In a recent Notice of Apparent Liability for Forfeiture and Order Initiating Removal Proceeding (NAL), the Federal Communications Commission (FCC) has proposed a substantial penalty of $14,021,293 against Tone Communication Services LLC. The FCC alleges that Tone Communication willfully and repeatedly violated federal rules related to the Affordable Connectivity Program (ACP) and the federal wire fraud statute.

Background

The apparent violations occurred between March 7, 2022, and the present, with the FCC proposing a penalty for what it perceives as serious breaches of rules and regulations. Tone Communication is accused of improperly enrolling subscribers and receiving millions of dollars in ACP support by submitting false information.

Emergency Broadband Benefit Program (EBB) and Affordable Connectivity Program (ACP)

The Emergency Broadband Benefit Program (EBB), was introduced on February 25, 2021, to provide broadband services and devices to eligible households during the COVID-19 pandemic. Although EBB ended on December 31, 2021, Congress continued its support through the Infrastructure Investment and Jobs Act, creating the Affordable Connectivity Program (ACP) to offer discounted broadband services to low-income households.

By the end of 2021, over nine million American households benefited from EBB subsidies, supporting virtual learning, telemedicine, and telework. ACP further expanded these efforts, enrolling more than 15.4 million households by the end of 2022.

Alleged Violations and Improper Enrollments

From at least July 2022 through June 2023, Tone Communication allegedly sought and received ACP funding for subscribers improperly enrolled in the program. The FCC asserts that the company used fake or false identifying information, including false addresses and repeated use of non-subscriber benefit qualifying persons (BQPs), to enroll multiple subscribers improperly.

These actions, if proven, would constitute violations of the Commission’s rules. Despite these alleged violations, Tone Communication repeatedly certified its compliance with FCC rules in reimbursement requests, leading to the improper receipt of millions of dollars in ACP support.

Wire Fraud Allegations and Misrepresentations

The FCC investigation also identified apparent violations related to the federal wire fraud statute, as Tone Communication allegedly submitted reimbursement requests via interstate wires. Furthermore, the company is accused of making misrepresentations to the FCC in its applications and election notices to participate in EBB and ACP. The FCC asserts that Tone Communication willfully and repeatedly made false statements during its participation in these programs.

FCC’s Response and Proposed Forfeiture

The FCC, through its Enforcement Bureau, found that Tone Communication apparently violated ACP rules governing the transfer of subscriber benefits, in apparent violation of section 54.1810(b)(2). The Bureau also discovered apparent misrepresentations to the Commission and failure to respond fully to two Letters of Inquiry, both of which are considered serious offenses.

To address the scope, duration, seriousness, and egregiousness of these apparent violations, the FCC proposes a forfeiture penalty of $14,021,293 on Tone Communication Services LLC. Tone Communication Services LLC has the opportunity to respond and contest these findings.

For legal assistance or guidance related to compliance with the Affordable Connectivity Program, please contact the telecom attorneys at Marashlian & Donahue, PLLC.