-...... ........ _________________ _ 
11 FCC Red No. 4 Federal Communications Commission Record DA 96-46 
Before the 
Federal Communications Commission 
Washington, D.C. 20554 
In the Matter of 
Target Telecom, Inc. File No. ENF-96-04 
NAIJAcct. No. 616EF004 
Apparent Liability for Forfeiture 
NOTICE OF APPARENT LIABILITY FOR FORFEITURE 
Adopted: January 19, 1996; Released: January 23, 1996 
; 
By the Ch ief, Common Carrier Bureau: 
I. INTRODUCTION 
1. By this Notice of Apparent Liability for Forfeiture 
("NAL"), we initiate enforcement action against Target 
Telecom, Inc. ("TTI"). 1 For the reasons discussed below, we 
find that TTI af parently willfully violated Commission 
rules and orders by changing the primary interexchange 
carrier ("PIC") designated by David S. Houlden 
("Houlden"), Executive Director of the Newburyport 
Housing Authority ("Newburyport") of Newburyport. Mas­
sachusetts, without Newburyport's authorization. Based 
upon o ur review of the facts and circumstances surround­
ing the violations, we find that TII is apparently liable for 
a forfeiture in the amount o f forty thousand dollars 
($40,000). 
II. THE COMMISSION'S PIC CHANGE 
RULES AND ORDERS 
2. In its Allocation Order and subsequent Reconsideration 
Order and Waiver Order,3 the Commission set forth rules 
and procedures for implementing equal access4 and cus-
1 Target Telecom, Inc. is located at 155 Willowbrook Bou­
levard, Wayne, New Jersey. 
2 47 C.F.R. ~ 64.1100: Investigation of Access and Divestiture 
Related Tariffs. CC Docket 83-1145. Phase l, IOI FCC 2d QI I 
(1985) (Allocation Order); recon. denied, I02 FCC 2d 503 (1985) 
(Reconsideration Order); Investigation of Access and Divestiture 
Related Tariffs. CC Docket 83-1145, Phase I, IOI FCC 2d 935 
~1985) (Waiver Order). 
See supra proceedings cited at note 2. 
4 Equal access for interexchange carriers ("IXCs") is that 
which is equal in type. quality and price to the access to local 
exchange facilities provided to AT&T and its affiliates. United 
States v. American Tel. & Tel., 552 F. Supp. 131. 227 (D.D.C. 
1982), aff d sub nom. Maryland v. United States. 460 U.S. HXll 
(1983) (Modification of Final Judgement or "MF/"). "Equal ac· 
cess allows end users to access facilities of a designated llXCI by 
dialing' I' only." Allocation Order, IOI FCC 2d at 91 I. 
s Presubscription is the process by which each customer selects 
one primary interexchange carrier ("PIC"), from among several 
available carriers, for the customer's phone line(s). Allocation 
Order, 101 FCC 2d at 91 I, 928. Thus, when a customer dials 
tOtt 
tomer oresubscriptions to an interexchange carrier 
("IXC").0 The Commission's original allocation plan re­
quired IXCs to have on file a letter of agency ("LOA") 
signed by the customer before submitting PIC change or­
ders to the local exchange carrier ("LEC") on behalf of the 
customer.7 After considering claims by certain IXCs that 
this requirement would stifle competition because consum­
ers would not be inclined to execute the LOAs even 
though they agreed to change their PIC, the Commission 
modified the requirement to allow IXCs to initiate PIC 
changes if they had "instituted steps to obtain signed 
LOAs."8 In 1992, the Commission again revised its rules 
because it continued to receive complaints about 
unauthorized PIC changes.9 Specifically, while the Commis­
sion recognized the benefits of permitting a 
telephone-based industry to rely on telemarketing to solicit 
new business, it required IXCs to institute one of the 
following four confirmation procedures before submitting 
PIC change orders generated by telemarketing: (1) obtain 
the consumer's written authorization; (2) obtain the con­
sumer's electronic authorization by use of an 800 number; 
(3) have the consumer's oral authorization verified by an 
independent third party; or (4) send an information pack­
age , including a prepaid, return postcard, within three days 
of the consumer 's request for a PIC change, and wait 14 
days before submitting the consumer's order to the LEC, so 
that the consumer has sufficient time to return the post­
card denying, cancelling or confirming the change order.'0 
Hence, the Commission's rules and orders require that 
IXCs either obtain a signed LOA or, in the case of 
telemarketing solicitations, complete one of the four 
telemarketing verification procedures before submitting 
PIC change requests to LECs on behalf of consumers. 
3. Because of its continued concern over u nauthorized 
PIC changes, the Commission recently prescribed the gen­
eral form and content of the LOA used to authorize a 
change in a customer's primary long distance carrier.11 The 
Commission's recent rules prohibit the potentially decep­
tive or confusing practice of combining the LOA with 
promotional materials in the same document.12 The rules 
also prescribe the minimum information required to be 
included in the LOA and require that the LOA be written 
in clear and unambiguous language.'3 The rules prohibit 
"I," only the customer accesses the primary lXC's services. An 
end user can also access other IXCs by dialing a five-digit access 
code ( IOXXX). Id. at 911. 
6 Pursuant to the MFJ, the Bell Operating Companies (BOCs) 
were ordered to provide. where technically feasible. equal access 
to their customers by September 1986. Id. 
7 An LOA is a document, signed by the customer, which states 
that the customer has selected a particular carrier as that cus­
tomer's primary long distance carrier. Allocation Order, IOI 
FCC 2d at 929. 
8 Waiver Order, 101 FCC 2d at 942. 
~ Policies and Rules Concerning Changing Long Distance Car­
riers, 7 FCC Red 1038-39 ( 1992) (PIC Change Order). 
10 See 47 C.F.R. § 64.1100: PIC Change Order, 7 FCC Red at 
1045. 
11 Policies and Rules Concerning Unauthorized Changes of 
Consumers' Long Dis1ance Carriers, 10 FCC Red 9560 ( 1995). 
ll See id. at 9574-75. Checks that serve as an LOA are excepted 
from the "separate or severable" requirement so long as the 
check contains certain information clearly indicating that en­
dorsement of the check authoriz~s a PlC change and otherwise 
complies with the Commission's LOA requirements. Id. at 9573. 
l3 See id. at 9564-65. 
DA 96-46 Federal Communications Commission Record 11 FCC Red No. 4 
all "negative option" LOAs1' and require that LOAs and 
any accompanying promotional materials contain complete 
translations if they employ more than one language.1s 
III. THE NEWBURYPORT COMPLAINT 
4. On July 31, 1995, the Commission received a written 
complaint from Houlden alleging that TTI had converted 
Newburyport's prescribed long distance service provider 
from AT&T Corporation ("AT&T") to TTI without 
Newburyport's authorization.16 Newburyport apparently 
first discovered the change to TTI when it received from 
TTI a telephone bill for February 1995. A Newburyport 
employee then contacted TTI about the bill. 17 In response 
to the inquiry, TTI faxed to Newburyport a copy of a 
signed "Customer Service Agreement" ("service agree­
ment") obtained from Business Network Communications, 
Inc. ("BNC") 18 that included a LOA purportedly signed by 
Houlden authorizing the change. Houlden states that not 
only is the signature on the service agreement not his, the 
signature does not reflect the correct spelling of his name.19 
Houlden attached to the complaint a copy of the LOA 
Newburyport received from TTI. 
5. The Common Carrier Bureau's Consumer Complaints 
Branch (formerly known as the Informal Complaints and 
Public Inquiries Branch) sent letters to both TTI and BNC 
requesting specific information re~rding the conversion of 
Newburyport's telephone service. 0 The information that 
TTI provided in response to the staff's inquiry indicates 
that Newburyport's service was switched to TTI on the 
basis of a BNC service agreement that was purportedly 
signed by Houlden.21 TTI states that when signed service 
agreements are received from its marketing agents they are 
verified by calling and confirming information prior to 
processing. TTI does not indicate that the order to convert 
Newburyport 's service was verified prior to submission to 
NYNEX-New England .22 In its response, BNC does not 
directly state that the signature was forged but states that an 
"independent representative" was responsible for submit­
ting the LOA purportedly containing Houl<len's signature 
and that the representative has been removed from BNC's 
program.2J 
IV. DISCUSSION 
6. We have carefully evaluated the information submitted 
in connection with Newburyport's informal complaint and 
conclude that TTI is apparently liable for forfeiture for 
willf~I violation of the Commission's rules and PIC change 
requirements. We find TTl's apparent actions particularly 
egregious. It appears that on or about January 24, 1995, 
14 See id. at 9565-66. "Negative option" LOAs require consum· 
ers to take some action to avoid having their long distance 
telephone service changed. 
15 See id. at 9581. 16 Newburyport Housing Authori1y, Informal Complaint No. 
IC-95-22371 (July 31, 1995). 
17 Id. . 
18 According to TTl's response to the complaint dated October 
31, 1995, BNC is an independent sales and marketing company 
for TTI. BNC receives commissions based on volume usage of 
the orders submitted and provided. BNC's response, dated Octo· 
ber 20, 1995, states that it has independent representatives who 
enroll customers to TTl's network and in turn earn monthly 
1812 
TTI submitted a PIC change request based on an appar­
ently forged LOA to NYNEX-New England, through its 
underlying carrier WilTel, Inc., resulting in the conversion 
of Newburyport's telephone service from AT&T to TTI. 
The statements and information provided by Newburyport, 
TTI, and BNC leave virtually no doubt that the LOA was 
not executed by Houlden and that TTI lacked the requisite 
authorization to request a PIC change to Newburyport's 
to·ng distance service. There is no similarity between 
Houlden's signature on Newburyport's complaint and 
Houlden's purported signature on the LOA form that TTI 
used as the basis for the PIC change. Indeed, the signature 
on the LOA is spelled differently than Houlden's signature 
on the complaint. Under these circumstances, we conclude 
that TTI's apparent actions were in willful violation of the 
Commission's PIC change rules and orders and that a 
substantial forfeiture penalty is appropriate. 
7. We also note that with regard to PIC changes, the 
actions of BNC, TTI's marketing agent, do not relieve TTI 
of its independent obligation to ensure compliance with 
our rules, nor do they otherwise mitigate TTI's role in the 
apparent violations. The Communications Act deems the 
acts or omissions of an agent or other person acting for a 
common carrier to be the acts or omissions of the carrier 
itself.24 Hence, the Act expressly prohibits a carrier from 
evading the requirements of the Act or the Commission's 
rules or orders by hiring someone else who then engages in 
conduct that contravenes these requirements. 
8. As a general matter, the unauthorized conversion of a 
customer's presubscribed long distance carrier continues to 
be a wide-spread problem in the industry.2s We are par ticu­
larly troubled by what appears to be a common practice by 
some IXCs of relying on unverified LOAs, which turn out 
to be falsified or forged, to effect changes in consumers' 
long distance service. The pervasiveness of the problem 
suggests that our current administration of the law has not 
produced sufficient deterrence to non-compliance and the 
carriers have little incentive to curtail practices that lead to 
consumer complaints. Furthermore. as a practical matter, 
the carriers' responses to alleged unauthorized conversion 
complaints rarely provide a detailed explanation or jus­
tification of the carrier's actions. Therefore, to draw in­
dustry's attention to the seriousness of the problem and to 
provide incentives to comply with the Commission's rules 
and orders, we intend to scrutinize carefully consumer 
complaints and to take prompt enforcement action, includ­
ing the imposition of substantial monetary fines, when the 
facts indicate that a carrier has failed to take the necessary 
steps to ensure that LOAs are valid and duly authorized. If 
carriers intend to rely on a LOA to request a PIC change, 
they will be responsible for ensuring its validity. 
commissions. 
19 Id. The signature on the .LOA reads "Holden" not 
"Hou lden" as used by the complainant. 
io Notice of Informal Complaint (September 11. 1995). 
lt TTI Response to Informal Complaint No. IC-9522371 (Octo­
ber 31, 1995). 
i 7 See id. 
23 BNC Response to Informal Complaint No. IC-9522371 (Octo­
ber 20, 1995). 
z.i See .i1 U.S.C. § 217. 
zs From June 1994 to June 1995. of the 28,773 informal com­
plaints filed. 7.900 were for alleged un:iuthorized conversions of 
the customer's presubscribed long distance carrier. 
-....... ............... __________ ~--
11 FCC Red No. 4 Federal Communications Commission Record DA 96-46 
9. Section 503(b)(2)(B) of the Communications Act au­
thorizes the Commission to assess a forfeiture of up to one 
hundred thousand dollars ($100,000) for each violation, or 
each day of a continuing violation, up to a statutory maxi­
mum of one million dollars ($1 ,000,000) for a single act or 
failure to act.26 In exercising such authority, the Commis­
sion is required to take into account "the nature, cir ­
cumstances, extent, and gravity of the violation and, with 
respect to the violator, the degree of culpability, any his­
tory of prior offenses, ability to pay, and such other matters 
as justice may require."27 For purposes of determining an 
appropriate forfeiture penalty in this case, we regard the 
conversion of Newburyport's telephone line as a single 
violation. After weighing the circumstances surrounding 
the violation, we find that TII is apparently liable for a 
forfeiture of forty thousand dollars ($40,000) for the 
unauthorized conversion of the Newburyport line. TII will 
have the opportunity to submit evidence and arguments in 
response to this NAL to show that no forfeiture should be 
imposed or that some lesser amount sho uld be assessed.28 
In this regard, we note that the Commission has previously 
held that a licensee's gross revenues are the best indicato r 
of its ability to pay a forfeiture and that use of gros.s 
revenues to determine a party's ability to pay is reasonable. 
appropriate, and a useful yardstick in helping to anal~ze a 
company's financial condition for forfeiture purposes. ·~ We 
will give full consideration to any financial information 
provided by TII before assessing a final forfeiture amount . 
V. CONCLUSIONS AND ORDERING CLAUSES 
10. We have carefully reviewed the information suhmit· 
ted in connection with Newburyport 's informal complaint 
and conclude that on or about January 24. 1995. TTl 
apparently converted, or caused a local exchange carrier to 
convert, Newburyport's telephone line without 
Newburyport's authorization through the use of an appar· 
ently forged LOA. We further conclude that ·rr1 ther~hy 
apparently willfully violated Commissi~n rules govern1~g 
primary interexchange carrier conversions. and that 11' 
conduct warrants a forfeiture in the amount of fort y thou· 
sand dollars ($40,000). 
11. Accordingly, IT IS ORDERED. pursuant to Section 
503(b} of Communications Act of 193~. as amem~el~. ~.7 
U.S.C. § 503(b), and Section 1.80 of the Comnll"ton' 
rules, 47 C.F.R. § 1.80. that Target Telecom. Inc. IS 
HEREBY NOTIFIED of an Apparent Liah i lit~ for Im· 
feiture in the amount of forty thousa~d . 'hl~lars !S·tll .tltllll 
for its willful violation of the Comm1s~mn s PIC chan~~ 
rules and orders. 4 7 C.F .R. § M.1100: l'IC Ch1111gr < 1rda. 1 
FCC Red 1038 ( 1992); Allocation Order. Ill I I CC :!d 911 
(1985); Waiver Order, 101FCC2d 935 (1QX5). 
26 47 U.S.C. § 503(b)(2)( B). 
27 Id. § 503(b)(2)(0). 
28 See id § 503(b)(-i)(C): ,i7 C.F.R. § l.1<1 t(f1t.•1. 
29 PJB Communications or Virgin ia. 7 r< (' K.:J ,:o/U\ . _!t ll(\I 
(1992) (finding that forreiture s or ~5,IMMI :inJ \ .IJMM I ·''~'~J 
· · ·ntly owned and 11""rateJ pal!'"!! .:11111 r ;in11.'' ,.,,·re against two JOI ,.. . • 011 . not excessive because the to1al fork 11urc :unuunt I ,1<.~ r•.rrc · 
nted a proximately 2.02 pcrcenl ur the .:~1mp:in1c' ~umh111 cJ 
se penues o f S3~5 -'fl~)' lt't' a/w ll;ivnl I.. llul linl!'"'"rth 
gross rev • · <. < 11 1 •1<1 ') dlbla Worland Services. 7 J'CC Red <lMll I um. .u u r. • 
(56 ()()() forfeiture representing :ipproxima1ely I .? I f1Crccn1 ur lic~nsee's 19<1 t grO'iS revenues and :ipproxim:itcly I ·'" percent of 
12. IT IS FURTHER ORDERED. pursuant to Section 
1.80 of the Commission's rules. 47 C.F.R. § 1.80. that 
within thirty days of the release of this Not ice. Target 
Telecom , Inc. SHALL PAY the full amount of the pro­
posed forfeiture30 OR SHALL FILE a respo nse ~howing 
why the proposed forfeiture should not he impo~ed or 
should be reduced . 
13. IT IS FURTHER ORDERED that a copy of this 
Notice of Apparent Liability for Forfeiture SI !,\LL B~ 
SENT by certified mail to Mr. Jonathan Kaufman . Presi­
dent of Target Telecom. Inc .. 155 Willo~hrool<. Boulevard. 
Wayne, New Jersey 07470. 
llll 
FEDERAL COMMUNICATIONS CO~MISSION 
Regina M . Keeney 
Chief. Common Carrier Bureau 
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