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Telseven, LLC $1.75M Notice of Apparent Liability

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Released: June 14, 2012

Federal Communications Commission

FCC 12-62

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
File No. EB-08-IH-1386
)
Telseven, LLC
)
NAL/Acct. No. 201232080024
)
Patrick B. Hines
)
FRN 0009834466
)
Apparent Liability for Forfeiture
)
FRN 0021816459

NOTICE OF APPARENT LIABILITY FOR FORFEITURE

Adopted: June 14, 2012

Released: June 14, 2012

By the Commission:

I.

INTRODUCTION

1.
In this Notice of Apparent Liability for Forfeiture (NAL), we find that Telseven, LLC
(Telseven or Company) apparently violated: (1) Section 254(d) of the Communications Act of 1934, as
amended (Act), and Section 54.706 of the Commission’s rules by willfully or repeatedly failing to
contribute fully to the Universal Service Fund (USF);1 (2) Section 54.711(a) of the Commission’s rules by
willfully or repeatedly filing inaccurate FCC Forms 499-Q;2 (3) Section 251(e)(2) of the Act and Section
52.17 the Commission’s rules by willfully or repeatedly failing to make full contributions to the
administration of the North American Numbering Plan (NANP);3 (4) Section 251(e)(2) of the Act and
Section 52.32(a) of the Commission’s rules by willfully or repeatedly failing to make full contributions to
the administration of local number portability (LNP);4 and (5) Sections 1.1154 and 1.1157(b)(1) of the
Commission’s rules by willfully or repeatedly failing to pay regulatory fees when due.5 Based on our
review of the facts and circumstances surrounding this matter, and for the reasons discussed below, we
find that Telseven is apparently liable for forfeiture penalties totaling one million, seven hundred fifty-
eight thousand, four hundred sixty-five dollars ($1,758,465).

II.

BACKGROUND

2.
The Act codifies Congress’s historic commitment to promote universal service to ensure that
consumers in all regions of the nation have access to affordable, quality telecommunications services. In


1 47 U.S.C. § 254(d); 47 C.F.R. § 54.706.
2 47 C.F.R. § 54.711(a). Form 499-Q is also known as the Quarterly Telecommunications Reporting Worksheet or
Quarterly Worksheet.
3 47 U.S.C. § 251(e)(2); 47 C.F.R. § 52.17.
4 47 U.S.C. § 251(e)(2); 47 C.F.R. § 52.32(a).
5 47 C.F.R. §§ 1.1154, 1.1157(b)(1).

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particular, 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.”6 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 on their interstate
and international end-user telecommunications revenues.7 The Universal Service Administrative
Company (USAC) currently administers the USF.8 USAC uses contributors’ revenue projections, as
reported on Form 499-Q, to determine each contributor’s monthly universal service contribution
obligation and bills the carrier accordingly each month.9 Consistent with the Debt Collection
Improvement Act of 1996 (DCIA),10 USAC transfers invoices for USF contributions that have become
over 90 days delinquent to the Commission for further action to collect the outstanding debt.11 A
provider’s failure to pay its share into the USF skews the playing field by giving the provider an
economic advantage over its competitors, who must then shoulder more than their fair share of the costs
of universal service.
3.
Section 251(e)(1) of the Act directs the Commission to oversee the administration of
telecommunications numbering to ensure the availability of telephone numbers on an equitable basis.12
Section 251(e)(2) of the Act requires that “[t]he cost of establishing telecommunications numbering
administration arrangements . . . shall be borne by all telecommunications carriers on a competitively
neutral basis as determined by the Commission.”13 In carrying out this statutory directive, the
Commission adopted Section 52.17 of its rules, which requires, among other things, that all
telecommunications carriers contribute on the basis of their end-user telecommunications revenues for the
prior calendar year on a competitively neutral basis to meet the costs of numbering administration.14


6 47 U.S.C. § 254(d).
7 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.”).
8 47 C.F.R. § 54.701(a).
9 See id. §§ 54.709(a), 54.713(b). The monthly bills are subject to an annual true-up based on the actual revenues
that contributors report on FCC Form 499-A. See Federal-State Joint Board on Universal Service, Petition for
Reconsideration Filed by AT&T
, Report and Order and Order on Reconsideration, 16 FCC Rcd 5748, 5755, para. 19
& n.32 (2001) (Quarterly Reporting Order); 47 C.F.R. § 54.709(a). Form 499-A is also known as the Annual
Telecommunications Reporting Worksheet or Annual Worksheet.
10 See Debt Collection Improvement Act of 1996, Pub. L. No. 104-134, 110 Stat. 1321, 1358.
11 See USAC, Understanding Invoices, available at http://www.universalservice.org/cont/invoices/ (last visited Apr.
28, 2012). Debt collection procedures may include further administrative efforts by both the Commission and the
United States Treasury or, as appropriate, Commission referral of the delinquent debt to the Department of Justice
for enforced collection action. 47 C.F.R. § 1.1917. Collection efforts may result in additional charges, including
interest and penalties, as provided under 31 U.S.C. § 3717, and administrative charges pursuant to 47 C.F.R.
§§ 1.1940, 54.713 and 31 C.F.R. § 285.12(j).
12 47 U.S.C. § 251(e)(1).
13 Id. § 251(e)(2).
14 47 C.F.R. § 52.17.
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4.
Section 251(b)(2) of the Act establishes that every telecommunications carrier has a duty to
provide local number portability in accordance with requirements established by the Commission.15
Section 251(e)(2) of the Act requires, in pertinent part, that “[t]he cost of establishing . . . number
portability shall be borne by all telecommunications carriers on a competitively neutral basis as
determined by the Commission.”16 In implementing this statutory directive, the Commission adopted
Section 52.32 of its rules, which requires, among other things, that all telecommunications carriers
contribute to the costs of local number portability on the basis of their end-user telecommunications
revenues for the prior calendar year.17
5.
Pursuant to Section 1.1151 of the Commission’s rules, providers of interstate
telecommunications services and other providers must pay regulatory fees to the Commission to cover the
costs of certain regulatory activities.18 In particular, Sections 1.1154 and 1.1157(b)(1) of the
Commission’s rules require that interstate telecommunications carriers pay regulatory fees on the basis of
their interstate and international end-user revenues.19 Such fees must be paid on an annual basis,20 and
failure to do so subjects a carrier to late payment penalties, as well as to possible revocation of its
operating authority.21 Further, under its “red light rule,” the Commission withholds action on applications
or requests for benefits from any entity that has failed to timely meet its USF, TRS, NANP, and LNP
contribution obligations or to pay its regulatory fees when due, and ultimately dismisses such applications
or other requests if the delinquencies are not resolved.22
6.
The Commission has established specific procedures for the administration of the USF,
numbering, LNP, regulatory fee, and other associated federal regulatory programs. The procedures
include the requirement that each telecommunications provider file accurate company-specific revenue
data on FCC Form 499-A annually.23 With certain exceptions, interstate telecommunications providers
also must file good faith estimates of their projected revenue on Form 499-Q.24 The numbering program
and LNP administrators and the Commission use the data reported on Form 499-A to determine and bill
for the telecommunications provider’s LNP administration, numbering administration, and regulatory fee
payment obligations, and USAC uses that data as well as the data reported on Form 499-Q to determine


15 47 U.S.C. § 251(b)(2).
16 Id. § 251(e)(2).
17 47 C.F.R. § 52.32.
18 Section 9(a)(1) of the Act directs the Commission to “assess and collect regulatory fees to recover the costs of the
following regulatory activities of the Commission: enforcement activities, policy and rulemaking activities, user
information services, and international activities.” 47 U.S.C. § 159(a)(1); see also 47 C.F.R. § 1.1151.
19 47 C.F.R. §§ 1.1154, 1.1157(b)(1).
20 Id. § 1.1157(b)(1). Section 1.1154 of the Commission’s rules sets forth the schedule of annual regulatory charges
and filing locations for common carrier services. See 47 C.F.R. § 1.1154.
21 See 47 U.S.C. § 159(c)(1), (c)(3).
22 47 C.F.R. § 1.1910. The “red light rule” took effect on November 1, 2004. See FCC Announces Brief Delay in
Enforcement of Red Light Rule
, Public Notice, 19 FCC Rcd 19452 (2004).
23 See 47 C.F.R. § 54.711(a); see also, e.g., FCC Form 499-A Telecommunications Reporting Worksheet − Annual
Filing, available at http://transition.fcc.gov/Forms/Form499-A/499a-2012.pdf (last visited May 15, 2012).
24 See 47 C.F.R. § 54.711(a); Quarterly Reporting Order, 16 FCC Rcd at 5755, para. 19; see also FCC Form 499-Q
Telecommunications Reporting Worksheet − Quarterly Filing for Universal Service Contributors
, available at
http://www.fcc.gov/Forms/Form499-Q/499q-2012.pdf (last visited May 15, 2012).
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and bill for the provider’s USF contribution obligations.25 Carriers must pay their contribution invoices in
a timely manner,26 and the Commission’s rules explicitly warn contributors that failure to file forms or
submit payments potentially subjects them to enforcement action.27
7.
Telseven is a Florida-based company that held itself out and registered with the
Commission28 as a “provider of interstate telecommunications services.”29 Telseven described its
telecommunications service as an “interstate Enhanced Number Assistance Directory Service”
(ENADA).30 This service, according to Telseven, offered consumers the ability to obtain information
about recently disconnected or out-of-service toll free numbers.31 A consumer using this service would


25 See 47 C.F.R. §§ 1.1154 (regulatory fees), 52.17 (numbering), 52.32 (LNP), 54.709 (USF).
26 See, e.g., 47 C.F.R. § 54.711(a) (“The Commission shall announce by Public Notice published in the Federal
Register and on its website the manner of payment and the dates by which payments must be made.”); Proposed
Fourth Quarter 2011 Contribution Factor
, Public Notice, 26 FCC Rcd 12943, 12946 (Off. Managing Dir. 2011)
(“Contribution payments are due on the date shown on the invoice.”); see also 47 C.F.R. § 54.713(b) (noting that if a
USF “contributor fails to make full payment on or before the date due of . . . monthly invoice provided by the
Administrator, the payment is delinquent”). The Act and our rules, however, do not condition payment on receipt of
an invoice or other notice from USAC, other program administrator, or the Commission. See, e.g., 47 U.S.C.
§ 254(d); 47 C.F.R. § 54.706(b). For instance, a carrier that does not file Form 499-A or Form 499-Q may not
receive an invoice from USAC, but is nonetheless required to contribute to the USF, unless its revenues are
considered de minimis. See Globcom, Inc., Notice of Apparent Liability for Forfeiture and Order, 18 FCC Rcd
19893, 19896, para. 5 n.22 (2003) (Globcom NAL) (subsequent history omitted). In the case of USF contributions,
providers whose contribution obligation in a given year is less than $10,000 are considered de minimis and
exempted from contributing to the USF for that year. See 47 C.F.R. § 54.708. Filers do not calculate the amounts
that they must contribute in the Quarterly and Annual Worksheets. Rather, the USF, TRS, NANP, and LNP
administrators use the revenue information on these Worksheets to calculate a funding base and individual
contributions for each support mechanism. See, e.g., 2012 Telecommunications Worksheet Instructions (FCC Form
499-A) at 31, available at http://www.fcc.gov/document/2012-form-499-instructions (last visited May 9, 2012).
27 47 C.F.R. § 54.713.
28 See Telseven, LLC “Registration Detail,” available at https://fjallfoss.fcc.gov/coresWeb/searchDetail.do?frn=
0009834466 (last visited May 15, 2012). Telseven also obtained authorization, pursuant to Section 214 of the
Communications Act and Section 63.18 of the Commission’s rules, to provide international telecommunications
services. See International Authorizations Granted, Public Notice, 19 FCC Rcd 4036 (Int’l Bur. 2004).
29 Telseven, LLC, d/b/a Calling 101 10 275, Calling 10 1515 800, Calling 10 10 141, Application for Authority to
Provide Service in Accordance with Section 63.18(e)(2) of the Rules
, Attach. 1 at Response to Question 9 (filed Feb.
6, 2004) (“Telseven . . . is a competitive provider of interstate telecommunications services.”), available at
http://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/reports/swr031b.hts?q_set=V_SITE_ANTENNA_FREQ.file_
numberC/File+Number/%3D/ITC2142004020900047&prepare=&column=V_SITE_ANTENNA_FREQ.file_numb
erC/File+Number (last visited May 14, 2012); FCC Form 499 Filer Database Detailed Information, Filer
Identification for Telseven, available at http://apps.fcc.gov/cgb/form499/499detail.cfm?FilerNum=823700 (last
visited May 11, 2012) (based on Telseven’s Form 499 filings, listing all states except Alaska and Nevada as
jurisdictions in which Telseven provides telecommunications services); see Letter from Wendy M. Creeden,
Counsel for Telseven, LLC, Sullivan & Worcester, LLP, to Elizabeth Mumaw, Attorney Advisor, Investigations &
Hearings Division, FCC Enforcement Bureau, at Responses to Questions 1–2 (Sept. 22, 2008) (on file in EB-08-IH-
1386) (Telseven Sept. 22 Letter).
30 Telseven Sept. 22 Letter at Response to Question 2.
31 See Telseven, LLC, Calling 10, LLC d/b/a California Calling 10, and Patrick Hines, Response to the Order
Instituting Investigation and Denial of All Assertions of Possible Violation of California Law of Telseven, LLC,
Calling 10, LLC d/b/a California Calling 10, and Patrick Hines, an Individual, Case No. I.10-12-010, at 9-10 (Cal.
Pub. Util. Comm’n, filed Jan. 21, 2011) (Telseven Response to Cal. Pub. Util. Comm’n Investigation Order).
4

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contact Telseven by dialing one of the approximately one million such numbers that Telseven
controlled.32 A consumer dialing one of these numbers typically heard a message offering Telseven’s
assistance in finding the current toll-free number of the party the consumer was trying to reach.33 A
recorded message would then provide the consumer with an “equal access code” (i.e., dial-around
number) for contacting Telseven’s directory assistance platform in Nevada.34 Consumers dialing this
equal access code would have their calls transmitted to the Nevada platform by Telseven, rather than by
the consumer’s prescribed long distance carrier.35 Since Telseven did not offer service in Nevada, all
calls using this equal access number were interstate long distance calls.
8.
Telseven imposed per call charges on many of the consumers who contacted its Nevada
platform. These charges included, in addition to any fees that Telseven imposed for transmission to the
Nevada platform and the other aspects of Telseven’s purported service, a per call “Federal Universal
Service Fund charge.”36 Telseven also “charge[d] an administrative recovery fee of $1.65 in any month”
the consumer dialed its “directory assistance service . . . to offset the cost Telseven incurs in complying
with regulatory obligations” including “the cost of complying with the Federal Universal Service
Charge.”37
9.
On July 2, 2008, the Enforcement Bureau (Bureau) issued a letter of inquiry (LOI) to
Telseven seeking information about its compliance with the USF contribution rules and other related
regulatory obligations.38 On September 22, 2008, Telseven responded to the LOI.39 In response to the
Bureau’s requests for additional financial information and the identity of all Telseven affiliates, Telseven
filed supplemental information on December 18, 2009, June 15, 2010, and July 12, 2010.40 The
information developed through the Bureau’s investigation indicates that Telseven apparently failed to
fully and timely contribute to the USF and the NANP and LNP cost recovery mechanisms, provide good


32 See Cal. Pub. Util. Comm’n, Order Instituting Investigation into the Operations of Telseven, LLC, Calling 10,
LLC, and Patrick Hines, Case No. I.10-12-010, at 7 (issued Dec. 21, 2010) (Cal. Pub. Util. Comm’n Investigation
Order
); Post-Hearing Brief of Consumer Protection & Safety Div., Cal. Pub. Util. Comm’n, Case No. I.10-12-010,
at 29 (filed Apr. 6, 2012) (Cal. Pub. Util. Comm’n Post-Hearing Brief); Cal. Pub. Util. Comm’n, Telseven Hearing,
Testimony of Patrick B. Hines, Case No. I.10-12-010, at 389 (Nov. 17, 2011).
33 See Cal. Pub. Util. Comm’n Post-Hearing Brief at 32.
34 See Telseven Response to Cal. Pub. Util. Comm’n Investigation Order at 10.
35 See Cal. Pub. Util. Comm’n, Opening Brief of Calling 10, LLC d/b/a California Calling 10. Telseven, LLC and
Patrick Hines, Case No. I.10-12-010, at 41 (Cal. Pub. Util. Comm’n, filed Apr. 6, 2011).
36 See “Telseven.com – Welcome to Telseven LLC,” available at http://telseven.com (Jan. 23, 2012) (on file in EB-
08-IH-1386).
37 See “Telseven.com – Rates,” available at http://telseven.com/rate.html (Jan. 23, 2012) (on file in EB-08-IH-
1386).
38 Letter from Trent B. Harkrader, Deputy Chief, Investigations & Hearings Division, FCC Enforcement Bureau, to
Patrick Hines, Chief Executive Officer, Telseven (Jul. 2, 2008) (on file in EB-08-IH-1386).
39 Telseven Sept. 22 Letter.
40 Letter from Wendy M. Creeden, Counsel for Telseven, to Robert B. Krinsky, Attorney Advisor, Investigations &
Hearings Division, FCC Enforcement Bureau (Dec. 18, 2009) (on file in EB-08-IH-1386); Letter from Kathy L.
Cooper, Counsel for Telseven, to Michele Berlove, Deputy Div. Chief, Investigations & Hearings Division, FCC
Enforcement Bureau (Jun. 15, 2010) (on file in EB-08-IH-1386); Letter from Kathy L. Cooper, Counsel for
Telseven, to Robert B. Krinsky, Attorney Advisor, Investigations & Hearings Division, FCC Enforcement Bureau
(Jul. 12, 2010) (on file in EB-08-IH-1386).
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faith estimates of its projected telecommunication revenue in its Quarterly Worksheets, and pay its annual
regulatory fees to the Commission.41
10. On April 20, 2012, Telseven filed for Chapter 7 bankruptcy in the United States Bankruptcy
Court for the Middle District of Florida, Jacksonville Division.42 Telseven informed the Bureau of this
Chapter 7 bankruptcy filing on April 23, 2012.43 By April 26, 2012, Telseven’s Internet website stated
that the Company is “no longer providing services.”44

III.

DISCUSSION

11. Under Section 503(b)(1) of the Act, any person who is determined by the Commission to
have willfully or repeatedly failed to comply with any provision of the Act or any rule, regulation, or
order issued by the Commission shall be liable to the United States for a forfeiture penalty.45 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” the law.46 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,47 and the


41 See Telseven Sept. 22 Letter at Response to Questions 9, 11–14; see also, e.g., E-mail from Fred Theobald,
USAC, to Robert Krinsky, Attorney Advisor, Investigations and Hearings Division, FCC Enforcement Bureau (Jan.
31, 2012, 13:28 EDT) (attaching USAC billing history for Telseven); E-mail from Fred Theobald, USAC, to Robert
Krinsky, Attorney Advisor, Investigations and Hearings Division, FCC Enforcement Bureau (Feb. 14, 2012, 9:20
EDT); E-mail from Fred Theobald, USAC, to Robert Krinsky, Attorney Advisor, Investigations and Hearings
Division, FCC Enforcement Bureau (Apr. 12, 2012, 11:41 EDT); E-mail from Fred Theobald, USAC, to Robert
Krinsky, Attorney Advisor, Investigations and Hearings Division, FCC Enforcement Bureau (Apr. 13, 2012, 14:04
EDT) (Fourth Theobald E-mail); E-mail from Fred Theobald, USAC, to Robert Krinsky, Attorney Advisor,
Investigations and Hearings Division, FCC Enforcement Bureau (May 1, 2012, 9:04 EDT) (Fifth Theobald E-mail);
E-mail from Fred Theobald, USAC, to Robert Krinsky, Attorney Advisor, Investigations and Hearings Division,
FCC Enforcement Bureau (May 2, 2012, 13:17 EDT) (Sixth Theobald E-mail); E-mail from Heather Bambrough,
Welch, LLP, to Robert Krinsky, Attorney Advisor, Investigations and Hearings Division, FCC Enforcement Bureau
(Jan. 24, 2012, 12:16 EDT) (regarding Telseven’s NANP payment deficiency); E-mail from Heather Bambrough,
Welch, LLP, to Robert Krinsky, Attorney Advisor, Investigations and Hearings Division, FCC Enforcement Bureau
(Jan. 24, 2012, 13:49 EDT) (Second Bambrough E-mail); E-mail from Karen Laffey, Neustar, Inc., to Robert
Krinsky, Attorney Advisor, Investigations and Hearings Division, FCC Enforcement Bureau (Jan. 27, 2012, 16:54
EDT) (E-mail from Karen Laffey, Neustar, Inc., to Robert Krinsky, Attorney Advisor, Investigations and Hearings
Division, FCC Enforcement Bureau (Apr. 23, 2012, 12:00 EDT) (Second Laffey E-mail) (attaching spreadsheet
listing delinquent invoice amounts); E-mail from Ann Monahan, Financial Management Specialist, FCC Office of
the Managing Director (Feb. 3, 2012, 9:29 EDT) (First Monahan E-mail); E-mail from Ann Monahan, Financial
Management Specialist, FCC Office of the Managing Director (Feb. 6, 2012, 16:09 EDT).
42 Notification from Jason B. Burnett and Paige A. Wagner, GrayRobinson, P.A., Counsel for Telseven, Notice of
Filing Chapter 7 Bankruptcy, U.S. Bankr. Ct., Mid. Dist. Fla., Jacksonville Div., Case No.: 3:11-bk-2682-PMG
(Apr. 23, 2012) (on file in EB-08-IH-1386) (stating that on April 20, 2012 Telseven had filed for Chapter 7
bankruptcy).
43 Id.
44 See Telseven, LLC Homepage, available at http://telseven.com/ (last visited Apr. 26, 2012) (“Telseven has filed a
Chapter 7 Bankruptcy proceeding in Jacksonville, Florida, Case No. 3:12-bk-02683. The company is no longer
providing services.”).
45 See 47 U.S.C. § 503(b)(1)(B); 47 C.F.R. § 1.80(a)(1).
46 47 U.S.C. § 312(f)(1).
47 See H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51 (1982).
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Commission has so interpreted the term in the Section 503(b) context.48 The Commission may also
assess a forfeiture for violations that are merely repeated, and not willful.49 “Repeated” means that the act
was committed or omitted more than once, or lasts more than one day.50 To impose such a 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.51 The Commission will then issue a forfeiture if it finds, based on the evidence, that the person
has violated the Act or a Commission rule.52
12. The fundamental issues in this case are whether Telseven apparently violated the Act and the
Commission’s rules by willfully or repeatedly failing to make required contributions to the USF and the
NANP and LNP cost recovery mechanisms, by failing to file accurate Quarterly Worksheets, and by
failing to pay required regulatory fees to the Commission.53 We answer these questions in the affirmative.
As set forth below, we conclude that Telseven is apparently liable for forfeiture for willful or repeated
violations of Section 251(e)(2) and 254(d) of the Act and Sections 1.1154, 1.1157(b)(1), 52.17, 52.32(a),
54.706, and 54.711 of the Commission’s rules. Based on the facts and circumstances before us, we
therefore conclude that Telseven is apparently liable for forfeitures totaling one million, seven hundred
fifty-eight thousand, four hundred sixty-five dollars ($1,758,465).

A. Telseven Apparently Failed to Make Full and Timely Universal Service Fund

Contributions

13. We conclude that Telseven apparently violated Section 254(d) of the Act and Section
54.706(a) of the Commission’s rules by willfully or repeatedly failing to contribute fully and timely to the
universal service support mechanisms.54 Section 54.706(a) of the Commission’s rules unambiguously
directs that “[e]ntities [providing] interstate telecommunications to the public . . . for a fee . . . must
contribute to the universal service support mechanisms.”55 As set forth above,56 Telseven not only held
itself out as—and has registered as—a provider of “interstate telecommunications services,” but
apparently also provided and charged for the interstate long distance transmission to its Nevada platform.
Indeed, Telseven’s fees to the public apparently included both per-call and monthly charges for the
USF.57 Those fees, in combination with Telseven’s registration with the Commission as a provider of


48 See, e.g., Southern California Broadcasting Co., Memorandum Opinion and Order, 6 FCC Rcd 4387, 4388, para.
5 (1991) (Southern California Broadcasting).
49 See, e.g., Callais Cablevision, Inc., Notice of Apparent Liability for Monetary Forfeiture, 16 FCC Rcd 1359,
1362, para. 10 (2001) (Callais Cablevision) (issuing an NAL for, inter alia, a cable television operator’s repeated
violation of the cable signal leakage rules).
50 Southern California Broadcasting, 6 FCC Rcd at 4388, para. 5; Callais Cablevision, 16 FCC Rcd at 1362, para. 9.
51 47 U.S.C. § 503(b); 47 C.F.R. § 1.80(f).
52 See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589, 7591, para. 4 (2002).
53 47 U.S.C. §§ 251(e)(2), 254(d); 47 C.F.R. §§ 1.1154, 1.1157(b)(1), 52.17(a), 52.32(a), 54.706, 54.711(a).
54 47 U.S.C. § 254(d); 47 C.F.R. § 54.706(a).
55 47 C.F.R. § 54.706(a).
56 Supra paras. 7–8.
57 See “Telseven.com – Rates,” available at http://telseven.com/rate.html (Jan. 23, 2012) (on file in EB-08-IH-1386)
(“Note that Telseven charges an administrative recovery fee of $1.65 in any month you dial our directory assistance
(continued …)
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interstate telecommunications services, make clear that Telseven was holding itself out to the public as
providing an interstate telecommunications service.
14. According to USAC, Telseven’s outstanding balance due for delinquent USF contributions
is $1,056,929.62.58 Our rules direct USAC to apply the “American Rule” of accounting whereby any
USF payment of less than the total amount due is applied first to the oldest past due debt.59 On the basis
of that rule, USAC determined that the last monthly USF invoice that Telseven paid in full was the
invoice dated October 22, 2007 and due November 15, 2007, and that the last monthly USF invoice that
Telseven partially paid was the invoice dated November 22, 2007 and due December 14, 2007.60
15. In its April 2009 and July 2009 Form 499-Q filings, Telseven projected such low
telecommunications revenues that USAC placed the company in de minimis status for 2009, meaning that
Telseven would not be required to contribute to the USF for that year.61 Based on the actual revenues
reported by Telseven on its Form 499-A for 2009, Telseven was not de minimis in 2009.62 This resulted
in subsequent true-up billing by USAC for each month from July 2010 through September 2010.63 The
last invoice USAC issued to Telseven with new USF contribution charges was for September 2010.64 For
each month from October 2010 through February 2011, inclusive, the invoices USAC issued to Telseven
added interest on unpaid obligations and DCIA penalty charges as our rules require.65 After February
2011, USAC transferred all of Telseven’s outstanding USF debt to the Commission for collection in
accordance with the DCIA. USAC therefore has not sent any additional invoices to Telseven since
February 22, 2011.66 The absence of a monthly invoice from USAC, however, does not relieve Telseven
(Continued from previous page)


service. This fee is intended to offset the cost Telseven incurs in complying with regulatory obligations and includes
the cost of complying with the Federal Universal Service Charge.”).
58 See Fifth Theobald E-mail (updating on May 1, 2012 Telseven USF data prepared on January 26, 2012).
59 47 C.F.R. § 54.713(e); see also Comprehensive Review of the Universal Service Fund Management,
Administration, and Oversight
, Report and Order, 22 FCC Rcd 16372, 16380–81, para. 16 (2007).
60 See USAC, “Telseven Invoice History,” attached to Fourth Theobald E-mail; Fifth Theobald E-mail; USAC
Invoices to Telseven, Invoice Nos. UBDI0000274287 (statement date Oct. 22, 2007), UBDI0000279222 (statement
date Nov. 22, 2007).
61 See Telseven’s Form 499-Q for Projected Third Quarter Revenues 2009 (received by USAC Apr. 24, 2009);
Telseven’s Form 499-Q for Projected Fourth Quarter Revenues 2009) (received by USAC Jul. 23, 2009); see also
Fourth Theobald E-mail. Section 54.708 of the Commission’s rules provides, in pertinent part, that if “a
contributor’s contribution to universal service in any given year is less than $10,000 that contributor will not be
required to submit a contribution . . . .” 47 C.F.R. § 54.708.
62 See Telseven 2009 Form 499-A Telecommunications Reporting Worksheet (reporting actual revenues for
calendar year 2009) (received by USAC on Mar. 29, 2010) (Telseven 2009 Form 499-A); Fourth Theobald E-mail.
63 See Telseven 2010 Form 499-A (reporting 2009 revenue); USAC Invoices to Telseven, Invoice Nos.
UBDI0000432028 (statement date Jul. 22, 2010), UBDI0000438013 (statement date Aug. 20, 2010),
UBDI0000444156 (statement date Sept. 22, 2010); see also Fourth Theobald E-mail.
64 USAC Invoice to Telseven, Invoice No. UBDI0000450029 (statement date Oct. 22, 2010); see also Fourth
Theobald E-mail.
65 See 47 C.F.R. § 54.713(b); USAC Invoices to Telseven, Invoice Nos. UBDI0000432028 (statement date Jul. 22,
2010), UBDI0000456025 (statement date Nov. 22, 2010), UBDI0000462005 (statement date Dec. 22, 2010),
UBDI0000466986 (statement date Jan. 21, 2011), UBDI0000472973 (statement date Feb. 22, 2011); see also Fourth
Theobald E-mail.
66 See supra para. 2 (discussing DCIA).
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of its outstanding payment obligations. The Commission has repeatedly stated that carriers must pay their
obligations to USAC regardless of whether or not they receive a bill from USAC.67 Telseven’s violations
for unpaid USF contributions continued with each subsequent day on which it failed to make full
payment.68 Based on the record, we find that Telseven has apparently violated Section 254(d) of the Act
and Section 54.706 of the Commission’s rules by willfully or repeatedly failing to contribute fully and
timely to the USF from December 2007 to April 2012, inclusive.

B. Telseven Apparently Failed to Provide Good Faith Estimates of Its Quarterly

Telecommunications Revenue

16. Our rules require carriers to file good faith estimates of their quarterly telecommunications
revenue on Form 499–Q.69 A carrier’s failure to provide such estimates has serious implications for the
USF program because USAC uses the revenue reported on Form 499–Q to calculate each carrier’s
monthly USF contribution obligation, if any, subject to an annual true-up based on the actual revenues, as
reported on the entity’s Form 499-A.
17. The Forms 499–Q that Telseven filed in April 2009 and July 2009 apparently failed to
provide good faith estimates of Telseven’s projected telecommunications revenue for the third and fourth
quarters of 2009.70 In those Quarterly Worksheets, Telseven projected revenues sufficiently low for
USAC to place Telseven in de minimis status for 2009.71 Telseven’s actual revenue for 2009, as reported
on its Form 499-A filing due April 1, 2010, was more than three times greater than Telseven had
predicted in its Form 499-Q filings and showed that Telseven did not qualify for de minimis status in
2009. USAC determined that Telseven’s actual revenues meant that it had a $13,444.62 contribution
obligation to the USF for 2009.72 We deem the difference between Telseven projected revenue, as
reported on its Forms 499–Q and its actual revenue, as reported on its Forms 499–A, to be so significant
as to show that the Form 499–Q revenue estimates were apparently not made in good faith, as Section
54.711(a) of our rules requires. Based on the record, we therefore find that Telseven apparently violated


67 See, e.g., Telrite Corp., Notice of Apparent Liability for Forfeiture, 23 FCC Rcd 7231, 7239 n.53 (2008) (Telrite
NAL
); Globcom, Inc. d/b/a Globcom Global Communications, Order of Forfeiture, 21 FCC Rcd 4710, 4712, para. 5
(2006) (Globcom Forfeiture Order); BCE Nexxia Corp., Notice of Apparent Liability, 20 FCC Rcd 15121, 15124,
15126, paras. 10, 15 (2005).
68 See, e.g., Kajeet Inc. and Kajeet/Airlink, LLC, Notice of Apparent Liability for Forfeiture and Order, 26 FCC Rcd
16684, 16690, para. 13 (2011) (Kajeet NAL); Telrite NAL, 23 FCC Rcd at 7239, para. 16; Globcom Forfeiture
Order
, 21 FCC Rcd at 4723, para. 35 n.105 (2006); Matrix Telecom, Inc., Notice of Apparent Liability for
Forfeiture, 15 FCC Rcd 13544, 13546, para. 7 (2000); Conquest Operator Services Corp., Order of Forfeiture, 14
FCC Rcd 12518, 12525, para. 16 (1999); see also Compass Global, Inc., Notice of Apparent Liability for Forfeiture,
23 FCC Rcd 6125, 6140, para. 33 (Compass Global NAL); Global Crossing North America, Inc., Notice of
Apparent Liability for Forfeiture, 23 FCC Rcd 6110, 6121, para. 24 (2008) (Global Crossing NAL).
69 See 47 C.F.R. § 54.711(a); Quarterly Reporting Order, 16 FCC Rcd at 5755, para. 19.
70 See supra note 63 and accompanying text.
71 See 47 C.F.R. § 54.708 (stating that “[i]f a contributor’s contribution to universal service in any given year is less
than $10,000 that contributor will not be required to submit a [USF] contribution . . . for that year”).
72 See Fourth Theobald E-mail; USAC Invoices to Telseven, Invoice Nos. UBDI0000432028 (statement date Jul. 22,
2010), UBDI0000438013 (statement date Aug. 20, 2010), UBDI0000444156 (statement date Sept. 22, 2010);
Telseven’s Form 499-A for calendar year 2009 (received by USAC Mar. 29, 2010); USAC Invoices to Telseven,
Invoice Nos. UBDI0000432028 (statement date Jul. 22, 2010), UBDI0000438013 (statement date Aug. 20, 2010),
UBDI0000444156 (statement date Sept. 22, 2010).
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Section 54.711(a) by willfully or repeatedly filing Forms 499–Q that failed to provide good faith
estimates of Telseven’s quarterly telecommunications revenue.

C. Telseven Apparently Failed To Make Full and Timely Contributions to the

NANP Cost Recovery Mechanism

18. We further find that Telseven has apparently violated Section 251(e)(2) of the Act and
Section 52.17(a) of the Commission’s rules by willfully or repeatedly failing to make timely contributions
toward the costs of number administration. As a provider of interstate telecommunications service,
Telseven was obligated to contribute to the NANP administration cost recovery mechanisms on the basis
of the end-user telecommunications revenues it reported on its Annual Worksheet (Form 499-A) during
the period covered by this NAL.73
19. The record demonstrates that Telseven failed to timely remit its NANP payment for 2011.
The due date on the invoice was July 12, 2011, but the invoice remains unpaid.74 We therefore conclude
based on the record that Telseven has apparently violated Section 251(e)(2) of the Act and Section
52.17(a) of the Commission’s rules by willfully or repeatedly failing to make timely NANP
administration contributions for 2011.75

D. Telseven Apparently Failed To Make Full and Timely Contributions to the LNP

Cost Recovery Mechanism

20. The record demonstrates that Telseven failed to contribute fully and timely to the LNP cost
recovery mechanism in 2005, 2010, and 2011.76 As of April 23, 2012, Telseven had not made payment
on the LNP invoice issued by the LNP administrator on December 31, 2005, which was due on February
14, 2006.77 Telseven made only a partial payment for 2010.78 It has not remitted any payment for 2011.79
Telseven’s outstanding LNP contribution debt is $5,027.20.80 Based on the record developed in our
investigation, we find that Telseven has apparently violated Section 251(e)(2) of the Act and Section
52.32(a) of the Commission’s rules by willfully or repeatedly failing to contribute fully and timely to the
LNP cost recovery mechanism in 2005, 2010, and 2011.81


73 47 C.F.R. § 52.17(b). In particular, contributions to support numbering administration are based upon a
provider’s end-user telecommunications revenues for the prior calendar year and a contribution factor determined
annually by the Chief of the Wireline Competition Bureau, but in no event will be less than $25. Id. § 52.17(a).
NANP administration contributions are due on an annual basis, with certain exceptions not relevant here.
74 See Second Bambrough E-mail.
75 47 U.S.C. § 251(e)(2); 47 C.F.R. § 52.17(a).
76 See Second Laffey E-mail.
77 See Account Summary-Telseven, LLC, attached to Second Laffey E-mail.
78 Id.
79 Id.
80 Id.
81 See 47 U.S.C. § 251(e)(2); 47 C.F.R. § 52.32(a).
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E. Telseven Apparently Failed to Pay Its Regulatory Fees

21. As an interstate telecommunications service provider, Telseven was required to pay
regulatory fees on the basis of its interstate and international end-user revenues reported on its Annual
Worksheet.82 According to Commission records, Telseven has not paid its annual regulatory fees to the
Commission for 2009 and 2010.83 Telseven is delinquent in the amount of $22,736.25.84 We find that
Telseven apparently violated Sections 1.1154 and 1.1157(b)(1) of the Commission’s rules by willfully or
repeatedly failing to pay regulatory fee program payments when due.85

F.

Proposed Forfeitures

22. Section 503(b)(1) of the Act provides that any person who willfully or repeatedly fails to
comply with any provision of the Act or any rule, regulation, or order issued by the Commission shall be
liable to the United States for a forfeiture penalty.86 Section 503(b)(2)(B) of the Act authorizes the
Commission to assess a forfeiture against a telecommunications carrier of up to $150,000 for each
violation or each day of a continuing violation, up to a statutory maximum of $1,500,000 for a single act
or failure to act.87 In determining the appropriate forfeiture amount, we consider the factors enumerated
in Section 503(b)(2)(E) of the Act, including “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,”88 as well as our forfeiture guidelines.89
23. We find that under the American Rule of accounting, in which all payments are applied first
to the oldest outstanding debt,90 the last Telseven USF invoice that was paid in full was the invoice issued
on October 22, 2007 that was due on November 15, 2007, and that the last Telseven USF invoice that
received partial payment was the invoice issued on November 22, 2007 that was due on December 14,
2007.91 Since that last partial payment, Telseven has not made any payments on its outstanding USF
obligations. The Commission has long recognized that failure to make universal service contributions is
an egregious offense.92 It not only deprives the USF of resources necessary to preserve and advance
universal service, but it also bestows on delinquent entities an unfair competitive advantage by shifting to


82 See 47 C.F.R. §§ 1.1154, 1.1157(b)(1).
83 See First Monahan E-mail.
84 Id.
85 See 47 C.F.R. §§ 1.1154, 1.1157. Standard regulatory fees applicable to common carrier services must be paid in
full by the due date. 47 C.F.R. § 1.1157(b)(1).
86 See 47 U.S.C. § 503(b)(1)(B); 47 C.F.R. § 1.80(a)(2).
87 See 47 U.S.C. § 503(b)(2)(B); see also 47 C.F.R. § 1.80(b)(2); Amendment of Section 1.80(b) of the Commission’s
Rules, Adjustment of Forfeiture Maxima to Reflect Inflation,
Order, 23 FCC Rcd 9845 (2008).
88 47 U.S.C. § 503(b)(2)(E).
89 See 47 C.F.R. § 1.80(b)(4), Note to Paragraph (b)(4): Guidelines for Assessing Forfeitures.
90 Id. § 54.713(e).
91 See USAC, “Telseven Invoice History,” attached to Fourth Theobald E-mail; Fourth Theobald E-mail; Fifth
Theobald E-mail; Sixth Theobald E-mail; USAC Invoices to Telseven, Invoice Nos. UBDI0000274287 (statement
date Oct. 22, 2007), UBDI0000279222 (statement date Nov. 22, 2007).
92 See, e.g., Kajeet NAL, 26 FCC Rcd at 16694, para. 21; ADMA Telecom, Inc., Forfeiture Order, 26 FCC Rcd 4152,
4157, para. 15 (2011)(ADMA Forfeiture Order); Telrite NAL, 23 FCC Rcd at 7241–42, para. 24.
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compliant contributors the economic costs and burdens associated with universal service. An entity’s
failure to make required universal service contributions frustrates Congress’s policy objective in Section
254(d) of the Act to ensure the equitable and non-discriminatory distribution of universal service costs
among all telecommunications providers.93 The Commission has established a base forfeiture amount of
$10,000 for each month in which a contributor has failed to fully pay required universal service
contributions and $20,000 for each month in which a contributor has failed to make any required
universal service contribution,94 plus an upward adjustment based on approximately one-half of the
largest amount of Telseven’s unpaid USF contributions during the period covered by the Commission’s
investigation.95 In addition, the Commission has treated failures to pay universal service and other
obligations as continuing violations.96 As noted above, because Telseven has not made any payments on
any USF invoices since late 2007, our forfeiture calculation reflects not only violations that began within
the last twelve months, but also violations that began prior to the last twelve months and continued during
the twelve-month period preceding this NAL.
24. As a result, we find that Telseven is apparently liable for a forfeiture for willful or repeated
failure to make any contribution to the USF for fifty-three months, from January 2008 to May 2012,
inclusive. Accordingly, we assess a $20,000 forfeiture for each of the fifty-three months in which
Telseven failed to remit any contribution toward its outstanding USF obligation, for a total of $1,060,000.
We also assess a $10,000 forfeiture for Telseven’s failure to fully pay the invoice due on December 14,
2007.97 Thus, we find Telseven apparently liable for a base forfeiture of $1,070,000 for its willful or
repeated failures to contribute fully and timely to the USF on fifty-four months from December 2007 to
May 2012, inclusive. Moreover, consistent with our approach for assessing liability for USF violations,
and taking into account all of the factors enumerated in Section 503(b)(2)(E) of the Act, we also add an
upward adjustment of $528,465 to the base forfeiture—approximately one-half of the largest amount of
Telseven’s unpaid USF contributions during the period covered by the Commission’s investigation.98 We
therefore find Telseven apparently liable for a forfeiture of one million, five hundred ninety-eight
thousand, four hundred sixty-five dollars ($1,598,465) for willful or repeated failures to contribute fully
and timely to the USF.


93 See 47 U.S.C. § 254(d).
94 See, e.g., Kajeet NAL, 26 FCC Rcd at 16694, para. 21; ADMA Forfeiture Order, 26 FCC Rcd at 4158, para. 15;
Globalcom NAL, 25 FCC Rcd at 13485, para. 16; NTS Communications, Inc., Notice of Apparent Liability for
Forfeiture, 25 FCC Rcd 5137, 5142, paras. 12–13 (2010); Telrite NAL, 23 FCC Rcd at 7242–44, paras. 25–28;
Compass Global, NAL, 23 FCC Rcd at 6138–40, paras. 31–34; Global Crossing NAL, 23 FCC Rcd at 6120, para.
21; OCMC, Inc., Order of Forfeiture, 21 FCC Rcd 10479, 10482, para. 10 (2006); Globcom Forfeiture Order, 21
FCC Rcd at 4721–24, paras. 31–38.
95 See, e.g., Kajeet NAL, 26 FCC Rcd at 16696, para. 26; ADMA Telecom, Inc., Notice of Apparent Liability for
Forfeiture, 24 FCC Rcd 838, 852–53, para. 34 (2009)(ADMA NAL); Telrite NAL, 23 FCC Rcd at 7243, para. 28.
96 See, e.g., Kajeet NAL, 26 FCC Rcd at 16694, para. 21; ADMA Forfeiture Order, 26 FCC Rcd at 4159 n.56; Telrite
NAL
, 23 FCC Rcd at 7245–46, para. 36; Compass Global NAL, 23 FCC Rcd at 6140–42, paras. 34–38; Global
Crossing NAL
, 23 FCC Rcd at 6120–23, paras. 21–27.
97 See USAC Invoice to Telseven, Invoice No. UBDI0000274287 (statement dated Oct. 22, 2007); see also Fourth
Theobald E-mail.
98 The American Rule of accounting was applied to determine the largest unpaid invoice. See USAC, “Telseven
Invoice History,” attached to Fourth Theobald E-mail; USAC Invoice Telseven, Invoice No. UBDI0000283967
(statement dated Dec. 21, 2007).
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25. As we noted above, a carrier’s obligation to file Annual and Quarterly Worksheets providing
good faith estimates of its telecommunications revenue is directly linked to, and thus has serious
implications for, administration of the USF, TRS, NANP, LNP and regulatory fee programs. Telseven
filed two Quarterly Worksheets that apparently failed to meet this standard. The Commission has
established precedent for a forfeiture of $50,000 for failure to file a Worksheet or for filing an inaccurate
Quarterly or Annual Worksheet.99 We find a forfeiture of $50,000 also appropriate for filing a Quarterly
Worksheet that fails to provide a good faith estimate of the filer’s projected telecommunications revenue.
Accordingly, we find that Telseven is apparently liable for a forfeiture of one hundred thousand dollars
($100,000) for its willful or repeated failure to file Quarterly Worksheets providing such good faith
estimates by the May 1 and August 1, 2009 filing deadlines.
26. We also conclude that Telseven apparently failed to contribute to the NANP administration
cost recovery mechanism in 2011. The failure to make required NANP administration contributions
hampers the Commission’s ability to ensure that the cost of establishing telecommunications numbering
administration arrangements is “borne by all telecommunications carriers on a competitively neutral
basis” as Congress envisioned.100 The Commission has generally established a base forfeiture amount of
$10,000 for each instance in which a contributor fails to make required contributions to the NANP
administration cost recovery mechanism. Consequently, and consistent with precedent,101 we find that
Telseven is apparently liable for a forfeiture of ten thousand dollars ($10,000) for willful or repeated
failure to make full and timely payment of its required contribution toward the NANP administration cost
recovery mechanism for 2011.102
27. We also find that Telseven is apparently liable for a forfeiture for willfully or repeatedly
failing to make full and timely contributions toward LNP cost recovery mechanisms in 2005, 2010, and
2011. The Commission has prescribed a $10,000 base forfeiture amount for failure to pay LNP
contributions.103 We therefore find Telseven apparently liable for a forfeiture of thirty thousand dollars
($30,000) for its willful and repeated failure to make full and timely payment of its required contribution
toward the LNP administration cost recovery mechanism for 2005, 2010, and 2011.
28. Finally, we conclude that Telseven has apparently failed to fully pay its regulatory fees to
the Commission. Telseven’s violations for failing to fully pay its regulatory fees are continuing until the
amounts owed are fully paid.104 The Commission has established a base forfeiture amount of $10,000 for
failure to make required regulatory fee payments.105 We find Telseven apparently liable for a forfeiture of
twenty thousand dollars ($20,000) for its willful or repeated failures to fully pay its regulatory fees to the
Commission for 2009 and 2010.


99 See, e.g., ADMA NAL, 24 FCC Rcd at 851–52, para. 31; Telrite NAL, 23 FCC Rcd at 7244, para. 31.
100 47 U.S.C. § 251(e)(2).
101 See, e.g., ADMA NAL, 24 FCC Rcd at 853, para. 36; Telrite NAL, 23 FCC Rcd at 7245, para. 33; Teletronics,
Inc
., Notice of Apparent Liability of Forfeiture and Order, 20 FCC Rcd 13291, 13303, para. 35 (2005).
102 See, e.g., Omniat International Telecom, Notice of Apparent Liability for Forfeiture and Order, 24 FCC Rcd
4265, para. 28 (2009); ADMA NAL, 24 FCC Rcd at 852, para. 37.
103 See, e.g., Kajeet NAL, 26 FCC Rcd at 16695, para. 24; Telrite NAL, 23 FCC Rcd at 7245, para. 34.
104 See, e.g., Telrite NAL, 23 FCC Rcd at 7245, para. 35.
105 See id.
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G. All Obligations under This NAL

Extend to Mr. Patrick Hines

29. The Commission may “pierce the corporate veil” and hold one entity or individual liable for
the acts or omissions of a different, related entity when: (1) there is a common identity of officers,
directors or shareholders; (2) there is common control between the entities; and (3) it is necessary to
preserve the integrity of the Communications Act and to prevent the entities from defeating the purpose
and provisions of statutory provisions.106 In Capital Telephone Co. v. FCC, for example, the United
States Court of Appeals for the D.C. Circuit upheld the Commission’s decision to pierce the corporate
veil of an applicant for a paging frequency license after concluding that (a) the applicant was wholly-
owned and controlled by another applicant for a paging frequency in the same area at a different location
and (b) “[i]t would do violence to the statutory command to grant both desirable frequencies to a single
commonly controlled enterprise having only one real owner.”107
30. Here, Telseven appears to be the corporate vehicle for the activities of just one person, Mr.
Patrick B. Hines, a/k/a P. Brian Hines.108 Mr. Hines is the sole officer and director of Telseven, and as
such has exercised complete control over Telseven.109 Mr. Hines is also a beneficiary, and likely the sole
beneficiary, of the Patrick Hines Revocable Trust, which owns 100 percent of Telseven.110 Indeed, Mr.
Hines has been identified in official Commission filings as holding 100 percent of Telseven’s equity,
either directly or indirectly.111 Further, in a proceeding before the California Public Utilities Commission,
Telseven acknowledged that it is wholly-owned by the Patrick Hines Revocable Trust and confirmed that
it “is not operated by any other entity . . . not controlled by any other entity . . . [and] is not managed by
any other entity.”112 Thus, it appears that Mr. Hines is the sole owner of Telseven. Telseven also


106 See APPC Service, Inc., Data Net Systems, LLC, Davel Communications, Inc., Jaroth, Inc. D/B/A Pacific
Telemanagement Services, and Intera Communications Corp., (Complainants) v. NetworkIP, LLC, and Network
Enhanced Telecom, LLP, (Defendants)
, Memorandum Opinion and Order, 22 FCC Rcd 4286, 4307, para. 47 (2007)
(citations omitted).
107 Capital Telephone Co. v. FCC, 498 F.2d 734 at 737 (D.C. Cir. 1974) (Capital Telephone); see Mansfield Journal
Co. (FM) v. FCC
, 180 F.2d 28, 37 (D.C. Cir. 1950) (piercing corporate veil where one family owned all of the stock
in both entities and the owners took active part in the control and formulations of both entities).
108 See Cal. Pub. Util. Comm’n, Hearing Transcript-Testimony of Patrick B. Hines, Case No. I.10-21-010 at 226-27,
(Nov. 16, 2011) (When asked by the administrative law judge to state his name for the record, Mr. Hines responded
“Patrick Hines, Patrick Brian Hines, H-i-n-e-s”); see also Cal. Pub. Util. Comm’n, Consumer Protection & Safety
Div., Response of Consumer Protection & Safety Division to Respondent Patrick Hines’ Motion to Stay or Dismiss
for Lack of Jurisdiction at 11 (May 4, 2012) (noting that Patrick B. Hines and P. Brian Hines are the same person,
and that Mr. Hines is using the “P. Brian Hines” presentation of his name for purposes of the Bankruptcy Court
litigation).
109 See Telseven Sept. 22 Letter at Response to Question 3.
110 See Calif. Pub. Utilities Comm’n, Case. No. I.10-12-010, Evidentiary Hearing Transcript at 302; Statement of
Financial Affairs,
In re: Telseven, LLC, U.S. Bankr. Ct., Mid. Dist. Fla., Jacksonville Div., Case No. 3:12-bk-
02682-PMG, Item 20 “Current Partners, Officers, Directors, and Shareholders” (filed May 4, 2012); see also
Corporate Ownership Statement (Rule 7008.1)
, In re: Telseven, LLC, U.S. Bankr. Ct., Middle Dist. Fla.
(Jacksonville Div.), Case No. 3:12-bk-02682-PMG at Item 20 “Current Partners, Officers, Directors, and
Shareholders” (filed May 4, 2012).
111 See International Section 214 Application of Telseven, LLC, FCC File Number ITC2142004020900047,
Attachment 2, granted Dec. 1, 2005, DA 05-3129, Report No. TEL-00970.
112 See Telseven, LLC and California Calling 10, LLC, Response to Inquiry 19 of the Feb. 19, 2009 Data Request
from Calif. Pub. Util. Comm’n, (Mar. 20, 2009), incorporated as part of documents assembled in re: Calf. Pub. Util.
Comm’n, Order Instituting Investigation on the Commission’s own motion into the operations, practices, and
(continued …)
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identified Mr. Hines as its president in its company registration information provided to the Commission
through the Commission Registration System (CORES).113 On January 5, 2004, Mr. Hines, acting in his
capacity as the president of Telseven, executed the Company’s “Articles of Amendment of
Organization.”114

31. As in Capital Telephone Co, it is necessary here to look beyond the Telseven corporate
name and take “cognizance of the identity of ownership and control” between Telseven and Patrick Hines
in order to implement core statutory directives and our implementing rules.115 Specifically, Section
254(d) of the Act mandates that “[e]very telecommunications carrier that provides interstate
telecommunications services shall contribute, on an equitable and nondiscriminatory basis” to the USF.116
Similarly, Section 251(e)(2) of the Act requires that all telecommunications carriers shall bear
telecommunications numbering and number portability costs on a competitively neutral basis.117 Finally,
Section 503(b)(1) of the Act specifies that “[a]ny person who is determined by the Commission . . . to
have willfully or repeatedly failed to comply with any of the provisions of [the] Act or [Commission]
rule . . . shall be liable . . . for a forfeiture penalty.”118 In these circumstances, we are entitled to look
through Telseven’s corporate structure to prevent Mr. Hines from using a corporate entity to circumvent
these statutory directives and our rules implementing them. Because Mr. Hines apparently solely owns,
controls, and manages Telseven, we find it consistent with our precedent to hold Mr. Hines personally
liable for the actions of Telseven. Accordingly, for purposes of this NAL, the term Telseven includes
Patrick Hines personally and all obligations under this NAL therefore also extend to Mr. Hines.

IV.

CONCLUSION

32. In light of the seriousness, duration, and scope of the apparent violations, we propose
forfeitures totaling one million, seven hundred fifty-eight thousand, four hundred sixty-five dollars
$1,758,465) against Telseven,119 consisting of one million, five hundred ninety-eight thousand, four
hundred sixty-five dollars ($1,598,465) for failure to make full and timely USF contributions; one
hundred thousand dollars ($100,000) for failure to file accurate Quarterly Telecommunications Reporting
Worksheets; ten thousand dollars ($10,000) for failure to make full and timely NANP contributions; thirty
(Continued from previous page)


conduct of Telseven, LLC, Calling 10, LLC dba California Calling 10, (U-7015-C), and Patrick Hines, an
individual, to determine whether Telseven, Calling 10, and Patrick Hines have violated the laws, rules and
regulations of this State in the provision of directory assistance services to California consumers, Case No. I.10-12-
010, Document No. PUC0226 at para. 3 (filed Dec. 16, 2010).
113 See FCC Registration system –Telseven Profile, available at https://fjallfoss.fcc.gov/coresWeb/serch
Detail.do?frn=0009834466 (last visited May 15, 2012).
114 See Telseven Sept. 22 Letter at Response to Question 1, Exhibit A: “Telseven Articles of Organization.”
115 Capital Telephone, 498 F.2d at 738.
116 47 U.S.C. § 254(d).
117 Id. § 251(e)(2); see also id. § 159(a) (requiring that the Commission collect regulatory fees to recover the costs of
its regulatory activities).
118 47 U.S.C. § 503(b)(1).
119 Telseven continues to have unpaid outstanding balances due to USAC, the LNP and NANP Administrators, and
the Commission. We note that payment of the forfeitures proposed in this NAL will not absolve Telseven of its
obligations to pay its delinquent balances. As discussed above in paragraph 2, debt collection procedures may
include further administrative efforts both by the Commission and by the United States Treasury or, as appropriate,
referral of the delinquent debt to the Department of Justice for enforced collection action. 47 C.F.R. § 1.1917.
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thousand dollars ($30,000) for failure to make full and timely LNP contributions; and twenty thousand
dollars ($20,000) for failure to make full and timely regulatory fee payments to the Commission.
33. We caution that additional violations of the Act or the Commission’s rules could subject
Telseven and its principal to further enforcement action. Such action could take the form of higher
monetary forfeitures, disqualification of Telseven’s principals, including Mr. Hines, from providing any
interstate common carrier service without the prior consent of the Commission, and/or revocation of
Telseven’s and Mr. Hines’s authority to operate any business that is subject to the Commission’s
regulatory jurisdiction under the Act.

V.

ORDERING CLAUSES

34.

ACCORDINGLY, IT IS ORDERED

that, pursuant to Section 503(b) of the Act,120 and
Section 1.80 of the Commission’s rules,121 Telseven, LLC is hereby

NOTIFIED of its APPARENT
LIABILITY FOR A FORFEITURE

in the amount of of one million, seven hundred forty-five
thousand, three hundred ninety-four dollars ($1,745,394) for willfully or repeatedly violating the Act and
the Commission’s rules.
35.

IT IS FURTHER ORDERED

that, pursuant to Section 1.80 of the Commission’s rules,
within thirty (30) calendar days of the release date of this Notice of Apparent Liability for Forfeiture,
Telseven

SHALL PAY

the full amount of the proposed forfeitures or

SHALL FILE

a written statement
seeking reduction or cancellation of the proposed forfeitures.
36. 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/Account Number and
FRN referenced above. Payments by check or money order may be mailed to Federal Communications
Commission, P.O. Box 979088, St. Louis, MO 63197-9000. Payments 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
TREAS/NYC, and account number 27000001. An FCC Form 159 (Remittance Advice) must be
submitted with any payments. 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).
Telseven will also send electronic notification within forty-eight (48) hours of the date said payment is
made to Terry.Cavanaugh@fcc.gov and Robert.Krinsky@fcc.gov.
37. 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.122 The written statement must be mailed to
Theresa Z. Cavanaugh, 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/Account number referenced above. The written statement should also be e-mailed to
Theresa Z. Cavanaugh at Terry.Cavanaugh@fcc.gov, Pamela S. Kane at Pamela.Kane@fcc.gov, and
Robert B. Krinsky at Robert.Krinsky@fcc.gov.


120 47 U.S.C. § 503(b).
121 47 C.F.R. § 1.80.
122 See 47 C.F.R. §§ 1.80(f)(3), 1.16.
16

Federal Communications Commission

FCC 12-62

38. 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.
39. 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. 20554.123 For
answers to questions regarding payment procedures, please contact the Financial Operations Group Help
Desk at 1-877-480-3201 or E-mail: ARINQUIRIES@fcc.gov.
40.

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 each of the following: Telseven,
LLC, 200 Executive Way, Ponte Vedra Beach, Florida 32082; Doreen Abbott, P.O. Box 56257,
Jacksonville, Florida 32241-6257; Jacob A. Brown, Esq., Akerman Senterfitt, LLP, 50 N. Laura Street,
Suite 3100, Jacksonville, Florida 32202; Jason B. Burnett, Esq., GrayRobinson, P.A., 50 N. Laura Street,
Suite 1100, Jacksonville, Florida 32202; and Patrick B. Hines, 350 Ponte Vedra Boulevard, Ponte Vedra
Beach, Florida 32082-1812.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary


123 See 47 C.F.R. § 1.1914.
17

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