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The FCC will take a number of significant actions in the final months of 2018 to facilitate the development of 5G, the fifth generation of wireless cellular technology. First, at its October meeting tomorrow, it will vote on making a portion of mid-band spectrum (2.5 to 4.2 GHz) available for 5G use.  Second, it will launch in November the first of two high-band 5G spectrum auctions scheduled for 2018.  Now is therefore a good time to take a look at what 5G is, and what impact it promises to have.

Looking back, the primary benefit of the transition from 3G to 4G was a significant speed boost, which allowed users to, among other things, stream YouTube and upload videos to social media platforms like Instagram without much waiting.  Once implemented, 5G is expected to deliver download speeds anywhere from 10-100 times faster than 4G, with speeds of up to 20 gigabits per second.  5G users will also experience significantly less latency, i.e., the time between when you click on a link and when the network responds.  While 4G latency is about 9 milliseconds, mature 5G systems will reduce latency to around 1 millisecond.

Mature 5G networks will use high-band spectrum (24 GHz and above), which is capable of transmitting significantly more data than 4G, but is limited to much shorter distances.  4G towers currently deliver service for up to 10 miles, while high-band 5G towers will only deliver service for up to 1,000 feet (about 3 football fields).

In addition, high-band 5G spectrum has a shorter wavelength than spectrum used for 4G, making it more difficult for these signals to penetrate solid objects such as walls and windows.  To overcome the distance and signal penetration challenges, 5G will require vast networks of small-cell sites located on a diverse array of real estate platforms, with the small-cells anchored by larger cell towers.  To streamline the deployment of small-cells, the FCC in March adopted new rules to reduce regulatory impediments to building out small-cell infrastructure, and in September adopted rules requiring state and local governments to approve or deny small-cell applications within prescribed time periods.  Not surprisingly, the new rules are unpopular with local governments, who object to any federal interference with their local site review processes.

There are numerous potential innovations and business models that can utilize 5G’s faster speeds, lower latency, and increased connection capacity.  Most agree that 5G will deliver seamless 4K video streaming and instant downloads of large files, but it could also dramatically change how users, including machines, access the Internet.  Currently, the primary option for residential and enterprise broadband customers is cable or fiber.  With speeds of up to 20 gigabits per second (and no need for wire infrastructure), 5G could disrupt the delivery of fixed Internet access as we know it.

5G will also allow the Internet of Things to flourish.  Specifically, it will allow vastly more “things” to connect to cell sites and remain connected to the Internet without the need to connect through smartphones or Wi-Fi.  4G can connect about 2,000 devices per square kilometer, while 5G will connect about one million over the same area.  For example, 5G could facilitate thousands of driverless cars in the same city talking to each other to coordinate efficient traffic flow without the need for passengers to open an app on their phone, or even to have a phone.

Another potentially transformative use of 5G is remote medicine.  For example, given the high speed and low latency of 5G, medical procedures could be performed using robot arms controlled by doctors in a different part of the country or world, harnessing almost instantaneous data transmission and lowering geographic barriers to treatment.  Similarly, augmented and virtual reality gaming, shopping, and other experiences should blossom under 5G.

Rollout of 5G will be gradual.  Following pilot programs in 2018 in select cities, wireless carriers are expected to launch the first iterations of widespread 5G networks in the United States in 2019.  5G-enabled smartphones are also expected to be released in 2019.  The first 5G networks will likely use low (600 to 900 MHz) and mid-band (2.5 to 4.2 GHz) spectrum already possessed by wireless carriers, rather than the high-band spectrum that will make up the majority of spectrum auctioned by the FCC for 5G use.  As a result, initial 5G networks will only scratch the surface of 5G’s potential, delivering speeds ranging from 10% faster than 4G to three times as fast.  Mature iterations of 5G networks that use high-band spectrum are expected to arrive in 2-4 years.

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We’ve said it before, and we’ll say it again:  If you wait until the last minute to submit an online FCC filing, be prepared to bang your head against your desk while you struggle to log in to a filing system that often melts down when thousands of filers simultaneously attempt access. Fortunately, the FCC appreciates the limitations of its filing systems, and has frequently granted extensions where the system collapse was sufficiently apparent. And so it was with today’s C-Band earth station registration deadline, which the FCC announced this afternoon would be extended to October 31, 2018.

As many of our readers are aware, the FCC issued a temporary freeze earlier this year on applications for new or modified fixed satellite service (FSS) earth stations and fixed microwave stations in the 3.7-4.2 GHz band (the “C-Band”) and concurrently opened a 90-day window during which entities that own or operate existing FSS earth stations in the C-Band could file to register their earth stations or modify their current registrations.  The purpose of the filing window was to give the FCC a better idea of whether and how to open up the band to other shared uses while giving those with constructed and operational (but currently unregistered or unlicensed) earth stations an opportunity to secure some degree of interference protection as the FCC moves to open the band.  In June, the FCC extended the filing window another 90 days, to today, October 17, 2018.

Then yesterday, things got (predictably) weird as IBFS experienced a “large influx of earth station applications filed near the deadline,” and the filing system “experienced intermittent difficulties that have prevented some applicants from filing for licenses or registrations.”  In response, the International Bureau earlier today extended the filing window for an additional two weeks, to October 31, 2018.

Consider yourself warned. If you’ve got any plans this Halloween, do not wait until the (new) last day to file.  The FCC is unlikely to treat you to any further extensions.

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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:

  • FCC Cracks Down on Call Spoofing Operations with Multimillion-Dollar Fine
  • New Jersey Utility Company Investigated for Improper Use of Private Land Mobile Radio
  • FCC Issues Repeated Notices to Florida LPFM Licensee Over Transmitter Issues

Call Me Maybe? FCC Proposes $37.525 Million Fine for Illegal Spoofing Operation

In response to the growing menace of ”spoofed” calls, the FCC issued a $37.525 million Notice of Apparent Liability for Forfeiture (“NAL”) to an Arizona telemarketer alleged to have made over 2.3 million spoofed calls over the past two years.

Section 227(e) of the Communications Act (“Act”) generally prohibits “call spoofing,” the practice of causing a false number to appear on a caller ID display to disguise the caller’s identity.  Section 227(e) of the Act and Section 64.1604 of the FCC’s Rules make it unlawful to knowingly transmit misleading or inaccurate caller ID information “with the intent to defraud, cause harm, or wrongfully obtain anything of value.”  Further, the Telephone Consumer Protection Act (“TCPA”) and Section 64.1200 of the FCC’s Rules prohibit marketing calls to numbers listed in the National Do-Not-Call-Registry (“DNR”).  Consumers can add their home and mobile phone numbers to the DNR in order to avoid unwanted telemarking calls.

The FCC was tipped off to the Arizona company’s spoofing operation by a whistleblower who had formerly worked in the company’s telemarketing phone room.  According to the employee, the company purchased a call directory and plugged the directory’s numbers into a telemarketing platform that would dial the numbers.  The company then modified its caller ID information to display the phone numbers of prepaid phones it had purchased from a big box store.  To avoid suspicion, the company regularly searched the Internet for complaints associated with the prepaid phone numbers and removed from rotation any numbers that had garnered a large amount of complaints.  If a consumer tried returning a telemarketing call originating from a prepaid phone, company policy instructed employees to hang up on or otherwise avoid complaining customers.  In addition to the prepaid phones, the company also used unassigned numbers and numbers assigned to unrelated private citizens.  As an example, the NAL describes an innocent consumer whose number was spoofed by the company and who received several calls a day for months from consumers attempting to complain about the company’s calls.

The FCC began its investigation by subpoenaing the company’s call records from the telemarketing platform.  According to the NAL, the company made 2,341,125 calls using 13 separate phone numbers.  Unsurprisingly, none of the 13 numbers were actually assigned to the company.  However, the FCC was able to match these numbers to dozens of complaints filed with the Federal Trade Commission from DNR registrants who had received unwanted calls.

According to the whistleblower, the company’s illicit behavior earned it nearly $300,000 per month.  The FCC alleges that the company’s spoofing and sophisticated prepaid phone operation show the company knew that what it was doing was wrong and sought to evade law enforcement and civil suits by hiding its connection to the illegal marketing scheme.

Pursuant to Section 227(e) of the Act and Section 1.80 of the FCC’s Rules, the FCC may impose a fine of up to $11,278 for each spoofing violation.  Previously, the FCC has applied a base fine of $1,000 per call in large-scale spoofing operations.  Out of the total 2,341,125 spoofed calls, the Enforcement Bureau was able to specifically examine and confirm the nature of 37,525 calls, and thus proposed a fine of $37,525,000.

In addition to the NAL, the FCC also issued a separate Citation and Order that cites the company for violating the Telephone Consumer Protection Act, as many of the call recipients were registered with the DNR.  The FCC uncovered 45 instances where the company dialed DNR registrants; however, it may not impose a monetary fine against parties not regulated by the FCC until: (1) the FCC issues a citation to the violator; (2) the FCC provides the violator a reasonable opportunity to respond; and (3) the violator continues to engage in the cited conduct.  The Citation and Order warns the company that any future violations could result in hefty fines.

The past year has seen several enforcement actions aimed at large scale robocall and spoofing operations.  The FCC asks consumers to report any illegal calls or text messages, and advises against answering calls from unknown numbers or giving out personal information.

A Failure to Communicate: FCC Investigates New Jersey Utility Company for Private Land Mobile Radio Violations

The FCC’s Enforcement Bureau issued a Notice of Violation (“NOV”) to a large New Jersey utility company for operating its Private Land Mobile Radio (“PLMR”) in an unauthorized manner and failing to regularly transmit station identification information. Continue reading →

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Toll free calling began in 1967, with the introduction of the 800 toll free code. It remains a frequently used communications tool, even in the Internet age, as new toll-free applications are developed, including the capability to send text messages to certain toll-free numbers. Yesterday, the FCC released a Report and Order that made several innovative changes to the toll free number marketplace.

First, the FCC revised its rules to permit the use of auctions to assign toll free numbers. Since 1998, the FCC has used a “first-come, first-served” approach, but now asserts that the times have changed such that flexibility in the form of auctions is necessary to meet the statutory requirement that toll free numbers be allocated “on an equitable basis.”

Specifically, the FCC states that the first-come, first-served approach has “rewarded actors that have invested in systems to increase the chances that their choices of toll free numbers are received first.” It also states that assigning numbers at no cost “has allowed accumulation of numbers without ensuring those numbers are being put to their most efficient use.”

The FCC will not waste any time using its new auction authority. The 833 toll free code, which was opened in 2017, currently has 17,000 “mutually exclusive” numbers. Mutually exclusive numbers are those subject to multiple requests. The FCC has established the 833 Auction to sell the rights to these numbers.

The Report and Order also revises FCC rules to allow a secondary market for toll free numbers purchased in an auction. Currently, FCC rules prevent three types of conduct that make a secondary market infeasible: (1) “brokering,” which is the selling of a toll free number by a private entity for a fee; (2) “hoarding,” which is the “acquisition by a toll free subscriber . . . of more toll free numbers than the toll free subscriber intends to use for the provision of toll free service;” and (3) “warehousing,” where toll free numbers are reserved without having an actual toll free subscriber for whom the numbers are being reserved.

The FCC explained that a secondary market for toll free numbers assigned via auction is desirable because it “permit[s] subscribers to legally obtain numbers which they value.” It further explained that a secondary market promotes efficient operation of an auction by allowing the purchase or sale of numbers in response to the outcome of the auction, and “limits pre-auction costs associated with estimating which—and how many—numbers a bidder may win.” Also, with a nod to speculators, it explained that a secondary market “encourages value-creating entities to promote efficiency by procuring rights to numbers with an intent to sell those rights to other interested subscribers.”

The rule changes established in the Report and Order will go into effect 30 days after publication in the Federal Register.

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The first 911 call was made 50 years ago, long before wireless phones, texting, and Internet calling were used for everyday communications. Congress and the FCC regularly propose and adopt laws and regulations to keep pace with ever-changing technology. Those efforts continue today with the release by the FCC of a Notice of Proposed Rulemaking (“NPRM”) to implement two bills recently adopted by Congress to improve 911 emergency calling.

The first, Kari’s Law, requires multi-line telephone systems (“MLTS”) in the United States to allow users to dial 911 directly, without having to dial a “9” or any other prefix to reach an outside line. The law was enacted in February in honor of a Texas woman who was fatally stabbed in a hotel room by her estranged husband in 2013. The woman’s nine-year-old daughter was in the room at the time and repeatedly tried dialing 911, but did not know that an extra “9” was needed to reach an outside line.

Though the focus here was on hotel phone services, the application to MLTS makes the impact much broader. MLTS are telephone systems used in settings such as office buildings, campuses, and hotels. Kari’s Law also requires that such systems transmit a notification to an appropriate on-site or third-party contact, such as a front desk or security office, when a 911 call is made.

Under the proposed rules, the direct dialing requirement would be mandatory for “persons engaged in the business of manufacturing, importing, selling, or leasing MLTS, as well as persons engaged in the business of installing, managing, or operating MLTS.” The notification requirement would mandate that a “person engaged in the business of installing, managing, or operating MLTS shall, in installing, managing, or operating the system, configure it to provide a notification that a 911 call has been placed by a caller on the MLTS system.” The notification would be required to include, at a minimum, the following information: (1) that the 911 call has been made; (2) a valid callback number; and (3) the caller’s location. In addition, to ensure timely notifications, the FCC proposes that notifications be transmitted at the same time as the 911 call.

The statutorily mandated compliance date of Kari’s Law is February 16, 2020, and only applies to MLTS that are “manufactured, imported, offered for first sale or lease, first sold or leased, or installed” after that date. Other MLTS are grandfathered from compliance.

The NPRM also proposes rules to implement RAY BAUM’S Act, which was enacted in March and requires that the FCC conduct a proceeding that considers adopting rules that require “dispatchable location” be transmitted to 911 call centers, regardless of the technological platform used. Dispatchable location is defined in the NPRM as “the street address of the calling party, and additional information such as room number, floor number, or similar information necessary to adequately identify the location of the calling party.” Currently, when a 911 call is made in an MLTS environment such as a large campus or hotel, the location may be included in the information sent to the 911 call center, but that location may be the site’s main entrance or an administrative office and not the precise location of the caller.

Under the proposed rules, the transmission of a dispatchable location would be required for MLTS, fixed telephone service, interconnected Voice over Internet Protocol (“VoIP”) services, and Telecommunications Relay Service. The FCC seeks comment on the technical feasibility of the requirement, a comparison of the costs and benefits, and whether the requirement should be extended to any other 911-capable services, such as outbound-only VoIP. The proposed compliance date is February 16, 2020, to coincide with the compliance date of Kari’s Law.

Comment on the FCC’s proposals will be due 45 days after the NPRM’s publication in the Federal Register, with reply comments due 30 days after that date.

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What do these three have in common?  Well, if you are planning to be at the Radio Show in Orlando next week, you probably already know about the Pillsbury Broadcast Finance sessions at the Radio Show, with this year’s session marking the event’s 28th year.  The 2018 edition is titled Pillsbury’s Broadcast Finance 2018: Radio’s Debt Cloud Finally Lifts—a reference to the packaged bankruptcies of iHeart and Cumulus that will lighten both companies debt load in 2019, and which will hopefully allow us to turn the page on investors’ perception of radio as a slow growth, high-debt industry.

The event (September 26 from 8:30am to 10am) is often referred to as the “Radio Show Leadership Breakfast” because (1) the session panels feature some of the most influential CEOs in the radio business along with up-and-comers that will soon become the future of radio, and (2) our friends at Media Services Group are once again buying breakfast for everyone.  It’s a tough combination to beat, and perennially a standing room only event.

In addition to our CEO panelists—Caroline Beasley of Beasley Media Group, Ginny Morris of Hubbard, and Dhruv Prasad of Townsquare—Wells Fargo analyst J. Davis Hebert will be returning to launch this year’s event with his always head-turning presentation on the Financial State of the Radio Industry.  This economic snapshot (with bright colors and graphs!) provides a degree of insightful clarity rarely found in such a large and complex industry.

But what—for those of you that still remember the question that launched this post—does any of this have to do with political dollars?  Well (spoiler alert), one of the points Davis will be illustrating with his slides is a projection that 2018 will be by far the biggest political ad spending midterm election of the century, and an incredibly close second to the biggest political ad spending election of all, the 2016 general election ($2.9B vs. 2016’s $3B).  There are 34 Senate seats at stake, 11 of which are highly competitive races, 66 highly competitive House races, and 36 gubernatorial elections, with 16 states “potentially in play.”

Radio will have to fight for its share of those dollars, but in markets with highly competitive races, the influx of dollars from candidates and PACs can be so immense that ad buyers have trouble finding media that aren’t sold out as election time nears.  The competition to place ads can be so intense that I’ve been contacted by more than one noncommercial station trying to figure out how to deal with candidates that are insisting upon placing ads on their stations.

Which raises the less fun to contemplate, but equally important, matter of ensuring that your station’s political ad practices don’t leave you fighting off political advertising complaints once the election is over.  The political advertising rules for broadcasters are complex and so fact-sensitive that many an experienced broadcaster is left scratching their head trying to deal with a political ad buy.  I know those calls well, which often begin with something along the lines of “I’ve been doing this for 20 years, but I’ve never had something like this pop up before….”

That, along with the fact that stations’ Political Files are now online for political activists to scrutinize at any time, day or night, means broadcasters will again lose a lot of sleep this election season trying to ensure they are doing everything right.  In hopes of making their lives a little easier, Pillsbury released an updated version of its Political Broadcasting Advisory this year.

So if you’ve been clinging to the last edition like it’s your security blanket during election season, you can now toss it aside and get that warm and fuzzy feeling that comes from holding something that’s still warm from the laser printer (it’s much longer than you’ll ever want to read on a phone).  That way, you’ll have something to read on the plane ride to Orlando, where you will arrive well-versed in the intricacies of political ad rules compliance, and stoked for a great Radio Show.

We look forward to seeing you there!

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The Federal Emergency Management Agency (FEMA), in coordination with the FCC, announced this morning that the National Emergency Alert System (EAS) and Wireless Emergency Alerts (WEA) tests scheduled for this Thursday, September 20, have been postponed due to “ongoing response efforts to Hurricane Florence.”

Instead, the tests will be conducted on the previously announced backup date of October 3.  The Wireless Emergency Alerts test will commence at 2:18 p.m. EDT and the EAS test will commence at 2:20 p.m. EDT on that date.  FEMA has indicated that the purpose of the tests is to “assess the operational readiness of the infrastructure for distribution of a national message and determine whether improvements are needed.”

As we previously discussed on CommLawCenter, in preparation for the national test, all EAS Participants were required to file their Form 1 with the FCC by August 27, 2018.  They were then to file their Form 2 (day of test data) on September 20, 2018, with the final test report to be filed on Form 3 by November 5, 2018.

The Form 2 (and likely the Form 3) deadline will now shift to align with the new October 3 test date.  As of the publication of this post, the FCC had not yet announced new filing deadlines, but the Form 2 will likely be due on October 3, 2018, and since the FCC’s Rules require that EAS Participants “are required to file detailed post-test data 45 days following a nationwide EAS test,” the Form 3 deadline will most likely move to November 19, 2018.  Those are just predictions, however, and broadcasters and other EAS Participants should watch for a formal announcement from the FCC with the new filing deadlines.

[Editor’s Note: Subsequent to publication, the FCC did in fact release a Public Notice confirming the October 3 deadline for Form 2, and the November 19 deadline for Form 3.]

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Whether tracking a developing storm so the public can prepare, or disseminating evacuation orders and alerts, broadcasters continue to serve as the bedrock of the nation’s warning system in emergencies.  As Hurricane Florence approaches the East Coast, TV and radio stations are hurrying to make sure they are in position to warn and inform their audiences of new developments.

Continuing operations during a hurricane is tough enough with employees sleeping in the studio while wondering if their house is still standing, but TV stations are also required by the FCC to ensure that all viewers, regardless of hearing or vision challenges, are able to receive emergency information being relayed.  As a result, emergency information presented on-air aurally must also be made available visually, and emergency information presented visually must also be made available aurally.  In past disasters, the FCC has proposed fines of up to $24,000 ($8,000 per “incident”) for TV stations that effectively said “run for shelter” but didn’t air a crawl or other graphic at that time conveying the same information.

To help television stations in this week’s storm path meet their obligations, Pillsbury today published an updated edition of Keep Calm and Broadcast On: A Guide for Television Stations on Airing Captions and Audible Crawls in an Emergency.  Stations whose communities are near the path of Hurricane Florence should review it, both as a refresher on what they will need to do in the next few days, and on how best to do it.

While broadcasters are working to help their communities prepare for the storm, the FCC is also trying to do its part to help broadcasters.  Earlier today, the FCC released a Public Notice providing emergency contact info for various divisions of the FCC relevant to an emergency, as well as procedures for making emergency requests for Special Temporary Authority to operate at variance from normal license parameters where needed due to equipment damage, etc.  The Public Notice also states that licensees requiring emergency assistance or STAs outside of business hours can “call the FCC’s Operations Center, which is open 24 hours a day, 7 days a week, at (202) 418-1122 or by e-mail at FCCOPCenter@fcc.gov.”

State governments are doing their part as well—nearly a dozen states have adopted laws granting broadcast personnel First Responder/First Informer status.  During earlier hurricanes in Florida, dedicated broadcasters stayed at their stations rather than protect their homes, only to find their transmissions halted when the station generator ran out of fuel and government officials prevented fuel trucks from entering the disaster area to resupply stations.  First Responder/First Informer laws allow broadcasters access to crisis areas, both for reporting on a disaster and maintaining station operations.  This includes granting priority to broadcasters for scarce fuel supplies (and emergency access for vehicles transporting fuel to stations) to keep their stations’ emergency generators—and the transmitters they power—running during emergencies.

Recognizing the limitations of a state-by-state approach, in March of this year, Congress granted broadcasters First Informer status in federal disaster areas throughout the nation.  Hurricane Florence will serve as one of the first tests of broadcasters’ new federal First Informer status.

While the last decade has brought progress in making communications infrastructure more resilient in emergencies, cable and Internet service is often disrupted in disasters, and cell phone networks, where they don’t fail outright, become overwhelmed by increased usage during a disaster.  Unlike communications infrastructure that requires wired connections over a broad area, or numerous short-range towers and repeaters, broadcast stations just need an upright tower or tall building for their antenna, fuel for their generator, and access for their employees.  That resilience in extreme conditions—and the ubiquity of radios and TVs—is critical in emergencies.

It’s time for broadcasters to once again weather the storm, and to help their communities survive it.

 

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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 →

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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.