Federal Communications Commission DA 07-1635 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Federal-State Joint Board on Universal Service Request for Review by i-Tel Long Distance a/k/a Impact Telecommunications, Inc. ) ) ) ) ) ) ) CC Docket No. 96-45 ORDER Adopted: April 10, 2007 Released: April 10, 2007 By the Chief, Telecommunications Access Policy Division, Wireline Competition Bureau: I. INTRODUCTION AND BACKGROUND 1. 2. In this Order we deny the request for review 1 filed by i-Tel Long Distance a/k/a Impact Telecommunications, Inc. (i-Tel) of two Administrator’s Decisions on Contributor Appeal. 2 In its request, i-Tel alleges that it qualifies for de minimis status and, thus, is not subject to universal service contributions. Based on the record, we find that i-Tel was not de minimis for the billing periods at issue. For the reasons set forth below, we affirm the Administrator’s Decisions. Pursuant to the Commission’s rules, if a contributor’s universal service contribution in any given year is less than $10,000, that contributor is not required to contribute directly to the federal Universal Service Fund (USF or Fund). 3 For the period of time at issue (calendar years 2001 through 2002), the Commission required contributors to file revenue information semi-annually (until May 2001) and then quarterly with an annual filing to true-up the quarterly filings. 4 During this time, contributors’ assessments were based on historical gross-billed revenues. The Commission modified its contribution methodology to assess contributors based on their projected collected revenues in 2003. 5 1 See Letter from David C. Holtz, Kajan Mather and Barish, attorneys for i-Tel Communications, Inc., to Office of the Secretary, Federal Communications Commission (filed February 11, 2004) (i-Tel Request). 2 Administrator’s Decision on Contributor Appeal, December 30, 2003 (addressing July 2001 – June 2002 billing period) (2001 Administrator’s Decision); and Administrator’s Decision on Contributor Appeal, December 30, 2003 (addressing 2002 First and Second Quarters billing periods (2002 Administrator’s Decision). 3 See 47 C.F.R. § 54.708. 4 See, e.g., Federal-State Joint Board on Universal Service; Petition for Reconsideration filed by AT&T, CC Docket No. 96-45, Report and Order and Order on Reconsideration, 16 FCC Rcd 5748, 5750, 5752-53, paras. 6 & 12 (2001). 5 See Federal-State Joint Board on Universal Service, CC Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, 95- 116, 98-170, Report and Order and Second Further Notice of Proposed Rulemaking, 17 FCC Rcd 24952, 24970, para. 29 (2002). Federal Communications Commission DA 07-1635 2 3. 4. 5. 6. With respect to the July 2001 through June 2002 billing period, i-Tel timely filed a 2001 FCC Form 499-A, reporting 2000 revenue, on March 26, 2001. 6 i-Tel did not file subsequent FCC Forms 499- Q reporting quarterly 2001 revenue until January 23, 2003. 7 The FCC Forms 499-Q had due dates of May 11, 2001, August 1, 2001, November 1, 2001, and February 1, 2002. 8 The revision of the FCC Forms 499-Q were submitted on January 23, 2003, after the respective revision deadlines. 9 Thus, USAC denied the forms. 10 i-Tel claims that it was de minimis for the 2001 billing period and did not need to contribute to USF. 11 With respect to the 2002 first and second quarters’ billing periods, i-Tel submitted two FCC Forms 499-Q reporting revenue for the periods October through December 2002 and April through June 2002 because, although i-Tel believed its previously filed 2001 FCC Form 499-A demonstrated that it qualified for de minimis status, USAC continued to send invoices to i-Tel. i-Tel filed the FCC Forms 499-Q to demonstrate its de minimis status. The FCC Forms 499-Q were due on May 1, 2002, and August 1, 2002, respectively. Any revisions to the FCC Forms 499-Q were due by August 1, 2002, and November 1, 2002. USAC received i-Tel’s FCC Forms 499-Q on January 23, 2003, after the deadlines. Because i-Tel’s FCC Forms 499-Q were untimely filed, USAC denied their appeal. 12 i-Tel claims that it was de minimis for the 2002 billing periods at issue and did not need to contribute to USF. 13 II. DISCUSSION The Commission has delegated authority to the Wireline Competition Bureau (Bureau) to consider petitions for review of decisions by the Administrator. 14 Section 54.723 of the Commission’s rules specifies that the Bureau shall conduct a de novo review. 15 We deny i-Tel’s request for review for the billing periods at issue and find that, based on the information that i-Tel provided to USAC, i-Tel did not qualify for the Commission’s de minimis exemption. i-Tel asserts that for the billing periods at issue, i-Tel’s annual USF obligation did not exceed $10,000. 16 However, based on the revenue reported by i-Tel to USAC, we determine that it did not qualify for de minimis status for the billing periods at issue. 17 Thus, we deny its request for review for the billing periods. We conclude that i-Tel had in excess of $10,000 in USF obligations for calendar years 2001 and 2002. 6 2001 Administrator’s Decision at 1. 7 Id. 8 Id. 9 Id. 10 Id. at 1-2. 11 i-Tel Request at 2. 12 2002 Administrator’s Decision at 1-2. 13 i-Tel Request at 2. 14 47 C.F.R. § 54.722(a). 15 Id. § 54.723. 16 i-Tel Request at 2. i-Tel provides “amended” FCC Forms 499-A for 2001 and 2002 dated February 6, 2004 which purport to calculate annual contribution amounts for the company for 2001 - 2002. 17 See Letter from USAC to Belinda Nixon, Federal Communications Commission (March 9, 2007), attached hereto at App. A. Federal Communications Commission DA 07-1635 3 7. 8. 9. 10. In its request for review, i-Tel is essentially asking the Commission for a waiver of its 45-day revision deadline for FCC Form 499-Q filings. 18 As noted in the Interim Contribution Methodology Order, the Commission established a 45-day period within which carriers may revise their FCC Forms 499-Q. 19 This deadline is essential in order to eliminate incentives for carriers to revise their revenue projections after the announcement of the contribution factor for the upcoming quarter in order to reduce their contribution obligations and to otherwise reduce the likelihood of a shortfall in universal service funding in a given calendar quarter. 20 Where i-Tel failed to meet these deadlines, USAC’s rejection of the form and use of an estimate for billing purposes was thus appropriate. 21 i-Tel has also failed to show good cause why the Bureau should waive the Commission’s 45- day revision deadline. USAC informed i-Tel on numerous occasions prior to April 1, 2003, that it did not qualify for de minimis status, 22 and, yet, i-Tel continued to miss the deadlines for properly filing FCC Forms 499-Q. Additionally, all of the forms that i-Tel did file demonstrate that it did not qualify for de minimis status for the billing periods at issue. We find that i-Tel has failed to show good cause why we should waive the Commission’s 45-day revision deadline. Further, i-Tel’s request for review is procedurally defective. Specifically, i-Tel failed to support its factual assertions with an affidavit signed by an officer of the company or other knowledgeable individual. 23 In addition, it did not indicate that it had served USAC with a copy of its appeal, as required by Commission’s rules. 24 Although we deny i-Tel’s request on its merits, we could also deny it on procedural grounds. Contributors are on notice that we may deny future appeals for procedural defects. III. ORDERING CLAUSE Accordingly, IT IS ORDERED that, pursuant to the authority contained in sections 1-4 and 254 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151-154 and 254, and pursuant to authority delegated in sections 0.91, 0.291, and 54.722(a) of the Commission’s rules, 47 C.F.R. §§ 0.91, 0.291, and 54.722(a), that the Request for Review as filed by i-Tel Long Distance, Inc. a/k/a Impact Telecommunications, Inc. IS DENIED. 18 Section 1.3 of the Commission’s rules provides that waiver of a rule may be granted upon “good cause shown.” 47 C.F.R. § 1.3. Commission rules are presumed valid, however, and an applicant for waiver bears a heavy burden. WAIT Radio v. FCC, 418 F.2d 1153, 1157 (D.C. Cir. 1969), cert. denied, 409 U.S. 1027 (1972) (WAIT Radio). The Commission may exercise its discretion to waive a rule “only if special circumstances warrant a deviation from the general rule and such deviation will serve the public interest.” Northeast Cellular Telephone v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990). The Commission may take into account considerations of hardship, equity, or more effective implementation of overall policy. WAIT Radio, 418 F.2d at 1159. 19 Federal-State Joint Board on Universal Service, CC Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, 95-116, 98-170, Report and Order and Second Further Notice of Proposed Rulemaking, 17 FCC Rcd 24952 (2002) (Interim Contribution Methodology Order). 20 Interim Contribution Methodology Order, 17 FCC Rcd at 24972, para. 36 21 47 C.F.R. § 54.709(d). 22 2001 Administrator’s Decision at 2. 23 See 47 C.F.R. § 54.721(c). By letter, we advised i-Tel that its request was procedurally defective and requested that it file an amended appeal. See letter from Cathy Carpino, Federal Communications Commission, to Todd Borth, President, i-Tel (July 13, 2005). The letter also advised that the request for review was not formatted properly. Id.; see 47 C.F.R. § 54.721(a). i-Tel did not respond to our request. 24 See 47 C.F.R. §§ 1.49, 54.721(b)(2). Federal Communications Commission DA 07-1635 4 11. IT IS FURTHER ORDERED that, pursuant to authority delegated under sections 0.91, 0.291 and 1.102 of the Commission’s rules, 47 C.F.R. §§ 0.91, 0.291, 1.102, this Order SHALL BE EFFECTIVE upon release. FEDERAL COMMUNICATIONS COMMISSION Jeremy D. Marcus Chief, Telecommunications Access Policy Division Wireline Competition Bureau Federal Communications Commission DA 07-1635 5 APPENDIX A