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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:

  • Broadcaster Agrees to Pay $100,000 Fine for Filing Applications Under False Names
  • FCC Proposes $13,000 Fine for Late License Renewal Application and Unauthorized Operation
  • Failure to Register with the FCC Results in $100,000 Fine for Telecom Provider

Catch Me If You Can: Broadcaster Settles Long-Running Investigation into the Use of Pseudonyms in FCC Applications

The FCC entered into a Consent Decree with a radio broadcaster to resolve an investigation into whether the broadcaster filed numerous applications using fake names and refused to cooperate with FCC investigations.

Section 1.17 of the FCC’s Rules requires that written and oral statements to the FCC be truthful and accurate. Section 1.65 of the Rules requires applicants to amend applications as needed for continuing accuracy and completeness. In addition, Section 73.1015 requires applicants to respond to FCC inquiries regarding broadcast applications.

The Consent Decree explains that, since 1982, there has been a “cloud of unanswered questions” about whether applications filed by the broadcaster were accurate. In 1993, the FCC sent the broadcaster a letter inquiring into: (1) his role in certain entities; (2) apparent misrepresentations he made to the FCC; (3) his prior failure to respond to certain site availability allegations; and (4) the operation of several FM translators. The broadcaster never responded to the letter, and since that time, the broadcaster’s real name has not appeared in any FCC application as a principal of any applicant. Instead, the broadcaster used pseudonyms, as well as the names of his wife, mother, and grandmother.

In addition, the Consent Decree states that a 1997 complaint filed by another broadcaster was never answered or disclosed by the broadcaster. The complaint alleged that the broadcaster was the real party in interest behind a certain licensee, and that the broadcaster had violated several other FCC Rules.

Under the terms of the Consent Decree, the broadcaster admitted to being the real party in interest on numerous applications for which he had used pseudonyms, and admitted to several other violations of FCC Rules. The broadcaster agreed to (1) pay a $100,000 fine; (2) the cancellation of licenses for an AM station and two low power FM stations; and (3) the dismissal of petitions for reconsideration involving two dismissed FM applications. In return, the FCC agreed to grant the license renewal applications for another AM station and seven FM translator stations, each with a shortened license term of one year so that the FCC can closely monitor the licensee’s operation of the stations in the future.

FCC Proposes $13,000 Fine for Unauthorized Operation Caused by Late License Renewal Application

The FCC issued a Notice of Apparent Liability for Forfeiture (“NAL”) against an Ohio FM licensee for failing to timely file its license renewal application and for continuing to operate the station after its license had expired. The FCC proposed a fine for the violations and simultaneously issued a Memorandum Opinion and Order regarding the licensee’s license renewal application.

Section 301 of the Communications Act provides that “[n]o person shall use or operate any apparatus for the transmission of energy or communications or signals by radio . . . except under and in accordance with this [Act] and with a license in that behalf granted under the provisions of [the Act].” Section 73.3539(a) of the FCC’s Rules requires that broadcast licensees file applications to renew their licenses “not later than the first day of the fourth full calendar month prior to the expiration date of the license sought to be renewed.”

In this case, the station’s license expired on October 1, 2004, rendering the license renewal application due by June 1, 2004. The licensee, however, did not file the renewal application until July 30, 2004. The FCC dismissed the application due to the licensee’s “red light” status for owing a debt to the FCC. Red light status prevents the FCC from providing any government benefit to a licensee, including license renewal. The licensee did not seek reconsideration of the dismissal and, as a result, the station’s license expired on October 1, 2004.

In January 2011, the FCC staff was told that the station was off the air. On January 12, 2011, the FCC wrote a letter to the former licensee inquiring into the operating status of the station, and requested a response within 30 days. The station did not respond until March 25, 2011, and stated that it was on-air as of the date of the FCC letter. However, the station explained that it had in fact suspended operations on February 23, 2011, after its transmitter was damaged during the theft of its copper feed lines.

In May 2011, the licensee filed a request for Special Temporary Authority (“STA”) to resume operations, stating that its transmitter repair was almost complete. The licensee also noted that it was unaware its 2004 license renewal application had been dismissed, and that it would file another license renewal application “once it [could].” The licensee submitted a license renewal application in July 2011, and the FCC subsequently granted the station’s STA request through March 2012.

In February 2012, the licensee filed another STA request to operate with reduced facilities, stating that the damage to the transmitter was far worse than previously thought, and would cost more than the value of the station to repair. The licensee also stated that the landlord of its transmitter site had declined to renew the station’s lease, but it had found an alternative, temporary location from which it could operate the station. The FCC granted the STA, and set an expiration date of August 2012. The licensee continued to operate under the STA facilities even after the August 2012 expiration date. The licensee did not file a request to extend the STA until February 2013. That request was granted as a new STA in March 2013, and the licensee has operated under a series of extensions to that STA ever since.

Based on the facts of this case, the FCC proposed the full base fine amount of $3,000 for failure to file a required form, and the full base fine amount of $10,000 for unauthorized operations. The FCC explained that while it typically assesses fines of $7,000 for unauthorized operations, the length of the first unauthorized period in this case—over six years—followed by a second unauthorized period, warranted a $10,000 fine.

The FCC stated that it would grant the station’s license renewal application upon the conclusion of the forfeiture proceeding “if there are no issues other than the apparent violation that would preclude grant of the applications.”

FCC Fines Prepaid Calling Card Company $100,000 for Failing to Register as Service Provider

The FCC fined a New Jersey provider of international prepaid calling card services $100,000 for failing to register as a telecommunications service provider and adhere to all registration requirements.

Section 64.1195(a) of the FCC’s Rules requires that companies providing interstate telecommunications services file an FCC Form 499-A, also known as the Annual Telecommunications Reporting Worksheet, with the Universal Service Administrative Company prior to providing service. The Form 499-A instructions state that “[w]ith very limited exceptions, all intrastate, interstate, and international providers of telecommunications in the United States must file this Worksheet.”

According to the FCC, compliance with the registration requirement is critical to determining a provider’s payment obligations to the Universal Service Fund, Telecommunications Relay Service Fund, and numbering support mechanisms. The FCC further stated that registration is a way to recover costs, and is a central repository for important details about providers.

Calling it a “dereliction of its responsibilities,” the FCC determined that the provider willfully operated for years without filing a Form 499-A, giving the provider an unfair economic advantage over its competitors. The FCC stated that the misconduct started when the provider began providing service in 1997 and continues until the provider files its initial Form 499-A. The FCC proposed a $100,000 fine for the provider’s transgressions.

In addition to the fine, the FCC instructed the provider to immediately register as a telecommunications provider, and to come into full compliance with all of its federal regulatory obligations. The FCC also warned that the fine was “a very limited action that does not reflect the full extent of [the service provider’s] potential forfeiture liability and that does not in any way preclude the Commission from imposing additional forfeitures … in the future.”

A PDF version of this article can be found at FCC Enforcement Monitor November 2016.

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What a difference a day makes.

As previously discussed in CommLawCenter, the Department of Labor announced in May a change to its overtime regulations.  That change would more than double the minimum salary needed to qualify an employee as exempt from overtime pay, and was scheduled to go into effect on December 1, 2016.  Because the change in the overtime-exempt minimum salary was so dramatic (moving from  $23,660 to $47,476 annually) the business community has been seeking to block it or at least mitigate its impact.  As part of that effort, Senator Lamar Alexander of Tennessee recently introduced S.3464 in the Senate, which would phase in the higher salary threshold over several years, and offer some relief to nonprofits, colleges and universities, certain health care providers, and state and local governments.

As we noted a few weeks ago, however, the likelihood of that legislation becoming law before December 1 is slim, particularly given that President Obama is likely to veto any bill that threatens to undercut the goal of using more overtime pay to help rebuild the middle class.  Taking a different tack, the State of Nevada and twenty other states brought suit against the Department of Labor’s new regulations in the U.S. District Court for the Eastern District of Texas.  A similar suit brought in that court by the Plano Chamber of Congress and over fifty other business organizations was recently consolidated with the 21 States’ suit.

In response to a motion filed by the 21 States, the District Court today granted a nationwide preliminary injunction, preventing the new salary threshold (and scheduled increases to it in future years) from going into effect until the court has had an opportunity to rule on the legality of the rule change.  In doing so, the court made clear that the Department of Labor will have a hard time defending it.  Under the Fair Labor Standards Act (FLSA), Congress exempted from overtime pay those employees who are employed in a “bona fide executive, administrative, or professional capacity”, and authorized the Department of Labor to adopt, and from time to time update, regulations defining which employees fall into those categories.

In granting the preliminary injunction, the court found that the Department of Labor had exceeded that authorization by including a salary component in addition to the “duties” test embedded in the statute:

After reading the plain meanings together with the statute, it is clear Congress intended the EAP exemption to apply to employees doing actual executive, administrative, and professional duties. In other words, Congress defined the EAP exemption with regard to duties, which does not include a minimum salary level.

***

[The FLSA] authorizes the Department to define and delimit these classifications because an employee’s duties can change over time….  While this explicit delegation would give the Department significant leeway to establish the types of duties that might qualify an employee for the exemption, nothing in the EAP exemption indicates that Congress intended the Department to define and delimit with respect to a minimum salary level. Thus, the Department’s delegation is limited by the plain meaning of the statute and Congress’s intent. Directly in conflict with Congress’s intent, the Final Rule states that “[w]hite collar employees subject to the salary level test earning less than $913 per week will not qualify for the EAP exemption, and therefore will be eligible for overtime, irrespective of their job duties and responsibilities.”  With the Final Rule, the Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test.

Further buttressing his preliminary findings, the judge added that:

The Department has admitted that it cannot create an evaluation “based on salary alone.”  But this significant increase to the salary level creates essentially a de facto salary-only test. For instance, the Department estimates 4.2 million workers currently ineligible for overtime, and who fall below the minimum salary level, will automatically become eligible under the Final Rule without a change to their duties.  Congress did not intend salary to categorically exclude an employee with EAP duties from the exemption.  [Cites omitted for clarity.]

It seems likely the Department of Labor will seek an immediate appeal of the preliminary injunction for two reasons.  First, of course, is the fact that the federal government hoped that once the rule change went into effect on December 1, it would be politically impossible to reduce the salary threshold without incurring the ire of millions of employees now receiving overtime pay.  Second, and a more recent development, is that if the preliminary injunction holds, and the court case continues beyond January 20 (as it will), a Department of Labor within the Trump administration might no longer be interested in defending the rule change, effectively letting the preliminary injunction become permanent.

On top of that, if the final result of the court case is a ruling that any increase over the existing $23,660 annual salary requirement is impermissible without a statutory change, then the drastic increase in the salary threshold attempted by the Department of Labor will have backfired.  Any effort to adopt a more moderate increase in the salary threshold would run headlong into the court’s decision here.  And the law of unintended consequences strikes again.

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November 2016

This Broadcast Station Advisory is directed to radio and television stations in Alabama, Colorado, Connecticut, Georgia, Maine, Massachusetts, Minnesota, Montana, New Hampshire, North Dakota, Rhode Island, South Dakota, and Vermont, and highlights the upcoming deadlines for compliance with the FCC’s EEO Rule.

December 1, 2016 is the deadline for broadcast stations licensed to communities in Alabama, Colorado, Connecticut, Georgia, Maine, Massachusetts, Minnesota, Montana, New Hampshire, North Dakota, Rhode Island, South Dakota, and Vermont to place their Annual EEO Public File Report in their public inspection file and post the report on their station website. In addition, certain of these stations, as detailed below, must electronically file their EEO Mid-term Report on FCC Form 397 by December 1, 2016.

Under the FCC’s EEO Rule, all radio and television station employment units (“SEUs”), regardless of staff size, must afford equal opportunity to all qualified persons and practice nondiscrimination in employment.

In addition, those SEUs with five or more full-time employees (“Nonexempt SEUs”) must also comply with the FCC’s three-prong outreach requirements. Specifically, Nonexempt SEUs must (i) broadly and inclusively disseminate information about every full-time job opening, except in exigent circumstances, (ii) send notifications of full-time job vacancies to referral organizations that have requested such notification, and (iii) earn a certain minimum number of EEO credits, based on participation in various non-vacancy-specific outreach initiatives (“Menu Options”) suggested by the FCC, during each of the two-year segments (four segments total) that comprise a station’s eight-year license term. These Menu Option initiatives include, for example, sponsoring job fairs, participating in job fairs, and having an internship program.

Nonexempt SEUs must prepare and place their Annual EEO Public File Report in the public inspection files and on the websites of all stations comprising the SEU (if they have a website) by the anniversary date of the filing deadline for that station’s license renewal application. The Annual EEO Public File Report summarizes the SEU’s EEO activities during the previous 12 months, and the licensee must maintain adequate records to document those activities. Nonexempt SEUs must submit to the FCC the two most recent Annual EEO Public File Reports with their license renewal applications.

In addition, all TV station SEUs with five or more full-time employees and all radio station SEUs with more than ten full-time employees must submit to the FCC the two most recent Annual EEO Public File Reports at the midpoint of their eight-year license term along with FCC Form 397 – the Broadcast Mid-Term EEO Report.

Exempt SEUs – those with fewer than five full-time employees – do not have to prepare or file Annual or Mid-Term EEO Reports.

For a detailed description of the EEO rule and practical assistance in preparing a compliance plan, broadcasters should consult The FCC’s Equal Employment Opportunity Rules and Policies – A Guide for Broadcasters published by Pillsbury’s Communications Practice Group. This publication is available at: https://www.pillsburylaw.com/publications/broadcasters-guide-to-fcc-equal-employment-opportunity-rules-policies.

Deadline for the Annual EEO Public File Report for Nonexempt Radio and Television SEUs

Consistent with the above, December 1, 2016 is the date by which Nonexempt SEUs of radio and television stations licensed to communities in the states identified above, including Class A television stations, must (i) place their Annual EEO Public File Report in the public inspection files of all stations comprising the SEU, and (ii) post the Report on the websites, if any, of those stations. LPTV stations are also subject to the broadcast EEO rules, even though LPTV stations are not required to maintain a public inspection file. Instead, these stations must maintain a “station records” file containing the station’s authorization and other official documents and must make it available to an FCC inspector upon request. Therefore, if an LPTV station has five or more full-time employees, or is part of a Nonexempt SEU, it must prepare an Annual EEO Public File Report and place it in the station records file.

These Reports will cover the period from December 1, 2015 through November 30, 2016. However, Nonexempt SEUs may “cut off” the reporting period up to ten days before November 30, so long as they begin the next annual reporting period on the day after the cut-off day used in the immediately preceding Report. For example, if the Nonexempt SEU uses the period December 1, 2015 through November 20, 2016 for this year’s report (cutting it off up to ten days prior to November 30, 2016), then next year, the Nonexempt SEU must use a period beginning November 21, 2016 for its next report. Continue reading →

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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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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.

Continue reading →

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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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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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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.