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FCC Ratchets Up Enforcement of Carrier Fee Payment Obligations with Threat of License Revocation

On July 1, 2016, the Enforcement Bureau of the Federal Communications Commission (“FCC”) initiated a Show Cause proceeding against LDC Telecommunications, Inc. (“LDC”) for its apparent failure to pay the annual FCC Regulatory Fee.  Therein, the Enforcement Bureau orders LDC to either pay the outstanding regulatory fee or show cause as to why the FCC should not revoke licenses granted to the company, notably its 214 International Authorization.

This development marks yet another material turning point in the FCC’s enforcement practices, which have been ratcheted up to unprecedented levels during the past several years under the leadership of Bureau Chief, Travis LeBlanc.  It now appears the FCC is prepared to go well beyond referring unpaid debts to the U.S. Treasury for collection actions, and may open parallel enforcement proceedings wherein a Carrier’s license to operate may be subject to revocation.  Carriers operating in the telecom industry must confront many compliance obligations, including the payment of fees (i.e., annual FCC regulatory fee) and contributions to programs such as the Universal Service Fund.  Failure to pay invoiced amounts can result in the imposition of penalties and interest, coinciding with debt collection referrals to the Department of Justice (acting on behalf of the U.S. Treasury), all under the Debt Collection Improvement Act (“DCIA”).  But, until now, the FCC had never suggested that a Carrier’s failure to pay regulatory fees could lead to a Show Cause proceeding where the Carrier’s very authorization to operate could be called into question. 

The Enforcement Bureau’s decision to open up a Show Cause proceeding against LDC is a signal to the industry that the FCC takes compliance with the annual regulatory fee obligation seriously.  Moreover, it foretells the possibility of similar efforts by the FCC to leverage Carriers into paying debts by opening up a second front, forcing Carriers to not only defend against the collection actions of the DoJ/U.S. Treasury, but also responding to a Show Cause proceeding where their very licenses to operate could be in jeopardy.  It is also likely that the Enforcement Bureau’s new “second front” strategy to leverage resolution of debts will not be limited to the FCC regulatory fee and could very well extend to a variety of programs, including the Universal Service Fund, Telecommunications Relay Services fund and more.

Should you have questions about the matters addressed in this Advisory or are confronting an FCC Enforcement Action requiring immediate attention, please contact Jonathan S. Marashlian at jsm@commlawgroup.com or by phone: 703-714-1313.

If you would like information about ensuring your Company’s compliance with FCC reporting, fee payment and various fund programs (including timely remittance of invoiced fees) by outsourcing compliance management to The Commpliance Group (starting at flat monthly subscription rates as low as $250), please contact Chris A. Canter at cac@commpliancegroup.com or by phone: 703-714-1308.

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