Carrier socked with potential $819,000 fine for not offering enough hearing aid-compatible phones

The FCC has been extraordinarily vigilant about enforcing the requirement that telecom carriers offer their customers certain minimum numbers of hearing aid-compatible handsets.   This requirement arose in 2008 when the Commission established a gradually increasing quota of acoustically coupled and inductively coupled handsets which carriers must make available to hard-of-hearing customers. The idea is that hearing-impaired folks must have a broad range of handsets of different feature levels to select from.

Although the FCC alerted the industry repeatedly to the requirements of Section 20.19 of the rules, T-Mobile seems to have seriously dropped the ball. According to a recent Notice of Apparent Liability (NAL), T-Mobile came up way short: as many as 33 acoustic hearing aid compatible handsets short in 2009 and 2010, and 14 inductive handsets short in that same period. These shortfalls were clear on the face of the annual report that T-Mobile (like other carriers) must file with the FCC detailing, among other things, the handsets they offer. The NAL doesn’t explain how T-Mobile could have failed to take steps to bring itself into compliance when its own disclosures apparently showed a shortfall in the required handsets.

The price tag for this problem?  $819,000.

Several things are notable about the NAL which, we hasten to mention, is only a preliminary set of allegations, not a final determination. T-Mobile will still have plenty of opportunity to plead its case to the Commission.

  • First, the amount of the proposed fine approaches the $1 million mark, even though by the FCC’s own account T-Mobile cooperated in the FCC’s investigation. Although the FCC points out that T-Mobile had revenues of over $21 billion in the years in question, a fine this size might be enough to get someone’s attention.
  • Second, the amount of the fine was higher than might have been expected because the Commission used a new calculation method. Previously, the FCC used a “highest handset shortfall” approach. Under that policy, a carrier was assessed a $15K fine for each handset it was short in the month of the year in which it fell the furthest short.  So if you were short, say two handsets in February, one in March and three in April, the FCC would fine you three times $15,000 for the three phones you were short in the month when you were the shortest; shortfalls in the other months would be ignored.

No more. The FCC has now decided that that approach didn’t encourage compliance, since it essentially forgives all but one of the months when you are non-compliant. It also treats you the same if you were non-compliant for 12 months or one month. T-Mobile would have gotten only a $165,000 fine under the old approach.

Under the new policy, you can be fined for being short a handset in every month of the year. The shortfalls each month are added together to calculate the total. Accordingly, since T-Mobile was apparently short seven handsets in November and December of 2009 and 45 handsets through August of 2010, its base penalty was $780,000 (i.e., 52 handsets short x $15K per handset short). The FCC then adjusted that amount upward by $39,000 to take into account T-Mobile’s size, but mitigated that increase to reflect the fact that it had cooperated in the investigation.

  • Third, we observe that normally the FCC can impose forfeitures on common carriers only for violations occurring within one year of the NAL. All of the violations charged here occurred in 2009 and 2010, more than a year ago. That’s not a problem here, though, because T-Mobile had voluntarily agreed to toll the statute of limitations for offenses occurring after October, 2009. But the FCC said it was exercising its “prosecutorial discretion” not to fine T-Mobile for violations occurring prior to that time. Hmmm – it’s not clear that the FCC could legally have assessed a fine for those old violations even if it wanted to.
  • Finally, a cautionary note. In reporting the Hearing Aid Compatibility (HAC) ratings of its handsets, T-Mobile made a few mistakes, according to the FCC. T-Mobile defended itself by claiming that it had relied on HAC rating information provided by one handset’s manufacturer – and that information turned out to be wrong. The FCC rejected that claim. Turns out that T-Mobile had relied on a manufacturer’s tech sheet that was incomplete, as the tech sheet itself clearly indicated. Later filings by the manufacturer with the FCC all showed that the device was not HAC-rated. Moral: If you’re going to rely on the manufacturer for HAC ratings information, be sure to get the final technical specs supplied by the manufacturer to the FCC

So, as with many FCC enforcement actions, the message from the FCC here is simple: “Listen up, people. We mean business.”