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While the great American songwriter Sammy Cahn felt it was Love and Marriage that were inseparable (as they “go together like a horse and carriage”), the FCC today found the UHF Discount just as inseparable from its 39% National TV Ownership Cap.  By a 2-1 party-line vote, the FCC this morning restored the UHF Discount, reversing a decision of the Wheeler FCC released just seven months ago.  The FCC indicated that it would consider the future of the UHF Discount in a comprehensive review of its broadcast ownership rules commencing later this year.

Most rules aimed at preserving competition focus on a competitor’s market share as the trigger for restricting further growth.  Oddly, the National TV Ownership Cap instead focuses exclusively on a television broadcaster’s mere geographic presence as being the danger.  Using that logic, you would expect Sears to be able to easily crush Amazon since Sears has far more locations than Amazon.  However, if you were ever to make that argument in public, the laughter would be long and loud.

Those unfamiliar with the Cap might assume a 39% limit means an entity is restricted to having no more than a 39% nationwide share of either advertising revenue or viewers (depending on which “market” the government thinks is the relevant one).  That is certainly the way a regulatory cap works in most industries.  In fact, before a court tossed it out for other reasons, the FCC’s own national cable cap rule prohibited ownership of cable systems having more than 30% of all U.S. subscribers.

In contrast, the National TV Ownership Cap just totals the households in each TV market served by a broadcaster (regardless of whether those viewers actually watch or can even receive the station at issue) and yells “Stop!” when the total market population reaches 39% of national TV households.  Even if a broadcaster’s stations have a less than a 1% audience/ad revenue share in each of those markets, it is still treated as a competitive behemoth whose growth must be halted.

In the real world, a station’s over-the-air signal often doesn’t cover all the households in its market, meaning that the Cap is not just measuring the wrong thing, but is doing so inaccurately by attributing all TV households in a market to that station.  Unlike the Cap itself, the UHF Discount acknowledges the illogic of this, and counts only half the TV households in a UHF market toward the Cap in an effort to approximate real world coverage.  Even if the digital transition had actually eliminated the disparity between VHF and UHF coverage (look here for a contrary argument), it doesn’t change the fact that the approach upon which the UHF Discount is based—trying to assess actual signal reach—is far more logical than the treatment of VHF stations under the Cap, which arbitrarily counts all TV households in a geographic market.

So if you are willing to overlook the flawed premise of the Cap itself—that geographic presence rather than actual market share is what is relevant—then the method of counting households under the UHF Discount is actually far more defensible than the arbitrary treatment applied to VHF stations by the Cap.  If the treatment of UHF and VHF stations needs to be conformed, the answer would not be to eliminate the UHF Discount, but to instead conform the treatment of VHF stations and make a similar assessment of their actual population coverage.

There are certainly those who would vigorously challenge that conclusion, and they would likely present two arguments to support their case.  The first is that the Cap is intended not merely to preserve competition, but also to preserve Americans’ access to diverse content.  The second is that cable and satellite carriage now relays a station’s signal to all corners of its market, making it reasonable to attribute all households in that market to the station.  However, these two arguments cancel each other out.

Even with cord-cutting, well over 80% of TV households are cable/satellite subscribers.  That sounds like a point in favor of the “you should count all households” approach, right?  But in those pay-TV households, retransmitted broadcast channels are surrounded by hundreds of other program streams.  As a result, these households have available a level of program diversity that was unimaginable when the National Cap rule was first created in 1985.  That in turn dilutes the potential influence of any one program source, eliminating the need for broadcast ownership restrictions with regard to these households.

It is therefore only in non-cable/satellite households that the Cap could theoretically serve its claimed purpose.  However, if the concern underlying the Cap is a broadcaster having influence over viewers in households lacking a multitude of competing program sources, less than 20% of all U.S. TV households would even be at risk of that (and that assumes we are talking about a broadcaster with a TV station in every market in the country).  While the Cap currently limits a broadcaster to having this influence in markets containing 39% of TV households, it has become physically impossible have such influence in even 20% of TV households.  And of course, all of this overlooks Internet video sources, which are likely heavily utilized in non-cable/satellite households since many are cord-cutters now relying on Internet video services.

Whether or not the UHF Discount is in place won’t alter any of this.  It’s not the UHF Discount that has outlived it usefulness, but the Cap itself.  The UHF Discount merely reduces the damage caused by a now outdated Cap.

Still, there are those who disagree with the FCC’s stated goal of reviewing the Cap and the UHF Discount together, arguing that if there is no longer a UHF/VHF disparity, the FCC should ignore the forest and focus on just that one tree.  However, Chairman Pai correctly noted that, in eliminating the UHF Discount, the “Commission vote[d] to substantially tighten the national audience reach cap,” and the FCC’s action would “substantially change the impact of the national cap.”  The notion that one can be eliminated without affecting the other is indeed a fiction.  By eliminating the UHF Discount without assessing whether the Cap as modified by that action was in the public interest, the FCC failed to meet its most fundamental statutory mandate.  Today, the FCC rectified that error.

So the FCC will now move on to a more unified and comprehensive review of its broadcast ownership rules.  In that review, it will have to recognize that the UHF Discount is just as inseparable from the current Cap as Sammy Cahn’s lyrical horse and carriage.  It might also conclude that, like the horse and carriage, the National Cap has become a relic of another time.

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To use a metaphor those headed to Vegas for the NAB Show will appreciate, two of the three wheels on the Spectrum Repack slot machine had stopped spinning, and all eyes have since been anxiously watching that third and final wheel.  The first stopped spinning on January 13, 2017 when the Reverse Auction concluded.  The second stopped on March 30, 2017 when the Assignment Phase of the Forward Auction came to an end.  The third wheel stopped this afternoon with the release of the FCC’s long-awaited Incentive Auction Closing and Channel Reassignment Public Notice.  That Public Notice formally marks the end of the Incentive Auction, and publicly reveals which stations got cherries and which stations got lemons in the auction and repack.

According to the FCC, there were 175 TV stations that sold spectrum in the auction for just over $10 Billion in total.  Of these 175, 30 are moving to a VHF channel and 133 have indicated that they will be channel sharing with a station that did not sell spectrum in the auction.  That suggests only twelve stations nationwide sold their spectrum with the intent to go dark permanently.

For those stations that did not sell spectrum in the auction, the FCC indicates that 957 of them are being involuntarily moved to new channels.  As a result, the Spectrum Repack looks like it will be every bit as complex and all-encompassing as many had feared.

In that regard, the Public Notice also locks in the deadlines broadcasters must meet for the 39-month Spectrum Repack, officially launching the rush to secure equipment and services needed by each repacked TV station to build out new transmitting facilities. The FCC had addressed in general terms many of the repack deadlines in various notices and webinars, but nearly all were geared to the release date of the Public Notice.  As a result, while we generally knew how long the FCC was allotting for various steps of the repack, they all remained moving targets until today’s release of the Public Notice.

With the Public Notice now in hand, we have assembled below the key deadlines. 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:

  • Failing to Make Timely Uploads to Online Public File Costs TV Station $13,500
  • FCC Fines Church’s Pirate Radio Station $25,000
  • FCC Proposes $7,000 Fine Against TV Station for Public File Violations

Slow Upload Speed: TV Licensee Agrees to Pay $13,500 to Settle FCC Investigation into Online Public File Violations

The FCC entered into a Consent Decree with an Iowa TV station to resolve an investigation into the licensee’s failure to timely upload required documents to its online public inspection file.

Section 73.3526 of the FCC’s Rules requires commercial broadcasters to maintain public inspection files containing specific types of information related to station operations, and subsection 73.3526(b)(2) requires TV and non-exempt radio licensees to upload most of that information to the FCC-hosted online public inspection file. For example, subsection 73.3526(e)(7) requires broadcasters to retain records that document compliance with equal employment opportunity rules; subsection 73.3526(e)(10) requires broadcasters to maintain materials relating to FCC investigations or complaints; and subsection 73.3526(e)(11) requires TV stations to place in their public inspection file (i) Quarterly Issues/Programs Lists describing the “programs that have provided the station’s most significant treatment of community issues during the preceding three month period” and (ii) certifications of compliance with the commercial limits on children’s programming.

In October 2013, the licensee filed its license renewal application, certifying that it timely placed in its public file all required documentation. However, an FCC investigation found that, with the exception of electronically submitted documents that the FCC automatically places in a station’s online file, the station’s online file was empty, meaning the licensee failed to upload any of the other required documents.

The FCC contacted the licensee in March 2014 to request that the station upload all required documents, and the licensee subsequently complied. However, the FCC discovered in January 2016 that the licensee failed to upload Issues/Program Lists and Commercial Limits Certifications for four quarters in 2014 and 2015. The FCC again contacted the licensee, at which point the licensee uploaded the missing documents. Still, in April 2016, the FCC found yet again that the licensee had failed to upload a required Issues/Programs List and commercial limits certification.

The licensee subsequently entered into a Consent Decree with the FCC to resolve the investigation into these public inspection file violations. As part of the Consent Decree, the licensee admitted liability, agreed to make a payment of $13,500 to the U.S. Treasury, and agreed to implement a compliance plan. The compliance plan must, among other things, designate a compliance officer responsible for ensuring compliance with the FCC’s Rules. The compliance officer must conduct training for all station employees and management at least once every 12 months. The compliance plan will remain in effect until FCC action on the station’s next license renewal application (which will be filed in 2021) is complete. Ultimately, the FCC decided to grant the station’s pending license renewal application, provided that the licensee makes the $13,500 payment on time and in full.

Praying with Fire: Church’s Pirate Radio Station Fined $25,000

After repeated warnings, the FCC fined the operators of an unlicensed radio station in California $25,000. Section 301 of the Communications Act prohibits any person from operating any apparatus for the transmission of energy, communications, or signals by radio within the United States without FCC authorization. Continue reading →

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Under a new federal law, businesses are forbidden from restricting, prohibiting or penalizing consumer-posted reviews of the business or its goods and services. The Consumer Review Fairness Act of 2016 goes into effect tomorrow, March 14, 2017, and declares unlawful any “form contract” that prohibits or restricts the ability of an individual to engage in a “covered communication,” which is broadly defined to include any review, performance assessment, or other similar analysis of the company’s goods, services, or conduct.  Our Pillsbury colleagues Michael Heuga, Amy L. Pierce and  Catherine Meyer discuss the details of the new law in a recent Pillsbury Client Alert.

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Robocalls and telemarketing calls are reliably the top source of consumer complaints received by the FCC.  Despite the good intentions of the 1991 Telephone Consumer Protection Act (TCPA), FCC decisions implementing the TCPA, and the collective efforts of the telecom industry, there has been little relief from these unwanted calls—particularly at dinner time.  More problematic is that an increasing number of these calls use false (or spoofed) Caller ID to perpetrate scams designed to trick call recipients into believing the call is coming from the Internal Revenue Service, law enforcement, computer support, or a credit card company.

The FCC is now making another attempt to reduce unwanted and sometimes fraudulent telemarketing calls and robocalls.  In a draft Notice of Proposed Rulemaking and Notice of Inquiry circulated March 2nd and to be considered formally at the next FCC Open Meeting on March 23rd, the FCC is proposing to adopt rules that would allow voice service providers (including wireline, wireless and VoIP providers) to block spoofed calls in certain circumstances. Continue reading →

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As someone who has been deeply involved in planning for the rollout of ATSC 3.0, I get a lot of questions about the next generation broadcasting standard. By far the two most common questions are “When will the transition start?” and “When will it end?”  My answers—which often lead to quizzical looks—are “Very soon.  And never.”

The visible transition to 3.0 in the United States will begin almost immediately after the FCC approves use of the new technology. Transmitters being built today are 3.0 ready, and many hundreds (perhaps more than a thousand) of these transmitters will be installed as a necessary part of the post-incentive auction repacking process.  Broadcasters are already discussing how to provide ATSC 1.0 simulcasts in many markets so that some stations can begin transmitting in 3.0.  Korean television stations will launch ATSC 3.0 broadcasts beginning in May of this year, accelerating the availability of 3.0-compatible receivers.  So, the transition will begin soon.  I would argue it is already underway.

When I say the transition will never end, I don’t mean the broadcast industry is entering its groundhog day. Quite the opposite.  I mean that ATSC 3.0 provides enormous headroom for broadcasting to continue to grow and evolve long after all stations have made the initial conversion.

And that’s the beauty of ATSC 3.0. It will bring a foundational change to the capabilities of our national television broadcast infrastructure.  Most important, it allows broadcasters to continually expand, enhance and improve the services they offer, even after all stations have converted to 3.0.  That’s why I say the “transition” will never end.

Though we can’t put a date on the end, we do know what the first steps are.

Step 1 – Upgrade to 3.0. Within a matter of years, most or perhaps all stations will have completed the transition to ATSC 3.0, in the sense that they will be broadcasting 3.0 signals.  But the services offered, and the networks and systems behind those services, can evolve to meet the changing demands of the incredibly robust and dynamic marketplace in which broadcasters must compete. 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:

  • FCC Proposes $25,000 Fine Against Individual for Operating a Pirate Radio Station
  • FCC Admonishes Wireless Carrier for Data Breach
  • Telecommunications Relay Service Providers Agree to $9.1 Million Settlement

Pirate Radio Operator Faces $25,000 Proposed Fine After Flaunting Multiple FCC Warnings

After issuing multiple warnings, the FCC proposed a $25,000 fine against a New Jersey man for operating an unlicensed radio station. Section 301 of the Communications Act prohibits any person from operating any apparatus for the transmission of energy or communications or signals by radio within the United States without FCC authorization.

In October 2015, the licensee of an FM translator station in Jersey City complained to the FCC that an unauthorized station was causing co-channel interference. FCC agents verified the complaint and issued a Notice of Unlicensed Operation (“NOUO”) to the owner of the apartment building where the unlicensed station was operating. The unauthorized broadcast subsequently stopped. However, in May 2016, the FCC received another complaint and found that the unlicensed station was operating again. FCC agents issued a second NOUO, this time to both the individual operating the pirate station and the building owner. The individual contacted the FCC in June 2016, at which time he was warned he could face additional enforcement action if unlicensed operations continued.

Despite that admonition, FCC agents found the individual again engaged in unlicensed operation in August 2016, this time at a different site. The FCC issued another NOUO, but later that month found the individual operating without a license again, this time at yet another site.

FCC guidelines set a base fine for unauthorized operation of $10,000 for each violation or each day of a continuing violation. The FCC may adjust the fine upward or downward after taking into account the particular facts of each case. Here, the FCC found that a “significant upward adjustment was warranted” due to the individual’s disregard of multiple warnings. As a result, the FCC proposed a $20,000 base fine—$10,000 for the May 2016 operations and another $10,000 for the August 2016 operations—and applied a $5,000 upward adjustment, for a total proposed fine of $25,000.

Hack of Wireless Carrier Leads to Admonishment by FCC

The FCC admonished a national wireless phone carrier for a 2015 data breach in which a third party gained unauthorized access to personal information collected by the carrier to run credit checks on customers.

Section 222(a) of the Communications Act requires telecommunications carriers to “protect the confidentiality of proprietary information of, and relating to . . . customers.” It also requires carriers to “take every reasonable precaution” to protect personal customer information. Section 201(b) of the Act requires practices related to interstate or foreign telecommunications to be “just and reasonable.” Continue reading →

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After the election, it was clear that we would be seeing a much different FCC in 2017. Such transitions typically take time, as a president’s nomination of new candidates to fill the Chairman’s or commissioners’ seats, along with the delay typically associated with obtaining Senate confirmation, means that a new fully-staffed FCC won’t typically be ready for action until May or June following the January change in administrations. By that time, the actions of the prior FCC have often become final and unappealable, or at least the regulated industries have already begun to adapt their operations to comply with those rules, making subsequent changes more complicated.

Continue reading →

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Just 29 days ago, the FCC’s Media Bureau issued an unusual decision denying Petitions for Reconsideration of an order adopted by the commissioners themselves, raising questions as to who’s in charge at the FCC.  The petitions were filed by noncommercial broadcasters in the Commission’s long-running proceeding to update its broadcast ownership reporting requirements.  Today, a much different Media Bureau backtracked on that decision—the FCC’s rules give it 30 days to change its mind—and decided that ruling on petitions seeking reconsideration of a Commission-level order is a matter best left to the commissioners themselves.

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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:

  • FCC Proposes $10,000 Fine to FM Licensee for Public Inspection File Violations
  • Spoofed Calls Lead to $25,000 Fine
  • Wireless Licensee Agrees to Pay $28,800 Settlement for Operating on Unauthorized Frequencies

FM Licensee Hit with $10,000 Proposed Fine for “Extensive” Public Inspection File Violations

The FCC proposed a $10,000 fine against a South Carolina FM licensee for “willfully and repeatedly” failing to retain all required public inspection file documents.

Continue reading →