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In 1994, Applicant determined that some of its independent sales agents had submitted unauthorized service orders. Applicant terminated the sales agents. Subsequently, the office of the Texas Attorney General learned of the situation, and requested information about it. Applicant entered into an agreement with the Texas Attorney General whereby it must comply with Federal Communications Commission (FCC) rules regarding changing of a customer's primary long distance carrier.

On January 5, 1999, the Texas Attorney General issued a Civil Investigative Demand to Applicant regarding one of its service offerings. Applicant supplied the requested information, and has received no further communications regarding the matter.

On February 19, 1999, the FCC and the Federal Trade Commission (FTC) issued a joint inquiry into the advertising practices of telecommunications providers. Applicant was one of the companies asked to provide marketing documents. Applicant provided the documents, and has received no further communications regarding the matter.

2. Choctaw

On May 5, 2000, the Utility Consumer's Action Network (UCAN) filed a complaint against Choctaw alleging that, among other things, it did not properly provide Universal Lifeline Telephone Service. The parties reached a settlement resolving most of the concerns. The Commission, in D.01-04-038, imposed a penalty of $5,000 for violation of the Commission's rules regarding measured rate service. Choctaw also paid UCAN $7,848.01 for legal expenses.

In December 2000, the Texas Attorney General issued a directive requiring Choctaw to produce documents regarding its services. Applicant responded, and has heard nothing further on the matter.

3. USRC

On November 3, 1998, USRC received a Notice of Intent to Assess an Administrative Penalty from the Public Utility Commission of Texas (PUCT), because it had determined that USRC had changed the primary long distance carrier of ten customers without authorization. USRC subsequently met with PUCT staff and, on April 30, 1999, submitted an affidavit saying that the mistakes were inadvertent and that it had credited all fees associated with the ten complaints. The matter was subsequently resolved by the parties, and no penalty was assessed.

On April 19, 1999, USRC was notified by the Oregon Department of Justice (ODOJ) that it was under investigation for unfair and deceptive business practices. On July 21, 1999, USRC signed an Assurance of Voluntary Compliance (Assurance) affirming that it was in compliance with the requests made by the ODOJ, and that the Assurance did not constitute an admission of wrongdoing or liability. The Assurance also required that it pay restitution to customers, and a $14,750 administrative penalty.

In June 1999, the Arkansas Attorney General filed a complaint against USRC alleging that it violated the Arkansas Deceptive Trade Practices Act. The parties reached a settlement that provided for restitution to customers, and a $75,000 administrative penalty.

In the Fall of 1999, the FTC conducted an inquiry into USRC's marketing and billing practices for design and hosting of web sites. In July 2000, USRC and the FTC reached a settlement in which USRC agreed to modify certain internal procedures, and pay refunds to customers who were billed for unauthorized services. No penalty was assessed.

In June 1999, the North Carolina Attorney General filed a complaint alleging unfair and deceptive business practices by USRC regarding web page services. The parties reached a settlement that provided for restitution to customers, a $75,000 administrative penalty and reliance on the settlement previously reached between USRC and the FTC.

On July 29, 1999, the Tennessee Regulatory Authority met with USRC regarding customer complaints about web services. The parties reached a settlement that provided for restitution to customers, a $45,200 administrative penalty, and reliance on the settlement previously reached between USRC and the FTC.

In 1999, USRC was notified by the Alabama, Idaho and Illinois Attorneys General, and the Wisconsin Department of Agriculture, Trade and Consumer Protection that it was under investigation regarding customer complaints. The investigations were closed based on reliance on the settlement previously reached between USRC and the FTC.

On June 18, 1999, the Kansas Attorney General launched an investigation of customer complaints against USRC. The parties reached a settlement that included a $75,000 administrative penalty, and reliance on the settlement previously reached between USRC and the FTC.

In August 1999, the Texas Attorney General launched an investigation of customer complaints against USRC. USRC provided the requested information and documentation, and in April 2000, requested that the matter be closed. USRC is awaiting response and further investigation by the Texas Attorney General.

On September 16, 1999, the Florida Public Service Commission notified USRC that it was being investigated regarding customer complaints. The parties resolved the matter based upon reliance on the settlement previously reached between USRC and the FTC, and withdrawal of USRC's authority to provide service in Florida subsequent to approval of its sale to Alliance.

On May 16, 2000, the Tennessee Attorney General filed a complaint against USRC alleging violations of the Tennessee Consumer Protection Act. The parties reached a settlement that included restitution to customers, payment of an administrative penalty of $4,000 and investigative costs of $5,000, an Assurance of Voluntary Compliance, reliance on the settlement previously reached between USRC and the FTC, and reliance on the previous settlement between USRC and the Tennessee Regulatory Authority.

Applicant no longer owns Choctaw or USRC, and none of Applicant's current management was part of the management of Choctaw or USRC. Given the above actions by other states, the FCC, and the FTC, as well as the fine and restitution imposed herein, we expect Applicant to avoid such errors in the future. Therefore, we find that Applicant has sufficient experience and knowledge to operate as a telecommunications carrier.

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