The Federal Communications Commission (FCC) has recently issued two Notices of Apparent Liability for Forfeiture (NALs) against TouchTone Communications, Inc. and Telco Experts, LLC. The proposed penalties amount to $3,175,209 and $400,000, respectively, due to apparent violations of the Communications Act of 1934 and various FCC rules, including the failure to file required reports and to timely pay contributions to the Universal Service Fund (USF) and the Telecommunications Relay Service (TRS) Fund.
TouchTone Communications, Inc.
Background:
TouchTone Communications, Inc. has been under scrutiny for non-compliance with FCC regulations since 2019. The company failed to submit its 2023 Annual Worksheet by the required deadline of April 3, 2023, filing it over a month late on May 9, 2023. Additionally, between April 1, 2023, and April 18, 2024, TouchTone paid 13 USF invoices late, with the most substantial delinquency amounting to $1,775,209. TouchTone also failed to pay two TRS Fund contributions on time in 2023.
Legal Framework:
Under sections 225 and 254(d) of the Communications Act and FCC rules, all telecommunications carriers providing interstate services must contribute to the USF and TRS Fund. These contributions are critical for maintaining affordable telecommunications services and supporting services for hearing and speech-impaired individuals.
Proposed Penalty:
The FCC proposes a total forfeiture of $3,175,209 against TouchTone Communications, Inc. This includes a $50,000 penalty for the late filing of the Annual Worksheet, $3,075,209 for the late USF payments, and $50,000 for the late TRS Fund contributions.
Telco Experts, LLC
Background:
Telco Experts, LLC, a telecommunications provider, has also been found in violation of FCC regulations. The company failed to file required USF and TRS reports and did not make timely payments, resulting in significant delinquencies. Similar to TouchTone, Telco Experts’ non-compliance has drawn the FCC’s attention and led to the issuance of a substantial penalty.
Legal Framework:
Telco Experts is subject to the same legal obligations as TouchTone under sections 225 and 254(d) of the Communications Act and FCC rules. These regulations mandate the timely and accurate filing of reports and payment of contributions to federal programs.
Proposed Penalty:
The FCC proposes a total forfeiture of $400,000 against Telco Experts, LLC. This penalty reflects the severity of the company’s repeated failures to comply with its regulatory obligations.
Importance of Compliance and Vendor Management
These decisions underscore the critical importance of maintaining rigorous compliance with FCC regulations. Telecommunications companies must ensure timely and accurate filings and payments to avoid substantial penalties.
Equally important is the careful selection and management of outsourced compliance vendors. While third-party vendors can assist with regulatory compliance, the FCC has established a clear precedent that companies cannot delegate their regulatory responsibilities. If a third-party vendor fails to fulfill compliance obligations, the regulated service provider remains liable for any resulting violations. This principle emphasizes the need for effective oversight and management of any outsourced compliance activities.
Recommendations:
- Compliance Review: Conduct a thorough review of your company’s compliance with FCC requirements, including filing and payment deadlines for USF and TRS contributions.
- Internal Controls: Implement or strengthen internal controls to ensure timely filings and payments.
- Vendor Management: Carefully select and manage outsourced compliance vendors to ensure they meet all regulatory requirements.
- Legal Consultation: Consult with legal counsel to address any potential compliance issues and to prepare for any regulatory inquiries or audits.
For further information or assistance, please do not hesitate to contact the attorney assigned to your account or contact Jonathan Marashlian at jsm@commlawgroup.com.
