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Commission Document Attachment

DA-13-2348A2





Federal Communications Commission


DA 13-2348

Before the

Federal Communications Commission

Washington, D.C. 20554


In the Matter of
)
File No.: EB-09-IH-1219

)

NTS Communications, Inc.
)
Acct. No.: 201032080024

)

Apparent Liability for Forfeiture
)
FRN: 0004266938

CONSENT DECREE


1.
The Enforcement Bureau of the Federal Communications Commission and NTS
Communications, Inc., by their authorized representatives, hereby enter into this Consent Decree for the
purpose of terminating the Bureau’s investigation into possible violations of Section 254(d) of the
Communications Act of 1934, as amended,1 and Section 54.706(a) of the Commission’s rules,2
concerning required contributions to the Universal Service Fund.

I.

DEFINITIONS

2.
For the purposes of this Consent Decree, the following definitions shall apply:
(a) “Act” means the Communications Act of 1934, as amended, 47 U.S.C. § 151 et seq.
(b) “Adopting Order” means an order of the Bureau adopting the terms of this Consent
Decree without change, addition, deletion, or modification.
(c) “Bureau” means the Enforcement Bureau of the Federal Communications Commission.
(d) “Commission” and “FCC” mean the Federal Communications Commission and all of its
bureaus and offices.
(e) “Communications Laws” means collectively, the Act, the Rules, and the published and
promulgated orders and decisions of the Commission to which NTS is subject by virtue
of its business activities.
(f) “Compliance Plan” means the compliance obligations and program described in this
Consent Decree at paragraph 12.
(g) “Covered Employees” means all employees and agents of NTS who perform, or
supervise, oversee, or manage the performance of, duties that relate to NTS’s
responsibilities under the Communications Laws, including Section 254(d) of the Act and
the Rules governing Universal Service and contributions to the USF.
(h) “Effective Date” means the date on which the Bureau releases the Adopting Order.
(i) “Investigation” means the investigation commenced by the Bureau’s July 31, 2009 Letter
of Inquiry3 regarding whether the Company failed to contribute timely and fully to the
USF in violation of Section 254(d) of the Act and Section 54.706(a) of the Rules.

1 47 U.S.C. § 254(d).
2 47 C.F.R. § 54.706(a).
3 Letter from Trent B. Harkrader, Deputy Chief, Investigations & Hearings Division, FCC Enforcement Bureau, to
Barbara Baldwin, Chief Executive Officer, NTS Communications, Inc. (July 31, 2009) (LOI).



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(j) “NAL” means NTS Communications, Inc., Apparent Liability for Forfeiture, File No. EB-
09-IH-1219, Notice of Apparent Liability for Forfeiture, 25 FCC Rcd 5137 (2010).
(k) “NTS” or the “Company” means NTS Communications, Inc. and its predecessors-in-
interest and successors-in-interest.
(l) “Operating Procedures” means the standard, internal operating procedures and
compliance policies established by NTS to implement the Compliance Plan.
(m) “Parties” means NTS and the Bureau, each of which is a “Party.”
(n) “Rules” means the Commission’s regulations found in Title 47 of the Code of Federal
Regulations.
(o) “Telecommunications” or “Telecommunications Service” have the meanings set forth in
Sections 3(50) and 3(53) of the Act, 47 U.S.C. §§ 153(50), 153(53).
(p) “USAC” means the Universal Service Administrative Company.
(q) “Universal Service Rules” means Section 254(d) of the Act and other Communications
Laws governing the payment of full and timely contributions to the USF, including any
Rules implementing Section 254(d) and any related Commission orders.
(r) “USF” means the Universal Service Fund.

II.


BACKGROUND

3.
Pursuant to Section 254(d) of the Act and Section 54.706(a) of the Rules,
telecommunications carriers that provide interstate Telecommunications Services are required to
contribute to the USF.4 Section 254(d) of the Act requires, among other things, that “[e]very
telecommunications carrier [providing] interstate telecommunications services . . . contribute, on an
equitable and nondiscriminatory basis, to the specific, predictable, and sufficient mechanisms established
by the Commission to preserve and advance universal service.”5 In implementing this Congressional
mandate, the Commission directed all telecommunications carriers providing interstate
telecommunications services and certain other providers of interstate telecommunications to register with
the Commission, comply with annual and quarterly filing requirements, and contribute to the USF based
upon their interstate and international end-user telecommunications revenues.6
4.
NTS is a Texas-based company that has provided Telecommunications Services since
1981.7 Through subsidiaries, NTS provides facilities-based and resold long distance, private line, frame
relay, ATM, and toll-free Telecommunications Services8 and accordingly is subject to the provisions of
Section 254(d) of the Act and Section 54.706(a) of the Rules. NTS is owned by Xfone, Inc.9

4 47 U.S.C. § 254(d); 47 C.F.R. § 54.706(a).
5 47 U.S.C. § 254(d).
6 47 C.F.R. §§ 54.706(b), 54.711, 64.1195; see also 47 U.S.C. § 254(d) (“Any other provider of interstate
telecommunications may be required to contribute to the preservation and advancement of universal service if the
public interest so requires.”). Contributions are based on a contributor’s projected revenues, and individual
universal service contribution amounts that are based upon quarterly filings are subject to an annual true-up. Id.; 47
C.F.R. § 54.709(b).
7 See Response of NTS Communications, Inc. to the Enforcement Bureau’s July 31, 2009 Letter of Inquiry at
responses to Questions 1 and 2 (Aug. 3, 2009) (LOI Response).
8 Id. at response to Question 4(b).
9 Id. at response to Question 4(c).

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5.
In July 2009, USAC referred NTS to the Bureau for potential enforcement action,
alleging that NTS had failed to comply with the Commission’s USF contribution rules. The Bureau
initiated the Investigation against NTS on July 31, 2009, issuing a letter of inquiry (“LOI”) to NTS
seeking information about its compliance with USF and other related regulatory obligations.10 NTS
responded to the LOI on August 31, 2009.11
6.
On May 6, 2010, the Commission released the NAL, finding that NTS was apparently
liable for a total forfeiture of $284,250 for apparently failing to meet its federal regulatory obligations and
its apparent accrual of a significant delinquent balance owed to the USF.12 The NAL ordered the
Company either to pay the proposed forfeiture or to file a written response stating why the proposed
forfeiture should be reduced or canceled.13 The NAL also ordered NTS to submit a report detailing its
plan to come into compliance with the obligations discussed in the NAL.14 Following release of the NAL,
the Bureau and NTS have engaged in discussions aimed at resolving the issues associated with the
Investigation. In order to resolve the Investigation with a Consent Decree, the Bureau extended the date
by which NTS was required to respond to the allegations contained in the NAL or pay the forfeiture
amount. As of the Effective Date, NTS has paid all invoiced amounts to the USF.

III.


TERMS OF AGREEMENT

7.

Adopting Order.

The Parties agree that the provisions of this Consent Decree shall be
subject to final approval by the Bureau by incorporation of such provisions by reference in the Adopting
Order.
8.

Jurisdiction.

The Company agrees that the Bureau has jurisdiction over it and the
matters contained in this Consent Decree and that the Bureau has the authority to enter into and adopt this
Consent Decree.
9.

Effective Date; Violations.

The Parties agree that this Consent Decree shall become
effective on the Effective Date as defined herein. As of the Effective Date, the Adopting Order and this
Consent Decree shall have the same force and effect as any other order of the Commission. Any violation
of the Adopting Order or of the terms of this Consent Decree shall constitute a separate violation of a
Commission order, entitling the Commission to exercise any rights and remedies attendant to the
enforcement of a Commission order.
10.

Termination of Investigation.

In express reliance on the covenants and representations
in this Consent Decree and to avoid further expenditure of public resources, the Bureau agrees to
terminate the Investigation and to cancel the NAL. In consideration for the termination of the
Investigation and cancellation of the NAL, the Company agrees to the terms, conditions, and procedures
contained herein. The Bureau further agrees that in the absence of new material evidence the Bureau will
not use the facts developed in this Investigation through the Effective Date, or the existence of this
Consent Decree, to institute, on its own motion, any new proceeding, formal or informal, or take any
action on its own motion against the Company concerning the matters that were the subject of the
Investigation. The Bureau also agrees that in the absence of new material evidence it will not use the
facts developed in this Investigation through the Effective Date, or the existence of this Consent Decree,
to institute on its own motion any proceeding, formal or informal, or take any action on its own motion

10 LOI.
11 See LOI Response.
12 See NAL, 25 FCC Rcd at 5137, para. 1.
13 Id. at 5143, paras. 15-16.
14 Id. at 5143, para. 17.

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against the Company with respect to the Company’s basic qualifications, including its character
qualifications, to be a Commission licensee or to hold Commission licenses or authorizations.
11.

Compliance Officer.

Within thirty (30) calendar days after the Effective Date, the
Company shall designate a senior corporate manager with the requisite corporate and organizational
authority to serve as Compliance Officer and to discharge the duties set forth below. The person
designated as the Compliance Officer shall be responsible for developing, implementing, and
administering the Compliance Plan and ensuring that the Company complies with the terms and
conditions of the Compliance Plan and this Consent Decree. In addition to the general knowledge of the
Communications Laws necessary to discharge his/her duties under this Consent Decree, the Compliance
Officer shall have specific knowledge of the Universal Service Rules prior to assuming his/her duties.
12.

Compliance Plan.

For purposes of settling the matters set forth herein, the Company
agrees that it shall within sixty (60) calendar days after the Effective Date, develop and implement a
Compliance Plan designed to ensure future compliance with the Communications Laws and with the
terms and conditions of this Consent Decree. With respect to the Universal Service Rules, the Company
shall implement the following procedures:
(a)

Operating Procedures.

Within sixty (60) calendar days after the Effective Date, the
Company shall establish Operating Procedures that all Covered Employees must follow
to help ensure the Company’s compliance with the Universal Service Rules. The
Company’s Operating Procedures shall include internal procedures and policies
specifically designed to ensure that the Company complies with the Universal Service
Rules. The Company shall also develop a Compliance Checklist that describes the steps
that a Covered Employee must follow to ensure compliance with the Universal Service
Rules.
(b)

Compliance Manual.

Within sixty (60) calendar days after the Effective Date, the
Compliance Officer shall develop and distribute a Compliance Manual to all Covered
Employees. The Compliance Manual shall explain the Universal Service Rules and set
forth the Operating Procedures that Covered Employees shall follow to help ensure the
Company’s compliance with the Universal Service Rules. The Company shall
periodically review and revise the Compliance Manual as necessary to ensure that the
information set forth therein remains current and accurate. The Company shall distribute
any revisions to the Compliance Manual promptly to Covered Employees.
(c)

Compliance Training Program.

The Company shall establish and implement a
Compliance Training Program on compliance with the Universal Service Rules and the
Operating Procedures. As part of the Compliance Training Program, Covered Employees
shall be advised of the Company’s obligation to report any noncompliance with the
Universal Service Rules under paragraph 13 of this Consent Decree and shall be
instructed on how to disclose noncompliance to the Compliance Officer. All Covered
Employees shall be trained pursuant to the Compliance Training Program within sixty
(60) calendar days after the Effective Date. Any person who becomes a Covered
Employee at any time after the Initial Training Program shall be trained within thirty (30)
calendar days after the date such person becomes a Covered Employee. The Company
shall repeat the compliance training on an annual basis, and shall periodically review and
revise the Compliance Training Program as necessary to ensure that it remains current
and complete and to enhance its effectiveness.
13.

Reporting Noncompliance.

The Company shall report any noncompliance with the
Universal Service Rules and with the terms and conditions of this Consent Decree within fifteen (15)
calendar days after NTS’s Compliance Officer or any Covered Employee becomes aware of the matter
(whether from a report from an employee or otherwise). Such reports shall include a detailed explanation

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of (i) each instance of noncompliance; (ii) the steps that the Company has taken or will take to remedy
such noncompliance; (iii) the schedule on which such remedial actions will be taken; and (iv) the steps
that the Company has taken or will take to prevent the recurrence of any such noncompliance. All reports
of noncompliance shall be submitted to the Chief, Investigations and Hearings Division, Enforcement
Bureau, Federal Communications Commission, Room 4-C330, 445 12th Street, S.W., Washington, D.C.
20554, with a copy submitted electronically to Theresa Z. Cavanaugh at Terry.Cavanaugh@fcc.gov,
William A. Kehoe at William.Kehoe@fcc.gov, and Margaret S. Dailey at Margaret.Dailey@fcc.gov.
14.

Compliance Reports.

The Company shall file compliance reports with the Commission
ninety (90) calendar days after the Effective Date, twelve (12) months after the Effective Date, twenty-
four (24) months after the Effective Date, and thirty-six (36) months after the Effective Date.
(a) Each Compliance Report shall include a detailed description of the Company’s efforts
during the relevant period to comply with the terms and conditions of this Consent
Decree and the Universal Service Rules. In addition, each Compliance Report shall
include a certification by the Compliance Officer, as an agent of and on behalf of the
Company, stating that the Compliance Officer has personal knowledge that the Company
(i) has established and implemented the Compliance Plan; (ii) has utilized the Operating
Procedures since the implementation of the Compliance Plan; and (iii) is not aware of any
instances of noncompliance with the terms and conditions of this Consent Decree,
including the reporting obligations set forth in paragraph 13 of this Consent Decree.
(b) The Compliance Officer’s certification shall be accompanied by a statement explaining
the basis for such certification and shall comply with Section 1.16 of the Rules and be
subscribed to as true under penalty of perjury in substantially the form set forth therein.15
(c) If the Compliance Officer cannot provide the requisite certification, the Compliance
Officer, as an agent of and on behalf of the Company, shall provide the Commission with
a detailed explanation of the reason(s) why and describe fully (i) each instance of
noncompliance; (ii) the steps that the Company has taken or will take to remedy such
noncompliance, including the schedule on which proposed remedial actions will be taken;
and (iii) the steps that the Company has taken or will take to prevent the recurrence of
any such noncompliance, including the schedule on which such preventive action will be
taken.
(d) All Compliance Reports shall be submitted to the Chief, Investigations & Hearings
Division, Enforcement Bureau, Federal Communications Commission, Room 4-C330,
445 12th Street, S.W., Washington, D.C. 20554, with a copy submitted electronically to
Theresa Z. Cavanaugh at Terry.Cavanaugh@fcc.gov, William A. Kehoe at
William.Kehoe@fcc.gov, and Margaret S. Dailey at Margaret.Dailey@fcc.gov.
15.

Termination Date.

Unless stated otherwise, the requirements set forth in paragraphs 11
through 14 of this Compliance Plan shall expire thirty-six (36) months after the Effective Date.
16.

Section 208 Complaints: Subsequent Investigations

. Nothing in this Consent Decree
shall prevent the Commission or its delegated authority from adjudicating complaints filed pursuant to
Section 208 of the Act16 against the Company or its affiliates for alleged violations of the Act, or for any
other type of alleged misconduct, regardless of when such misconduct took place. The Commission’s

15 47 C.F.R. § 1.16.
16 47 U.S.C. § 208.

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adjudication of any such complaint will be based solely on the record developed in that proceeding.
Except as expressly provided in this Consent Decree, this Consent Decree shall not prevent the
Commission from investigating new evidence of noncompliance by the Company with the
Communications Laws.
17.

Voluntary Contribution.

The Company agrees that it will make a voluntary
contribution to the United States Treasury in the amount of $215,000 (two hundred fifteen thousand
dollars) (Voluntary Contribution). Due to the Company’s inability to make a lump sum payment, such
Voluntary Contribution shall be made in installments (each an Installment Payment). The first
Installment Payment in the amount of $30,714.26 (thirty thousand seven hundred fourteen dollars and
twenty-six cents) is due within thirty (30) calendar days after the Effective Date. The balance of the
Voluntary Contribution will be made in six consecutive payments of $30,714.29 (thirty thousand seven
hundred fourteen dollars and twenty-nine cents), payable every six (6) months beginning on the first day
of the sixth month following the Effective Date. The seventh and final payment is due on the first day of
the thirty-sixth month following the Effective Date (Maturity Date). The Company acknowledges and
agrees that upon execution of this Consent Decree, the Voluntary Contribution and each Installment
Payment shall become a “Claim” or “Debt” as defined in 31 U.S.C. § 3701(b)(1).17 Upon an Event of
Default, all procedures for collection permitted by law may, at the Commission’s discretion, be initiated.
In addition, the Company agrees that it will make the first and all subsequent Installment Payments in
United States Dollars without further demand or notice by the dates specified above. The Company shall
also send electronic notification of payment to Theresa Z. Cavanaugh at Terry.Cavanaugh@fcc.gov,
William A. Kehoe at William.Kehoe@fcc.gov, and Margaret S. Dailey at margaret.dailey@fcc.gov on the
date said Installment Payments are made.
18.
Installment Payments must be made by check or similar instrument, wire transfer, or
credit card, and must include the NAL/Account number and FRN referenced above. Regardless of the
form of payment, a completed FCC Form 159 (Remittance Advice) must be submitted.18 When
completing the FCC Form 159, enter the Account Number in block number 23A (call sign/other ID) and
enter the letters “FORF” in block number 24A (payment type code). Below are additional instructions
regarding the form of payment:
• Payment by check or money order must be made payable to the order of the Federal
Communications Commission. Such payments (along with the completed Form 159) must be
mailed to Federal Communications Commission, P.O. Box 979088, St. Louis, MO 63197-
9000, or sent via overnight mail to U.S. Bank – Government Lockbox #979088,
SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO 63101.
• Payment by wire transfer must be made to ABA Number 021030004, receiving bank
TREAS/NYC, and Account Number 27000001. To complete the wire transfer and ensure
appropriate crediting of the wired funds, a completed Form 159 must be faxed to U.S. Bank
at (314) 418-4232 on the same business day the wire transfer is initiated.
• Payment by credit card must be made by providing the required credit card information on
FCC Form 159 and signing and dating the Form 159 to authorize the credit card payment.
The completed Form 159 must then be mailed to Federal Communications Commission, P.O.
Box 979088, St. Louis, MO 63197-9000, or sent via overnight mail to U.S. Bank –

17 Debt Collection Improvement Act of 1996, Pub. L. No. 104-134, 110 Stat. 1321, 1358 (Apr. 26, 1996).
18 An FCC Form 159 and detailed instructions for completing the form may be obtained at
http://transition.fcc.gov/fees/form159.html. " title="http://transition.fcc.gov/fees/form159.html. ">http://transition.fcc.gov/fees/form159.html. 

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Government Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO
63101.
Questions regarding payment procedures should be addressed to the Financial Operations Group Help
Desk by phone, 1-877-480-3201, or by e-mail, ARINQUIRIES@fcc.gov.
19.

Event of Default.

The Company agrees that an Event of Default shall occur upon the
failure by the Company to pay the full amount of any Installment Payment on or before the due date
specified in this Consent Decree.
20.

Interest, Charges for Collection, and Acceleration of Maturity Date.

After an Event
of Default has occurred under this Consent Decree, the then unpaid amount of the Voluntary Contribution
shall accrue interest, computed using the U.S. Prime Rate in effect on the date of the Event of Default
plus 4.75 percent, from the date of the Event of Default until payment in full. Upon an Event of Default,
the then unpaid amount of the Voluntary Contribution, together with interest, as aforesaid, any penalties
permitted and/or required by the law, including but not limited to 31 U.S.C. § 3717 and administrative
charge(s), plus the costs of collection, litigation, and attorneys’ fees, shall become immediately due and
payable, without notice, presentment, demand, protest, or notice of protest of any kind, all of which are
waived by the Company.
21.

Waivers.

The Company waives any and all rights it may have to seek administrative or
judicial reconsideration, review, appeal or stay, or to otherwise challenge or contest the validity of this
Consent Decree and the Adopting Order, provided the Bureau issues an Adopting Order as defined in this
Consent Decree. The Company shall retain the right to challenge Commission interpretation of the
Consent Decree or any terms contained herein. If either Party (or the United States on behalf of the
Commission) brings a judicial action to enforce the terms of the Adopting Order, neither the Company
nor the Commission shall contest the validity of the Consent Decree or the Adopting Order, and the
Company shall waive any statutory right to a trial de novo. The Company hereby agrees to waive any
claims it may otherwise have under the Equal Access to Justice Act19 relating to the matters addressed in
this Consent Decree.
22.

Invalidity.

In the event that this Consent Decree in its entirety is rendered invalid by any
court of competent jurisdiction, it shall become null and void and may not be used in any manner in any
legal proceeding.
23.

Subsequent Rule or Order.

The Parties agree that if any provision of the Consent
Decree conflicts with any subsequent rule or order adopted by the Commission (except an order
specifically intended to revise the terms of this Consent Decree to which the Company does not expressly
consent) that provision will be superseded by such Commission rule or order.
24.

Successors and Assigns.

The Company agrees that the provisions of this Consent
Decree shall be binding on its successors, assigns, and transferees.
25.

Final Settlement.

The Parties agree and acknowledge that this Consent Decree shall
constitute a final settlement between the Parties with respect to the Investigation. The Parties further
agree that this Consent Decree does not constitute either an adjudication on the merits or a factual or legal
finding or determination regarding any compliance or noncompliance with the Communications Laws.
26.

Modifications.

This Consent Decree cannot be modified without the advance written
consent of both Parties.

19 See 5 U.S.C. § 504; 47 C.F.R. Part 1, Subpart K.

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27.

Paragraph Headings.

The headings of the paragraphs in this Consent Decree are
inserted for convenience only and are not intended to affect the meaning or interpretation of this Consent
Decree.
28.

Authorized Representative.

Each Party represents and warrants to the other that it has
full power and authority to enter into this Consent Decree. The FCC signatory represents that she is
signing this Consent Decree in her official capacity and that she is authorized to execute this Consent
Decree.
29.

Counterparts.

This Consent Decree may be signed in counterpart (including by
facsimile). Each counterpart, when executed and delivered, shall be an original, and all of the
counterparts together shall constitute one and the same fully executed instrument.





________________________________
P. Michele Ellison
Chief
Enforcement Bureau


________________________________
Date



________________________________

NTS Communications, Inc.
By: Niv Krikov
Its: Executive Vice President and
Chief Financial Officer


________________________________
Date







8

Document Outline

  • I. DEFINITIONS
  • II. BACKGROUND
  • III. TERMS OF AGREEMENT

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