NEWSReport No. CC 95-21 COMMON CARRIER ACTION March 31, 1995 ONCOR COMMUNICATIONS, INC. APPARENTLY LIABLE FOR FORFEITURE OF $1,410,000 IN SLAMMING CASE The Commission has issued a Notice of Apparent Liability (NAL) finding Oncor Communications, Inc. (Oncor) apparently liable for a forfeiture penalty of $1.41 million for willful and repeated violations of Commission rules and orders concerning changes to consumers' long distance carriers. Based on an investigation conducted by the Common Carrier Bureau's Enforcement Division, the Commission has determined that Oncor apparently violated the Commission's rules by substituting itself as the primary interexchange carrier ("PIC") for 94 pay telephone lines maintained by the Metropolitan Transportation Authority of the State of New York ("MTA") without MTA's authorization. The practice of changing a consumers' PIC without authorization is commonly known as "slamming." Commission rules require that PIC change requests submitted by long distance carriers be confirmed by either a Letter of Agency (LOA), signed by the customer or, for sales generated by telemarketing, one of four verification procedures: (1) written authorization; (2) electronic verification via a customer-dialed 800-number call; (3) independent third-party verification of a customer's oral authorization; or (4) a follow-up information package, affording the customer an opportunity to cancel the request. The staff's investigation revealed that Oncor did not meet any of these requirements before it made PIC changes to MTA pay-telephones. The NAL also names Operator Communications, Inc., which does business using the Oncor name. Both companies are wholly owned by Ronald J. Haan. Between November 1993 and April 1994, Oncor made numerous unauthorized changes to MTA pay telephones, according to the staff investigation. MTA did not authorize the PIC changes, and notified Oncor that it did not want Oncor service and returned purported LOAs disguised as "commission checks." Oncor also apparently slammed certain MTA telephone lines two times, converting some of the payphones to its service after MTA had already cancelled unauthorized Oncor service once before. According to the NAL, when requested by the staff, Oncor did not provide a copy of any LOA or other evidence indicating that Oncor complied with the Commission's PIC change rules or that MTA approved the PIC changes. Rather, the company stated that an agent of two Oncor distributors responsible for soliciting long distance customers had requested the MTA PIC changes and the distributors electronically submitted the change orders to Oncor. (over) -2- Under the terms of the Communications Act, a carrier has responsibility for these actions. In addition, based on the number, frequency, and circumstances surrounding the unauthorized conversions, the staff concluded that Oncor apparently knew or should have known that MTA had not authorized Oncor to provide service for its pay telephones. Based on the willful and repeated nature of the violations, the FCC has notified Oncor of its apparent liability for a forfeiture of $15,000 for each of the 94 slamming incidents, or a total of $1,410,000. The Communications Act provides for a forfeiture of up to $100,000 per violation or each day of continuing violation, up to a maximum of $1,000,000 for a single act or failure to act. The Act also requires the Commission to consider "the nature, circumstances, extent, and gravity of the violation and, with respect to the violator, the degree of culpability, any history of prior offenses, ability to pay, and such other matters as justice may require." The Commission stated that, based on the information obtained during the investigation of this matter, it believes this amount is reasonable relative to Oncor's assets and revenues. Oncor, however, will have the opportunity to submit evidence and arguments in response to this NAL to show that no forfeiture should be imposed or that some lesser amount should be assessed. The Commission noted in making this finding that it has previously held that a licensee's gross revenues are the best indicator of its ability to pay a forfeiture and that use of gross revenues to determine a party's ability to pay is reasonable, appropriate, and a useful yardstick in helping to analyze a company's financial condition for forfeiture purposes. Action by the Commission on March 29, 1995 by Notice of Apparent Liability of Forfeiture (FCC 95-127). Chairman Hundt, Commissioners Quello, Barrett, Ness and Chong. -FCC- News Media contact: Susan Lewis Sallet at (202) 418-1500. Common Carrier Bureau contact: Heather L. McDowell at (202) 418-0960.