On September 14, 2016, the FCC’s Enforcement Bureau released a Notice of Apparent Liability for Forfeiture alleging that UnityComm, LLC (“UnityComm”) failed to timely file Telecommunications Reporting Worksheets (“Worksheets”) with the Universal Service Administrative Company (“USAC”). 

 Background.  The Communications Act directs the FCC to establish, administer, and maintain programs to promote universal service, TRS, and numbering administration programs, among other mandates.  To help accomplish these goals, the FCC has established the Universal Service Fund (“USF”), Telecommunications Relays Service (“TRS”) Fund, and cost recovery mechanisms for Local Number Portability (“LNP”) and North American Numbering Plan (“NANP”) administration, and funds these programs through assessments on telecommunications service providers.  Interstate telecommunications service providers, among others, must file FCC Form 499A annually as well as FCC Form 499Q quarterly to allow the FCC and USAC to determine providers’ payment obligations for USF, TRS, LNP and NANP.   

Investigation.  After alleged repeated, unsuccessful attempts by USAC to audit the accuracy of UnityComm’s worksheets, it referred UnityComm to the FCC for potential enforcement action on May 28, 2014.  The FCC’s Enforcement Bureau issued a Letter of Inquiry to UnityComm on April 3, 2015 to investigate whether UnityComm had failed to file the required regulatory data.  On July 29, 2015, UnityComm responded. 

Notice of Apparent Liability.  After completing its investigation, the Enforcement Bureau concluded that UnityComm apparently did not file two Form499Q quarterly worksheets, due May 1 and August 1, 2016.  The Bureau explained that the failure to timely file these worksheets precludes federal program administrators from fully invoicing an operator for its required payment obligations and would enable an operator to temporarily avoid making full payments required of interstate and international telecommunications services providers for USF, TRS, LNP, NANP and federal regulatory fees. Therefore, the filing failures would give an operator an unfair economic advantage over its competitors who would have to pay more than their fair share of the costs of the federal regulatory fee programs.

Accordingly, the Enforcement Bureau found UnityComm apparently liable for a forfeiture of $100,000 ($50,000 for each alleged failure to timely file Form 499Q).  The Enforcement Bureau further cautioned that this was a limited action and does not preclude it from imposing additional forfeitures against the operator in the future.

UnityComm has 30 days to pay the proposed forfeiture or file a written statement seeking reduction or cancellation.

Takeaways.  Here, the FCC is signaling the importance of filing required reports, especially Form 499Q each quarter, and that it will vigorously enforce its filing rules.  Missing even a single deadline can result in a costly penalty.  Providers are not required to contribute directly to the universal support mechanisms if their contributions for a given year would be less than $10,000 (i.e., de minimis).  Thus, providers whose contributions would be de minimis are not required to file the 499Q worksheet but are encouraged to complete a form contained in the 499Q instructions quarterly documenting their status and to retain it internally for five years.  The instructions note that documentation of de minimis status must be provided upon request to the FCC, the FCC’s Data Collection Agent or USAC.

If you have any questions regarding Telecommunications Reporting Worksheets filing requirements, including calculating and documenting your de minimis status, please contact Bruce Beard at bbeard@cinnamonmueller.com or (314) 394-1535.

Fiscal Year 2016 Regulatory Fees Due to FCC by 11:59 PM EDT on September 27, 2016

On September 2, 2016, the FCC released an Order establishing its Fiscal Year 2016 Regulatory Fees.  Regulatory fee payments must be made no later than 11:59 p.m., Eastern Daylight Time, on September 27, 2016.  All licensees must use their FRN and password to access the Fee Filer System, and review, create, update, or change the fees owed. 

• 2016 Cable/IPTV regulatory fee:  Cable systems (including IPTV systems) that had subscribers as of December 31, 2015 must pay $1.00 per subscriber, a $0.04 increase from 2015. 

• CARS licenses and permits:  CARS facilities operating on October 1, 2015 must pay $775.00, a $155 increase from 2015, even if the facility’s license expired after October 1, 2015.

• Interconnected VoIP regulatory fee:  $0.00371 for each dollar of interstate and international telecommunications revenue that a provider reports on its Form 499-A. 

This year, the FCC has set the DBS provider per-subscriber regulatory fee at $0.27, more than double last year’s $0.12 fee level, which was the first time that the FCC concluded that DirecTV and DISH should be included as a sub-category of payors to the “Cable and IPTV” fee category. 

Entities whose total regulatory fee liability, including all categories of fees for which payment is due, is $500 or less are exempt from payment.  Municipal providers and providers that qualify as non-profit entities are also exempt from regulatory fees.

If you have any questions about regulatory fee payments, please contact Scott Friedman at (312) 372-3930 or sfriedman@cinnamonmueller.com.

EEO Form 396-C Due September 30, 2016 

Multichannel video programming distributors (“MVPDs”), including cable operators, must submit Form 396-C, the FCC’s MVPD Equal Employment Opportunity (“EEO”) Program Annual Report, electronically by midnight on September 30, 2016.  To file Form 396-C, login to the Media Bureau’s CDBS Electronic Filing System.

Last month, the FCC released a Public Notice listing the MVPDs that the FCC randomly selected to file a Supplemental Investigation Sheet along with their Form 396-C.  For this year’s filing, Supplemental Investigation Sheet filers must:

• Include one job description for employees in the category “Technicians” in Part I of the form.

• Answer questions 3,5, and 8 in Part II of the form:

1.     Name the organizations, media, educational institutions, and other recruitment sources used to attract applicants whenever job vacancies become available.
2.     Describe the employment unit’s efforts to promote in a nondiscriminatory manner to positions of greater responsibility.
3.    Describe the manner in which the employment unit conducts its continuing review of job structure and employment practices.

• Attach, as Part III, a copy of the unit’s EEO public file report created in 2016 covering the previous 12 months.

If you have any questions about EEO compliance, please contact Scott Friedman at (312) 372-3930 or sfriedman@cinnamonmueller.com.