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Matrix Telecom To Pay $875K To Resolve Rural Call Investigation

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Released: June 4, 2014
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Federal Communications Commission

DA 14-679

Before the

Federal Communications Commission

Washington, DC 20554

In the Matter of

)

File No.: EB-IHD-13-00011204

1

)

MATRIX TELECOM, INC.

)

Acct. No.: 201432080032

)

)

FRN: 0004333068

ORDER

Adopted: June 4, 2014

Released: June 4, 2014

By the Acting Chief, Enforcement Bureau:

1.

In this Order and Consent Decree, we settle allegations that Matrix Telecom, Inc. (Matrix

or Company) violated federal laws by failing to complete long-distance calls to rural areas on a just,

reasonable, and non-discriminatory basis. These laws operate to ensure that long-distance calls to rural

destinations, whether business or residential in nature, are completed as dialed, without undue delay, and

with all attendant information (e.g., Caller ID) intact, just as such calls are completed to non-rural areas of

the nation. In this case, the Commission’s Rural Call Completion Task Force received and investigated

information that the Company failed to ensure adequate long-distance call completion to rural areas for its

retail and wholesale customers. For purposes of the settlement, Matrix will pay $875,000 to resolve the

allegations and implement a three-year compliance plan.

2.

In this Order, we adopt the Consent Decree entered into between the Enforcement Bureau

(Bureau) and Matrix. The Consent Decree resolves and terminates the Bureau’s investigation into

whether Matrix violated Sections 201(b) and 202(a) of the Communications Act of 1934, as amended

(Act),2 with respect to its call completion practices to rural areas, including its use and oversight of

intermediate providers (entities used by Matrix to route calls to specified destinations) for call completion

purposes.

3.

A copy of the Consent Decree negotiated by the Bureau and Matrix is attached to this

Order and is incorporated herein by reference.

4.

In the absence of material new evidence relating to this matter, we conclude that our

investigation raises no substantial or material questions of fact as to whether the Company possesses the

basic qualifications, including those related to character, to hold or obtain any Commission license or

authorization.

5.

After reviewing the terms of the Consent Decree and evaluating the facts before us, we

find that the public interest will be served by adopting the Consent Decree and terminating the

investigation.

1 This investigation was initiated under File No. EB-13-IH-0282 and subsequently assigned File No. EB-IHD-13-

00011204.

2 See 47 U.S.C. §§ 201(b), 202(a); see also Developing an Unified Intercarrier Compensation Regime, Declaratory

Ruling, 27 FCC Rcd 1351 (Wireline Comp. Bur. 2012) (Rural Call Completion Declaratory Ruling).

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DA 14-679

6.

Accordingly, IT IS ORDERED that, pursuant to Sections 4(i), 4(j), and 503(b) of the

Act,3 and Sections 0.111 and 0.311 of the Rules,4 the Consent Decree attached to this Order IS

ADOPTED.

7.

IT IS FURTHER ORDERED that the above-captioned investigation IS

TERMINATED.

8.

IT IS FURTHER ORDERED that a copy of this Order and Consent Decree shall be

sent by both First Class U.S. Mail and Certified Mail to Bob Beaty, CEO, Matrix Telecom, Inc., 433 E.

Las Colinas Boulevard, Irving, Texas 75039.

FEDERAL COMMUNICATIONS COMMISSION

Travis LeBlanc

Acting Chief, Enforcement Bureau

3 See 47 U.S.C. §§ 154(i), 154(j), 503(b).

4 See 47 C.F.R. §§ 0.111, 0.311.

2

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Federal Communications Commission

DA 14-679

Before the

Federal Communications Commission

Washington, DC 20554

In the Matter of

)

File No.: EB-IHD-13-00011204

1

)

MATRIX TELECOM, INC.

)

Acct. No.: 201432080032

)

)

FRN: 0004333068

CONSENT DECREE

1.

The Enforcement Bureau (Bureau) of the Federal Communications Commission and

Matrix Telecom, Inc. (Matrix or Company), by their authorized representatives, hereby enter into this

Consent Decree for the purpose of terminating the Bureau’s investigation into possible violations of

Sections 201(b) and 202(a) of the Communications Act of 1934, as amended (Act),2 with respect to

Matrix’s call completion practices to rural areas, including its use and oversight of Intermediate

Providers.

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 the Company is

subject by virtue of its business activities.

(f)

“Compliance Plan” means the compliance obligations, program, and procedures

described in this Consent Decree at paragraph 17.

(g) “Covered Employees” means all employees and agents of the Company who

supervise, oversee, or manage the performance of, duties that relate to the

Company’s responsibilities under this Consent Decree, Sections 201(b) and 202(a)

of the Act, as interpreted in the Rural Call Completion Declaratory Ruling, and the

rules adopted in the Rural Call Completion Order.3

1 This investigation was initiated under File No. EB-13-IH-0282 and subsequently assigned File No. EB-IHD-13-

00011204.

2 See 47 U.S.C. §§ 201(b), 202(a); see also Developing an Unified Intercarrier Compensation Regime, Declaratory

Ruling, 27 FCC Rcd 1351 (Wireline Comp. Bur. 2012) (Rural Call Completion Declaratory Ruling).

3 Rural Call Completion, Report and Order and Further Notice of Proposed Rulemaking, 28 FCC Rcd 16154 (2013)

(Rural Call Completion Order).

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DA 14-679

(h) “Effective Date” means the date on which the Bureau releases the Adopting Order.

(i)

“Intermediate Provider” has the meaning provided in Section 64.1600(f) of the

Rules,4 but excludes a tandem provider to which the terminating carrier subtends or

a carrier to which the terminating carrier requires an indirectly interconnecting

carrier to deliver traffic.

(j)

“Investigation” means the investigation commenced by the Bureau’s March 21, 2013

Letter of Inquiry (LOI)5 regarding Matrix’s possible violations of Sections 201(b)

and 202(a) of the Act.

(k)

“Matrix” or “Company” means Matrix Telecom, Inc., including all of its subsidiaries,

affiliates, predecessors-in-interest, and successors-in-interest.

(l)

“Operating Procedures” means the standard, internal operating procedures and

compliance policies established by the Company to implement the Compliance Plan.

(m) “Parties” means Matrix 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.

II.

BACKGROUND

3.

Section 201(b) of the Act provides, “[a]ll charges, practices, classifications, and

regulations for and in connection with [interstate and foreign] communication service, shall be just and

reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is

hereby declared to be unlawful.”6 Section 202(a) states, “[i]t shall be unlawful for any common carrier to

make any unjust or unreasonable discrimination in charges, practices, classifications, regulations,

facilities, or services for or in connection with like communication service, directly or indirectly, by any

means or device, . . . or to subject any particular person, class of persons, or locality to any undue or

unreasonable prejudice or disadvantage.”7

4.

The Commission has emphasized that “it is vital that our Nation maintains a

communications network that offers reliable and resilient service.”8 The Commission has also recognized

that “permitting blocking or the refusal to deliver voice telephone traffic, whether as a means of ‘self-

help’ to address perceived unreasonable intercarrier compensation charges or otherwise, risks

‘degradation of the country’s telecommunications network.’”9 To prevent that result, the Commission has

4 47 C.F.R. § 64.1600(f).

5 Letter from Theresa Cavanaugh, Chief, Investigations & Hearings Division, FCC Enforcement Bureau, to Jerry

Ou, President and CEO, Matrix Telecom, Inc. (Mar. 21, 2013) (on file in EB-IHD-13-00011204).

6 47 U.S.C. § 201(b).

7 Id. § 202(a).

8 Reliability and Continuity of Communications Networks, Including Broadband Technologies, Notice of Inquiry, 26

FCC Rcd 5614, 5616, para. 5 (2011); see also Establishing Just and Reasonable Rates for Local Exchange Carriers,

Declaratory Ruling and Order, 22 FCC Rcd 11629, para. 1 (Wireline Comp. Bur. 2007) (explaining that “the

ubiquity and reliability of the nation’s telecommunications network is of paramount importance to the explicit goals

of the Communications Act”) (Call Blocking Declaratory Ruling).

9 Connect America Fund, Report and Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17663,

18029, para. 973 (2011), pets. for review pending sub nom. In re: FCC 11-161, No. 11-9900 (10th Cir. filed Dec.

2011) (quoting Access Charge Reform, Seventh Report and Order and Further Notice of Proposed Rulemaking, 16

FCC Rcd 9923, 9933, para. 24 (2001)) (footnotes omitted).

2

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DA 14-679

consistently held that telecommunications carriers, including interexchange carriers, generally may not

“‘block, choke, reduce or restrict traffic in any way.’”10

5.

In June 2011, a coalition of trade associations representing rural rate-of-return incumbent

local exchange carriers (LECs) sent a letter to the Bureau concerning “a nationwide and industry-wide

epidemic” of calls to rural LEC service areas failing to complete or having poor call quality.11 In

September 2011, the Commission announced that it had created a Rural Call Completion Task Force “to

investigate and address the growing problem of calls to rural customers that are being delayed or that fail

to connect.”12

6.

On February 6, 2012, the Commission’s Wireline Competition Bureau (WCB) clarified

in the Rural Call Completion Declaratory Ruling that “it is an unjust and unreasonable practice in

violation of section 201 of the Act for a carrier that knows or should know that it is providing degraded

service to certain areas to fail to correct the problem or to fail to ensure that intermediate providers, least-

cost routers, or other entities acting for or employed by the carrier are performing adequately.”13 Thus,

for example, “if carriers continue to hand off calls to agents, intermediate providers, or others that a

carrier knows are not completing a reasonable percentage of calls or are otherwise restricting traffic . . .,

that is an unjust or unreasonable practice prohibited by section 201 of the Act.”14 WCB further clarified

that “adopting or perpetuating routing practices that result in lower quality service to rural or high-cost

localities than like service to urban or lower cost localities (including other lower cost rural areas) may, in

the absence of a persuasive explanation, constitute unjust or unreasonable discrimination in practices,

facilities, or services and violate section 202 of the Act.”15

7.

Matrix offers retail telecommunications services to retail and business customers

throughout the United States, and it offers wholesale service to other service providers, including long-

distance providers. Calls delivered to Matrix by its wholesale customers account for a substantial

majority of the interstate long-distance traffic carried by the Company.

8.

The Bureau initiated an investigation of Matrix (and companies Matrix had acquired,

including Excel Telecommunications and Vartec Telecom) based on allegations and information

concerning the Company’s performance in completing long-distance calls to rural areas. The Bureau

represents that this material included allegations and information from consumers and from rural carriers,

responses by long-distance providers to complaints served by the Commission’s Rural Call Completion

Task Force, and performance data from carriers that used Matrix as an Intermediate Provider.16 On

10 Id. at 17903, para. 734 (quoting Call Blocking Declaratory Ruling, 22 FCC Rcd at 11631, para. 6). The

Commission has permitted call blocking “only under rare and limited circumstances.” See Call Blocking

Declaratory Ruling, 22 FCC Rcd at 11631, para. 6 n.20.

11 Letter from Michael Romano, National Telecommunications Cooperative Association, et al., to Theresa Z.

Cavanaugh, Acting Chief, Investigations & Hearings Division, FCC Enforcement Bureau, and Margaret Dailey,

Attorney Advisor, Investigations & Hearings Division, FCC Enforcement Bureau at 3 (June 13, 2011).

12 FCC Launches Rural Call Completion Task Force to Address Call Routing and Termination Problems in Rural

America, News Release, 2011 WL 4454097 (Sept. 26, 2011), available at https://www.fcc.gov/document/fcc-

launches-rural-call-completion-task-force-sets-oct-18-workshop. The Task Force conducted a workshop on rural

call completion issues on October 18, 2011. See https://www.fcc.gov/events/rural-call-completion-workshop.

13 See Rural Call Completion Declaratory Ruling, 27 FCC Rcd at 1355–56, para. 12 (footnote omitted).

14 Id.

15 Id. at 1357–58, para. 14.

16 The Bureau forwarded one consumer inquiry regarding rural call completion to the Company, and the Company

responded to that inquiry.

See Letter from James Lister, Birch Horton Bittner & Cherot, to Marlene Dortch,

(continued….)

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March 21, 2013, the Bureau issued an LOI to Matrix seeking information about its performance, and the

performance of its Intermediate Providers, in completing long-distance calls.17

9.

Pursuant to an agreement with the Bureau,18 on May 20, 2013, Matrix submitted narrative

responses to most of the questions in the LOI and produced relevant documents.19 On June 20, 2013,

Matrix responded to the remaining questions in the LOI and produced call answer data for specified one

week samples covering six months between 2012 and 2013.20 Matrix provided multiple supplemental

responses to the LOI and additional material from July through November 2013, and it cooperated fully

with the Investigation.21

10.

In the months immediately following its receipt of the LOI, Matrix significantly reduced

the number of Intermediate Providers it used to deliver long-distance calls to rural areas. As a result of

those routing changes, Matrix’s call completion performance to rural areas substantially improved. Also,

after it received the LOI, Matrix made significant investments to upgrade its network and related

operations to improve rural call completion performance.

11.

On November 8, 2013, the Commission released the Rural Call Completion Order,

which adopted rules requiring covered providers to record, retain, and report to the Commission call

answer rates for long-distance calls.22 The Commission found that “rural call completion problems are

serious and widespread,”23 and that “[t]hese failures have significant and immediate public interest

ramifications, causing rural businesses to lose customers, cutting families off from their relatives in rural

areas, and creating potential for dangerous delays in public safety communications in rural areas.”24 The

new rules require “covered providers”25 to record and retain detailed information about long-distance calls

(Continued from previous page)

Secretary, FCC (filed May 20, 2013 in EB-IHD-13-00011204). The Bureau did not share other allegations and

information with Matrix due to confidentiality concerns.

17 See supra n.5.

18 E-mail from Theodore Marcus, Attorney Advisor, Investigations & Hearings Division, FCC Enforcement Bureau,

to Aurora Ares, Assistant General Counsel, Matrix Telecom, Inc. (Mar. 29, 2013, 13:34 EDT) (on file in EB-IHD-

13-00011204).

19 See Letter from James Lister, Birch Horton Bittner & Cherot, to Marlene Dortch, Secretary, FCC (filed May 20,

2013 in EB-IHD-13-00011204).

20 See Letter from James Lister, Birch Horton Bittner & Cherot, to Marlene Dortch, Secretary, FCC (filed June 20,

2013 in EB-IHD-13-00011204).

21 See Letter from James Lister, Birch Horton Bittner & Cherot, to Marlene Dortch, Secretary, FCC (filed July 11,

2013 in EB-IHD-13-00011204); James Lister, Birch Horton Bittner & Cherot, to Marlene Dortch, Secretary, FCC

(filed Aug. 8, 2013 in EB-IHD-13-00011204); James Lister, Birch Horton Bittner & Cherot, to Marlene Dortch,

Secretary, FCC (filed Aug. 30, 2013 in EB-IHD-13-00011204); James Lister, Birch Horton Bittner & Cherot, to

Marlene Dortch, Secretary, FCC (filed Sept. 10, 2013 in EB-IHD-13-00011204); James Lister, Birch Horton Bittner

& Cherot, to Marlene Dortch, Secretary, FCC (filed Sept. 20, 2013 in EB-IHD-13-00011204); James Lister, Birch

Horton Bittner & Cherot, to Marlene Dortch, Secretary, FCC (filed Nov. 1, 2013 in EB-IHD-13-00011204).

22 See Rural Call Completion Order, 28 FCC Rcd at 16211–14, Appendix A.

23 Id. at 16161, para. 14.

24 Id. at 16155, para. 1.

25 “Covered provider” means a “provider of long-distance voice service that makes the initial long-distance call path

choice for more than 100,000 domestic retail subscriber lines.” Id. at 16165, 16211, para. 20, Appendix A

§ 64.2101(c).

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to customers of incumbent rural LECs,26 as identified by Operating Company Numbers (OCNs).27 The

rules also require covered providers to report to the Commission, on a quarterly basis, answer rates for

long-distance calls delivered to each rural OCN and answer rates for long-distance calls delivered to non-

rural OCNs in the aggregate.28 The information collections required by the Rural Call Completion Order

will go into effect after the Office of Management and Budget approves the information collections and

the Commission publishes a notice in the Federal Register announcing their effective date(s).29

III.

TERMS OF AGREEMENT

12.

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.

13.

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.

14.

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.

15.

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. In consideration for the termination of the Investigation, 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 the 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 the 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 against the Company with respect to the Company’s basic

qualifications, including its character qualifications, to be a Commission licensee or hold Commission

licenses or authorizations.

26 The Commission concluded that “the only call attempts that need to be retained are those to incumbent LECs that

are rural telephone companies” because “rural call completion problems are largely confined to such carriers.” Id. at

16177–78, para. 49; see also 47 U.S.C. § 153(44).

27 An OCN is an alphanumeric code that uniquely identifies providers of local telecommunications service. See

Alliance for Telecom. Industry Solutions, ATIS Telecom Glossary, available at

http://www.atis.org/glossary/definition.aspx?id=8448 (last visited May 13, 2014). The Commission ordered the

National Exchange Carrier Association, Inc. (NECA), which maintains lists of incumbent LEC OCNs, to update

those lists annually. See Rural Call Completion Order, 28 FCC Rcd at 16187–88, para. 73. A list of incumbent

rural LEC OCNs is available at

http://www.neca.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=8874&libID=8894 (last visited May 13,

2014).

28 Rural Call Completion Order, 28 FCC Rcd at 16184, para. 65.

29 Id. at 16207, para. 131.

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16.

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 a 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 the Company’s compliance 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 Sections 201(b) and 202(a) of the Act, as interpreted in the

RuralCall Completion Declaratory Ruling, and the rules adopted in the Rural Call Completion Order

prior to assuming his/her duties.

17.

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 Sections 201(b) and 202(a) of the Act, as

interpreted in the Rural Call Completion Declaratory Ruling, with the rules adopted in the Rural Call

Completion Order,30 and with the terms and conditions of this Consent Decree. With respect to Sections

201(b) and 202(a) of the Act, as interpreted in the Rural Call Completion Declaratory Ruling, and the

rules adopted in the Rural Call Completion Order, 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 shall follow

to help ensure the Company’s compliance with Sections 201(b) and 202(a) of the Act, as

interpreted in the Rural Call Completion Declaratory Ruling, and with the rules adopted

in the Rural Call Completion Order. The Company’s Operating Procedures shall include

internal procedures and policies specifically designed to ensure the Company’s

compliance with Sections 201(b) and 202(a) of the Act, as interpreted in the Rural Call

Completion Declaratory Ruling, and the rules adopted in the Rural Call Completion

Order.

The Company shall also develop a Compliance Checklist that describes the steps

that a Covered Employee must follow to ensure compliance with Sections 201(b) and

202(a) of the Act, as interpreted in the Rural Call Completion Declaratory Ruling, and

the rules adopted in the Rural Call Completion Order.

(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, all of whom shall follow the procedures detailed in the Compliance Manual.

Distribution of the Compliance Manual by e-mail or an e-mail link to an internal intranet

site shall be deemed to comply with the distribution requirement in this paragraph. The

Compliance Manual shall explain Sections 201(b) and 202(a) of the Act, as interpreted in

the Rural Call Completion Declaratory Ruling, and the rules adopted in the Rural Call

Completion Order, and set forth the Operating Procedures that Covered Employees shall

follow to help ensure the Company’s compliance with Sections 201(b) and 202(a) of the

Act, as interpreted in the Rural Call Completion Declaratory Ruling, and the rules

adopted in the Rural Call Completion Order. At least once annually, the Company shall

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. The Compliance Manual shall

require Covered Employees to contact the Company’s Compliance Officer and, if

30 The Company shall have no obligation to comply with the information collections required by the Rural Call

Completion Order until they become effective. See supra n.29 and accompanying text.

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appropriate, regulatory legal counsel with any questions or concerns that arise with

respect to the Company’s obligations under Sections 201(b) and 202(a) of the Act, as

interpreted in the Rural Call Completion Declaratory Ruling, and the rules adopted in the

Rural Call Completion Order.

(c)

Compliance Training Program. The Company shall establish and implement a

Compliance Training Program on compliance with Sections 201(b) and 202(a) of the Act,

as interpreted in the Rural Call Completion Declaratory Ruling, the rules adopted in the

Rural Call Completion Order, 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 rules adopted in the Rural Call Completion Order

under paragraph 18 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 ninety (90) calendar days after the

Effective Date.

Any person who becomes a Covered Employee at any time thereafter

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. At least once annually, the Company shall review and revise the Compliance

Training Program as necessary to ensure that it remains current and complete and to

enhance its effectiveness.

(d)

Compliance With the Rural Call Completion Order. Matrix agrees that while this

Consent Decree is in effect, the Company shall be treated as a “covered provider” for

purposes of the rules adopted in the Rural Call Completion Order, regardless of whether

the Company makes the initial long-distance call path choice for more than 100,000

domestic retail subscriber lines.

(e)

Testing. The Company will cooperate with the FCC and with rural LECs to undertake

commercially reasonable steps to establish test points and uniform test criteria to evaluate

rural call completion when complaints, or data collected in accordance with the Rural

Call Completion Order, indicate potential rural call completion problems.

(f)

Resolution of Call Completion Problems. The Company will notify any Intermediate

Provider it has reason to believe is causing call completion problems, and it will work

cooperatively with each such Intermediate Provider to analyze and resolve such problems

as soon as practicable. If complaints, testing, or data collected in accordance with the

Rural Call Completion Order show that an Intermediate Provider has sustained

inadequate performance on a particular route, as reasonably determined by the Company,

the Company will cease using the Intermediate Provider on that route, provided that other

Intermediate Providers offer commercially reasonable options for reaching that location.

18.

Reporting Noncompliance. The Company shall report any noncompliance with the

rules adopted in the Rural Call Completion Order or with the terms and conditions of this Consent Decree

within fifteen (15) calendar days after the 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 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 & Hearings

Division, Enforcement Bureau, Federal Communications Commission, Room 4-C330, 445 12th Street,

SW, Washington, DC 20554, with copies submitted electronically to Theresa Z. Cavanaugh at

Terry.Cavanaugh@fcc.gov and Theodore C. Marcus at Theodore.Marcus@fcc.gov.

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19.

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, with Sections 201(b) and 202(a) of the Act, as interpreted in the Rural Call

Completion Declaratory Ruling, and with the rules adopted in the Rural Call Completion

Order. 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 18 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.31

(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, SW, Washington, DC 20554, with copies submitted electronically to

Theresa Z. Cavanaugh at Terry.Cavanaugh@fcc.gov and Theodore C. Marcus at

Theodore.Marcus@fcc.gov.

31 See 47 C.F.R. § 1.16.

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20.

Termination Date.

Unless stated otherwise, the requirements set forth in paragraphs 16

through 19 of this Consent Decree shall expire thirty-six (36) months after the Effective Date.

21.

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 Act32 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

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.

22.

Voluntary Contribution. The Company agrees that it will make a voluntary

contribution to the United States Treasury in the amount of eight hundred seventy-five thousand dollars

($875,000) (Voluntary Contribution). Such Voluntary Contribution shall be made in seven installments

(each an Installment Payment) in the amount of one hundred twenty-five thousand dollars ($125,000.00)

apiece. The first Installment Payment is due on June 16, 2014. Thereafter, Installment Payments are due

and payable on the following dates: January 5, 2015, July 1, 2015, January 4, 2016, July 1, 2016, January

6, 2017 and a final Installment Payment on July 3, 2017 (Maturity Date). Matrix 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).33

Upon an Event of

Default (as defined below), all procedures for collection as permitted by law may, at the Commission’s

discretion, be initiated. In addition, Matrix 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. Matrix

shall also send electronic notification of payment to Theresa Z. Cavanaugh at Terry.Cavanaugh@fcc.gov

and Theodore C. Marcus at Theodore.Marcus@fcc.gov on the date each Installment Payment is made.

23.

Installment Payments must be made by check or similar instrument, wire transfer, or

credit card, and must include the Account Number and FRN referenced in the caption to the Adopting

Order. Regardless of the form of payment, a completed FCC Form 159 (Remittance Advice) must be

submitted.34 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 you should follow based on the form of payment you select:

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.

32 47 U.S.C. § 208.

33 See Debt Collection Improvement Act of 1996, Pub. L. No. 104-134, 110 Stat. 1321, 1358 (Apr. 26, 1996).

34 An FCC Form 159 and detailed instructions for completing the form may be obtained at

https://www.fcc.gov/Forms/Form159/159.pdf.

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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 –

Government Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO

63101.

Questions regarding payment procedure should be addressed to the Financial Operations Group Help

Desk by phone, 1-877-480-3201, or by e-mail, ARINQUIRIES@fcc.gov.

24.

Event of Default. Matrix 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 dates specified in

paragraph 22 of this Consent Decree.

25.

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 Matrix.

26.

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 the 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 Act35 relating to the matters addressed in

this Consent Decree.

27.

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.

28.

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.

29.

Successors and Assigns. The Company agrees that the provisions of this Consent

Decree shall be binding on its successors, assigns, and transferees.

30.

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 and shall not be construed as either an adjudication on

the merits or a factual or legal finding or determination regarding any compliance or noncompliance with

the requirements of the Communications Laws. The Parties also agree that this Consent Decree does not

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

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constitute an admission of liability by the Company or a concession by the Commission that its

Investigation was not well-founded.

31.

Modifications. This Consent Decree cannot be modified without the advance written

consent of both Parties.

32.

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.

33.

Authorized Representative. Each Party represents and warrants to the other Parties that

it has full power and authority to enter into this Consent Decree. Each person signing this Consent

Decree on behalf of a Party hereby represents that he or she is fully authorized by the Party to execute this

Consent Decree and to bind the Party to its terms and conditions.

34.

Counterparts. This Consent Decree may be signed in counterparts and may be delivered

by facsimile or electronic delivery. 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.

________________________________

Travis LeBlanc

Acting Chief

Enforcement Bureau

______________________________

Date

________________________________

Bob Beaty

President & CEO

Matrix Telecom, Inc.

______________________________

Date

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