Source: http://www.fcc.gov/print/node/36787
Timestamp: 2015-04-21 21:38:48
Document Index: 680620693

Matched Legal Cases: ['§ 225', '§ 52', '§ 214', '§ 63', '§ 254', '§ 54', '§ 254', '§ 54', '§ 54', '§ 54', '§ 1', '§ 1', '§ 3717', '§ 1', '§ 285', '§ 225', '§ 64', '§ 64', '§ 251', '§ 251', '§ 52', '§ 54', '§ 54', '§ 52', '§ 54', '§ 54', '§ 254', '§ 54', '§ 54', '§ 54', '§ 214', '§ 63', '§ 63', '§ 63', '§ 63', '§ 63', '§ 214']

Forfeiture Proposed for USF and Other Violations
Word Document [1]PDF Document [2]Text Document [3]	Released: December 5, 2011
FCC 11-180
File No. EB-09-IH-1972
NAL/Acct. No. 201232080007
FRN 0019614908
Kajeet/Airlink, LLC
NAL/Acct. No. 201232080008
FRN 0018691477
Released: December 5, 2011 By the Commission:
In this Notice of Apparent Liability for Forfeiture and Order (“NAL”), we find that Kajeet, Inc. (“Kajeet”) and its wholly-owned subsidiary Kajeet/Airlink, LLC (“Kajeet/Airlink”) (collectively, the “Companies”) apparently violated sections 225(b)(1), 251(e)(2), and 254(d) of the Communications Act of 1934, as amended (the “Act”),1 and sections 52.32(a), 54.706(a), and 64.604(c)(5)(iii)(A) of the Commission’s rules,2 by apparently willfully and repeatedly failing to contribute fully and timely to the Universal Service Fund (“USF”), the Telecommunications Relay Service (“TRS”) Fund, and the Local Number Portability (“LNP”) cost recovery mechanism. In addition, we find that Kajeet/Airlink apparently violated section 214 of the Act and section 63.24 of the Commission’s rules,3 by apparently willfully consummating an unauthorized assignment of an international section 214 authorization. Based on our review of the facts and circumstances surrounding this matter, and for the reasons discussed below, we find that Kajeet is apparently liable for a total forfeiture of four hundred sixty thousand, one hundred eighty-six dollars ($460,186) and Kajeet/Airlink is apparently liable for a total forfeiture of five hundred two thousand, six hundred forty-two dollars ($502,642).
We also order the Companies to submit within thirty (30) calendar days a report―supported by a declaration under penalty of perjury from a corporate officer―setting forth in detail their plans to come into compliance with the payment obligations discussed herein and describing the steps Kajeet/Airlink has taken to come into compliance with the requirements of section 214 of the Act and section 63.24 of the Commission’s rules. 1 47 U.S.C. §§ 225(b)(1), 251(e)(2), 254(d).2 47 C.F.R. §§ 52.32(a), 54.706(a), 64.604(c)(5)(iii)(A). 3 47 U.S.C. § 214; 47 C.F.R. § 63.24.
The Act codifies Congress’s historic commitment to promote universal telecommunications service to ensure that consumers in all regions of the nation have access to affordable, quality telecommunications services. In particular, section 254(d) of the Act requires, among other things, that “[e]very telecommunications carrier [providing] interstate telecommunications services … contribute, on an equitable and nondiscriminatory basis, to the specific, predictable, and sufficient mechanisms established by the Commission to preserve and advance universal service.”4 In implementing this Congressional mandate, the Commission directed all telecommunications carriers providing interstate telecommunications services and certain other providers of interstate telecommunications to register with the Commission, comply with annual and quarterly filing requirements, and contribute to the Universal Service Fund based on their interstate and international end-user telecommunications revenues.5 The Universal Service Administrative Company (“USAC”) currently administers the USF.6 USAC uses the revenue projections submitted on the quarterly filings to determine each carrier’s monthly universal service contribution amount, and bills them accordingly each month.7 Consistent with the Debt Collection Improvement Act of 1996 (“DCIA”),8 invoices for USF contributions that have become over 90 days delinquent are transferred to the Commission for further action to collect the outstanding debt.9 A provider’s failure to pay its share into the USF skews the playing field by giving the provider an economic advantage over its competitors, who must then shoulder more than their fair share of the costs of universal service. 4.
Section 225(b)(1) of the Act, which codifies Title IV of the Americans with Disabilities Act of 1990, directs the Commission to “ensure that interstate and intrastate telecommunications relay services are available, to the extent possible and in the most efficient manner, to hearing-impaired and speech-impaired individuals in the United States.”10 To that end, the Commission established the TRS Fund to reimburse TRS providers for the costs of providing interstate telecommunications relay services.11 4 47 U.S.C. § 254(d). 5 47 C.F.R. §§ 54.706(b), 54.711, 64.1195. See also 47 U.S.C. § 254(d) (“Any other provider of interstate telecommunications may be required to contribute to the preservation and advancement of universal service if the public interest so requires.”). Contributions are based on a contributor’s projected revenues, and individual universal service contribution amounts that are based on quarterly filings are subject to an annual true-up. 47 C.F.R. § 54.709(b).
6 47 C.F.R. § 54.701(a).7 See 47 C.F.R. § 54.709.8 See Debt Collection Improvement Act of 1996, Pub. L. No. 104-134, 110 Stat. 1321, 1358 (1996). Pursuant to the “red light rule,” the Commission withholds action on applications or other requests for benefits by delinquent debtors and ultimately dismisses such applications or other requests if the delinquency is not resolved. See 47 C.F.R. § 1.1910. 9 See http://www.universalservice.org/fund-administration/contributors/understanding-your-invoice/important [4]-invoicing-deadlines.aspx. Debt collection procedures may include further administrative efforts both by the Commission and the United States Treasury or, as appropriate, the Commission may refer the delinquent debt to the Department of Justice for enforced collection action. 47 C.F.R. § 1.1917. Collection efforts may result in additional charges, to include interest and penalties, as provided under 31 U.S.C. § 3717, and administrative charges pursuant to 47 C.F.R. §§ 1.1940, 54.713, and 31 C.F.R. § 285.12(j).
10 47 U.S.C. § 225(b)(1).11 See Telecommunications Relay Services and the Americans with Disabilities Act of 1990, Third Report and Order, 8 FCC Rcd 5300, 5301 ¶ 7 (1993). Telecommunications relay services enable persons with hearing and speech disabilities to communicate by telephone with voice-telephone users. Such services provide telephone access to a (continued …)
Pursuant to sections 64.604(c)(5)(iii)(A) and 64.601(b) of the Commission’s rules, every provider of interstate telecommunications services and certain other providers of telecommunications must contribute to the TRS Fund based on their interstate end-user revenues.12 The TRS Fund administrator uses the annual filings to determine each contributor’s TRS Fund contribution amount.13 The TRS Fund administrator bills carriers each July based on their annual revenues.14
In addition, section 251(e)(1) of the Act directs the Commission to oversee the administration of telecommunications numbering to ensure the availability of telephone numbers on an equitable basis.15 Section 251(e)(2) of the Act requires that “[t]he cost of establishing telecommunications numbering administration arrangements … shall be borne by all telecommunications carriers on a competitively neutral basis as determined by the Commission.”16 In carrying out this statutory directive, the Commission adopted section 52.32 of its rules, which requires, among other things, that all telecommunications carriers contribute to the costs of local number portability on the basis of their end-user telecommunications revenues for the prior calendar year.17 6.
The Commission has established specific procedures for the administration of the USF, TRS, local number portability, and other associated federal regulatory programs. Pursuant to section 54.711(a) of the Commission’s rules,18 a carrier is required to file FCC Form 499-A, also known as the annual Telecommunications Reporting Worksheet (“annual Worksheet” or “Form 499-A”),19 for the purpose of determining its USF, TRS Fund, LNP, and North American Numbering Plan (“NANP”) administration and regulatory fee payments, and with certain exceptions, to file Quarterly Telecommunications Reporting Worksheets (“quarterly Worksheet” or “Form 499-Q”) to determine its monthly universal service contribution amounts.20 These periodic filings trigger a determination of liability, if any, and subsequent billing and collection by the entities that administer the regulatory programs.21 Carriers must pay their contribution invoices in a timely manner,22 and the Commission’s (Continued from previous page) significant number of Americans who, without it, might not be able to make calls to or receive calls from voice-telephone users. See Telecommunications Relay Services and Speech-to-Speech Services for Individuals with Hearing and Speech Disabilities, Report and Order, 15 FCC Rcd 5140, 5143 ¶ 5 (2000). 12 47 C.F.R. §§ 64.604(c)(5)(iii)(A), 64.601(b).13 47 C.F.R. § 64.604(c)(5)(iii)(B).14 Rolka Loube Saltzer Associates, LLC replaced the National Exchange Carrier Association as the TRS Fund administrator effective July 1, 2011. See http://www.r-l-s-a.com/TRS/ [5]. 15 47 U.S.C. § 251(e)(1).16 47 U.S.C. § 251(e)(2).17 47 C.F.R. § 52.32.18 47 C.F.R. § 54.711(a).19 See FCC Form 499-A Telecommunications Reporting Worksheet − Annual Filing, http://transition.fcc.gov/Forms/Form499-A/499a2-2011.pdf [6] (October 2011).
20 See Federal-State Joint Board on Universal Service, Petition for Reconsideration filed by AT&T, Report and Order and Order on Reconsideration, 16 FCC Rcd 5748 (2001). Carriers report their revenues for the prior quarter by the beginning of the second month in each quarter (i.e., February 1, May 1, August 1, and November 1). See id. at 5755, ¶ 19. See also FCC Form 499-Q Telecommunications Reporting Worksheet − Quarterly Filing for Universal Service Contributors, http://www.fcc.gov/Forms/Form499-Q/499q.pdf [7] (April 2010).
21 See 47 C.F.R. § 54.709. See also 47 C.F.R. §§ 52.32, 64.604(c)(5)(iii)(B). 3
rules explicitly warn contributors that failure to file forms or submit payments potentially subjects them to enforcement action.23
Section 214(a) of the Act prohibits any carrier from constructing, extending, or operating any line, and from engaging in transmission through any such line, “unless and until there shall first have been obtained from the Commission a certificate that the present or future public convenience and necessity” require, or will require, the construction, extension, or operation of the line.24 In accordance with sections 63.12 and 63.18 of the Commission’s rules, any international carrier seeking authorization for such activities pursuant to section 214 of the Act, including an assignment of an authorization, must obtain approval from the Commission.25 In particular, pursuant to section 63.24 of the Commission's rules,26 the assignment of an international section 214 authorization requires application to, and prior approval from, the Commission. Section 63.24(e) requires that the proposed assignee apply to the Commission for approval prior to the consummation of the proposed assignment.27 The Commission employs a public interest standard under section 214(a) of the Act that involves the examination of the positive and negative public interest impact of a proposed transaction.28 8.
Kajeet is a Maryland-based company that has provided telecommunications services since 2007.29 Kajeet provides prepaid wireless services as reseller for a nationwide wireless carrier.30 (Continued from previous page) 22 See 47 C.F.R. § 54.711(a) (“The Commission shall announce by Public Notice published in the Federal Register and on its website the manner of payment and the dates by which payments must be made.”); Proposed Fourth Quarter 2011 Contribution Factor, Public Notice, 26 FCC Rcd 12943, 12946 (Managing Dir. 2011) (“Contribution payments are due on the date shown on the invoice.”). See also 47 C.F.R. § 54.713(b) (noting that if a USF “contributor fails to make full payment on or before the date due of … the monthly invoice provided by the Administrator, the payment is delinquent.”). The Act and our rules, however, do not condition payment on receipt of an invoice or other notice from USAC. See 47 U.S.C. § 254(d); 47 C.F.R. § 54.706(b). A carrier that does notfile required worksheets may not receive an invoice from USAC, but is nonetheless required to contribute to the USF, unless its revenues are considered de minimis. See Globcom, Inc., Notice of Apparent Liability for Forfeiture and Order, 18 FCC Rcd 19893, 19896 ¶ 5 n.22 (2003) (“Globcom NAL”) (subsequent history omitted). The instructions for the Worksheets include tables for carriers to determine their annual contributions. Providers whose annual contribution is less than $10,000 are considered de minimis and exempted from contributing to the USF. See also 47 C.F.R. § 54.708.
23 47 C.F.R. § 54.713.24 47 U.S.C. § 214(a). 25 47 C.F.R. §§ 63.12, 63.18. 26 47 C.F.R. § 63.24. For purposes of section 63.24 of the Commission’s rules, “an assignment of an authorization is a transaction in which the authorization is assigned from one entity to another entity. Following an assignment, the authorization is held by an entity other than the one to which it was originally granted.” 47 C.F.R. § 63.24(b). 27 47 C.F.R. § 63.24(e); see also 47 C.F.R. § 63.24(d) (excluding pro forma applications, or non-substantial assignments and transfers of control that do not result in a change in the actual controlling party or do not require prior Commission approval) and Note 1 to paragraph (d) (listing the factors relevant to a determination of control). 28 See 47 U.S.C. § 214(a).29 Response of Kajeet, Inc. and Kajeet/Airlink, LLC to the Enforcement Bureau’s December 10, 2009 Letter of Inquiry, dated February 28, 2010, at response to Question 3 (“LOI Response”). 30 Id. at response to Questions 3 and 9. Most of the customers of Kajeet’s prepaid wireless service are children and the ability to make international calls from Kajeet handsets has been disabled from all of Kajeet handsets. Because Kajeet offers no international telecommunications services, it does not hold an international section 214 authorization. Id. at response to Question 12. 4
Kajeet/Airlink has provided telecommunications services since April 2009.31 Kajeet/Airlink provides prepaid wireless services as a reseller for a nationwide wireless carrier and sells prepaid long distance calling cards.32 9.
In July 2009, USAC referred Airlink Mobile, In