Federal Communications Commission DA 12-65 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Start Wireless Group, Inc. d/b/a Page Plus Cellular Apparent Liability for Forfeiture ) ) ) ) ) ) ) ) ) File No.: EB-11-IH-0057 NAL/Acct. No.: 201232080013 FRN: 0016871113 NOTICE OF APPARENT LIABILITY FOR FORFEITURE Adopted: January 19, 2012 Released: January 19, 2012 By the Chief, Enforcement Bureau: I. INTRODUCTION 1. In this Notice of Apparent Liability for Forfeiture (“NAL”), we find that Start Wireless Group, Inc., d/b/a Page Plus Cellular (“Page Plus”), apparently willfully and repeatedly violated Section 214 of the Communications Act of 1934, as amended (the “Act”),1 and Section 63.18 of the Commission’s rules2 by providing international telecommunications service without a Section 214 certificate of authorization from the Commission. Based on our review of the facts and circumstances surrounding this matter, and for the reasons discussed below, we find that Page Plus is apparently liable for a total forfeiture of $100,000. II. BACKGROUND 2. Section 214(a) of the Act prohibits any carrier from constructing, extending, acquiring, or operating any line, and from engaging in transmission over any such line, without first obtaining a certificate of authorization from the Commission.3 While the Commission has granted “blanket” authority for carriers to provide domestic service,4 meaning that such carriers need not apply individually for such authority, the Commission has not extended blanket authority to providers of international telecommunications services.5 Section 63.18 of the Commission’s rules requires any carrier that seeks 1 47 U.S.C. §214(a). 2 47 C.F.R. § 63.18. 3 Supra note 1. 4 47 C.F.R. § 63.01(a) (“Any party that would be a domestic interstate communications common carrier is authorized to provide domestic, interstate services to any domestic point and to construct or operate any domestic transmission line as long as it obtains all necessary authorizations from the Commission for use of radio frequencies”). 5 Implementation of Section 402(b)(2)(A) of the Telecomm. Act of 1996, Report and Order in CC Docket No. 97-11, Second Memorandum Opinion & Order in AAD File No. 98-43, 14 FCC Rcd 11364, 11366 n.8 (1999) (grant of blanket authority is only for domestic services and does not extend to the provision of international services). Federal Communications Commission DA 12-65 2 Section 214 authority “for provision of common carrier communication services between the United States, its territories or possessions, and a foreign point” to request such authority by application.”6 This requirement applies to, among others, carriers that resell the international services of other authorized carriers,7 and to providers of international commercial mobile radio service.8 3. Page Plus is an Ohio corporation, incorporated on March 13, 2003. 9 According to its submissions, as part of its business, Page Plus sells prepaid phone cards with minutes purchased from Cellco Partnership d/b/a Verizon Wireless.10 Page Plus sells some of these cards directly to end-user customers through its www.pagepluscellular.com website.11 These calling cards enable consumers to make domestic and international telephone calls.12 Page Plus provided international telecommunications service through its calling card business from its incorporation in 2003 until 2011 without obtaining an international 214 authorization, as required by the Act.13 4. On October 14, 2010 the Enforcement Bureau (“Bureau”) issued a letter of inquiry (“LOI”) to Page Plus requesting information concerning potential violations of Section 214 of the Act and Section 63.18 of the Commission’s rules.14 At the time the Bureau initiated its investigation, a review of the Commission’s International Bureau Filing System (“IBFS”) database revealed no record that Page Plus had applied for or obtained an international Section 214 authorization. On November 23, 2010, in its LOI Response, Page Plus confirmed that it held no international 214 authorization.15 5. On December 14, 2010, after having provided international telecommunications service for over eight years without Commission authorization, Page Plus simultaneously filed an application for Special Temporary Authority (“STA”) to provide international service and an application for an international Section 214 authorization.16 On January 20, 2011, the Commission’s International Bureau (“IB”) granted Page Plus’s application for STA.17 On February 4, 2011, without prejudice to any 6 47 C.F.R. § 63.18. 7 See id. § 63.18(e)(2). 8 1998 Biennial Regulatory Review—Review of International Common Carrier Regulations, Report and Order, 14 FCC Rcd 4909, 4926-27 ¶¶ 38-39 (1999) (“1998 International Biennial Review Order”); see also, Personal Communications Indus. Ass’n’s Broadband Personal Communications Servs. Alliance’s Pet. for Forbearance for Broadband Personal Communications Servs., Memorandum Opinion and Order and Notice of Proposed Rulemaking, 13 FCC Rcd 16857, 16881-84 ¶¶ 45-54 (1998) (declining PCIA’s request to forbear from requiring Section 214 authority for a broadband PCS carrier to provide international services) (“PCIA Forbearance Order”); Implementation of Sections 3(n) and 332 of the Communications Act, Regulatory Treatment of Mobile Servs., Second Report and Order, 9 FCC Rcd 1411, 1481 ¶ 182 n.369 (1994) (declining to forbear from application of Section 214 to provision of international services). 9 See Response of Start Wireless Group, Inc. to Commission Letter of Inquiry (Nov. 23, 2010) (“LOI Response”), Note 8; see also, LOI Response, attachment 3. 10 See id. 11 See id; see also www.pagepluscellular.com, last visited on Dec. 7, 2011. 12 www.pagepluscellular.com, last visited on Dec. 7, 2011. 13 See LOI Response at 3. 14 47 C.F.R. § 63.18. 15 See LOI Response at 3. 16 See IBFS file no. ITC-STA-20101215-00484 and IBFS file no. ITC-214-20101215-00483. 17 See IBFS file no. ITC-STA-20101215-00484. Federal Communications Commission DA 12-65 3 enforcement action by the Commission for prior non-compliance, IB granted Page Plus a Section 214 authorization to provide international telecommunications service.18 III. DISCUSSION 6. Under Section 503(b)(1) 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.”19 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.20 The legislative history to Section 312(f)(1) of the Act clarifies that this definition of willful applies to both Sections 312 and 503(b) of the Act,21 and the Commission has so interpreted the term in the Section 503(b) context.22 The Commission may also assess a forfeiture for violations that are merely repeated and not willful.23 To impose a forfeiture penalty, the Commission must issue a notice of apparent liability, and the person against whom the notice has been issued must have an opportunity to show, in writing, why no such forfeiture penalty should be imposed.24 The Commission will then issue a forfeiture if it finds by a preponderance of the evidence that the person has violated the Act, a rule, or a Commission order.25 7. The fundamental issue in this case is whether Page Plus violated the Act and the Commission’s rules by willfully or repeatedly failing to obtain authorization prior to providing international telecommunications service. Based on a preponderance of the evidence, we conclude that Page Plus is apparently liable for a forfeiture of $100,000 for its apparent willful and repeated violation of Section 214 of the Act and Section 63.18 of the Commission’s rules.26 A. Page Plus Failed to Obtain an International Section 214 Authorization Before Providing International Telecommunications Service 8. By its own admission, Page Plus provided international telecommunications service from at least March 2003 until February 2011 without a Section 214 authorization from the Commission.27 Nevertheless, in its LOI Response, Page Plus argues that it remains “unconvinced” that Section 214 of the Act applies to its operations because it does not “own, lease, operate, acquire, construct, or maintain any ‘line’ as described by Section 214.”28 Page Plus further claims it had been “completely unaware” of the 18 See IBFS file no. ITC-214-20101215-00483. 19 47 U.S.C. § 503(b)(1)(B); 47 C.F.R. § 1.80(a)(1). 20 47 U.S.C. § 312(f)(1). 21 H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51 (1982). 22 See, e.g., Southern California Broadcasting Co., Memorandum Opinion and Order, 6 FCC Rcd 4387, 4388, ¶ 5 (1991). 23 See, e.g., Callais Cablevision, Inc., Grand Isle, Louisiana, Notice of Apparent Liability for Monetary Forfeiture, 16 FCC Rcd 1359, 1362, ¶ 10 (2001) (issuing a Notice of Apparent Liability for, inter alia, a cable television operator’s repeated signal leakage). 24 47 U.S.C. § 503(b); 47 C.F.R. § 1.80(f). 25 See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589, 7591, ¶ 4 (2002). 26 47 U.S.C. § 214(a); 47 C.F.R. § 63.18. 27 See LOI Response at 3. 28 See id., at Note 8. Federal Communications Commission DA 12-65 4 rule that providers of international telecommunications service must apply for Section 214 authorization.29 As described in detail below, Page Plus’s arguments are meritless. 9. First, the Commission has consistently held that resellers of telecommunications service are common carriers and are subject to regulation under Title II of the Act.30 The nature of a telecommunications reseller’s business is to function as a broker to facilitate transmission of communications over lines owned by another carrier.31 The Commission has made clear that ownership of the underlying transmission facilities is not dispositive of whether a service provider is a common carrier. 32 As the Commission stated in the Resale Order, “with the exception that some resellers may not own any transmission plant, we perceive no difference between resale and traditional communications common carriage.”33 Whether a reseller offers telecommunications services to the public for a fee is “the ‘sine qua non’ of common carrier status.”34 As described above, Page Plus is a reseller of telecommunications services to the public for a fee, and thus is a common carrier subject to Title II. 10. Second, the Commission has determined that “because they provide transmission of information, without a change in form or content, for a fee directly to the public,” prepaid calling card services are telecommunications services and their providers are subject to regulation as telecommunications carriers. 35 In accordance with long-established Commission precedent, Page Plus is subject to Title II regulation as a telecommunications carrier because its prepaid calling card service enables transmission of information between points chosen by the user, does not change the form or content of such information, and is available directly to the public for a fee. 29 See id., at 3. 30 See, e.g., Regulation of Prepaid Calling Card Services, WC Docket No. 05-68, Declaratory Ruling and Report and Order, 21 FCC Rcd 7290, 7293-94, 7312, ¶¶ 10, 65 (2006), vacated in part on other grounds sub nom. Qwest Servs. Corp. v. FCC, 509 F.3d 531 (D.C. Cir. 2007); NOS Communications, Inc., Affinity Network Inc. and NOSVA Limited Partnership, EB Docket No. 03-96, Order to Show Cause and Notice of Opportunity for Hearing, 18 FCC Rcd 6952, 6953-54, ¶ 3 (2003); Regulatory Policies Concerning Resale and Shared Use of Common Carrier Services and Facilities, Docket No. 20097, Report and Order, 60 FCC 2d 261, 265 ¶ 8 (1976) (“an entity engaged in the resale of communications service is a common carrier, and is fully subject to the provisions of Title II”), aff’d sub nom. AT&T v. FCC, 572 F.2d 17 (2d Cir. 1978) (“Resale Order”). 31 See Resale Order, 60 FCC 2d 261, 271 ¶ 17 (defining “resale” as “an activity wherein one entity subscribes to the communications services and facilities of another entity and then reoffers communications service and facilities to the public (with or without ‘adding value’) for profit.”) 32 See, e.g., Resale Order, 60 FCC 2d at 308, ¶ 101. The Act defines “telecommunications carrier” as “any provider of telecommunications services.” 47 U.S.C. § 153 (51). “Telecommunications service” is “the offering of telecommunications for a fee directly to the public, . . . regardless of the facilities used.” Id. § 153(53) (emphasis added). “Telecommunications” is “the transmission, between or among points specified by the user, of information of the user’s choosing, without change in the form or content of the information as sent and received.” Id. § 153(50). 33 Resale Order at 308 ¶ 101. 34 See Resale Order, 60 FCC 2d 261, 308 ¶ 101; see also NARUC v. FCC, 533 F.2d 601, 608 (D.C. Cir. 1976). 35 See AT&T Corp. Petition for Declaratory Ruling Regarding Enhanced Prepaid Calling card Services; Regulation of Prepaid calling Card Services, WC Docket Nos. 03-133, 05-68, Order and Notice of Proposed Rulemaking, 20 FCC Rcd 4826, 4827 ¶ 4 (2005) (“To date, calling card services have been regulated by the Commission as telecommunications services because they provide transmission of information, without a change in form or content, for a fee directly to the public”); see also, Regulation of Prepaid Calling Card Services, 21 FCC Rcd at 7293 ¶ 10 (“prepaid calling cards are telecommunications services and . . . their providers are subject to regulation as telecommunications carriers”). Federal Communications Commission DA 12-65 5 11. Third, because Page Plus is a common carrier reseller of international telecommunications services, it is required, pursuant to Section 214, to obtain Commission authorization before providing international telecommunications services. When it adopted Section 63.18 of the rules, the Commission included resellers of telecommunications services within the class of service providers required to meet the obligations of Section 214. The Commission has enforced this rule with respect to resellers in a well-established line of decisions.36 12. Although Page Plus claims it was “completely unaware” of its obligation to comply with Section 214 of the Act and Section 63.18 of the rules, ignorance of the Act or the Commission’s rules does not exonerate, excuse, or mitigate violations.37 Page Plus’s lack of awareness is irrelevant. 13. A carrier’s failure to obtain Section 214 authorization “undermines the Commission’s ability to accomplish Congress’s objectives in Section 214 of the Act.”38 The Commission has explained that given the “clear requirements and the important public interest considerations involving national security, law enforcement, foreign policy and trade, the failure to obtain Section 214 authority from the Commission prior to providing international telecommunications services [is] egregious.”39 Given the unambiguous language of the Act,40 the Commission’s rules41 and decisions,42 and even the Commission’s web site,43 it should have been apparent to Page Plus that it was required to obtain Section 214 authority from the Commission to provide international telecommunications service. We, therefore, conclude that, in failing to obtain an international Section 214 authorization from the Commission prior to providing international telecommunications service, Page Plus apparently willfully and repeatedly violated Section 214 of the Act and Section 63.18 of the Commission’s rules.44 Furthermore, because Page Plus operated as an international telecommunications service provider from at least 2003 until 2011 without 36 See, e.g., ADMA Telecom, Inc., Forfeiture Order, 26 FCC Rcd 4152, 4161 ¶¶ 26-27 (2011) (assessing a $100,000 forfeiture against a prepaid calling card company for unauthorized international telecommunications service); Teleplus, LLC, Notice of Apparent Liability for Forfeiture, 24 FCC Rcd 7666, 7670-71 ¶ 12 (2009) (“Teleplus NAL”) (same); Omniat International Telecom, LLC d/b/a Omniat Telecom, Notice of Apparent Liability for Forfeiture, 24 FCC Rcd 4254, 4264, ¶ 25 (2009) (“Omniat NAL”) (same); InPhonic, Inc., Notice of Apparent Liability of Forfeiture and Order, 20 FCC Rcd 13277, 8706, ¶ 41 (2007) (“InPhonic NAL”) (same). 37 See In the Matter of the Bureau D’Electronique Appliquee, Inc., Forfeiture Order, 20 FCC Rcd 17893, 17896-7 (2005) (rejecting claims by manufacturer/distributor that its failure to obtain a requisite certification was due to “good faith inadvertent mistakes” and that it lacked “actual knowledge of the need to test and certify” its equipment); In the Matter of Liability of Profit Enterprises, Inc., 8 FCC Rcd 2846, 2846 (1993) (“[P]rior knowledge or understanding of the law is unnecessary to a determination of whether a violation existed. . . . The Commission also does not consider ignorance of the law a mitigating factor”). 38 Omniat NAL, 24 FCC Rcd at 4264 ¶ 24 (2009). 39 See Id. at 4264 ¶ 25; see also, Teleplus NAL, 24 FCC Rcd at 7670-71 ¶ 13; InPhonic NAL, 20 FCC Rcd at 8706 ¶ 41 (2007). 40 47 U.S.C. § 214(a). 41 See, e.g., 47 C.F.R. §§ 63.12, 63.18, 63.20, 63.21, 63.23; see also, 1998 International Biennial Review Order, 14 FCC Rcd 4909; Regulation of Int’l Common Carrier Services, Report and Order, 7 FCC Rcd 7331 (1992) (“International Resale Order”). 42 See supra note 36. 43 See International Bureau Frequently Asked Questions, http://www.fcc.gov/ib/pd/pf/214faq.html, last visited December 7, 2011. 44 47 U.S.C. § 214; 47 C.F.R. § 63.18. Federal Communications Commission DA 12-65 6 authorization from the Commission,45 we find that Page Plus’s apparent noncompliance with the Act and the Commission’s rules constitutes a continuing violation. B. Proposed Forfeiture Amount 14. Section 503(b)(1) of the Act provides that any person that willfully or repeatedly fails 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.46 Section 503(b)(2)(B) of the Act and Section 1.80(b)(2) of the rules authorizes the Commission to assess a forfeiture of up to $150,000 for each violation or each day of a continuing violation by a common carrier, up to a statutory maximum for continuing violations of $1,500,000 for a single act or failure to act.47 In determining the appropriate forfeiture amount, we consider the factors enumerated in Section 503(b)(2)(E) of the Act, including “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.”48 Through consideration of these factors, and the adjustment criteria provided by Section 1.80 of the rules, the Commission has established that the base forfeiture amount for operating without Commission authorization pursuant to Section 214 is $100,000.49 15. As explained above, we find that Page Plus violated a clear requirement of the Act and the Commission’s rules by operating without the required international Section 214 authorization for at least eight years. In light of the Commission’s clear requirements,50 the important public interest considerations involving national security, law enforcement, foreign policy, and trade policy,51 and consistent with prior precedent for entities failing to receive prior authorization from the International Bureau,52 a proposed forfeiture of $100,000 is warranted for Page Plus’s apparent willful repeated failure to obtain Section 214 authority from the Commission prior to providing international telecommunications service. IV. ORDERING CLAUSES 16. ACCORDINGLY, IT IS ORDERED that, pursuant to Section 503(b) of the Act and Sections 0.111, 0.311, 0.314 and 1.80 of the rules,53 Start Wireless Group, Inc. d/b/a Page Plus Cellular, is hereby NOTIFIED of its APPARENT LIABILITY FOR A FORFEITURE in the amount of $100,000 for apparently willfully and repeatedly violating Section 214(a) of the Act and Section 63.18 of the rules.54 45 See LOI Response at 3; see also supra note 18. 46 47 U.S.C. § 503(b)(1)(B); see also 47 C.F.R. § 1.80(a)(2). 47 47 U.S.C. § 503(b)(2)(B); see also 47 C.F.R. § 1.80(b)(2). 48 47 U.S.C. § 503(b)(2)(E). 49 See supra note 36. 50 47 U.S.C. § 214(a); 47 C.F.R. § 63.18. 51 See 1998 International Biennial Review Order, 14 FCC Rcd at 4915-17, ¶ ¶ 15-18; id. 4939-40, ¶¶ 72-74. 52 See supra note 36. 53 See 47 U.S.C. § 503; 47 C.F.R. §§ 0.111, 0.311, 0.314, 1.80. 54 See 47 U.S.C. § 214(a); 47 C.F.R. §§ 63.18, 63.04. Federal Communications Commission DA 12-65 7 17. IT IS FURTHER ORDERED that, pursuant to Section 1.80 of the Commission’s rules,55 within thirty days of the release date of this Notice, Start Wireless Group, Inc. d/b/a Page Plus Cellular SHALL PAY the full amount of the proposed forfeiture or SHALL FILE a written statement seeking reduction or cancellation of the proposed forfeiture. 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/Acct. No. and FRN 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. Payments by wire transfer may be made to ABA Number 021030004, receiving bank Federal Reserve Bank of New York, 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). Page Plus will also send electronic notification within forty-eight (48) hours of the date said payment is made to Terry Cavanaugh at Terry.Cavanaugh@fcc.gov, Pamela Kane at Pamela.Kane@fcc.gov, and Edward Smith at Edward.Smith@fcc.gov. 19. The response to this Notice of Apparent Liability for Forfeiture seeking reduction or cancellation of the proposed forfeitures, if any, must include a detailed factual statement supported by appropriate documentation and affidavits pursuant to Sections 1.80(f)(3) and 1.16 of the Commission’s rules.56 The response must be mailed to Theresa Z. Cavanaugh, Acting Chief, Investigations and Hearings Division, Enforcement Bureau, Federal Communications Commission, 445 12th Street, S.W., Room 4-C330, Washington, D.C. 20554 and must include the NAL/Acct. No. referenced above. The response should also be emailed to Terry Cavanaugh at Terry.Cavanaugh@fcc.gov, Pamela Kane at Pamela.Kane@fcc.gov, and Edward Smith at Edward.Smith@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 (GAAP); 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. Requests for payment of the full amount of this Notice of Apparent Liability for Forfeiture under an installment plan should be sent to: Chief Financial Officer -- Financial Operations, Federal Communications Commission, 445 12th Street, S.W., Room 1-A625, Washington, D.C. 20554.57 For answers to questions regarding payment procedures, please contact the Financial Operations Group Help Desk at 1-877-480-3201 or Email: ARINQUIRIES@fcc.gov. 55 See 47 C.F.R. § 1.80. 56 See 47 C.F.R. §§ 1.80(f)(3), 1.16. 57 See 47 C.F.R. § 1.1914. Federal Communications Commission DA 12-65 22. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability for Forfeiture shall be sent by certified mail, return receipt requested, to counsel for Page Plus: Robert E. Levine, Law Offices of Robert E. Levine, 1750 K Street, N.W., Suite 350, Washington, D.C. 20006. FEDERAL COMMUNICATIONS COMMISSION P. Michele Ellison Chief, Enforcement Bureau