DA 96-47 Federal Communications Commission Record 11 FCC Red No. 4 
Before the 
Federal Communications Commission 
Washington, D.C. 20554 
In the Matter of 
Home Owners Long 
Distance, Inc. 
File No. ENF·95-05 
NAlJAcct. No. 616EF005 
Apparent Liability for Forfeiture 
NOTICE OF APPARENT LIABILITY FOR FORFEITURE 
Adopted: January 19, 1996; Released: January 23, 1996 
By the Chief, Common Carrier Bureau: 
I. INTRODUCTION 
l. By this Notice of Apparent Liability for Forfeiture 
(" NAL"), we initiate enforcement action against Home 
Owners Long Distance, Inc. ("HOLD").1 For the reasons 
discussed below, we find that HOLD apparently willfully 
or repeatedly violated Commission rules and orders2 by 
changing the primary interexchange carrier ("PIC") des­
ignated by Sharon M. Paquet ("Paquet"), Vice President of 
Leather Luster, Inc., of Canon City, Colorado and Donald 
M. Marchant ("Marchant") of Tifton, Georgia without 
Paquet's or Marchant's authorization. Based upon our re­
view of the facts and circumstances surrounding the viola­
tions, we find that HOLD is apparently liable for a 
forfeiture in the amount of eighty thousand dollars 
($80,000). 
II. THE COMMISSION'S PIC CHANGE 
RULES AND ORDERS 
2. In its Allocation Order and subsequent Reconsideration 
Order and Waiver Order,3 the Commission set forth rules 
and procedures for implementing equal access~ and cus-
1 Home Owners Long Distance, Inc. is located at 8000 Vantage. 
Suite 2001. Building A, San Antonio. Texas. 78230. 
2 47 C.F.R. § 64.1100; Investigation of Access and Divestiture 
Related Tariffs. CC Docket 83-1145, Phase I. IO I FCC 2d 911 
( 1985) (Allocation Order); recon. denied, I02 FCC ld 503 ( 1985) 
(Reconsideration Order); lnve.stigation of Access and Divestiture 
Related Tariffs. CC Docket 83-1145, Phase I, IOI FCC 2d 935 
~ 1985) (Waiver Order). 
See supra proceedings cited at note 2. 
4 Equal access for interexchange carriers ("IXCs") is that 
which is equal in type, quality and price to the access to local 
exchange facilities provided to AT&T and its affiliates. United 
States v. American Tel. & Tel., 552 F. Supp. 131, 227 (D.D.C. 
1982), aff'd sub nom. Maryland v. United States, 460 U.S. llJOI 
( 1983) (Modification of Final Judgement or "MFJ"). "Equal ac­
cess allows end users to access facilities of a designated llXCI by 
dialing · 1 · only." Allocation Order, 10 I FCC 2d at 911. 
s Presubscription is the process by which each customer selects 
one primary interexchange carrier ("PIC"), from among several 
available carriers, for the customer's phone line(s). Allocation 
Order, IOI FCC 2d at 911. 928. Thus. when a customer dials 
1808 
tomer presubscriptions to an interexchange carrier 
("IXC").r. The Commission's original allocation plan re­
quired IXCs to have on file a letter of agency ("LOA") 
signed by the customer before submitting PIC change or­
ders to the local exchange carrier ("LEC") o n behalf of the 
customer.7 After considering claims by certain IXCs that 
this requirement would stifle competition because consum­
ers would not be inclined to execute the LOAs even 
though they agreed to change their PIC, the Commission 
modified the requirement to allow IXCs to initiate PIC 
changes if they had "instituted steps to obtain signed 
LOAs."8 In 1992, the Commission again revised its rules 
because it continued to receive complaints about 
unauthor ized PIC changes.9 Specifically, while the Commis­
sion recognized the benefits of permitting a 
telephone-based industry to rely on telemarketing to solicit 
new business, it required IXCs to institute o ne of the 
following four confirmation procedures before submitting 
PIC change orders generated by telemarketing: (1) obtain 
the consumer's written authorization; (2) obtain the con­
sumer's electronic authorization by use of an 800 number; 
(3) have the consumer's oral authorization verified by an 
independent third party; or (4) send an information pack­
age, including a prepaid, return postcard, within three days 
of the consumer's request for a PIC change, and wait 14 
days before submitting the consumer's order to the LEC, so 
that the consumer has sufficient time to return the post­
card denying, cancelling or confirming the change order.10 
Hence, the Commission's rules and orders require that 
IXCs either obtain a signed LOA o r , in the case of 
telemarketing solicitations, complete one of the four 
telemarketing verification procedures before submitting 
PIC change requests to LECs on behalf o f consumers. 
3. Because of its continued concern over unauthorized 
PIC changes. the Commission recently prescribed the gen­
eral form and content of the LOA used to au thor ize a 
change in a customer's primary long distance carrier. 11 The 
Commission's recent rules prohibit the potentially decep­
tive or confusing practice of combining the LOA with 
promotional materials in the same document.12 The rules 
also prescribe the minimum information required to be 
included in the LOA and require that the LOA be written 
"I," only the customer accesses the primary IXC's services. An 
end user can also access other IXCs by dialing a five-digit access 
code ( IOXXX). Id. at 911. 
6 Pursuant to the .\1FJ, the Bell Operating Companies (BOCs) 
were ordered to provide, where technically feasible. equal access 
to their cust0mers by September 1986. Id. 
7 An LOA is a document. signed by the customer. which states 
that the customer has selected a particular carrier as that cus­
tomer's primary long distance carrier. Allocation Order, IOI 
FCC 2d at Q29. 
8 Waiver Order, IOI FCC 2d at 942. 
Q Policies and Rules Concerning Changing Long Distance Car­
riers. 7 FCC Red 1038-39 ( 1992) (PIC Change Order). 
JO See 47 C.F.R. § 64.1100; PIC Change Order, 7 FCC Red at 
1()45. 
11 Policies and Rules Concerning Unauthorized Changes of 
Consumers' Long Distance Carriers, IO FCC Red Q560 ( f9Q5). 
12 See id. at Q574-75. Checks that serve as an LOA are excepted 
from the "separate or severable" requirement so long as the 
11 FCC Red No. 4 Federal Communications Commission. Record DA 96-47 
in clear and unambiguous language. 13 The rules prohibit 
all "negative option" L0As14 and require that LOAs and 
any accompanying promotional materials contain complete 
translations if they employ more than one Ianguage.15 
Ill. THE PAQUET AND MARCHANT COMPLAINTS 
A. Paquet Complaint 
4. On May 22, 1995, the Commission received a written 
complaint from Paquet alleging that HOLD had converted 
her company's prescribed long distance service provider 
from AT&T Corporation (AT&T) to HOLD without her 
authorization.'6 Paquet states that upon discovering that 
AT&T was no longer her long distance carrier she con­
tacted HOLD and was told that she had signed an applica­
tion/entry form authorizing HOLD to make the change. 
On May 16, 1995, HOLD apparently forwarded to Paquet, 
by facsimile transmission, a copy of a form captioned 
"Long Distance Application & Entry Blank" that included 
a LOA purporting to bear Paquet's signature. Paquet a t­
tached a copy of the application/entry form to her com­
plaint. Paquet states that the signature o n the sweepstakes 
entry form is not hers. 
5. The Common Carrier Bureau's Consumer Protection 
Branch17 directed HOLD to provide specific information 
regarding the conversion of Paquet's telephone service.18 
HOLD has not responded to the staffs request nor has it 
sought an extension of time in which to subm it the re-
. quested information. 
B. Marchant Complaint 
6. On June 16, 1995, the FCC received a written com­
plaint from Marchant alleging that HOLD had converted 
his residential prescribed long distance service provider 
from AT&T to HOLD without his authorization _l 9 
Marchant states that AT&T notified him that his prescribed 
long distance carrier had been switched to LDDS 
Metromedia Communications ("LDDS"). Marchant then 
contacted LDDS, who acts as a provider of network ser­
vices for HOLD, to inquire how his long distance carrier 
was switched. Marchant apparently was told that he had 
signed a sweepstakes entry form authorizing HOLD to 
change his long d istance service and Marchant then re­
quested a copy of that form. On May 22. 1995. Marchant 
received a facsimile transmission from HOLD of the form, 
captioned "Long Distance Application & Entry Blank." 
which was purportedly signed by Marchant and used by 
HOLD to convert Marchant's prescribed long distance car­
rier. Marchant states that the signature on the LOA is 
neither his nor his wife0s. Marchant attached to his com­
plaint a copy of the sweepstakes entry form he received 
check contains certain information clearly indicating that en­
dorsement of the check authorizes a PIC change and otherwise 
complies with the Commission's LOA requirements. Id. at 9573. 
13 See id. at 9564-65. 
14 See id. at 9565-66. "Negative option" LOAs require consum­
ers to take some action to avoid having their long distance 
telephone service changed. 
15 See id. at 9581. 
16 Sharon D. Paquet, Vice President of Leather Luster. Inc .. 
Informal Complaint No. IC-95-16841 (May 22. 19Q5). 
17 Formerly known as the Informal Complaints and Public 
1809 
from HOLD, as well as a page of a deed that shows both 
Marchant's and his wife 's signature, for comparison with 
the LOA.20 
7. The Consumer Protection Branch directed HOLD to 
provide specific information regarding the conversion of 
Marchant's telephone service.2t HOLD has not responded 
to the staffs request, nor has it sought an extension of time 
in which to submit the requested information. 
IV. DISCUSSION 
8. We have carefully evaluated the information subm itted 
in connection with Paquet's and Marchant's informal com­
plaints and conclude that HOLD is apparently liable for 
forfeiture for willful or repeated violation of the Commis­
sion 's rules and PIC change requirements. We find 
HOLD's apparent actions particularly egregious. It appears 
that on or about March 15, 1995, and April 21, 1995, 
HOLD, through its underlying carrier , LDDS. submitted 
PIC change requests to both U S West Communications 
("U S West") and BellSouth Telecommunications, Inc. 
("BellSouth"), based on apparently forged LOAs, resulting 
in the conversion of Paquet's and Marchant's telephone 
service from AT&T to HOLD. The statements and informa­
tion provided by Paquet and Marchant leave virtually no 
doubt that the LOAs were not executed by the complain­
ants and that HOLD lacked the requisite authorization to 
request a PIC change to either Paquet's or Marchant's long 
distance service. There is no similarity between the signa­
tures provided by both Paquet and Marchant and the pur­
ported signatures on the LOA forms that HOLD used as 
the basis for the PIC changes submitted to U S West and 
BellSouth. Under these circumstances, we conclude that 
HOLD's apparent actions were in willful or repeated viola­
tion of the Commission's PIC change rules and orders and 
that a substantial forfeiture penalty is appropriate. 
9. As a general matter. the unauthorized conversion of a 
customer's presubscribed long distance carrier continues to 
be a wide-spre~d problem in the industry.1i We are particu­
larly troubled by what appears to be a common practice by 
some lXCs of relying on unverified LOAs. which turn out 
to be falsified or forged, to effect changes in consumers' 
long distance service. The pervasiveness of the problem 
suggests that our current administration of the law has not 
produced sufficient deterrence to non-compliance and the 
carriers have little incentive to curtail practices that lead to 
consumer complaints. Furthermore, as a practical matter, 
the carriers' responses to alleged unauthorized conversion 
complaints rarely provide a detailed explanation or jus­
tification of the carrier 's actions. Therefore. to draw in­
dustry's attention to the seriousness of the problem and to 
provide incentives to comply with the Commission's rules 
Inquiries Branch. 
18 Notice of Informal Complaint No. IC-95-16841 (December I. 
1995). 
1
" Donald M. Marchant. Informal Complaint No. IC 95-19424 
<June 16, 19Q5). 
~o Id. 
?I Notice of Informal Complaint No. IC-95- 19424 (December I, 
1995). 
22 From June 1994 to June 1995. of the .IB,773 informal com­
plaints filed, 7.960 were for alleged unauthorized conversions of 
the customer's presubscribed Jong distance carrier. 
DA 96-47 Federal Communications Commission Record 11 FCC Red No. 4 
and orders, we intend to scrutinize consumer complaints 
and to take prompt enforcement action, including the im­
position of substantial monetary fines, when the facts in­
dicate that a carrier has failed to take the necessary steps to 
ensure that LOAs are valid and duly authorized. If carriers 
intend to rely on a LOA to request a PIC change, they will 
be responsible for ensuring its validity. 
10. Section 503(b)(2)(B) of the Communications Act au­
thorizes the Commission to assess a forfeiture of up to one 
hundred thousand dollars ($100,000) for each violation, or 
each day of a continuing violation, up to a statutory maxi­
mum of one million dollars ($1,000,000) for a single act or 
failure to act.23 In exercising such authority, the Commis­
sion is required to take into account "the nature, cir ­
cumstances, extent, and gravity of the violation and, with 
respect to the violator , the degree of culpability, any his­
tory of prior offenses, ability to pay, and such other matters 
as justice may require."24 For purposes of determining an 
appropriate forfeiture penalty in this case, we regard the 
conversion of Paquet's and Marchant's telephone lines as 
two violations. After weighing the circumstances surround­
ing the violation, we find that HOLD is apparently liable 
for a forfeiture of eighty thousand dollars ($80,000) for the 
unauthorized conversion of the Paquet and Marchant lines. 
HOLD will have the opportunity to submit evidence and 
arguments in response to this NAL to show that no for­
feiture should be imposed, or that some lesser amount 
should be assessed.25 In this regard, we note that the Com­
mission has previously held that a licensee's gross revenues 
are the best indicator of its ability to pay a forfeiture and 
that use of gross revenues to determine a party's ability to 
pay is reasonable, appropriate, and a useful yardstick in 
helping to analyze a company's financial condition for 
forfeiture purposes.26 We will give full consideration to any 
financial information provided by HOLD before assessing a 
final forfeiture amount. 
V. CONCLUSIONS AND ORDERI~G CLAUSES 
11. We have carefully reviewed the information submit­
ted in connection with Sharon M. Paquet's and Donald M. 
Marchant's informal complaints and conclude that on or 
about March 15, 1995, and April 21, 1995. HOLD appar­
ently converted, or caused a local exchange carrier to 
convert. Paquefs and Marchant's telephone lines, without 
either Paquet's or Marchanfs authorization. through the 
use of apparently forged LOAs. We further conclude that 
HOLD thereby apparently willfully or repeatedly violated 
Commission rules governing primary interexchange carrier 
conversions, and that its conduct warrants a forfeiture in 
the amount of eighty thousand dollars ($80,000). 
2J 47 u.s.c. § 503(b)(2)(B). 
! 4 Id. § 503(b)(2)(D). 
~s See id. § 503(b)(4)(C): .l7 C.F.R. § 1.~0(f)(3). 
26 PJB Communications of Virginia. 7 FCC Red 2088. 2089 
(19112) (finding that forfeitures of $5.000 and S3.1Xl0 assessed 
against two jointly owned and operated paging companies were 
not excessive because the total forfeiture amount ($8.(XlO) repre­
sented approximately 2.02 percent of the companies' combined 
gross revenues of $395,469): see al.so David L. Hollingsworth 
d/b.la Worland Services. 7 FCC Red 6640 (Com. Car. Bur. 1992) 
($6,000 forfeiture representing approximately 1.21 percent of 
licensee's 1991 gross revenues and approximately 1.34 percent of 
1810 
12. Accordingly, IT IS ORDERED, pursuant to Section 
503(b) of Communications Act of 1934, as amended, 47 
U.S.C. § 503(b), and Section 1.80 of the Commission's 
rules, 47 C.F.R. § 1.80, that Home Owners Long Distance, 
Inc., Inc. IS HEREBY NOTIFIED of an Apparent Liability 
for Forfeiture in the amount of eighty thousand dollars 
($80,000) for its willful or repeated violation of the Com­
mission's PIC change rules and orders, 47 C.F.R. § 
64.1100; PIC Change Order, 7 FCC Red 1038 (1992); Al­
location Order, 101 FCC 2d 911 (1985); Waiver Order, 101 
FCC 2d 935 (1985). 
13. IT IS FURTHER ORDERED, pursuant to Section 
1.80 of the Commission's rules, 47 C.F.R. § 1.80, that 
within thirty days of the release of this Notice, Home 
Owners Long Distance, Inc. SHALL PAY the full amount 
of the proposed forfeiture27 OR SHALL FILE a response 
showing why the proposed forfeiture should not be im­
posed or should be reduced. 
14. IT IS FURTHER ORDERED that a copy of this 
Notice of Apparent Liability for Forfeiture SHALL BE 
SENT by certified mail to Mr. Joe Webb, President of 
Home Owners Long Distance, Inc., 8000 Vantage, Suite 
2001, Building A, San Antonio, Texas, 78230. 
FEDERAL COMMUNICATIONS COMMISSION 
Regina M. Keeney 
Chief, Common Carrier Bureau 
projected 1992 gross revenues not found to be excessive): Afton 
Communications Corp., 7 FCC Red 6741 (Com. Car. Bur. 1992) 
($6,(X)(} forfeiture representing approximately 3.91 percent 
ofh) 1990 gross revenues and 2.75 percent of projected 1992 gross 
revenues not found to be excessive). 
27 The forfeiture amount should be paid by check or money 
order drawn to the order of the Federal Communications Com­
mission. Reference should be made on Home Owners Long 
Distance. lnc.'s check or money order to "NAUAcct. No. 
616EF005." Such remittances must be mailed to Forfeiture Col­
lection Section, Finance Branch, Federal Communications 
Commission, P.O. Box. 73482, Chicago. Illinois 60673-7482.