CommLawBlog : Broadcast & Communications Lawyers & Attorneys : Fletcher Heald & Hildreth Law Firm : Telecommunications, FCC Regulation, Communications Act

Persistent applicant seeks successive reconsiderations; Quoth the FCC, “Nevermore!”

This is another in our continuing series on people who just don’t give up.

Back in 2000, an individual with interests in several wireless companies filed applications to provide maritime radio service along various U.S. waterways. The FCC dismissed the applications because they did not meet the coverage requirements then in effect. Unhappy with the outcome, the applicant filed petitions for reconsideration (denied in 2001), a petition for further reconsideration (denied in 2001), applications for review (denied in 2002), and then appeals to the U.S. Court of Appeals (terminated by the court in 2007).

In 2002, the FCC changed the coverage requirements. The same applicant filed a request to have his applications reinstated (denied in 2004), a petition for reconsideration (dismissed in 2005 as untimely), a petition for reconsideration (denied in 2006), an application for review (denied in 2008), and a petition for reconsideration (dismissed in January, 2010). The FCC tossed this last one as repetitious because, in the Commission’s view, it offered no new relevant information. In an unusual move, the FCC added: “We plan to give no further consideration to this matter, and the staff is hereby directed to dismiss summarily any subsequent pleadings filed by [this applicant] or related parties with respect to these applications . . . .”

That makes nine separate times the FCC rejected the same applications. Most people, by then, would have concluded that “No!” means no. That last dismissal for repetitiousness would deter even the most determined applicant. Even fewer of those would have the nerve to try again, after the FCC ordered its staff not to consider further requests.

But this gentleman is apparently cut from different cloth. Undaunted, he filed a petition seeking reconsideration of the dismissal for repetitiousness of his last reconsideration request.

That one did not even make it to the full Commission. In two brief paragraphs, with a terse citation to the “no further consideration” order, a Deputy Bureau Chief dismissed the arguments yet again.

This is an exciting time for those with an interest in someone so indomitable of spirit.  They will eagerly scan the FCC daily releases over the weeks to come. Will he try to extend his streak at the FCC? Or challenge the most recent dismissal in court? Watch this space for updates.

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Fifth Circuit backs FCC on fine issued to manufacturer of radar jamming device.

Most companies are content to lose a case once or twice. But some don’t get the message, and just keep on running up against the wall.

Rocky Mountain Radar (RMR) makes a jammer intended to help motorists evade police radar. It is different from a radar detector (legal in 49 states), which merely signals the presence of a radar beam. The RMR jammer does more. It not only detects the radar beam, but modifies it and sends it back to confuse the police radar device so it cannot register the car’s speed. The driver sails by, with a friendly wave for the officer.

The FCC announced 14 years ago that such jamming devices are illegal. RMR ignored the memo and kept on selling the product. A short time later, the FCC’s then-named Compliance and Information Bureau cited RMR for marketing an unlawful “intentional radiator” – FCC-speak for what most of us call a transmitter.

RMR raised a Clintonian defense. The FCC rules define an intentional radiator as a device that “intentionally generates and emits” radio-frequency (RF) energy. Not guilty, said RMR. Our device does not “generate” RF. Rather, it simply picks up the RF from the police radar and sends it back. Not being an intentional radiator, the jammer is not subject to FCC regulation. QED.

The Bureau disagreed. The device does “generate” a signal, it said. The incoming police beam just serves as a power source. Besides, said the Bureau, the purpose of the device is to cause harmful interference to a licensed service (police radar), which is illegal no matter how we classify the unit.

RMR sought review by the full Commission, which backed the Bureau. Next, RMR appealed to the U.S. Court of Appeals for the Tenth Circuit, whose 1999 decision backed the Commission.

At that point RMR had lost in every available forum except the U.S. Supreme Court. Actually it tried that one, too, but the Court declined to hear the case.

Scholars of communications law are accustomed to ambiguity and uncertainty. But here, for once, there was none. Few principles have been established so plainly: radar jammers are illegal. Some might disagree on whether this is the right outcome, but no one could seriously think the law is otherwise.

Except, apparently, the people at RMR.

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Proposals are intended to make FCC proceedings more efficient and transparent, and less prone to abuse.

Those of us charged with getting the FCC to do things – issue licenses, grant waivers, cancel fines, all of that – are vitally interested in the fine points of FCC procedures, because understanding them can spell the difference between success and failure.  Just as no one would sensibly sit down to a game of poker without knowing that three of a kind beats two pair, no competent practitioner would take on the FCC without knowing the somewhat more complex rules of that agency’s regulatory game. And, sometimes, part of the job lies in knowing how to navigate those rules most advantageously.

So we take notice when the FCC proposes to change its procedures, as it did in two recent Notices of Proposed Rulemaking (NPRMs).  By and large the amendments are meant to serve laudable goals:  to make FCC proceedings more efficient and transparent, and to forestall some of the more common forms of abuse.

One NPRM proposes internal housekeeping changes which would:

• allow the staff (in place of the full Commission) to dispose of frivolous or repetitive requests for reconsideration;
• allow the FCC to amend  an action (as well as to set it aside) within the first 30 days;
• expand the use of electronic filing and notification;
• close some of the 3,000+ dockets that have become inactive;
• split overly large dockets; and
• clarify the effective date of new rules.

In a separate NPRM, the FCC takes on the always-controversial subject of its ex parte rules.

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* (With a two-year contract. Fees may apply.)

You know those pesky penalties the cell phone companies impose when you cancel your service before the contract period has expired?  How they keep you from switching providers even when the service turns lousy or the competition offers a better deal? Or a better phone? To folks in the biz, those are referred to as Early Termination Fees (ETFs), and they’re back under the FCC’s microscope.

Cell phone companies offer deep discounts on the phone du jour, but only if the customer signs up for a one- or two-year contract, during which the company recoups the subsidy (and more) from monthly charges. Locking the customer into the contract is an ETF that can range up to $350. Worse, the ETF often remains at the full amount up to the last day of the contract period. Customers have complained their company charges the fee even when they move to an area the company doesn’t serve.

Back in December, we reported that the FCC had put Verizon’s ETF in its crosshairs after public outcry moved Congress to act, or to at least to threaten action. The FCC asked about Verizon’s customer notification policy on ETFs: what do the customers know and when do they know it?

Recently, the FCC widened its scope to include AT&T, Google, T-Mobile, Sprint, and another letter to Verizon. The first, Verizon-only, round of questions focused on how the consumer learns about the ETFs. Now the FCC is interested in how the ETFs are calculated, how they are applied to various phones and service plans, whether (and how) ETFs are prorated, and whether it possible for consumers to avoid ETFs altogether.

The companies’ responses are due by February 23, 2010.

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Proposed rules would increase FCC restrictions on “robocalls”

You would think marketing experts would realize that making you crawl off your couch to field an unsolicited phone solicitation – especially one delivered via prerecorded message (i.e., a “robocall”) – is a poor way to generate loyal customers. But the practice persists.

Robocalls and other forms of telephone solicitation have been such an irritant that Congress, over the years, has passed several laws to regulate them, giving both the FCC and the Federal Trade Commission (FTC) authority to adopt telemarketing regulations. The two agencies’ regulations generally track one another, but sometimes gaps appear.

The FTC recently amended its rules to tighten the robocall restrictions. The FCC now wants to come into sync with the FTC, and accordingly released a detailed Notice of Proposed Rulemaking. 

You might ask: Why do we need both agencies to adopt regulations? Can’t we just rely on the FTC? Well, you probably could, if things were set up differently. But as it is, the FTC’s jurisdiction to regulate telemarketing, oddly enough, is less than universal: it doesn’t cover common carriers (e.g., telephone companies or airlines) when they are “engaged in common carrier activity”. Similarly, the FTC telemarketing rule does not reach banks, federal credit unions, federal savings and loans, or non-profit organizations. The FCC’s telemarketing jurisdiction, by contrast, covers promotions by all those industries.  Moreover the FCC has jurisdiction over both interstate and intrastate telephone solicitations, while the FTC’s rules cover only interstate telemarketing.

Under the proposed the FCC’s proposed new rules:

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Constitutional challenge to the FCC’s indecency policy is center stage in Fox’s second trip to appeals court, judges appear unsympathetic to FCC arguments

If at first you don’t succeed, try, try again. And so it was that the FCC trudged back into the U.S. Court of Appeals for the Second Circuit on January 13 to defend the “fleeting expletives” portion of its indecency regime one more time. When last the Commission fought this particular fight in this particular arena, things didn’t go so well for the agency. From what we saw, the Commission is not likely to fare any better this time around. 

Back in 2006, in the wake of Janet Jackson’s Super Bowl flash, the Commission determined that fleeting uses of “fuck” and “shit” in two live awards shows aired by Fox in 2002 and 2003 violated the prohibition on indecent broadcasts. Fox appealed the decision to the Second Circuit, which overturned the FCC on non-constitutional grounds. According to the court, the FCC failed to explain why it had chosen to abandon a longstanding policy of not penalizing the occasional “fleeting” use of expletives. As we reported here last April, the Supreme Court, having agreed to hear the FCC’s appeal of the Second Circuit ruling, reversed the Second Circuit and shipped the case back down for further consideration.

While the FCC may have been pleased to have won a temporary reprieve from the Supremes, any Commission elation must have been tempered by the grim reality that it was about to jump out of the frying pan and into the fire.

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With “Reboot.FCC.Gov”, FCC solicits public input to improve public interaction with agency

Depending on who you ask, 2010 may or may not be the start of a new decade. Depending on who answers, 2010 may or may not be the start of a new FCC. That’s because the FCC is relying on you (and you and you, the guy in the brown shoes reading this during his lunch break) to help decide on the direction in which the agency should be moving. They’ve labeled this process “Reboot.FCC.Gov” and, like all the kids are doing nowadays, they’ have not only set up a website at that domain, but also tied the whole thing together with the Blogging, and the Twittering and the Facebooking and the YouTubing (there’s a bunch of other social media connections as well, including, for some reason MySpace, in case the next big indie band wants to participate).

A more conventional format was used to launch the rebooting process on January 13: a press release (the website does contain a one minute “welcome” video from FCC Chairman Julius Genachowski).  As that release explains, the Commission is “soliciting public input on ways to improve citizen interaction with the FCC.” The Chairman elaborates on this, explaining that the goal is to “get input from all corners of the country on ways to improve usability, accessibility, and transparency across the agency.”

The project’s efforts focus on five key elements:

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It’s that time of year again – no, not tax time (well, not quite), but rather time to file annual Customer Proprietary Network Information (CPNI) certifications with the Commission. And just to make sure that the deadline is clearly highlighted on everybody’s “to do” list, the FCC has released an “Enforcement Advisory” reminding telecommunications carriers and interconnected VoIP providers that their CPNI certifications are due by March 1, 2010 (although they can be filed any time after January 1, 2010). 

CPNI is information relating to the quantity, type, destination, location, amount of use and configuration of service provided to telecom users. While it’s the kind of data that is collected routinely by carriers in the ordinary course of their business, it is nevertheless very private information – as the FCC has recognized in Subpart U of Part 64 of its rules. That subpart requires carriers and interconnected VoIP providers to establish and maintain systems designed to ensure that subscribers’ CPNI is adequately protected. 

And since the FCC is not in a position to inspect each and every company in order to confirm compliance with the rules, the Commission has dumped that particular monkey onto the backs of the companies themselves.  Each year telecommunications carriers must certify that they have established appropriate procedures and processes to protect CPNI. The certificate must include a description of how the procedures ensure that the responding company is or is not in compliance with the CPNI rules and must include a summary of all consumer complaints about unauthorized release of CPNI. It should also explain any actions taken against data brokers. And a detail which is often overlooked: the certification must be signed by a company officer who must affirmatively state that he/she has personal knowledge that the CPNI safeguards which have been established are adequate to ensure compliance.

Who has to file?

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Enforcement Bureau throws the (phone) book at convenience store

On January 14, just beating the expiration of the statute of limitations to punish offenders, the FCC’s Enforcement Bureau issued a spate of fines and citations against companies which had failed to file Hearing Aid Compatibility (HAC) Reports.   While the Bureau’s actions to some extent targeted the usual suspects (equipment vendors and carriers), they also, perhaps unwittingly, threatened a vast new class of businesses with regulation and enforcement actions. And by doing that, the Bureau also may have started a domino effect likely to lead to the elimination of the near-ubiquitous availability of prepaid phones and phone cards.

Despite the dire (and probably unforeseen, at least by the Bureau) consequences of its action, this whole affair started from good intentions. The Commission is rightly sensitive to the needs of the hearing-impaired. Because of that, the FCC’s rules contemplate that telephone equipment manufacturers will produce, and telecommunications service providers will make available to the public, a significant stock of cellphone handsets that are compatible with hearing aid devices. No problem there. And to keep everybody honest (in a “trust but verify” mode), the Commission requires all phone manufacturers and service providers to submit HAC reports on January 15 of each year, detailing their compliance with the handset stocking rules. Since these rules came into effect a few years ago, the FCC has taken an extremely harsh and unforgiving attitude toward carriers who fail in the slightest measure to meet the requirements of the rules.  

That harsh approach was evident in the fact that, among the Bureau’s targets was Firefly Mobile Communications. Firefly is a conventional telecommunications service provider, to be sure, but it was actually exempt from complying with the substantive handset stocking rules because it sold so few of them. Even so, Firefly was not exempt from the requirement to file an HAC report, so the Bureau slapped it with a citation and threatened to impose a fine if it fails to file the report again. (A “citation” is the FCC equivalent of a cop issuing you a warning rather than a speeding ticket; for some categories of offenders, the FCC is required to first issue such a warning before it can impose an actual fine.)

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Concerned about uncertain real-world-scenario performance of national EAS operation, FCC proposes annual national test for all EAS participants

The FCC has proposed rules providing for an annual test of the national alert capability of the broadcast Emergency Alert System (EAS).  What’s more, all EAS participants in the country will have to tell the FCC whether they received the test, whether they retransmitted it, and if not, what went wrong.

Just about every full power radio and television station in the country is required to have an EAS decoder in place, and most are also required to have an encoder and to conduct weekly and monthly alert tests.   All tests must be recorded in the station’s log.  Not every station is fully attentive to these responsibilities, and fines for non-compliance pop up fairly frequently.

The EAS is capable of both national alerts and alerts restricted to a smaller area, such as one state.  If a national alert is received, all stations must cease normal programming and either (a) put the alert on the air or, if they can’t put it on the air, (b) shut down.  Retransmission of smaller area alerts is optional on the part of the licensee.

The FCC has never tested the national alert system, so they are starting to wonder what would happen if the President ever pushed the magic button and tried to get his voice on every station in the country.  A lot of EAS decoders are automated, and a lot of stations operate unattended all or part of the day.  Would the nationwide system really work, or would it crash with a dull thud? 

(Actually, the Commission does have an idea of what might happen. It turns out that, in 2007, some FEMA workers in Illinois accidentally triggered a national-level EAS alert. Since it was not intended to be a test, presumably the alert looked like a real alert, and therefore it should have rocketed coast-to-coast lickety-split. Oops. Apparently, it “caused some confusion to broadcasters and other communications in the Ohio Valley and beyond” and ultimately ran out of gas because of a “combination of EAS Participant intervention and equipment failure”. That hardly encourages confidence that the system will work when it’s triggered on purpose.)

Such uncertainty may soon come to an end, if the FCC has its way.

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 Next time get it in writing, says FCC

Here in Washington, regulatory agencies – the FCC is an excellent example – announce official decisions in written orders or public notices. But those official documents are just the tip of the iceberg when it comes to the nitty-gritty task of regulating. Much more agency business goes on informally, in meetings and phone calls between agency staffers and lawyers like us.

That's generally a good thing. If every little decision had to undergo the agency’s formal review processes, actions would take even longer than they do now. Besides, many regulatory decisions just don't rise to a level of importance that warrants full-dress agency procedures resulting in detailed decisions memorialized in official documents.

On the other hand, relying on informal staff advice can get people in trouble.

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One of the things that gripes an awful lot of people is the so-called early termination fee, or ETF, which you have to pay if you try to cancel your cellphone contract before two years are up. It is usually about $200, so if you are a Verizon customer drooling to get an iPhone, you are out of luck and can’t move over to AT&T unless you are willing to pay the piper’s penalty.

There is another side of the story, of course. Cellphone companies offer handsets at subsidized prices – below what they really cost – to woo customers. If you accept the subsidy, you should at least keep buying the service for a while, so that the carrier can recoup its investment in your whiz-bang phone toy. If you prefer not to subject yourself to an ETF, you can usually do so, but then getting the phone you want will cost you more. Because the cellphone companies make the deep discount on the phones so attractive, most people go for the ETF, which is, of course, exactly what the phone companies hope to accomplish: they get their hooks into you as a customer.

So many people got stressed out about ETFs, though, that Congress finally threatened to pass a law about them. Exactly how that would have shaken out we can’t say, because the cellphone companies made a pre-emptive strike by pro-rating their ETFs. In many cases, the fee goes down a little each month and is smaller in the final few months of your contract. Congress quieted down after that, even though the ETF stays high enough to cause indigestion when you have only a month or two to go before true freedom is yours.

However, quiet rarely endures.

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Comment deadlines set in “parental empowerment” inquiry

Last month we reported on the FCC’s Notice of Inquiry into parental empowerment. That notice has now made it into the Federal Register, which in turn establishes the comment and reply comment deadlines. If you’re moved for whatever reason to chime in on any or all of the questions posed in the notice – sample question: Is there “a minimum level of media literacy that parents, teachers, and children must have to ensure that children can participate effectively in modern society and enjoy the benefits of electronic media while avoiding the potential harms” – you have until January 25, 2010. Reply comments are due on February 22, 2010.

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Unlicensed operator rejects FCC authority, FCC rejects unlicensed operator’s rejection

They think big in Texas, and they think independent in Texas, and so it should be no surprise that an FM radio operator was not impressed when the Feds arrived at his doorstep. Some FCC agents claimed that the operator – one Raymond Frank – was lacking some piece of paper or other from some agency Back East in Washington, but Mr. Frank knew better. No “pirate broadcaster” he – no, he was operating strictly within the boundaries of the Republic of Texas, and so was not subject to the laws of the Yoo-nited States or any little ol’ FCC. (Frank also argued that the FCC’s rules violate the First Amendment. But if Frank was not a U.S. Citizen – being as how he claimed Republic of Texas citizenship and all – that argument may have been a tad inconsistent, but we digress.)

Not surprisingly, the Dallas office of the FCC’s Enforcement Bureau didn’t see things that way, and whupped Mr. Frank but good with a $10,000 fine for unauthorized operation.

The most interesting aspect of the Bureau’s Forfeiture Order is the fact that the Bureau felt the need to respond, in detail, to Frank’s claim that the FCC lacks jurisdiction over radio operations in Texas. To quote the Bureau:

We also note that Texas is a “State” of the United States of America, and it and its residents are subject to the laws of the United States. According to the to the [sic] Texas Historical Commission, Texas was annexed to the United States as the 28th state on December 29, 1845; Texas seceded from the United States and joined the Confederate States of America on January 28, 1861; and Texas officially was readmitted to the Union on March 30, 1870, following the period of Reconstruction. See http://www.thc.state.tx.us/triviafun/trvgov.shtml. Because Texas is a State, Mr. Frank’s invocation of the Foreign Sovereign Immunities Act is misplaced.

Presumably the Bureau felt that, by relying for this historical review on the “Fun Facts” page of the Texas Historical Commission website, the Bureau could not be accused of any kind of Yankee Revisionism. Yee haw.

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Another step closer to mobile spam?

Back in September we wrote about a petition for declaratory ruling filed by Club Texting, Inc., which appeared to be anticipatorily seeking a Get Out Of FCC Jail Free card for itself and others engaging in “text broadcasting”.   Deadline alert!!!  The FCC has just invited the public to comment on that petition. In a public notice issued November 9, the Commission summarizes Club Texting’s petition, and then opens the door for the Great Unwashed to chip in their two cents’ worth. Comments on the proposal are due by November 30, reply comments by December 7.

Curiously, the FCC’s public notice does not provide a link to Club Texting’s petition. Such a link would certainly come in handy to anybody who might want to take the Commission up on its invitation to submit comments. Even more curiously, when we went out to the FCC’s ECFS to try to track down the petition, we couldn’t find it – even using the spiffy new ECFS interface. No problem – we tracked down a copy of the petition  and are providing the link, above, as a public service.

The Commission’s notice tersely echoes the general points advanced by Club Texting in its petition. What the notice doesn’t emphasize is that “text broadcasting” is pretty much the same as (or, as Club Texting describes it, the “functional equivalent” of) that scourge of the late 20th Century, junk faxing. (Not surprisingly, Club Texting prefers the more benign term, “fax broadcasting”.) Nor does the public notice mention that Club Texting is touting, on its website, the fact that it has over 60 million cellphone numbers that it can make available to its customers who might want to text their important messages to some, or all, of those 60,000,000 phones. The Commission probably didn’t mention that factoid because Club Texting didn’t mention it in its petition.

Anyway, if you feel moved to comment on Club Texting’s petition, you’ve got until November 30.

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Trouble in River City?

If you’re looking for a good example of your tax dollars being spent – spent, yes, but not necessarily being put to work – you should check out the Notice of Inquiry (NOI) issued by the Commission on October 23. Entitled “Empowering Parents and Protecting Children in an Evolving Media Landscape”, it reads like a cross between an undergraduate course in child psychology and a weekend program on “modern parenting” that might be offered at the local community center. 

While no one can fault the Good Intentions presumably underlying the NOI – after all, Looking Out For The Kids ranks right up there with apple pie, the flag and motherhood in the pantheon of unassailable motivations – the NOI is grossly flawed in numerous ways. It lacks legislative authority, raises the specter of unconstitutionality, largely duplicates an inquiry just completed by the Commission, inserts the FCC into a regulatory area which other, presumably better suited, agencies are already working, and asks questions which are unanswerable.

If this is how the Genachowski Commission plans to deploy its resources, we’d all better fasten our seatbelts – it could be a bumpy night.

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Genachowski announces plans to expand, codify Network Neutrality Principles

In a speech this morning, FCC Chairman Julius Genachowski announced his intention to initiate a proceeding looking to the adoption of new rules designed to preserve and enhance the “openness” of the Internet, in accordance with the principles of “network neutrality.” (You can read the speech here or watch it being delivered here.) While the Chairman’s support for a so-called “Fifth Principle”, prohibiting discrimination by Internet service providers, was widely anticipated, he also made the surprising announcement of a “Sixth Principle” requiring broadband Internet service providers to be transparent about their network management practices.   A Notice of Proposed Rulemaking, to be issued in the near future, will certainly precipitate a hotly contested battle over the nature of “discrimination” and “reasonable network management.” 

Fifth and Sixth Principles? What are the first Four? Back in a different Internet era (2005), the FCC took a tentative first step in addressing the issues of Network Neutrality with its Internet Policy Statement (“IPS”). That laid out four “principles” designed to “preserve and promote the open and interconnected nature of the public Internet”. Specifically, the FCC stated that consumers are entitled to:

• access the lawful Internet content of their choice;
• run applications and use services of their choice, subject to the needs of law enforcement;
•  connect their choice of legal devices that do not harm the network; and 
• competition among network providers, application and service providers, and content providers.

Two elements of the IPS helped bring us to today’s announcement.

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FCC public notice attempts to squelch Internet rumor, but recent request for declaratory order sends a different message

Responding to a rumor that has already been circulating on the Internet for five years or more, the Commission has issued a public notice which – you should probably be sitting down for this one – denies the accuracy of the rumor! It’s charming, in a kind of down-home-folksy way, that the FCC thinks that, with the issuance of a one-page notice, it may be able to Set the Record Straight, freeing countless naifs from misinformation which the Internet-fanned rumor has forced them to embrace.

According to the notice, the “rumor”, circulated “mostly by e-mail”, warns that “a nationwide directory of cell phone numbers will be made available to telemarketers, and that consumers will start receiving telemarketing calls on their cell phones.” The Commission assures us that “[t]here is no truth to this rumor”.

But as it turns out, the “rumor” may not be too far from the truth.

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ALL emergency information must be accessible to ALL, regardless of disabilities

In the midst of wildfire season in California and hurricane season on the coasts, the Commission has issued a public notice reminding stations everywhere – not just in Cali or on the coasts – of their obligation to make emergency information accessible to those with either visual or hearing impairments. As stations in the danger zones have learned from past experience, there are no exceptions to this requirement, and no excuses will be accepted. The latest public notice makes clear that this policy applies in areas well away from the zones directly affected by the emergency conditions.

The obligations in question here arise from Section 79.2 of the rules, which requires that all video distributors make “emergency information” “accessible” to those with visual or hearing disabilities (the latter by closed captioning or other visual means). “Emergency information” is defined by the Commission to mean information “about a current emergency, that is intended to further the protection of life, health, safety, and property, i.e., critical details regarding the emergency and how to respond to the emergency”.

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Briefing schedules set for indecency remands

As we all know, last April the Supreme Court affirmed the FCC’s re-cast indecency policy on APA grounds, and sent the matter back down to the Second Circuit for further consideration. For those of you who have lost track of the case amid various summer distractions, here’s a heads up: the Second Circuit has established a briefing schedule for the remand phase. 

Fox’s brief is due September 16, along with any amici briefs supporting Fox’s position. The FCC and its friends are set to file their responsive briefs on October 28, and Fox et al. will have until November 12 to file their replies. The Court has apparently decided to hold additional oral arguments at some point after it has had a chance to review the briefs, but it won’t be announcing a schedule for the arguments until after all the paperwork has been filed. Even if the current briefing schedule doesn’t get extended for any reason (and there are never any guarantees), it’s clear that the Court won’t likely be issuing any new opinions in the case until mid-2010, at the earliest – if you figure that arguments won’t likely happen until the middle of the first quarter of 2010 (again, at the earliest) and then the Circuit takes a few months to crank out its decision.

With that schedule, the parties would not likely be asking the Supremes to take another look at it until the latter part of 2010, which in turn means that we’re not likely to see a second Supreme Court take on the matter until 2011 or later.

Meanwhile, in Philadelphia, the Third Circuit folks got a slight jump on their Second Circuit colleagues by calling for briefs in the CBS case (involving L’Affaire Janet Jackson) starting earlier this month, with the last round of reply briefs currently due toward the end of September. No word yet about plans for oral argument. While the Third Circuit’s six-week head start over the Second may result in the CBS case getting to the Supremes’ door step before the Fox case does, we’re still probably looking at 2011 as the earliest before we’ll be seeing another Supreme Court decision on the merits of the FCC’s indecency policy.

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FCC rules have the force of law. That means people who violate them are subject to a fine.

But suppose a company sells a product having a feature the rules do not plainly prohibit. Even a careful reader might not take the rules as alluding to this feature at all. The company might plausibly think its actions are perfectly okay. And, just to make it interesting, let’s suppose another part of the FCC had approved the same feature as being lawful.

Now the FCC’s enforcement arm claims the feature is a violation, and imposes a fine.

The General Mobile Radio Service (GMRS) is a category of two-way radios, usually more powerful and of better quality than the little FRS “family radios” sold everywhere. Users must hold individual licenses from the FCC. The radios must be certified by the FCC for compliance with applicable rules. One of those rules prohibits GMRS users from sending “coded messages.”

Several brands of GMRS radios come with a “voice privacy” feature that converts the speaker’s voice to gobbledygook. Any radio from any manufacturer with the same feature converts the voice back to intelligibility.

The FCC recently singled out one of these manufacturers for a $21,000 fine, claiming the radio was capable of sending what it called “coded messages.” Could the manufacturer reasonably have known in advance that the feature was unlawful?

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More verification, certification fines for FM transmitter marketer

We reported in February a proposed FCC fine of $7,000 against a company called Inter Tech which had failed to properly verify an FM broadcast transmitter. This is a rare offense, in part because verification is so easy: just test the product for compliance with the FCC’s technical rules, and keep certain records. In the same order, the FCC proposed to add on another $11,000 for Inter Tech’s saying it had discontinued a particular model when, in fact, the model was still on sale. We observed that Inter Tech was lucky, as the FCC could have imposed the same $7,000 fine separately for each of fifteen different models.

We spoke too soon. The FCC is back.

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Media Bureau hands out fines for re-hires, over-reliance on Internet recruitment

Following up on audits of the EEO performance of a number of broadcast licensees, the Media Bureau has dished out fines ranging from $3,000 to $12,000 to three licensees for various shortcomings. In addition to the fines, each of the three is also saddled with reporting requirements for the next three-four years – and if any of the stations happen to be sold in the meantime, the buyer will get stuck with the reporting chores. (Good luck explaining to the buyer exactly why he or she should bear that particular cross.) You can read the decisions here, here and here.      

As has been invariably the case for years, the “EEO” miscues at issue did not involve any actual, or even alleged, illegal discrimination. Rather, in each case the licensee failed to jump through various procedural hoops in just the right way. For example, one licensee failed to send out notices of vacancies to two organizations which had asked to be on its mailing list. It also neglected to “retain fully detailed documentation to support the data reported” in its annual EEO report in its public file. That’ll be $3,000, please – be sure to make the check payable to the FCC.

There’s more.

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The Commission has added to the lexicon of things you can’t say on the radio, if you’re a noncommercial broadcaster and you’re referring to people or companies who have provided you with underwriting support. We last alerted our readers to the issue of prohibited “advertisements” in a blog posted in March. Readers may recall that one of the terms declared verboten by the Commission then was “world famous pepperoni rolls”. This time around, the target is nothing less than (cue ominous music) . . . “cold refreshing beer”.

In a decision directed against a community college station in Auburn, New York, the Enforcement Bureau has declared that the following announcements were Too Promotional:

• A cable company blurb which referred to “targeted advertising through specialized channels such as ESPN”
• An announcement for a local bank which stated: “Meets all your banking needs. Visit one of our four branches in the Finger Lakes. Banking the old fashioned way.”
• Reference to the Bank of America, which was said to “[p]rovide[ ] flexible financing for policemen, firemen, nurses, and others in the community that serve it so well."
• And last but not least, an announcement which described Miller Beer as “cold refreshing beer”.

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I think broadcasters have let the record companies put them on the defensive by establishing a one-sided framework for the public discussion of the performance royalty issue. And that may be why broadcasters seem to be having trouble in the struggle with record companies over that issue.  Maybe it’s time to change that framework.

At the NABOB annual awards dinner a couple of months ago, I listened to NABOB President Jim Winston bemoan the burden that would be placed on struggling minority station owners if they had to pay the “performance royalties” being touted by the record industry. I thought to myself that the performance royalty debate has been in favor of recording artists, because the record companies have managed to cast their side as poor suffering recording artists who have supposedly been victimized by a freeloading broadcasting industry.  Artists have worked hard to create these recordings – as the argument generally goes – so why should they have to let their work be used for free by fat-cat broadcasters?

That approach, of course, misses the other side of the debate: the undeniable truth that airplay provides artists with valuable, if not vital, exposure to vast audiences, exposure that helps those artists sell records (pardon me – I mean CDs and downloads), fill concert seats, move merchandise, and establish the public images which are so crucial to their popular success. You will notice that in most music awards shows, artists give an appreciative shout-out to the radio industry in their acceptance speeches.

Broadcasters have historically provided exposure for free, just as the artists have made their recordings available to broadcasters for free. That quid pro quo arrangement has served everybody – artists, broadcasters and the listening public – well for decades. But if artists now want to change the deal by charging for the use of their recordings, that is a two-way street. Why not let broadcasters ask artists to pay for the exposure they get on the radio?

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In a decision which comes as no real surprise, the Supreme Court has agreed to hear the FCC’s appeal of the 2008 decision of the U.S. Court of Appeals for the Third Circuit, which reversed the forfeiture meted out to CBS for the Janet Jackson Super Bowl incident. But having agreed to hear the appeal, the Supremes lost no time in vacating the lower court’s decision and shipping the case back down to the Third Circuit for further consideration in light of the recent decision in FCC v. Fox Television Stations, Inc.

As we have previously reported here and here, the Fox decision changes certain non-constitutional considerations relating to the FCC’s indecency policy. Since the Third Circuit’s decision was based on just such non-constitutional considerations, the Supreme Court’s remand is standard operating procedure.

The remand does set up the possibility that both Fox and CBS could return to the Supremes simultaneously. Both the Second Circuit (i.e., the Fox court) and the Third Circuit (i.e., the CBS/Janet Jackson court) will be getting their respective cases back at essentially the same time (i.e., now). Since the remaining issues are relatively straightforward, both courts might be able to deal with the remand proceedings in reasonably short order. If both courts were to issue decisions in those remands at approximately the same time, consolidated review by the Supreme Court would not be out of the question.

While both Fox and CBS/Janet Jackson involve FCC findings of “indecency”, the two cases are distinct in a number of ways. Perhaps most obviously, Fox involves mere words, while CBS/Janet Jackson involves the fleeting image of Ms. Jackson’s right breast. Consolidated consideration of both cases would provide the Supremes the opportunity to consider both the verbal and visual components of indecency regulation.

Check back to www.commlawblog.com for further developments.

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Do you know what constitutes an antenna farm? 

Nobody else does, either. Except maybe the FCC. But, for reasons that aren’t exactly clear, they’re not telling.

The question came up recently when a CP applicant mistakenly thought it knew, but it didn’t, and but for a legal technicality (let’s hear it for statutes of limitations!) it would have been socked with a fine from the FCC’s Audio Division.

The recent case (which was described, in a different context, in an earlier post) involved the folks who had failed to jump through the various pre-application environmental hoops established in the Commission’s National Programmatic Agreement. One reason they relied on for not doing so: their proposed tower was to be built in an “antenna farm”, and the Commission’s rules specifically state that a proposal for a new tower in an established antenna farm is categorically excluded from environmental processing. Since the proposed site already included two existing towers reasonably close together, it seemed reasonable to conclude that that site could be deemed an “antenna farm”, thus relieving them of the environmental homework.

Wrong.

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[Blogmeister’s note: As part of our overall coverage of the on-going development of FCC indecency law and policy, we present here a nitty-gritty synopsis of the six separate opinions issued by the Supreme Court in FCC v. Fox. Veteran court-watcher and First Amendment guru Kevin Goldberg has read all 72 pages, so you don’t have to . . .]

Just because the fortune-teller got it right does not necessarily mean that we have to like it when the accurately-predicted future becomes present reality. Like when we correctly read the tea leaves in the wake of the November 4, 2008 oral arguments in FCC v. Fox Television Stations, Inc. The Supreme Court has – by the 5-4 margin we predicted (though we reversed the positions of Justices Kennedy and Souter) – overturned the earlier ruling against the Commission by the United States Court of Appeals for the Second Circuit.

The Supreme Court ruled that the FCC did not violate the Administrative Procedure Act (APA) when the Commission suddenly, and without prior warning to broadcasters, reversed 25 years of agency precedent by ruling that “fleeting expletives” broadcast on the 2002 and 2003 Billboard Music Awards violated the indecency rules.  The Court did not take any position as to whether the FCC’s application of the indecency rules violated the First Amendment.

 Our post-argument impressions on the case (which include a summary of key quotes from the oral arguments) and Harry Cole’s early thoughts on the Court's decision offer significant background.  Here’s a summary of the Court’s majority, concurring and dissenting opinions.

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First reaction to the Big Decision

[Blogmeister's note: Our crack team covered the oral argument in Fox last November, and will be providing additional coverage of the Court's decision released April 28.  The following is one commentator's view of the landscape.]

The Supreme Court has issued its long-awaited decision in FCC v. Fox Television Stations, Inc., the case involving the application of the FCC’s indecency policy to “fleeting expletives”. By a 5-4 vote, the Justices concluded that the FCC’s action was consistent with its statutory obligations under the Administrative Procedure Act. Accordingly, they reversed the contrary decision of the U.S. Court of Appeals for the Second Circuit and remanded the case back to the Second Circuit. Score one for the Commission.

While any decision favoring the Commission’s indecency policy in any way is troubling, the good news here is that the Supreme Court’s ruling changes very little on the indecency front. To the contrary, its primary effect in the indecency area is to set the stage for the next, and far more important, act in this long-running drama.

But the news is not all good. Lurking behind the high profile “celebrities talking dirty on TV” allure of the case is a major shift in a seemingly mundane legal doctrine, a shift that could affect FCC regulatory activity in all respects for years to come. So while many commentators may choose to dwell on the obvious “indecency” aspects of the ruling, the real importance of this decision lies elsewhere.

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Answer: When the FCC says it’s a TV.

The FCC has hit up a manufacturer of personal computer TV tuner cards for a $175,000 forfeiture. Why? Because the manufacturer marketed cards that have only analog and not digital tuning capability.  The Notice of Apparent Liability was issued by the full Commission, as opposed to, say, the Enforcement Bureau – a clear sign that the full FCC is still in full-tilt enforcement mode with respect to the marketing of non-compliant TV receivers. (It has been in that mode for at least a couple of years, as we have previously reported here and here, for example.)

Of course, all new TV sets must have both analog and digital tuners.  That requirement, first imposed in 2002, was phased in based on screen size. Since March 1, 2007, all TV receivers imported into or shipped or marketed within the U.S. must include DTV capability.  The rule also applies to all kinds of receiving equipment, including VCRs (who remembers VCRs?) and other devices that lack their own screen and have to plugged into the back of a TV set or other display device.

The PC card manufacturer ran through a whole host of reasonable arguments for why a computer card should not be deemed subject to the rule. It argued that consumers should have a choice of what they want to buy; and in any case, a PC card is just a computer peripheral, not a TV, and is different from a VCR in that the output can’t be plugged into the back of a TV set.  No way, the FCC said.  TV is going digital, and we are not going to tolerate anything, with or without a screen, that is used to receive and display over-the-air TV signals unless it can work with digital signals.

But even the Commission, hard-nosed though it may be, had to acknowledge that, as violations go, selling cheap PC tuner cards with no screen attached is “not as egregious” as selling, like, real TVs (“television receivers with an associated viewing screen”). So rather than lower the maximum boom ($97,500 per violation) onto the manufacturer, the Commission figured it would cushion the blow by charging a mere $25,000 per violation. But what might initially have looked like a mild spanking got ugly when the Commission decided that a separate “violation” occurred with each model marketed. Since the manufacturer had sold seven different PC card models, the bottomline line turned into a considerably heftier $175,000 – not exactly pocket change.

It took me only about five minutes on the Web today to find some analog-only PC cards still for sale.  At least one catalog displayed the consumer alert that was used before digital tuners were universally required, but that alert no longer protects the vendor.  I wonder if the FCC is also browsing the Web.

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Time for NCE’s to review their underwriter announcements?

The Enforcement Bureau has come down hard – very hard – on a low power FM station for broadcasting thousands of prohibited advertisements over the course of some 14 months. Total fine specified in the Notice of Apparent Liability: a cool $20,000. Ouch! And this is an 11-watt (yes, when they say “low power”, they really mean it) station we’re talking about. Double Ouch!

The Bureau’s decision highlights the perennial problem presented by the limits on noncommercial educational (NCE) licensees. (By definition LPFM stations are NCE.) NCE licensees are prohibited from broadcasting any promotional announcements on behalf of for-profit entities at any time in exchange (in whole or in part) for any consideration of any kind. BUT they MAY broadcast announcements which identify and acknowledge non-profit and/or for-profit entities (referred to by the cognoscenti as "underwriters") who contribute to the station’s operations, monetarily or otherwise. 

The trick is telling the prohibited promo from the acceptable acknowledgement.

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Editors' Note: Let’s be honest. The first day on a new job usually stinks. Everything’s new and different. Everybody’s trying to weasel up to your good side. Big and Important Stuff definitely needs to get done, but right out of the box it can be hard to tell the Big and Important Stuff from the Totally Unnecessary and Possibly Counterproductive Stuff.

As a public service, we here at CommLawBlog have put together a "To Do" List for Julius Genachowski when he arrives on the Eighth Floor of the FCC. (We know he hasn’t been confirmed yet, but who really believes that that’s going to be a problem?)  

But what do we know? The Chairman-Designate would probably benefit even more from suggestions from CommLawBlog readers. We down here in the CommLawBlog bunker merely have our fingers on the pulse of the Regulated Nation; you ARE the pulse of the Regulated Nation.

We’re sure Mr. Genachowski would welcome additional input from the blogosphere for his To Do list. Check out our initial thoughts below, then post your own using the comment box at the end of our list.

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And you thought that a contest on your website couldn’t get you in trouble with the FCC? No such luck – you’ve got at least one more think coming!

As it turns out, while the FCC’s jurisdiction over broadcasters is generally limited to their over-the-air activities, a contest on a website that does not toe the line with FCC disclosure requirements for on-air contests can still raise the FCC’s ire IF on-air announcements allude to the contest and IF the station somehow ties the website to listening to the station in some way. Who knew? In a recent decision out of the Enforcement Bureau, a Los Angeles FM licensee found out the hard way.

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On February 2 the FCC proposed two fines resulting from sloppy paperwork by manufacturers.

One concerns “verified” equipment, which makes it a rarity in FCC jurisprudence. Verification is a form of equipment authorization that does not require any filings with the FCC, and so it is not often a target of enforcement. This time, though, the FCC became interested when it checked the website of Inter Tech FM, which manufactures fifteen models of FM broadcast transmitters. (Why? We don’t know. But often these investigations start with a tip from a disgruntled competitor.) When asked, Inter Tech was unable to produce its copies of the paperwork that the verification procedure requires. It also told the FCC it had discontinued marketing a particular model, even though the model was still being promoted on the company’s website. The FCC proposed a fine of $7,000 for the verification violations. With regard to the company’s misinformation about the model on the website, the FCC proposed to fine it $11,000 for “provid[ing] material factual information that is incorrect . . . without a reasonable basis for believing that any such material factual statement is correct and not misleading” – in other words, for getting it wrong without checking the facts first.

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Last September we reported that FCC staffers were apparently sitting in the comfort of their cubicles in the Portals, checking out station websites to determine whether stations had posted their Form 397 EEO “Broadcast Mid-Term Report” on-line. After we did some checking, though, we updated that report to advise that, contrary to what had been told to us by a staffer, Form 397 is not required to be posted on the station’s website (although a copy is required to be placed in the station’s local public inspection file). This was confirmed by a supervisory FCC official, so we’re reasonably sure that it’s correct.

What, then, do we make of an email received from an FCC staffmember on January 30, 2009, with the subject line reading “Mid-Term Report (FCC Form 397)/[licensee name omitted here for obvious reasons]” and the content of which read, in its entirety, “A review of the above-noted stations' website shows that the 2007 public file report is still posted.  Please ask the licensee to upload the 2008 report by February 3, 2009.”

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The concept of “harmful interference” is central to FCC spectrum policy. The FCC has never said just what the term means. Oddly, though, that might be a good thing.

Nearly every band of the radio spectrum is shared among two or more categories of users. If we think of the spectrum as being spread out horizontally, the users of each band are stacked vertically. To see how this looks, click here.

Each band has a predetermined pecking order among its users: primary, secondary, and unlicensed. The relationships among all of these turn on harmful interference. Specifically:

• “Primary” users are protected against harmful interference from all other users.
• “Co-primary” users – services in the same band jointly designated as primary – may not cause harmful interference to each other.
• "Secondary” users may not cause harmful interference to primary users, and must accept harmful interference from primary users.
• Unlicensed users may not cause harmful interference to primary or secondary users, and must accept harmful interference from everybody.

The notion of harmful interference being key to the whole enterprise, we might expect to find a crisp and objective definition in the FCC rules. But when we look, we find something else. It comes in two parts:

In the case of a radio-navigation service (like GPS) or a safety service (police, fire, distress beacons, etc.), harmful interference is anything that “endangers” its functioning.

In the case of any other licensed service, harmful interference is whatever “seriously degrades, obstructs, or repeatedly interrupts” the service.

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On January 22, President Obama elevated Commissioner Michael Copps to the position of Acting Chairman of the Commission. Copps, who has been a Commissioner since 2001, will preside over the slimmed-down three-person Commission until a permanent Chairman takes over. Former Commissioner Tate left the agency in December  when her term ended, and former Chairman Martin bailed out as of Inauguration Day – leaving Acting Chairman Copps to rule the roost over remaining Commissioners Adelstein (D) and McDowell (R). No word yet on how long it may be before the Commission returns to full five-member strength (or who might be filling at least one of the two empty seats). Repeated media reports have indicated that President Obama intends to nominate Julius Genachowski – an Obama Harvard Law School chum and Chief Counsel to Former FCC Chairman Reed Hundt – to be permanent Chairman, but until the President makes a nomination and that nominee is confirmed by the Senate, Copps is The Man.

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If you’re a telecommunications carrier (and FYI – we’re not just talking about POTS and cellular here – think VoIP operators, satellite operators, international resellers and others as well), the FCC wants to be sure that you don’t forget that your annual CPNI certifications are due between January 1 and March 1.  The Commission has issued a public notice reminding everyone about those certifications, and also helpfully providing a suggested template to be used. CPNI – which stands for Customer Proprietary Network Information – is information relating to the quantity, type, destination, location, amount of use and configuration of service.

CPNI is inherently private information, and the FCC’s CPNI rules are designed to protect customers’ CPNI against unauthorized access and disclosure. (While the CPNI rules have been on the books since the late 1990s, the FCC’s interest in enforcing them increased dramatically in 2007 after media disclosures of “pretexting” practices used to obtain CPNI surreptitiously. For further background on CPNI, see the May and September, 2007 issues of FHH Telecom Law.)

One measure adopted by the Commission in 2007 is the annual certification requirement. Each year, telecommunications carriers must have an officer sign and file with the Commission a compliance certificate stating that he or she has personal knowledge that the company has established operating procedures that are adequate to ensure compliance with the rules. The carrier must provide a statement accompanying the certification explaining how its operating procedures ensure that it is or is not in compliance with the rules. Additionally, the carrier must include an explanation of any actions taken against data brokers and a summary of all customer complaints received in the past year concerning the unauthorized release of CPNI.

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In what has to have been an unprecedented farewell kiss-off by any Chairman, on January 19, 2009, now-former FCC Chair Kevin Martin (who exited the Furnitureship with the inauguration of Barack Obama) appears to have caused the Enforcement Bureau to issue 28 separate notices of apparent liability (NALs) and three forfeiture orders, all directed to cable companies, seeking an aggregate of more than $500,000 in fines. (We won’t bother to link to each of the separate orders – but you can find links to them at the Enforcement Bureau’s homepage.)

Don’t check your calendars – January 19 was, indeed, Martin Luther King Day, a Federal holiday. (It’s probably a fair question to ask whether the Bureau staffers – many of them union members – got time-and-a-half for coming in on their day off.)

The fines all stem from the cable industry’s on-going conversion to digital signal distribution, which usually cannot be seen on a TV set without a cable box of some sort, for which a monthly gratuity to the cable company gets tacked on to your bill.

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Bird flipped on the Peacock, complaints ensue

When is a finger just a finger, and when is it a potentially multi-million dollar fine? NBC may well find out soon enough.  At least 18 complaints have reportedly been lodged with the FCC for the Peacock Net’s live broadcast of the Golden Globe Awards on January 11. The gripes involve actor Mickey Rourke’s acceptance speech and, more specifically, producer Darren Aronofsky’s pantomimed response during that speech, a response which NBC dutifully broadcast (for those of you on the West Coast who got a two-second black screen, YouTube is your friend – for research only, of course).

We can’t recall a single instance in the indecency era in which a televised image of a middle finger provoked an enforcement response from the Commission. While we highly doubt that the airwaves have been completely void of such gestures over the last 30 years, the lack of any cases involving such a gesture shouldn’t be surprising: after all, the FCC’s rules define broadcast indecency as “language or material that, in context, depicts or describes, in terms patently offensive as measured by contemporary community standards for the broadcast medium, sexual or excretory organs or activities.” Does flipping the bird really fit in there? We would think not, but then again, we thought that a millisecond flash of nipple was OK and a fleeting view of an attractive woman’s buttocks might be, too . . . and the FCC disagreed. So who knows?

There’s no word yet whether the FCC will take any action at all here, but the stage has been set. Just how far will the Commission be inclined to stretch the long arm (or finger) of the law?

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Four-to-five figure fines for recordkeeping, self-assessment short-falls

With the release of six notices of apparent liability (NAL) at the very tail end of 2008, the FCC has given us a glimpse of what EEO enforcement is likely to look like for the foreseeable future. And the outlook is what you might expect: continued emphasis on detailed record-keeping despite the absence of any indication that any unlawful employment discrimination has occurred.

The six decisions appear to be directed to the broadest possible range of stations, with stations in the east and west, large and small licensees, minority and non-minority ownership. One common factor that all share is the age of the alleged violations: all of the alleged recordkeeping shortfalls took place at least two years ago, with most of the data going back to 2003 or 2004.   The penalty in all cases was a combination of a fine (with amounts varying from $7,000 to $20,000) and reporting conditions.

Each of the NALs arose from the Commission’s random audit program. Each year the FCC requires that randomly-selected stations submit detailed information concerning their EEO efforts. The FCC’s review process is apparently rigorous – how else to explain the multi-year timeframe from initial submission of the EEO information to the 2008 issuance of the NALs?

There are a number of lessons to be taken from the NALs.

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On Friday, December 12, we told you that the Commission had released the agenda for their final hurrah of 2008 (scheduled for December 18) - remember? Well, that was sooo yesterday’s news. 

Late that same day, the Commission announced that the December 18^th meeting was cancelled. After the Agenda was released Thursday evening, Chairman Martin received a letter from Representative Waxman and Senator Rockefeller asking the Commission to cancel the meeting and expend the Commission’s resources on the DTV Transition. Apparently, there were items on the agenda, including the AWS-3 Auction, that had raised substantial controversy and the members of Congress did not want the Commission to be distracted from the DTV Transition. According to the FCC spokesman, after receiving the letter, Chairman Martin determined that it did “not appear that there [was] consensus to move forward and the agenda meeting has been canceled.”

The public notice indicated that the Commissioners will resolve the seven items that were on the agenda via circulation. So, just like the weather in Washington, if you don’t like what's on the FCC Agenda, wait ten minutes, and it may change…

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Products today come with dozens of warnings that few people actually read. If the item includes digital circuitry – almost everything does, nowadays – the manual is supposed to include a warning mandated by the FCC. Digital circuits emit radio waves as by-product, and so have the potential to cause interference to radio communications. The FCC not only sets limits on these stray emissions, but also mandates specific warning text for the product’s instruction manual. The required wording first alerts the user to the possibility of interference. The warning for consumer devices (“Class B,” in FCC-speak) goes on to suggest specific ways to fix interference to radio or TV reception. The text for commercial and industrial devices (“Class A”) just warns against operating in residential areas.

Minnesota-based Multi-Tech Systems makes a device that attaches to an office phone system for routing cell-phone calls to and from people’s desktops. It is a Class A device that contains digital circuitry. Multi-Tech duly went through of the required procedures to ensure the stray emissions are within bounds. AT&T successfully tested the device to ensure compatibility with its cell network. With all needed approvals in place, Multi-Tech shipped several hundred units.

The trouble started with a complaint that the product was causing interference to other electronic equipment, particularly speakers and telephone landlines. Some people would just ask Multi-Tech to fix the problem or send a refund. But this party instead went to the FCC. After investigating, the FCC concluded the Multi-Tech product was unlikely to have caused the reported interference. Case closed.

Not quite.

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The FCC has announced its official agenda for its final meeting of 2008, to be held Thursday, December 18, 2008 in Room TW-C305 at the Commission with a tentative start time of 10 a.m.  At the meeting, the Commission is currently planning to consider seven items:

1. A spectrum auction rules/free broadband proposal
2. Wireless license renewal
3. DTV translator service
4. Cable carriage rules
5. Violations of the Commission’s DTV consumer education requirements
6. Wireless, enhanced 911 location requirements; and
7. Satellite Digital Audio Radio Service.

Admission is free and open to the general public.  For those who cannot make it in person, audio/video coverage of the meeting will be broadcast live with open captioning over the Internet at www.fcc.gov/realaudio.

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With much ballyhoo, on December 9 a report from the majority (i.e., Democratic) staff of the House Committee on Energy and Commerce was released, slapping the bejeebers out of Chairman Martin. Titled “Deception and Distrust: The Federal Communications Commission under Chairman Kevin J. Martin”, the report concluded a year-long investigation. But despite a considerable amount of grandstanding on the part of the House Committee, the report itself is disappointing on a couple of levels. 

While it does conclude that Martin “withheld important and relevant data”, “manipulat[ed]” a staff report, “undermined the integrity of the staff”, engaged in “senseless waste of resources”, yadda, yadda, yadda, the report does not contain any truly blockbuster, make-your-eyes-bleed, exposés – no 8’x10’ glossies or lurid videos of Martin in flagrante delicto committing [fill in the political nightmare of your choice here]. In fact, none of the Committee’s charges even seems to rise to the level of a punishable violation of law or rule (although the Committee does suggest that further investigation into some matters may be in order).

More depressingly, though, the report tends to confirm the long-held but seldom articulated beliefs of a number of observers about the way the FCC operates, regardless of who happens to be its Chair. And the odds are that the issuance of the report is not likely to change anything.

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Ordure in the Court, Part II

Elsewhere on this blog we have posted reports about the oral argument in FCC v. Fox, the first broadcast indecency case to reach the Supreme Court in 30 years. From our notes taken during the argument, we have mined the following nuggets:

• Justice Ginsburg noted that there was “no rhyme or reason” in the FCC’s application of its indecency policy.
• In a brief reference to the “scarcity rationale” which has historically been invoked to justify content regulation of broadcasting, one justice suggested that that rationale was not involved in the seminal Pacifica case (the 1978 Supreme Court decision which upheld the FCC’s first enforcement action under its then-new indecency policy). In response, Justice Stevens pointed out that scarcity was indeed a basis for Red Lion (the 1969 Supreme Court decision upholding the Fairness Doctrine), and Red Lion, in turn, was a basis for Pacifica. No one in the courtroom was in a position to argue with that statement, since Stevens unquestionably knows whereof he speaks: he was the author of the plurality opinion in Pacifica.
• Speaking of the scarcity rationale, Justice Ginsburg pointed out that Pacifica arose “before the Internet”, an observation which suggests that she may believe that the explosion in available media sources over the last 10-15 years might undermine the scarcity rationale.
• When asked by Ginsburg how the FCC determines what the “community standards” for indecency are, the Commission’s lawyer responded that the FCC applies its “collective experience”.
• In a discussion of whether the “community” is more tolerant of certain words today than it was in 1978, Justice Scalia bemoaned the “coarsening of manners” which he apparently perceives around him – and which he apparently attributes, at least in part, to broadcast content – and indicated that the expletives under consideration are not used “in polite society”.
• Justice Stevens, who got the indecency ball rolling with his opinion in Pacifica, asked whether the determination of whether or not a particular word or term is indecent is dependent on whether it is “hilarious” -- a proposition which Justice Scalia re-stated (probably sarcastically) to ask whether bawdy jokes might be judged not indecent “if they’re really good”. Later, Stevens also inquired of the FCC’s lawyer whether the word “dung” is indecent. (Like any good lawyer, FCC counsel answered with a solid maybe.)

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Three FHH attorneys who have followed the ups and downs of the FCC’s indecency policies over the years attended the Supreme Court oral argument in FCC v. Fox Television Stations, Inc., the first broadcast indecency case to reach the high court in 30 years. They filed the following reports with www.CommLawBlog.com.

Jeff Gee reports:

Anyone hoping to hear Justice Ginsburg drop the F-bomb in open court was sorely disappointed as the U.S. Supreme Court held oral arguments on the FCC's indecency rules. Justices and attorneys alike proceeded without a single utterance (fleeting or otherwise) of any of Carlin's famous seven dirty words. Instead, the audience was treated to debate on the finer points of the Administrative Procedure Act. What about the part where the FCC's rules violate First Amendment? Oddly enough, that might not matter too much.

As readers of our Memo to Clients may recall, the case being considered by the U.S. Supreme Court (formally titled FCC v. Fox Television Stations, Inc.) arose from a decision made by the U.S. Court of Appeals for the Second Circuit. The Second Circuit overturned the FCC's rules prohibiting "isolated" or "fleeting" indecent utterances solely on the grounds that the FCC failed to adequately justify its rules. Although the Second Circuit's decision also suggested that the FCC’s rules might not pass a First Amendment review, the Second Circuit made clear that its decision was based solely on administrative law and not constitutional law. As a result, the issue before the Supreme Court technically was not whether the FCC's rules are constitutional or even workable. Rather, the issue before the Court was whether the FCC sufficiently followed the rules applicable to Federal agencies as they make policy.

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If you thought that the departure of Elliott Spitzer from the public scene might have put out the FCC’s fire for enforcement of the payola rules, think again. That fire is still blazing. In recent days the Enforcement Bureau has sent out letters of inquiry to a number of Spanish-language radio stations demanding responses concerning allegations of payola.

The claims arise from a lawsuit filed in Los Angeles two years ago. The plaintiff there, one Daniel Mireles, claims that he was wrongfully discharged from his position as Vice President of Promotions at Univision Music. (As always, the pivotal role of the “disgruntled former employee” should never be underestimated.) According to his complaint, Mireles was instructed by management-level executives of Univision and Fonovisa (a record label owned by Univision) to make “cash payments to the program directors and others at radio stations in order to increase the airplay of Fonovisa’s records”. While Mireles alleges that he resisted those instructions initially (apparently he had been involved in a payola investigation in the 1990s and was understandably gun-shy about going through the meat grinder again), he acknowledges that, between February-June, 2006, he was given some $720,000 to pay to “individuals at radio stations”. The goal was apparently to “get Fonovisa’s records played more frequently on the radio”.

Mireles claims that, in drawing up his list of “individuals at radio stations”, he spoke with people at “approximately fifty or more” stations. He allegedly made deals to make payments ranging from $3,000-$10,000 per month.

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The FCC recently issued Notices of Apparent Liability against Time Warner Cable (TWC) and Cox Communications, resulting from service changes when those cable TV operators migrated certain programming channels to their Switched Digital Video (SDV) platforms.  In August, 2008, the FCC found that this action by TWC violated an FCC rule requiring 30 days advanced written notice to the local franchise authority before making a service change.  More recently and ominously, however, the FCC has expanded its enforcement action and issued additional Notices of Apparent Liability asserting that the cable operators have also violated two technical rules. The Notices propose a $20,000 fine for each of the operators, as well as a requirement that the operators issue refunds to their customers who have been harmed by the move to SDV.  

The nature of the first violation alleged in the Notices is this: the migration of the channels to the SDV platform meant that only customers who had set-top boxes leased from the operators could access the channels moved to the SDV platform – customers who were taking cable service without use of a set-top box, because they were using digital cable-ready TV sets and/or DVRs, suddenly could no longer access channels that were part of their subscription package. The FCC asserts that that is a violation of Section 76.1201 of the rules, which prohibits an operator from “prevent[ing] the connection or use of navigation devices to or with its system.”  The FCC also found a violation of the same rule because the migration of the channels to SDV prevented subscribers without set-top boxes from using some of the functions of their digital-ready TV sets and/or DVRs: viewing picture-in-picture and recording one channel while viewing another.

A bit of background:  Section 629 of the Communications Act requires the Commission to ensure the commercial availability of navigation devices, thus allowing consumers the freedom to purchase and use their own navigation devices from sources other than their cable operator, as long as such use does not lead to theft of service. In order to prevent such theft, the FCC established a framework whereby the navigation functions and the security functions of devices are separated, with consumers who purchase their own navigation devices (e.g., digital cable-ready TV sets) being required to also purchase a “CableCARD” from the cable operator, which allows the subscriber to access the operator’s programming. To facilitate this, major manufacturers and operators entered into an agreement about necessary equipment standards (Plug and Play), and in 2003 the FCC issued an Order requiring compliance with those standards (Plug and Play Order).

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For years a number of programmers have complained that their requests for carriage have not been treated fairly by a number of large cable operators. Now those complaints have been referred to an Administrative Law Judge (ALJ), who has been charged with the task of “resolv[ing] the factual disputes” and recommending some resolution of the dispute within 60 days. 

While the precise issues to be resolved by the ALJ are not laid out with specificity in the “Memorandum Opinion and Hearing Designation Order” (HDO) issued by the Media Bureau, the HDO includes considerable discussion of allegations that cable systems owned by Comcast, Time-Warner, and Cox discriminated in favor of program services in which they own an interest against Wealth TV, the NFL Network, and MASN (a mid-Atlantic baseball network). Discrimination in favor of cable-owned program services is not permitted.

Wealth TV made a prima facie showing, sufficient to warrant a hearing, that MOJO, a programming service in which the cable operators have an interest that has similar content and aims at a similar demographic, was given nationwide distribution when all Wealth TV could get was a so-called "hunting license" to negotiate with individual cable systems. On the sports side, the NFL Network and MASN made a case that the cable companies treat sports channels in which they have an interest better in terms of tier selection. The FCC also raised an eyebrow about the charge that the cable companies asked for licensing fees from the sports channels, as demanding an equity interest in programming in return for carriage is forbidden.

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Last month, in a blog posting about apparent FCC monitoring of station websites (to see if stations’ Form 397s – the mid-term EEO report – are being posted on those websites), we indicated that Form 397 is required to be posted on the website of each station required to submit a Form 397. That was based on what a Commission staffer informally told one of our colleagues. That staffer also advised that the staffer’s job activities include on-line checking on whether Form 397s have been posted on stations’ websites.

 We have since done some double- and triple-checking of our own, and as it turns out, the rules do not require Form 397 to be placed on a station’s website. No such requirement of website posting is imposed, implicitly or explicitly, by the public file rules (Section 73.3526 and 73.3527) or by the EEO rule (Section 73.2080). In fact, those rules don’t even require, explicitly or implicitly, that Form 397 be placed in the station’s hard-copy local public inspection file. While the instructions to Form 397 do explicitly state that a copy of the Form 397 “must be kept in the station’s public file”, those instructions say nothing about posting the Form 397 on the station’s website.

Still, as noted above and in our earlier posting, we were advised by the Commission’s staff that they understand that website posting of Form 397 is de rigueur and, moreover, that they are doing their own on-line spot-checks for compliance.

What to do?

We have contacted a senior FCC official whose responsibilities include EEO enforcement. He has confirmed our research: Form 397 is NOT required to be placed on any station’s website. He also assured us that, if there is any misunderstanding on that point among FCC staff, he will correct it right away.

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By now all radio and TV licensees with "station employment units" (SEUs) having five or more full-time employees should be in the habit of preparing the annual EEO report that must be placed in the station's local public inspection file each year on the anniversary of the due date for their renewal application. Those annual reports are also required to be posted on the station's website, IF the station has a website.  Ditto for FCC Form 397, the mid-term EEO report required of TV SEUs with five or more full-timers and radio SEUs with 11 or more full-timers at the mid-point of their license terms.  

One of the miracles of the Internet, of course, is the fact that pretty much anything that's posted there can be viewed by pretty much anybody pretty much anywhere. So it should come as no surprise that we have heard that FCC staffers – sitting in the comfort of their government-issued chairs in beautiful Washington, D.C. (our nation's capital) – have been checking station websites across the country to see whether those websites include FCC Form 397 like they're supposed to. 

So far we have not heard of any fines being issued for any apparent violations detected through this remote investigation technique, but it's probably just a matter of time. You have been warned.

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Indecency appeals – FCC now 0-2 – In a long-awaited decision, the U.S. Court of Appeals for the Third Circuit reversed the FCC’s order holding that CBS and its affiliates had broadcast indecency in the notorious 2004 Super Bowl half-time show featuring Janet Jackson and Justin Timberlake.  The Court found that the FCC had had a longstanding policy not to penalize the occasional fleeting instance of possible indecency and that the Commission had not adequately explained why it chose to depart from that policy when it whacked the CBS folks for the half-second exposure of La Jackson’s right breast.  The Court’s decision was consistent with the Second Circuit’s decision in the Fox case, although unlike the Second Circuit, the Third Circuit did not suggest that the Commission’s indecency policy is unconstitutional.

It’s not clear where this case will go from here.  The Court remanded the matter back to the FCC for further consideration – so if the FCC wants to try to take another crack at explaining its abandonment of the fleeting expletive policy, it could conceivably do so.  But that policy is already before the U.S. Supreme Court in the Fox case, so it’s unlikely that the Commission will bother to try to tweak its policy before Chief Justice

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The FCC is on the prowl again, this time striking at a station for going over the line with "underwriting" announcements before it gave up the noncommercial ship and switched to commercial status.  And the attack was on the sacred national treasure -- Tastee Freeze ice cream.

You will recall that noncommercial stations may acknowledge funding but may not use qualitative terms or suggest that listeners should make a purchase.

The announcements on this station (WCVZ, South Zanesville, Ohio) said that Tastee Freez products are "tastefully decorated" -- whoops, that says they are of good quality -- and they may be suitable for "a special occasion" -- whoops, that's telling you to buy some if you're having a party.

The friendly neighborhood realtor also caused heartburn with announcements that "we are about family," and "we love selling real estate" -- whoops, that says they are nice people, which is not allowed.

The FCC did back down in one situation, where a vendor's products were described as "creative learning materials."   The FCC left that one alone.

Don't count on any let-up in the FCC's enforcement efforts in the underwriting area.  The new decision included a bill to the station for $9,000 to help fund the FCC's budget.

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Readers of this blog know that full-power analog TV stations will go off the air for good on February 17, 2009, leaving only their digital counterparts.  Sadly, though, not everyone is so well-informed.  Come that Tuesday morning, a lot of people will turn on their trusty old TVs, ready to start the day with a little news or Gilligan's Island, and instead see . . . nothing.  With a little advance warning, those folks can either upgrade to digital TVs or attach a government-subsidized adapter to the old one.  But some people -- many of them elderly, poor, or not fluent in English -- will be caught short.

The FCC wants to keep the numbers of these unfortunates to a minimum.  To that end it prohibited the manufacture and importation of analog-only TVs as of 2005-2007 (exact dates depended on screen size), and required that analog-only TVs offered for sale after last May carry a warning.  It also mandated certain upgrades to the V-chip circuitry.

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The FCC has banned importation and interstate shipment of analog-only TV receivers.  Anything that picks up TV has to pick up digital TV.  The rules cover not only conventional receivers with screens, but anything with a TV tuner (such as off-the-air video recorders).  The aim is to minimize the number of consumers caught short when analog TV goes off the air early next year.

A year ago, the FCC sent a "Letter of Inquiry" (LOI) to a company suspected of violating this rule.  The letter asked for information about seventeen products the FCC thought might be analog-only.  It wanted the quantities of each that were imported or shipped interstate, the relevant dates, and the entities to whom the devices were shipped.

The company admitted that some of the products specified in fact were analog-only.  But these were not stand-alone devices, it said -- they were plug-in boards for personal computers.  The company expressed its view that plug-in boards were not covered by the analog-only rules.  And it came up with creative and interesting arguments on why consumers benefit from having analog-only boards available.  Perhaps thinking it had adequately disposed of the inquiry, the company did not provide the requested particulars.  And we can guess why.  Responding to these LOIs often takes several person-days of digging through records -- a major disruption for a small business.

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On December 28, 2007, the U.S. Court of Appeals for the D.C. Circuit released a decision in Biggerstaff v. FCC, No. 06.1191, in which two petitioners asked the court to review a 2006 FCC action involving tweaks to the Junk Fax rules. The tweaks had been made at the direction of Congress (in the Junk Fax Prevention Act of 2005 ("JFPA")). The two petitioners are both long-time critics of the junk fax industry, and they both challenged the FCC's implementation of the "Established Business Relationship" exception to the junk fax rules.  That exception had been mandated by Congress, so there really wasn't much to argue about.  But that didn't stop the petitioners, one of whom in effect was challenging the FCC's original adoption of the EBR exception (back in 1992), and the other of whom wanted the court to force the FCC to modify its regulatory language to change "permit" to "does not prohibit" in characterizing the effect of the JFPA.

The first petitioner got past the Scylla and Charybdis of standing and ripeness - meaning that the Court agreed at least to listen to his argument - but ultimately failed on the merits because nothing the FCC did in its 2006 rulemaking pursuant to the JFPA "re-opened" the 1992 agency action in a way which would permit judicial review of that earlier action.

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This week the FCC imposed a fine of $63,000 on a company that, it said, marketed Class A digital devices without first having them "verified" for compliance, as the FCC rules require.

The action is unusual in two respects.

First, Class A devices rarely become enforcement targets. These are devices marketed for commercial or industrial use, and which by their nature are unsuited to consumer applications. Here the offending products were rack-mounted computer gear -- not sleek high-end audio racks, but the kind used in back-room installations. These have all the esthetic appeal of the back of a refrigerator. They don't go with anyone's living-room furniture.

Verification of a Class A device, like these, has three steps: (1) Test the product for compliance with FCC rules. (2) Put the test results and certain design data in a drawer. (3) Close the drawer. That's it. No submission to the FCC; no special labeling; no paperwork to the customer.

Class A enforcement is unusual because compliance is easy and violations are hard to spot. An un-verified device looks just the same as one that has been verified. Here the FCC tells us it launched an investigation because it "received a complaint," which usually means a phone call from a competitor. Without those phone calls, the FCC has no practical way to enforce the verification rules.

The second reason this case raises eyebrows is an FCC rule mandating that most violators receive a citation -- a formal warning -- and then commit the same offense again, before they can be fined. There are exceptions for FCC licensees and the like, who can be fined outright, on the theory that they should know better. And no citation is necessary if the offending activity is one for which a license, permit, or certificate is required. Here, though, the defendant was not (and need not have been) a licensee; and the offense was a lack of verification, which does not entail a license, permit, or anything of the kind. A prior citation and re-offense seem to have been necessary prerequisites to a fine; yet the FCC skipped those steps entirely.

Companies that manufacture or market Class A equipment can easily avoid becoming featured in one of these emails. All it takes is having your products tested, and keeping your records in good order. True, there are costs involved. But compliance is a lot cheaper than paying fines to the FCC. Or paying a lawyer to bail you out.

The FCC order is available here.

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Electronic "kits," once the basis of a popular hobby, now form a grey area in FCC regulation. With a few exceptions, kits are not subject to FCC rules, even though their assembly may yield an otherwise FCC-regulated device. Computers, for example, are regulated as to their stray radio-frequency emissions. (Check for the FCC logo on the underside of any laptop.) But is nonetheless legal to sell a computer in kit form, and some companies do, even if its emissions are over the FCC limits.

The legal basis for this quirk lies in the structure of the FCC's rules, which prohibit the marketing of an unapproved device. Manufacture is not regulated. Neither are the components marketed as a kit, because they are not separately capable of emitting radio-frequency energy. The consumer who assembles the kit for his or her own use ordinarily does not market the end product, which thus escapes regulation entirely.

Lately the FCC has been clamping down on entrepreneurs who attempt to exploit this loophole.

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By Michael Richards
703-812-0456 email

As discussed in our October, 2007 Memorandum to Clients, like they did in their initial foray into the debt collection world a couple of years ago, the Feds are not relying solely on their in-house resources these days.  Rather, they have embraced the spirit of outsourcing, and have enlisted various private companies to try to increase revenue collection.

Some collection calls may come from the Treasury, or from companies to which Treasury has "referred" the "debt" in question.  But you should also be aware that the FCC itself has out-sourced its own pre-Treasury-referral collection effort. At least some of the FCC's private posse whom have identified themselves, in dunning calls and emails, as being associated with "Perot Systems". The Perot folks have apparently been given space at the FCC, as their caller ID's show FCC phone numbers and their email addresses end with "fcc.gov".  So if you get a call from somebody at "Perot Systems", you should recognize that it's probably the FCC's hired guns.

Of course, as we mentioned in the Memo to Clients, a lot of the FCC's claimed delinquencies are simply wrong.  In many cases, the debt was already paid, or was not even owed in the first place!

Although it's a hassle (and possibly an expense) to respond to incorrect demands for payment, do not ignore collection calls or letters.  You've got to answer, unless you want to fall into even a bigger dark hole, with the Treasury Department (or possibly some company to which Treasury might assign the "debt") stalking you.  Once in that situation, it can take many weeks to clear things up as Treasury and the FCC each will tell you to call the other until the computers fully update. And while you wait, you may well be kept from any action on any application.  Bad news, that.

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Cumulus thought its quarterly public file lists were in compliance . . . Cumulus was wrong.

A prominent broadcaster recently got caught in the dangerous trap the FCC has set for unwary broadcast renewal applicants.  You can read the FCC's decision here. There are a number of lessons to be learned here about public file maintenance, quarterly issues/programs lists, and certifications lurking in renewal applications.

It happened to Cumulus at a couple of stations they own in Florida and Georgia.

Back in 2003, both stations filed for renewal.  In response to the question about the completeness of their public files, each station certified that, yes, all required material had been placed in their public files at the appropriate times.  In early 2004 a couple of objections rolled in alleging that the files were missing the required quarterly issues/programs lists; Cumulus responded (also in 2004) that all required lists WERE placed in the file in a timely manner and the renewal certifications WERE accurate and correct.

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Late on Friday, the FCC confirmed a $1 million fine against Behringer USA, Inc. for the importation and marketing of digital audio devices that had not been tested for FCC compliance.

Behringer initially claimed that it thought CE compliance would suffice for importation to the U.S. But of 66 models, it could show evidence of CE compliance for only one before it began importation, and only seven before it received its first letter of inquiry from the FCC, and only 17 before being notified of the fine.

The very large fine reflects not only the number of units illegally sold (approximately 1.17 million), but also Behringer's continuing to import untested devices even after receiving the FCC's letter of inquiry. Behringer also failed to submit certain forms to Customs after promising the FCC it would do so, otherwise dragged its feet in achieving compliance, and appears not to have been fully candid with the FCC.

The offenses covered five years. The FCC fined Behringer only for unlawful activity during the one year covered by the statute of limitations. But, as in other recent cases, it increased the fine in part because of Behringer's behavior prior to that year.

The FCC rejected claims that it had earlier discontinued some of the offending models, that some devices do not come within the cited FCC rules, and that some identical; models were counted twice.

The order is at this link.

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The FCC has fined a distributor of TV receivers almost $3 million for shipping units that lack digital tuners and associated DTV capability.

As part of the nation's conversion to digital television, the FCC has mandated that receivers sold in the U.S. be capable of receiving DTV signals. The requirement is phased in, starting with imports and interstate shipments of screen sizes over 36 inches, followed by 25-36 inch sets a year later, and sub-25 inch screens a year after that. The FCC may have reasoned that the extra cost of the DTV circuitry would be less obvious in the big-screen products. It did express the hope that costs would come down as the smaller, more popular, smaller sizes came within the rule.

The importer in this case admitted to having imported or shipped a total of 72,487 noncompliant products. Of these, 22,069 came within the one-year statute of limitations. The FCC calculated the fine at $50 per unit for the first 1,000 units, $75 each for next 1,500, and so on, upward in steps of uneven size, to a maximum of $250 per unit above 50,000 (although this offender did not get that high). There is no explanation of where the numbers come from. The total works out to $2,899,575.

On the same day, another company was charged with importing or shipping 1,288 noncompliant TVs for a total of $63,650, using the same formula. The company argued the products were not consumer TVs, but monitors for commercial and educational customers. The FCC rejected the argument, in part because some of the products were sold to retailers.

The two orders are at the links below:

http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-07-106A1.doc

http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-07-105A1.doc.

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