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In a decision that disappointed but didn’t entirely surprise broadcasters, the U.S. Court of Appeals for the Second Circuit today declined to rehear in banc its earlier decision rejecting a request by broadcasters to terminate with extreme prejudice Aereo’s broadcast subscription service in New York. Today’s announcement was not a decision on the merits, but merely the result of a poll taken among the Second Circuit judges in which less than a majority indicated an interest in hearing the case in banc. Barring an effort by broadcasters to seek Supreme Court review (and Fox, at least, has indicated that option is not off the table), the matter will return to the trial court for a full trial on whether Aereo is infringing on broadcast copyrights.

Once again, Second Circuit Judge Denny Chin, who had been the district judge in the earlier Cablevision case on which Aereo has built its business, dissented from today’s decision. His dissent is respectful but spirited, and so thoroughly dismantles the court’s earlier decision in favor of Aereo that a reader new to the dispute could be forgiven for being mystified as to how the other two judges on the original panel could have reached a contrary conclusion.

As interesting as the legal dispute itself is (at least to lawyers), the end result may well be governed more by technology than by law. If you have spent much time in the communications world, you have heard the old saw that “the law struggles to keep up with technology.” In the case of Aereo, however, it has been quite the opposite, with technology struggling to keep up with the law.

After the Second Circuit’s decision in Cablevision created, as Judge Chin’s dissent today puts it, “‘guideposts’ on how to avoid compliance with our copyright laws,” Aereo and others apparently raced to develop technology that could neatly fit through the legal loophole Cablevision ostensibly created. Judge Chin is obviously not a fan of such reverse engineering, noting today that “[i]n my view, however, the system is a sham, as it was designed solely to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law purportedly created by Cablevision.”

So far, the Aereo legal proceedings have presumed that Aereo was successful in its engineering efforts, and that its “one tiny antenna per subscriber” approach allows it to technologically clear the legal hurdles of the Copyright Act. Those familiar with the intricacies of radiofrequency engineering, however, have been quick to point out that the biggest obstacle to the Aereo system isn’t the laws of copyright, but the laws of physics.

One of the immutable laws of RF antenna design is that the size of the receiving antenna must correlate to the wavelengths it is meant to receive. As a result, high frequency devices (which means short wavelengths) can get by with smaller antennas, whereas the comparatively massive wavelengths of TV signals require much larger receiving antennas. That is why, during the golden age of over-the-air TV reception, and during the silver age of over-the-air HDTV reception, the promises of smaller and smaller antennas that would work “just as good” as hulking rooftop antennas never came to fruition.

Aereo’s claim of reliable reception with dime-size TV antennas (particularly in New York, the world capital of urban multipath interference) therefore seemed more akin to alchemy than to advanced RF antenna design. However, with the exception of patent lawyers and a fair number of communications lawyers, engineering expertise is not a common skill in the legal trade. As a result, the debate over Aereo has focused on that which lawyers know–the law–rather than on that which determines whether Aereo even fits within the legal loophole it claims to exploit–incredible advancements in TV antenna design.

Communications lawyers are perhaps more sensitized than most to the law/engineering dichotomy, as communications is one of the few fields where engineering solutions to legal problems are often an elegant alternative to brute force legal tactics. Because of this, one of the most interesting commentaries on the Aereo dispute I have come across is a piece by Deborah McAdams titled Aereo’s Unlikely Proposition.

It is a very intriguing article (and well worth a read) in which a number of engineers discuss why the “fits exactly into the shape of the loophole” system described by Aereo can’t exist in the real world. In other words, that Aereo isn’t an example of the law falling behind technology, but of technology being unable to produce an antenna capable of outrunning the law. If true, then the success of Aereo’s legal battle hangs not on whether it has a groundbreaking legal theory, but on whether the claimed antenna technology emerged from Aereo’s engineering department, or from its marketing department.

In either case, Aereo’s claims for its technology would be better assessed in an RF testing lab than in a courtroom. Extended debate over the legality of Aereo’s claimed technology is pointful only once it has been confirmed that Aereo has indeed created a revolutionary antenna technology that functions as described. If not, then the legal wranglings over a theoretical retransmission system are much ado about nothing.

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Last month, the FCC released an Order on Reconsideration and Further Notice of Proposed Rulemaking that clarified a number of aspects of the FCC’s complex closed captioning requirements for video programming delivered using Internet Protocol (IP) and the devices used by consumers to view it. In the FCC’s words, the Order and Further Notice was issued to “affirm, modify, and clarify certain decisions” made by the Commission last year implementing closed captioning requirements for video programming distributed via IP.

The original IP captioning rules were adopted in January 2012 in response to the 21st Century Communications and Video Accessibility Act (CVAA). The Order on Reconsideration and Further Notice has now been published in the Federal Register, and the rules adopted in the Order are set to take effect on August 1, 2013. For those who would like a refresher on the CVAA and the IP requirements, you can find my previous posts on the subject here and here.

In the Further Notice adopted simultaneously with the Order, the Commission asked for comment on imposing “closed captioning synchronization requirements for covered apparatus, and on how DVD and Blu-ray players can fulfill the closed captioning requirements of the statute.” Based on the publication of the Further Notice in the Federal Register, comments on the Further Notice are now due on September 3, 2013, and reply comments are due September 30, 2013.

The bulk of the Order is largely a response to three Petitions for Reconsideration filed in connection with last year’s Report and Order, which adopted rules governing the closed captioning requirements for owners, providers, and distributors of IP-delivered video programming, as well as the closed captioning capabilities of devices used by consumers to view video programming. The Petitions were filed by the Consumer Electronics Association, TV Guardian, and a coalition of consumer groups, respectively.

Highlights of the FCC’s Order and Further Notice include:

  • Refusing to limit covered devices to those intentionally designed to play back video programming, but clarifying the rule and issuing two class-based waivers in response to requests by the Consumer Electronics Association (CEA) to exclude equipment such as digital cameras and baby monitors;
  • Clarifying that the January 1, 2014, deadline for devices to be equipped to display closed captioned video programming applies to the date of manufacture of the apparatus, and “not to the date of importation, shipment, or sale”;
  • Reaffirming its decision to allow video programming providers and distributors to select either the rendering or pass through of captions to end users; and
  • Delaying a final decision regarding whether video clips (i.e., “excerpts of full length programming”) should be included within the scope of covered programming until more information is collected as part of another public notice that the FCC plans to issue within the next six months.

The CEA had requested that the FCC narrow the applicability of the closed captioning equipment requirements to cover only those devices intended by the manufacturer to receive, play back, or record IP video programming, rather than broadly applying the rules to any device with a video player.

In response, the FCC revised its definition of “apparatus” to make clear that “video players” requiring captioning capability include only those that display “video programming transmitted with sound.” The FCC declined to limit the requirement to only those devices intentionally designed to play back video programming, but clarified its rule and issued two class-based waivers excluding from the requirement equipment such as still digital cameras and baby monitors, which play back consumer generated images and not IP “video programming” as defined by the CVAA.

The following two classes of “apparatus” qualify for the waiver:

(i) devices that are primarily designed to capture and display still and/or moving images consisting of consumer-generated media, or of other images that are not video programming as defined under the CVAA and our rules, and that have limited capability to display video programming transmitted simultaneously with sound … and (ii) devices that are primarily designed to display still images and that have limited capability to display video programming transmitted simultaneously with sound.

The FCC also decided to delay the January 1, 2014 compliance deadline for DVD players that do not render or pass through closed captions. According to the Commission, that extension was granted to give the FCC more time to collect data regarding additional costs that might be imposed by adding IP captioning functionality to low-cost devices like DVD and Blu-ray players. The extension does not apply to other removable media players or to DVD players that already have the ability to caption.

Regarding the TV Guardian Petition, the FCC denied the Petition, which had requested that the Commission prohibit video programming providers and distributors from rendering captions where passing through captions is “technically feasible”, determining that the request was inconsistent with the language of the CVAA. The FCC also noted that the consumer electronics industry “coalesced around the use of HDMI, which permits the use of rendered captions but does not pass through closed captions, meaning that it only conveys captions when they have been decoded and mixed into the video stream.”

The FCC deferred a decision on the main thrust of the third Petition, filed by a number of consumer groups, which questioned why IP video captioning requirements only apply to “full-length programming” that appears on TV with captions and is then distributed via IP to end users substantially in its entirety. The coalition of consumer groups urged the FCC to expand the captioning requirement to also cover “video clips” containing less than a full-length program. The FCC is keeping the record open on this issue until more information is gathered on the captioning of video clips, including the difficulty of doing so, and the degree to which such captioning already occurs voluntarily.

Finally, in the Further Notice, the FCC asked for “further information necessary to determine whether the Commission should impose synchronization requirements on device manufacturers.” What the FCC is asking for here is additional information to determine whether to “require apparatus manufacturers to ensure that their apparatus synchronize the appearance of closed captions with the display of the corresponding video.” In the Report and Order, the FCC had declined to impose synchronization requirements on manufacturers, instead placing the obligation on video programming distributors and providers.

As noted, initial comments on the Further Notice are due September 3, 2013, with reply comments due on September 30, 2013. The issues raised in the proceeding are obviously complex, so those who wish to file comments should start preparing sooner rather than later.

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June 2013

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 Issues Heavy Fines for Late-Filed Children’s Television Programming Reports
  • Motel with Multichannel Video Programming Distribution System Is Cited for Excessive Cable Signal Leakage

FCC Fines Multiple Licensees for Failure to Timely File Children’s Television Programming Reports

As broadcasters have learned, the FCC takes licensees’ public inspection file and reporting obligations very seriously. This month, the FCC issued multiple Notices of Apparent Liability for Forfeiture (“NAL”) against licensees for failing to file Children’s Television Programming Reports on Form 398 in a timely manner. On June 18 and 21, the FCC issued a total of seven decisions proposing to fine stations between $3,000 and $18,000 for not filing their Form 398s on time.

Under the FCC’s rules, commercial television stations must report their children’s educational and informational broadcast programming efforts each quarter by electronically filing FCC Form 398, the Children’s Television Programming Report. Historically, the FCC has fined stations for failing to file their reports, and there would be nothing new about the FCC issuing an NAL for “failure to file”.

In these seven cases, however, the stations were not fined for a failure to file their reports, but for failing to file their reports on time. In the decisions, the FCC issued the following fines:

  • For a station that missed the filing deadline twenty-three times, the FCC issued an NAL in the amount of $18,000.
  • For a licensee that missed the filing deadline eleven times on one station and thirteen times on another, the FCC issued an NAL in the amount of $15,000.
  • For a station that missed the filing deadline fourteen times, the FCC issued an NAL in the amount of $9,000.
  • For a station that missed the filing deadline ten times, the FCC issued an NAL in the amount of $9,000 (eight reports were filed more than 30 days late).
  • For a station that missed the filing deadline three times, the FCC issued an NAL in the amount of $6,000 (three reports were filed more than 30 days late).
  • For a station that missed the deadline sixteen times, the FCC issued an NAL in the amount of $6,000.
  • For a station that missed the filing deadline eleven times, the FCC issued an NAL in the amount of $3,000.

The cases were all relatively similar. As an example, in the $15,000 NAL, the licensee filed license renewal applications for its two Class A TV stations. At the time of the applications, the licensee did not disclose that it had filed some of its Children’s Television Programming Reports late, and in fact, certified in its renewal applications that it had timely filed all relevant programming reports with the FCC. However, the Commission subsequently reviewed its records and found that the licensee failed to file programming reports on time for 11 quarters for one station and 13 quarters for another.

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We now know what the per-subscriber fee for cable systems lacking retransmission agreements with local broadcast stations is, and it isn’t “free”.

Section 76.64 of the FCC’s Rules requires cable systems to have a written retransmission agreement in place before retransmitting the signal of a station that elected retransmission consent status. Because the law is clear on this point (for a differing view, see Aereo), there have been few cases where the FCC has had to address complaints of illegal retransmission.

In the first of these cases, the FCC found the cable system violated its obligation to negotiate in good faith with the broadcaster and ordered retransmission to cease until an agreement was in place. Two later cases for a pair of 34-day violations against one cable system operator resulted in base fine calculations of $255,000 each, but the FCC reduced the fines to $15,000 each based upon the cable system operator’s inability to pay.

Today, the FCC upped the ante, proposing a fine of $2.25 million for TV Max, Inc. and related parties for retransmitting six local TV stations to 245 multiple dwelling unit buildings in Houston without a retransmission agreement. Despite having previously had retransmission agreements with all of the stations, the cable system operator claimed it now qualified for an exemption from the retransmission agreement requirement because it had installed a master antenna on each of the buildings, allowing residents to obtain the broadcast signals for free over-the-air. Each of the six stations filed a complaint with the FCC, noting that the respective retransmission agreements with the cable system operator had expired or been terminated for non-payment, but that retransmission was continuing.

On December 20, 2012, following an investigation, the FCC’s Media Bureau issued a letter to TV Max stating its “initial finding that TV Max had willfully and repeatedly violated, and continued to violate, the Commission’s retransmission consent rules, and stating that it planned to recommend that the Commission issue a Notice of Apparent Liability for Forfeiture for these violations.” The Media Bureau later followed up with a March 28, 2013 letter to all of the parties asking for the status of carriage and whether retransmission agreements were now in place. While the stations all responded that they were still being carried without their consent, TV Max indicated it had not retransmitted the stations over its fiber since June 7, 2012.

That led to today’s Notice of Apparent Liability for Forfeiture and Order. In its decision, the FCC found that some of the cable system operator’s statements to the FCC were “lacking in candor”. Specifically, the FCC concluded that the cable system had continued to retransmit the stations over its fiber and had not installed master antennas on all of its buildings by the time it claimed to have ceased fiber retransmission:

Based upon the evidence before us, and in view of the applicable law and Commission precedent, we conclude that TV Max has willfully and repeatedly violated Section 325 of the Act and Section 76.64 of the Commission’s rules, and persists in its violation of these provisions, by retransmitting the Stations’ signals without the express authority of the originating stations. As discussed below, the violations are based on (1) TV Max’s admitted carriage of the Stations from the time their retransmission consent agreements expired through at least July 25, 2012 without the Stations’ consent and without a master antenna television (MATV) system in place in all the buildings it serves; and (2) TV Max’s ongoing carriage of the Stations without their consent since July 26, 2012 because it was not exclusively using its MATV facilities to retransmit the broadcast signals to its subscribers.

While the precise length of time any particular station was carried without a retransmission agreement varied, the FCC noted in its decision that Section 503 of the Communications Act limits its ability to issue fines for cable violations occurring more than one year ago. As a result, the FCC based its proposed fine on 365 days worth of violations involving six stations. While the decision is a bit fuzzy on the precise math behind the final number (particularly given that the maximum fine is much higher than the fine proposed), a little reverse engineering provides some real-world context for a $2.25 million fine.

The FCC notes that the system has about 10,000 subscribers, that six stations were carried without a retransmission agreement, and that the fine reflected one year’s worth of violations. That works out to a monthly retransmission “fee” of $3.13 per subscriber for each station (apparently the federal government has less negotiating leverage than ESPN). Still, that is more than the cable system operator would have paid under an arms-length negotiated broadcast retransmission agreement. Unfortunately for the affected stations, however, payment of the fine goes to the U.S. Government rather than to the television stations.

On the other hand, retransmitting programs without consent is also a copyright violation, meaning that stations pursuing copyright claims against the cable system operator could add significantly to the operator’s financial pain. Such are the risks of reinterpreting the breadth of the Communications Act’s retransmission consent requirements (see Aereo?).

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Last month, the FCC issued its latest annual Notice of Proposed Rulemaking (NPRM) as well as a Further Notice of Proposed Rulemaking (FNPRM) containing regulatory fee proposals for Fiscal Year (FY) 2013. Those who wish to file comments on the FCC’s proposed fees must do so by June 19, 2013, with reply comments due by June 26, 2013. The NPRM proposes to collect just under $340 million in regulatory fees for FY 2013.

The FCC indicates that this year’s Congressional budget sequester reduced FCC salaries and expenditures by $17 million but that the sequester does not impact the collection of regulatory fees. According to the NPRM, this is because the sequester does not change the amount Congress required the FCC to collect in the FY 2012 appropriation (and continued in effect in FY 2013 by virtue of the Further Continuing Appropriations Act in 2013).
The NPRM seeks comments on adoption and implementation of proposals to reallocate the Agency’s regulatory fees based on the matters actually worked on by current FCC full time employees (FTEs) for FY 2013 to more accurately assess the costs of providing regulatory services to various industry sectors and to account for changes in the wireless and wireline industries in recent years. Understanding that a modification of its current fee allocation method based on FTE workload will result in significantly higher fees for some fee categories, the NPRM proposes to potentially cap rate increases at 7.5% for FY 2013.
The FCC’s NPRM also asks for comment on the following:

  1. Combining Interstate Telecommunications Service Providers (ITSPs) and wireless telecommunications services into one regulatory fee category and using revenues as the basis for calculating the resulting regulatory fees;
  2. Using revenues to calculate regulatory fees for other industries that now use subscribers as the basis for regulatory fee calculations, such as the cable industry;
  3. Consolidating UHF and VHF television stations into one regulatory fee category;
  4. Proposing a regulatory fee for Internet Protocol TV (IPTV) equivalent to cable regulatory fees;
  5. Alleviating large fluctuations in the fee rate for Multiyear Wireless Services; and
  6. Determining whether the Commission should modify its methodology for collecting regulatory fees from those in declining industries (e.g., CMRS Messaging).

In the FNPRM, the FCC seeks comment on the how to treat, for regulatory fee purposes, services such as non-U.S.-Licensed Space Stations, Direct Broadcast Satellites and broadband.
The FCC also notes that it is seeking to modernize its electronic filing and payment systems. As a result, beginning on October 1, 2013, the FCC will no longer accept paper and check filings for payment of Annual Regulatory Fees. What that means is that this year’s regulatory fee filing is likely the last time that regulatory fees can be paid without using electronic funds.
We will be publishing a full Advisory on the FY 2013 Regulatory Fees once they are adopted (likely this summer). You may also immediately access the FCC’s FY 2013 proposed fee tables attached to the NPRM, in order to estimate, at least approximately, the size payment the FCC will be expecting from you this fall.

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In what has been a recurring theme at CommLawCenter, I’ve written about the FCC rule prohibiting the airing of Emergency Alert System codes and tones unless there is an actual emergency or EAS test. Despite the rule, the draw of using an EAS tone is apparently irresistible, and we’ve seen it used in movie ads, oil company ads, and even zombie alerts.

Unlike many FCC rules, the ambiguity of which can leave seasoned practitioners arguing over what is or isn’t prohibited, Section 11.45 of the FCC’s Rules has been a model of clarity:

“No person may transmit or cause to transmit the EAS codes or Attention Signal, or a recording or simulation thereof, in any circumstance other than in an actual National, State or Local Area emergency or authorized test of the EAS.”

As a result, while advertisers might succumb to the temptation to slip an EAS tone (really, it’s more of a digital squeal) into their ads, the broadcaster’s duty was straightforward–try to catch the ad before it airs, and then let the advertiser know that the ad can’t be run unless it is modified to delete the tone.

Yesterday, however, life suddenly became more complicated for broadcasters when stations began receiving copies of a Public Service Announcement from the Federal Emergency Management Agency seeking to educate the public about the Emergency Alert System using the EAS tone to get that message across. Station operators were understandably confused, thinking that surely FEMA, as a fellow federal agency to the FCC (and an expert on all things related to EAS), wouldn’t be distributing a PSA that included an illegal EAS tone.

That was not, however, a safe assumption. On multiple occasions, federal and state agencies have, for example, distributed ads or PSAs that lack the sponsorship identification announcement required by the FCC, with one of the more famous examples leading to a 2002 FCC decision refusing to grant a waiver of its sponsorship identification rule to allow the White House Office of National Drug Control Policy to run anti-drug ads without disclosing that it was the sponsor.

As stations began to decline to run the PSAs for fear or incurring the FCC’s wrath, the FCC moved quickly (and quietly, I might add) to break from its prior approach, and today released a decision granting an unprecedented one-year waiver of Section 11.45, permitting FEMA spots to use the EAS tone as long as they make “clear that the WEA [Wireless Emergency Alert] Attention Signals are being used in the context of the PSA and for the purpose of educating the viewing or listening public about the functions of their WEA-capable mobile devices and the WEA program.” The FCC also “recommend[s] that FEMA take steps to ensure that such PSAs clearly state that they are part of FEMA’s public education campaign.”

The good news today is that the FCC approached the problem head on by granting a waiver rather than trying to “interpret” its rule to somehow not cover the FEMA PSA tones. Such an interpretation would have left broadcasters scratching their heads every time an EAS tone pops up in a future spot, trying to figure out whether that use might also fit into such an exception. The bad news, however, is that broadcasters have now been told that fake EAS tones are sometimes okay, and they need to be watching the FCC’s daily releases to determine if a particular use has suddenly become acceptable. Hopefully, such spots will actually educate the public to better understand the purpose of EAS alerts, as opposed to merely acclimating them to hearing the tone on-air and learning to ignore it.

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May 2013

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 Establishes New Enforcement Policy for Student-Run Noncommercial Radio Stations
  • CB Radio Owner Receives Fine for Harmful Interference and Lack of Responsiveness

Student-Run Noncommercial Radio Stations Will Face Lighter Sanctions on Some FCC Enforcement Actions

In a recent Policy Statement and Order, the FCC established a new policy for certain first-time violations of FCC documentation requirements committed by student-run noncommercial radio stations. The new policy allows such stations the option of entering into a Consent Decree with the FCC that includes a compliance plan and a “voluntary” contribution to the government that is smaller than the typical base fines for these violations.

In justifying its more lenient policy toward student-run stations, the FCC noted that such stations are staffed by a continually changing roster of young students lacking experience in regulatory compliance. In addition, such stations function without any professional oversight other than that provided by over-worked faculty advisors, and often operate with budgets so small that they are exceeded by even the base fine for a public inspection file violation. In the past, the FCC has issued numerous fines of $8,000-$10,000 to licensees of student-run stations, and with this new policy, the FCC recognizes that continuing to impose such fines could result in schools selling their stations altogether, as has indeed happened.

In the past, the FCC rejected arguments that fines on student-run stations should be reduced solely because the stations are run by students. The FCC has also typically rejected “inability to pay” arguments for these types of stations, and instead looked at the financial resources of the entire university or college, rather than the financial resources of the station, when assessing a fine. However, the FCC now concludes that allowing the cost of a first-time documentation violation to be reduced in exchange for a consent decree with a compliance plan will actually improve compliance with the FCC’s rules. Specifically, the FCC believes that such compliance plans will assist in the training of students while contributing to the educational function of these stations.

In its Policy Statement, the FCC emphasized that the policy will apply only to student-run noncommercial radio stations where the station is staffed completely by students. Stations that employ any professional staff, other than faculty advisors, do not qualify. The policy is also limited to violations where a student-run station has failed to (a) file required materials with the FCC (e.g., an Ownership Report), (b) place required materials in the public inspection file, or (c) publish a notice in a local newspaper or broadcast an announcement on the air. This new policy will not change the FCC’s forfeiture policies for any other type of violation or licensee.

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A few minutes ago, the FCC issued a Public Notice granting a thirty-day extension of the deadlines for submitting comments and reply comments in response to the FCC’s April 1, 2013 Public Notice seeking input on whether the Commission should make changes to its current broadcast indecency policies. Comments and reply comments were originally due on May 20 and June 18, 2013, respectively, but have now been extended to June 19, 2013 (comments) and July 18, 2013 (reply comments). The extension was granted in response to a Motion filed by the National Association of Broadcasters on April 26, 2013.

Scott Flick of our office posted a detailed analysis of the Public Notice early last month. To refresh your memory, the Public Notice (jointly released by the FCC’s Enforcement Bureau and General Counsel’s Office) was issued in response to FCC Chairman Genachowski’s request that FCC staff review the “Commission’s broadcast indecency policies and enforcement to ensure they are fully consistent with vital First Amendment principles.”

With respect to guidance for parties planning to file comments, the quoted language below from the Public Notice describes the matters on which the FCC is seeking comment:

  1. [W]hether the full Commission should … treat isolated expletives in a manner consistent with our decision in Pacifica Foundation, Inc., Memorandum Opinion and Order, 2 FCC Rcd 2698, 2699 (1987) (“If a complaint focuses solely on the use of expletives, we believe that . . . deliberate and repetitive use in a patently offensive manner is a requisite to a finding of indecency.”)?
  2. Should the Commission instead maintain the approach to isolated expletives set forth in its decision in Complaints Against Various Broadcast Licensees Regarding Their Airing of the “Golden Globe Awards” Program, Memorandum Opinion and Order, 19 FCC Rcd 4975 (2004)?
  3. As another example, should the Commission treat isolated (non-sexual) nudity the same as or differently than isolated expletives?

The Public Notice also states that parties are invited “to address these issues as well as any other aspect of the Commission’s substantive indecency policies.” As Scott pointed out in his analysis last month, this final question appears to open the door to a broader review of indecency doctrine than the FCC has engaged in for quite some time.

Given the controversy the FCC’s indecency policies have historically generated, you can expect to see plenty of comments filed on June 19 and reply comments on July 18 by parties on all sides of this issue. As the FCC moves toward new leadership with the departure of Chairman Genachowski, the FCC’s indecency enforcement policies could take some interesting turns.

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April 2013

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:

  • Assignment of Paired AM Stations Denied by the FCC
  • Use of Illegal Cell Phone Jammers Leads to Fines in Excess of $125,000

FCC Denies Two Assignment Applications of Paired AM Stations

Early this month, the FCC issued two letters denying several assignment applications seeking to separately assign jointly-operated AM stations to different licensees, contrary to the FCC’s rules.

In the 1990s, the FCC expanded the AM band frequencies and permitted AM licensees to operate both existing AM band stations and expanded band AM stations in order to improve the quality of the AM service. However, this dual operating authority was contingent upon the surrender of one of the two licenses within five years from the grant of the license for the expanded band station.

In September 1999, one of the licensees filed an assignment application to assign two paired AM band stations to a second licensee. The FCC granted this assignment application, but the receiving licensee only consummated the assignment of one of the two AM stations due to “environmental issues.” Several years later, the two licensees filed several new assignment applications requesting FCC approval to separately assign the stations to new licensees, including one application in 2006 and two applications in 2012. In none of these applications did the licensees mention that the stations were part of a jointly-operated pair or that any additional special conditions might apply.

In its letters, the FCC denied all of the pending assignment applications and declined to grant a waiver of the FCC’s rule requiring the surrender of one of the two licenses. In its decisions, the FCC stated that the grant of the applications would be contrary to the public interest and would “(1) constitute a further violation of a Commission-imposed processing policy; (2) bestow a further benefit on a party that knowingly engaged in such violation; (3) be unfair to those licensees that have returned one of the paired licenses; and (4) be inconsistent with the expanded band licensing principle that each licensee surrender one license at the expiration of the dual operating authority period.” In other words, the FCC made clear that the only assignment application it would be willing to accept is one resulting in both AM stations being held by a single licensee.

Use of Cell Phone Jammers to Prevent Cell Phone Use during Working Hours Does Not Pay Off

The FCC has long kept a careful eye on the sale and use of illegal cell phone jamming devices that interfere with cellular communications. This month, the FCC continued to take action against the use of illegal cell phone jammers by issuing two hefty Notices of Apparent Liability for Forfeiture (“NAL”) against two companies, one in Alabama and one in Louisiana, both of which used several cell phone jamming devices at their worksites.

As described in the two NALs, each company purchased four cell phone jammers from various Internet sources (and a fifth jammer as a backup) and installed them throughout their worksites to prevent their employees from using cell phones while working. In both instances, agents from the FCC’s Enforcement Bureau responded to anonymous complaints and inspected the worksites.

Using direction finding techniques, the agents discovered strong wideband emissions on the cellular bands and determined that the source of these emissions was from signal jammers.

The Enforcement Bureau agents then inspected the worksites and interviewed the managers of the two companies, both of whom admitted that they had purchased the jammers online and operated them at their worksites–one company for a period of two years and the other for a period of a few months. Both managers showed the agents the locations of the jamming devices and voluntarily surrendered them.

Sections 301, 302(b), and 333 of the Communications Act generally prohibit the importation, use, marketing, and manufacture of cell phone jammers because jammers are designed to impede authorized communications and can disrupt safety communications, such as 911 calls. Moreover, since the primary purpose of a jammer is to interfere with authorized communications, jamming devices cannot be certified and cannot comply with the FCC’s technical standards for operation.

In response to the use of illegal jamming devices, the FCC issued substantial forfeitures to both companies. The relevant base forfeiture amounts are $10,000 for operating without FCC authorization, $5,000 for using unauthorized or illegal equipment, and $7,000 for interference with authorized communications. The base forfeiture for violations of the prohibition on signal jamming is $16,000 per violation or per day, up to a maximum of $112,500 for a single violation. For the company in Alabama that operated four jamming devices for a period of two years, the FCC found that the company committed 12 total violations, representing three violations for each of the four jamming devices in use. Thus, the fine would normally be $16,000 per violation, for a total fine of $192,000. However, since the company immediately surrendered the jamming devices and was cooperative with the Enforcement Bureau agents, the FCC reduced the penalty by 25% to $144,000. The FCC applied the same type of calculation to the company in Louisiana that operated four jamming devices for a period of a few months, resulting in a fine of $126,000 after a 25% reduction in the total fine amount. The FCC also ordered both companies to submit sworn written statements providing contact information for the sellers of the jamming devices and all information regarding the sources from which the jamming devices were purchased.

In addition, the FCC cautioned the companies that while the FCC chose not to impose separate forfeitures for the illegal importation of the jamming devices, the FCC has the power to impose “substantial monetary penalties” on individuals or businesses who illegally import jammers. The FCC further warned the companies and other individuals and businesses that the FCC “may pursue alternative or more aggressive sanctions, should the approach set forth [here] prove ineffective in deterring the unlawful operation of jamming devices.”

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The FCC’s revised rules for its Experimental Radio Services (“ERS”) were published in today’s Federal Register, and become effective on May 29, 2013 (except for several rules that contain new or modified information collection requirements, which require further approval by the Office of Management and Budget). These revised rules allow parties, including manufacturers, entrepreneurs, and students, to engage in a wide variety of experiments involving radio spectrum, including, for example, technical demonstrations, equipment testing, limited market studies, and development of radio techniques. The FCC’s revisions streamline and modernize the ERS rules, allowing parties to more quickly develop new technologies and products for the marketplace.

One of the primary changes to the rules is the creation of three types of ERS licenses: (1) Program Licenses; (2) Compliance Testing Licenses; and (3) Medical Testing Licenses. An applicant for a license must demonstrate in its application that it meets the eligibility requirements, must provide a certification of radio frequency (RF) expertise or partner with another entity with such expertise, and must explain the purpose of its experiment. Each license has a term of five years and is renewable.

Under a Program License, the license holder is permitted to conduct an ongoing program of research and experimentation under a single authorization without having to obtain prior FCC consent for each distinct experiment or series of unrelated experiments, as would have been required under the FCC’s prior rules. Eligibility is limited to colleges, universities, research laboratories, manufacturers of radio frequency equipment or end-user products with integrated radio frequency equipment, and medical research institutions. Authorized entities must provide a “stop buzzer” point of contact, identify the specifics of each proposed experiment in advance of the testing on a public web database established by the FCC, and post a report detailing the results of each experiment upon completion of the experiment (A “stop buzzer” point of contact is a person who can address interference concerns and cease all transmissions immediately if interference occurs).

A Compliance Testing License allows a test lab to conduct testing for FCC equipment authorizations. Such licenses are available to labs that are currently recognized for RF product testing as well as any other lab that the FCC finds has sufficient expertise to undertake such testing. Unlike a Program Licensee, a compliance testing licensee does not have to identify a “stop buzzer” point of contact, provide any notification period prior to testing, or file any narrative statement regarding test results. Testing is limited to those activities necessary for product certification.

The third type of experimental license is a Medical Testing License. This license allows an eligible entity to conduct clinical trials of medical devices (i.e., a device that uses RF wireless technology or communications functions for diagnosis, treatment, or patient monitoring). Only health care facilities (defined as hospitals and other establishments that offer services, facilities and beds for beyond a 24-hour period in rendering medical treatment, as well as institutions and organizations regularly engaged in providing medical services through clinics, public health facilities, and similar establishments, including government entities and agencies) are eligible for this type of experimental license. Medical devices tested under a Medical Testing License must comply with the FCC’s Part 15, 18 and 95 rules. Authorized health care entities must provide a “stop buzzer” point of contact and also follow the same notice and reporting requirements as Program Licensees. A Medical Testing Licensee is required to file a yearly report with the FCC on the activity that has been performed under the license.

The FCC’s other changes to its ERS rules include:

  • consolidating all of the experimental licensing rules into Part 5 of the FCC’s Rules;
  • consolidating its rules regarding marketing of unauthorized devices;
  • allowing demonstrations in residential areas of devices not yet authorized, so long as the relevant spectrum licensee is working with the device manufacturer;
  • permitting, without an experimental license, the operation of devices not yet authorized, so long as the devices are operated as part of a trade show demonstration and at or below the maximum power level permitted for unlicensed devices under the FCC’s Part 15 rules;
  • allowing more flexible product development and market trials;
  • standardizing and increasing the importation limit for devices that have not yet been authorized to 4,000 units; and
  • codifying the existing practice of allowing RF tests and experiments conducted within an anechoic chamber or Faraday cage without the need for obtaining an experimental license.

Parties interested in learning more about the FCC’s revised ERS rules should contact their communications counsel for advice.

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