FCC Cancels LCP Enforcement Actions Against AT&T
On August 11, 2020, the Commission released an Order canceling a Notice of Apparent Liability for Forfeiture (NAL) issued against AT&T in 2016. BellSouth Telecommunications, LLC, d/b/a/ AT&T Southeast, Order, FCC 20-103 (rel. Aug. 11, 2020). The NAL proposed a forfeiture of $106,425 against AT&T for apparently failing to charge two Florida school districts the lowest corresponding price for telecommunications services it provided under the E-Rate program during funding year 2014-2015. The Telecommunications Act requires the Commission to issue an NAL within one year of a violation. 47 U.S.C. § 503(b)(6)(B); see also 47 C.F.R. § 1.80(c)(4). Because the apparent violations at issue occurred more than one year before the NAL was issued, the Commission found the NAL to be time-barred by the statute of limitations and it canceled the NAL and the proposed forfeiture.
Under the E-rate program rules, service providers are prohibited from charging a price above the lowest corresponding price. 47 C.F.R. § 54.511(b); see also 47 U.S.C. § 254(h)(1)(B). From July 2012 to June 2015, the Commission found that AT&T repeatedly violated the program rules by failing to charge two Florida districts the lowest corresponding price for telecommunications services. In 2016, the Commission issued an NAL against AT&T. The NAL limited it determination to funding year 2014-2015 and proposed a forfeiture of $106,425, based on the difference between the price the districts should have been charged and the price they were actually charged, trebled for damage caused by AT&T’s unlawful actions.
In response, AT&T argued the NAL was time-barred by the statute of limitations. The NAL was issued on July 27, 2016, more than a year after AT&T last charged for the relevant services on June 1, 2015. Upon review, the Commission agreed and found that the lowest corresponding price violations occurred when AT&T charged the non-compliant prices to the two school districts. The Commission also determined that each charge of non-compliant prices was a single event and not a continuing violation. Because AT&T’s last charge occurred more than a year before the NAL was issued, the Commission concluded that the NAL was time-barred by the statute of limitations. Accordingly, the Commission canceled the NAL and the proposed forfeiture.
Commissioner O’Rielly issued a separate statement supporting the decision to cancel the NAL on procedural grounds, but also asserting that the NAL was substantially defective. Commissioner O’Rielly noted that the two school districts purchased services on a month-to-month basis directly from AT&T, rather than through the consortium’s contract. He argued that the rules should not require AT&T to charge the school districts the same rates from the bulk consortium contract.
Commissioner Rosenworcel dissented from the Order, arguing that some rule violations should be treated as continuing until remedied. Commissioner Rosenworcel agreed with the Commission’s earlier approach to count the infractions from the date of universal service disbursements, rather than the billing date. She noted that the Commission may not become aware of billing until well after an infraction has taken place, making enforcement of the rules more difficult.
Commissioner Starks concurred in the decision, agreeing that the statute of limitations time-barred the NAL and forfeiture. However, Commissioner Starks said the Commission should have addressed the merits of this case to provide E-rate program participants some guidance on price expectations. Additionally, Commissioner Starks commented that the Commission may need to adjust its rules and enforcement practices to ensure it actually punishes and deters violations of the lowest corresponding price rule.
