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The FCC has issued its latest annual Notice of Proposed Rulemaking containing regulatory fee proposals for Fiscal Year 2012. Those who wish to file comments on the FCC’s proposed fees must do so by May 31, 2012, with reply comments due by June 7, 2012.

The FCC’s NPRM includes an interesting twist. Citing the “rapid transformation” of the communications industry, the FCC indicates that it plans to re-examine its regulatory fee program which has remained largely the same since the program was first introduced in 1994. According to the NPRM, the FCC will be undertaking two separate “Reform Proceedings” in the near future to address the Commission’s regulatory fee program. In the first phase, the FCC will consider the allocation percentages of core bureaus involved in regulatory fee activity and how it calculates those percentages. In the second phase, the FCC states that it will review other outstanding substantive and procedural issues. According to the FCC, “given the breadth and complexity of the issues involved, the issuance of two separate Notices of Proposed Rulemaking will permit more orderly and consistent analysis of the issues and facilitate their timely resolution.”

We will be publishing a full Advisory on the FY 2012 Regulatory Fees once they are officially adopted (likely this summer) and will keep you posted regarding the Phase I and Phase II Reform Proceedings. You may also immediately access the FCC’s FY 2012 proposed fee tables in order to estimate the payments (barring changes) that you will owe in September.

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The FCC created a stir in the broadcast community when, after proclaiming for more than a year that surrendering broadcast channels for the planned broadband spectrum auction would be entirely voluntary, it began to “volunteer” Class A stations it concluded had not complied with all FCC rules. I first raised this issue in a February post on the day the FCC released the first sixteen Orders to Show Cause demanding that the recipient Class A TV stations submit evidence as to why the FCC should not revoke their Class A status for infractions that would have previously drawn only a fine.

Loss of Class A status not only eliminates protection from being displaced by full power TV stations (or by a spectrum auction), but also disqualifies the station from sharing a post-auction channel with a full power station or seeking any compensation for its spectrum in the auction. Downgrading Class A stations to LPTV status therefore allows the FCC to sweep them aside involuntarily to clear spectrum for the auction, and avoid sharing the proceeds of the spectrum auction with that licensee.

It was therefore not too surprising when that initial batch of FCC orders was followed by dozens of subsequent FCC actions against Class A stations, some of which proposed substantial fines and indicated that the licensee had been earlier informed it could avoid a fine by notifying the FCC it wished to relinquish its Class A status.

Having put scores of stations on notice that their Class A status was either directly at risk or that they could avoid a fine by agreeing to relinquish Class A status, the FCC turned up the heat further this past week when it began issuing follow up orders revoking stations’ Class A status. While the writing was already on the wall for many of these stations given the FCC’s earlier actions against them, one of the orders offers a particularly disturbing insight into the determination with which the FCC is moving to thin the ranks of Class A stations (old FCC motto for Class A stations–“last bastion of independent voices in a consolidated TV world”; new FCC motto for Class A stations–“old and in the way”).

Station KVHM is (or at least was) a Class A station that received a pair of investigatory letters from the FCC in late March and early August of 2011. According to the FCC, the letters noted that the station had failed to file required children’s television reports and provided the licensee with thirty days to respond, making the first response due at the end of April 2011. However, as the FCC itself notes in the Order, the licensee, Humberto Lopez, died in May of 2011. According to his obituaries, Mr. Lopez, who owned multiple TV and radio stations and was an inductee of the Tejano Roots Hall of Fame, died “on May 16 after battling a long illness.”

In the last few weeks of his life, he apparently didn’t find time to respond to the FCC’s March letter, and was certainly unable to respond to its August letter. His failure to respond led the FCC to issue a February 2012 Order to Show Cause demanding that Lopez demonstrate why his Class A status should not be revoked. When, not surprisingly, the licensee was unable to deliver that message from beyond the grave, the FCC issued last week’s Order, stating “Lopez did not file a written statement in response to the Order to Show Cause, and, therefore, we deem him to have accepted the modification of the KVHM-LP license to low power television status.” Talk about being tough on a licensee; the FCC demanded not just that Lopez rise from the grave to defend his Class A status, but that he do so in writing.

While it is easy enough to ridicule an FCC Order that is on its face so completely preposterous as to invite comparison with the worst cinematic portrayals of soulless bureaucracy, the real lesson of this case can be found by delving a bit deeper into the facts. On the FCC’s side of the ledger, it is true that the first investigatory letter did arrive while the licensee was still alive, and that it was at least theoretically possible the licensee could have responded. Had the FCC’s Order been based on this fact alone, rather than on the licensee’s failure to respond long after his death to the 2012 Order to Show Cause, its action would have been hard-hearted, but perhaps defensible. The FCC could have argued that, given the licensee’s failure to meet the original response deadline, his estate lacked the “clean hands” necessary to protest the loss of Class A status, and that the FCC was just playing the hand it was dealt. However, as it turns out, the FCC lacked clean hands as well.

Why, you may ask, did the licensee’s estate not step up to oppose the Class A revocation? Apparently because it is still waiting for the FCC to grant the application to transfer control of the station from the deceased licensee to the licensee’s estate (controlled by an Executor). Despite the fact that such post-death transfers are normally accorded nearly automatic grants, that application remains pending at the FCC since early November 2011. Worse, the apparent reason why the transfer application is hung up at the FCC is because the FCC has still not acted on the station’s 2006 license renewal, which also remains pending. To be blunt, the licensee literally died waiting for the FCC to act on his license renewal application. While the FCC will often sit on a transfer application until the underlying station’s license renewal is granted based on the theory that the “seller” shouldn’t profit from the transfer of a station unless the FCC can first determine he was qualified to own it, the licensee here is beyond caring about such profit.

So in the fair world we like to think we live in, the FCC would have promptly granted the station’s transfer application (and perhaps its license renewal application as well), transferring control of the station to the Executor of the licensee’s estate. Without altering its timetable one iota, the FCC could then have proceeded to issue its February Order to Show Cause, and the Executor would have had a reasonable opportunity to try to defend the station’s Class A status. Instead, in its apparent haste to clear “voluntary” spectrum for auction, the FCC cut all of these procedural corners, leaving Lopez’s wife and (according to the obituary) twelve children with an asset of significantly diminished value, and no opportunity to seek their share of any spectrum auction proceeds.

What is particularly ironic is that the Lopez family is the archetype of the kind of licensee the FCC has argued will be interested in participating in the auction–a licensee that may no longer be as interested in running the station as in monetizing it to pay estate taxes and to split any remaining proceeds among the many heirs. The FCC has placed itself in the role of the cattle baron who dams up the stream, depriving his neighbors of water so that he can obtain their land for next to nothing (or in this case, nothing). If the FCC’s thirst for broadcast spectrum has become so intense that it is willing to sacrifice fundamental fairness and “widows and orphans” to get it, all broadcasters need to be looking over their shoulders for the next regulatory lightning bolt encouraging them to also “volunteer” their spectrum. Like death and taxes, it appears the FCC is determined to make surrendering spectrum for the auction an unavoidable fact of life (and death).

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April 2012
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:

  • The FCC’s $10,000 fines for items missing from the public inspection file continue
  • License cancellation no obstacle to FCC proposing $18,000 fine against former broadcaster

FCC Again Issues $10,000 Fines for Public Inspection File Violations

As we have reported on numerous occasions, $10,000 has become the standard fine for even minor public inspection file violations. That proved true again this month, with the FCC issuing a number of $10,000 fines for failure to include all Quarterly Issues/Programs Lists in a station’s public inspection file.

The FCC’s public inspection file requirements are found at Sections 73.3526 (commercial stations) and 73.3527 (noncommercial stations) of the FCC’s Rules. They require broadcast licensees to maintain particular information in their files, including the Quarterly Issues/Programs Lists, and to update the material in the file regularly throughout the license term.

In one decision, the FCC assessed a $10,000 fine against a noncommercial radio station in Louisiana for excluding twenty-four Quarterly Issues/Programs Lists (six years’ worth) from its file over a seven-year period. The licensee had disclosed the problem in its license renewal application. In a second decision, the FCC fined a South Carolina commercial radio station $10,000 for ten absent Quarterly Issues/Programs Lists over a four-year period. Like the first case, the fact that the documents were missing from the file was disclosed in the station’s license renewal application. The station belatedly placed the missing documents in the file when it filed its license renewal application.

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To follow up on my post from last week regarding the FCC’s open meeting on implementing its proposals to require online posting of TV station public inspection files, including the political file, the FCC today voted to require television broadcasters to post their entire public inspection files online. FCC Commissioner McDowell dissented regarding the requirement that TV stations’ political files be included online.

According to statements made in the FCC’s meeting today, all TV stations will have six months to move their public inspection files online. The FCC has agreed to host TV public inspection files on its own website. With respect to the political file, online posting will be a “phased in” process. Stations affiliated with the top-four national networks in the top-50 Nielsen markets will be required to begin placing their political files online, with all other TV stations to follow on July 1, 2014. The FCC also indicated that it plans to issue a Public Notice in a year to evaluate the effectiveness of the process.

In adopting its Order, the FCC rejected a compromise proposal advanced last Friday by the National Association of Broadcasters, the ABC, CBS, NBC, Fox, and Univision networks, State Broadcasters Associations, as well as various television station groups. The compromise proposal would have permitted TV stations to provide summary information online, including the total amount of an advertising buy and the total amount of money a candidate has spent at that station on ads during a particular election window. The compromise proposal would have kept commercially-sensitive per unit rate information out of the online public file, while still including this information in the hard copy of the political file for candidates to inspect regarding lowest unit rate and other political advertising requirements.

Much more on these issues to follow, including further specifics on the details of the FCC’s Order in this proceeding.

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As many of you know by now, very few topics were hotter during the NAB Show in Las Vegas this week than the FCC’s looming April 27 public meeting vote to decide how to implement its proposals to require online posting of TV station public inspection files. As Laurie Lynch Flick reported previously here, the FCC is proposing to require television broadcasters to replace their existing locally-maintained public inspection files with digital public inspection files to be maintained online, including stations’ political records. The online public file has broadcasters concerned because creating and maintaining a centralized online public file substantially increases their public inspection file burdens, while the political portion of the file contains sensitive competitive and pricing information that broadcasters would prefer not be made available to competitors online on a near real-time basis.

The proposals have proven to be so controversial that earlier today the National Association of Broadcasters (NAB) filed a request with the FCC to grant a two business day delay of the commencement of the “sunshine period” in the FCC’s online public file proceeding. For those who are not familiar with the “sunshine period” requirement, the term refers to the week before one of the Commission’s monthly public business meetings (known as “open meetings”) during which time all contacts with Commission staff concerning the matters to be decided at the meeting are prohibited, until such time as the text of the Commission’s decision is publicly released. The sunshine period for the online file proceeding is scheduled to commence today, and the NAB is asking the FCC to delay the effective date until next Tuesday, April 24, in order to allow interested parties to continue to discuss the FCC’s proposals with FCC staff members.

To make matters even more interesting, yesterday a media placement company asked the FCC to refrain from going forward at the April 27 meeting with any requirements regarding placing political files online.

The precise details of the FCC’s online public file requirements, including those for the political file, aren’t likely to be released until the FCC’s April 27 monthly meeting. However, during discussions at the NAB Show, FCC staff informed broadcasters that the FCC’s Order is expected to, at a minimum, require online posting of public inspection files by all television stations this year, with the posting of the online political file portion of the public file to be phased in, initially applying to network-affiliated stations in the top 50 markets. All other television stations would be required to move their political files online within the next two years.

Regardless of the precise approach taken by the FCC for putting political file information online, stations would be wise to ensure that their current political file is complete and that their political sales practices comply with the numerous legal requirements. Moving a poorly kept political file online is an invitation to trouble.

A good place to start for ensuring your political file compliance is with our Political Broadcasting Advisory, which is regularly updated and is a comprehensive guide for broadcasters to use to help them comply with the FCC’s political broadcasting rules, including the political file requirements. The time to fix any public file/political file and political sales problems is now, before the data has to be posted on the Internet.

As the details of the Order the FCC is expected to release on April 27 leak out, the FCC continues to revise its positions and there may be a few more twists and turns before we are done. The FCC has moved this item to the front burner of its agenda about as fast as any in recent memory. What makes it more of an immediate concern for TV broadcasters is that the item will be released just prior to the time TV stations are preparing for what is expected to be the most expensive presidential campaign advertising blitz on record.

As the online public file/political file debate rages on, there can be no doubt we will have plenty more to discuss regarding these issues in the coming days and weeks ahead.

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It’s that time of year. Broadcasters, brokers, bankers, and broadcast lawyers hop on the proverbial bus and head to Las Vegas to seek their fortunes. In contrast to the last few recessionary years, during which the crowds were thinner and many attendees had the glassy-eyed look of disaster survivors, indications are that 2012 will mark the return of the dealmaking, equipment buying, and venture launching that animate the industry. More broadly, cautious optimism about the state of the industry and the economy seems to be giving way to genuine enthusiasm about moving forward. It is a welcome sight.

Attending the show this year to help that process along are eight of our communications attorneys, including myself, Dick Zaragoza, Cliff Harrington, Lauren Lynch Flick, Miles Mason, Paul Cicelski, Lauren Birzon, and our newest addition, partner Lew Paper.

If you see us at the show, say hello, or better yet, buy us a drink and we’ll regale you with tales of great legal battles (buy us two drinks, and we promise not to talk about law at all!). You can reach us by email at the Show by clicking on the name links above. They will take you to our respective bios at Pillsbury where you can find our email addresses.

For those of you headed to the Show, we look forward to seeing you there. For those who aren’t going, we hope to see you there next year.

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A panel of the United States Court of Appeals for the Ninth Circuit in San Francisco today ruled, in a 2 – 1 decision, that the long-standing prohibition on the carriage of paid political and issue advertising by noncommercial television and radio stations is unconstitutional and may no longer be enforced by the FCC.

The majority opinion in Minority Television Project Inc v. FCC was authored by Judge Carlos Bea, a George W. Bush appointee, and joined in by Judge John Noonen, a Reagan appointee; Judge Richard Paez, a Clinton appointee, wrote a dissenting opinion. The case arose when Minority Television Project, licensee of noncommercial television station KMTP-TV was fined $10,000 by the FCC for violating the prohibition in Section 399B of the Communications Act against noncommercial stations carrying paid advertising for commercial entities. According to the FCC, KMTP-TV had carried over 1,900 advertisements for entities such as State Farm, Chevrolet and Asiana Airlines in the period from 1999-2002. Minority Television Project paid the fine, but filed suit in District Court for reimbursement of the fine and declaratory relief. After its arguments were rejected by the District Court, Minority Television Project brought this appeal.

The Court of Appeals focused on whether the statutory prohibitions on paid advertising in Section 399B are consistent with the U.S. Constitution. It concluded that the statute contains content-related restrictions that must be reviewed under the standard of “intermediate scrutiny,” which provides that the government must show that the statute “promotes a substantial governmental interest” and “does not burden substantially more speech than necessary to further that interest.”

The Court found that the prohibition on broadcasting paid commercial advertising on behalf of for-profit entities, the primary focus of Minority Television Project’s appeal, was narrowly tailored and promotes the substantial governmental goal of preventing the commercialization of educational television. As a result, the fine imposed on Minority Television Project was upheld. However, the Court went on to address the prohibition on carriage of paid candidate and paid issue advertising by noncommercial stations. It found no legitimate governmental goal underlying that prohibition. The Court reviewed the Congressional record developed when the prohibition on political and issue advertising was adopted, and failed to find any evidence to support the provision. It therefore held that aspect of the law to be unconstitutional.

The decision leaves open many important questions as to how to implement it. For example, the questions of whether or how the lowest unit charge provision of Section 315 of the Communications Act will apply to noncommercial stations are not addressed. Similarly, the Decision does not consider whether federal candidates will be entitled to
“reasonable access” rights on noncommercial stations, permitting federal candidates to buy advertising on noncommercial stations that do not want to accept political advertising. While the reasonable access provision of the Communications Act appears to exempt noncommercial educational stations from that requirement, it is a content-related law, and therefore raises questions as to whether the disparate treatment of commercial and noncommercial stations for this purpose is constitutional. Other practical questions, such as the application of equal opportunities rights, political file obligations, and the like will also have to be resolved if this decision is implemented. More broadly, if the decision stands, it could have a fundamental impact on the nature and funding of noncommercial broadcasting.

The Ninth Circuit’s decision only applies to states located within the jurisdiction of that Court (Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington). The FCC and the Justice Department may seek review by the entire Ninth Circuit, sitting en banc, or seek review by the U.S. Supreme Court. As that drama plays out during an active political season, a lot of noncommercial stations will be scratching their heads trying to figure out what they can, can’t, and must do in light of the decision. Conversely, a lot of commercial stations aren’t going to be happy if they find that their political advertising revenues are being diverted to noncommercial stations. One thing is certain–if upheld, the implications of this decision for both noncommercial and commercial stations will be far reaching.

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Late last month I wrote about a strange occurrence at a number of TV stations that were visited by FCC inspectors demanding that the station make a copy of its entire public inspection file in 24-48 hours and provide that copy to the FCC.

I commented at the time that this highly unusual event was more likely connected to the FCC’s pending proceeding to move the public inspection file online than to any enforcement action, noting that “while this would seem bizarre any place outside of Washington (well, it’s bizarre here too, but you get used to that after a while), the FCC has been on the receiving end of numerous comments and declarations from broadcasters noting how large the public inspection file has become, and how burdensome and time-consuming it would be to require stations to scan the entire contents of it for the sake of posting it online.” It therefore seemed likely that the FCC was not so much interested in the substance of each station’s public file as in determining the sheer size of those files. Regardless, stations with the misfortune of being on the receiving end of these requests had to absorb the overtime and copying costs involved to comply.

Since that time, the FCC has scheduled a vote at its April 27 meeting to require that the public file, including the political file portion of it, be posted online. The timing of the planned vote is not a good sign for broadcasters, as it is a long-standing FCC tradition to schedule votes on orders that are favorable to broadcasters so that they can be released just before the NAB Show, ensuring that FCC commissioners speaking at the NAB Show will receive a warm reception. Conversely, FCC orders that broadcasters are not going to be happy about tend to be delayed until after the NAB Show concludes. With the FCC’s scheduled vote coming the week after the NAB Show, it should surprise no one that the FCC appears ready to adopt an order requiring that public files (including the political file) be moved online.

On the good news side, the FCC appears to be dropping its proposals to require that certain inter-station agreements and sponsorship identification lists be added to the file, either because broadcasters’ complaints about those proposals were heard, or because the FCC saw them as unnecessary judicial baggage in an order that it would like to see implemented quickly.

Returning, however, to the mystery of why the FCC was demanding copies of stations’ public files, the last document placed in the FCC’s record in the online public file proceeding this past Friday (just before the holiday weekend) is illuminating. It is a one-page “Submission for the Record” from the Media Bureau noting that “[t]he Commission requested a copy of the public file from all broadcast stations in the Baltimore DMA in March of 2012, received the documents either on paper or electronically, and subsequently reviewed each file, counting the total number of pages in the following categories….” The Submission then notes the total number of pages in each file (with the award for the largest file going to WJZ-TV, at 8,222 pages), and breaks out the number of pages in the categories of Political File, letters/emails from the public, documents currently available online at the FCC, and documents the FCC found extraneous to the file. This certainly appears to confirm that the FCC’s goal in demanding that stations rapidly provide a copy of their entire public file was merely to determine the quantity, and not the quality, of those files. By placing that information in the public record, the FCC can now rely on it in its decision to implement an online public file requirement (although how it supports that result is still unclear).

While one can question the burden placed on individual stations merely to determine the number of pages in a public inspection file (which is information that is already in the record, having been submitted in numerous broadcasters’ comments), once that information has been gathered, it is fair for the FCC to make use of it by placing it in the record. What is curious, however, is the effort the FCC appears to have expended to do so as quietly as possible. In addition to it being dropped into the record right before the holiday weekend, the Submission itself is an unusual document. It is not on letterhead, it is not dated, and it is not signed. If it were not for the fact that the FCC’s filing system indicates it was submitted by the Media Bureau, you might well wonder where it came from. There may, however, be a reason for this.

When the FCC moved its public comment system online, the FCC and communications lawyers quickly found that the number of one-page submissions from the public stating a position but providing no supporting rationale exploded exponentially. The result was that it became difficult to locate the more substantive comments filed in a proceeding, as they were lost among hundreds or thousands of short “me too” submissions. To the FCC’s eternal credit, it modified its comment search filter so that you can exclude “Brief Comments” from your search, allowing you to focus on the more substantial comments filed. Parties actively following a proceeding therefore tend to use this option and exclude “Brief Comments” when checking the record.

By eliminating all extraneous information, the FCC was able to keep its Submission down to one page in length, and as it turns out, the system’s definition of a Brief Comment is one that is one page long, meaning that those using the search filter will not see it. That may well be nothing more than a coincidence, but it would at least explain the unusually brief and cryptic nature of the FCC’s Submission. But if that is the case, we have just traded one mystery for another–having gone to such lengths to gather this information, why is the FCC being so shy about having found it?

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The clock is ticking away the minutes until December 13, the effective date of the FCC’s new Commercial Advertisement Loudness Mitigation Act (CALM Act) rules. TV broadcasters and multichannel video programming distributors (MVPDs) attending the upcoming NAB Show in Las Vegas will be looking for the equipment necessary to meet the CALM Act requirements, and they will have plenty to see and do. According to the NAB’s agenda for the Vegas Show, there will be seminars led by equipment manufacturers discussing the CALM Act and dozens of vendors and manufacturers on hand to showcase their CALM Act monitoring, processing, and verification equipment at the Las Vegas Convention Center during the event.

The reason CALM Act compliance and equipment are likely to be “big in Vegas” this year is because, as you may recall, last December the FCC adopted rules for the implementation of the CALM Act which require TV stations and MVPDs to keep the volume of commercials at the same level as the accompanying programming. The FCC’s new rules incorporate the Advanced Television Systems Committee’s (ATSC) Recommended Practice (RP), which essentially allows broadcast stations and MVPDs to comply with the rules by meeting the requirements of the ATSC protocol (known as the A/85 RP). Stations and MVPDs must be in compliance with the A/85 RP and the FCC’s rules by December 13, 2012.

The CALM Act arises from decades of complaints to the FCC and Congress regarding excessively loud commercials. In fact, according to the FCC’s Notice of Proposed Rulemaking in the CALM Act proceeding, loud commercials “have been a leading source of complaints to the Commission since the FCC Consumer Call Center began reporting the top consumer complaints in 2002.” The subsequent rules adopted by the FCC are therefore designed to limit the volume of commercials transmitted to consumers and apply to advertisements locally inserted by television stations and MVPDs as well as to advertisements embedded in programs from third-party suppliers.

For locally inserted commercials, TV stations and MVPDs will be required to demonstrate that they have installed the necessary equipment to ensure compliance. The FCC will assume that a broadcast station or MVPD is in compliance if it has installed, uses, and maintains equipment that complies with the A/85 RP. For advertisements already embedded in programming received from third parties, networks and other program suppliers must certify that their programming is in compliance with the CALM Act.

The FCC’s rules establish a “safe harbor” for embedded advertisements received from suppliers. To use the safe harbor, TV stations and MVPDs are allowed to rely on certifications of compliance from their program supplier which certify that the programming is A/85 RP-compliant. For programming that has not been certified, “large” TV stations (i.e., those stations with more than $14 million in annual revenue) and “very large” MVPDs (i.e., those with over 10 million subscribers) may still transmit the third-party programming, but will be required to perform annual “spot checks” of 100 percent of the third-party programming they transmit. “Large” MVPDs (i.e., those with at least 400,000 subscribers nationally) will need to annually spot check 50 percent (chosen at random) of the noncertified channels carried by any system operated by the MVPD. The spot check requirements will phase out after two years. Small stations and cable systems do not need to conduct any spot checks to be in the safe harbor.
While many broadcasters and MVPDs won’t be at the NAB Show to attend “loudness legislation” seminars or to acquire the hardware and software tools needed to comply with the FCC’s CALM Act rules, all TV broadcasters and MVPDs need to make sure that they are familiar with the rules and understand their CALM Act obligations. Even though the CALM Act has been passed by Congress and is being implemented by the FCC, there is little doubt that the FCC will continue to hear complaints from consumers regarding loud commercials for the foreseeable future. The difference is that the FCC now has an enforcement mechanism to address those complaints.

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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:

  • A discussion of a number of forfeitures issued by the FCC fining individuals up to $25,000 for operating unlicensed radio stations.

FCC Sends Warning to Unlicensed Radio Operators

The FCC has recently been taking an active stance against unlicensed radio operations, as further evidenced by four recently issued penalties for violations of the Communications Act. Radio stations operating without a license should take this as a warning of future enforcement actions against such illegal operations.

In the first two instances involving the same individual in San Jose, California, the Enforcement Bureau issued two separate Notices of Apparent Liability for Forfeiture (“NAL”) for $25,000 each to the operator for unlicensed broadcasting on various FM band frequencies and for a failure to allow inspection of an unlicensed broadcast station. After several months, the operator failed to respond to either of the NALs. As a result, the Enforcement Bureau issued the two $25,000 Forfeiture Orders against the individual.

In a second case, a Florida man was found apparently liable for $15,000 for operating an unlicensed FM radio transmitter in Miami. In September 2011, the Enforcement Bureau, following up on a complaint lodged by a national telecommunications carrier, discovered two antennas used for unlicensed operations on the frequency 88.7 MHz on the roof of a building. During the site visit, the building’s owner indicated that the equipment was located in a rooftop suite rented by a tenant. The Enforcement Bureau agents left a hand-delivered Notice of Unlicensed Operations (“NOUO”) with the building owner, who indicated that he would deliver the NOUO to the tenant. On three subsequent occasions, agents from the Miami Field Office determined that the antennas in question were the source of radio frequency transmissions in excess of the limits of Part 15 of the FCC’s rules, therefore requiring a license for operation.

When the agents were finally able to interview the tenant, he admitted to owning the transmitter and operating the station. He also stated that he had been employed as a disc jockey for a station previously authorized to operate on 88.7 and was “aware he needed a license to operate the station.”

The base forfeiture amount under the FCC’s rules for operation without an authorization is $10,000. In this case, the FCC concluded that a $5,000 upward adjustment of the NAL was warranted because the operator was aware that his operations were unlawful prior to and after receipt of the NOUO.

Though the FCC issued the multiple hefty penalties for unlicensed operations described above, the FCC was ultimately more sympathetic to a third unlicensed operator. In September 2011, the Enforcement Bureau’s San Juan Office issued a NAL against the operator of an unlicensed radio transmitter in Guayama, Puerto Rico for $15,000. In response to the NAL, the operator argued that he believed his broadcast operations were legal, and he submitted financial information to support the claim that he was unable to pay the full amount of the NAL. Though the FCC affirmed its claims that the operator willfully violated the FCC’s rules, the FCC nevertheless lowered the fine to $1,500 due to the operator’s inability to pay.

After issuing multiple fines against unlicensed operators this month, the FCC is likely to continue issuing similar penalties in the future. Radio operators should be mindful of the equipment used in their operations and the signal levels transmitted during operations to avoid facing similar consequences.