The FCC proposed to fine a provider of international and domestic telecommunications services $392,930 for (1) charging excessive universal service fees to its customers, (2) unauthorized transfers of control, and (3) failing to timely pay regulatory fees in full.

Section 54.712(a) of the FCC’s Rules prohibits Universal Service Fund (“USF”) contributors from charging customers excessive USF fees. Section 214 of the Communications Act and Sections 63.03 and 63.24 of the FCC’s Rules require that approval be obtained from the FCC prior to the transfer of control of international and domestic telecommunications service authorizations. In addition, Sections 1.1154 and 1.1157(b)(1) of the Rules require timely payment of regulatory fees to the FCC for relevant telecommunications services.

The provider was referred to the FCC for potential enforcement action by the Universal Service Administrative Company in June 2015, after it failed to respond to questions concerning collection of USF surcharges. In November 2015, the FCC issued a Letter of Inquiry to the provider to investigate whether it had violated the Communications Act and FCC’s Rules.

After reviewing sample invoices and other information from the provider, the FCC determined that, in 2015, the provider billed at least three customers USF surcharges for international service even though the company was not assessed, and did not pay, USF charges on international revenue at that time.

The FCC also found that the provider had transferred its authorizations to provide both international and domestic services two times without FCC approval (for a total of four transfers). According to the FCC, the provider had a sole shareholder from 2002 to 2010; but in 2010, 51 percent of the company’s shares were transferred to the original shareholder’s ex-wife in compliance with a divorce decree. In September 2015, the majority stock interest reverted back to the original shareholder. No requests for approval of any of these transfers were submitted to the FCC.

In addition, the provider failed to pay regulatory fees for fiscal years 2008, 2011, and 2016. In November 2016, the provider entered into a 36-month payment plan with the U.S. Treasury Department, and made its first payment. However, the unpaid fees and late penalties totaled $80,309.88 as of October 2016.

The FCC found the provider’s violations to be “a serious dereliction of its responsibilities,” warranting a “significant” fine. The FCC proposed imposing the base fine for excessive USF charges of $40,000 for each instance, totaling $120,000, and $32,000 for the unauthorized transfers of control (applying the base $8,000 fine to each of the four transfers). As punishment for the provider’s repeated failure to pay regulatory fees (and to deter other telecommunications licenses from engaging in similar violations), the FCC assessed “treble the harm [the provider] has caused to the Commission’s regulatory fee program,” for a proposed fine of $240,930 for the delinquent regulatory fees, bringing the total proposed fine to $392,930.