Posted February 25, 2015
Pillsbury's communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month's issue includes:
- FCC Issues $3.36 Million Fine to Company and Its CEO for Selling Toll Free Numbers
- Antenna Fencing and Public Inspection File Violations Result in $17,000 Fine
- FCC Reiterates That "Willful Violation" Does Not Require "Intent to Violate the Law"
Hold the Phone: FCC Finds Company and CEO Jointly and Severally Liable for Brokering Toll Free Numbers
The FCC handed down a $3,360,000 fine to a custom connectivity solutions company (the "Company") and its CEO for violations of the FCC's rules regarding toll free number administration. Section 251(e)(1) of the Communications Act mandates that telephone numbers, including toll free numbers, be made "available on an equitable basis." As a general rule, toll free numbers, including "vanity" numbers (e.g., 1-800-BUY-THIS), cannot be transferred, and must be returned to the numbering pool so that they can be made available to others interested in applying for them when the current holder no longer needs them. Section 52.107 of the FCC's Rules specifically prohibits brokering, which is "the selling of a toll free number by a private entity for a fee."
In 2007, the Enforcement Bureau issued a citation to the Company and CEO for warehousing, hoarding, and brokering toll free numbers. The Bureau warned that if the Company or CEO subsequently violated the Act or Rules in any manner described in the 2007 citation, the FCC would impose monetary forfeitures. A few years later, the Bureau received a complaint alleging that in June and July of 2011, the Company and CEO brokered 15 toll free numbers to a pharmaceutical company for fees ranging from $10,000 to $17,000 per number. In 2013, the FCC found the Company and CEO jointly and severally liable for those violations and issued a $240,000 fine.
Despite the 2007 citation and 2013 fine, the Bureau found evidence that the CEO continued to broker toll free numbers. In early 2013, the Bureau received tips that the CEO sold several toll free numbers to a law firm for substantial fees. An investigation revealed that the CEO, who was the law firm's main point of contact with the Company, had sold 32 toll free numbers to the firm for fees ranging from $375 to $10,000 per number. On other occasions, the CEO solicited the firm to buy 178 toll free numbers for fees ranging from $575 to $60,000 per number. This, along with his correspondence with the firm--including requests that payments be made to his or his wife's personal bank accounts--were cited in support of a 2014 Notice of Apparent Liability ("NAL") finding that the CEO, in his personal capacity and on behalf of the Company, had "yet again, apparently violated the prohibition against brokering."
As neither the Company nor the CEO timely filed a response to the 2014 NAL, the FCC affirmed the proposed fines: $16,000 for each of the 32 toll free numbers that were sold, combined with a penalty of $16,000 for each of the 178 toll free numbers that the Company and CEO offered to sell, resulting in a total fine of $3.36 million.
FCC Rejects AM Licensee's "Not My Tower, Not My Problem" Defense
The FCC imposed a penalty of $17,000 against a Michigan radio licensee for failing to make available its issues/program lists in the station's public file and for failing to enclose the station's antenna structure within an effective locked fence.