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Could the FCC Enforcement Bureau be ramping up for Letters of Inquiry for 499-A Non-Filers?

November 30, 2009 Washington DC – The Federal Communication Commission.
In the wake of the Omnibus Notice of Apparent Liability of 2008-2009 for CPNI violations against small-sized carrier, there are rumblings that the next major enforcement actions will be against non-filers and contributors of the 499-A for 2008 and 2009.   Comment on confirmation or dispel.

UPDATE February 19, 2010 – Washington DC  

 The FCC’s Office of Inspector General (OIG) seems to be the source of some recent inquiries that may have a potential impact on telecommunication and VoIP service providers that have failed to report on the FCC Form 499-A. Initial reports believed the inquiries from the FCC’s Enforcement Bureau, the inquires were in fact originating from the FCC’s Office of Inspector General.    

Beginning in 2009, the Inspector General undertook a program called the USF Contributors Survey Project to vet out telecommunication companies that are not, or have not, filed the Telecommunications Reporting Worksheet (FCC Form 499-A) during other ongoing contributor audit field work. The FCC’ Office of Inspector General has apparently contracted an independent accounting/audit firm to find federal USF non-filers by comparing listings of active telecommunication companies registered from each state Public Utility Commissions (“PUC”) to USAC’s main 499-A database. The audit initially focused on active registered telecommunication companies from state PUCs in Maryland, Delaware, Virginia, Pennsylvania, West Virginia and New Jersey.  Out of those six initial states, the accounting/audit firm identified about 50 probable non-filing telecommunication companies for follow-up.  Further research on telecom listings gathered from a broad range of state PUC websites identified over 1,000 potential non-filing telecommunication companies in 32 states.  These results have spurred inquiries by the OIG. 

In September 2009, the OIG issued 49 letters to potential non-filers asking for the companies’ position on whether they were required to file FCC Form 499-A or if they claimed an exemption to the filing requirement – and if so to provide a written explanation and documentation to support their exemption.  Two telecommunication companies responded that they would begin filing the 499-A.  As of February 19, 2010, the OIG effort in the USF Contributors Survey Project is ongoing.

 Under Section 2 of the Inspector General Act, the OIG has independent discretionary authority to conduct audits and investigations related to the FCC’s programs and operations, such as the federal universal service program. This includes contributions to the FCC’s regulatory support mechanisms and USAC. While USAC does itself have authority to conduct audits in Regard to USF and reported revenues on the Telecommunications Reporting Worksheet (FCC Form 499-A), the statutory directive of the OIG is to provide leadership and coordination for the agency (USAC), and to recommend policies designed to promote economy, efficiency and effectiveness and to prevent fraud, waste and abuse in agency programs and operations. The OIG often refers discovered abuses or fraud against the E-Rate Program and of TRS/VRS to the Department of Justice and the U.S. Postal Inspector General for criminal investigation.  

In the case of the USF Contributors Survey Project, the interplay between the OIG (and non-filer information it is now gathering) and the FCC’s Enforcement Bureau has yet to be seen.  Failures to contribute to USF or failure to file the Telecommunications Reporting Worksheet (FCC Form 499-A) are violations of the Communications Act of 1934, as amended and have resulted in forfeitures against carriers and providers.

 Clear from the recent audits and investigations by the OIG is that non-contributors are on the radar of future actions of the FCC.  Those carriers or providers that have failed to consistently file the Telecommunications Reporting Worksheet (FCC Form 499-A) for the last four (4) years are well advised to do so and report any and all back filings and make arrangement for any back USF contributions.  

 As more information becomes available, this post will be updated.

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