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As 2018 moves into the rear view mirror, 2019 promises to be a consequential year for broadcasters.  In accordance with a Pillsbury holiday tradition that goes back farther than any of us can remember, earlier this month we published our annual calendar of upcoming regulatory deadlines for broadcasters–a compendium of the currently “known knowns” of 2019 (this year’s edition being innovatively titled, for the first time ever, the 2019 Broadcasters’ Calendar).  It’s chock-full of dates and deadlines affecting TV and radio in the coming year, and cross-references some of our other Advisories to help stations meet their regulatory obligations in the year ahead.

Of course, 2019 will also bring some currently “known unknowns” into focus, with one of the biggest being the FCC’s recently-launched 2018 Quadrennial Review of its media ownership rules–a proceeding that could well alter the broadcast landscape when it reaches completion.

But as broadcasters look ahead to 2019, pondering both the knowns and unknowns of the coming year, they can at least recount with the confidence of hindsight what rule changes 2018 dropped into their regulatory stocking, right?  Perhaps not.  In a year when deregulatory changes were announced at a steady pace, some broadcasters have become confused as to whether a particular rule change was just proposed, voted on, or has actually gone into effect.

So as we prepare for 2019, let’s take a quick refresher on the changes to the FCC’s Rules 2018 brought, and what’s still to come in 2019:

  • Myth: In 2018, the FCC eliminated the requirement that stations file copies of contracts like TV network affiliations, articles of incorporation, bylaws, options, etc. with the FCC.
  • Fact: While the FCC voted in 2018 to eliminate the paper filing of certain contracts, the process for implementing that change has not yet been completed.  As a result, the rule remains in effect, and stations must continue to file such contracts in paper form at the FCC until January 22, 2019.  Also, while paper copies of these contracts need no longer be filed after that date, stations must still either upload them to their online public file or upload a list of such contracts to the online public file and promptly make copies available to those requesting them.  Check out our CommLawCenter article on this topic.
  • Myth: Broadcasters have been relieved of the need to post a copy of their license at their transmission facility.
  • Fact: Not yet! Even though the FCC voted to eliminate the posting requirement in December 2018, the rule change won’t go into effect until after it has been published in the Federal Register.  As a result, this “2018 rule change” also won’t go into effect until sometime in 2019.
  • Myth: Since all stations were required to file their biennial ownership reports in 2018, that means no more biennial ownership reports until 2020, right?
  • Fact: Unfortunately not the case.  The biennial ownership reports filed in 2018 reported station ownership as of October 1, 2017.  That filing deadline was extended from December 1, 2017 to March 2, 2018 due to the merging of the filing deadlines for all commercial and noncommercial stations, as well as delays in bringing the FCC’s new ownership report filing system online.  As a result, the next batch of biennial ownership reports are due December 1, 2019, and must report station ownership as it exists on October 1, 2019.
  • Myth: In 2019, the FCC will reimburse LPTV, TV translator, and FM broadcast stations for all their costs incurred as a result of the TV spectrum repack.
  • Fact: A partial Yes. In March 2018, Congress passed legislation allocating more repack reimbursement funds and expanding the list of entities eligible for reimbursement to include these types of facilities.  However, in its August Notice of Proposed Rulemaking, the FCC noted that Congress had limiting eligibility for LPTV stations to those that were licensed and operating for nine of the twelve months prior to April 13, 2017.  The FCC also proposed reimbursing FM radio stations on a sliding scale based on the length of their time off-air, with only those stations off for more than thirty days entitled to 100% reimbursement.  All in all, certain stations may be on their way to receiving reimbursements, but who will be reimbursed and for how much (and in what order of priority) remains to be determined in 2019.  For more, check out our CommLawCenter article on this topic.
  • Myth: In 2019, CommLawCenter will be the place to go for up-to-date news and analysis in the world of communications law and business.
  • Fact: Actually, this one is true!  Best wishes to all for a New Year that holds few unpleasant regulatory surprises.  Keeping the 2019 Broadcasters’ Calendar close at hand will go a long way in achieving that result.
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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:

  • Unpaid Regulatory Fees Bring License Revocation Proceeding for Massachusetts FM Station
  • Unregistered Tower and Unauthorized Silence Spell Trouble for North Carolina AM Station
  • FCC Issues Warning to Denver Trucking Company for Unauthorized Transmissions on Public Safety Frequency

The Check is (Not) in the Mail: Massachusetts Station Risks Revocation over Missing Regulatory Fees

The FCC’s Media Bureau issued an Order to Pay or to Show Cause (“Order”) to the licensee of a Massachusetts FM station for failing to pay five years’ worth of regulatory fees and the corresponding penalty fees.  In response to the Order, the licensee must either pay the overdue fees or demonstrate why it does not owe regulatory fees.  The Order also launches a proceeding to revoke the station’s broadcast license.

Section 9 of the Communications Act (“Act”) requires the FCC to “assess and collect regulatory fees” for certain regulated activities, including broadcast radio.  Should a party fail to timely pay such fees, the FCC will assess a 25% late fee, as well as interest, penalties and administrative costs.  The FCC may also revoke licenses for failure to pay.

The licensee failed to pay its regulatory fees between fiscal years 2014 and 2018, and has accumulated a debt of $9,641.73 in unpaid fees and related charges.  The FCC repeatedly sent the licensee Demand Letters calling for payment but received no response.  The FCC eventually transferred the licensee’s debt for fiscal years 2014-2017 to the Treasury Department for collection.  At the FCC’s request, the Treasury Department recently transferred this debt back to the FCC in order to consolidate the collection process.

The licensee has 60 days to either: (1) provide the FCC with documented evidence that all its regulatory fee debt has been paid, or (2) show cause for why such payment is either “inapplicable or should otherwise be waived or deferred.”

Failure to provide a satisfactory response to the Order may result in the revocation of the licensee’s sole FM station license.

Silent Night: FCC Investigates North Carolina Licensee for Unregistered Tower and Other Violations

The FCC’s Enforcement Bureau issued a Notice of Violation (“NOV”) to the licensee of a North Carolina AM radio station for failing to register and light its tower, and for failure to operate its station in accordance with the FCC’s Rules.

Part 17 of the FCC’s Rules requires a tower owner to comply with various registration, lighting and painting requirements.  With limited exceptions, a tower that exceeds 200 feet in height above ground level must be registered with the FCC.  Further, towers must be painted and lighted in compliance with FAA requirements, and any extinguished or improperly functioning lights must be reported to the FAA if the problem is not corrected within 30 minutes.

Part 73 of the FCC’s Rules sets minimum operating hours for commercial broadcast stations.  A commercial AM station must operate for at least two-thirds of the total hours it is authorized to operate between the hours of 6 a.m. and 6 p.m., and two-thirds of the total hours it is authorized to operate between 6 p.m. and midnight every day except Sunday.  A station that expects to be silent for over 30 days must seek and obtain Special Temporary Authority (“STA”) from the FCC to be silent for such an extended period. Continue reading →

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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:

  • Premature Construction Turns Texas LPFM’s Minor Change into a Major Fine
  • FCC Issues Notice of Violation to Miami LPFM Licensee for Unauthorized Antenna Location
  • California Man Pleads Guilty to FCC Bomb Threat, Fatal “Swatting” Hoax

Houston, We Have a Problem: Media Bureau Proposes $5,000 Fine for Unapproved Construction of a Broadcast Facility

The FCC’s Media Bureau issued a Notice of Apparent Liability (“NAL”) to the licensee of a Houston-area low power FM (“LPFM”) station for engaging in premature construction of broadcast facilities.

Section 319(a) of the Communications Act (“Act”) prohibits the FCC from licensing an applicant to operate broadcast facilities unless that applicant has previously obtained a construction permit from the FCC to build those specific facilities.  A construction permit sets out the facilities and operating parameters for a proposed station, including the station’s frequency allotment.  Though an applicant may initiate certain pre-construction measures, including site clearance and purchase of broadcast equipment that is not specific to the station (e.g., generic studio equipment, but not a frequency-tuned antenna), the applicant may not take more substantive steps until it has a construction permit in hand.

In seeking a construction permit, an applicant must show that its proposed service contour is sufficiently distant from other stations operating on the same or adjacent frequencies as to ensure no interference will be created to existing stations.  If the proposed LPFM facilities do not satisfy the minimum geographic distances set out in Section 73.807 of the FCC’s Rules, the applicant must obtain a waiver of those requirements by demonstrating that the proposed operation will not result in actual interference.  For example, an applicant might be able to demonstrate that intervening terrain (mountains) will block the interfering signal.

According to the NAL, the LPFM applicant filed for a construction permit to modify its existing facilities.  Because the proposed site would not satisfy the minimum distance requirements for two local second-adjacent FM stations, the licensee also filed a waiver request purporting to demonstrate that the proposed service contour would not reach the two FM stations’ potential listeners.

Before the Commission granted either of these requests, it received a Petition to Deny from another local station, alleging that the licensee had prematurely begun construction on the proposed site without prior FCC approval.  The petition alleged that the licensee had mounted an antenna on an existing tower and had already proceeded to attach a transmission line to the antenna, in contravention of the prohibition on premature construction.

The petition also alleged that the waiver request was “flawed” because it did not sufficiently protect local listeners of the two second-adjacent FM stations.  According to the petition, the waiver application assumed its contour would only reach one-story structures, when, in fact, several surrounding structures were two-story.

In response, the applicant swiftly removed its equipment from the tower only three weeks after it had installed it.  In a later amendment, the applicant also proposed operating at a lower power level with a different antenna to reduce the likelihood of interference to nearby two-story buildings.

Nearly ten months later, the Media Bureau issued the NAL, proposing a $5,000 fine for the applicant’s premature construction.  Though the FCC’s Rules establish a base fine of $10,000 for unauthorized construction, the Media Bureau adjusted this amount downward, citing the brief duration of the violation and the licensee’s prior history of compliance.

The Media Bureau indicated that once the fine was “resolved,” and assuming no additional issues emerged, it intended to grant the waiver and related modification application, finding that the applicant’s new engineering solution was sufficient to prevent interference to the nearby second-adjacent stations.

Technical Foul: Miami Licensee Cited for Unauthorized Facilities

In another case involving an LPFM, the Enforcement Bureau presented a Notice of Violation (“NOV”) to the licensee of a Miami station for operating at variance from the station’s authorization.  As with all other broadcast operations, LPFM stations must operate in compliance with the Commission’s technical rules and with the station’s own authorization.

In August of this year, FCC field agents investigated the Miami LPFM and found violations in nearly every aspect of the station’s operation.  At the time of the investigation, the station’s license authorized it to operate on 107.9 MHz in southern Miami at a height of 62 meters.  Two months prior, the station had been granted a construction permit to operate four miles west of its original location on a new frequency and at a height of 15 meters.

When the field agents located the actual transmission facilities, however, they found that the licensee was operating at a completely different location several miles away from both its licensed and newly-authorized coordinates.  The station was also using an antenna located 45 meters above ground. Continue reading →

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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:

  • Ownership Questions Lead to Hearing Designation Order for LPFM Licensee
  • NC Man Hit with $40,000 Fine for Unauthorized Transmissions Over Public Safety Radio
  • FCC Issues Notice to Hospital Paging System Licensee for Harmful Interference

FCC Launches Hearing in Response to LPFM’s Undisclosed Foreign Ownership

The FCC has designated for hearing a Low Power FM (“LPFM”) licensee’s modification application after an investigation into whether the licensee misrepresented the makeup and citizenship of its ownership in various Commission filings.

Under Section 309 of the Communications Act (“Act”), the FCC must first determine that the public interest will be served before it can grant a station license or modification application.  If there is a substantial question that prevents the Commission from making that determination, it must designate the application for a hearing before an Administrative Law Judge (“ALJ”).  The FCC can revoke the license if an ALJ determines that the applicant lacks the “requisite qualifications” to be a licensee, taking into consideration the applicant’s record, character, and truthfulness in dealings with the FCC.

The Act also prohibits entities with greater than 20% alien ownership or voting control from holding a broadcast license where the FCC finds such foreign ownership is not in the public interest.  Many FCC filings require the licensee to identify all officers, directors, and entities with attributable ownership interests in the licensee, including their citizenship.

According to the Hearing Designation Order (“HDO”), the Missouri-based licensee initially applied for a construction permit for a new LPFM station in 2013.  In that application, the licensee listed five individuals as board members and identified all of them as U.S. citizens.  In two separate modification applications in January and November 2017, the licensee identified the same board members as U.S. citizens.

The Enforcement Bureau began its investigation after another licensee alleged that four of the five listed board members were not actually U.S. citizens.  The Bureau discovered that one of the board members had, only weeks before the licensee’s January application, lost an appeal before a federal court to reopen his deportation order to Guatemala.  The court decision referred to him as a Guatemalan citizen.  His wife, another board member, had already been deported to Guatemala.  These revelations indicated that foreign ownership and control of the licensee not only exceeded 20 percent, but that the licensee had also falsely certified the U.S. citizenship of the two board members.

In addition to questions of citizenship, the Bureau also found evidence that the licensee may not have even identified all individuals with attributable interests in the licensee.  Specifically, in documents filed with the Missouri Secretary of State, the licensee listed several officers and board members that it had not disclosed to the FCC.

According to the FCC, these discoveries raised a “substantial and material question of fact” as to whether the licensee misrepresented to the Commission both the makeup and the citizenship of its attributable owners.

The FCC sent the licensee two Letters of Inquiry seeking information about the licensee’s board members, but never received any response.  Failure to respond to a Commission inquiry is also a violation of the FCC’s Rules.

As a result, the FCC commenced an administrative hearing to determine whether the licensee: (1) made misrepresentations in its applications; (2) violated the Commission’s foreign ownership rules; (3) failed to maintain the accuracy of its pending application; and (4) failed to respond to the FCC’s inquiries.

In light of these questions, the ALJ must also examine the facts to determine whether granting the licensee’s pending application is in the public interest, and whether the licensee is even qualified to hold an FCC license at all.

FCC Proposes $40,000 Fine for Impersonating a Firefighter

In a Notice of Apparent Liability (“NAL”), the FCC found a North Carolina man apparently liable for transmitting on a frequency licensed to local first responders while impersonating a member of the local Volunteer Fire Department. Continue reading →

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Originally intended as an “innovation band” for the testing of new wireless broadband services, the Citizen Broadband Radio Service (CBRS) was created in 2015 to permit commercial and federal spectrum users to operate in the same spectrum band. By utilizing smaller geographic areas for licenses, and short-term authorizations lacking an expectation of renewal, the CBRS was seen as a test bed for a variety of different wireless broadband services, including those of rural wireless broadband service providers.

To that end, the FCC created two new classes of licenses, Priority Access Licenses (PALs) and General Authorized Access Licenses (GAAs).  GAAs are permitted to operate anywhere within the CBRS band, so long as incumbent licensees and PALs are protected. PALs are required to protect the incumbent licensees, and will receive protection from GAAs. A key component of the CBRS licensing scheme is the implementation of a central database, the Spectrum Access System (SAS) (had enough acronyms yet?), maintained by third parties who will coordinate among licensees to prevent interference.

At its October meeting, the FCC revised its rules for the service with the stated goal of further encouraging the rapid development of 5G technologies.  The revised rules were adopted in response to petitions filed by CTIA and T-Mobile in 2017 which proposed several changes to the original 2015 rules.  The FCC sought comment on those proposals, which suggested several changes to the Priority Access Licenses, including adjusting the size of the geographic license, expanding the initial and renewal terms for licenses, and adopting performance standards. Although the FCC did not fully adopt the proposals, the revised rules make significant changes before the FCC has even issued the first CBRS authorization.

License Area: Under the 2015 rules, PALs were to be issued based on census tracts. The intent was to encourage local broadband development, especially in rural areas that may not receive service by nationwide carriers. By highlighting the difficulty of managing the licensing and build-out of service in 74,000 separate census tracts, CTIA, T-Mobile and several other parties argued that the FCC should expand the PAL geographic area to the more-manageable Partial Economic Areas. Ultimately, the FCC rejected that proposal, but instead expanded the PAL geographic area to county-based authorizations.

License Terms: In 2015, the FCC was concerned about the warehousing of spectrum, so it limited the license term of PALs in a particular geographic area to two sequential three-year periods, with no option for renewal. Several parties filed comments arguing that the three-year limit for licenses would serve as a roadblock to robust investment by wireless companies. The FCC has now agreed and extended the initial term to ten years. The FCC also modified its rules to permit licensees to renew their PAL authorizations.

Performance Standards: In light of its decision to extend the license term and permit renewals, the FCC imposed a “substantial service” performance standard for services operating in the CBRS band. For mobile and point-to-multipoint services, a licensee must demonstrate that it provides service to at least 50 percent of the licensed service area. For point-to-point service, a licensee must demonstrate that it provides at least four links in areas with a service population of 134,000 people or less, and at least one link per 33,500 people in service areas with a population greater than 134,000 people. This showing will be required when the licensee files its license renewal application.

Competitive Bidding: Finally, the FCC decided to grant PALs in accordance with its competitive bidding auction rules, permitting applicants to claim bidding credits as “small” or “very small business” entities, as a rural service provider, and/or if they propose to serve qualifying Tribal lands.

Support for the proposed rule changes was first signaled by then-Commissioner Pai and Commissioner O’Rielly in their concurring statements when the original rules were adopted in 2015. Because the FCC is still working on approval of the various SAS database proposals, and because there was a change in FCC leadership in January 2017, it was possible for the petitioning parties to seek revision of the 2015 rules before the FCC issued its first CBRS authorization. To date, the FCC has not issued authorizations for PALs or GAAs, but it is possible that new authorizations could be issued in 2019. Thus, while the rule changes will not impact any existing PAL or GAA licensees, these changes will have a significant impact on the operation of the CBRS band in the future.

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For nearly 80 years, the FCC’s Rules have required broadcasters to file paper copies of various types of documents relating to the control and operation of their stations.  Section 73.3613 of the FCC’s Rules requires broadcasters to file with the FCC certain contracts and instruments relating to network affiliations, present or future ownership or control, and some personnel agreements, as well as local marketing agreements (“LMAs”) and joint sales agreements (“JSAs”).  Today, the FCC voted unanimously to eliminate this requirement.

The rule was originally created in the 1930s to make these documents more accessible to both FCC staff and the public.  However, the advent of the online public inspection file has effectively rendered this octogenarian obligation obsolete.  By March 1, 2018, all full-power TV, Class A TV, AM and FM broadcasters should have transitioned to the online public inspection file (“OPIF”), where they must either (i) upload all Section 73.3613 documents, or (ii) maintain an up-to-date list of those documents and provide a copy of any listed contract requested by a party within seven days of that request.  Similarly, stations are required to list all Section 73.3613 documents in their Ownership Reports, which are then automatically linked by the FCC to station OPIFs.

In eliminating the requirement to file such documents with the Commission, the FCC reasoned that the paper filing rule not only imposed unnecessary burdens on stations, but was redundant with the OPIF and Ownership Report requirements; as a result, the requirement did little to serve the public.  The FCC also observed that very few people actually visited its Reference Information Center, where all of these paper filings are maintained.  Members of the public will continue to be able to obtain copies of Section 73.3613 agreements directly from stations by requesting them.

For their part, stations must remain diligent and update their OPIF contract lists within 30 days of the execution, termination, or amendment of any Section 73.3613 document.  As we have previously discussed, timely filing is now particularly important because all OPIF uploads are timestamped, and late uploads are easy for FCC staff to spot at license renewal time.

Today’s Order also extends the FCC’s permitted redaction rules applicable to JSAs and LMAs to all Section 73.3613 documents.  Section 73.3613 currently only addresses redaction of confidential or proprietary information in the context of JSAs and LMAs.  In the past, stations have filed redacted copies of other contracts, as Section 0.459 of the FCC’s Rules allows certain materials to be withheld from public inspection.  The amended Part 73 redaction rule will explicitly allow limited redaction of all Section 73.3613 documents.

Though these changes will certainly save broadcasters time and resources in the long run, broadcasters should continue filing Section 73.3613 documents with the FCC for the moment.  Before the full rule change can go into effect, it must be approved by the Office of Management and Budget.  In the past, such approvals have typically taken many months, so this rule change may well not go into effect until sometime next year.

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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.