**Before the**

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of                 | *  | File No. EB-08-SE-1075       |
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| Midcontinent Communications,     | ** | NAL/Acct. No. 200932100011   |
| Inc.                             |    |                              |
|                                  | *  | FRN 0009713678               |
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Notice OF apparent liability for forfeiture AND ORDER

**Adopted: January 19, 2009 Released: January 19, 2009**

By the Chief, Enforcement Bureau:

# introduction

1.  In this *Notice of Apparent Liability for Forfeiture and Order*
    ("*NAL*"), we find that Midcontinent Communications, Inc.
    ("Midcontinent") apparently willfully violated a Commission Order
    and Section 76.939 of the Commission's Rules ("Rules") in failing to
    respond fully to an Enforcement Bureau Letter of Inquiry.[^1] We
    conclude, pursuant to Section 503(b) of the Communications Act of
    1934, as amended ("Act"),[^2] that Midcontinent is apparently liable
    for a forfeiture in the amount of twenty-five thousand dollars
    (\$25,000). We also order Midcontinent to respond fully to the LOI
    within ten (10) days of release of this *NAL.* If Midcontinent again
    fails to submit a complete response, it will be subject to further
    enforcement action.

# background

2.  In response to consumer complaints against Midcontinent, on October
    30, 2008, the Enforcement Bureau ("Bureau") issued a Letter of
    Inquiry ("LOI") regarding the company's migration of analog
    programming to digital tiers.[^3] The LOI sought information
    concerning instances in which Midcontinent had migrated analog
    channels to a digital tier, including the channels affected, whether
    and how the company notified customers of the change, whether, in
    light of the change in service, the company permitted customers to
    change their service tier without charge, and the rates charged
    customers before and after the channel migration. The LOI also asked
    about Midcontinent's charges for digital set-top boxes as well as
    information regarding Midcontinent's subscriber rates and the rates
    it pays to video programmers.

3.  In its response to the LOI,[^4] Midcontinent states that it made a
    good faith effort to respond to the Bureau's LOI.[^5] Midcontinent
    admits, however, that it did not respond fully to the LOI.[^6] For
    example, Midcontinent fails to answer Question 1.d. which requests
    information about the number of overall subscribers in each affected
    cable system at the time of the analog-to-digital channel change. In
    its response to Question 7, which seeks information about oral
    complaints from subscribers, Midcontinent fails to identify the
    number of inquiries or comments it received from subscribers
    regarding the analog-to-digital migration of channels.[^7]
    Midcontinent claims that the two week time period allowed in which
    to respond to these questions was inadequate.

4.  More troubling, Midcontinent refuses to answer Question 8.b., which
    asks it to provide the per-subscriber fees it pays to video
    programming distributors for those channels subject of the inquiry.
    Midcontinent alleges that the disclosure of the requested
    information would subject it to potential liability for breach of
    contract, injunction, damages and termination of contract
    rights.[^8] While Midcontinent acknowledges that the Bureau issued a
    Protective Order[^9] with respect to this information, Midcontinent
    states that the Protective Order fails to protect or indemnify
    Midcontinent from this potential liability.[^10] Moreover,
    Midcontinent states that the Bureau failed to explain or justify the
    demand for information concerning programming contracts and
    decisions, and that the Bureau failed to demonstrate that the
    request is rationally related to the alleged complaint or that the
    request is within the Commission's jurisdiction.[^11]

# discussion

## Failure to Respond Fully to the LOI

5.  We find that Midcontinent's failure to fully respond to the Bureau's
    inquiry constitutes an apparent willful[^12] violation of a
    Commission order and Section 76.939 of the Rules. The Bureau
    directed Midcontinent to provide certain information related to the
    movement of analog channels to digital tiers. This information was
    necessary to enable the Commission to perform its enforcement
    function and evaluate whether Midcontinent violated Commission
    rules. Midcontinent received the LOI but has failed to provide a
    full and complete response.

6.  The Commission has broad investigatory authority under Sections
    4(i), 4(j), and 403 of the Act, its Rules, and relevant precedent.
    Section 4(i) authorizes the Commission to "issue such orders, not
    inconsistent with this Act, as may be necessary in the execution of
    its functions."[^13] Section 4(j) states that "the Commission may
    conduct its proceedings in such manner as will best conduce to the
    proper dispatch of business and to the ends of justice."[^14]
    Section 403 grants the Commission "full authority and power to
    institute an inquiry, on its own motion \... relating to the
    enforcement of any of the provisions of this Act."[^15] Pursuant to
    Section 76.939 of the Rules, a cable operator must comply with FCC
    requests for information, orders, and decisions.[^16] In carrying
    out this obligation, a cable operator also must provide truthful and
    accurate statements to the Commission or its staff in any
    investigatory or adjudicatory matter within the Commission's
    jurisdiction.[^17] Lastly, numerous FCC decisions have reaffirmed
    the Commission's authority to investigate potential misconduct and
    punish those that disregard FCC inquiries. [^18] The Commission
    delegated this authority to the Enforcement Bureau in Section
    0.111(a)(16) of the Rules.[^19]

7.  We reject Midcontinent's contentions that it was not obligated to
    respond fully and completely to the Bureau's inquiry, because it
    believes the Commission lacks the authority to seek the information
    in the LOI.[^20] As stated above, the Commission has broad
    investigatory authority, and Midcontinent is obligated to respond to
    our inquiries, even if it believes them to be outside the
    Commission\'s authority.[^21]

8.  Midcontinent alleges that it could not have responded fully to the
    LOI because the amount of time allowed for the preparation of the
    company's LOI response was too brief.[^22] Certain complaints
    received by the Commission regarding the migration of analog
    programming to a digital tier, however, allege that cable operators
    are falsely linking the programming changes with the digital
    television transition. Because of the strong public interest in
    avoiding confusion about the transition and the rapidly approaching
    transition date, the Bureau determined that two weeks was an
    appropriate deadline for the cable operators' responses and we
    conclude that two weeks was a reasonable deadline. Midcontinent does
    not dispute that this decision was within our discretion. Thus,
    Midcontinent was obligated to provide the requested information by
    our deadline. Moreover, we note that since it submitted its LOI
    response and while this matter remains under investigation by the
    Bureau, Midcontinent has neither contacted the Bureau about its
    response nor provided any supplemental information.

9.  Finally, we reject Midcontinent's contention that the confidential
    nature of some of the information responsive to the Bureau's LOI
    absolved Midcontinent of its obligation to respond.[^23] In addition
    to requesting confidential treatment of such material pursuant to
    the Commission's well-established, long-standing rules regarding the
    treatment of material routinely considered confidential,[^24] the
    Bureau issued a Protective Order in this investigation specifically
    to address any concerns regarding the potentially confidential
    nature of certain information. Thus, Midcontinent had the option, as
    set forth by the Commission's General Counsel in his letter directed
    to Midcontinent,[^25] of providing the information under that
    Protective Order.[^26] We find therefore that Midcontinent's failure
    to fully respond to the Bureau's inquiry constitutes an apparent
    willful[^27] violation of a Commission order and Section 76.939 of
    the Rules.

## Proposed Forfeiture

10. We conclude under applicable standards set forth in the Act, that
    Midcontinent is apparently liable for forfeiture for its apparent
    willful violation of a Commission Order and Section 76.939 of the
    Rules. Under Section 503(b)(1)(B) of the Act, any person who is
    determined by the Commission to have willfully or repeatedly failed
    to comply with any provision of the Act or any rule, regulation, or
    order issued by the Commission shall be liable to the United States
    for a forfeiture penalty.[^28] To impose such a forfeiture penalty,
    the Commission must issue a notice of apparent liability and the
    person against whom such notice has been issued must have an
    opportunity to show, in writing, why no such forfeiture penalty
    should be imposed.[^29] The Commission will then issue a forfeiture
    if it finds by a preponderance of the evidence that the person has
    violated the Act or a Commission rule.[^30] We conclude under this
    standard that Midcontinent is apparently liable for forfeiture for
    its apparent willful violation of a Commission Order and Section
    76.939 of the Rules.

11. Under Section 503(b)(2)(A) of the Act,[^31] we may assess a cable
    operator a forfeiture of up to \$37,500 for each violation, or for
    each day of a continuing violation up to a maximum of \$375,000 for
    a single act or failure to act. In exercising such authority, we are
    required to take into account "the nature, circumstances, extent,
    and gravity of the violation and, with respect to the violator, the
    degree of culpability, any history of prior offenses, ability to
    pay, and such other matters as justice may require."[^32]

12. Section 1.80 of the Rules and the Commission's *Forfeiture Policy
    Statement* establish a base forfeiture amount of four thousand
    dollars (\$4,000) for failure to respond to Commission
    communications.[^33] We find that Midcontinent's failure to respond
    fully to the LOI in the circumstances presented here warrants a
    significant increase to this base amount. Misconduct of this type
    exhibits contempt for the Commission's authority and threatens to
    compromise the Commission's ability to adequately investigate
    violations of its rules. Prompt and full responses to Bureau inquiry
    letters are essential to the Commission's enforcement function. In
    this case, Midcontinent's apparent violations have delayed our
    investigation and inhibited our ability to examine allegations
    raised in consumer complaints and also potentially touching on an
    area of critical importance \-- the DTV transition. We further note
    that Midcontinent failed to provide a full and complete LOI response
    even after receiving a specific warning from the Commission's
    General Counsel that such actions could be subject to enforcement
    penalties.[^34]

13. Based on these facts, we therefore propose a twenty-five thousand
    dollar (\$25,000) forfeiture against Midcontinent for failing to
    respond fully to Commission communications. This forfeiture amount
    is consistent with precedent in similar cases, where companies
    failed to provide complete responses to Bureau inquiries concerning
    compliance with the Commission's Rules despite evidence that the
    LOIs had been received.[^35]

14. We also direct Midcontinent to respond fully to the October 30, 2008
    LOI within ten (10) days of the release of this Notice of Apparent
    Liability for Forfeiture and Order. Failure to do so may constitute
    an additional violation subjecting Midcontinent to further
    penalties, including potentially higher monetary forfeitures.[^36]

# ordering clauses

15. Accordingly, **IT IS ORDERED** that, pursuant to Section 503(b) of
    the Act, and Section 1.80 of the Rules, and the authority delegated
    by Sections 0.111 and 0.311 of the Commissions Rules, Midcontinent
    Communications, Inc. is **NOTIFIED** of its **APPARENT LIABILITY FOR
    A FORFEITURE** in the amount of twenty-five thousand dollars
    (\$25,000) for its willful violation of a Commission Order and
    Section 76.939 of the Rules.

16. **IT IS FURTHER ORDERED** that, pursuant to Section 1.80 of the
    Rules, within thirty days (30) days of the release date of this
    Notice of Apparent Liability for Forfeiture and Order, Midcontinent
    **SHALL PAY** the full amount of the proposed forfeiture or **SHALL
    FILE** a written statement seeking reduction or cancellation of the
    proposed forfeiture.

17. **IT IS FURTHER ORDERED** that, pursuant to sections 1, 4(i), 4(j),
    403 of the Communications Act of 1934, as amended, 47 U.S.C. §151,
    154(i), 154(j), 403, Midcontinent shall fully respond to the October
    30, 2008 Letter of Inquiry sent by the Enforcement Bureau in the
    manner described by that Letter of Inquiry within ten (10) days of
    the release of this Notice of Apparent Liability and Order.

18. Payment of the forfeiture must be made by check or similar
    instrument, payable to the order of the Federal Communications
    Commission. The payment must include the NAL/Account Number and FRN
    Number referenced above. Payment by check or money order may be
    mailed to Federal Communications Commission, P.O. Box 979088, St.
    Louis, MO 63197-9000. Payment by overnight mail may be sent to U.S.
    Bank -- Government Lockbox #979088, SL-MO-C2-GL, 1005 Convention
    Plaza, St. Louis, MO 63101. Payment by wire transfer may be made to
    ABA Number 021030004, receiving bank TREAS/NYC, and account
    number 27000001. For payment by credit card, an FCC Form 159
    (Remittance Advice) must be submitted. When completing the FCC Form
    159, enter the NAL/Account number in block number 23A (call
    sign/other ID), and enter the letters "FORF" in block number 24A
    (payment type code). Requests for full payment under an installment
    plan should be sent to: Chief Financial Officer \-- Financial
    Operations, 445 12th Street, S.W., Room 1-A625, Washington,
    D.C. 20554. Please contact the Financial Operations Group Help Desk
    at 1-877-480-3201 or Email: ARINQUIRIES@fcc.gov with any questions
    regarding payment procedures. Midcontinent will also send electronic
    notification on the date said payment is made to
    JoAnn.Lucanik@fcc.gov and nissa.laughner@fcc.gov.

19. The response, if any, must be mailed to the Office of the Secretary,
    Federal Communications Commission, 445 12th Street, S.W.,
    Washington, D.C. 20554, ATTN: Enforcement Bureau -- Spectrum
    Enforcement Division, and must include the NAL/Acct. No. referenced
    in the caption. The response should also be e-mailed to JoAnn
    Lucanik, Deputy Chief, Spectrum Enforcement Division, Enforcement
    Bureau, FCC, at JoAnn.Lucanik@fcc.gov and Nissa Laughner, Esq.,
    Spectrum Enforcement Division, FCC, at nissa.laughner@fcc.gov.

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

21. **IT IS FURTHER ORDERED** that a copy of this Notice of Apparent
    Liability for Forfeiture and Order shall be sent by first class mail
    and certified mail return receipt requested to counsel for
    Midcontinent Communications, Inc., J. Christopher Redding, Esq., Dow
    Lohnes PLLC, 1200 New Hampshire Avenue, NW, Suite 800, Washington,
    D.C. 20036-6802.

    FEDERAL COMMUNICATIONS COMMISSION

Kris Anne Monteith

Chief, Enforcement Bureau

[^1]: 47 C.F.R. § 76.939.

[^2]: 47 U.S.C. § 503(b).

[^3]: Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement
    Division, Enforcement Bureau, Federal Communications Commission to
    J.G. Harrington, Esq., Counsel for Midcontinent Communications,
    Inc., Dow Lohnes PLLC (Oct. 30, 2008) ("LOI").

[^4]: Letter from J. Christopher Redding, Counsel for Midcontinent
    Communications, Inc., Dow Lohnes PLLC to Nissa Laughner, Attorney
    Advisor, Spectrum Enforcement Division, Enforcement Bureau, Federal
    Communications Commission (Nov. 13, 2008) ("LOI Response"). We note
    that Midcontinent seeks confidential treatment of certain portions
    of its LOI Response. *See* Letter from J. Christopher Redding,
    Counsel for Midcontinent Communications, Inc., Dow Lohnes PLLC to
    Marlene H. Dortch, Secretary, Federal Communications Commission
    (Nov. 13, 2008). We do not rule on Midcontinent's request for
    confidentiality at this time.

[^5]: *Id*. at 2.

[^6]: *Id*. at 2-3.

[^7]: *Id*. at 15.

[^8]: *Id*. at 16.

[^9]: *Midcontinent Communications, Inc*.***,*** Protective Order, DA
    08-2495 (Enf. Bur. rel. Nov. 13, 2008).

[^10]: LOI Response at 16.

[^11]: *Id*.

[^12]: Section 312(f)(1) of the Act defines willful as "the conscious
    and deliberate commission or omission of \[any\] act, irrespective
    of any intent to violate" the law. 47 U.S.C. § 312(f)(1). The
    legislative history of Section 312(f)(1) of the Act indicates that
    this definition of willful applies to both Sections 312 and 503(b)
    of the Act, H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51 (1982), and
    the Commission has so interpreted the term in the Section 503(b)
    context. *See, e.g., Southern California Broadcasting Co.*,
    Memorandum Opinion and Order, 6 FCC Rcd 4387, 4387-88 ¶ 5 (1991)
    ("*Southern California Broadcasting*").

[^13]: 47 U.S.C. § 154(i).

[^14]: 47 U.S.C. § 154(j).

[^15]: 47 U.S.C. § 403.

[^16]: 47 C.F.R. § 76.939 ("Cable operators shall comply with ... the
    Commission's requests for information, orders, and decisions.").

[^17]: *See* 47 C.F.R. § 1.17.

[^18]: *See, e.g.,* *SBC Communications, Inc.*, Forfeiture Order, 17 FCC
    Rcd 7589, 7599-7600 ¶¶ 23-28 (2002) (ordering \$100,000 forfeiture
    for egregious and intentional failure to certify the response to a
    Bureau inquiry) ("*SBC Forfeiture Order*"); *Digital Antenna, Inc.,*
    Notice of Apparent Liability for Forfeiture and Order, 23 FCC Rcd
    7600, 7602 (Spectr. Enf. Div., Enf. Bur. 2008) (proposing \$11,000
    forfeiture for failure to provide a complete response to an LOI);
    *BigZoo.Com Corporation*, Forfeiture Order, 20 FCC Rcd 3954 (Enf.
    Bur. 2005) (ordering \$20,000 forfeiture for failure to respond to
    an LOI).

[^19]: 47 C.F.R. §0.111(a)(16) (granting the Enforcement Bureau
    authority to "\[i\]dentify and analyze complaint information,
    conduct investigations, conduct external audits and collect
    information, including pursuant to sections 218, 220, 308(b), 403
    and 409(e) through (k) of the Communications Act, in connection with
    complaints, on its own initiative or upon request of another Bureau
    or Office."). *See also* 47 C.F.R. §§0.111(a)(13) (Enforcement
    Bureau has authority to "\[r\]esolve complaints regarding
    multichannel video and cable television service under part 76 of the
    Commission\'s rules"); 0.311 (general delegated authority for
    Enforcement Bureau).

[^20]: *See* LOI Response at 16.

[^21]: *See SBC Forfeiture Order*, 17 FCC Rcd at 7591 ¶ 5. *See also* 47
    U.S.C. §408 (Commission orders "shall continue in force for the
    period of time specified in the order or until the Commission or a
    court of competent jurisdiction issues a superseding order."); 47
    U.S.C. § 416(c) ("It shall be the duty of every person, its agent
    and employees ... to observe and comply with such orders so long as
    the same shall remain in effect"); *Peninsula Communications, Inc.,*
    Forfeiture Order, 17 FCC Rcd 2832, 2834 ¶ 5 (2002) (subsequent
    history omitted) (a regulatee "cannot ignore a Commission order
    simply because it believes such order to be unlawful"); *World
    Communications Forfeiture Order,* 19 FCC Rcd at 2719-2720 (issuing
    forfeiture against regulatee who failed to respond to an LOI because
    it believed the LOI to be beyond the Commission's jurisdiction).

[^22]: *See* LOI response at 2-3.

[^23]: *Id*. at 16.

[^24]: *See* LOI Attachment, *Request for Confidential Treatment*,
    referencing the Commission's Rules at 47 C.F.R. § 0.459.

[^25]: *See* Berry Letter at 2.

[^26]: *See* *Midcontinent Communications, Inc*.***,*** Protective
    Order, DA 08-2495 (Enf. Bur. rel. Nov. 13, 2008).

[^27]: Section 312(f)(1) of the Act defines willful as "the conscious
    and deliberate commission or omission of \[any\] act, irrespective
    of any intent to violate" the law. 47 U.S.C. § 312(f)(1). The
    legislative history of Section 312(f)(1) of the Act indicates that
    this definition of willful applies to both Sections 312 and 503(b)
    of the Act, H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51 (1982), and
    the Commission has so interpreted the term in the Section 503(b)
    context. *See, e.g., Southern California Broadcasting Co.*,
    Memorandum Opinion and Order, 6 FCC Rcd 4387, 4387-88 ¶ 5 (1991)
    ("*Southern California Broadcasting*").

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

[^29]: 47 U.S.C. § 503(b); 47 C.F.R. § 1.80(f).

[^30]: *See* *SBC Forfeiture Order*, 17 FCC Rcd at 7591.

[^31]: 47 U.S.C. § 503(b)(2)(A). The Commission has amended Section
    1.80(b)(3) of the Rules, 47 C.F.R. § 1.80(b)(3), three times to
    increase the maximum forfeiture amounts, in accordance with the
    inflation adjustment requirements contained in the Debt Collection
    Improvement Act of 1996, 28 U.S.C. § 2461. *See Amendment of Section
    1.80 of the Commission's Rules and Adjustment of Forfeiture Maxima
    to Reflect Inflation*, Order, 23 FCC Rcd 9845 (2008) (adjusting the
    maximum statutory amounts for broadcasters and cable operators from
    \$32,500/\$325,000 to \$37,500/\$375,000); *Amendment of Section
    1.80 of the Commission's Rules and Adjustment of Forfeiture Maxima
    to Reflect Inflation,* Order, 19 FCC Rcd 10945 (2004) (adjusting the
    maximum statutory amounts for broadcasters and cable operators from
    \$27,500/\$300,000 to \$32,500/\$325,000); *Amendment of Section
    1.80 of the Commission's Rules and Adjustment of Forfeiture Maxima
    to Reflect Inflation,* Order, 15 FCC Rcd 18221 (2000) (adjusting the
    maximum statutory amounts for broadcasters and cable operators from
    \$25,000/\$250,000 to \$27,500/\$300,000). The most recent inflation
    adjustment took effect September 2, 2008 and applies to violations
    that occur after that date. *See* 73 Fed. Reg. 44663-5.
    Midcontinent's apparent violations occurred after September 2, 2008
    and are therefore subject to the higher forfeiture limits.

[^32]: 47 U.S.C. § 503(b)(2)(E). *See also* 47 C.F.R. § 1.80(b)(4), Note
    to paragraph (b)(4): Section II. Adjustment Criteria for Section 503
    Forfeitures.

[^33]: *See* 47 C.F.R. § 1.80(b)(4); *The Commission's Forfeiture Policy
    Statement and Amendment of Section 1.80 of the Rules to Incorporate
    the Forfeiture Guideline*s*,* Report and Order, 12 FCC Rcd 17087
    (1997), *recon. denied,* 15 FCC Rcd 303 (1999).

[^34]: *See* Berry Letter at 2.

[^35]: *See supra* note 17.

[^36]: We do not decide in this *NAL* whether the failure to respond to
    an LOI constitutes a continuing violation.