ITTA Joins Challenge to FCC Treble Damages

Add ITTA, which represents mid-sized telecoms/ISPs/video providers, to the list of associations--including the National Cable & Telecommunications Association--challenging the FCC's decision to triple the damages for violating federal program payment rules for Universal Service Fund and other fees.

The APA requires the FCC to give regulated entities notice about substantive changes. The groups argue the change (discussed in this FCC document (http://www.fcc.gov/document/fcc-issues-policy-statement-federal-payment-...)--a policy statement rather than a rule change voted on by the commission--was substantive and that notice was not provided, in violation of the Administrative Procedures Act (APA).

In a filing late last week, ITTA said it was all for transparency about forfeiture standards, and agreed with the FCC that entities need to bear their fair share of federal programs, but it says it strongly agrees with NCTA and the others that it was an unlawful rule change without proper notice and comment under the APA.

ITTA also says the change is arbitrary and capricious--also an APA violation--because it does not assess forfeitures based on the circumstances in each case. "The one-size-fits all approach...would essentially function as a strict liability standard that does not take into account mitigating or aggravating factors" as required by the Communications Act.

Billing it as part of its ongoing process-reform effort, the FCC said in a Feb. 3 policy statement that it was replacing current, cumbersome methodologies for calculating forfeitures for violations with a treble damages methodology it billed as a more "straight-forward" basis for fines and a way to resolve investigations more quickly and thereby promote increased compliance with the federal program payment rules.

The monies at issue involve the Universal Service Fund, Telecommunications Relay Service Fund, local number portability (LNP), North American Numbering Plan and regulatory fees.

Previously, the commission had assessed fines based on "the number of monthly bills that remain unpaid within the one-year statute of limitations; and for USF and TRS payment violations, we have added 50 percent of the highest debts owed by delinquent companies for these programs, taking into account the timing of assessments, payments, collection transfers and reversals, and installment plan activities. To determine a delinquent contributor’s forfeiture liability."

The FCC said that is a time- and resource-consuming method, with staff having to engage in a "resource-intensive process similar to forensic accounting, gathering and analyzing large amounts of data that are difficult to track, and usually involve multiple entities over multiple years."

Now, it says, the forfeiture will simply be three times what the company owes in fees and contributions.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.