FCC Proposes to Revamp Equipment Authorization Rules, Again

Changes will update policies and procedures to accommodate developing technologies.

Among the FCC’s many functions is one known to a small community of technical experts – and, of course, CommLawBlog readers: the equipment authorization program. These procedures seek to ensure that devices capable of emitting radio-frequency energy comply with the FCC’s requirements as to frequency, power, and other technical properties.

The program is essential to harmony in the radio spectrum. Take your cell phone, for example. It transmits on frequencies set aside for your cell carrier. But suppose a particular model of cell phone has a design defect that causes it also to transmit on, say, the frequencies used by public safety responders. A police officer trying to summon an ambulance could find his two-way radio overpowered by nearby cell phones.

To prevent this kind of thing, the FCC writes detailed technical rules that govern the operation of devices that, in normal operation, emit radio waves; and it establishes and oversees the equipment authorization procedures that manufacturers and importers must follow to establish compliance with those rules. Continue Reading

Update: Last of the New E911 Rules Now in Effect

Back in February the FCC released its new E911 standards designed to improve E911 location capability. As we reported in March, most of those new standards were to take effect in April … except for a small handful that happened to be “information collections” and thus subject to the hilariously named Paperwork Reduction Act. Thanks to that Act, those information collections have to be run past the Office of Management and Budget for its approval before they can kick into gear.

(The sections in question here: Sections 20.18(i)(2)(ii)(A) and (B); 20.18(i)(2)(iii) and (iv); 20.18(i)(3)(i), (ii), and (iii); 20.18(i)(4)(i), (ii), (iii) and (iv); 20.18(j)(2) and (3). Interestingly, Section 20.18(i)(2)(iv) was not identified as an information collection back when the Commission’s Fourth Report and Order was first published in the Federal Register, so maybe it really isn’t an information collection. But who cares? One way or the other, it’s now been approved.)

We are pleased to report that, on July 20, OMB wrapped up its review and gave those remaining provisions the green light. This we know from a notice that the FCC has published in the Federal Register, which announces that those remaining provisions are in effect as of August 3, 2015.

Update: Media Bureau Suspends Deadlines for Comments on Proposed Reservation of UHF Channel Space for Unlicensed Use, Wireless Mics

Last month we reported on the Commission’s proposal to preserve vacant UHF TV channel space in every geographic area of the country for use by unlicensed TV white space devices and wireless microphones. The deadlines for comments on the proposal were set tout de suite, and things seemed to be moving merrily along on the fast track. But now the FCC has announced that the comment deadlines have been suspended until further notice. The suspension is in response to a request by the NAB, which was troubled by the fact that some still-up-in-the-air aspects of the Incentive Auction make it difficult if not impossible to comment on the white space/wireless mic proposals. In particular, the NAB notes the possibility that some TV stations might end up getting repacked into the “duplex gap”. But the FCC has decided to let unlicensed devices and wireless microphones operate in the duplex gap. Obviously, the extent to which full-service TV stations are shunted into the gap could affect the FCC’s decision on the availability of channels for white space/wireless mic use. But until we all have a better fix on the former it’ll be hard to gauge what that latter effect will be. Accordingly, the NAB proposed a “limited extension” of the comment deadlines.

The FCC (actually, the Media Bureau) has agreed with the NAB, and gone it one better. Rather than a “limited extension”, the Bureau has effectively ordered an indefinite stay – the previously-announced comment deadlines have been suspended “until further notice”. Presumably we’ll get more word on this once the Commission acts on the two big Incentive Auction-related items that were on the agenda for the FCC’s meeting two weeks ago, but which were then postponed to the FCC’s meeting currently set for early August. Check back here for updates. And meanwhile, the suspension of the deadlines doesn’t mean that you can’t still file comments if you have something to say about the proposals notwithstanding the still-unresolved questions surrounding the Incentive Auction and repack process. Both comments and replies may be filed through the FCC’s ECFS online filing system; refer to Proceeding Nos. 15-146 and 12-268.

FCC Tweaks Designated Entity, Former Defaulter and Joint Bidding Rules

The FCC looks to plug loopholes in advance of the Incentive Auction.

One never fails to marvel at the ingenuity of man. No matter what program, policy or rule the FCC adopts to further some worthy public interest goal, a clever gamesman inevitably figures out a way to manipulate the system to garner a benefit that was never intended. So there is a ceaseless cycle of plugging loopholes in the system, which then opens new loopholes, and the cycle begins again.

Such is the FCC’s Designated Entity program.

The FCC has released its order (full name, if you can believe it: “Report and Order; Order on Reconsideration of the First Report and Order; Third Order on Reconsideration of the Second Report and Order; Third Report and Order”) addressing the terms under which Designated Entities (DEs) may qualify for discounts in upcoming auctions, including the 600 MHz “Incentive Auction” scheduled for next spring. The FCC’s order is a commendable effort both to expand opportunities for small businesses to win licenses in auctions and at the same time to curb abuses of the DE system. The FCC also takes the opportunity to lift some of the burdens on “former defaulters” – people who had previously failed to pay non-tax debts to the federal government — and to revise other auction procedures which had permitted collusive behavior among related auction participants. Let’s take a quick look at what the FCC did and didn’t do. Continue Reading

FilmOn Takes a Big Step Closer to Section 111 Eligibility

Federal judge in California declares Aereo clone potentially eligible for compulsory copyright license.

FilmOn logo-1Sometimes, getting there first doesn’t mean that you’re the winner. Just look at Aereo, whose innovative technology was going to revolutionize the delivery of video programming.

Although supposedly embraced by the consuming public, Aereo was sued for copyright infringement by lots of broadcasters (including all the major networks). It won a string of victories in several lower courts, but ultimately lost the Big One in the Supreme Court, which held that Aereo’s system did indeed infringe on the broadcasters’ copyrights, including particularly their exclusive right to publicly perform their programs. (Anyone fuzzy on the Aereo saga may want to take a look through our posts on the topic.)

According to Aereo’s Plan A, Aereo was entitled to retransmit, without copyright liability, programming it received through its over-the-air antennas. The Supreme Court, however, viewed Aereo’s system to be more akin to cable systems, whose retransmissions of broadcast material are subject to copyright obligations. As we reported, following its loss in the Supremes, Aereo moved to Plan B: it argued that it was a cable system and offered to pay copyright royalties to participate in the cable compulsory license. The Copyright Office (from which Aereo sought a favorable determination) didn’t buy it. Aereo filed for bankruptcy, sold off most of its assets and is now, for all intents and purposes, dead.

Ironically, “FilmOn X” lives on, and may be on the verge of winning the fight that Aereo could not. Continue Reading

The FCC’s Tower Approval Process: Round and Round It Goes, When Will It Stop? Nobody Knows!

FCC OK’s reopening of seemingly closed historic review process … eight years after the question is raised.

Getting governmental approval to build a tower can take a long time. As a recent FCC decision demonstrates, it can take a lot longer when the government can’t decide when the approval process has come to an end.

If you wanted to build a radio tower at any time in the last decade, you presumably ran into the “Nationwide Programmatic Agreement” (NPA). That’s an agreement – official full name: “the Nationwide Programmatic Agreement for the Review of Effects on Historic Properties for Certain Undertakings Approved by the Federal Communications Commission” – entered into by the Commission, the Advisory Council on Historic Preservation and the National Conference of State Historic Preservation Officers. (A copy of the NPA may be found here; related information may be found here.) As its name suggests, the NPA was adopted to avoid construction that would cause unacceptable disruption to historical or cultural interests.

The approval process imposed by the NPA is complicated for towers that come within its reach. Among other things, the NPA requires applicants to give the relevant State Historic Preservation Officer (SHPO) notice of the project. That notice must include (among other things): (a) a list of properties near the proposed tower site that are listed on (or eligible for listing on) the National Register; and (b) an evaluation of whether the proposed construction would adversely affect any such properties. If the SHPO “concurs in writing” that no historic properties would be affected, then, according to Section VII of the NPA, the process is “complete, and the Applicant may proceed with the project”.

That may look clear. Looks can be deceiving. Continue Reading

SESAC Suit Settled

Props to Bill Velez for striking a good deal for the radio industry!

Bill Velez and the gang at the Radio Music License Committee (RMLC) have struck again. Having targeted SESAC in an antitrust suit in 2012, they have now used the leverage of that suit to gain a settlement with SESAC that should prove extremely beneficial to radio broadcasters.

Under Bill’s able and dedicated leadership, RMLC has certainly fulfilled its mission to “achieve fair and reasonable license fees with the music licensing organizations (such as ASCAP and BMI) on behalf of radio stations.” In a settlement announced on July 23, 2015 the two organizations seem to have achieved significant certainty surrounding the SESAC radio licenses for years to come. The full Settlement Agreement is 33 pages of legal jargon; that’s why we’re happy that the press release hits the high points – and makes it evident that radio stations are not only getting certainty out of this deal but also relief on some key aspects of the SESAC licensing system that have frustrated broadcasters for years.

Among the most interesting aspects of the settlement are (with my commentary in parenthesis):

  • SESAC’s license fees will be subject to determination by a third-party arbitration panel if the two sides cannot reach agreement on reasonable fees. (This voluntary resort to third-party resolution of differences is different from the judicial oversight imposed on ASCAP and BMI by a decades-old court order. Still, the RMLC approach should provide a significant backstop against attempts by SESAC to increase royalty rates by an unreasonable amount.)
  • SESAC’s rates will be frozen at existing 2015 levels, with no further rate changes until the parties’ negotiations or arbitration are concluded covering rates for the license term 2016 through 2018. (Bottom line: No rate increase in the near term!)
  • SESAC will continue to offer its existing All-Talk Amendment discount of 75%. (This has been a cornerstone of the ASCAP/BMI agreements as well and is necessary to ensure that talk/news/sports radio pay royalties that are reasonably proportional to their uses of copyrighted music.)
  • SESAC will enhance its online repertory search offerings in order to support more user-friendly identification of SESAC works. (This is intended to resolve a key complaint about SESAC and one of the motivating factors for RMLC’s lawsuit: historically, SESAC’s repertoire has been so hidden that it was impossible to know what music was in fact subject to SESAC licensing. This has be a vexing problem for all broadcasters, and especially talk/news/sports stations that make very limited use of music.)
  • The scope of rights to be covered under future SESAC licenses will mirror the coverage that traditional operators currently enjoy with ASCAP and BMI. Moreover, SESAC is committing to consolidate (as of 2016) its licensing structure. As matters now stand, you need three separate SESAC licenses to cover, respectively, over-the-air, HD radio and streaming transmissions. Starting in 2016, new SESAC licenses will cover all three in a single license, like ASCAP and BMI licenses already do.)
  • The RMLC will be reimbursed by SESAC for the legal fees it incurred in prosecuting the antitrust case against SESAC. (This is not small potatoes. According to the Settlement Agreement itself, the RMLC will be reimbursed $3,564,087.39. That they were willing to put themselves out there to that extent demonstrates that the RMLC really does have the radio industry’s best interests at heart.).

Coming on the heels of the recent settlement of the TVMLC/SESAC lawsuit, the settlement negotiated by RMLC means that SESAC, like ASCAP and BMI, will now, at last, be subject to some significant independent oversight with regard to all broadcast media. As I opined in a post last year regarding the DOJ’s (still pending) review of the ASCAP and BMI Consent Decrees, the court-imposed constraints on ASCAP and BMI have greatly benefitted the broadcast industry by keeping royalty fees at a more or less reasonable level. Radio and television broadcasters should realize the same benefits from the SESAC settlements as well.

Audio Overkill: New AM and FM Licenses Conditioned on Continuous Operation

New radio licensees now presumed to have constructed only “temporary” facilities if they fail to operate continuously for a year.

uncle sam-Permanent Facilities-5What a difference a day makes! That is, if the day in question is July 2, 2015 and you happen to be a radio broadcaster waiting for grant of a license application.

That’s because all but one of the commercial and noncommercial FM and AM licenses (both new licenses and mods of old licenses) granted on or after July 2 have included the following condition:

Grant of this license application is conditioned on continuous operations of the licensed facility for the twelve-month period following grant. Failure to do so will result in the rescission of this grant, dismissal of the license application and the forfeiture of the associated construction permit pursuant to 47 C.F.R. § 73.3598(c) unless licensee rebuts presumption that authorized facilities were temporarily constructed.

Radio licenses granted on or before July 1 don’t appear to have contained that condition.

It’s likely a good bet that the new condition will grace all AM and FM, commercial and noncommercial, licenses going forward. (Our conclusion here is based on review of all the AM and FM licenses granted between June 29 and July 21, according to CDBS. Admittedly we’re speculating, but there is no obvious reason why 21 licenses granted on or after July 2 should suddenly have all been subject to a condition that does not appear on licenses granted prior to July 1. As discussed below, the Audio Division has thus far shed no light on this at all.)

Take a close look at the language the Audio Division has added there. It says that, if the station fails to operate “continuous[ly] … for the twelve-month period following grant of the license”, the grant will be rescinded, the license application will be dismissed, and the underlying construction permit will be toast. Sure, the licensee will apparently be given some opportunity to “rebut[ ] presumption [sic] that authorized facilities were temporarily constructed” – but exactly how and when that opportunity will be provided isn’t stated.

So, for example, suppose you receive a license just before (choose one: the hurricane; the earthquake; the tornado; the blizzard; the lightning storm; the terrorist attack; the tragic plane accident; the massive unexplained county-wide power outage; etc.) occurs. That event knocks you off the air for a couple of days, maybe even a couple of weeks. You have just failed to comply with the condition, and the construction permit and license on which you relied are, under the terms of the condition, history. You can apparently try to get the breath of life breathed back into them, but really, under those circumstances would your time be better spent getting back on the air or rebutting a bogus presumption?

We’d like to explain this development, but we can’t. That’s because the Audio Division hasn’t bothered to clue us all in about what it’s doing and why. Instead, it has simply started to tack on the condition.

If this strikes you as, um, unusual, get in line.

What’s up with that?

In view of the timing, we’re guessing that this new language is part of the Division’s effort to stamp out “temporary construction”. We reported last May on a Division decision in which it frowned on the construction of less-than-permanent facilities. In particular, that decision cautioned that facilities authorized in a construction permit should be built to “endure beyond the de minimis period necessary … to file a license to cover” the permit. The Division followed that up with a second decision a few weeks later. In that latter decision, it elaborated that permittees who dismantle the facilities (or otherwise cease operation) of a station while an application for a covering license is pending must notify the Commission promptly when they do so.

Perhaps figuring that those admonitions wouldn’t stop a station from getting its license application grant and then turning the station off and dismantling its facilities, the Division has gone a large step further. Now the constructed facilities must remain up and running not only while the license application is pending, but for a continuous 12-month period after the application has been granted.

This can’t be legal, can it?

As far as we can see, the legality of this move is, at best, dubious.

First, the Division’s condition effectively creates a new regulatory requirement that is inconsistent with existing rules. The rules have long recognized that some interruptions in station operation may occur from time to time. In fact, a station can be off the air for up to 30 days without asking the Commission for its permission (and up to 10 days without even having to tell the Commission). Moreover, the Communications Act provides that a station may be off-the-air for more than 11 months without facing automatic expiration of its license. The Audio Division’s new condition runs counter to those provisions. Where, exactly, does the Division get off imposing a standard that is considerably stricter than standards imposed by Congress and the full Commission? Moreover, to the extent that the Division appears to be staking out a regulatory position not previously endorsed by the Commission, it’s not clear that the Division (or the Media Bureau, for that matter) has the necessary delegated authority.

Second, if the Division has decided that it does have the authority to do what Congress and the Commission have chosen not to do, shouldn’t the Division provide at least some general heads-up about that decision? A public notice, for example, or maybe a policy statement putting all current and future radio license applicants on notice that they will be required to operate for one-year continuously, and maybe even offering something akin to an explanation. No such notice or statement has been issued. Instead, recipients of licenses granted after July 1 have found out the hard way – by reading the condition at the bottom of their licenses. That hardly seems right.

Third, the condition itself appears to be based on a plainly indefensible “presumption”. According to the D.C. Circuit, a presumption is valid only “when proof of one fact renders the existence of another fact so probable that it is sensible and timesaving to assume the truth of [the inferred] fact….” That emphatically does not describe the Division’s presumption here.

According to the Division’s new condition, a failure to operate continuously for 12 months following grant gives rise to a presumption that the facilities built were “temporarily constructed”. As we have noted in a previous post, the term “temporarily constructed” hasn’t been defined by the Division, which raises immediate questions about the validity of this presumption. But that’s by no means the only problem here. To meet the Circuit’s standard, the mere fact that a station might have failed to operate continuously for 12 months would mean that it is very probable that that station’s facilities had been temporarily constructed, so probable that it would be sensible to assume such temporary construction to be the case unless and until proven otherwise.

There is zero basis for such a conclusion.

To the contrary, in our experience the overwhelming majority of license applicants build facilities which they intend to – and do in fact – use indefinitely. That intent, however, is not a guarantee that the operation of those facilities may not be interrupted by factors beyond the licensee’s control: the full range of natural and man-made disasters, or simple mechanical malfunction, or inadvertent operator error. When such factors cause the discontinuance of operation, that does not mean that the station’s facilities were “temporarily constructed”. And yet, that is precisely the assumption on which the Division’s presumption is erroneously based.

Fourth, the condition provides for not only the rescission of the license, but also the dismissal of the license application at any time during the first 12 months following grant. Under normal circumstances, once the Division has taken action on an application, it has only 30 days (from the date of public notice of the action) to modify or set aside that action on its own motion. (The full Commission would have an additional 10 days beyond that to jump in.) So if the presumptively fatal discontinuance of operation were to occur more than 40 days after public notice of the grant of the license application, neither the Division nor the Commission would have the authority to declare, long after the fact, that the grant should be rescinded and the application dismissed. It’s not clear how that limitation squares with the Division’s condition.

On that last point, we suspect that the Division believes that, by including the condition in the license, it is able to side-step the 30-day limitation by shifting responsibility to the licensee. That is, by accepting the license with the condition, the licensee is (so the theory would go) effectively agreeing to abide by that condition notwithstanding any contrary regulatory limitations on the Division. And lest the Division be seen to be holding a gun to the licensee’s head, we expect that the Division would point to Section 1.110 of the rules. That section provides that, if a licensee isn’t happy with any condition imposed in a license which it is granted, the licensee may opt to reject the grant as made. Upon such a rejection, the Commission vacates the grant and sets the application for hearing.

In other words, the unhappy licensee isn’t forced to accept a condition it doesn’t like – but the alternative is to lose the grant and get stuck in a hearing. (Truth be told, extremely few grantees choose this course.) Whether the Division’s 12-month-continuous-operation condition is really the kind of thing for which the partial grant rule was adopted is far from clear, but that doesn’t appear to have deterred the Division.

The Division might also be thinking that folks who construct solid, permanent facilities need not worry, since they will presumably be operating continuously for the first year and, thus, the condition won’t kick in. And even if stuff happens and operation is discontinued temporarily, a couple of Polaroids of the big honking tower and fancy transmitter building should be enough to satisfy the Division’s staff that this was not a “temporary construction”.

But why should licenses issued to such folks be under any cloud at all? And let’s not forget that banks and other lenders may be very reluctant to finance construction of facilities if they know that the license covering those facilities is subject to a condition that, on its face, does not bode well for the licensee. And why should such licensees be forced to take extra steps when they happen to be forced off the air through no fault of their own?

We can all agree that, when the Commission issues a license, it expects that the licensee will in fact use that license to provide service to the public. And when stations don’t operate for extended periods of time, they are obviously not serving the public. And it may also be that the Division has encountered more non-operators than it would like. But does any of that justify an approach that seems to say that everybody who files for a radio license is presumed to be a likely non-operator?

Eleven Field Offices Culled in Reorganization

Moving to “refocus” and “update” field office operations, FCC preserves more offices than originally anticipated, but some field personnel will lose jobs.

A few months ago, we reported on Chairman Wheeler’s then-rumored plan to eliminate 16 of the Commission’s 24 Field Offices. (The plan, as described by Wheeler himself in testimony on Capitol Hill, would have replaced the decommissioned offices with “Tiger Teams” that would fly around the country to respond to unlawful interference.) Reports of the plan triggered considerable controversy which in turn triggered some old-fashioned D.C. lobbying (by both regulatees and field office employees) which then prompted Congressional intervention.

The result? In a terse order long on bureaucratese and short on detail, the FCC has announced that 11 of the 24 Field Offices (down from the 16 originally proposed) will be shuttered.

Surviving the cuts will be the offices in NYC, LA, San Francisco, Chicago, Atlanta, Miami, Dallas, and Columbia, MD – all of which were previously said to have been on the safe list. The five saved from the anticipated elimination are Boston, Denver, Honolulu, New Orleans and Portland. (The Atlanta, San Francisco and Columbia offices will be moved to different FCC-owned properties in or near their respective cities.) Continue Reading

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