FCC Investigating Small Carriers for Failure to File Key Reporting Form
An independent auditing firm hired by the FCC has identified more than 1,000 telephone companies that may not have filed FCC Form 499-A, as required by commission rules, the FCC Office of Inspector General said in its semi-annual report to Congress. The information supplied on that form is used to calculate contributions to the Universal Service Fund, the telecommunications relay services support mechanism, the cost recovery mechanism for numbering administration and the cost recovery mechanism for shared costs of long-term number portability.
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Virtually all telecom providers providing U.S. interstate service are required to file the form and face fines if they fail to. OIG said it hired an accounting firm after commission investigators determined that some companies may not be filing the form. The firm so far has gathered data from state commissions in 32 states, OIG said. OIG said in September it issued follow-up letters to companies from six states that apparently had failed to file the form.
So far, 23 providers have responded. Of those, two companies said they will begin filing the form. “Follow-up to initial replies and additional analysis continues,” OIG said. It said it also identified one company that “may be liable for assessments of additional USF contributions.”
OIG also reported on its investigation of allegations of gross mismanagement and waste of funds by the Consumer and Governmental Affairs Bureau regarding its management of the Consumer Information Management System. “The main complaint was that after the Commission spent $3 million on CIMS, the system did not work,” OIG said. “After an intensive investigation, OIG concluded that mismanagement of the CIMS development project by contractor and Commission personnel resulted in the failure of the CIMS project as planned, with monetary, human resource, and program efficiency costs to the agency.” Though “multiple factors” were involved, one big failing was the lack of an adequate Systems Development Life Cycle (SDLC) structure as required by FCC rules, OIG said. “Deadline pressure, combined with off-task requests for contractors to produce data reports from existing systems, development protocol breaches (making changes on the fly in the production environment without proper testing), and the turnover and competence of the project’s contracting officer’s technical representatives all figured into the equation that resulted in the failure,” OIG concluded.
OIG reported on a busy half-year, from April 1 to Sept. 30, the period covered by the report. OIG said it has largely completed an investigation of the San Bernardino, Calif., Unified City District, examining $7.8 million it received from the USF program’s Schools and Libraries Program. OIG also substantially completed investigations of eight Sprint Nextel USF high-cost fund recipients. OIG said its investigations also uncovered one company that overstated USF-related interstate and international end-user revenue in 2007, one company that didn’t submit a required form for reporting international revenue, three companies that failed to follow rules to qualify for the reseller’s revenue exemption regarding USF-related interstate and international end-user revenue, and one company that mis-classified VoIP related revenue as non-telecommunication revenue and, as a result, did not pay any associated USF contributions.