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EB Proposes $8,000 Fine against Windstream Iowa Comm., Inc.

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Released: December 14, 2011

Federal Communications Commission

DA 11-2012

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
File No.: EB-10-IH-2091
)
Windstream Iowa Communications, Inc.
)
NAL/Acct. No.: 201232080011
)
Apparent Liability for Forfeiture
)
FRN: 0019527837

NOTICE OF APPARENT LIABILITY FOR FORFEITURE

Adopted: December 13, 2011

Released: December 14, 2011

By the Chief, Enforcement Bureau:

I.

INTRODUCTION

1.
In this Notice of Apparent Liability for Forfeiture (“NAL”), we find that Windstream
Iowa Communications, Inc. (“Windstream Iowa”) apparently willfully violated Section 214(a) of the
Communications Act of 1934, as amended (the “Act”),1 and Sections 63.03 and 63.04 of the
Commission’s rules,2 by failing to obtain Commission approval prior to obtaining control of a domestic
Section 214 authorization held by Direct Communications, LLC (“Direct”). Based on our review of the
facts and circumstances surrounding this matter, and for the reasons discussed below, we find that
Windstream Iowa is apparently liable for a total forfeiture of $8,000.

II.

BACKGROUND

2.
Section 214(a) of the Act prohibits any carrier from constructing, extending, acquiring or
operating any line, and from engaging in transmission through any such line, “unless and until there shall
first have been obtained from the Commission a certificate that the present or future public convenience
and necessity” require, or will require, the construction, extension, acquisition, or operation of the line.3
Sections 63.03 and 63.04 of the rules require Commission approval before a transfer of control or
assignment of a domestic Section 214 authorization is consummated.4
3.
Iowa Telecommunications Services, Inc. (“Iowa Telecom”) is an Iowa-based company
that operates as a local exchange services provider. On July 1, 2009, Iowa Telecom acquired
substantially all of the assets of Sherburne Tele Systems, Inc. (“Sherburne”) and its subsidiaries,
including Sherburne’s interest in Direct, a telecommunications service provider offering fiber optic


1 47 U.S.C. 214(a).
2 47 C.F.R. §§ 63.03, 63.04.
3 Supra note 1.
4 Supra note 2.

Federal Communications Commission

DA 11-2012

transport services.5 Before the parties consummated their transaction on July 1, 2009, Iowa Telecom
apparently sought Commission approval to transfer most of Sherburne’s Commission authorizations to
Iowa Telecom, but Iowa Telecom did not seek Commission approval for the transfer of Direct’s domestic
Section 214 authority to Iowa Telecom.6
4.
Iowa Telecom did not file an application with the Commission’s Wireline Competition
Bureau (“WCB”) for approval to transfer control of Direct’s domestic Section 214 authorization to Iowa
Telecom until December 14, 2009, more than six months after it had consummated its transaction with
Sherburne.7 WCB granted Iowa Telecom’s application on January 22, 2010.8 On April 14, 2010, the
Enforcement Bureau issued a letter of inquiry (“LOI”) to Iowa Telecom, directing the company to
respond to inquiries concerning the transfer of Direct’s domestic Section 214 authorization to Iowa
Telecom.9 Iowa Telecom responded to the LOI on April 29, 2010.10 On June 1, 2010, Iowa Telecom
merged with and into Buffalo Merger Sub, Inc. (“Buffalo”), a subsidiary of Windstream Corporation
(“Windstream”). After this merger, Buffalo became Windstream Iowa.11

III.

DISCUSSION

5.
Under Section 503(b)(1) of the Act, “[a]ny person who is determined by the Commission
. . . to have . . . willfully or repeatedly failed to comply with any of the provisions of this Act or of any
rule, regulation, or order issued by the Commission under this Act . . . shall be liable to the United States
for a forfeiture penalty.12 Section 312(f)(1) of the Act defines “willful” as the “conscious and deliberate
commission or omission of [any] act, irrespective of any intent to violate any provision of this Act or any
rule or regulation by the Commission authorized by this Act.”13 The legislative history to Section
312(f)(1) of the Act clarifies that this definition of “willful” applies to both Sections 312 and 503(b) of the
Act,14 and the Commission has so interpreted the term in the Section 503(b) context.15 To impose a


5 See Letter from Gregory Vogt, Counsel to Iowa Telecommunications Services, Inc., to Trent Harkrader, Deputy
Chief, Investigations & Hearings Division, Enforcement Bureau, Federal Communications Commission, Exhibit 1
(Apr. 29, 2010) (“LOI Response”).
6 See id. Iowa Telecom has admitted that it should have obtained Commission authority to transfer control of
Sherburne’s interest in Direct before July 1, 2009. Id.
7 Domestic Section 214 Application Filed for the Acquisition of Assets of Direct Communications, LLC by Iowa
Telecommunications Services, Inc.
, Public Notice, 24 FCC Rcd 14636 (Wireline Competition Bureau 2010).
8 Notice of Domestic Section 214 Authorizations Granted, Public Notice, 25 FCC Rcd 863 (Wireline Competition
Bureau 2010).
9 Letter from Trent Harkrader, Deputy Chief, Investigations & Hearings Division, Enforcement Bureau, Federal
Communications Commission, to Gregory Vogt, Counsel to Iowa Telecommunications Services, Inc. (Apr. 14,
2010).
10 See supra note 5.
11 See Domestic Section 214 Application Filed for the Transfer of Control of Iowa Telecommunications Services,
Inc. to Windstream Corporation
, Public Notice, 25 FCC Rcd 444, 445 (Wireline Competition Bureau 2010); see
also
Electronic mail message from Malena F. Barzilai, Regulatory Counsel and Director, Federal Government
Affairs, Windstream Communications, to David Janas, Special Counsel, Investigations & Hearings Division,
Enforcement Bureau, Federal Communications Commission (Nov. 16, 2011).
12 47 U.S.C. § 503(b)(1); see also 47 C.F.R. § 1.80(a)(1).
13 47 U.S.C. § 312(f)(1).
14 H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51 (1982).
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DA 11-2012

forfeiture penalty, the Commission must issue a notice of apparent liability, and the person against whom
the notice has been issued must have an opportunity to show, in writing, why no such forfeiture penalty
should be imposed.16 The Commission will then issue a forfeiture if it finds, based on the evidence, that
the person has violated the Act, a rule, or a Commission order.17

A.

Apparent Violation of Section 214

6.
We conclude that it is apparent that Windstream Iowa’s predecessor, Iowa Telecom,
willfully violated Section 214 of the Act and Sections 63.03 and 63.04 of the rules because it failed to
obtain Commission approval before consummating a substantial transfer of control of a domestic Section
214 authorization.18 Iowa Telecom did not file an application for Commission approval until December
14, 2009, more than 6 months after its July 1, 2009 transfer of control.

B.

Proposed Forfeiture

7.
In determining the amount of a forfeiture penalty, Section 503(b)(2)(E) of the Act and
Section 1.80(a)(4) of the rules direct the Commission to take into account “the nature, circumstances,
extent, and gravity of the violation . . . and the degree of culpability, any history of prior offenses, ability
to pay, and such other matters as justice may require.”19 The Commission’s Forfeiture Policy Statement
and implementing rules prescribe a base forfeiture of $8,000 for each separate unauthorized substantial
transfer of control.20 Based on the facts and circumstances presented, we conclude that a proposed
forfeiture of $8,000 against Windstream Iowa is warranted.

IV.

ORDERING CLAUSES

8.

ACCORDINGLY, IT IS ORDERED

that, pursuant to Section 503(b) of the Act21 and
Sections 0.111, 0.311, 0.314 and 1.80 of the rules,22 Windstream Iowa Communications, Inc. is hereby

NOTIFIED

of its

APPARENT LIABILITY FOR A FORFEITURE

in the amount of $8,000 for
apparently willfully or repeatedly violating Section 214 of the Act and Sections 63.03 and 63.04 of the
rules.23
9.

IT IS FURTHER ORDERED

that, pursuant to Section 1.80 of the rules, within thirty
(30) calendar days of the release date of this Notice of Apparent Liability for Forfeiture, Windstream
Iowa Communications, Inc.

SHALL PAY

the full amount of the proposed forfeiture or

SHALL FILE

a
written statement seeking reduction or cancellation of the proposed forfeiture.




15 See, e.g., Southern California Broadcasting Co., Memorandum Opinion and Order, 6 FCC Rcd. 4387, 4388, ¶ 5
(1991) (“Southern California Broadcasting”).
16 47 U.S.C. § 503(b); 47 C.F.R. § 1.80(f).
17 See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd. 7589, 7591, ¶ 4 (2002).
18 See 47 U.S.C. 214(a); see also 47 C.F.R. §§ 63.03, 63.04.
19 47 U.S.C. § 503(b)(2)(E).
20 See 47 C.F.R. § 1.80; Forfeiture Policy Statement, 12 FCC Rcd. 17087, 17113 (1997).
21 47 U.S.C. § 503(b).
22 47 C.F.R. §§ 0.111, 0.311, 0.314, 1.80.
23 47 U.S.C. § 214; 47 C.F.R. §§ 63.03, 63.04.
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Federal Communications Commission

DA 11-2012

10.
Payment of the forfeiture must be made by check or similar instrument, payable to the
order of the Federal Communications Commission. The payment must include the NAL/Acct. No. and
FRN referenced above. Payment by check or money order may be mailed to Federal Communications
Commission, P.O. Box 979088, St. Louis, MO 63197-0000. Payment by overnight mail may be sent to
U.S. Bank – Government Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO
63101. Payments by wire transfer may be made to ABA Number 021030004, receiving bank Federal
Reserve Bank of New York, and account number 2700001. For payment by credit card, an FCC Form
159 (Remittance Advice) must be submitted. When completing the FCC Form 159, enter the
NAL/Account number in block 23A (call sign/other ID), and enter the letters “FORF” in block number
24A (payment type code). ATMS will also send electronic notification within forty-eight (48) hours of
the date said payment is made to Terry Cavanaugh at Terry.Cavanaugh@fcc.gov, Pamela Kane at
Pamela.Kane@fcc.gov, and David Janas at David.Janas@fcc.gov.
11.
The written statement seeking reduction or cancellation of the proposed forfeitures, if
any, must include a detailed factual statement supported by appropriate documentation and affidavits
pursuant to Sections 1.80(f)(3) and 1.16 of the Commission’s rules.24 The written statement must be
mailed to Theresa Z. Cavanaugh, Acting Chief, Investigations and Hearings Division, Enforcement
Bureau, Federal Communications Commission, 445 12th Street, S.W., Room 4-C330, Washington, D.C.
20554 and must include the NAL/Acct. No. referenced above. The written statement should also be
emailed to Terry Cavanaugh at Terry.Cavanaugh@fcc.gov, Pamela Kane at Pamela.Kane@fcc.gov, and
David Janas at David.Janas@fcc.gov.
12.
The Commission will not consider reducing or canceling a forfeiture in response to a
claim of inability to pay unless the petitioner submits: (1) federal tax returns for the most recent three-
year period; (2) financial statements prepared according to generally accepted accounting practices
(GAAP); or (3) some other reliable and objective documentation that accurately reflects the petitioner’s
current financial status. Any claim of inability to pay must specifically identify the basis for the claim by
reference to the financial documentation submitted.
13.
Requests for payment of the full amount of this Notice of Apparent Liability for
Forfeiture under an installment plan should be sent to: Chief Financial Officer – Financial Operations,
Federal Communications Commission, 445 12th Street, S.W., Room 1-A625, Washington, D.C. 20554.25
For answers to questions regarding payment procedures, contact the Financial Operations Group Help
Desk at 1-877-480-3201 or Email: ARINQUIRIES@fcc.gov.


24 See 47 C.F.R. §§ 1.80(f)(3), 1.16.
25 See 47 C.F.R. § 1.1914.
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Federal Communications Commission

DA 11-2012

14.

IT IS FURTHER ORDERED

that a copy of this Notice of Apparent Liability for
Forfeiture shall be sent by certified mail, return receipt requested, to Malena F. Barzilai, Regulatory
Counsel and Director, Federal Government Affairs, Windstream Communications, 1101 17th Street,
N.W., Suite 802, Washington, D.C. 20036.
FEDERAL COMMUNICATIONS COMMISSION
P. Michele Ellison
Chief, Enforcement Bureau
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