On June 4, 2009, the FCC
proposed to levy a fine or forfeiture in the amount of
$100,000 against a prepaid calling card provider
offering international services without Section 214
authority. The company originally applied for Section
214 authority on February 17, 2006, after having begun
to offer service in May 2005. Its application was
eventually granted on June 18, 2008, following referral
of its application to the Executive Branch (i.e., the
Federal Bureau of Investigation, the Department of
Justice, and/or the Department of Homeland Security) for
a protracted review of national security, law
enforcement, foreign policy and trade concerns. During
the course of the review, the company indicated that it
had accumulated a customer base of at least 1,000 retail
end users and had earned several million dollars in
revenue from its prepaid calling card services in
calendar year 2007 alone. Subsequent to the grant, the
FCC’s Enforcement Bureau initiated an investigation into
whether the company had violated FCC rules by operating
without prerequisite Section 214 authority.
The FCC’s decision to
levy the proposed forfeiture is based on several
factors. First, the Commission found that the company
operated unlawfully without Section 214 authority from
May 2005 until June 18, 2008. Second, the FCC found
that the company failed to obtain interim temporary
authority (called a “special temporary authority”) while
its application was pending. Third, the FCC found the
violation to be “egregious” warranting a higher
forfeiture amount since the company’s revenues during
the period of unlawful operation were high. This
decision will likely serve as the model for future
Enforcement Bureau actions against providers operating
without Section 214 authority.
All telecommunications
providers (including facilities-based carriers,
resellers, prepaid calling card providers and many
wireless service providers) offering calling between the
U.S. and foreign points must obtain a certificate of
authority under Section 214 of the Communications Act of
1934 (“Act”). It is unlawful to offer or advertise
services allowing international calling without first
obtaining a Section 214 license. While the application
is pending, a provider generally may not commence
offering services. In short, a 214 authorization is a
license to offer international telecommunications
service. Because this requirement stems from Section
214 of the Act, it is generally referred to as a “214
license”, “214 authority”, “214 certificate”, “214
authorization”, or simply “214”.
Common misconceptions
surround Section 214 licenses. For example, despite the
belief of some, prepaid calling card providers as well
as prepaid wireless providers are required to hold 214
authorizations if their service allows calls to be
placed between the U.S. and foreign points. Another
“misconception” is that providers can “ride on” the 214
license of another carrier or their underlying
provider. This is not true, and providers that resell
the international services of other 214-authorized
carriers are required to have their own 214
authorization.
For more information,
see http://www.tkcrowe.com/fcc_214_licenses.html
If you have any
questions or require assistance, please do not hesitate
to contact us.
