to Nourain\'s assumptions of
authorizations. [I.D.]{.underline}, ¶ 45.

18\. Lehmkuhl, Richter, and Barr all testified that they had no
knowledge of Nourain\'s compliance methodology. Nourain did not inform
the attorneys when he was activating a building. McKinnon stated that
there was no procedure established for Pepper & Corazzini to monitor
licenses and the timing of activations. No one knew at any given moment
the progress of the licensing procedure from frequency coordination to
application to commencement of service. Nourain illegally activated
microwave paths both before and after receiving Richter\'s April 1993
letter explaining the difference between construction and operation and
advising how long application preparation and processing took. And, even
after it received Richter\'s letter expressing concern about Nourain\'s
compliance, Liberty\'s management never monitored Nourain\'s erroneous
time assumptions or his path activations. [I.D.]{.underline}, ¶¶ 53-54,
57-60; Joint Motion at 14-15.

19\. In addition to the information Liberty received in the Richter
letter, Lehmkuhl provided Price and Nourain with an inventory of
Liberty\'s licenses and pending applications as of February 24, 1995.
The inventory listed pending applications, granted licenses, transmit
location information, and status and path information for each
transmitter site. The license status of each path was identified as
pending or granted. Liberty also prepared internal weekly Installation
Progress Reports, containing information on the status of installations.
The February 23 and March 2, 1995 reports indicated a \"complete\"
status for six buildings later listed in the [HDO]{.underline} as having
unauthorized paths. Price forwarded the inventory\'s cover memorandum to
Liberty owners Howard and Edward Milstein and to its other counsel.
Howard Milstein testified that he would have expected a recipient of
Lehmkuhl\'s memorandum to compare its inventory of licenses with
Liberty\'s own list of activated facilities. Edward Milstein stated,
however, that no one at Liberty reconciled FCC authorizations with
activated facilities. Price also attended weekly staff meetings of
senior management at which scheduling for construction related to the
installation of OFS paths was regularly discussed, but he testified that
he did not make the connection or attempt any comparison between
Lehmkuhl\'s memorandum and Liberty\'s reports. [Id.]{.underline} at ¶¶
32, 40, 61; Time Warner/Cablevision Exhs. 14, 65; Liberty/Bureau Exh.
1;[^4] tr. 559, 1618, 2175-76. Lehmkuhl also prepared a second inventory
on April 28, 1995 that indicated premature operations at twelve of the
nineteen buildings listed in the [HDO]{.underline}. [Id]{.underline}. at
¶¶ 34, 45, 74; [see]{.underline} ¶ 28, [infra]{.underline}.

20\. The IAR revealed that, out of a total of 126 buildings Liberty
served by OFS paths, Liberty activated ninety-three paths without
authorization between June 1992 and April 1995. Liberty activated six of
the nineteen unauthorized microwave facilities identified in the
[HDO]{.underline} before an application was filed. Of the seventy-four
additional unauthorized activations disclosed in the IAR, there were
thirty-two activations before an application was filed. Of this latter
group, there was a hiatus between activation and filing ranging from
eight days to thirteen months, with an average hiatus between activation
and application of 2.43 months. In all, Liberty activated service on
thirty-eight of the prematurely operated paths prior to filing an
application for a license. Path activation was expensive \-- estimated
at \$25,000 per path \-- and highly labor intensive for Nourain, who
worked up to sixty hours a week. Nourain testified that activations had
to be coordinated with marketing. The record also showed that Liberty\'s
executive offices were physically located in a different part of
Manhattan from where Nourain worked, Nourain was not invited to the
weekly staff meetings at which planned installations and activations
were discussed, and licensing issues were not a topic of discussion at
the meetings even though Price, McKinnon, and Liberty owners Howard and
Edward Milstein were present. [I.D.]{.underline}, ¶¶ 44 (and Table I),
46, 49, 55, 62-63 (and Table II), 64; Time Warner/Cablevision Exh. 67;
tr. 683-84.

21\. McKinnon testified that during his tenure at Liberty, where he
supervised construction and activation, no paths were activated without
Commission licenses, and that he had no knowledge of unauthorized
activations. According to information contained in the IAR, however,
during McKinnon\'s tenure, there were twenty-three paths illegally
activated, of which nineteen were activated before applications were
filed. The Report concluded that \"Mr. McKinnon was aware from Mr.
Nourain that some buildings were being activated without a specific FCC
license or STA.\" [I.D.]{.underline}, ¶¶ 52-53; Time Warner/Cablevision
Exh. 67. Furthermore, according to the Report, Nourain \"believe\[d\]
that he told Mr. Price that \[Liberty\] was rushing and might not get
approvals on time.\" [I.D.]{.underline}, ¶ 54; Time Warner/Cablevision
Exh. 67. In addition to McKinnon, the Report concluded that Nourain,
Richter, and Anthony Ontiveros, Liberty\'s General Manager and Director
of Operations, also probably knew that there were illegal activations.
[I.D.]{.underline}, ¶ 30.

[2.]{.underline} [Statements Made in Applications and
Pleadings]{.underline}

22\. In addition to the evidence of Liberty\'s unauthorized activations,
the ALJ also made findings pertaining to Liberty\'s representations in a
series of STA requests and other pleadings. First, on May 4, 1995,
Liberty filed fourteen applications for STAs relating to the paths that
were already operating without authority. In support of its requests,
Liberty stated that its applications were \"in technical order\" and
argued that STAs were necessary because Liberty had to deliver service
within thirty days or risk losing its customers. Although Liberty stated
that \"\[a\]ny further delay in the consideration of the aforementioned
applications . . . seriously undermines Liberty\'s ability to deliver
service,\" Liberty did not disclose that the STAs concerned ongoing
unauthorized operations. [Id.]{.underline} at ¶¶ 74-75, 78; Time
Warner/Cablevision Exh. 17. On May 26, 1995, Liberty filed a reply to
Time Warner\'s opposition to its May 4 STA requests and again did not
mention that the subject facilities for which it was seeking STAs were
already in operation. [I.D.]{.underline}, ¶ 82; Time Warner/Cablevision
Exh. 19.

23\. On May 17, 1995, Liberty filed a surreply to Time Warner\'s May 5,
1995 pleading, which had identified two Liberty facilities as providing
microwave service without authorization. Liberty for the first time
admitted violations, the two identified by Time Warner and the
unauthorized activations at thirteen other facilities. Liberty had known
of at least twelve of these operations since April 27 or 28, 1995.
[I.D.]{.underline}, ¶ 45. These unauthorized facilities included the
fourteen buildings for which Liberty had requested STA authority on May
4, 1995 (without discussing their operational status) and a fifteenth
building discussed below for which Liberty did not seek an STA until May
19, 1995. [See]{.underline} ¶ 24, [infra]{.underline}. Liberty also
asserted that it has \"traditionally sought special temporary
authority\" to operate pending Commission approval of license
applications and that \"\[i\]t has been Liberty\'s pattern and practice
to await a grant of either a pending application or request for STA
prior to making a microwave path operational.\" Liberty further
explained that Nourain commenced operation prior to grant because he
\"assumed grant of the STA requests, which in his experience had always
been granted within a matter of days of filing.\" [I.D.]{.underline}, ¶¶
75, 79-80; Time Warner/Cablevision Exh. 18.

24\. On May 19, 1995, Liberty filed an STA request for a fifteenth
microwave facility at 2727 Palisades Avenue without disclosing in the
filing that unauthorized service had already been activated at that
facility on April 24, 1995. [I.D.]{.underline}, ¶¶ 75, 81; Time
Warner/Cablevision Exh. 38. In a May 24, 1995 amendment to the STA
request for Palisades Avenue, Liberty again did not disclose that the
facility was already in operation. [I.D.]{.underline}, ¶ 82; Time
Warner/Cablevision Exh. 39. On July 12 and 24, 1995, Liberty again
amended its May 19 Palisades Avenue STA request, stating that authority
was required to operate until grant of the underlying license. It did
not disclose therein that the Palisades Avenue facility was operating
without authorization. [I.D.]{.underline}, ¶ 84; Time Warner/Cablevision
Exhs. 40, 43. As noted above, however, Liberty had pointed out in its
May 17 surreply that the Palisades facility was already operating.

25\. In response to Liberty\'s May 17, 1995 disclosure that it had
prematurely activated fifteen buildings, on June 9, 1995 the Bureau
requested that Liberty provide additional information about its
unlicensed operations. On June 16, 1995 Liberty responded by listing the
addresses, dates of commencement of service, and number of subscribers
for the fifteen buildings. In the meantime, as a result of its internal
investigation, Liberty discovered four more instances of premature
operations. On July 17, 1995, Liberty filed applications for these four
locations. These facilities were already in operation on the date the
applications were filed, but the applications did not disclose that
information. Lehmkuhl prepared the applications, and Nourain and Barr
reviewed the applications prior to filing. Liberty did not subsequently
amend its June 16 response to the Bureau to reveal the four additional
unauthorized activations. On July 24, 1995, however, Liberty filed STA
requests for the four facilities that contained the disclosure that
these paths were already activated. [I.D.]{.underline}, ¶¶ 75, 83, 85;
Time Warner/Cablevision Exhs. 20, 21, 25, 27.

[3.]{.underline} [Liberty\'s Document Production]{.underline}

26\. The ALJ also made findings with regard to Liberty\'s disclosure in
this proceeding of documentary evidence concerning its premature
microwave activations. With respect to Liberty\'s IAR, the ALJ ordered
production of the Report on September 16, 1997 after the court of
appeals rejected on the merits Liberty\'s argument that the Report was
protected from disclosure by FOIA Exemptions 4 and 6, 5 U.S.C. §§
552(b)(4) and (b)(6), and concluded that Liberty\'s attorney-client and
work-product privilege claims were not properly raised before the
Commission. [See]{.underline} [Bartholdi Cable Co., Inc. v.
FCC]{.underline}, 114 F.3d at 279, 281-83. The audit of Liberty\'s
licensing practices was conducted by Constantine & Partners. In an
affidavit associated with the Report, Lloyd Constantine stated that the
auditing attorneys were given \"complete access to Liberty\'s books and
records and . . . unlimited opportunity to interview all Liberty
personnel, officers and outside-retained counsel \[Pepper &
Corazzini\].\" The Report itself stated that the investigation included
a review of \"documentation related to the initiation and operation of
service to each of the 126 buildings served by \[OFS\] connection.\"
Because Liberty represented that the Report was \"comprehensive\" in
nature, and because it contained relevant information regarding the
number of undisclosed activations and knowledge on Liberty\'s part of
those activations, the ALJ inferred that Liberty was motivated to keep
the Report out of evidence to avoid undermining its direct case.
[I.D.]{.underline}, ¶¶ 23, 25, 29-30; Time Warner/Cablevision Exhs. 29,
67.

27\. Liberty withheld Lehmkuhl\'s February 24, 1995 inventory of
licenses and pending applications from initial discovery on April 15,
1996 based on an assertion of attorney-client privilege, and did not
make the inventory available until June 27, 1996. [See]{.underline}
[Orders]{.underline}, FCC 96M-53, released March 20, 1996; FCC 96M-164,
released June 27, 1996. Similarly, Liberty did not produce Nourain\'s
April 26, 1995 memorandum, which Price claimed informed him of the
unauthorized operations, until January 13, 1997, the first day of
hearing when Nourain was scheduled to testify. Price testified that, on
April 27, 1995, the day after Nourain prepared his memorandum, Price saw
it and discussed the matter of unlicensed facilities with counsel in a
conference call. During that call, Price decided not to inform the
Commission of the activations until Liberty had investigated the matter.
The Joint Motion for Summary Decision filed by Liberty and the Bureau
did not disclose the Lehmkuhl inventory, the Nourain memorandum, or the
conference call. [I.D.]{.underline}, ¶¶ 31-33, 73; tr. 1386.

28\. Lehmkuhl prepared a second inventory, dated April 28, 1995. This
inventory, prepared at Nourain\'s request, also confirmed that OFS paths
had been activated before authorization at a number of the sites later
identified in the [HDO]{.underline}. In an accompanying memorandum,
Lehmkuhl stated that the Commission staff had indicated future STA
requests would probably not be granted because of the pendency of Time
Warner\'s petition to deny, but Lehmkuhl advised that Liberty should
still apply for STAs because of the \"seriousness of the situation.\"
Liberty did not produce the Lehmkuhl document, which had not been
identified as a privileged item, until January 6, 1997, one week before
the hearing. In his testimony, Lehmkuhl stated that the relevant files
at Pepper & Corazzini had been searched by counsel in April 1996 and the
inventory and memorandum were in the files at that time, but were not
turned over because of oversight. [I.D.]{.underline}, ¶¶ 34, 45, 74;
Time Warner/Cablevision Exh. 34; tr. 1292-94, 1317.

29\. Liberty also did not disclose in discovery the April 20, 1993
Richter letter. The letter was produced after being uncovered in the
course of cross-examination of Barr on January 28, 1997.
[See]{.underline} [Order]{.underline}, FCC 97M-14, released February 5,
1997. The Richter letter had been attached to the August 14, 1995 IAR,
as was the June 16, 1992 memorandum of instruction from Stern to
Nourain, which was not produced either. [I.D.]{.underline}, ¶¶ 25, 35.

30\. Finally, in depositions given in May 1996, Price and Howard and
Edward Milstein all stated that they may have first learned of the
premature OFS activations in May 1995 as a result of Time Warner\'s May
5 pleading. When confronted with the February and April 1995 Lehmkuhl
inventories and the April 1995 Nourain memorandum at the January 1997
hearing session, however, these witnesses changed their testimony to say
they learned of the activations in April 1995, prior to Liberty\'s May
1995 STA requests and Time Warner\'s May 5, 1995 pleading identifying
unlicensed operations. [Id.]{.underline} at ¶ 36.

[B.]{.underline} [The I.D.\'s Conclusions]{.underline}

31\. The ALJ concluded that Liberty activated OFS paths in reckless
disregard of its licensing obligations, deliberately withheld full
disclosure in order to obtain OFS authorizations, made false statements
in its filings regarding its activation practices, and tried to mislead
the tribunal by withholding relevant evidence. He found that Liberty
violated 47 C.F.R. §1.65 because it did not report its unlawful
activations \"as promptly as possible\" after April 27, 1995, the date
Price said he discovered them. Liberty was motivated to delay reporting
the unauthorized activations to the Commission, in the ALJ\'s view,
because Price hoped to obtain STAs for its unauthorized operations
before Time Warner learned the facts. The ALJ also concluded that
Liberty\'s continued failure to disclose the information until May 17,
1995 and its misstatements of fact on that and subsequent dates,
discussed in detail below, constituted a pattern of nondisclosure in
violation of 47 C.F.R. §1.17. In reaching these conclusions, the ALJ
rejected Liberty\'s defense that its unauthorized activations were
solely the result of employee negligence and an executive failure to
supervise adequately. Therefore, the ALJ determined that it would not be
appropriate to impose only a forfeiture for Liberty\'s misconduct in
this case as proposed by the Joint Motion. In view of his findings, the
ALJ concluded that Liberty\'s applications should be denied.

32\. As to Liberty\'s disregard of its licensing obligations, the ALJ
specifically concluded that, although Liberty continuously prematurely
activated microwave paths, Price did not heed Richter\'s April 1993
warning that it should be concerned about unlawful activations and
attentive to the steps and time required for Commission authorization.
Nor did he provide guidance to Nourain, as requested, on Richter\'s
expressed concern that there might be premature activations. Likewise,
the ALJ found that Price chose to ignore Lehmkuhl\'s February 1995
inventory, which listed a number of applications for activated paths as
pending, and which provided the same type of information about
activations that Price admittedly learned in April 1995. By comparing
the Lehmkuhl inventory with its weekly reports, the ALJ found, Liberty
could readily have ascertained that these prematurely activated paths
had pending rather than granted license applications. The ALJ also found
that Liberty\'s unauthorized operations were too numerous and the time
lags too significant for Liberty to credibly deny knowledge of them
prior to April 1995. Nourain did not work \"in a vacuum,\" and someone
in Liberty\'s management must have known of his methodology. In the
ALJ\'s view, Liberty\'s principals \"recklessly disassociated
themselves\" from any concern about whether activations were authorized.
Nourain, too, in the ALJ\'s view, could have learned of the unauthorized
activations prior to April 1995. Stern alerted him in 1992 to the need
for close supervision of licensing in order to avoid premature
activations; he had conversations with Richter and received her
inventories in 1993, and was sufficiently concerned to ask Price for
advice; and he had access to Lehmkuhl\'s February 1995 inventory and
Liberty\'s Installation Progress Reports.

33\. With respect to Liberty\'s lack of candor, the ALJ concluded that
from May 4, 1995 to July 17, 1995, Liberty engaged in a pattern of
failure to disclose, misrepresentation, and lack of candor in pleadings
filed with the Commission. Liberty projected business losses from
prospective customer cancellations if STA relief was denied, the ALJ
found, and Liberty was thus motivated to present the facts as favorably
as possible when it filed its fourteen STA requests on May 4, 1995.
Accordingly, it did not disclose the premature activations in order to
mislead the Commission that the fourteen pathways were not in operation.
After Time Warner alleged two illegal operations on May 5, 1995, Liberty
disclosed fifteen unauthorized activations in its May 17, 1995 reply,
but misrepresented in the same pleading by claiming that it had a
pattern and practice of licensing compliance. Its subsequent STA
applications also failed to disclose the unauthorized activations.
Liberty also did not disclose its four additional activations in its May
17, 1995 reply to Time Warner or its June 16, 1995 response to the
Bureau, and its July 17, 1995 applications for the four paths did not
provide an explanation for its earlier failure to disclose the four
additional activations.

34\. Finally, the ALJ concluded that Liberty withheld significant
documentary evidence from the proceeding to such an extent that it
cannot be trusted to be reliable in the future. Most significant, in the
ALJ\'s view, Liberty \"strategically withheld\" production of its IAR
\"under a waived assertion of the attorney-client privilege.\" Although
Liberty relied on the IAR to argue in the Joint Motion that it was
acting responsibly by fully investigating and reporting the facts to the
Commission, it used its erroneous assertion of confidentiality as a tool
to keep the highly relevant information in the Report out of the
proceeding as long as possible. Exacerbating the situation, the ALJ
held, was the fact that the Richter letter and the Stern memorandum were
attached to the Report and were not made available. In addition, the ALJ
noted, the two Lehmkuhl inventories and the Nourain memorandum were not
produced until the eve of trial, even though they did not qualify as
privileged documents. Timely disclosure of the underlying documents, the
ALJ found, would have permitted more accurate deposition testimony.
Although it could not be conclusively determined that the withholdings
were intentional, the ALJ stated, Liberty\'s pattern was to deprive the
tribunal of timely evidence and its apparent purpose was to mislead by
omitting relevant documents from the Joint Motion in the expectation
that there would be no further inquiry.

[C.]{.underline} [Exceptions]{.underline}

35\. As a procedural matter, Liberty contends that the ALJ violated the
Commission\'s summary decision procedures by issuing his
[I.D.]{.underline} immediately following denial of the Joint Motion,
instead of holding a hearing on the remaining issues in accordance with
47 C.F.R. § 1.251(e). On the merits, Liberty initially argues that the
[I.D.]{.underline}\'s negative candor findings with regard to Liberty\'s
confidentiality and privilege assertions relating to the IAR, and its
judicial appeal of the Commission\'s ruling, are inconsistent with
Liberty\'s constitutional right to due process in filing its appeal,
federal rules of civil procedure, its right to judicial review under 47
U.S.C. § 402, and its right to submit confidential materials under 47
C.F.R. § 0.459. Furthermore, Liberty states that the ALJ was wrong to
conclude that Liberty asserted the privilege as a tool to keep relevant
information hidden. In fact, Liberty points out that it made the Report
available to the Bureau on August 14, 1995, and states that Time Warner
rejected its pre-hearing offer to produce a redacted version of the
Report. Moreover, Liberty asserts that its confidentiality claim and
court appeal preceded issuance of the [HDO]{.underline}, so the ALJ was
wrong to infer that Liberty brought the appeal in order to manipulate
the hearing proceeding.

36\. Liberty also disputes the ALJ\'s candor finding based on its late
production of certain other documents. Liberty asserts that it produced
some 15,000 pages of documents during discovery and quickly corrected
any inadvertent omissions. Specifically, it states that the February 24,
1995 Lehmkuhl inventory was withheld because of a mistaken privilege
designation, and the April 26, 1995 Nourain memorandum and April 28,
1995 Lehmkuhl inventory were discovered shortly before the January 1997
hearing. Moreover, Liberty states, the Stern memorandum was not produced
because it preceded the January 1, 1993 discovery cut-off date, and both
it and the Richter letter were submitted to the Bureau as attachments to
the IAR before the [HDO]{.underline} was issued.

37\. Liberty then excepts to the [I.D.]{.underline}\'s conclusion that
it deliberately withheld knowledge of the premature activations in a
series of pleadings beginning May 4, 1995 in order to deceive the
Commission. Liberty states that Price and outside counsel became aware
of the activations during the April 27, 1995 conference call and decided
to disclose the violations when the facts were gathered and verified.
Liberty avers that it initiated an accelerated audit to determine the
extent of the activations and, on May 17, 1995, disclosed fifteen
unauthorized operations. Liberty then ordered a fuller investigation,
which resulted in the IAR, revealing an additional seventy-four
unauthorized operations, that was disclosed to the Bureau in confidence
on August 14, 1995, and directed counsel to develop a compliance
program, which Liberty subsequently instituted. Although Liberty
concedes that it would have been better immediately to report the
violations discovered in April, it contends that it did not violate 47
C.F.R. § 1.65 because it actively investigated the matter in order to
make complete disclosure and revealed the premature activations within
thirty days. Liberty asserts that the ALJ erred in finding that the
statements in its May 17 pleading regarding Liberty\'s \"pattern and
practice\" and the extent of known violations were not candid because
Liberty believed the statements to be true at the time, and it did not
learn that there were additional unauthorized activations until weeks
later upon completion of the IAR. Liberty argues that its failure
expressly to disclose the fifteen premature activations in subsequent
STA requests and amendments does not establish an intent to deceive
because Liberty already had apprised the Commission of the same
unlicensed paths in its May 17 pleading.

38\. Liberty also excepts to the [I.D.]{.underline}\'s conclusion that
its principals must have known about the premature activations before
April 1995. Specifically, Liberty claims, the April 20, 1993 Richter
letter did not state that premature activations had occurred and Richter
testified that she had no knowledge of unauthorized operations when she
wrote the April 20 letter. Also, Liberty asserts, Richter\'s March and
April 1993 inventories were not useful for determining license status,
and Nourain did not look to them for that purpose. Whereas Nourain\'s
April 26 1995 memorandum on its face alerted it to a problem, Liberty
states, Lehmkuhl\'s February 24, 1995 inventory was a multi-page
document containing technical information which, only on hindsight,
should have been considered by Price as a warning sign. Even if its
witnesses modified their testimony as to when they learned of the
activations (that is, that they learned in April 1995 rather than in May
1995), Liberty maintains that this change was [de]{.underline}
[minimis]{.underline}. Also, Liberty argues, reliance on the IAR for the
inference that Nourain probably informed Price of unlawful activity is
rebutted by the uncontroverted record evidence that none of its
principals knew about these activations before April 27, 1995.

39\. Next, Liberty contends that the ALJ erroneously concluded that the
premature activations could not be due to inadvertence. Liberty argues
that it had reason to believe Nourain was well qualified to perform his
engineering duties, and he was not excluded from Liberty\'s weekly
meetings to shield management from knowledge of illegal activities.
Furthermore, Liberty contends, the sheer number of activations does not
support the ALJ\'s conclusion that Liberty must have known of them.
Liberty also disputes the ALJ\'s conclusion that the Stern memorandum
detailed the application process to Nourain. Liberty avers that the
Stern memorandum and Stern\'s testimony both indicate that Nourain
claimed he was already familiar with the licensing process. Finally,
Liberty argues that, in the absence of intentionally deceptive conduct
by its principals, disqualification is inappropriate. Moreover, Liberty
states, even if the ALJ\'s findings are accepted, the forfeiture jointly
proposed by Liberty and the Bureau is the correct remedy,[^5]
particularly since the Commission has imposed forfeitures in cases
involving more serious misconduct, and there was no harm caused to the
public as a result of the activations in this case.

40\. In reply, Time Warner and Cablevision submit that there are at
least three instances of lack of candor that are sufficient to
disqualify Liberty. First, although Liberty admits it knew in April 1995
of unlicensed operations, its fourteen May 4 STA requests did not state
that these facilities were already operating but, to the contrary,
argued that STAs were needed to avoid losing customers. Second,
Liberty\'s May 17 surreply did not identify all of Liberty\'s unlicensed
operations, but did misrepresent that Nourain activated the unauthorized
paths based on the mistaken assumption that applications and STA
requests had been granted within a reasonable time of filing whereas, in
fact, some facilities had been activated before applications were filed
and others shortly thereafter. Third, Liberty moved for summary judgment
based in part on the representation that Nourain was uninformed about
the licensing process, even though he had received a memorandum of
instruction when he began his job in 1992. Time Warner and Cablevision
also support the ALJ\'s conclusions that Liberty\'s lack of candor in
this proceeding is further demonstrated by its unjustified delay in
producing damaging documents, and that Price\'s self-serving testimony
should be rejected because Liberty either knew it was operating
microwave facilities illegally before April 1995 or recklessly
disregarded its obligations to the FCC.

41\. In its reply, the Bureau explains that its support for Liberty\'s
position has declined in light of various developments following the
filing of the Joint Motion, including disclosure of the February 1995
Lehmkuhl memorandum and the April 1993 Richter letter, testimony that
raised concerns about Price\'s candor, and testimony by Liberty\'s
witnesses that conflicted with their deposition testimony. The Bureau
agrees with the ALJ\'s conclusions that Liberty\'s overall practice was
to belatedly disclose highly relevant information such as the IAR and
that, in view of Liberty\'s business plan to rapidly activate service,
and the abundant warnings against premature activation, someone at
Liberty must have been aware of the violations prior to April 1995. The
Bureau also concurs with the ALJ that Liberty\'s disregard of the
Commission\'s requirements could not have been the result of mere
inadvertence. Finally, in agreement with Time Warner and Cablevision,
the Bureau stresses that the ALJ\'s credibility findings should be given
decisional weight.

[D. Discussion]{.underline}

42\. As a preliminary matter, we conclude that the ALJ did not commit
reversible procedural error by denying the Joint Motion in the course of
the [I.D.]{.underline} Summary decision may be granted only upon a
showing that there is no genuine issue of material fact for
determination at the hearing. 47 C.F.R. § 1.251(a)(1), (d); [Big Country
Radio, Inc.]{.underline}, 50 FCC 2d 967 (Rev. Bd. 1975). As the ALJ
explained in the [I.D.]{.underline}, the issues relating to premature
OFS microwave activations could not be summarily decided because of
disputed questions involving Liberty\'s credibility and candor that were
central to the proceeding. Subsequent to the January 1997 hearing, the
ALJ advised the parties that he would likely deny summary decision and
would rule on the Joint Motion in the [I.D.]{.underline}
[See]{.underline} [Orders]{.underline}, FCC 97M-63 and 97M-64, released
April 21, 1997. Not only was Liberty on notice of the ALJ\'s intentions,
but it also had a full opportunity to present evidence at the hearing on
all disputed issues. Hence, although 47 C.F.R. § 1.251(e) provides that
\"the hearing will proceed on the remaining issues\" when summary
decision is either denied or only some of the issues are decided, strict
adherence by the ALJ to this procedure in this case was unnecessary
because the hearing was already completed and there was no prejudice or
surprise to Liberty as a consequence of the ALJ\'s actions.

43\. In considering the merits, we turn initially to the ALJ\'s
conclusion that Liberty must have known of or suspected unauthorized
operations prior to late April 1995, the date it told the Commission it
learned of the violations, and, hence, that its numerous violations
cannot be excused as mere negligence but amounted to a reckless
indifference to its responsibility to obtain licenses. The ALJ\'s
conclusion is based on two principal pieces of documentary evidence:
first, the April 1993 Richter letter and, second, the February 1995
Lehmkuhl inventory. We need not address whether or not Richter\'s
inventories identified a problem because we find that Richter\'s April
letter, written to one of Liberty\'s two senior managers, was a clear
warning to Liberty by its legal counsel that, based on her prior
discussions with Nourain, there was a serious danger of future
unauthorized operations. Richter stated in her letter that her
conversations with Nourain, in which he asked whether he could proceed
without a license, gave both parties \"pause\" because of \"some things
\[that\] were revealed.\" She emphasized in the letter in plain language
that Liberty could construct a facility but not operate it without
Commission authorization. Her intention in sending the letter to
McKinnon was to make sure that, as Nourain\'s superior, he understood
the rules and her concern that Nourain was confused about licensing
procedures. Tr. 2054-55. The letter also stated in cautionary language
how long FCC application processing takes. Despite Richter\'s efforts,
and although Nourain forwarded the letter to Price with a specific
request for advice, Price did not discuss the letter with Nourain, or
Liberty\'s owners, or investigate the possibility that there were or
might later be unauthorized operations. In its exceptions, Liberty
points out that Price testified that Richter\'s letter did not state
that Liberty was operating OFS paths illegally, and Richter agreed in
her testimony that she was only concerned about future violations. Tr.
2044, 2060-61, 2194-95. In this regard, although the IAR concludes that
Richter apparently learned from her conversations with Nourain of
unauthorized activations, there is no direct evidence that she informed
Liberty. Nevertheless, the letter to Liberty management, from a Liberty
attorney responsible for licensing compliance, describing her obvious
alarm over the lack of understanding of basic licensing procedures by
Liberty\'s engineer who was responsible for building activations, was an
overt admonition and caution about future compliance that someone in
Price\'s position could not reasonably have ignored. Yet, apart from
focusing on Richter\'s incidental reference to the possible use of STAs
to overcome processing time lags, even with the most favorable reading
of the record, Price appears to have done just that.

44\. Two years later, Liberty received even more explicit information in
the form of the Lehmkuhl inventory. This was a list of Liberty\'s
current microwave licenses and applications that counsel sent to Price
and Nourain. A number of buildings at which Liberty had commenced
service were identified on the inventory as the subject of \"pending\"
applications. Although Liberty argues that the inventory was too
\"technical\" to provide adequate notice of premature activation, we
disagree because the inventory clearly indicates the license status of
each path as either pending or granted. Moreover, Liberty was aware of
the status of its installations from its internal weekly progress
reports, and Howard Milstein testified that he would have expected
Liberty to compare its attorney\'s report with Liberty\'s own weekly
operational records, and Price admitted that such a comparison would
have revealed the existence of Liberty\'s unlicensed but operating
facilities. Tr. 559, 1417-18; Liberty/Bureau Exh. 11, at 174-78. But
Price stated that he did not make such a comparison. Hence, although
Price received communications from Liberty\'s counsel giving him
cautionary advice about microwave licensing procedures in 1993 and
specific data on the current status of all its applications in 1995, and
could have used this information to confirm the possibility or existence
of unlicensed operations, he disregarded the information.

45\. Although Price freely admitted to a lack of executive oversight
(tr.1413), Liberty\'s claim that he reasonably relied on engineering and
operations staff to coordinate with counsel on licensing is undermined
by other evidence. For example, Price said he set up a compliance
procedure in a memo to McKinnon in 1992, but McKinnon testified that he
understood the memo as instructing him to spend less time monitoring
licensing procedures and more time on installing facilities. Tr.
1396-97; Time Warner/Cablevision Exh. 41, at 19-20. The memo, which is
only one paragraph long, supports McKinnon\'s view because it directs
him to \"concentrate\" on \"planning, installation, and operation,\"
while leaving FCC licensing matters to Stern and counsel. Time
Warner/Cablevision Exh. 67, Att. D. Moreover, the efficacy of Price\'s
memo as a compliance mechanism is questionable because, although it
indicated that Price wanted Stern to provide audits of Liberty\'s
applications, Stern did not do so, and Price took no further steps to
insure that audits were generated. Joint Motion, at 11-12. Nor does it
appear that Price issued any other instructions subsequent to his brief
1992 memo to insure licensing compliance, notwithstanding the specific
warning contained in Richter\'s letter. Liberty also relies on Price\'s
assertion that he assumed Nourain understood what he was doing because
he was recommended to Price and was supervised by Ontiveros, who oversaw
building construction. Ontiveros testified, however, that he did not
supervise Nourain\'s licensing activities, although he admitted he
should have been more involved. Tr. 1439-40, 1688, 1691-92, 1702. In any
event, we believe that it was incumbent upon Price to review Nourain\'s
performance after receiving Richter\'s letter and Nourain\'s explicit
request for advice about the letter, but Price simply ignored the gist
of the letter and Nourain\'s request. And, whatever Price may have
thought about Nourain\'s activities, Liberty\'s licensing attorneys and
Nourain agreed that only Nourain actually knew what he was doing.

46\. Price attributed his first knowledge of Liberty\'s unauthorized
operations to Nourain\'s memorandum, which he saw on April 27, 1995. He
testified that the memorandum alerted him to a problem because it listed
paths for which STA applications were being filed and which he knew
Liberty was already operating. He stated that it was a simple matter to
deduce from the memorandum that there were unauthorized operations
because he knew some of the buildings listed were already being provided
service. Tr. 1362-64, 1373-75, 1385-86, 1417-18. We agree with the ALJ
that Price as easily could have learned of the activations in February
1995 by using his knowledge of Liberty\'s operations to compare with the
equally accessible information contained in the Lehmkuhl inventory.
Neither document stated directly that there were unauthorized
operations, but both provided data from which that conclusion could be
drawn by those familiar with Liberty\'s operations. In addition, we
agree with the ALJ that Liberty\'s professed inability to learn the
truth at an earlier time is undermined by the extraordinary number of
unauthorized activations revealed in the record and the extensive time
lags between activations and filings that occurred over a prolonged
period of time. The IAR shows that, of 126 buildings to which Liberty
provided OFS service, there were ninety-three unauthorized activations,
which is approximately three-fourths of the total. In addition, Liberty
prematurely activated thirty-eight of these paths, or over two-fifths of
its unauthorized operations, prior to filing an application with the
Commission. And, of the nineteen unauthorized microwave facilities
identified in the [HDO]{.underline}, six, approximately one-third, were
activated before an application was filed. The ninety-three violations,
which took place over nearly a three year period between June 1992 and
April 1995, can hardly be characterized as isolated incidents or
atypical occurrences, such as might be expected to result from simple
employee negligence or neglectful managerial oversight, as Liberty would
have us find. Rather, they establish an overwhelming pattern of
unlicensed operations which, it is reasonable to conclude, would have
been noticed by management officials who were even minimally attentive
to their licensing responsibilities.

47\. Furthermore, the IAR indicates that several agents or managerial
employees of Liberty knew that there were illegal activations prior to
April 1995. First, consistent with Liberty\'s wish to activate paths
rapidly to accommodate new subscribers, the Report finds that Nourain
believed he informed Price that Liberty was hurrying and might not get
FCC approvals before paths were activated. Second, the Report concludes
that Richter appears to have learned from Nourain of specific
unauthorized activations, which, in turn, implies that Nourain knew
these activations were premature. Third, consistent with the ALJ\'s
finding that there were twenty-three paths illegally activated during
the time McKinnon supervised construction and activation of Liberty\'s
microwave installations, of which nineteen were activated before
applications were filed, the Report concludes that McKinnon knew that
licenses had not been obtained for at least some of these microwave
paths. Although McKinnon testified to his belief that these operations
were covered by an experimental authorization Liberty had received from
Hughes Aircraft, Stern explained in a January 1992 memorandum to
McKinnon and Price that the Hughes authorization was a \"Test License\"
that could be used only \"for [test purposes]{.underline}\" and not for
\"commercial service.\" Time Warner/Cablevision Exh. 67, Att. C
(Emphasis in original). Moreover, in her April 1993 letter to McKinnon,
Richter reiterated that the Hughes experimental license could only be
used to test equipment, and that Hughes believed it \"is in
contravention of its authority under the license\" for operators to use
it to serve subscribers while their station applications are pending.
Time Warner/Cablevision Exh. 51. Thus, McKinnon (and Price) were on
notice that the Hughes license could not justify Liberty\'s unlicensed
operations. Furthermore, although Liberty seeks to distance McKinnon
from its management by claiming that he was not a principal but only an
\"administrator\" (Exceptions at 15 n. 12), the record establishes that
he had management and supervisory authority (over Nourain and Stern)
because he was Executive Vice President and Chief Operating Officer in
charge of day-to-day operations and installation of buildings that
contracted with Liberty for service. Time Warner/Cablevision Exh. 41;
Joint Motion at 9; Time Warner/Cablevision Exh. 67. Finally, the Report
states that Ontiveros, Liberty\'s General Manager, who had overall
responsibility for technical and operational matters relating to the
provision of service, also learned in late 1994 or early 1995 that one
or two buildings had been improperly activated and raised the issue of
unrealistic time constraints on the activation of service to a
particular building at a December 1994 meeting.

48\. Insofar as Liberty excepts to the ALJ\'s reliance on the IAR to
find that Nourain likely informed Price of unlawful activity because the
hearing testimony of its principals shows they did not know about these
activations before April 27, 1995, we must consider the ALJ\'s
credibility findings based on his observation of the witnesses. These
findings do not support Liberty\'s position. Most important, with regard
to Price, the ALJ found that \"neither substantial nor reliable evidence
supports\" Price\'s explanations, that \"Price\'s credibility remains
suspect,\" that his testimony that he knew of or suspected no illegal
activations before April 1995 \"is not sufficiently persuasive\" and
\"will not be accepted as reliable evidence,\" and that his testimony
explaining his understanding of the Richter letter was \"vague,\"
\"lacking credibility,\" and \"evasive.\" [I.D.]{.underline}, ¶¶ 40, 61
n.33, 64, 70-71. Also, despite Lehmkuhl\'s testimony that he did not
discuss his February 1995 inventory with anyone at Liberty, the ALJ
found that it was \"too incredible to accept\" that Liberty management
did not know the substance of it. [Id.]{.underline} at ¶ 39. Moreover,
the ALJ also concluded, based on McKinnon\'s deposition testimony, that
his \"inability or unwillingness\" to recall receiving Richter\'s April
6, 1993 final inventory, which she directed to him and Nourain, \"raises
doubt about his credibility and reliability as a source of evidence.\"
[Id.]{.underline} at ¶ 67. An ALJ\'s credibility findings are \"entitled
to great weight,\" [Broadcast Assoc. of Colorado]{.underline}, 104 FCC
2d 16, 19 (1986), and his credibility determinations are to be upheld
unless the findings patently conflict with other record evidence.
[Milton Broadcasting Co.]{.underline}, 34 FCC 2d 1036, 1045 (1972);
[KQED, Inc.]{.underline}, 3 FCC Rcd 2821, 2823 (Rev. Bd. 1988), [rev.
denied]{.underline}, 5 FCC Rcd 1784 (1990), [recon. denied]{.underline},
6 FCC Rcd 625 (1991), [aff\'d mem. sub nom. California Public
Broadcasting Forum v. FCC]{.underline}, 947 F.2d 505 (D.C. Cir. 1991);
[see also]{.underline} [WHW Enterprises, Inc. v. FCC]{.underline}, 753
F.2d 1132, 1141 (D.C. Cir. 1985) (ALJ\'s credibility findings may not be
upset unless reversal is supported by substantial evidence).

49\. Nourain played a key role in all of this, of course. Acting on the
basis of a series of unfounded assumptions regarding the filing and
processing of Liberty\'s applications, and with an understanding that
Liberty wished to proceed quickly, he routinely activated buildings
without Commission authorization. As was true of Liberty management, he
did not heed the advice and information received from counsel in 1993
and 1995 regarding premature activations, and he also failed to follow
Stern\'s recommendations in 1992 for close coordination of licensing
activities with counsel. In view of the information he received from
these sources, it cannot be concluded that Nourain\'s actions were
entirely inadvertent either. Although Liberty faults the ALJ\'s
conclusion that Stern\'s memorandum to Nourain \"detailed\" the
application process, the memorandum did provide guidance to Nourain and
\"strongly recommend\[ed\]\" that Nourain work with counsel on licensing
matters. Furthermore, after observing Nourain\'s demeanor while
testifying, the ALJ concluded that there was additional reason to
believe that counsel was not in full control of his activities. The ALJ
stated that Nourain was \"more inclined to quickly rationalize his
answers than to listen and answer questions asked of him based on a
careful recalling of fact,\" and that it was conceivable counsel had
difficulty convincing him to follow their advice. [I.D.]{.underline}, ¶
56 n.27.

50\. To summarize to this point, we cannot agree with Liberty that the
preponderance of record evidence would support a conclusion that the
excessive unlicensed operations in this case were purely the result of
inadvertence or negligence. At the very least, Price was specifically
warned by counsel of a present threat of unlicensed activations and
later received current status information from counsel which, taken
together with Liberty\'s readily available installation progress
reports, would have informed a reasonable man that such operations in
fact had occurred. Although the IAR makes clear that the extent of
unauthorized activations was extreme, that the infractions occurred over
a long period of time, and that a number of individuals associated with
Liberty probably had knowledge of at least some of these unlicensed
operations, Liberty falls back upon the position that no one told Price
in so many words that Liberty was operating unauthorized facilities. But
the record certainly establishes that, at very least, Price recklessly
disregarded all indications of premature activations and made little
effort to insure that Liberty was acting in compliance with basic
licensing requirements. Moreover, as a matter of law, we attach great
weight to the ALJ\'s determination that Price\'s explanation as to his
understanding of Richter\'s letter and his testimony with regard to his
actual knowledge of unlawful operations lacked credibility. In any
event, in this case, at a minimum, the record establishes an
indifference and wanton disregard for the licensee\'s obligations to the
Commission that is \"equivalent to an affirmative and deliberate
intent.\" [RKO General, Inc. v. FCC]{.underline}, 670 F.2d 215, 225
(D.C. Cir. 1981), [cert. denied]{.underline}, 456 U.S. 927 and 457 U.S.
1119 (1982), quoting [Golden Broadcasting Systems, Inc.]{.underline}, 68
FCC 2d 1099, 1106 (1978).

51\. We consider next the ALJ\'s conclusions that Liberty was lacking in
candor, made misstatements of fact in violation of 47 C.F.R. § 1.17, and
violated 47 C.F.R. § 1.65 in applications and pleadings filed after it
admittedly learned of the unlicensed microwave operations in April 1995.
To begin with, as to Liberty\'s candor, it is undisputed that the
fourteen applications for STAs Liberty filed on May 4, 1995 did not
disclose the fact that the facilities in question were already in
operation. This was a blatant omission of basic information that was
pertinent to the Commission\'s consideration of the requests. The
omission was compounded by Liberty\'s bland assertion that its
applications were \"in technical order\" and by Liberty\'s claim that
approval of the STA requests was necessary to avoid losing customers,
without also revealing that customers were being served at that time. In
this regard, we attribute more significance than Liberty does to the
fact that several of its key witnesses changed their testimony with
respect to when Liberty learned of the unauthorized operations. Liberty
principals Howard Milstein, Price, and Edward Milstein all indicated in
deposition testimony that they did not know of the unauthorized
activations until Time Warner disclosed two violations in its May 5
pleading. At hearing, after further documentary evidence was produced,
these witnesses revised their testimony and agreed that they first
learned of the activations in late April. Tr. 517-18, 1362-63, 1623-24.
Accepting this latter testimony as correct, it must be concluded that
Liberty knowingly filed incomplete and misleading information on May 4
in its fourteen STA requests because it did not disclose its knowledge
of these operations. It also appears from the record that Liberty\'s
nondisclosure was intentional because Price decided, after receiving
Nourain\'s April 26 memo and discussing the matter with counsel, to
delay reporting until Liberty had investigated the matter. Liberty
evidently never considered reporting at once to the Commission what it
knew at the time concerning the fourteen STA requests, with a promise to
update the information as it was uncovered.

52\. When Liberty did reveal premature activations in its May 17
surreply to Time Warner\'s May 5 pleading, its disclosure was mixed.
Although it admitted the two alleged activations and revealed thirteen
previously unknown activations, its statements were again incomplete, if
not affirmatively misleading. It was not correct that Liberty
\"traditionally\" sought STAs pending approval of its applications or
that Liberty\'s \"pattern and practice\" was to receive a grant or an
STA prior to activation. In fact, the record establishes that Liberty\'s
overwhelming practice was to activate OFS facilities prior to receiving
authorization and its substantial practice was to activate the
unlicensed paths before even filing an application. Indeed, Price
conceded in his testimony that he understood at the time Liberty filed
its May 17 surreply that Liberty\'s actual practice with regard to the
buildings listed differed from its professed policy to abide by the
Commission\'s rules. Tr. 1577-81. It was also inaccurate for Liberty to
state, based on nothing more than Nourain\'s unsubstantiated and
incorrect assumptions, that STAs were always granted \"within a matter
of days.\" Liberty argues that its May 17 pleading was not intentionally
deceptive because it reflected the truth as it was known at that time.
But as summarized above, a number of Liberty\'s principals and agents
had either actual knowledge or substantial reason to suspect additional
unauthorized operations well before that time. The fact that complete
information was not formally set forth by counsel until completion of
the IAR does not mean that Liberty management was unaware of or could
not have learned the facts earlier, or that Liberty was justified in
making representations that it knew or suspected had little basis in
fact. And we note in this regard that the ALJ\'s credibility findings
pertaining to Price\'s testimony concerning the state of his knowledge
of unauthorized activations prior to the IAR are also entitled to great
weight.

53\. Liberty filed more misleading documents on July 17 when it
submitted applications for four additional buildings that had been
prematurely activated, without also revealing the fundamental fact that
these facilities were already in operation. It was not until Liberty
filed STA requests for the four buildings on July 24 that it revealed
the activations. Although Liberty argues that it intended to file the
STA requests together with the applications, this episode is consistent
with the ALJ\'s finding that Liberty engaged in a pattern of failing to
timely disclose pertinent information in its filings. On the other hand,
although Liberty also filed several STA requests or amendments between
May 19 and July 24 pertaining to one of the unauthorized facilities at
Palisades Avenue without stating that the building was already in
operation, we agree with Liberty that such disclosure, while
appropriate, would have been repetitive of information previously
revealed as to this path in its May 17 pleading. The same is true of
Liberty\'s May 26 reply to Time Warner\'s opposition to its May 4 STA
requests, which also did not mention the ongoing operations that had
been disclosed previously on May 17. These filings, though incomplete,
do not independently evidence an intent to mislead because the
information was already on file.

54\. With respect to the ALJ\'s conclusion that Liberty violated the
reporting requirements of 47 C.F.R. § 1.65, that rule provides in
pertinent part that:

\[W\[henever the information furnished in the pending application is no
longer substantially accurate and complete in all significant respects,
the applicant shall as promptly as possible and in any event within 30
days, unless good cause is shown, amend or request the amendment of his
application so as to furnish such additional or corrected information as
may be appropriate.

55\. In arriving at his conclusion, the ALJ found that Liberty did not
reveal its discovery of the unauthorized operations \"as promptly as
possible\" after April 26, whereas Liberty argues in its exceptions that
its report of the activations on May 17 was \"within thirty days\" of
discovery. Liberty explains that it did not report the activations as
quickly as possible because it decided to wait until all the facts were
known before making full disclosure. Despite this stated intention,
however, Liberty subsequently revealed fifteen unauthorized operations
on May 17, before its investigation was complete. This disclosure was
within the thirty day provision of the rule, but was prompted by and
made in reply to Time Warner\'s allegations on May 5, rather than in
response to its reporting obligations. In any event, Liberty\'s
explanation does not justify its failure to disclose this critical
information in its May 4, 1995 STA requests.

56\. We agree with the ALJ that Liberty filed applications and pleadings
on May 4, May 17, and July 17 that made incomplete and intentionally
misleading statements to the Commission regarding Liberty\'s operations
and practices in violation of the Commission\'s rules. Section 1.17
prohibits the making of any misrepresentation or willful material
omission in any application, pleading, or any other written submission
to the Commission. Moreover, the duty of candor requires applicants to
be fully forthcoming as to all facts and information that may be
decisionally significant to their applications. The requirement for
absolute truth and candor from those appearing before the Commission is
fundamental because the Commission must rely heavily on the completeness
and accuracy of the submissions made to it by applicants. [Swan Creek
Communications v. FCC]{.underline}, 39 F.3d 1217, 1222 (D.C. Cir. 1994);
[Sea Island Broadcasting Corp. v. FCC]{.underline}, 627 F.2d 240, 243
(D.C. Cir.), [cert. denied]{.underline}, 449 U.S. 834 (1980). First,
Liberty\'s obvious desire to have its STA requests and applications
approved does not justify its failure to inform the Commission that the
subject unlicensed facilities were already operating. Second, although
Liberty voluntarily and belatedly disclosed certain of its unauthorized
activations, and we have found that its failure to repeat these
disclosures in every subsequent filing did not necessarily evidence a
deceptive intent, nevertheless, Liberty completely mischaracterized its
practices and was far less than forthcoming with regard to the most
basic licensing information. Liberty deliberately withheld decisionally
significant information purportedly because it was gathering the facts
and believed its statements were true when made, but other evidence
previously recited indicates that Liberty either knew or should have
known of the state of its activations and practices before its
investigation was completed. Liberty\'s repeated failure to promptly and
accurately report its unauthorized operations was in violation of the
requirements of 47 C.F.R. §§ 1.17 and 1.65.

57\. Lastly, we review the ALJ\'s adverse findings regarding Liberty\'s
candor and future reliability as a Commission licensee based on its
document production at the hearing. Initially, with regard to the IAR,
we disavow any suggestion in the [I.D.]{.underline} that Liberty\'s
exercise of its procedural rights to seek confidentiality for the IAR
under the Commission\'s rules or to appeal the Commission\'s denial of
its claims to the court of appeals is in itself a basis for
disqualification.

58\. With regard to other documents highlighted by the ALJ as part of a
pattern of untimely disclosure, such as the Nourain memorandum and the
Lehmkuhl inventories, Liberty contends that their late production was
inadvertent. Other than the evident significance of these documents on
their face as containing information potentially damaging to Liberty\'s
case, and the consequent advantage to Liberty in their nondisclosure,
there appears to be little or no direct evidence to contradict
Liberty\'s explanations that they were not deliberately withheld from
discovery. For example, there is no evidence to rebut Lehmkuhl\'s
testimony that, although the relevant files were searched at the law
firm, his April 1995 inventory was simply overlooked. And even though
Lehmkuhl\'s February 1995 inventory indicated on its face that it was
provided to Comsearch, a third party, there is no other evidence to
undermine Liberty\'s claim that the document was mistakenly designated
as privileged.

59\. Liberty\'s claims with respect to the April 1993 Richter letter and
June 1992 Stern memorandum, other documents identified by the ALJ as
improperly withheld, are less persuasive. Although Liberty argues that
the Stern memorandum predated the January 1, 1993 discovery cutoff date,
the ALJ observed that, by contrast, Liberty willingly disclosed early in
the proceeding a February 1992 compliance memorandum from Price to
McKinnon that Liberty considered helpful to its position.
[I.D.]{.underline}, ¶ 51. And the ALJ expressly denied Liberty\'s claim
that the Richter letter was protected by the attorney-client privilege
because Liberty waived the privilege. [See]{.underline}
[Order]{.underline}, FCC 97M-14, released February 5, 1997.

60\. In short, we can readily understand how the ALJ drew the inference
that Liberty engaged in a pattern of incomplete or delayed document
production intended to preclude disclosure of damaging evidence. We can
also sympathize with the ALJ\'s view that Liberty\'s strategy frustrated
the trier of fact\'s efforts to compile a complete record. Nevertheless,
despite the suspicious circumstances, there is little direct evidence
that Liberty (and its counsel) deliberately embarked on such a course of
action. Even though we concur with the ALJ that these episodes of late
production were \"disheartening,\" [id.]{.underline} at ¶ 120, we also
agree with his observation that it is \"a difficult case to make\" that
the withholdings were intentional, [id.]{.underline} at ¶ 117, and we
find there is not substantial evidence that they were.

**V. SANCTION AND ORDERING CLAUSES**

61\. Implementing the licensing system established by Congress in the
Communications Act is a fundamental Commission duty. Section 301 of the
Act precludes any person from operating a facility to transmit
communications by radio without a license granted by the Commission. 47
U.S.C. § 301. Enforcement of this mandate is a core responsibility and,
as we have stated many times, unlicensed operation of a radio
transmitter is a serious violation of the Act. [See]{.underline}
[Madison Communications, Inc.]{.underline}, 8 FCC Rcd 1759 (1993); [Data
Investments, Inc.]{.underline}, 6 FCC Rcd 4496 (1991). Indeed the
Commission has made repeated efforts to terminate all unlicensed radio
operations. [See]{.underline} [Creation of a Low Power Radio
Service]{.underline}, FCC 99-6, released February 3, 1999 at 27-28. We
may also disqualify where there is misrepresentation or lack of candor.
[See]{.underline} [Leflore Broadcasting Co., Inc. v. FCC]{.underline},
636 F.2d 454, 461 (D.C. Cir. 1980).

62\. The unlicensed operations in this case were legion. We have found
that, at the very least, Liberty\'s violations were in such total and
reckless disregard of its obligations as a Commission licensee to insure
that it activated only authorized OFS paths as to be tantamount to
intentional misconduct. Moreover, the preponderance of record evidence
establishes that Liberty was not fully candid with the Commission.
Liberty lacked candor not only with regard to whether and when it knew
or could have known of the illegal operations but also in statements
made in multiple filings after there could be no doubt that the
violations were known. These derelictions were compounded by Liberty\'s
repeated noncompliance with the Commission\'s reporting requirements.

63\. The Commission has broad discretion in its choice of remedies and
sanctions. [See]{.underline} [RKO General, Inc. v. FCC]{.underline}, 670
F.2d 215, 237 (D.C. Cir. 1981), [cert. denied]{.underline}, 456 U.S. 927
and 457 U.S. 1119 (1982); [Leflore Broadcasting Co., Inc. v.
FCC]{.underline}, 636 F.2d at 463; [Lorain Journal Co. v.
FCC]{.underline}, 351 F.2d 824, 831 (D.C. Cir. 1965). We have decided
that, because of the significant misconduct found in this case,
involving Liberty\'s disregard of its basic responsibilities and its
lack of candor with the Commission, denial of Liberty\'s applications,
as the ALJ held, is fully warranted. [See]{.underline} [Contemporary
Media, Inc.]{.underline}, FCC 98-133, released June 25, 1998, [petition
for recon. filed]{.underline}, July 27, 1998 (disqualification for
criminal acts and repeated misrepresentations, which were unaccompanied
by adequate remedial measures). In addition, because we agree with the
ALJ\'s observations that \"\[i\]t is hard to discern a more egregious
flaunting of the most fundamental principle of licensing the spectrum\"
and \"this \[is\] one of the worst cases of a pattern of unlicensed
spectrum operations since 1934,\" [I.D.]{.underline}, ¶ 123, we also
believe that imposition of the additional sanction of a substantial
monetary forfeiture will serve the public interest.[^6]
[See]{.underline} [PCS 2000, L.P.]{.underline}, 12 FCC Rcd 1681, 1688-89
(1997); 12 FCC Rcd 1703, 1717-18 (1997) (maximum statutory forfeiture of
\$1 million for misrepresentation in connection with C Block auction,
but no disqualification where applicant removed all individuals
responsible for misconduct).

64\. We reach this conclusion for several reasons. First, Liberty\'s
overall record of compliance with our rules and policies was extremely
poor, and involved abundant violations of Section 301 of the Act and
Section 94.23 of the Rules and repeated violations of Sections 1.17 and
1.65 of the Rules. Second, Liberty\'s proposal in the Joint Motion for
Summary Decision that it should only pay a forfeiture was premised on an
argument that Liberty\'s violations did not involve intentional
misconduct, but the record does not support such a finding. Third,
Liberty\'s violations were serious, willful, recent, and repeated
throughout most of its history as an OFS licensee, and involved the
reckless, if not knowledgeable, actions of the individual who, at all
relevant times, served as its President and Chief Executive Officer.
[Cf.]{.underline} [Policy Regarding Character Qualifications in
Broadcast Licensing]{.underline}, 102 FCC 2d 1179, 1227-1228 (1986)
(subsequent history omitted) (Commission considers willfulness,
frequency, and currentness of the behavior, as well as its seriousness,
the participation of owners and managers, and other relevant factors in
weighing licensee misconduct); [see also]{.underline} [1990 Character
Policy Statement]{.underline}, 5 FCC Rcd 3252, 3253 (1990) (all
licensees are required to tell the truth to the Commission).

65\. Although Liberty does not deny that the unauthorized operations
occurred or its responsibility for them, and initiated its own internal
investigation that disclosed the full extent of its unlawful operations,
its remedial measures were also of limited impact. Price, Nourain, and
Ontiveros were disciplined for their actions only to the extent of being
reprimanded and receiving no annual bonuses. By contrast, in other cases
involving remedial acts, our action was based upon the removal from
ownership and control positions of those responsible for misconduct.
[See]{.underline}, [e.g.]{.underline}, [PCS 2000, L.P.]{.underline}, 12
FCC Rcd at 1688-89 (disqualification not warranted where applicant
expeditiously removed CEO responsible for misrepresentation and second
official who was aware of misconduct but did not disclose it); [Faulkner
Radio, Inc.]{.underline}, 88 F.C.C. 2d 612, 618 (1981) (renewal
conditioned on total exclusion of wrongdoer from station operations);
[Teleprompter Cable Systems, Inc.]{.underline}, 40 FCC 2d 1027 (1973)
(no disqualification in case involving criminal misconduct where
applicant took rehabilitative step of hiring new management and board
members).

66\. Liberty also temporarily suspended billing for the nineteen paths
that were prematurely activated, at least until it received interim
authority from the Commission. More significantly, Liberty adopted a
compliance program, naming its in-house counsel as Compliance Officer
and requiring him to certify to an FCC license check list and to verify
that the Commission has stamped \"granted\" on a pending application
before approving commencement of service. [I.D.]{.underline}, ¶ 75;
Joint Motion, at 20; Time Warner/Cablevision Exh. 67, Att. A; tr. 2371.
The effect of this program, however, is diminished by Liberty\'s current
status. As a result of its asset sale to Freedom in March 1996
([see]{.underline} n. 1, [supra]{.underline}), Liberty now only provides
OFS transmission service to Freedom, which in turn provides video
programming directly to customers. According to Price, Liberty currently
is involved only in maintaining the microwave network, is not applying
for licenses, and has no knowledge of what licensing procedures Freedom
is using. Tr. 2207.

67\. Liberty argues that there could be an adverse \"impact on
competition in New York and the possible displacement of Liberty\'s
current subscribers\" if its applications are denied. Request for Oral
Argument at 2-3. We disagree. The Bureau informs us that, since
Liberty\'s asset sale to Freedom, Freedom has filed applications for new
microwave licenses to provide video programming in New York City,
including service along the same paths that are the subject of this
proceeding. According to the Bureau, although RCN, Freedom\'s parent,
could conditionally activate these paths under 47 C.F.R. § 101.31(e), it
has advised the Bureau that it will await the Bureau\'s action on its
pending applications. Bureau Opposition to Request for Oral Argument at
5-6. Assuming grant of these applications, therefore, the competitive
implications of denial of Liberty\'s OFS applications would appear to be
minimal. Therefore, we direct the Bureau to expedite its processing of
Freedom\'s applications in order to insure that there is no interruption
of service to existing subscribers in New York City following the denial
of Liberty\'s applications. We note that, with regard to twenty
additional applications filed by Liberty that are not subject to this
proceeding, we previously instructed the Bureau to grant those
applications conditioned on the outcome of this proceeding
([see]{.underline} n. 1, [supra]{.underline}). We direct the Bureau to
take into account our findings here in the disposition of those
applications and, if appropriate to its deliberations, to take into
consideration the views of the respective parties. [^7]

68\. Finally, in light of Liberty\'s willful and repeated failure to
comply with Section 301 of the Act in connection with the unauthorized
operations involving nineteen buildings identified in the
[HDO]{.underline}, we conclude that a forfeiture should be imposed
pursuant to 47 U.S.C. § 503(b). The statutory maximum under 47 U.S.C. §
503(b)(2)(C) for a continuing violation is \$75,000 for each single
violation of the Act, and we believe this is the appropriate amount to
be assessed here in view of the serious magnitude of the infractions. As
we have stated previously, \"the Commission has had no reservation about
imposing the maximum authorized penalty when the circumstances of a case
warrant such a sanction.\" [Centel Cellular Co.]{.underline}, 11 FCC Rcd
10800, 10806 (1996) (\$2,000,000 forfeiture for failure to obtain FAA
tower approval and failure to light tower); [see also]{.underline} [PCS
2000, L.P.]{.underline}, 12 FCC Rcd at 1717-18 (maximum forfeiture of
\$1 million for misrepresentation); [A T & T
Communications]{.underline}, 10 FCC Rcd 1664 (1995) (maximum \$1,000,000
forfeiture for continuing violation of Section 201(a)). The amount in
this case was determined after consideration of the factors set forth in
47 U.S.C. § 503(b)(2)(D), including the nature, circumstances, extent,
and gravity of the violations.[^8] We find no downward adjustment
factors present. [See]{.underline} 47 C.F.R. § 1.80. The total
forfeiture is \$1,425,000.[^9]

69\. ACCORDINGLY, IT IS ORDERED, That pursuant to 47 U.S.C. §503(b),
Liberty Cable Co., Inc. SHALL FORFEIT to the United States the sum of
one million four hundred and twenty five thousand dollars (\$1,425,000)
for willful and repeated violations of 47 U.S.C. § 301. Payment of the
forfeiture may be made by mailing a check or similar instrument, payable
to the Federal Communications Commission, within forty (40) days of the
release date of this order, to Federal Communications Commission, P.O.
Box 73482, Chicago, IL. 60673-7482.

70.. IT IS FURTHER ORDERED, That the Motion to Strike filed July 24,
1998 by Liberty Cable Co., Inc. IS DENIED; the Request for Prompt
Disposition filed March 2, 1999 by Time Warner Cable of New York City
and Paragon Communications IS DISMISSED; and the subject applications of
Liberty Cable Co., Inc. for private operational fixed microwave service
authorization and modifications in New York City ARE DENIED.

71\. IT IS FURTHER ORDERED, That Liberty IS AUTHORIZED to continue
interim operation of the subject OFS facilities until 12:01 A.M. on the
ninety-first day following the release date of this Decision; PROVIDED,
however, that if Liberty seeks reconsideration or judicial review of our
Decision, it is authorized to continue to operate these facilities until
final disposition of all administrative and/or judicial appeals.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

[^1]:     ^?^Liberty is now known as Bartholdi Cable Company, Inc.
    following an asset sale in March 1996 to Freedom New York, LLC.
    Freedom is 80% owned by RCN Corporation and 20% by Bartholdi. Under
    the agreement, Freedom acquired Liberty\'s subscriber base. The
    agreement expressly excluded Liberty\'s current OFS authorizations
    and related equipment. The parties also agreed that Liberty would
    provide Freedom with microwave transmission service. As a result of
    the sale, Liberty now provides OFS microwave transmissions to
    Freedom, which in turn provides video programming to Liberty\'s
    former subscribers. [I.D.]{.underline}, ¶ 10. (By [Memorandum
    Opinion and Order]{.underline}, FCC 96M-178, released July 16, 1996,
    the ALJ denied a request to add an issue to determine whether
    Liberty transferred OFS licenses without Commission approval. No
    exception has been taken to this ruling.) In the interest of
    maintaining consistency with the designations used in the record,
    the [I.D.]{.underline}, and the exceptions, this decision refers to
    the applicant as Liberty.

    In addition to the fifteen applications at issue here, Liberty has
    filed another twenty applications for new licenses, which the
    Commission has instructed to be granted conditioned upon the outcome
    of this proceeding. [See]{.underline} ¶ 67, [infra]{.underline}.

[^2]:     ^?^On March 2, 1999 Time Warner filed a Request for Prompt
    Disposition, in which it asks that the Commission issue a prompt
    decision in this case in light of the pendency of a \"related\"
    antitrust suit brought by Liberty against Time Warner in New York
    federal district court. According to Time Warner, there are issues
    in this proceeding that may be relevant to the antitrust case. On
    March 11, 1999 Liberty filed an Opposition to the Request, in which
    it disputes Time Warner\'s assertions. In light of our Decision
    herein, Time Warner\'s Request is moot and therefore is dismissed.

[^3]:     ^?^Time Warner and Cablevision filed joint hearing exhibits.

[^4]:     ^?^\"Liberty/Bureau\" exhibits are ones submitted in support
    of the Joint Motion for Summary Decision.

[^5]:     ^?^The Joint Motion for Summary Decision proposed a forfeiture
    amount of \$710,000 for the nineteen unauthorized operations
    identified in the [HDO]{.underline}. This figure consisted of
    \$75,000 for each of the six instances in which Liberty was
    operating prior to applying for authority, and \$20,000 each for the
    other thirteen unauthorized operations. Joint Motion at 51;
    [see]{.underline} ¶ 20, [supra]{.underline}. The Bureau subsequently
    proposed, and Liberty agreed to, an increase in the forfeiture of
    \$300,000 (or \$20,000 per each of the fifteen applications in this
    proceeding), for a total of \$1,010,000, to reflect that Liberty
    knowingly filed incomplete information in its fifteen May 1995 STA
    requests. Bureau Proposed Findings, filed February 28, 1997, at
    40-41; Liberty Reply, filed March 10, 1997, at 42-43.

[^6]:     ^?^The ALJ declined to assess a forfeiture because \"the
    condition for Liberty\'s willingness to pay a substantial
    forfeiture\" \-- [i.e.]{.underline}, a finding that the violations
    resulted from mere negligence or inadvertence \-- \"has not been
    met.\" [I.D.]{.underline}, ¶ 131. Were the Commission to determine
    that a forfeiture was warranted, however, the ALJ believed that a
    forfeiture amount significantly greater than that proposed or agreed
    to by Liberty would be appropriate. [Id.]{.underline};
    [see]{.underline} n. 5, [supra.]{.underline}

[^7]: ^?^ Those applications were granted \"subject to the outcome of
    the hearing designation order and notice of opportunity for hearing
    WT Docket No. 96‑41.\" [See]{.underline}, [e.g.]{.underline},
    [Order]{.underline}, File Number 9508718556, Call Sign WPJA950 (WTB
    March 11, 1996).

[^8]: ^?^ In a recent notice of apparent liability for forfeiture issued
    for operating numerous unlicensed microwave paths, the Commission
    assessed a base forfeiture amount of \$200,000, which it reduced to
    \$100,000 because of mitigating factors, including the licensee\'s
    prior compliance with FCC licensing requirements and its voluntary
    disclosure of unlicensed operations in its applications and STA
    requests. [See]{.underline} [Preferred Entertainment,
    Inc.]{.underline}, 14 FCC Rcd 11105 (1999). No such mitigation
    evidence is present here. The record in this case discloses, [inter
    alia]{.underline}, a history of unlicensed operations and a lack of
    candor in STA requests and other filings with the Commission.

[^9]:     ^?^This forfeiture, together with the \$80,000 forfeiture
    previously imposed by the ALJ in connection with Liberty\'s failure
    to obtain a franchise for its hard wire interconnections
    ([see]{.underline} ¶ 6, [supra]{.underline}), brings the total
    monetary forfeiture imposed in this proceeding as a result of
    Liberty\'s infractions to \$1,505,000.