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In a long-anticipated move towards commencement of the spectrum auction, the FCC today released a Public Notice and related Appendix providing an initial clearing target of 126 Megahertz of spectrum in what is currently the broadcast television band. The 126 MHz figure represents the targeted amount of spectrum to be repurposed from broadcast television to mobile wireless uses.  The FCC also announced that bidding in the reverse auction will commence on May 31, 2016.

The 126 MHz target is the highest the FCC was contemplating, and indicates that a large number of television stations have chosen to participate in the auction.  By setting a high clearing target, the FCC is maximizing the amount of broadcast spectrum purchased, but increasing the risk that if there is insufficient interest in the forward auction for this amount of spectrum (at the prices the FCC needs to pay selling broadcasters and cover other costs), the auction may have to be redone with a lower clearing target.

In the forward auction, the FCC will offer 10 paired blocks of spectrum, each block comprised of 10 MHz, to mobile wireless bidders.  The remaining 26 MHz of spectrum to be cleared will be used for guard band and duplex gap purposes; i.e., to protect adjacent users from interference.  If the auction is completed with the 126 MHz clearing target, the post-auction television broadcast band will consist of VHF channels 2-13 and UHF channels 14-29.  The process of repacking stations into channels 2-29 would commence following completion of the auction, and is estimated by the FCC to take approximately three years, although many have questioned whether that is sufficient time for the repack.

With the release of the clearing target information, the FCC has locked in all of the following dates for auction-related events:

May 4, 2016, noon:  Date by which each television broadcast licensee that made an initial commitment in the reverse auction must receive a third confidential status letter from the FCC.  That letter will inform the applicant whether its station(s) will be qualified to participate in the reverse auction.  Applicants who have not received this letter by noon (Eastern Time) on May 4 should contact the FCC Auctions Hotline at (717)338-2868.

May 5, 2016: FCC Incentive Auction Reverse Auction Bidding System User Guide available on Auctions webpage.

May 18, 2016:  Online Bidding Tutorial available on Auctions webpage.

May 23, 2016, 10 a.m.:  Bidding Preview Period begins.

May 24, 2016, 10 a.m.:  Clock Phase Workshop.

May 24, 2016, 6 p.m.:  Bidding Review Period ends.

May 25, 2016, 10 a.m.:  Mock Auction Bidding Round 1.  Additional Mock Auction Rounds occur throughout May 25 and May 26.

May 31, 2016:  Bidding in the reverse auction commences for qualified applicants, with a single round of bidding on May 31 and June 1, and two rounds per day starting on June 2.

While it is unclear how many rounds of bidding will be required before the auction closes, or whether the 126 MHz target might lead to a repeat of the reverse auction, today’s news brings a palpable sense that the auction has really begun.  How successful the auction will be for broadcasters, mobile wireless companies, and the FCC will be a developing story.  Stay tuned for more updates.

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Fulfilling Chairman Wheeler’s promise at the NAB Show to launch a proceeding before the end of the month commencing the process of authorizing use of ATSC 3.0 by TV broadcasters, the FCC today released a Public Notice on the subject.  The Public Notice seeks comments on an April 13, 2016 Petition filed by a consortium that includes America’s Public Television Stations, the AWARN Alliance, the Consumer Technology Association, and the National Association of Broadcasters.

Quoting heavily from the Petition, the Public Notice summarizes the Petition as requesting the FCC to:

“amend its rules to allow broadcasters to use the signaling portion of the physical layer of the new ATSC 3.0 (‘Next Generation TV’) broadcast standard, while they continue to deliver current-generation DTV broadcast service to their communities.”  More specifically, the Petition asks the Commission to (1) “approve the Next Generation TV transmission standard as a new, optional standard for television broadcasting;” (2) “approve certain rule changes to permit local simulcasting to enable Next Generation TV to be deployed while ensuring that broadcasts in the current DTV standard remain available to viewers;” and (3) “specify that Next Generation TV transmission is ‘television broadcasting’ in parity with the current DTV standard, and otherwise to conform Sections 73, 74 and 76 of [the] rules to permit the deployment of this innovative new standard.”

Moving from the filing of the Petition to releasing the Public Notice in less than two weeks is an impressive feat for the FCC.  Readers may recall that the Chairman, speaking at the 2015 NAB Show, announced to broadcasters that the Commission would be voting on an AM Revitalization order “in the coming weeks”.  For reasons described in part here on CommLawCenter, a few weeks ultimately stretched out to more than six months, finally leading to the release of an AM Revitalization order in late October of last year.

It is therefore a positive sign that the Chairman was able to fulfill this year’s “NAB speech promise” much faster than last year’s (while acknowledging that releasing a two-page public notice is a lot easier than releasing a final order establishing new rules).  Whether the Chairman views the enhanced capabilities of ATSC 3.0 as promoting his oft-stated mantra of “competition, competition, competition”, or as a back-up legacy for his Chairmanship should the spectrum auction disappoint, it launches the FCC down the path to a more flexible future for broadcasters and the services they provide.

Those interested in having their say on that future should be aware that the deadline for filing comments is May 26, 2016, with reply comments due June 27, 2016.  As a variety of parties make their views known to the FCC in this proceeding, we’ll soon know whether the path to ATSC 3.0 leads to a steep climb, or a walk in the digital park.

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In a recently issued Notice of Proposed Rulemaking, the FCC asked for comments on proposed rules that would apply the traditional privacy requirements of the Communications Act to providers of broadband Internet access services. This proceeding is an outgrowth of the FCC’s decision last year in the Open Internet Order to reclassify broadband as a telecommunications service, subject to certain requirements under Title II of the Communications Act.  Specifically, Section 222 of the Act imposes privacy obligations on telecommunications carriers and, in this proceeding, the FCC is considering whether to apply those rules, or other rules that might be more applicable to protect consumers, to providers of Internet access services.

The proposed rules focus on transparency, choice and data security. According to the FCC, adoption of the rules will ensure that consumers (i) have the information needed to understand what data broadband providers are collecting and what they do with that information, (ii) can decide how their information is used, and (iii) are protected against the unauthorized disclosure of their information.

  • Transparency. The FCC expects that broadband providers’ privacy policies would include disclosure of what information they collect and for what purpose, what information is shared and with whom, and how consumers can opt in or out of use and sharing of their personal information.
  • Choice. The proposed rules allow the use of personal information as needed to provide broadband services and for other purposes that make sense within the context of the service provider-customer relationship. They also allow service providers to use customer personal information to market other communications services unless the consumer opts out of such usage, but require specific opt-in approval from customers before broadband providers can share customer information with third parties that do not offer communications services.  The proposed rules include mechanisms to document customer opt-in and opt-out choices and provisions on how to notify customers of privacy policies.
  • Data Security. Broadband providers would be required to ensure the security, confidentiality and integrity of any customer information they receive. This would include requirements for regular risk management assessments and training of employees that handle customer information.   The NPRM also proposes to require broadband providers to notify affected customers within ten days of the discovery of a data breach that triggers customer notification requirements, and seeks comment on whether broadband providers should also notify customers after discovery of conduct that could reasonably be tied to a breach.  Further, the NPRM proposes to require broadband providers to notify the FCC of all data breaches, and to notify other federal law enforcement of breaches that impact more than 5,000 customers.  The NPRM proposes to require notification to federal law enforcement within seven days of discovery of such a breach, and three days before notification to the customer, and would allow law enforcement to seek delay of customer notification.  Broadband providers would be required to keep records of any data breaches and notifications for a minimum of two years.

The FCC suggested that it broadly wants to protect personally identifiable information, which, in the broadband context, would include any information that is linked or linkable to an individual and is acquired by the service provider in connection with its provision of broadband services. This could include:  (1) service plan information, including type of service (e.g., cable, fiber, or mobile), service tier (e.g., speed), pricing, and capacity (e.g., information pertaining to data caps); (2) geo-location; (3) media access control (MAC) addresses and other device identifiers; (4) source and destination Internet Protocol (IP) addresses and domain name information; and (5) traffic statistics.  The FCC seeks comments on whether other types of information should also be protected, including port information, application headers, application usage and customer equipment information.

The FCC acknowledged that there are existing state privacy laws that could overlap with the proposed rules. To resolve any conflicts, the proposed rules would preempt state laws that were inconsistent with the FCC’s rules—with the FCC making preemption determinations on a case-by-case basis.  In addition, the rules would prohibit broadband providers from conditioning the offering of service, or the continuation of services, on a customer’s agreement to waive privacy rights guaranteed by law or regulation.

The proposed rules, like the Open Internet Order itself, drew dissents from Republican Commissioners Pai and O’Rielly.  They question the FCC’s jurisdiction to regulate Internet service providers, suggest that the Federal Trade Commission has established standards and precedents to protect consumer privacy, and question whether any rules can be effective that are not also applied to edge and content providers, such as Netflix and Twitter. The Open Internet Order is currently being appealed in the United States Court of Appeals for the DC Circuit, and a decision is expected within the next three months.

Comments on the proposed rules are due May 27, 2016.  Reply Comments are due June 27, 2016.

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The FCC’s video description rules require covered broadcasters and MVPDs to provide audio-narration of the key visual elements of a program during pauses in the dialogue so as to make it more accessible to individuals who are blind or visually impaired. Under the current rules (which Congress in 2010 directed the FCC to reinstate after a court struck them down in 2000), broadcast stations affiliated with ABC, CBS, Fox, or NBC that are located in the top 60 television markets are required to provide 50 hours of programming with video description per calendar quarter. The top five non-broadcast networks on Pay-TV systems serving 50,000 or more subscribers (currently USA, TNT, TBS, History, and Disney Channel, as of July 1, 2015) are also subject to this requirement.

In addition to directing the FCC to reinstate its video description rules in the Twenty-First Century Communications and Video Accessibility Act of 2010 (CVAA), Congress gave the FCC authority to adopt additional video description rules if the benefits of doing so would outweigh the costs. At today’s Open Meeting, the FCC tentatively concluded that the substantial benefits of adopting additional video description requirements would outweigh the costs of the proposed requirements, and therefore adopted a Notice of Proposed Rulemaking recommending an update to and expansion of its video description rules.

The FCC’s additional proposed requirements include increasing the required amount of video-described programming on each covered network from 50 hours per calendar quarter to 87.5 hours, and expanding the number of networks subject to the rules from four broadcast and five non-broadcast networks to five broadcast and ten non-broadcast networks.

The NPRM will also seek comment on a “no-backsliding rule”, which would keep covered networks subject to the requirements even if they fall below the top-five (broadcast) or top-ten (non-broadcast) ranking.

Dissenting in part, Commissioners Pai and O’Rielly voiced concern that the FCC’s proposals exceed the Commission’s statutory authority, which had been the downfall of the earlier rules. In particular, both commissioners warned that the proposals far exceed the 75% increase of the total hour requirement permitted under the CVAA:  Commissioner Pai’s “conservative estimate” was that the proposed additional requirements would increase the total hours requirement by 192% (before taking into account the no-backsliding rule).  With respect to the no-backsliding rule, Commissioner Pai described the proposal as the “Hotel California” approach to regulation, and accused the FCC of Orwellian speak and “reinvent[ing] math”—where the “top five broadcast networks can mean more than five networks.”

The text of the NPRM and comment deadlines have yet to be released, but it’s already sounding like the FCC will be in for a lively debate.

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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:

  • Noncommercial FM Broadcaster Fined $10,000 for Public Inspection File Violations
  • TV Licensee Faces $20,000 Fine for Untimely Filing of 16 Children’s TV Programming Reports
  • Man Agrees to $2,360 Fine for Using GPS Jamming Device at Newark Airport

FCC Refuses to Take Pity on “Mom and Pop” FM Public Broadcaster With Public Inspection File Violations

The FCC’s Media Bureau denied a New York noncommercial FM licensee’s Petition for Reconsideration of a March 2015 Forfeiture Order, affirming a $10,000 fine against the licensee for failing to place 13 Quarterly Issues/Programs Lists in the station’s public inspection file.

Section 73.3527 of the FCC’s Rules requires noncommercial educational licensees to maintain a public inspection file containing specific types of information related to station operations. Among the materials required for inclusion in the file are the station’s Quarterly Issues/Programs Lists, which must be retained until final Commission action on the station’s next license renewal application. Issues/Program Lists detail programs that have provided the station’s most significant treatment of community issues during the preceding quarter.

In February 2014, the licensee filed an application for renewal of the station’s license, which it had acquired from a university in 2010 after the university decided to defund the station. In the application, the licensee admitted that the station’s public inspection file was missing 13 Quarterly Issues/Programs Lists, commencing with the licensee’s acquisition of the station in 2010.

In March 2015, the FCC issued a Notice of Apparent Liability for Forfeiture in the amount of $10,000, the base fine for a public inspection file violation. The licensee filed a Petition for Reconsideration, urging the FCC to withdraw the fine. While the licensee did not dispute the violations, it explained that it had a history of compliance with the FCC’s rules, and that it was the public radio equivalent of a “mom-and-pop-operation.” It further explained that it only had several employees and volunteers, including an unpaid manager, and was under constant financial strain.

In response, the FCC contacted the station on three separate occasions in 2015 to request that the licensee provide documentation supporting its claim of financial hardship. After receiving no response to these requests, the FCC chose not to reduce the fine based on financial hardship when it issued the resulting Forfeiture Order. In addition, the FCC chose not to reduce the fine based on the station’s history of compliance with the rules because of the “extensive” nature of the violations. Ultimately, however, the FCC stated that it would grant the license renewal application upon the conclusion of the forfeiture proceeding if “there are no issues other than the violations discussed here that would preclude grant of the application.”

Sour Sixteen: Failing to Timely File 16 Children’s TV Programming Reports Nets Proposed $20,000 Fine

A Texas TV licensee is facing a $20,000 fine for failing to timely file sixteen Children’s Television Programming Reports.

Section 73.3526 of the FCC’s Rules requires each commercial broadcast licensee to maintain a public inspection file containing specific information related to station operations. Subsection 73.3526(e)(11)(iii) requires a commercial licensee to prepare and place in its public inspection file a Children’s Television Programming Report for each calendar quarter. The report sets forth the efforts the station made during that quarter and has planned for the next quarter to serve the educational and informational needs of children. Licensees are required to file the reports with the FCC and place them in their public files by the tenth day of the month following the quarter. Continue reading →

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Consumer protection is always in style at the Federal Trade Commission (FTC”). When 50 fashion “influencers” flooded Instagram, all wearing the same dress in photos tagged “@lordandtaylor”, and an article featuring the same dress appeared in the online fashion magazine Nylon, some at the FTC suspected an advertising campaign masquerading as a social media dialogue.  While this matter arose in a “new media” context, and therefore impacts all businesses’ online activities, broadcasters are doubly affected—online and on-air—by the FTC’s action.

As we describe in more detail in our Client Advisory Lord and Taylor Case Shows the Importance of Transparency in Advertising, the FTC’s investigation into a supposedly viral phenomenon unveiled an integrated advertising campaign. Among other things, Lord & Taylor formally contracted with fashion influencers, giving them the dress for free and compensating them to “product bomb” Instagram with photos of themselves wearing the dress on one particular weekend.  Lord & Taylor approved the influencers’ posts and required them to include the @lordandtaylor tag and #DesignLab hashtag.  Lord & Taylor also contracted with Nylon to run an article about its new Design Lab collection, featuring the dress in the article and on Nylon’s Instagram page as well.  Again, Lord & Taylor reviewed the content before it was published.  However, Lord & Taylor did not require the influencers or Nylon to disclose their connection to Lord & Taylor or that they had been compensated for posting the photos and comments.

In December 2015, the FTC released its Enforcement Policy Statement on Deceptively Formatted Advertisements.  The Policy Statement provides an overview of how the FTC intends to apply its consumer protection principles to “native advertising”—online advertising material that resembles editorial content, product reviews, or other content which could mislead consumers into believing that the advertising isn’t really advertising.  It also notes some factors that have contributed to a rise in native advertising online, such as the increased ability of publishers to quickly and cheaply reformat and reuse content, evolving business models around monetization of content, and the ability of consumers to skip or block ads placing pressure on advertisers to capture consumers’ attention.  However, the Policy Statement concludes that “[a]lthough digital media has expanded and changed the way marketers reach consumers, all advertisers, including digital advertisers, must comply with the same legal principles regarding deceptive conduct the Commission has long enforced.”

In setting out what those legal principles are, the FTC referred back to many cases involving a wide variety of media, including television infomercials that blurred the line between advertising and editorial content.  The FTC brought numerous cases in the 1980s and 1990s against infomercials that looked like investigative news reports or consumer product review content and required the addition of conspicuous “PAID ADVERTISEMENT” disclosures at the beginning and throughout the program where product ordering information was presented.

The FTC’s approach to digital marketing is similar. In its Native Advertising: A Guide For Businesses released along with the December Policy Statement, the FTC noted “[t]he more a native ad is similar in format and topic to content on the publisher’s site, the more likely that a disclosure will be necessary to prevent deception.”  In the Lord & Taylor case, the Nylon article used language similar to traditional editorial content recommending certain fashion choices.  Specifically, it stated:  “[W]e’re taking out the guess work and introducing you to spring’s must-have line: Lord & Taylor’s Design Lab.”  The FTC faulted Lord & Taylor for not requiring a disclosure that the article was paid-for advertising.

In addition, the FTC’s updated Endorsement Guides published in 2009 require that when advertisers recruit endorsers and provide them with free merchandise or other compensation, they must require their endorsers to clearly and conspicuously disclose their connection to the advertiser and, further, to monitor those endorsements for accuracy and inclusion of the required disclosure language.  Here, while Lord & Taylor did review and even edit the endorsements, it did not require any disclosure of the endorser’s relationship with Lord & Taylor.  We have written extensively about the Endorsement Guides and how they apply to broadcasters, including common situations that arise in on-air “banter”, here and here.

As a result of its investigation into Lord & Taylor’s advertising of the Design Lab line, the FTC and Lord & Taylor agreed to a settlement which imposes a number of conditions beyond mere compliance on Lord & Taylor going forward.  These include filing various reports with the FTC, preserving documents for later FTC review should it be necessary, and providing copies of the settlement agreement to all those who have anything to do with creating similar advertising campaigns. The case is an important reminder to all advertisers that, as the FTC has said, “[r]egardless of the medium in which an advertising or promotional message is disseminated, deception occurs when consumers acting reasonably under the circumstances are misled about its nature or source, and such misleading impression is likely to affect their decisions or conduct regarding the advertised product or the advertising.”

Do your online and on-air promotions meet this test?

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It’s not just high school seniors who should be waiting by the mailbox for a thick package to arrive this coming week.  All television stations that filed a Form 177 application in Auction 1001 should be looking for their Second Confidential Status Letter between today and March 22nd.  The FCC has released a Public Notice stating that the letters have now been mailed to auction applicants.

THE SECOND CONFIDENTIAL STATUS LETTER REQUIRES A SIGNATURE

The Second Confidential Status Letter was sent to the contact person for each applicant.  Someone must be available to sign for the package.  It does not have to be the contact person, but applicants will want to be sure someone is available at the address used in their Form 177 to sign for the package.

APPLICANTS THAT DO NOT RECEIVE THEIR LETTER BY NOON ET ON MARCH 22ND MUST CONTACT THE AUCTIONS HOTLINE BY TELEPHONE

The Second Confidential Status Letter will inform applicants as to whether their Form 177 applications have been deemed complete.  Those applicants whose applications are deemed complete with respect to at least one selected station will receive the SecurID tokens for each of the applicants’ authorized bidders.  To participate in the auction, the applicant will need the SecurID token, the FCC-assigned Username associated with that token, and the password associated with that licensee’s Federal Registration Number.  Note that group owners that hold licenses in multiple licensees will receive a token and Username for each licensee and will have to sign in to the auction system separately for each licensee.

The Second Confidential Status Letter will also provide applicants with instructions for signing in to the auction online system and submitting their Initial Commitment by the deadline of 6:00 p.m. ET on March 29, 2016.  As we have previously written, there will be a preview period beginning at 10:00 a.m. on March 24, 2016.  All applicants should sign in to the system during the preview period to familiarize themselves with the system.

The FCC held a Workshop on March 11th to educate applicants about the Initial Commitment process.  The presentation is available for review here.  In the Initial Commitment, applicants will have the opportunity to designate their preferred relinquishment option from among the relinquishment option(s) they selected on their Form 177.  Any applicant that selects the “Go Off Air” option will be accommodated, unless the FCC determines that their station is not needed.  Stations that select one of the options to move to the High VHF or Low VHF band will also have the ability to select one or more “fall back” options.

It is important for applicants to understand their Initial Commitment options.  Once the Initial Commitment window closes, the FCC will take several weeks to recalculate its spectrum clearing targets.  The FCC will then send applicants a Final Confidential Status Letter which will advise them whether their station is needed in the auction (recall that when the FCC released the opening bids, it identified some stations that would not be needed in the auction because its analysis showed those stations will always have a channel to repack to, regardless of the elections made by other broadcasters).  Stations previously deemed needed could be recategorized as not needed based on the information the FCC receives in the Initial Commitments.

In addition, any station that selects the move to High VHF or Low VHF band in the Initial Commitment window will be informed whether that selection can be accommodated.  If a station making a VHF selection cannot be accommodated because of the limited number of channels available in that band, the station will be repacked in its original band and not be eligible to participate in the auction unless the station has selected a “fall back” option that can be accommodated.  As noted, the “Go Off Air” option can always be accommodated unless the station is deemed not needed.

The learning curve for the Broadcast Incentive Auction is steep.  Applicants should take advantage of the educational materials that the FCC has released thus far, and keep a sharp eye out for the arrival of the Second Confidential Status Letter.

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Today, the FCC posted to the Auction 1001 website the Reverse Auction Initial Commitment User Guide and Online Tutorial.  Broadcasters that submitted an FCC Form 177 to participate in the Reverse Auction should review these materials to gain a better understanding of how the system will work so that they are prepared to participate when the Initial Commitment Window opens.  The Tutorial is easy to use, and you can pause it as needed to study and better understand the materials.  The User Guide is largely duplicative, but does contain important information such as technical requirements for using the system and contact information for help troubleshooting problems.

A few informational highlights include:

Important Dates:

  • March 28, 2016 10am ET – March 29, 2016 6pm ET: The Initial Commitment Window – a total of 32 hours – during which broadcasters must file their Initial Commitments. The Initial Commitment may be changed until the close of the window, but if no commitment is made by the close of the window, the station will be excluded from the auction and repacked in its pre-auction band.
  • March 24, 2016 10am ET – March 28, 2016 9:59am ET: The Initial Commitment Preview Period – a four-day period during which all participating stations are encouraged to log into the system, set their PINs, and view the list of stations and Relinquishment Options available to them.

What to Do in the Preview Period:  During the Preview Period, broadcasters should log in to the system and familiarize themselves with it. You will understand why this is important as you read through the paragraph below.

To log in to the system for the first time, each authorized bidder must activate their FCC-supplied RSA token (which displays a code randomly generated every 60 seconds) and select a PIN. To do so, select the “Click here for the login screen” link, enter the FCC-assigned Username for the authorized bidder logging in, the password associated with the FRN listed on the licensee’s Form 177, and the current code displayed on the FCC-supplied RSA token.  Click the Log In button.  Next, choose a 4-8 digit PIN, enter it twice in the fields provided, and click the Continue button.  There is a limited time to complete this step, with the remaining time shown on the screen.  On the next screen, type in the PIN you selected and the code shown on the RSA token.  This code cannot be the same as the one used on the prior screen.  If that code is still showing (because you have proceeded through these steps in less than 60 seconds), wait for the next code to appear.  Click the Continue button.

Once these steps are completed, each authorized bidder will log in by entering the bidder’s FCC-assigned Username, the password associated with the licensee’s FRN, the PIN selected in the step above, and the current code shown on the RSA token assigned to that bidder. Multiple bidders for a licensee can be logged into the system at the same time, but only one will be able to place bids at a time.

Overview of the System:  Once logged in, the broadcaster will see three options displayed on a navigation bar to the left of the screen: Make Commitment, Messages, and Station Info.  In addition, clocks showing the current date and time as well as the countdown to the opening of the Initial Commitment Window are displayed.

Make Commitment:  When clicking on this tab, the broadcaster will see its station or stations, if they have been deemed eligible to participate.  The Preferred Relinquishment option the broadcaster selected in its Form 177 (and the associated opening bid) will appear in a column to the right of the call sign.  To choose this Relinquishment Option as the station’s Initial Commitment, the broadcaster need only click the “Submit” button and will then see a green checkmark appear.  If the station has additional options available to it based on its frequency band and the selections the station made in its Form 177, these are available from a dropdown menu under the Preferred Relinquishment option.  As noted above, the FCC indicates that the choice the station makes from among these options can be changed until the end of the Initial Commitment Window.  Stations that no longer wish to participate in the auction will select the “Decline Commitments” option from the dropdown menu.

If the broadcaster chooses either the Move to a High VHF channel or Move to a Low VHF channel option as its Preferred Relinquishment choice, a window will open advising that the system will attempt to fulfill this choice, but that because of limited channels in the VHF band, this option is not guaranteed. These stations will be given fallback options, if available to them based on their Form 177 choices, and the option to decline fallback options.  It is important to understand the impact of selecting a VHF band option.  If the choice can be accommodated, it will be.  If the option cannot be accommodated, the station will be eliminated from the auction and repacked in its current band, unless one or more fallback options has been selected.

Messages:  In this section, FCC staff can communicate with the licensee and the licensee can communicate with FCC staff.  All authorized bidders for a station can see messages sent by that station’s other authorized bidders as long as they are logged into the system.

Station Info: This section lists all of the licensee’s stations that are eligible to participate in the auction, along with the Relinquishment Option(s) available to each station based on its frequency band and the station’s selections in its Form 177.  This is the only section that the broadcaster can see during the Preview Period.

The FCC has also announced an Initial Commitment Window Workshop to take place on March 11, 2016 from 10am – 1pm ET.  Participants can attend in person or watch online remotely, and the FCC’s staff highly recommends those interested in participating in the reverse auction also participate in the Workshop.  The FCC has said that additional tutorials and resources for participation in the next stages of the auction will be made available to licensees at a later date.  Those, however, will only be useful to broadcasters that successfully make their Initial Commitment, so time to open the Tutorial and start studying.

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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 Fines Radio Licensee $10,500 Despite Claims of Public File Sabotage
  • Unlocked Gate Costs AM Licensee $7,000
  • Class A Licensee Faces Hobson’s Choice: Pay $12,000 Fine or Revert to Low Power Status

Whodunit, Who Cares? FCC Fines Radio Licensee $10,500 for Missing Issues/Program Lists

The FCC’s Enforcement Bureau denied a licensee’s Petition for Reconsideration of a June 2015 Forfeiture Order, affirming the $10,500 fine against the licensee of two Michigan radio stations (one AM and one FM) for failing to place five Quarterly Issues/Programs Lists in the stations’ public inspection files, and for failing to immediately notify the FCC upon a change of tower ownership.

Section 73.3526 of the FCC’s Rules requires each commercial broadcast licensee to maintain a public inspection file containing specific information related to station operations. Under Subsection 73.3526(e)(12), a licensee must create a list of significant issues affecting its viewing area in the past quarter and the programs it aired during that quarter to address those issues. The list must then be placed in the station’s public inspection file by the tenth day of the month following that quarter. In addition, Section 17.57 of the Rules requires tower owners to immediately notify the FCC of any change in ownership information.

In February 2010, the licensee acquired the stations and accompanying tower from another company. In December 2010, the licensee filed a notification of change in tower ownership. However, the FCC promptly rejected the application as deficient and directed the licensee to refile its ownership change notification.

During a September 2011 inspection, an FCC agent found that the licensee’s public inspection files were missing five quarters of Issues/Programs Lists. The agent also determined that the ownership change notification had never been refiled. The FCC subsequently issued a Notice of Apparent Liability for these violations and proposed a $13,000 fine—$10,000 for the missing Issues/Programs Lists and $3,000 for the absent ownership change notification.

The licensee did not contest the violations, but asked for a cancellation or reduction of the fine, arguing that (1) it made good faith attempts to correct the violations, (2) the missing Issues/Programs Lists had been removed by a third party, (3) it was unable to pay the fine due to financial difficulties, and (4) it had a history of compliance with the FCC’s Rules. In its June 2015 Forfeiture Order, the FCC reduced the fine to $10,500 due to the licensee’s history of compliance. However, the FCC found no basis for any further reduction. It explained that, while it may reduce a proposed penalty when a violation arose “just prior” to an FCC inspection, the Issues/Programs Lists were allegedly removed more than two months before the inspection—leaving the licensee adequate time to identify and correct the deficiency. The FCC also stated that the licensee had not shown the “severe financial distress” necessary to warrant a reduction, and that good faith efforts to correct violations must be made prior to notification of the violation to be considered as a basis for a fine reduction.

The licensee subsequently filed a Petition for Reconsideration, arguing that the Issues/Program Lists were in the public inspection file until the general manager of its major competitor deliberately removed them. Because the Petition failed to demonstrate a material error in the Forfeiture Order or raise any new facts or arguments, the FCC chose not to address the merits of the licensee’s arguments. The FCC noted, however, that even had it considered the merits of the licensee’s Petition, it still would have found no basis for reconsideration, explaining that the alleged third-party removal of the lists did not diminish the licensee’s liability for failing to identify and correct the deficiency in the two months between the alleged removal and the inspection.

The Price of Convenience: AM Licensee Is Fined $7,000 for Leaving the Gate to Its Tower Unlocked for Contractors

The FCC’s Enforcement Bureau upheld a Forfeiture Order against a New York AM licensee for leaving the gate to its tower unlocked for several days so that contractors could have access. Section 73.49 of the FCC’s Rules requires towers having radio frequency potential at the base to be enclosed within effective locked fences or other enclosures. Continue reading →

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The FCC’s new Licensee-Conducted Contest Rule became effective this past Friday.  Under the new rule, a broadcast licensee conducting a contest still has the obligation to disclose the material terms of the contest “fully and accurately” and to conduct the contest substantially as announced.  However, as we wrote last September, the new rule allows broadcasters to meet these requirements by posting the contest terms on their websites rather than reading them on-air.  To take advantage of this new flexibility, broadcasters must:

  • Post the terms on the station’s or licensee’s website, or if neither the station nor the licensee has a website, on a free website that is available to the public 24/7, without registration;
  • Broadcast the website address with sufficient information for a consumer to find the terms easily, using simple instructions or natural language;
  • Broadcast the website address periodically throughout the term of the contest;
  • Establish a conspicuous link or tab on the home page of the website that takes consumers to the contest terms;
  • Maintain the terms on the website for at least 30 days after the contest has ended and conspicuously mark those that are expired, including the date a winner was selected;
  • On the rare occasions that a change in terms occurs during the contest, announce the changes on-air within 24 hours and periodically thereafter, and direct participants to the written terms on the website; and
  • Assure that the contest rules posted online conform to those announced on-air.

The effective date of the new rule has been eagerly anticipated by broadcasters as the change grants them more flexibility in announcing contest terms, avoids long and complicated contest announcements on-air, and permits participants to review the rules at their leisure.  However, in making the change, the FCC noted that “[a]s with all elements of contest-related announcements, the burden is on the broadcaster to inform the public, not on the public to discern the message.”

Indeed, the law views the rules of a contest or sweepstakes to be a contract between the sponsor (station) and anyone who enters the contest, or even anyone who tries to enter and fails to do so successfully.  If the sum total of your on-air contest rules are “be the 103rd caller after X song is played” and a vague “station policy” somewhere on the website that says you can only win once every 30 days, you have left a lot out of your “contract.”  For example, when a station ran a contest on-air like the one above and did not get many callers, the DJ simply awarded the prize to the last person to call in after hours of trying to attract more callers.  The station was fined by the FCC because it did not run the contest substantially as advertised.  Properly written contest rules should account for such situations, as well as other foreseeable developments, such as the phone lines going down after the trigger song has been played.  A station with contest rules that don’t address likely (or even unlikely) contest developments is inviting challenges from both contestants and regulators.

In that regard, as we noted in FCC Proposes to Clear Airwaves of Boring Contest Disclosures, But State Issues Remain, stations should remember that the FCC is not the only regulator watching out for contest and sweepstakes violations.  For example, some states’ contest laws require that all announced prizes be awarded in order to prevent “bait and switch” contests.  For stations giving away “time sensitive” prizes such as concert tickets that have to be used on a specific date, the rules should address the situation where a winner is chosen but then turns down the prize or simply does not claim it because they cannot attend on the date specified.  If the rules say that an alternate winner will be chosen after 10 days, there may not be enough time left before the concert to award the prize.  The station with poorly written contest rules must then choose between violating the law by failing to award a prize, or violating the law by failing to conduct the contest in accordance with the announced rules.  Badly-drafted contest rules are a liability for any business, but are worse for broadcasters, as in addition to all of the state and federal laws governing contests, broadcasters are uniquely subject to the FCC’s contest oversight as well.

Finally, while you might imagine that contest complaints come from those who lost the contest (and indeed they often do), many come from contest winners.  While professional contestants who enter every contest will complain about the valuation placed on a prize for tax purposes, first-time winners are more likely to complain about having to sign a release to claim the prize, or where the prize is large, having to provide the station with their Social Security Number, appear in person, or attend a further event, such as the day when all the winners of keys must try them out in the grand prize car.  These obligations need to be clear in the contest rules, not just to avoid liability, but to ensure the station is able to get the promotional value it anticipated from the contest.  Contestants who demand anonymity and refuse to sign releases greatly undercut the promotional value of a big contest.

The bottom line is, now that the FCC will let you post your rules online for contestants and regulators to scrutinize, you need to ensure you have rules that can withstand scrutiny.