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January 2015

Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • Individual fined $25,000 for Unauthorized “Chanting and Heavy Breathing” on Public Safety Station
  • Failure to Timely Request STA Results in $5,000 Fine
  • FCC Imposes $11,500 Fine for Intentional Interference and Station ID Violation

FCC Fired up by a New Yorker’s Deliberate Disregard for Public Safety

Earlier this month, the FCC imposed a $25,000 fine against a New York man for operating a radio transmitter without a license and interfering with the licensed radio communications system of the local fire department. Section 301 of the Communications Act provides that “[n]o person shall use or operate any apparatus for the transmission of energy or communications or signals by radio . . . except under and in accordance with [the Act] and with a license.” Section 333 of the Act prohibits a person from willfully or maliciously interfering with any radio communications of any station licensed or authorized under the Act or operated by the United States government.

On October 31, 2013, the local fire department complained to the FCC that unauthorized transmissions of chanting and heavy breathing were interfering with its radio communications system. When the transmissions occurred during fire emergencies, the firefighters were forced to switch to an alternate frequency to communicate with each other and with the dispatchers. FCC agents traced the source of the interfering transmissions to an individual’s residence–a location for which no authorization had been issued to operate a Private Land Mobile Station. County police officers interviewed the individual and confirmed that one of his portable radios transmitted with the unique identifying code that the fire department observed when the unauthorized transmissions interfered with its communications. The officers subsequently arrested the individual for obstruction of governmental administration.

The FCC found the individual’s conduct was particularly egregious because his unlicensed operations hampered firefighting operations and demonstrated a deliberate disregard for public safety and the Commission’s authority and rules. Thus, while the FCC’s base fines are $10,000 for operation without authorization and $7,000 for interference, the FCC found that an upward adjustment of $8,000 was warranted, leading to the $25,000 fine.
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In a just released Public Notice, the Media Bureau has designated May 29, 2015, as the Pre-Auction Licensing Deadline. That is the date by which certain full-power and Class A TV stations must have a license application on file with the FCC in order for their modified facilities to be protected in the repacking process following the spectrum incentive auction.

While the FCC earlier concluded that full-power and Class A TV facilities licensed by February 22, 2012 would be protected in the repacking, it envisioned protection of TV facilities licensed after that date in a few specific situations. It is to this latter group that the May 29, 2015 deadline applies. These include:

  • Full-power television facilities authorized by an outstanding channel substitution construction permit for a licensed station, including stations seeking to relocate from Channel 51 pursuant to voluntary relocation agreements with Lower 700 MHz A Block licensees;
  • Modified facilities of full-power and Class A television stations that were authorized by construction permits granted on or before April 5, 2013, the date of the FCC’s announcement of a freeze on most television modification applications, or that have been authorized by construction permits that were granted after April 5, 2013, but which fit into one of the announced exceptions to the application freeze; and
  • Class A TV stations’ initial digital facilities that were not licensed until after February 22, 2012, including those that were not authorized until after announcement of the modification application freeze.

Today’s announcement means that, with the exception of stations affected by the destruction of the World Trade Center, stations in the categories above must complete construction and have a license application on file with the FCC by the May 29, 2015 deadline if they wish to have those facilities protected in the repacking process. According to the Public Notice, licensees affected by the destruction of the World Trade Center may elect to protect either their licensed Empire State Building facilities or a proposed new facility at One World Trade Center as long as that new facility has been applied for and authorized in a construction permit granted by the May 29 deadline.

The Public Notice will inevitably cause some confusion, as it refers in a number of places to having a facility “licensed” by the May 29 deadline (e.g., “We also emphasize that, in order for a Class A digital facility to be afforded protection in the repacking process, it must be licensed by the Pre-Auction Licensing Deadline.”). Fortunately for those of us that read footnotes carefully (that’s what lawyers do!), the FCC stated in the small print that “[t]he term ‘licensed’ encompasses both licensed facilities and those subject to a pending license to cover application….”

For those holding TV licenses that are more interested in the spectrum auction than in the repacking of stations afterwards, the Pre-Auction Licensing Deadline is also relevant, as the FCC indicates that “[t]he Pre-Auction Licensing Deadline will also determine which facilities are eligible for voluntary relinquishment of spectrum usage rights in the incentive auction.” In other words, to the extent the FCC bases auction payments in part on a selling station’s coverage area, the facilities constructed by the Pre-Auction Licensing Deadline (with a license application on file) will be used in making that determination.

Finally, the Public Notice indicates that this is a “last opportunity” for full power and Class A TV stations to modify their licenses to correct errors in their stated operating parameters if they want the FCC to use the correct operating parameters in determining post-auction protection.

So, whether a television station owner is planning on being a seller or a wallflower in the spectrum auction, today’s announcement is an important one, and represents one of the FCC’s more concrete steps towards holding the world’s most complicated auction.

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I wrote in March of last year that the FCC had proposed fines of $1,120,000 against Viacom, $530,000 against NBCUniversal, and $280,000 against ESPN for airing ads for the movie Olympus Has Fallen that promoted the movie with an EAS alert tone. Seven Viacom cable networks aired the spot a total of 108 times, seven NBCUniversal cable networks aired it a total of 38 times, and ESPN aired it a total of 13 times on three cable networks.

According to the FCC, NBC elected to pay its $530,000 fine shortly thereafter and call it a day, but Viacom and ESPN challenged their respective fines, arguing that the fines should be rescinded or reduced because:

  • as programmers, Viacom and ESPN lacked adequate notice that Section 11.45 of the FCC’s Rules (the prohibition on false EAS tones) and Section 325 of the Communications Act (the prohibition on false distress signals) applied to them;
  • the prohibition on false EAS tones does not apply to intermediary program distributors, as opposed to broadcast stations and cable systems that transmit directly to the public;
  • the use of the EAS tone in the ad was not deceptive as it was clear from the context that it was not an actual EAS alert; and
  • Viacom and ESPN did not knowingly violate the prohibition on transmitting false EAS tones.

In an Order released earlier today, the FCC rejected these arguments, noting that Section 325 of the Communications Act and Section 11.45 of the FCC’s Rules are not new, and that they apply to all “persons” who transmit false EAS tones, not just to broadcasters and cable/satellite system operators. The FCC found that transmission of the network content to cable and satellite systems for distribution to subscribers constituted “transmission” of false EAS tones sufficient to trigger a violation of the rule. In reaching this conclusion, the FCC noted that both Viacom and ESPN had reviewed the ad before it was aired and had the contractual right to reject an ad that didn’t comply with law, but had failed to do so. The FCC also concluded that it was irrelevant whether the use of the EAS tone was deceptive, as the law prohibits any use of the tone except in an actual emergency or test of the system.

In line with many prior FCC enforcement decisions, the FCC found the violations to be “willful” on the grounds that it did not matter whether the parties transmitting the ads knew they were violating a law, only that they intended to air the ads, which neither party disputed. The FCC summed up its position by noting that it “has consistently held that ignorance or mistake of law are not exculpating or mitigating factors when assessing a forfeiture.”

While Viacom and ESPN also challenged the sheer size of the fines, the FCC noted that the base fine for false EAS tone violations is $8,000, and that in assessing the appropriate fines here, it took into account “(1) the number of networks over which the transmissions occurred; (2) the number of repetitions (i.e., the number of individual transmissions); (3) the duration of the violation (i.e., the number of days over which the violation occurred); (4) the audience reach of the transmissions (e.g., nationwide, regional, or local); and (5) the extent of the public safety impact (e.g., whether an EAS activation was triggered).” Because there were “multiple violations over multiple days on multiple networks, with the number of transmissions doubled on some networks due to the separate East Coast and West Coast programming feeds,” the FCC concluded the size of the fines was appropriate.

In describing more precisely its reasoning for the outsize fines, the FCC’s Order stated:

As the rule clearly applies to each transmission, each separate transmission represents a separate violation and Viacom cites no authority to the contrary. Moreover, the vast audience reach of each Company’s programming greatly increased the extent and gravity of the violations. Given the public safety implications raised by the transmissions, and for the reasons set forth in the [Notice of Apparent Liability], we find that the instant violations, due to their egregiousness, warrant the upwardly adjusted forfeiture amounts detailed by the Commission.

Finally, to buttress its argument for such large fines, the FCC pulled out its “ability to pay” card, noting the multi-billion dollar revenues of the companies involved and stating that “entities with substantial revenues, such as the Companies, may expect the imposition of forfeitures well above the base amounts in order to deter improper behavior.”

While today’s Order is not surprising in light of the FCC’s increasingly tough treatment of false EAS tone violations since 2010, it is not all bad news for the media community. To the extent that one of more of the Viacom, ESPN or NBCUniversal networks that transmitted the ads is likely carried by nearly every cable system in the U.S., the FCC could have elected to commence enforcement actions and issue fines against each and every system that failed to delete the offending content before transmitting the network programming to subscribers. Pursuing such fines would be expensive for all affected cable and satellite systems, but particularly devastating for smaller cable systems.

While it is always possible that the FCC could still commence such proceedings, it is notable that the FCC specifically rejected Viacom’s argument that it was unfair for the FCC to fine the networks while not fining the ad agency that created the ad or the cable and satellite systems that actually delivered the ad to subscribers. It therefore appears that, at least for now, the FCC is content to apply pressure where it thinks it will do the most good in terms of avoiding future violations. Should the FCC decide to broaden its enforcement efforts in the future however, we’ll be hearing a lot more about my last post on this subject–ensuring you are contractually indemnified by advertisers for any illegal content in the ads they send you to air.

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The press has been abuzz in recent months regarding the launch of various Internet-based video services and the FCC’s decision to revisit its current definition of Multichannel Video Programming Distributors (MVPDs). In December, the FCC released a Notice of Proposed Rulemaking (NPRM), seeking to “modernize” its rules to redefine what constitutes an MVPD. The FCC’s proposals would significantly expand the universe of what is considered an “MVPD” to include a wide-variety of Internet-based offerings. Today, the FCC released a Public Notice providing the dates by which parties can provide their own suggestions regarding how to modify the definition of “MVPD”. Comments are now due February 17, 2015, with reply comments due March 2, 2015.

The Communications Act currently defines an “MVPD” as an entity who “makes available for purchase, by subscribers or customers, multiple channels of video programming.” Specific examples given of current MVPDs under the Act are “a cable operator, a multichannel multipoint distribution service, a direct broadcast satellite service, or a television receive-only satellite program distributor who makes available for purchase, by subscribers or customers, multiple channels of video programming.” The Act states, however, that the definition of MVPD is “not limited” to these examples.

Historically, MVPDs have generally been defined as entities that own the distribution system, such as cable and DBS satellite operators, but now the FCC is asking for comments on two new possible interpretations of the term “MVPD.” The first would “includ[e] within its scope services that make available for purchase, by subscribers or customers, multiple linear streams of video programming, regardless of the technology used to distribute the programming.” The second would hew closer to the traditional definition, and would “require an entity to control a transmission path to qualify as an MVPD”. The FCC’s is looking for input regarding the impact of adopting either of these proposed definitions.

What all this means is that the FCC is interested in making the definition of “MVPD” more flexible, potentially expanding it to include not just what we think of as traditional cable and satellite services, but also newer distribution technologies, including some types of Internet delivery.

Underscoring its interest in this subject, the FCC asks a wide array of questions in its NPRM regarding the impact of revising the MVPD definition. The result of this proceeding will have far-reaching impact on the video distribution ecosystem, and on almost every party involved in the delivery of at least linear video programming. Consequently, this is an NPRM that will continue to draw much attention and merits special consideration by those wondering where the world of video distribution is headed next.

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In what has become an annual holiday tradition going back so far none of us can remember when it started (Pillsbury predates the FCC by 66 years), we released the 2015 Broadcasters’ Calendar last week.

While starting a new year is usually jarring, particularly breaking yourself of the habit of dating everything “2014”, this new year seems particularly so, as many took last Friday off, making today, January 5th, their first day back at work. For broadcasters, whose fourth quarter regulatory reports need to be in their public inspection files by January 10th, that doesn’t leave much time to complete the tasks at hand.

To assist in meeting that deadline, we also released last week our fourth quarter Advisories regarding the FCC-mandated Quarterly Issues/Programs List (for radio and TV) and the Form 398 Quarterly Children’s Programming Report (for TV only). Both have not-so-hidden Easter Eggs for Class A TV stations needing to meet their obligation to demonstrate continuing compliance with their Class A obligations, effectively giving you three advisories for the price of two (the price being more strain on your “now a year older” eyes)!

And all that only takes you through January 10th, so you can imagine how many more thrilling regulatory adventures are to be found in the pages of the 2015 Broadcasters’ Calendar. Whether it’s SoundExchange royalty filings, the upcoming Delaware and Pennsylvania TV license renewal public notices, or any of a variety of FCC EEO reports coming due this year, broadcasters can find the details in the 2015 Broadcasters’ Calendar. For those clamoring for an audiobook edition, we’re holding out for James Earl Jones. We’ll keep you posted on that.