FCC Denies Appeal of Late Fees for Missed USAC Invoices due to Failure to Update Billing Address


On October 16, 2012, the Federal Communications Commission’s (“FCC”) Wireline Competition Bureau (“Bureau”) released an Order denying Bestel’s Request for Review of a Universal Service Administrative Company (“USAC”) decision upholding late fees assessed for failure to make timely Universal Service Fund (“USF”) contribution payments.  Bestel became a direct contributor to the USF in 2010.  Bestel relocated to Mexico City and updated its corporate address via its 2010 Form 499-A.  It neglected, however, to update its billing address.

When USAC first began sending invoices to Bestel in July 2010, it relied upon the billing address identified in Bestel’s 2005 original Form 499-A because Bestel left the billing address field blank on its post-2005 Form 499-A filings.  USAC refused to update the billing address based upon requests made over the phone and instead instructed the company to update the billing address via a revised Form 499-A filing, which the company failed to file.  As a result, Bestel claimed that it did not receive USAC invoices until months after the due dates, and asked USAC to void late charges and penalties applied.  USAC refused, and Bestel sought review with the FCC.  Bestel also challenged USAC’s instruction to Bestel to change its billing address to a U.S. address.  The Bureau upheld USAC’s decision finding that Bestel’s late receipt of the USAC invoices did not excuse its USF contribution responsibility.  And, Bestel failed to properly update its billing address so there was no reason to cancel applicable penalties and interest.

Notably, the Bureau concluded that “The Commission has consistently stated that carriers must pay their USF obligations even if they do not receive a USAC invoice.”  The FCC has adopted rigid policies with respect to late penalties and interest for failure to contribute despite lack of receipt of a USAC invoice.  For example, the FCC has refused to waive late fees and interest where carriers have failed to update their billing address, underreported revenues, failed to file a Form 499-Q or 499-A or where invoices were not received because a debt had been transferred to the FCC for collection per the Debt Collection Improvement Act (“DCIA”).

This problem is compounded by the fact that the FCC has not to date recognized a limitations period on USAC’s ability to back-bill for USF fees owed.  In 2009, a carrier sought FCC review of a USAC true-up invoice issued nearly five years after the carrier reported revenue information upon which the true-up was based.  The Bureau denied the request, finding it untimely.  The FCC upheld the Bureau’s procedural denial.  The FCC’s order is currently under review by the Court of Appeals for the D.C. Circuit.  If the court overturns the order and remands the substantive issue back to the Commission for review, the FCC will finally have the opportunity to consider whether there is a limit to USAC’s ability to back-bill.

Carriers should be wary of relying upon the lack of USAC invoice as evidence that no USF fees are owed.  Clients are encouraged to subscribe to compliance and reporting services offered by the Firm’s consulting arm, The Commpliance Group.  The Commpliance Group provides monthly summaries of filers’ USF contribution obligations.  These summaries clearly identify USF fees owed even if a carrier has not received an invoice from USAC, thus protecting against the possibility of assessment of late fees and penalties in the event of non-receipt of a USAC invoice.  A sample summary is available here for review.

Clients with questions regarding this advisory or who are interested in subscribing to compliance and reporting services offered by The Commpliance Group should contact Chris Canter at cac@commpliancegroup.com.

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