Company Fined $60k for Not Seeking Prior OK to Transfer Licenses

By Paul J. Feldman on Posted in Enforcement

Continued use of expired licenses leads to enforcement action

The FCC recently released an Order and Consent Decree that, with a $60,000 fine, acts as a bold reminder to manufacturers, utilities, and other companies that they must seek prior Commission approval to transfer FCC dispatch/internal communications licenses when the licensee company is purchased by or merged into another company.  Similarly, companies must pay attention to the expiration dates of those licenses, and either renew them on a timely basis, or discontinue using them after expiration.

This sad story apparently began when the FCC sent a letter to Precision Castparts Corp. (PCC), inquiring about a number of expired radio licenses held by subsidiaries of PCC; the agency asked whether the company continued to operate any of those licenses after expiration. Sure enough, a number of licenses used for remote control overhead cranes and for cross-campus communications were still being used.  That’s a violation of FCC rules and the Communications Act.

As part of its subsequent internal audit, PCC also realized that when it had been previously acquired by Berkshire Hathaway Inc. (BHI), applications to transfer control of its FCC licenses to BHI had not been filed at the FCC. Oops! … that was also a violation of the Communications Act and the FCC’s rules.  Now there was a really big mess to clean up.

Occasionally, big and small companies to enter into a sale or merger and forget to seek prior FCC approval of the transfer of the company’s FCC licenses, or to just ignore the issue. But sooner or later, the FCC figures this out on its own, or the newly merged company has to address the matter when it needs to renew the licenses.  Filing at the FCC before a sale or merger is relatively quick, easy and inexpensive.  But as PCC discovered, cleaning up the mess after failing to do so is anything but:  in addition to the $60,000 fine, they must fulfill an extensive on-going FCC compliance and reporting plan.

These situations are not limited to manufacturers: in August of 2016, an affiliate of the Canadian Pacific Railroad settled with the FCC and paid a fine of $1.2 million, for failing to obtain prior approval of the purchase of carriers with FCC licenses, as well as for constructing, operating, modifying, and relocating FCC-authorized wireless facilities without prior FCC approval.

At Fletcher Heald & Hildreth, we have deep experience filing the sort of assignment/transfer of control and renewal applications that could have kept PCC out of trouble.  We also have deep experience in helping companies navigate the FCC’s processes if they have failed to make the proper filings. Call us if you have any questions.

FCC Creates Some Clarity Regarding USF Contribution Obligations for Audio Conferencing

By FHH Law on Posted in Telecommunications

Recently, the FCC’s Wireline Competition Bureau (WCB) overruled a Universal Administrative Company’s (USAC) decision that required Cisco to pay into the Universal Service Fund (USF) based on revenue realized from the audio component of its WebEx service. The WCB’s decision seems to shed some light on the factors used in determining whether service providers are subject to USF contribution obligations when providing both telecommunications and information services to end-users.

Under the FCC’s rules, providers are required to contribute to the USF based on revenues realized from telecommunications service offerings. However, revenues from “information services” – a defined category of services that are largely unregulated – are exempt from USF contribution obligations.  The line between information services and telecommunications services is often blurry, especially since the former often depends on, or integrates, the latter. For example, voicemail is considered an information service, but often depends on accessing regular telephone services in order to be used.

Under existing FCC precedent, a service is exempt from the USF if the telecommunications and information service offerings are “sufficiently” or “functionally” integrated so as to constitute a single service offering. Using the voicemail example: the telephone service used to access voicemail would not be considered sufficiently or functionally integrated with the voicemail service for both components to be considered a singular information service. A company offering both services would thus be subject to USF on the telephone service (a telecommunications service), but exempt from USF on the voicemail service. Continue Reading

FCC Names Spectrum Access Administrators

By Mitchell Lazarus on Posted in Unlicensed Operations and Emerging Technologies

Seven companies will simultaneously control multiple users across three priority levels in the Citizens Broadband Radio Service.

The FCC hopes to launch new spectrum management techniques with the Citizens Broadband Radio Service (CBRS), in which large numbers of users will share the spectrum with each other and with incumbents through a three-tiered access model. Each unit (except the incumbents) will need permission to transmit, provided by an automated frequency assignment and control database mechanism called a Spectrum Access System (SAS). Read about it here, with a follow-up here.

A key question has been: who will run the SAS? Now, we know. The FCC has conditionally approved seven SAS Administrators: Amdocs, Inc., Comsearch, CTIA—The Wireless Association, Federated Wireless, Google, Inc., Key Bridge, and Sony Electronics, Inc. They will compete for business among CBRS users while working from and updating a common database.

The order linked above provides a list of twelve performance benchmarks the approved entities will have to meet. That done, their systems will undergo compliance testing, which may include public testing and field trials, and then be subject to a trial period before the administrators receive final certification.

An SAS will have to authorize very large numbers of users while ensuring they do not interfere with each other or with higher-priority users. This will entail keeping close track of each individual user’s location, elevation, frequency, priority status, and possibly direction and speed of motion, type of equipment, and other factors, all processed through a mathematical model of how radio waves propagate. As the technology has not yet been publicly demonstrated, its ultimate feasibility is still an open question. Yet the FCC likes the idea so much it has been proposing SAS for use in other services in other bands. That will put these first administrators under a lot of pressure to succeed.

 

 

 

Radio Music License Committee and Global Music Rights Reach Interim License Agreement

By Karyn K. Ablin and FHH Law on Posted in Intellectual Property, Media

(Stations Fearing a Difficult Choice Before January 1 now have until January 31 to opt in to an interim license agreement and continue playing GMR songs through September.)

copyright-fire-1If you are a radio station, especially a commercial radio station primarily playing music, you are probably aware of the dueling lawsuits filed by the Radio Music License Committee (RMLC) against “new kid on the block” PRO Global Music Rights (GMR) and vice-versa.  Perhaps you read about it in our blog post on November 22  Or you listened to our webinar on December 14.  Or you caught the archived version that we posted here afterward.  Or, maybe we’re giving ourselves too much credit and you just read about it via one of the emails that the RMLC sent to radio stations over the last few weeks.

No matter how you heard about the RMLC-GMR fight, many of you had one common question:  what happens on January 1 if the two sides don’t reach some sort of interim agreement that allows radio stations to legally play GMR music?  As we explained in both the blog post and webinar, there seemed to be three unappealing choices:  (1) negotiate a license with GMR so that you can continue to play those songs, (2) stop playing GMR music altogether, or (3) continue playing GMR-represented songs without a license, exposing yourself to liability for copyright infringement.  Unhappy with those options, many stations were hoping for some sort of rapprochement between the RMLC and GMR. Continue Reading

The FCC’s Foray Into 5G, IoT Device Cybersecurity

By FHH Law on Posted in Unlicensed Operations and Emerging Technologies, Wireless

5G-2Public Safety Bureau asks wide-ranging questions in NOI The Commission’s Public Safety and Homeland Security Bureau has put out a Notice of Inquiry (NOI) seeking information about the security of communications in 5G networks and devices. The Bureau raises these questions especially in light of the expected Internet-of-Things-related proliferation of wireless devices that have the potential to collect personal information and also more readily bring cyberattacks against our devices and into our homes. Well known examples are hackers opening cars and garage doors, and taking control of Jeeps and other vehicles. Cybersecurity is an issue already being raised by consumer advocates, as well as manufacturers; the NOI shows that the FCC has been listening.

The NOI’s key focus is “CIA” (gotta love government acronyms!), meaning the principles of confidentiality, integrity, and availability of security practices used by networks, service providers, and equipment developers. (As an aside, broadband providers already are expected to take CIA principles into account in protecting the privacy of users.) The Bureau tees up numerous questions about current practices, concerns about vulnerabilities, lessons learned from past deployment, and best methods for handling risks: Continue Reading

FCC Gives NCEs Reprieve on Filing Biennial Ownership Reports

By FHH Law on Posted in Deadlines, Media

fcc building-1Non-commercial educational (NCE) television and radio stations received an early Christmas present from the Commission. The agency suspended biennial ownership filing requirements for those that who would otherwise be required to file such reports on Form 323-E.

That means NCE licensees and other entities with attributable interests in such stations are not required to biennially file the existing Form 323-E on February 1, April 1, June 1, August 1, or October 1. Instead, these entities must now file their biennial ownership reports on the revised version of Form 323-E—FCC Form 2100, Schedule 323-E—on or before December 1, 2017 and file biennially thereafter. The information must be current as of October 1, 2017.

The Commission has been trying to align ownership reporting requirements for non-commercial educational stations with the deadlines for commercial broadcast stations.

Merry Christmas to the Licensee Community from New York! Appeals Court Holds No New York Performance Right in Sound Recordings

By Karyn K. Ablin on Posted in Intellectual Property, Internet, Media

thumbs up-1In what comes as an early Christmas gift for those who play “oldies” music – think Sirius XM Radio, radio broadcasters, and webcasters – and coal in the stockings of the owners of those recordings, New York’s highest state court ruled today that New York does not recognize a public performance right in sound recordings. The ruling was issued in response to a certified question from the U.S. Court of Appeals for the Second Circuit, where an earlier – contrary – ruling from the U.S. District Court for the Southern District of New York was being challenged.  In that earlier federal district court case, Flo & Eddie, Inc. – a corporation owned by two of the original members of The Turtles (famous for “Happy Together”) – had sued Sirius XM Radio for publicly performing sound recordings fixed before February 15, 1972 (so-called “pre-72 recordings”) without obtaining a license for those performances.

[Note:  February 15, 1972 is a magic date because sound recordings fixed on or after that date are protected by federal copyright law.  Sound recordings fixed before that date are protected – if at all – under the patchwork quilt of various state copyright laws, with state-law protection expiring on February 15, 2067.]

Parting ways with the federal district court, the New York high court held that its “common-law copyright protection prevents only the unauthorized reproduction of the copyrighted work, but permits a purchaser to use copies of sound recordings for their intended purpose, namely, to play them.” It based its conclusion on an analysis of New York state copyright decisions, which it found granted a common law right to prevent others from making copies of sound recordings – but did not grant a public performance right. Continue Reading

Expecting Money From The FCC Post-Incentive Auction?

By FHH Law on Posted in Media

webinar-1If you’re the owner of a full-power or Class A broadcast television station or are a multichannel video program distributor, and anticipate receiving a winning bid or seeking reimbursement funds from the Commission post-incentive auction, how will you get your money? The FCC has created an online tutorial to explain how this will work.

To see the tutorial, go to the Auction 1001 website  and click on the “Education” tab.

All entities doing business with the FCC must update their information in the Commission Registration System (CORES), so the agency has the appropriate point of contact for payment and banking questions. The tutorial describes how to make changes in the updated version of CORES.

Those who expect to receive FCC payment(s) after the incentive auction must also submit additional data, including bank account information, after taking these initial steps to update their records. The changes to the system are designed to strengthen the security of records, improve the system’s usability and improve the Commission’s compliance with various statutes that govern debt collection and the collection of personal information, according to the FCC’s Incentive Auction Task Force.

These required changes and updates include: (1) designating specific FCC Usernames to access FCC Registration Numbers (FRNs) and related records (multiple usernames for each FRN with different levels of access are permitted); (2) requiring valid email addresses for online access to the system; and (3) establishing password-recovery security questions specific to each Username.

Those who watch the online tutorial will learn how to update their FRN point of contact information as well as how to register for a new FCC Username Account; register for a new FRN; associate a Username to an existing FRN; reset a Username-Password; approve or reject an FRN Association Request; update FRN information; and administer a View FRN Financial Info Permission in CORES and the new FCC User Registration System. The agency says it’s critical that it have complete and accurate CORES information for everyone who expects to receive an auction-related payment. Those who do should follow the procedures in the tutorial; the Commission plans to hold an additional webinar on post-auction payment processes in the future.

Media Bureau Seeks Comment On Broadcast EEO Petition

By FHH Law on Posted in Deadlines, Media

Earlier this week, two broadcasting companies petitioned the FCC to revise its Equal Employment Opportunity (EEO) rules to allow broadcasters to rely on Internet recruitment sources when filling job openings. The Commission’s current EEO rules, which date back to 2002, require broadcasters employing five or more full-time employees, and MVPDs employing six or more full-time employees, to maintain an EEO recruitment program, which includes outreach requirements for filling job vacancies (we have previously warned clients about the strictness of these requirements here, here, and here).

The 2002 rules cited the daily newspaper as the presumptive method of outreach, but broadcasters have frequently reported that on-air and Internet announcements are now by far the most effective recruitment methods. Nonetheless, the FCC has repeatedly held that posting openings only to internet sites does not satisfy the rules, and has imposed fines and reporting conditions based at least in part on failure to meet this requirement.

Despite the disparity between the EEO rules and licensees’ preferred recruiting practices, compliance with EEO rules has historically been important for broadcasters and MVPDs, as the FCC conducts random audits of EEO programs each year, as well as reviewing EEO compliance in the context of license renewals. While it may not signal a change in the Commission’s own perspective on the rules, the Media Bureau has at least sought comment on the broadcasters’ petition. Interested parties may file comments to MB Docket 16-410 by January 30, 2017.

FCC Gives Some Radio Stations Limited Online Public File Waiver

By FHH Law on Posted in Cable, Media, Satellite

As we reported a few days ago, most large market radio stations are required to have their complete (but for a few exceptions) local public inspection files posted online by no later than Christmas Eve.  Perhaps moved by the spirit of the holidays, the Commission has now granted a narrow exception to that requirement for a small number of broadcasters.  Specifically, in response to a request filed by Cox Radio, the Commission has released an Order providing that licensees will, in certain circumstances, not be required to upload issues and programs lists and EEO reports from prior license terms, even if the license renewal applications covering those terms remain pending at the Commission.

No NCE radio stations have to comply with any of the online public file rules until March 1, 2018 – irrespective of their market.

In the normal course, broadcasters are required to retain issues and programs lists, and EEO reports, until the license renewal application for the period covered by those reports is granted by final order. With the imposition of the online public file requirements, licensees would therefore be required to upload a potentially very large universe of such documents; if their last license renewal applications remained pending, that would include the eight years covered by those applications as well as documents for the current license term (more than five years old for some stations).  Under the Commission’s Order, licensees will now be required to upload issues and programs lists and EEO reports only for the current license term, provided that 1) the pending renewal application was not opposed, 2) the reason the renewal remains pending is not due to any issues related to the issues and program lists or EEO reports, and 3) the required documents remain available in the station’s hard copy public file.

As readers may recall, the Commission issued a similar waiver to television broadcasters in 2013.  As such, it would have been somewhat difficult to deny the same treatment to radio broadcasters now.  The impact of the current waiver is likely to be far more limited, however.  When the online public file requirements became effective, a very large number of television renewals had remained pending for many years due to complaints regarding allegedly indecent programming.  A much smaller percentage of radio stations have had renewal applications pending for extended periods of time, so the relief granted in the Commission recent Order will not be enjoyed as widely.  For those stations it does impact, however, it is still likely a welcome relief in advance of the holidays.

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