Caveat Carriers: Telecom Report Form 499-A Is Due April 1

FCC pillories telecom provider with $600K+ fine as the Form 499-A deadline draws near. Coincidence? We suspect not. 

With less-than-subtle timing, the FCC has fined ADMA Telecom, Inc., a Florida telecommunications company, more than HALF A MILLION DOLLARS for Universal Service Fund (USF)-related violations.  The message is clear: telecom companies that ignore the FCC’s paperwork requirements run the risk of hefty financial penalties. So get out your calculator, look through your books,  and get those 499-A’s on file by April 1, 2011.

As we all know, Congress has long required the FCC to establish and oversee a number of programs aimed at assuring the provision of telecommunication services to all Americans. Those programs are for the most part funded by consumers, through telecom providers. The FCC has developed an extensive set of reporting requirements so that it can keep track of all providers and determine how much each of them owes to the various programs. (Those programs include the USF, the Telecommunications Relay Service (TRS), and the North American Numbering Plan (NANP).)

The reporting requirements include an initial registration (to let the FCC know that the telecom provider has started providing telecom services) and then annual (and, in most cases, quarterly) worksheets – either Form 499-A or 499-Q – from which USF contributions are calculated. These filing chores apply to most telecommunications carriers, including resellers and interconnected VoIP providers.  Limited exceptions include government-only providers, broadcasters, certain non-profits, and systems integrators that derive less that 5% revenue from telecoms resale. Carriers owing less than $10,000 are considered de minimis and do not have to contribute, but still must file the form and pay any TRS and NANP contributions.

Since these programs involve billions of dollars, the Commission has an obvious incentive in riding close herd on the players, to make sure that everybody pays what they owe. And it has an equally obvious incentive to make examples of those who come up short. 

ADMA, for example.

Each USF-related violation carries its own forfeiture amount.  The Commission concluded that ADMA had failed to register itself for several years, had been late in filing its worksheets, and didn’t make its required USF/TRS/NANP contributions for significant periods.   Here’s the dollar breakdown of ADMA’s forfeiture:

  • Failure to register: $100,000
  • Late/Missing Form 499’s: $150,000 ($50,000 each)
  • Failure to contribute to USF: $211,835
  • Failure to contribute to TRS: $80,706
  • Failure to contribute to NANP: $20,000

The FCC also slapped on $100,000 for operating without an international section 214 authorization, bringing the grand total up to $662,541.

Notice that the fines for stiffing the USF and TRS look a bit strange – they’re not the nice round numbers you’d expect to see. That’s because for these types of fines, the FCC starts with a base figure (for example, $20,000 per month for no USF payment) and then adds half the total unpaid amount to the forfeiture.  Oh, and by the way, this does not decrease the amount due: the carrier still has to pay all the contributions in arrears.

As noted above, the deadline for the next Form 499-A is right around the corner – April 1, 2011. While the timing of the ADMA fine may just be coincidental, we suspect it wasn’t. What better way to encourage timely filing than to make an expensive example of an untimely filer on the eve of the deadline?

So don’t delay. Carriers who have already registered can submit the form online through the Universal Service Administrative Company (USAC)’s website.

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