FCC Cancels Notice of Apparent Liability for Forfeiture Against AT&T

On Tuesday, BellSouth Telecommunications, LLC, doing business as AT&T Southeast (AT&T) escaped forfeiture penalties assessed by the Federal Communications Commission (FCC) because the action was ruled to be untimely under the applicable statute of limitations. The FCC’s order explained that it failed to issue a Notice of Apparent Liability for Forfeiture (NAL) within one year of AT&T’s alleged violations as required by provisions of the Communications Act of 1934, thus, it was forced to cancel the NAL and proposed forfeiture against AT&T.

The allegations began in 2016, when the FCC accused AT&T of failing to offer two Florida school districts the lowest corresponding price (LCP) for telecommunications services it provided under the E-Rate program. The E-Rate program enables eligible education institutions like schools and libraries to receive discounted telecommunication and internet services. An FCC rule prohibits service providers from charging more than the LCP established for E-Rate program participants and empowers the FCC to assess forfeiture penalties to willful or repeat violators.

One caveat is that the Commission may not pursue enforcement actions for violations that occur more than one year prior to the date of the NAL’s issuance. The Commission issued an NAL against AT&T for its purported violations of the LCP rule on July 27, 2016 with a proposed forfeiture of $106,425. One month later, AT&T responded, arguing that the allegations should be dismissed as time-barred. It pointed out that the last supposed overcharge occurred in Dixie County on July 1, 2014, and in Orange County on June 1, 2015. Thus, the latest date for a timely NAL to issue was June 1, 2016.

The FCC agreed with AT&T, in part because each overcharge was a standalone event, not a “continuing violation,” as each was “perfected when each allegedly non-compliant invoice was issued.” Thus, the July 26, 2016 NAL was untimely and FCC dismissed the action.

In response to the decision, Commissioner Rosenworcel dissented and Commissioner Starks concurred. Both issued a statement. Rosenworcel argued that while he respected the decision, the Commission’s “prior approach recognized that some violations of our rules should be treated as continuing until they are remedied.” He reasoned, “[t]his could be a more transparent point for action than the one we adopt here involving counting from when schools are billed by a provider. The agency may not become aware of billing until well after an infraction has taken place and as a result the approach in today’s decision could make enforcement of our rules more difficult.”

Commissioner Starks voiced his concern about effective enforcement of the E-Rate program, stating, “I do not disagree with today’s outcome, but I want to emphasize how much more needs to be done to give the lowest corresponding price rule the teeth it needs.” He remarked that, “[g]oing forward, we may need to adjust our rules or enforcement practices to ensure we actually punish and deter violations of the lowest corresponding price rule.”