FCC issues $100,000 NAL [telecom]

I just got an email that alerted me to this news: the Federal Communications Commission has issued an Notice of Apparent Liability for forfeiture (NAL) to an Oklahoma LEC, charging negligence in routing 911 traffic and proposiing a $100,000 fine.

This is from the FCC website:

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  1. 911 is the single most critical tool for citizen emergency communications. The American public universally relies upon 911 in a time of crisis. When there is an emergency citizens can, should, and do trust that when they call 911, someone will answer the phone. The Hinton Telephone Company of Hinton, Oklahoma, Inc. (Hinton) undermined that trust and betrayed its customers when for several months in 2013 it apparently routed 911 calls from Caddo County, Oklahoma, to an automated AT&T operator message which instructed callers to "hang up and dial 911" if their call is an emergency. That trust was further betrayed when Hinton allegedly continued to allow
911 calls to be routed to the automated message for three months after the company discovered the problem. The company returned the system to functionality only after being contacted by FCC investigators and directed to do so. This is manifestly unacceptable. This betrayal is particularly egregious and dangerous for a rural community like Caddo County, Oklahoma, whose residents may be far from help and most in need of reliable and efficient emergency communications. The Commission's 911 rules are intended to ensure that emergency calls are routed properly and always result in contact with public safety personnel. Hinton apparently failed to use reasonable judgment in routing its Caddo County customers' 911 calls, willfully and repeatedly violating our rules, and created a significant threat to the life and property of the residents of Caddo County, Oklahoma. This is unconscionable and warrants a substantial penalty. We propose to fine Hinton $100,000.

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Reply to
Bill Horne
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And, who are they actually fining?

Don't the ratepayers eventually pay this?


Reply to
Bob K

You might as well ask the same question *any* time the government fines a business.

But if it's a LEC, aren't they regulated by the local PUC? They may not allow them to increase rates. And how much would they have to increase to recover $100K, anyway? Add a penny to each customer's bill, and they've made it back in a single billing cycle.

Reply to
Barry Margolin

That is 100% true. It is always the consumer -- the bottom guy on the totem pole -- that eventually pays for everything.

In my state I think the PUC used to more or less guarantee that the stockholders would receive a certain return on their investment. But now, with regulated companies getting into unregulated activities, the whole thing gets murky. Costs and profits get shifted back and forth between the regulated and non-regulated portions of the operation. Still, it's the small guy that gets it in the end.

Reply to
Bob K

Nowadays, ILECs fall into two categories. Price Cap ILECs are allowed to make any profit level, but some (not all) their prices may be subject to certain limits. That category includes all of the Bells and other big carriers. They are not allowed to collect much per line from the Universal Service Fund; their high-cost areas are supposed to be cross-subsidized by their low-cost areas.

Rate of Return ILECs are still on a more traditional kind of regulation. These are almost all small rural carriers. But they don't ask state PUCs for rate increases as in the old days. They get their money from the federal Universal Service Fund. That takes their total allowable costs, subtracts their own revenues (often much less than half), and USF (paid from that ~16% tax on many services) makes up the rest.

If a carrier is fined, USF presumably does not consider it an allowable expense, so it comes out of their actual bottom line.

The carrier in Oklahoma, Hinton Tel, only has around 3000 lines. So it wouldn't be totally trivial on a per-line basis.

Reply to
Fred Goldstein

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