Articles Posted in

Published on:

By and

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:

Headlines:

  • International Hotel Company Agrees to $504,000 Settlement for Overlooked Wireless License Transfers
  • Media Bureau Fines AM Licensee for Years-Old Unauthorized Transfers
  • Suburban Elementary School Busted as Pirate Radio Operator

Approval Needed: International Hotel Chain Settles with the FCC for $504,000 Over Unauthorized Transfers

The FCC recently entered into a Consent Decree with a global hotel company for violating the FCC’s rules governing transfers of control.  The company admitted to transferring dozens of private wireless licenses without prior FCC approval in the midst of its multi-billion dollar acquisition of another international hotel group.

In addition to regulating the transfer of broadcast licenses, Section 310 of the Communications Act (“Act”) prohibits the transfer of control of a private wireless license holder without prior FCC approval.  Under Section 1.948 of the FCC’s Rules, parties seeking consent to a transfer of control of such a license must first file FCC Form 603 and await Commission approval before completing the transfer.

At issue in this case were the transfers of 65 wireless licenses controlled by entities owned or operated by the acquired company.  Unlike commercial wireless services such as wireless broadband, private wireless licenses are generally used for internal communications, like those associated with company operations or security.  According to the late-filed transfer applications, these wireless licenses were used for “operational efficiency and safety of employees and guests” at the company’s various properties.  Prior to the transaction, the acquired company’s employees controlled the use of the licenses as part of their regular operational duties.  Though the day-to-day use of the licenses did not change as a result of the company’s acquisition, ultimate control of the licenses did.

In February 2017, several months after the deal was completed, the hotel company voluntarily disclosed the violations to the FCC, chalking up the missing applications to “administrative oversight … during a larger transaction.”  By January 2018, applications for transfer of control of all 65 licenses were submitted to the FCC’s Wireless Bureau.  Those applications remain pending.

To resolve the FCC’s investigation of the violations, the acquiring company entered into a Consent Decree with the Commission.  Under the terms of the Consent Decree, the hotel company agreed to (1) admit liability for violations of the FCC’s unauthorized transfer rules; (2) develop and implement a compliance plan to prevent further violations of the FCC’s Rules; and (3) pay $504,000 to the United States Treasury.

Trust Issues: “Ridiculously Complicated” Estate Planning Leads to $8,000 Fine

The Media Bureau entered into a Consent Decree with the licensee of three Georgia AM radio stations to resolve an investigation into an unauthorized transfer of control of the station licenses.

Section 310 of the Act and Section 73.3540 of the FCC’s Rules prohibit transfers of control of broadcast licensees from one individual, entity, or group to another without prior FCC approval.  In the case of full-power broadcast stations, parties must file FCC Form 315 applications and receive FCC consent before a transfer of control can be consummated.

The applications ultimately leading to the Consent Decree were filed with the FCC in March 2018, but the licensee’s problems began nearly two decades earlier when the licensee’s sole owner created an irrevocable trust and named two of his sons as co-trustees.  That same day, the FCC approved the licensee’s acquisition of the Georgia stations.  The following day, the licensee’s owner, functioning as de facto trustee of the irrevocable trust (and without his sons’ knowledge), transferred 90% of his equity in the licensee to the trust in the form of non-voting shares.  When the station acquisition was consummated a few days later, the licensee failed to report the existence of the trust to the FCC and did not subsequently report it until earlier this year.

In 2010, the trust was divided into sub-trusts for each of the father’s six children—each of whom was then unaware that they were to serve as trustee of their respective sub-trust.  Shortly before their father’s passing in 2013, the children assumed control of the overall trust (as trustees of the individual sub-trusts).  They converted the trust’s stock in the licensee to voting shares and cancelled all other shares of licensee stock, resulting in a transfer of control of the licensee to the children as trustees of the trust. Continue reading →

Published on:

By and

Many thought the broadcast incentive auction was the most complex task ever undertaken by the FCC, but the ten-phase spectrum repack following the auction is running a close second.  The TV stations being repacked in Phase 1 are serving as the pioneers of the repack process, and since they must complete the transition to their post-repack channel by November 30, 2018, the applicable deadlines are coming at a fast and furious pace.

The process of repacking these Phase 1 stations has led to lots of questions, and in an effort to answer at least some of them, the FCC released a Public Notice this week discussing a variety of details for stations completing the repack.  Since Phase 1 will be the template for all subsequent phases, all stations being repacked should review the Public Notice with an eye toward discerning their obligations and timely meeting the various milestones.

The Public Notice also reminds transitioning stations that they can, where necessary, seek authority from the FCC to go silent, operate with alternate facilities or reduced power, remain on their pre-transition channels for a period of time, or commence early operations on their post-transition channels.  All of these require filing for Special Temporary Authority and obtaining Commission consent in advance.  While such flexibility will be useful for stations facing unusual repack obstacles, such stations must be sure to schedule adequate time to request and secure Special Temporary Authority from the Commission, lest they find themselves in the uncomfortable position of being forced to violate either the FCC’s repack requirements or the FCC’s operating rules (or being forced off the air entirely).

While the Public Notice provides various ground rules for stations, it also provides a lot of densely packed information on the procedures stations must follow during the repack.  To assist stations, we have consolidated that information below in a concise format that will hopefully make it easier to follow.  While the dates will obviously be different for stations assigned to other phases of the repack, the information below provides a good overview of the path that all repacked stations must navigate during their own repack phase.  Note that the information below assumes that a station will not terminate operations on its pre-transition channel until the last day of the phase (November 30, in the case of Phase 1 stations).  Stations transitioning before that time will need to adjust the other various dates accordingly. 

The Public Notice makes clear that between September 14, 2018 and November 30, 2018, Phase 1 stations may test their equipment/signal and commence operating on their new channel pursuant to program test authority.  The testing phase, however, is strictly for testing, and does not permit stations to simulcast content on both their pre-transition and post-transition channels.  Broadcasters should be aware that some stations’ construction permits do not grant them automatic program test authority (e.g., stations transitioning to Channel 14), so those stations must build extra time into their schedules to request and obtain such authority.

Finally, the Public Notice indicates that linked stations cannot simply test their own equipment and commence operations on their post-transition channel as they choose.  They must coordinate with the other stations in their phase with which they are linked by interference concerns.

The schedule for Phase 1 stations is as follows:

September 1, 2018 Last day to provide notice of channel change to MVPDs.  Any stations granted additional time or flexibility to transition by the FCC must provide MVPDs with this notice 90 days prior to commencing operation on their post-transition channel.  Stations should also review their construction permits for individual notice requirements.  For example, a station must provide notice of its channel change to health care facilities in its service area an “ample time before commencing operation” on its new channel, and some stations may be required to give notice to nearby AM stations, as discussed in more detail in the Public Notice.
September 4, 2018 Last day to request 180-day Construction Permit Extension on Form 2100, Schedule 337.  Stations may request one extension of up to 180 days in which to complete construction of their new facility.  An extension application must include an exhibit demonstrating circumstances that, despite all reasonable efforts by the station, were either unforeseeable or beyond the station’s control.
September 14, 2018 Testing Period begins.
September 21, 2018 File Transition Progress Report on Form 2100, Schedule 387.  Transitioning stations must file a transition progress report ten weeks before the end of their assigned construction deadline.
October 1, 2018 Deadline for channel-sharing repacked stations to file a minor modification application.  Applications must specify the host’s post-auction channel and the parameters of the sharee’s facility.
October 10, 2018 File Quarterly Transition Progress Report on Form 2100, Schedule 387.  Transitioning stations must file a transition progress report on the tenth day following each calendar quarter, providing information regarding the steps taken during the previous quarter to construct facilities for its new channel and end operations on its current channel.  This obligation ceases when a station has completed its transition and has filed a final report with the FCC indicating that fact.
November 1, 2018 Last day to commence consumer notifications of channel change.  Any stations granted additional time or flexibility by the FCC must provide viewers with this notice 30 days prior to commencing operations on their post-transition channel.
November 30, 2018 Last day to operate on pre-auction channel absent FCC consent.
December 5, 2018 Last day to file “Pre-Auction Termination” Transition Progress Report on Form 2100, Schedule 387.  Any stations that terminate operations on their pre-auction channel earlier than November 30 must file this report within 5 days of terminating operations on their pre-auction channel.
December 10, 2018 Last day to file “Construction Completion” Transition Progress Report on Form 2100, Schedule 387.  Any stations that complete construction earlier (including before September 14, 2018) must file this report within 10 days of completion of all construction-related work.
December 10, 2018 Last day to file License to Cover Application on FCC Form 2100, Schedule B (full power) or Schedule F (Class A).  Any stations that commence program test operations earlier than November 30 must file this application within 10 days of commencing program test operations.
December 30, 2018 Last day to file certification of compliance with viewer notification obligations.  Any stations that complete their transitions earlier than November 30 must place these certifications in the public file within 30 days of completing the transition.

Considering the variety of notices, reports, applications, and certifications involved in the repack process, and how tightly interwoven the associated deadlines are, stations should not dally in finalizing their repack plans.  One missed deadline can quickly cascade into multiple missed deadlines, severely undercutting a station’s prospects for achieving a successful repack.

Published on:

By

The FCC and FEMA have established September 20, 2018 as the date for the next nationwide test of the Emergency Alert System (EAS).  The nationwide test is designed to study the effectiveness of the EAS and to monitor the performance of EAS participants.  The Wireless Emergency Alert (WEA) system will be tested immediately prior to the test of the EAS.  The FCC and FEMA have designated October 3, 2018 as the back-up date should circumstances prevent testing on September 20.

While the test itself is a month away, all EAS participants must file their Form One with the FCC by August 27, 2018 in preparation for the test.  To make this filing, EAS participants must log in to the EAS Test Reporting System using an FCC Username Account.  Those filers who do not already have an account can register for one in the FCC’s updated CORES system.  Once a username account is set up, it will need to be associated with a licensee’s FCC Registration Number (FRN) before the user can draft or file forms for that licensee’s station(s).  Many filers struggled to successfully register in past years, but those who participated in the annual test in 2017 should already be registered.

Form One requests information about a station’s transmitter location, EAS equipment, and the stations it is assigned to monitor.  For most EAS participants, this information will prefill from last year’s Form One (so be particularly careful reviewing it if your monitoring assignments, equipment, or something else has changed since last year).  Stations will also see an instruction to file a separate Form One for each encoder, decoder or combination unit.  Most broadcasters will likely have a combination unit and therefore only need to file a single Form One.  However, there may be situations where multiple filings are needed, for example where a cluster of co-owned radio stations share a studio but have to employ separate encoders and decoders to deal with stations in the group having different monitoring assignments.

As in the past, after the test is completed, participants must report the results of the test by filing Form Two, which requests abbreviated “day of test” data, and then Form Three, which collects more detailed data about the station’s performance.

Filing Deadlines:

  • Form One must be filed on or before August 27, 2018.
  • Form Two (“day of test” data) must be filed by 11:59 PM (EDT) on September 20, 2018.
  • Form Three must be filed on or before November 5, 2018.

Additional Requirements

To prepare for the test, the FCC recommends that EAS participants review the EAS Operating Handbook and be sure that it is available at normal duty positions or EAS equipment locations, and is otherwise readily accessible to employees responsible for managing EAS actions.

Participants should also use this time to ensure their facilities are in a state of “operational readiness.”  Operators should confirm that their EAS equipment has any necessary software and firmware upgrades and that it is capable of receiving the various test codes.  If not automatic, operators must also manually set their EAS equipment to the “official time” as established by the National Institute of Standards and Technology.  Each of these issues has been a significant cause of stations being unable to receive or transmit past tests.

Finally, the person filing for each station should verify that they have the right username, password, and licensee FRN in advance of the filing deadline.  Experience from the the past two national tests revealed that many stations were caught off guard not by the test itself, but by their inability to access the ETRS to make required filings, often because of confusion surrounding how to log in.

Summer break notwithstanding, this is one test that broadcasters should study for ahead of time.

Published on:

By

In adopting a Notice of Proposed Rule Making late last week, the FCC took the first step in establishing ground rules for reimbursing Low Power Television, TV translator and FM radio stations affected by the TV spectrum repack. Most of the proposed rules track the statutory direction contained in the Reimbursement Expansion Act (REA) adopted in March, but a few potentially controversial proposals were included as well.

The REA limited reimbursement eligibility for LPTV, TV translators and FM radio stations to stations that were licensed and operating on April 13, 2017. In addition, LPTV stations must establish that they were broadcasting for nine of the twelve months prior to April 13, 2017, which was the date the Incentive Auction officially ended. The FCC is seeking comment on what evidence it should request from licensees to substantiate their eligibility, including potentially requiring licensees to provide program guides and/or power bills.

The FCC is also seeking comment on guidelines for reimbursing licensees, focusing on both the types of expenses that should be reimbursed, and the process for licensees seeking reimbursement. For example, the REA limited eligibility to those LPTV and TV translators that filed a Special Displacement application, so the FCC proposed to limit the reimbursable expenses to just those relating to the displacement of such stations.

While it is likely that no FM radio stations will be permanently displaced as a result of the Incentive Auction, the FCC developed a three-tier proposal to reimburse FM stations for expenses to operate auxiliary stations instead of temporarily ceasing operations while tower work is done. The FCC noted that its rules permit stations to either power down or temporarily discontinue operations for less than thirty days without seeking advance authority, so the FCC proposes to limit reimbursement for constructing new or upgraded FM auxiliary facilities to those stations that will be off-air for extended periods of times.

Under the proposal, FM radio stations off-air for more than 30 days would receive reimbursement for 100% of their expenses to construct or modify existing auxiliary facilities, but stations off-air between 11 and 30 days would receive reimbursement for only 75% of their expenses, and stations expected to be off-air for 1-10 days would receive reimbursement for only 50% of their expenses. To be eligible for reimbursement, FM auxiliary facilities will need to cover 80% of the existing station’s geographic or population coverage.

While the FCC obviously intends to borrow heavily from the existing reimbursement process used by Class A and full-power television stations, it is clear that there are unique circumstances surrounding the reimbursement of expenses for LPTV, TV Translator and FM radio stations that will require further examination. Moreover, Commissioner O’Rielly noted in his separate statement that the FCC has proposed to allocate reimbursement funds based on the length of time that FM radio stations will be off air, but urged parties to submit alternative proposals if the FCC’s assumption that “time equals money” is incorrect.

Comment deadlines have not yet been established, but comments on the FCC’s proposals will be due 30 days after the NPRM’s publication in the Federal Register, with reply comments due 30 days after that date.