On August 25, 2014, the Federal Communications Commission’s (“FCC”) Enforcement Bureau (“Bureau”) announced that Time Warner Cable, Inc. (“TWC”) negotiated a Consent Decree with the Bureau that resolved an investigation into whether TWC complied with the Commission’s network outage reporting requirements. (See In the Matter of Time Warner Cable Inc., File No. EB-SED-14-00013331, Order, DA 14-1126 (rel. Aug. 25, 2014)). Through the Consent Decree, TWC agreed to pay a “civil penalty” of $1.1 million, and implement a three-year compliance plan to ensure future compliance with the Commission’s network outage reporting rules. The Bureau’s Consent Decree with TWC appears to be the first public indication of the more stringent Bureau enforcement policies as forecasted by our firm in a previous Client Advisory and Memorandum.
This Advisory will discuss the parameters of the TWC Consent Decree, and how the related penalty compares historically with fines, consent decrees, and forfeitures related to a communications provider’s failure to comply with the Commission’s filing rules.
Sections 4.9 and 4.11 of the FCC’s rules require wireline communications providers and Interconnected Voice Over Internet Protocol (“I-VoIP”) providers to report network outages of at least 30 minutes in duration that potentially affect: (1) at least 900,000 user minutes of service; (2) any special offices and facilities; or (3) a 9-1-1 special facility. Furthermore, these provisions require providers to submit several reports, including an initial Notification of the outage (within 120 minutes of discovering the network outage), as well as a Final Report (within 30 days of the outage), to the FCC detailing the exact nature, scope, and damage of such outages. Failure to report network outages promptly can result in the assessment of forfeiture penalties by the FCC’s Enforcement Bureau.
For detailed guidance on the FCC’s Outage Reporting Rules, we invite you to review our Outage Reporting Compliance Manual. As applied to Interconnected VoIP services, the FCC’s outage reporting rules necessitate the application of a complex formula.
Interconnected VoIP providers may contact their primary Attorney or Jonathan Marashlian to request a step-by-step flow chart that is critical in determining whether a particular network outage (including outages impacting unaffiliated underlying ISPs) is subject to the outage reporting requirements. And any provider requiring assistance with submitting reports (which must be filed within a brief window of time following an outage) may solicit the assistance of our affiliated consulting firm, The Commpliance Group, which specializes in FCC compliance reporting services.
In September 2013, the Commission’s Public Safety and Homeland Security Bureau (“PSHSB”) notified TWC that it had failed to file a required Final Report for a reportable I-VoIP network outage for which TWC filed an initial Notification. Further investigation by the PSHSB revealed that TWC failed to file a “substantial” number of initial and final reports with respect to a series of reportable wireline and I-VoIP network outages. In response, TWC submitted the missing reports to the Commission in November 2013. However, in response to a subsequent inquiry by the Enforcement Bureau, TWC admitted that it failed to timely file a substantial number of network outage reports with the Commission. The Consent Decree negotiated between the Bureau and TWC subsequently followed.
There are several provisions of the Consent Decree that our clients should take note of including, but not limited to, the broad and burdensome scope of the three-year filing compliance and monitoring plan. However, the staggering civil penalty of $1.1 million is the most significant aspect of the Consent Decree. First, this amount radically departs from the Commission’s Forfeiture Guidelines, which generally prescribe a base forfeiture amount of $3,000 per violation. Second, it is by our firm’s estimates ten to twenty times the normal amount assessed in recent forfeitures for a provider’s violation of any of their reporting and/or filing obligations with the Commission. For example, in 2012, the Bureau entered into a Consent Decree with Verizon in which Verizon agreed to pay only a $90,000 “voluntary contribution” for violating the Commission’s network outage reporting rules. (See In the Matter of Verizon, File Nos. EB-09-SE-218, EB-11-SE-010, Order, DA 12-391 (rel. Mar. 14, 2012)). Like the TWC Consent Decree, the 2012 Consent Decree does not discuss the Commission’s Forfeiture Policy Statement. However, unlike Verizon’s 2012 Consent Decree, the forfeiture amount of today’s Consent Decree appears to demonstrate that the guidelines governing forfeiture amounts since 1997 are now obsolete. Compounding this fact, the “voluntary contribution” language is entirely lacking from the TWC Consent Decree, and the Bureau opts for the harsher tone of imposing of a “civil penalty” for TWC’s filing violations. Thus, the TWC Consent Decree may be demonstrative of a new hard line stance by the Enforcement Bureau regarding forfeitures for violations of the Commission’s rules – throwing the Commission’s Forfeiture Guidelines out the window.
In light of our Firm’s prior guidance on the new, more stringent policies of the Enforcement Bureau, as confirmed by the TWC Consent Decree, we again caution clients and other communications providers of their potential exposure to the crippling consequences of failing to comply with their FCC compliance and reporting obligations.
Should you have any questions regarding this Advisory, the FCC’s new enforcement policies, or outage reporting, please contact Jonathan S. Marashlian at email@example.com, or by phone at 703-714-1313.