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For those who follow my speaking schedule on our CommLawCenter Events Calendar… wait, no one follows my speaking schedule? Disappointing. Well if you had, you would have known I was speaking on a pair of regulatory panels at the Texas Association of Broadcasters’ convention yesterday (incidentally, another great show this year from Oscar Rodriguez and TAB’s excellent staff).

On the first of those panels, with Stephen Lee of the FCC’s Houston Enforcement Bureau office, we discussed the FCC’s July 1st expansion of the TV online political file requirement to all TV stations. During that discussion, an audience member asked whether radio stations would someday have to put their public inspection files online as well. I noted that when the FCC moved TV public files online in August of 2012, it had indicated that it was starting with TV, but anticipated it would eventually consider moving radio public files online as well. However, in the two years since, the FCC has focused on working the bugs out of the online public file software and has not mentioned expanding the online requirement to radio.

Unknown to most, that changed unexpectedly about two hours after the panel, when the FCC released a Public Notice rapidly responding to a petition for rulemaking filed just six days earlier by the Campaign Legal Center, Common Cause and the Sunlight Foundation. The petition asked that cable and satellite providers also be required to post their political files online. While broadcasters and those three organizations (who have filed more than a dozen complaints against TV stations for alleged online political file violations in the past few months) haven’t seen eye to eye on much in the past, this might be one requirement they can agree on, albeit for very different reasons.

While the original purpose of the political file was to ensure that candidates had the information needed to enforce their rights to equal opportunity and lowest unit rate for advertising, the Campaign Legal Center, Common Cause and the Sunlight Foundation have sought to use it instead to track political spending by PACs, since that information is not available, at least in real time, from the Federal Election Commission. To make it easier for them to access this information, they demanded the FCC require that TV stations post their political files online. They have also urged the FCC to require TV stations’ political files be posted in a machine-readable format to make aggregating the information easier.

Broadcasters opposed those efforts, noting the burden of keeping the fast-changing political file up to date online, and the competitive concerns with posting sensitive ad rate data online for all the world to see. In particular, they found it competitively unfair that broadcasters were required to post their ad rate information online when competing cable and satellite providers were not.

The FCC agreed, and when it decided to require that TV stations post their public files online, it originally excluded the political file from that requirement, finding that uploading and updating the political file online would be too burdensome. However, after a change in personnel at the FCC, the agency reversed course and concluded that posting the political file online wouldn’t be burdensome after all.

Television broadcasters therefore likely welcomed yesterday’s Public Notice seeking comment on at least leveling the information playing field with cable and satellite. However, buried in the middle of the Public Notice, and completely unrelated to the petition for rulemaking on cable and satellite political files to which the Public Notice responds, is a single sentence sending chills down the collective spines of radio broadcasters:

“We also seek comment on whether the Commission should initiate a rulemaking proceeding to require broadcast radio stations to use the online public file, and on an appropriate time frame for such a requirement.”

While the need to first launch a rulemaking means that a radio online public file requirement would take at least some time to implement, it appears that it is indeed (spontaneously) back on the FCC’s agenda. With staffs that are typically much smaller than those of TV stations, radio stations would undoubtedly find an online public file requirement to be far more burdensome than it was for TV (not that TV stations found it to be a picnic either). If they don’t want to find themselves facing that very burden in the not too distant future, radio licensees will need to speak up in what most would have assumed is a completely unrelated proceeding. To the broadcaster who asked that question at yesterday’s panel, the FCC has quietly changed my answer.

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The FCC’s July 11, 2014 Order, concluding that clips of video programming shown by broadcasters are required to be captioned when delivered on the Internet, was published in the Federal Register this week. The rule specifically applies when a provider posts a video clip or video programming online that was first aired on television (“covered” Internet Protocol (IP) video). The FCC ultimately plans to expand its Twenty-First Century Communications and Video Accessibility Act of 2010 (CVAA) captioning rules to cover all forms of video programming on the Internet.

As I have discussed many times previously, the FCC requires that certain video programming delivered online by television stations be captioned if that programming previously aired on television with captions. Some of my recent posts on the subject can be found at the following links: “FCC Seeks Greater Clarity on IP Video Captioning Rules”, “Second Online Captioning Deadline Arrives March 30”, and “First Online Video Closed Captioning Deadline Is Here”.

More recently, I noted that the FCC sought comment on information regarding whether it should remove the “video clip” exemption from its rules. The FCC’s final answer was “yes”. The rules will apply to video clips regardless of their content or length.

According to the FCC, the new rules are intended to accomplish the following:

  • Extend the IP closed captioning requirements to IP-delivered video clips if the video programming distributor or provider posts on its Web site or application a video clip of video programming that it published or exhibited on television in the United States with captions;
  • Establish a schedule of deadlines for purposes of the IP closed captioning requirements;
  • After the applicable deadlines, require IP-delivered video clips to be provided with closed captions at the time the clips are posted online, except as otherwise provided;
  • Find that compliance with the new requirements would be economically burdensome for video clips that are in the video programming distributor’s or provider’s online library before January 1, 2016 for “straight lift clips”, and January 1, 2017 for “montages”; and
  • Apply the IP closed captioning requirements to video clips in the same manner that they apply to full-length video programming, which among other things means that the quality requirements applicable to full-length IP-delivered video programming will apply to video clips.

In its Order, the FCC also established the following set of deadlines for providing captions based on the type of video clip shown:

  • January 1, 2016: for “straight lift” clips, which include a “single excerpt of a captioned television program with the same video and audio that was presented on television”;
  • January 1, 2017: for “montages”, which are defined as a single file containing “multiple straight lift clips”; and
  • July 1, 2017: for “video clips of live and near-live television programming, such as news or sporting events”, keeping in mind that there is a “grace period” of twelve hours to caption “live video programming” and eight hours to caption “near-live programming.”

As part of the item, the FCC also issued a Second Further Notice of Proposed Rulemaking, which proposes to extend the reach of the FCC’s captioning rules even further. Among other things, the Further Notice is specifically asking for comment regarding whether: (1) third party video programming providers and distributors should be subject to the closed captioning requirements; (2) the FCC should decrease or eliminate the “grace periods” for “live” and “near-live” programming; (3) application of the IP closed captioning requirements should be extended to “mash-ups”, which the FCC defines as files that “contain a combination of video clips that have been shown on television with captions and online-only content”; and (4) application of the IP closed captioning rules to “advance” video clips “that are first added to the video programming distributor’s or provider’s library on or after January 1, 2016 for straight lift clips or January 1, 2017 for montages, but before the associated video programming is shown on television with captions, and which then remain online in the distributor’s or provider’s library after being shown on television.”

Comments on the Further Notice are due October 6, 2014, and reply comments are due November 3, 2014.

As is often the case, the new closed captioning rules adopted by the FCC are complex and parties should make sure that they remain up to speed with the rapid pace of the ever evolving rules in this area. The Order and Further Notice demonstrate that the FCC appears far from satisfied with the many new closed captioning rules that it has already adopted in recent years and that there will undoubtedly be additional rules to deal with in the not too distant future.

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July 2014

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:

  • Multi-Year Cramming Scheme Results in $1.6 Million Fine
  • Violation of Retransmission Consent Rules Leads to $2.25 Million Fine
  • $25,000 Fine for Failure to Respond to FCC

Continued Cramming Practices Lead to Double the Base Fine

The FCC recently issued a Notice of Apparent Liability for Forfeiture (“NAL”) against a Florida telephone company for “cramming” customers by billing them for unauthorized charges and fees related to long distance telephone service.

The FCC had received more than 100 customer complaints against the company. The complaints alleged that the company had continued to bill the customers and charge them late fees after they had paid their final bills and canceled their service with the company. The FCC opened an investigation in response to the complaints and issued a Letter of Inquiry (“LOI”) to the company in July 2011, but the company did not submit a timely response. The FCC issued an NAL in 2011 proposing a $25,000 fine against the company for its failure to reply to the LOI, and ultimately issued a Forfeiture Order fining the company $25,000.

Section 201(b) of the Communications Act of 1934 (the “Act”) requires that that “[a]ll charges . . . in connection with . . . communication service shall be just and reasonable.” Prior decisions of the FCC have determined that placing unauthorized charges and fees on consumers’ phone bills is an “unjust and unreasonable” practice and is therefore unlawful.

The NAL provides information from 11 customer complaints detailing instances where customers attempted to cancel their service and continued to be charged late fees and other fees by the company. The FCC determined that the phone company did not have authorization to continue billing these customers after they canceled their service.

Although the FCC’s Forfeiture Guidelines do not provide a base fine for cramming, the FCC has settled on $40,000 as the base fine for a cramming violation. The NAL addressed 20 cramming violations, which would create a base fine of $800,000. However, the FCC determined that an upward adjustment of the fine was appropriate in this case because the unlawful cramming practices had been occurring since 2011, the company did not respond to the 2011 LOI, and there was a high volume of customers who received cramming charges. Therefore, the FCC increased the proposed fine by $800,000, resulting in a total proposed fine of twice the base amount, or $1.6 million.

Cable Operator’s Retransmission of Six Texas TV Stations Results in Multi-Million Dollar Fine

Earlier this month, the FCC issued an order against a cable operator for rebroadcasting the signals of six full-power televisions stations in Texas in violation of the FCC’s retransmission consent rules.

The cable operator serves more than 10,000 subscribers in the Houston Designated Market Area (“DMA”) in 245 multiple-dwelling-unit buildings and previously had retransmission consent agreements with the stations. However, those agreements expired in December 2011 and March 2012. The cable operator continued retransmitting the signals of those stations without extending or renewing the retransmission consent agreements, and the licensees notified the cable operator that its continued retransmissions were illegal. Subsequently, each licensee filed a complaint with the FCC.

In its May 2012 response to the complaints, the cable operator did not deny that it had retransmitted the stations without the licensee’s express written consent, but said that it had relied on the master antenna television (“MATV”) exception to the retransmission consent requirement. The cable operator noted that it had begun converting its buildings to MATV systems in November 2011 and had hoped to complete the installations before the retransmission agreements expired in December 2011, but did not complete the MATV installation until July 26, 2012.
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For those of you following our numerous posts on EAS matters over the years, a new chapter starts today. After participating in EAS summits and meetings for such a long time, it’s hard to disagree that working to improve emergency alerts for all of us is one of the more important items before the FCC. The EAS summits hosted to address improvements to the alert system have been very useful toward achieving that goal, and many thanks should go out to the state broadcasters associations, the FCC, FEMA, the National Association of Broadcasters, Capitol Hill staff, and many others for working hard to save lives in emergencies, realizing in particular the vital role that local broadcasters play in that effort.

Today, the FCC’s latest EAS NPRM was published in the Federal Register, which means that parties will have 30 days to file comments and an addition fifteen days for reply comments. Comments are therefore due on August 14, and reply comments are due on August 29.

The NPRM is highly technical, but the proposed changes to Part 11 of the Commission’s Rules are a response to the nationwide EAS test held in November 2011. The FCC notes in the NPRM that since the national test, it has implemented CAP and the Wireless Emergency Alert system to standardize geographically-based alerts and interoperability among equipment. According to the Commission, the proposals in the NPRM are intended as first steps to fix the vulnerabilities uncovered in the national test.

A copy of the NPRM can be found here.

Lots of very specific questions are posed in the NPRM, but the principal proposals are:

  • The FCC proposes that all EAS participants have the capability to receive a new six zero (000000) national location code. The national test used a location code for Washington, DC, but many EAS units apparently rejected it as outside their local area. The FCC says that the proposal is intended to remedy this problem by providing a code that will trigger EAS units regardless of location.
  • The second major proposal is to amend the rules governing national EAS tests. The FCC proposes to amend the rules to create an option to use the National Periodic Test (NPT) for regular EAS system testing and seeks comment on the manner in which the NPT should be deployed.
  • The Commission is also proposing to require that all EAS Participants submit test reports on an electronic (as opposed to paper) form. The information in the electronic reports that identifies monitoring assignments would then be integrated into State EAS Plans. The FCC proposes to designate the EAS Test Reporting System (ETRS) as the primary EAS reporting system and to require that all EAS Participants submit nationwide EAS test results data electronically via the ETRS for any future national EAS test.
  • The NPRM also asks whether the FCC should require that emergency crawls be positioned to remain on the screen (and not run off the edge of the screen) and be displayed for the duration of an EAS activation.

Finally, although not a primary topic of the NPRM, the FCC proposes that a reasonable time period for EAS Participants to replace unsupported equipment and to perform necessary upgrades and required testing to implement the proposed rules be six months from the effective date of any rules adopted as a result of the NPRM.

The NPRM attempts to tackle some difficult technical issues and is a tough read. However, given what is at stake, and the challenges of implementing a more nationwide approach to EAS, it is worth the effort.

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June 2014

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:

  • Bad Legal Advice Leads to Admonishment for Public File Violations
  • $10,000 Fine for Tower Violation
  • Missing Emergency Alert System Equipment Results in $6,000 Fine

Licensee’s Poor Financial Condition and Reliance on Bad Legal Advice Fend Off Fines

Earlier this month, the FCC’s Enforcement Bureau issued an order against the former licensee of a Texas radio station admonishing the licensee but declining to impose $40,000 in previously proposed fines relating to public inspection file violations.
In December of 2010, agents from the Enforcement Bureau’s local office reviewed the station’s public inspection file and determined that, among other things, the file did not contain any quarterly issues-programs lists. In response, the FCC issued a Notice of Apparent Liability for Forfeiture (“NAL”), and ultimately a Forfeiture Order, imposing a fine of $25,000, which the licensee subsequently paid.

After the original NAL was issued, the station hired an independent consultant to assist it in ensuring that the station’s public inspection file was complete. In August of 2011, the licensee submitted a statement to the FCC in which it certified that all of the required documents had been placed in the station’s public inspection file. However, field agents visited the station again in October of 2011, and found that the public inspection file still did not contain any issues-programs lists. In response, the FCC issued two more NALs in June of 2012 (the “2012 NALs”) for the still-incomplete public inspection file and for the false certification submitted in response to the original NAL. The 2012 NALs proposed a $25,000 fine for providing false information to the FCC and a $15,000 fine for the still-missing issues-programs lists.

In this month’s order, the FCC analyzed the now-former licensee’s claim that it had engaged an independent consultant to assist it in responding to the original NAL and that it had subsequently placed documentation regarding issues-programs in its public inspection file. The FCC noted that the outside consultant’s advice that placing copies of the station’s daily program logs in the file would be adequate to meet the requirement was erroneous. However, since the licensee had sought to fix the problem by hiring a consultant and had relied on the consultant’s advice, the FCC concluded that the licensee had not negligently provided incorrect information to the Enforcement Bureau, and therefore the FCC did not impose the originally-proposed $25,000 fine for false certification.

In contrast, the FCC concluded that the former licensee had indeed willfully violated Section 73.3526 of the FCC’s Rules by not including issues-program lists in its public inspection file. The former licensee had, however, submitted documentation of its inability to pay and asked that it not be required to pay the proposed $15,000 fine. The FCC agreed that the former licensee had demonstrated its inability to pay, and therefore declined to impose the $15,000 fine.

In doing so, the FCC also noted that while “[r]eliance on inaccurate legal advice will not absolve a licensee of responsibility for a violation, [it] can serve as evidence that the licensee made an effort to assess its obligations, that its assessment was reasonable, if erroneous, and was made in good faith.” In light of all the facts, the FCC elected to formally admonish the former licensee, and warned that, should the former licensee later acquire broadcast licenses, it could face substantial monetary penalties, regardless of its ability to pay, for future rule violations.
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In a 6-3 decision released this morning, the Supreme Court didn’t just rain on Aereo’s parade, but drenched it. For a case involving fairly convoluted points of law, the Supreme Court’s decision is surprisingly straightforward: if it walks like a duck and quacks like a duck, no amount of technology will change the fact that it is a duck.

At this early stage of the case–keep in mind this was just about whether an injunction against Aereo should have been issued by the lower courts for one specific type of copyright infringement–the question before the Court was whether Aereo’s system “performs” broadcasters’ copyrighted works, and whether that is a “public” performance. If so, Aereo’s operations infringe on broadcasters’ copyrights in that programming. Aereo’s argument in response was that since its system does nothing until activated by a subscriber, and even then only transmits a single private copy to that subscriber, Aereo was not involved in generating public performances.

The Court strongly disagreed, finding that an essential purpose of Congress’s passage of the Copyright Act of 1976 was to make clear that transmissions of broadcast programming by third-parties to the public (e.g., cable systems) create public performances that implicate copyright law. Specifically, the Court noted “the [Copyright] Act is unmistakable: An entity that engages in activities like Aereo’s performs,” and “the fact that Aereo’s subscribers may receive the same programs at different times and locations is of no consequence. Aereo transmits a performance of petitioners’ works ‘to the public.'”

Aereo’s argument that it is just a renter of receiving equipment fared no better, with the Court stating: “We conclude that Aereo is not just an equipment supplier and that Aereo ‘performs.'” Of note for those concerned about whether an Aereo decision for broadcasters might affect the public’s ability to store other data in the cloud, the Court agreed with the brief filed by the Department of Justice that there is an important distinction between members of the public storing their own content in the cloud and those using the Internet to access the content of others, finding that a transmission to “the public” for purposes of implicating the Copyright Act “does not extend to those who act as owners or possessors of the relevant product.”

However, the most interesting aspect of the decision is that the Court is far more hostile to Aereo than even the 6-3 vote would indicate. Some of the strongest arguments against Aereo are actually found in Justice Scalia’s dissent, which was joined by Justices Thomas and Alito. While criticizing the majority for its “looks like a cable system” premise, in making his best case for finding in favor of Aereo, Justice Scalia makes two telling statements. The first, after he argues that Aereo is just a passive conduit for subscribers’ content reception and therefore does not “perform” broadcasters’ copyrighted content, is his statement noting

“[t]hat conclusion does not mean that Aereo’s service complies with the Copyright Act. Quite the contrary. The Networks’ complaint that Aereo is directly and secondarily liable for infringing their public-performance rights (Section 106(4)) and also their reproduction rights (Section 106(1)). Their request for a preliminary injunction–the only issue before this Court–is based exclusively on the direct-liability portion of the public performance claim…. Affirming the judgment below would merely return this case to the lower courts for consideration of the Networks’ remaining claims.”

Justice Scalia then goes much further, stating:

“I share the Court’s evident feeling that what Aereo is doing (or enabling to be done) to the Networks’ copyrighted programming ought not to be allowed. But perhaps we need not distort the Copyright Act to forbid it.”

He then proceeds to note again that there are other copyright infringement claims before the lower court that should be considered on remand, and that Congress is always free to modify the law to eliminate any perceived “loophole” if necessary.

As a result, while today’s ruling is a 6-3 decision in favor of granting an injunction against Aereo, it ultimately reads like a 9-0 rebuke of Aereo’s business plan. One of the most interesting legal analogies is also found in Justice Scalia’s dissent, where he likens Aereo to a copy shop where the shop owner plays no part in the content copied:

“A copy shop rents out photocopiers on a per-use basis. One customer might copy his 10-year-old’s drawings–a perfectly lawful thing to do–while another might duplicate a famous artist’s copyrighted photographs–a use clearly prohibited by Section 106(1).”

The reason this analogy is (perhaps unintentionally) revealing is that in the Aereo scenario, the subscriber can’t use the system to display his ten-year-old’s drawings; he can only display the content that Aereo puts on the shelf in its copy shop for the subscriber to access–all of which is copyrighted. Even if a particular program has entered the public domain, the broadcast signal–including its combination of program selections, current advertising, and station interstitials–is not in the public domain. In any event, Aereo has never attempted to limit its relay of content to subscribers to public domain materials (which admittedly would be the worst business plan ever).

While there had been some concern among broadcasters (and hope for Aereo supporters) after oral argument in this proceeding that Aereo was gaining traction with its claim that a ruling against Aereo was a ruling against innovation, the Court’s decision states that it sees today’s ruling as narrowly focused on the issue of transmission of broadcast signals, and that parties seeking to expand its principles to issues like cloud computing will have to wait until that issue is actually before the Court. In the meantime, the Court made clear that the only innovation it saw in Aereo was copyright infringement, and that has already been around for a long time.

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With the heat of Summer now upon us, the FCC is gearing up for its annual regulatory fee filing window, which usually occurs in mid-September. Like other federal agencies, the FCC must raise funds to pay for its operations (“to recover the costs of… enforcement activities, policy and rulemaking activities, user information services, and international activities.”). For Fiscal Year 2014, Congress has, for the third year in a row, mandated that the FCC collect $339,844,000.00 from its regulatees.

Accordingly, the FCC is now tasked with determining how to meet the Congressional mandate. At its most basic level, the FCC employs a formula that breaks down the cost of its employees by “core” bureaus, taking into consideration which employees are considered “direct” (working for one of the four core bureaus), or “indirect” (working for other divisions, including but not limited to, the Enforcement Bureau and the Chairman’s and Commissioners’ offices). The FCC factors in the number of regulatees serviced by each division, and then determines how much each regulatee is obligated to pay so that the FCC can collect the $339M total.

In its quest to meet the annual congressional mandate, the FCC evaluates and, for various reasons, tweaks the definitions or qualifications of its regulatee categories to, most often, increase certain regulatory fee obligations. FY 2014 is just such an occasion. In FY 2013, the FCC, which historically has imposed drastically different fees for VHF and UHF television licensees, decided that, effective this year, FY 2014, VHF and UHF stations would be required to pay the same regulatory fees. In addition, a new class of contributing regulatees, providers of Internet Protocol TV (“IPTV”), was established and is now subject to the same regulatory fees levied upon cable television providers. Prior to FY 2014, IPTV providers were not subject to regulatory fees.

The FCC’s proposals for FY 2014 regulatory fees can be found in its Order and Second NPRM (“Order”). In that Order, the FCC proposes the following FY 2014 commercial VHF/UHF digital TV regulatory fees:

  • Markets 1-10 – $44,875
  • Markets 11-25 – $42,300
  • Markets 26-50 – $27,100
  • Markets 51-100 – $15,675
  • Remaining Markets – $4,775
  • Construction Permits – $4,775

Other proposed TV regulatory fees include:

  • Satellite Television Stations (All Markets) – $1,550
  • Construction Permits for Satellite Television Stations – $1,325
  • Low Power TV, Class A TV, TV Translators & Boosters – $410
  • Broadcast Auxiliaries – $10
  • Earth Stations – $245

The proposed radio fees depend on both the class of station and size of population served. For AM Class A stations:

  • With a population less than or equal to 25,000 – $775
  • With a population from 25,001-75,000 – $1,550
  • With a population from 75,001-150,000 – $2,325
  • With a population from 150,001-500,000 – $3,475
  • With a population from 500,001-1,200,000 – $5,025
  • With a population from 1,200,001-3,000,000 – $7,750
  • With a population greater than 3,000,000 – $9,300

For AM Class B stations:

  • With a population less than or equal to 25,000 – $645
  • With a population from 25,001-75,000 – $1,300
  • With a population from 75,001-150,000 – $1,625
  • With a population from 150,001-500,000 – $2,750
  • With a population from 500,001-1,200,000 – $4,225
  • With a population from 1,200,001-3,000,000 – $6,500
  • With a population greater than 3,000,000 – $7,800

For AM Class C stations:

  • With a population less than or equal to 25,000 – $590
  • With a population from 25,001-75,000 – $900
  • With a population from 75,001-150,000 – $1,200
  • With a population from 150,001-500,000 – $1,800
  • With a population from 500,001-1,200,000 – $3,000
  • With a population from 1,200,001-3,000,000 – $4,500
  • With a population greater than 3,000,000 – $5,700

For AM Class D stations:

  • With a population less than or equal to 25,000 – $670
  • With a population from 25,001-75,000 – $1,000
  • With a population from 75,001-150,000 – $1,675
  • With a population from 150,001-500,000 – $2,025
  • With a population from 500,001-1,200,000 – $3,375
  • With a population from 1,200,001-3,000,000 – $5,400
  • With a population greater than 3,000,000 – $6,750

For FM Classes A, B1 &C3 stations:

  • With a population less than or equal to 25,000 – $750
  • With a population from 25,001-75,000 – $1,500
  • With a population from 75,001-150,000 – $2,050
  • With a population from 150,001-500,000 – $3,175
  • With a population from 500,001-1,200,000 – $5,050
  • With a population from 1,200,001-3,000,000 – $8,250
  • With a population greater than 3,000,000 – $10,500

For FM Classes B, C, C0, C1 & C2 stations:

  • With a population less than or equal to 25,000 – $925
  • With a population from 25,001-75,000 – $1,625
  • With a population from 75,001-150,000 – $3,000
  • With a population from 150,001-500,000 – $3,925
  • With a population from 500,001-1,200,000 – $5,775
  • With a population from 1,200,001-3,000,000 – $9,250
  • With a population greater than 3,000,000 – $12,025

In addition to seeking comment on the proposed fee amounts, the Order seeks comment on proposed changes to the FCC’s basic fee formula (i.e., changes in how it determines the allocation of direct and indirect employees and thus establishes its categorical fees), and on the creation of new, and the combination of existing, fee categories. The Order also seeks comment on previously proposed core bureau allocations, the FCC’s intention to levy regulatory fees on AM Expanded Band Radio Station licensees (which have historically been exempt from regulatory fees), and whether the FCC should implement a cap on 2014 fee increases for each category of regulatee at, for example, 7.5% or 10% above last year’s fees. Comments are due by July 7, 2014 and Reply Comments are due by July 14, 2014.

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When the FCC voted at its March 31, 2014 meeting to deem television Joint Sales Agreements involving more than 15% of a station’s weekly advertising time as an attributable ownership interest, it announced that broadcasters that are parties to existing JSAs would have two years to modify or terminate those JSAs to come into compliance. However, the FCC’s Report and Order adopting that change to the rules was not released until April 15, 2014, and noted that the effective date of the rule change would be 30 days after the Report and Order was published in the Federal Register.

The Federal Register publication occurred on May 20, 2014, and the FCC today released a Public Notice confirming that the effective date of the JSA attribution rule is therefore tomorrow, June 19, 2014. At that time, the two-year compliance period will also commence, with the deadline for existing JSAs to be modified to come into compliance with the new rule being June 19, 2016. As a result, subject to any actions the courts may take on the matter, all new TV JSAs must comply with the FCC’s multiple ownership rules from their inception, and JSAs that were already in existence before the rule change can remain in place until June 19, 2016.

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Surprise, surprise, the FCC has instituted yet another application filing freeze! The FCC effectively said “enough is enough” and stopped accepting applications for LPTV channel displacements and new digital replacement translators.

Yesterday, the FCC released a Public Notice indicating that, effective June 11, 2014, the Media Bureau would cease to accept applications seeking new digital replacement translator stations and LPTV, TV translator, and Class A TV channel displacements. The FCC did provide that in certain “rare cases”, a waiver of the freeze may be sought on a case-by-case basis, and that the Media Bureau will continue to process minor change, digital flash cut, and digital companion channel applications filed by existing LPTV and TV translator stations.

According to industry sources, there have been grumblings at the FCC that low power television broadcasters have been using the digital replacement translator and LPTV displacement processes to better position themselves from the fallout of the upcoming spectrum auction and subsequent channel repacking. That appears to be confirmed by the Public Notice, as it states that the freeze is necessary to “to protect the opportunity for stations displaced by the repacking of the television bands to obtain a new channel from the limited number of channels likely to be available for application after repacking….” Setting aside the freeze itself for a moment, it seems clear from this statement that the FCC has no illusions that there will be room in the repacked spectrum for all existing low power television stations.

While there have been myriad FCC application freezes over the years, they have been occurring with increasing frequency. From the radio perspective, absent a waiver, extraordinary circumstances, or an FCC-announced “filing window”, all opportunities to seek a new radio license (full-power, low power FM or translator) have been quashed for some time now.

The first notable television freeze occurred in 1948 and lasted four years. The FCC instituted a freeze on all new analog television stations applications in 1996. In furtherance of the transition to digital television, the FCC instituted a freeze on changes to television channel allotments which lasted from 2004 to 2008. In 2010, the FCC froze LPTV and TV translator applications for major changes and new stations; a freeze which remains in effect today.

Yet another freeze on TV channel changes was imposed in 2011 in order to, among other things, “consider methodologies for repacking television channels to increase the efficiency of channel use.” And as Scott Flick wrote here last year, still another television application freeze on full power and Class A modifications was launched on April 5, 2013. That freeze remains in effect and effectively cuts off all opportunities for existing full-power or Class A television stations to expand their signal contours to increase service to the public. The volume of application freezes has grown to such an extent that it is difficult to keep track of them all.

In terms of reasoning, yesterday’s Public Notice indicated that since the DTV transition occurred five years ago, the impact of the instant freeze would be “minimal” since transmission and contour issues should have been addressed as part of, or generally following, that transition. The Notice proceeded to say that LPTV displacement and digital replacement applications were necessary after the DTV transition, and up to the FCC’s April 2013 filing freeze, for purposes of resolving “technical problems” associated with the build-out of full-power DTV stations, but that since there have been no “changes” to those service areas because of the last freeze, there should be no need for LPTV channel displacements or digital replacement translators.

Left out in the cold by these cascading freezes are broadcast equipment manufacturers and tower crews. As previously noted by numerous broadcasters and the NAB, the FCC’s frosty view of just about every form of station modification is effectively driving out of business the very vendors and equipment installers that are critical to implementing the FCC’s planned channel repacking after the spectrum auction. As we learned during the DTV transition, the size and number of vendors and qualified installers of transmission and tower equipment is very limited and, given the skills required, can’t be increased quickly. Driving these businesses to shrink for lack of modification projects in their now-frozen pipelines threatens to also leave the channel repacking out in the cold.

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May 2014

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 $11,000 Fine for Marketing of Unauthorized Device
  • $2,944,000 Fine for Robocalls Made Without Recipients’ Consent
  • Sponsorship Identification Complaint Leads to $185,000 Consent Decree
  • Premature Consummation of Transaction Results in $22,000 Consent Decree

Modifying Design of Parking Meter Requires New FCC Certification and Warning to Users

Earlier this month, the Spectrum Enforcement Division of the FCC’s Enforcement Bureau issued a Notice of Apparent Liability for Forfeiture (“NAL”) against a company that designs, develops, and manufactures parking control products (the “Company”). The NAL indicated the Company had marketed one of its products without first obtaining an FCC certification and for failing to comply with consumer disclosure rules. The FCC’s Enforcement Bureau proposed an $11,000 fine against the Company.

In August of 2013, the FCC received a complaint that a particular product made by the Company did not have the required FCC certification and that the product did not comply with consumer disclosure requirements. After receiving the complaint, the FCC’s Spectrum Enforcement Division issued a Letter of Inquiry (“LOI”) to the Company. The Company responded in the middle of March, at which time it described the product in question as a “parking meter that accepts electronic payments made with credit cards, smart cards, or Near Field Communications-enabled mobile device applications.” The response to the LOI indicated that the Company had received an FCC authorization in 2011 but had since refined the design of the product. Although one refinement involved relocating the antenna on the device, which increased the field strength rating from the level authorized in 2011, the Company assumed that the changes to the device qualified as “permissive changes” under Section 2.1043 of the FCC’s Rules. In addition, the Company admitted to marketing the refined product before obtaining a new FCC certification for the increased field strength rating, and that its user manual did not contain required consumer disclosure language. However, the Company had not actually sold any of the new parking meters in the U.S.

Section 302(b) of the Communications Act prohibits the manufacture, import, sale, or shipment of home electronic equipment and devices that fail to comply with the FCC’s regulations. Section 2.803(a)(1) of the FCC’s Rules provides that a device must be “properly authorized, identified, and labeled in accordance with the Rules” before it can be marketed to consumers if it is subject to FCC certification. The parking meter falls under this requirement because it is an intentional radiator that “can be configured to use a variety of components that intentionally emit radio frequency energy.” The Company’s product also meets the definition of a Class B digital device, in that it is “marketed for use in a residential environment notwithstanding use in commercial, business and industrial environments.” Under Section 15.105(b) of the FCC’s Rules, Class B digital devices “must include a warning to consumers of the device’s potential for causing interference to other radio communications and also provide a list of steps that could possibly eliminate the interference.”

The base fine for marketing unauthorized equipment is $7,000, and the base fine for marketing devices without adequate consumer disclosures is $4,000. The Company argued that even though it had marketed the device before it was certified, it had not sold any, and it promptly took corrective action after learning of the issue. The Enforcement Bureau declined to reduce the proposed fines because the definition of “marketing” does not require that there be a sale, and “corrective measures implemented after the Commission has initiated an investigation or taken enforcement action do not nullify or mitigate past violations.” The NAL therefore assessed the base fine for both violations, resulting in a total proposed fine against the Company of $11,000.

Unsolicited Phone Calls Lead to Multi-Million Dollar Fine

Earlier this month, the FCC issued an NAL against a limited liability company (the “LLC”) for making unlawful robocalls to cell phones. The NAL followed a warning issued more than a year earlier, and proposed a fine of $2,944,000. The LLC provides a robocalling service for third party clients. In other words, the LLC’s clients pay it to make robocalls on their behalf to a list of phone numbers provided by the client.

The Telephone Consumer Protection Act (“TCPA”) prohibits robocalls to mobile phones unless there is an emergency or the called party has provided consent. These restrictions on robocalls are stricter than those on live calls because Congress found that artificial or prerecorded messages “are more of a nuisance and a greater invasion of privacy than calls placed by “live” persons.” The FCC has implemented the TCPA in Section 64.1200 of its Rules, which mirrors the statute.

The LLC received an LOI in 2012 from the Enforcement Bureau’s Telecommunications Consumers Division (the “Division”) relating to an investigation of the LLC’s services. The Division required the LLC to provide records of the calls it had made, as well as to submit sound files of the calls. This preliminary investigation revealed that the LLC had placed 4.7 million non-emergency robocalls to cell phones without consent in a three-month period. After making these findings, the Division issued a citation to the LLC in March of 2013, warning that making future calls could subject the LLC to monetary penalties and providing an opportunity to meet with FCC staff and file a written reply. The LLC replied to the citation in April of 2013, and met with FCC staff.

However, in June of 2013, the Division initiated a second investigation to ensure the LLC had stopped making illegal robocalls. The LLC objected, but produced the documents and audio files requested. The Division determined, by analyzing the materials and contacting customers who had received the prerecorded calls made by the LLC, that the Company made 184 unauthorized robocalls to cellphones after receiving the citation. Continue reading →