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November 2016

The staggered deadlines for noncommercial radio and television stations to file Biennial Ownership Reports remain in effect and are tied to each station’s respective license renewal filing deadline.

Noncommercial radio stations licensed to communities in Colorado, Minnesota, Montana, North Dakota, and South Dakota and noncommercial television stations licensed to communities in Alabama, Connecticut, Georgia, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont must electronically file their Biennial Ownership Reports by December 1, 2016. Licensees must file using FCC Form 323-E and must also place the form as filed in their station’s public inspection file.

On January 8, 2016, the Commission adopted changes to the ownership report forms and a single national filing deadline for all noncommercial radio and television broadcast stations like the one that the FCC previously established for all commercial radio and television stations. However, until the Office of Management and Budget approves the new forms, noncommercial radio and television stations should continue to file their biennial ownership reports every two years by the anniversary date of the station’s license renewal application filing deadline.

A PDF of this article can be found at Biennial Ownership Reports are due by December 1, 2016 for Noncommercial Radio Stations in Colorado, Minnesota, Montana, North Dakota, and South Dakota and Noncommercial Television Stations in Alabama, Connecticut, Georgia, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont

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November 2016

All commercial and noncommercial educational digital television broadcast station licensees and permittees must file FCC Form 2100 – Schedule G by December 1, 2016.

The FCC requires all digital television stations, including all commercial and noncommercial educational full power television stations, digital low power television stations, digital translator television stations, and digital Class A television stations, to submit FCC Form 2100 – Schedule G (formerly known as the FCC Form 317) each year. The report details whether stations provided ancillary or supplemental services at any time during the twelve-month period ending on the preceding September 30. It is important to note that the Form 2100 – Schedule G must be submitted regardless of whether stations offered such services. Form 2100 – Schedule G must be filed electronically in the Commission’s Licensing and Management System (“LMS”), absent a waiver, and is due on December 1, 2016.

Ancillary or supplementary services are all services provided on the portion of a DTV station’s digital spectrum that is not necessary to provide the required single free, over-the-air signal to viewers. Any video broadcast service that is provided with no direct charge to viewers is exempt. According to the FCC, examples of services that are considered ancillary or supplementary include, but are not limited to, “computer software distribution, data transmissions, teletext, interactive materials, aural messages, paging services, audio signals, subscription video, and the like.”

If a DTV station provided ancillary or supplementary services during the 12-month time period ending on September 30, 2016, it must pay the FCC 5% of the gross revenues derived from the provision of those services. This payment can be forwarded to the FCC’s lockbox at the U.S. Bank in St. Louis, Missouri and must be accompanied by FCC Form 159, the Remittance Advice. Alternatively, the fee can be paid electronically using a credit card on the FCC’s website. The fee amount must also be submitted by the December 1, 2016 due date.

A PDF of this article can be found at Annual DTV Ancillary/Supplementary Services Report Due for Commercial and Noncommercial Digital Television Stations

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As he rushes to accomplish his list of objectives before the change in administrations, FCC Chairman Tom Wheeler was able to cross one off that list last week. For the first time, the FCC imposed privacy requirements on providers of broadband internet access services (BIAS). The much-anticipated Order requires BIAS providers to notify customers about the types of information the BIAS providers collect about their customers; how and for what purposes the BIAS provider uses and shares this information; and in some circumstances requires customer consent for the use and sharing of this information. This order was an outgrowth of the FCC’s 2015 Open Internet Order, which reclassified BIAS as a telecommunications service and wrested privacy jurisdiction from the Federal Trade Commission.

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But there are treatments available. When the Department of Labor announced in May that it would more than double the minimum salary needed to qualify an employee as exempt from overtime pay on December 1, 2016, you could hear the collective gasp from businesses nationwide. That sound echoed even more loudly in broadcast studios across the country, as the “round the clock/breaking news” nature of running a broadcast station places a high premium on employees that aren’t locked into a 9 to 5 existence. By increasing the minimum salary needed for an employee to qualify as overtime-exempt (from $23,660 annually to $47,476 annually), the rule change may price many broadcast employees out of their jobs.

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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:

Headlines:

  • FCC Revokes Company’s Authorizations for Failure to Pay Regulatory Fees
  • Failure to Disclose Felonies in License Applications Yields $175,000 Fine
  • Cable Operator Settles Investigation into Unlawful Billing for $2.3 Million

Pay Up or Shut Down: Failure to Pay Regulatory Fees Leads to License Revocation 

In a rare move, the FCC revoked the domestic and international 214 authorizations of a Florida telecommunications company to provide facilities-based and international telecommunications services.

Section 9 of the Communications Act directs the FCC “to assess and collect regulatory fees” to recover costs of certain FCC regulatory activities. When a required payment is not made or is late, the FCC will assess a monetary penalty. Further, Section 9(c)(3) of the Act and Section 1.1164(f) of the FCC’s Rules permits the FCC to revoke authorizations for failure to make timely regulatory fee payments. Under Section 1.1917 of the Rules, a non-tax debt owed to the FCC that is 120 days delinquent is transferred to the Secretary of the Treasury for collection.

In December 2008, the company was authorized to provide facilities-based and resold international telecommunications services. In October 2014, the FCC sent the company a Demand Letter notifying the company of delinquent regulatory fees for fiscal year 2014 and demanding payment. The company failed to respond to the Letter and, as required by Section 1.1917 of the Rules, the FCC transferred the FY 2014 debt to the Secretary of the Treasury. As of July 1, 2016, the company had unpaid regulatory fees of $711.40 for FY 2014, and $3,025.34 for FY 2012. According to the FCC, the company does not appear to have any current customers.

In July 2016, the FCC issued an Order to Pay or Show Cause, instructing the company to demonstrate within 60 days that it paid the regulatory fees and penalties in full, or show why the payment was inapplicable or should be waived or deferred. The Order also explained that failure to comply could result in revocation of the company’s international and domestic authorizations. The company neither responded to the Order nor made any payments.

Citing the company’s failure to either pay its regulatory fees or show cause to remove, waive, or defer the fees, the FCC revoked the company’s international and domestic authorizations. The Revocation Order explicitly stated that such revocation did not relieve the company of its obligation to pay the delinquent fees or “any other financial obligation that has or may become due resulting from the authorizations held until revocation.”

Companies Settle Investigation Into Subsidiaries’ Failure to Disclose Felony Convictions in Wireless Applications With $175,000 Fine

Two engineering corporations, on behalf of themselves and their subsidiaries, entered into a Consent Decree with the FCC to end an investigation into the subsidiaries’ failure to disclose two corporate felony convictions in several wireless license applications. Continue reading →

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The NAB has negotiated a waiver agreement with Sony Music Entertainment that will once again enable radio stations to stream Sony-licensed music unhindered by certain restrictions established by the statutory music streaming license. Stations wishing to take advantage of the Sony waiver need to opt in on the NAB website, and (depending on the amount of streaming they do) may need to place a button on their websites or apps to enable listeners to click through to purchase Sony song downloads.  A previous waiver agreement with Sony, as extended, expired on July 31, 2016, leaving stations without a waiver for the past few months.  NAB’s new agreement with Sony will last until December 31, 2020.

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With great anticipation, the Stage 2 Forward Auction commenced at 10am this morning.  It officially ended at 12:14pm, when the FCC announced:

Bidding in the forward auction has concluded for Stage 2 without meeting the final stage rule and without meeting the conditions to trigger an extended round. The incentive auction will continue with Stage 3 at a lower clearing target.

As I wrote less than a week ago, there was never much hope that the Stage 2 Forward Auction would bring in the $57B or so needed to cover the FCC’s bidding commitments and associated costs in the Stage 2 Reverse Auction.  The Stage 1 Forward Auction concluded at a paltry $23B, and a sudden jump in bidding to nearly $60B in Stage 2 was definitely going to be a bid too far.  However, as we discussed last week, spectrum auction groupies are basically split into two camps: those who think that wireless bidders were holding back in Stage 1 to conceal their resources and bidding strategies, and those who thought Stage 1 represented the high water mark, with the total amount bid going down as the amount of spectrum being cleared dropped with each stage.  Based on this morning’s results, the latter group is growing.

Not that we should be surprised.  With the FCC starting the bidding where the bids left off in Stage 1, the main reason for bidding in Stage 2 was to correct for any refinements of bidding strategy since Stage 1.  Based on Stage 2 concluding after only one round of bidding, it appears that the wireless bidders had already refined their strategies before Stage 1 commenced, and didn’t see any reason to change their approach now.

The rapid conclusion of the Stage 2 Forward Auction does appear to have surprised the FCC a bit.  The FCC announced this morning that:

The FCC expects to release a public notice next week announcing details about the next stage, including the clearing target for Stage 3, and the time and date at which bidding in Stage 3 of the reverse auction will begin.

While this language is quite similar to the language that concluded Stage 1 (except for the addition of “expects to”), it certainly contrasts with recent statements from the FCC about its intent to accelerate the auction process, including its statement (later modified) that the Stage 2 Forward Auction would commence “on the next business day after the close of bidding in Stage 2 of the reverse auction.”

So the big question now is whether the FCC will continue to slowly reduce the clearing target (126 MHz in Stage 1, 114 MHz in Stage 2, and now 108 MHz in Stage 3?) as it previously indicated it was bound to do, or whether it can make a more significant reduction that brings the forward and reverse auction dollar figures much closer together.  While some have argued that there is no reason for the FCC to expedite the process, and that remaining on the slow and meticulous path of very incremental clearing targets converts the greatest amount of broadcast spectrum to wireless use, bidder fatigue is definitely beginning to set in.  More importantly, the sooner the auction is concluded, the sooner spectrum is freed for its newfound purpose, so the delay is not harmless.

In addition, the continued applicability of the rule on prohibited communications during the auction has put much of the TV broadcast industry into a cryogenic state, particularly with regard to station sales.  Dragging the process out any longer than necessary causes real economic harm, and the impact only grows as station owners recognize there will be no windfall and want to move quickly to sell stations they otherwise would have sold several years ago.

With forward auctions now measured in hours, it is clear that it is the reverse auctions where significant time is being lost in concluding the Incentive Auction.  The Stage 1 Reverse Auction lasted 28 days, and the Stage 2 Reverse Auction lasted 30 days.  Unlike the Forward Auction, which went from 14 days to half a day, the Stage 2 Reverse Auction still consumed significant time, even with a reduced spectrum clearing target.  More rapidly reducing the spectrum clearing target is the most efficient way of moving new spectrum to wireless use, commencing the broadcast repack, and putting broadcasters back on the road to normalcy.

After six years of the National Broadband Plan and its key component, the Spectrum Incentive Auction, it’s getting hard for broadcasters to remember what normal feels like.

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The FCC has announced the conclusion of the Stage 2 Reverse Auction, moving the spotlight from the broadcasters willing to relinquish 114 MHz of their spectrum to the bidders in the forward auction hoping to buy it.  Unfortunately for those wishing to see a speedy conclusion to the Spectrum Incentive Auction, the FCC set the cumulative buying price for 114 MHz of spectrum at $54,586,032,836, plus the cost of the $1.75B repacking fund and the cost of conducting the auction itself.

Given that forward auction bidders in Stage 1 stopped bidding at $23 billion, it seems unlikely that they will show up for Stage 2 so rejuvenated as to bid two and a half times that amount now.  If they don’t, then the auction will move to Stage 3 and likely into 2017 as well.  Still, $55B is significantly less than the $88B the FCC was targeting in the Stage 1 Forward Auction, confirming the FCC’s earlier assertion that the additional broadcast spectrum needed to reach the original clearing target of 126 MHz is quite expensive.  While the likelihood of Stage 2 concluding the auction appears small, a 40% drop in the clearing cost, while clearing over 90% of the spectrum originally targeted by the FCC, definitely illuminates the path to where supply will meet demand.  Unfortunately for many broadcasters, that point on the path is not looking like one that will bring stations anywhere close to the prices initially presented to entice them into the auction in the first place.

So while the Stage 2 Forward Auction might be anticlimactic for broadcasters looking for a highly profitable end to what seems a very long trek from the announcement of the National Broadband Plan over six and a half years ago, it will still be informative.  In particular, it may settle the debate between those who believe the Stage 1 Forward Auction set the high water mark for how much the wireless industry would bring to the table for the absolute maximum amount of spectrum, and those who believe wireless bidders were holding back in Stage 1 to conceal their motivations and bidding strategies, nearly certain the auction would proceed to further stages.  If the Stage 2 Forward Auction brings in less than Stage 1’s $23.1B, that trend will not be promising for a quick or profitable end to the auction for those broadcasters still willing to sell spectrum.

Of course, that could be because the wireless bidders are still confident more auction stages are coming, and will continue to hold their ultimate bids in reserve for those later stages.  So it goes with history’s most complicated auction, where the more you know, the more you are left to fathom what it means.

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The era of newsgathering drones is upon us.  Since new Federal Aviation Administration rules allowing limited commercial operation of drones (also known as unmanned aircraft systems or UAS) weighing 55 lbs. or less took effect a little over a month ago, media organizations have moved quickly to utilize the technology.

Sinclair Broadcast Group, which operates or provides services to 173 television stations across the country, recently announced it was going “all in” on newsgathering drones.  It plans to have 80 trained and certified UAS pilots working in 40 markets by the end of 2017, and already has launched UAS teams for newsgathering in Washington, DC; Baltimore, MD; Green Bay, WI; Columbus, OH; Little Rock, AR; and Tulsa, OK.  Providing an example of the benefits drones can bring to newsgathering, Sinclair released footage taken over the Cedar River in Cedar Rapids, IA, showing an aerial perspective of a newly constructed flood wall as the city braced for flooding.

Sinclair’s announcement comes on the heels of CNN’s launch of CNN Aerial Imagery and Reporting (CNN AIR), a unit with two full-time drone operators dedicated to integrating aerial imagery and reporting across CNN networks.

Broadcasters and other organizations with newsgathering operations are increasingly taking advantage of the FAA’s new “Part 107” rules, which took effect on August 29, 2016.  The small drones authorized under the rules offer broadcasters and other news organizations a cost-effective way to gather aerial footage, especially as compared to the cost of using helicopters.  While the Part 107 rules have paved the way for widespread use of newsgathering drones, broadcasters and other potential UAS operators should keep in mind that some requirements must be met before UAS operations can commence.

To protect the public, the Part 107 rules come with a number of operational limitations on UAS operation.  However, if a party can demonstrate the ability to operate safely while deviating from a specific limitation, the FAA may grant a waiver of one or more of the specific limitations found in its rules.  With regard to newsgathering operations, the most relevant limitations (and therefore good candidates for waiver requests) include the prohibitions on flights above people not participating in the UAS operation, flights beyond visual line of sight, flights above 400 feet (or more than 400 feet above a building or other structure), and nighttime flights.  The FAA has added a portal to its website for waiver applications, and has recorded a standard-issue government YouTube video on the subject.  For an example of a waiver that has been granted, take a look at CNN’s waiver for flights over non-participants.

In addition, the Part 107 rules require those operating small drones to either hold a “remote pilot certificate” or be under the supervision of a person who holds such a certificate.  To qualify for a certificate, the applicant must be at least 16 years old, be vetted by the Transportation Security Administration, and pass an aeronautical knowledge test at an FAA-approved testing center.  The FAA offers a free online preparation course for the knowledge test.  In addition to pilot certification, Part 107 requires that all drones used for commercial purposes be marked and registered.  Drones can be registered through the FAA’s website.

Pillsbury launched one of the nation’s first UAS legal teams long before commercial operations were possible, and being a part of these developments has been fascinating.  Because of the myriad issues UAS operations involve, Pillsbury’s UAS practice consists of an interdisciplinary team of lawyers from our Aviation, Communications, Privacy, and Transportation practices.  Those contemplating entering the world of UAS operations for newsgathering or other purposes will find the UAS team’s blog and advisories an excellent place to start.

It’s time to stop reading about drones in the news, and start reading news brought to us by drones.

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While some debate endlessly which content best serves the public interest, there is universal agreement that the content broadcasters air during emergencies is vital to their communities.  Whether it comes in the form of tracking a developing storm so the public can prepare, or disseminating evacuation orders and alerts, broadcasters continue to serve as the bedrock of the nation’s warning system in emergencies.  As Hurricane Matthew approaches the East Coast, TV and radio stations are hurrying to make sure they are in position to warn and inform their audiences of new developments.

Curiously, the growth of alternative information sources has only served to emphasize that in a true emergency, there is no substitute for local broadcasts.  While the last decade has brought progress in making communications infrastructure more resilient in emergencies, cable and Internet service is often disrupted in disasters, and cell phone networks, where they don’t fail outright, become overwhelmed by increased usage during a disaster.

That is why nearly a dozen states have laws on the books granting broadcast personnel First Responder/First Informer status.  These laws allow broadcasters access to crisis areas, both for reporting on a disaster and maintaining station operations throughout.  This includes granting priority to broadcasters for scarce fuel supplies (and emergency access for vehicles transporting fuel to stations).  That fuel keeps stations’ emergency generators, and the transmitters they power, running during emergencies.

Unlike communications infrastructure that requires wired connections over a broad area, or numerous short-range towers and repeaters, broadcast stations just need an upright tower or tall building for their antenna, fuel for their generator, and access for their employees to be able to reach the station’s facilities.  That resilience in extreme conditions is, however, only part of the reason local broadcast stations are critical in emergencies.  Also important is the fact that broadcast receivers are ubiquitous and easy to power.  Some estimates place the number of radios in the U.S. at nearly 600,000,000, almost double the population of the U.S.  Many of those radios are powered by replaceable batteries.  As a result, they don’t need access to the power grid for recharging like smartphones do.  A box full of batteries will bring radio service for the duration of most any emergency.

Speaking of smartphones, in part because of the importance of accessing local broadcast signals during emergencies, the big 4 wireless providers have now activated the FM chip in at least some of their smartphones.  While there are a lot of radios out there, people aren’t generally walking around with a transistor radio in their hand at all times.  Being able to access emergency broadcast information via the smartphone in your pocket ensures that even when the cell phone network has ceased to function, you still have immediate access to important local information.  In fact, even where the cell phone system is still operating and not overwhelmed by traffic, there are two good reasons for utilizing a phone’s FM receiving capability.  First, it consumes a fraction of the battery power that streaming data does, ensuring the longest battery life possible—an important factor if you don’t know where your next charge is coming from.  Second, and taking a broader perspective, utilizing the FM capability is helpful to the community at large, as the more individuals that are obtaining information by radio, the less likely the wireless network will become overwhelmed, ensuring it is available for coordination of relief efforts and other vital functions.

Because televisions have far greater power needs than radios, the typical pattern in a disaster is for people to rely on local TV to track and prepare for an impending disaster, and then switch to radio when the power goes out.  However, with people scurrying about in their cars to buy storm supplies, the portability of radio (and its universal availability in cars), makes it a big part of storm preparations too.  Conversely, those lucky enough to have power after a storm (whether by generator or good fortune) can follow the storm recovery on their TVs.  The promise of ATSC 3.0 to make broadcast television signals more accessible to mobile devices can only increase that availability in adverse conditions.

And that’s where life gets even more complicated for television broadcasters.  It’s tough enough to continue operations during a hurricane, with employees sleeping in the studio while wondering if their house is still standing.  TV stations are also required to ensure that all of their viewers, regardless of hearing or vision challenges, are able to receive the emergency information being relayed.  As a result, emergency information presented on-air aurally must also be made available visually, and emergency information presented visually must also be made available aurally.  In past disasters, the FCC has proposed fines of up to $24,000 ($8,000 per “incident”) to TV stations that effectively said “run for shelter” but didn’t air a crawl or other graphic at that time conveying the same information.

Last year, the FCC created additional obligations for relaying emergency information to all segments of the public.  The “Audible Crawl Rule”, as it has come to be known, requires TV stations to aurally present on a secondary audio stream (“SAS”) any emergency information that is provided visually in non-newscast programming. The station must insert an aural tone (both on the main video stream and the SAS) before transmitting emergency information on the SAS to differentiate that information from normal audio. This alerts the viewer to turn on the SAS and focus on the emergency content.  Think that sounds complicated?  It is, which is why stations have been working on automating the process as much as possible.

Preventing a person’s hearing or vision impairment from becoming the cause of their death or injury is certainly a worthy goal, but it isn’t hard to understand the frustration of a station employee that hasn’t slept in 24 hours trying to get emergency information out to viewers as quickly as possible, but needing to pause to ensure the appropriate graphics and SAS information is prepared and aired in order to avoid an FCC fine.  To help stations simplify that process when preparing for last year’s hurricane season, we drafted a detailed summary of the FCC’s emergency information accessibility rules titled Keep Calm and Broadcast On: A Guide for Television Stations on Airing Captions and Audible Crawls in an Emergency.  Stations whose communities will be affected by Hurricane Matthew should review it, both as a refresher on what they will need to do in the next few days, and on how best to do it.

While these rules add to a station’s challenges during an already challenging time, the FCC is doing its part as well.  Earlier today, the FCC released a Public Notice reminding broadcasters, among others, that:

The Federal Communications Commission (FCC) will be available to address emergency communications needs twenty-four hours a day throughout the weekend, especially relating to the effects that Hurricane Matthew may have on the Southeastern United States.

The FCC reminds emergency communications providers, including broadcasters, cable service providers, wireless and wireline service providers, satellite service providers, emergency response managers and first responders, and others needing assistance to initiate, resume, or maintain communications operations during the weekend, to contact the FCC Operations Center for assistance at 202-418-1122 or by e-mail at FCCOPCenter@fcc.gov.

Here’s hoping that the FCC’s phone doesn’t ring much in the coming days.