On May 3, 2013, the Federal Communications Commission (“FCC” or “Commission”) issued an order granting Ascent Media’s request for waiver of the FCC Form 499-Q filing deadline and directing the Universal Service Administrative Company (“USAC”) to accept the company’s revised August 2007 FCC Form 499-Q as if timely filed.

Ascent Media mistakenly reported the company’s total projected revenues (instead of only its projected interstate and international end-user telecommunications revenues) on its August 2007 Form 499-Q.   Ascent Media did not realize the mistake until it received its first invoice based on the filing in October 2007.  The invoiced amount was ten times the amount the company would have been required to pay had it correctly reported its revenues, and exceeded its gross projected revenues for the quarter.  Ascent Media paid the invoice in full, and appealed the invoice with USAC on November 14, 2007.  Ascent Media did not pay the November and December 2007 invoices, and USAC imposed interest and penalties under the Debt Collection Improvement Act (“DCIA”) accordingly.

In January 2008, USAC denied Ascent Media’s appeal, and the company sought review of USAC’s denial with the FCC in February 2008.  In its request for review, Ascent Media sought waiver of the 45-day filing deadline for revised Forms 499-Q and a refund of interest and penalties assessed for its failure to pay the November and December invoices.  The Wireline Competition Bureau (“Bureau”) dismissed the waiver request and denied the refund request.  Ascent Media sought reconsideration of the Bureau’s decision with the FCC on January 14, 2009.  The Commission found that Ascent Media demonstrated that waiver is warranted. The FCC noted that Ascent Media had paid its October 2007 invoice in full.  Even though the Commission disagreed with the company’s failure to pay its November and December invoices, because the imposition of interest and penalties in this instance would “disproportionately penalize” Ascent Media, and because the company modified its internal policies to ensure that such filing mistakes would not occur in the future, the FCC found good cause existed to grant the waiver of the filing deadline, and ordered USAC to accept a revised Form 499-Q for August 2007.

The Ascent Media decision, available here: Ascent Media Decision represents a rare occasion wherein the FCC has granted a Universal Service Fund (“USF”) contributor’s appeal or request for review of a USAC decision.  Notably, the entire appeals process took over six years for resolution, and the FCC considered the fact that Ascent Media had paid in its first invoice based on the mistaken filing full (in accordance with USAC’s “pay and dispute” policy for USF invoices) in reaching its decision.  Nonetheless, the company’s failure to pay two monthly invoices did not prevent the Commission from finding that, given the severe penalty that would befall the company, a waiver of the Form 499-Q filing deadline was appropriate.