Enforcement, Investigations & Audits

As summer begins to wind down, the FCC will begin considering whether to revise or eliminate decade-old regulations, including certain rules related to the Universal Service Fund (“USF”), equipment authorization procedures, and disabilities access. The FCC kicked off its review with a Public Notice under the Regulatory Flexibility Act, which requires federal agencies to reexamine regulations within 10 years of their adoption to assess the continued need for the rules, the rules’ complexity, and whether the rules overlap or conflict with other federal regulations. The purpose of the review is to ensure that older, unnecessary rules do not remain on the books, lowering the compliance burden for smaller businesses. Although the FCC rarely eliminates a rule outright as part of this review, the comments received can help the agency identify improvements for future rulemakings or flag potential compliance issues.

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The FCC recently reached a $5.25 million settlement with AT&T to resolve investigations into two 911 service outages that resulted in thousands of failed emergency calls. This edition of Full Spectrum’s series on FCC enforcement discusses the unexpected settlement and its implications on carrier network practices and the FCC’s enforcement priorities. Partner Steve Augustino and

As we enter the dog days of summer, the FCC continues to turn up the heat on equipment marketing enforcement. But while million dollar fines for marketing noncompliant devices capture the spotlight, the FCC also quietly issued a number of equipment marketing actions focused on a single type of device: LED signs. In just the last three months, the FCC has settled over ten investigations involving the marketing of LED signs used in digital billboards for commercial and industrial applications without the required authorizations, labeling, or user manual disclosures. Each action involved an entity that either manufactured or sold (or both) LED signs. The agency’s recent actions should be a shot across the bow to any retailer of LED signs to ensure that their devices are properly tested and authorized prior to sale. Otherwise, these companies may face significant fines and warehouses of unmarketable devices.

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On June 28, 2018, the FCC’s Enforcement Bureau announced a Consent Decree with AT&T Mobility, LLC (“AT&T”) to resolve investigations into two 911 service outages in 2017. The outages lasted for more than five hours and resulted in approximately 15,000 failed calls. The settlement was somewhat unexpected because more than a year had passed since the FCC issued its report on the outages, which did not indicate that enforcement action was coming. The penalty levied against AT&T underscores that improving the nation’s 911 capabilities continues to be a top priority for the FCC and that outages will be met with significant fines.

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On June 5, 2018, the Federal Communications Commission’s (“FCC’s” or the “Commission’s”) Enforcement Bureau (“Bureau”) issued a Notice of Apparent Liability against a manufacturer and retailer for marketing non-compliant RF devices, a dozen models of which were capable of operating in restricted spectrum bands.  The FCC proposes to assess a total fine of $2,861,128.00 against ABC Fulfillment Services LLC and Indubitably, Inc. (collectively, “HobbyKing”) for equipment authorization rule violations involving 65 models of recreational audio/video transmitters (“AV Transmitters”) used with model airplanes drones.  But more than $2.2 million of that resulted from the fact that twelve models apparently operates in restricted radio bands and three at higher powers than authorized in other bands. The restricted bands are those in which unlicensed transmitters are not allowed to operate because of potential interference to sensitive radio communications.  In the case of HobbyKing’s  the Commission found that its AV transmitters operated in bands where important government and public safety operations, such as those of the Federal Aviation Administration managing commercial and passenger flight traffic, doppler weather radar, flight testing, and other activities the FCC has determined are particularly worthy of heightened interference protection take place.  In other words, the moral is that marketing devices that do not have proper equipment authorization is bad, but doing so when the devices operate within restricted bands is quite simply “egregious,” as the NAL put it.

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Simultaneously with issuing a nearly $3,000,000 fine to HobbyKing for marketing unauthorized (and in some cases not capable of being authorized) audio/video (“AV”) transmitters for use with drone mounted cameras, the Federal Communications Commission’s (“FCC’s” or “Commission’s”) Enforcement Bureau issued an Advisory Tuesday reminding retailer manufacturers, and operators of their obligations:  no marketing or operation of unauthorized equipment except under very limited exceptions.

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On May 30, 2018, the Commission issued a Notice of Apparent Liability (“NAL”) proposing a total penalty of $590,380 against a company for marketing noncompliant radio frequency (“RF”) devices in apparent violation of the agency’s equipment marketing rules.  The allegations in the NAL provide a textbook example of how a company that becomes aware of a violation relating to products subject to the Commission equipment authorization procedures should not respond.  The NAL was issued against Bear Down Brands, LLC, dba Pure Enrichment (“Pure Enrichment”), a Delaware company, in connection with fourteen models of the company’s consumer-oriented electronic personal hygiene and wellness devices it markets and imports, all of which were Part 15 or Part 18 unintentional radiators.  The NAL alleges that the devices were noncompliant because they lacked proper equipment authorization, failed to make required user manual disclosures, and/or did not have compliant FCC labels.

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In the largest forfeiture ever imposed by the agency, the Federal Communications Commission (FCC) issued a $120 million fine against Adrian Abramovich and the companies he controlled for placing over 96 million “spoofed” robocalls as part of a campaign to sell third-party vacation packages.  The case has received significant attention as an example of the growing issue of spoofed robocalls, with lawmakers recently grilling Mr. Abramovich about his operations.  The item took the lead spot at the agency’s May meeting and is emblematic of the Pai FCC’s continued focus on illegal robocalls as a top enforcement priority.  While questions remain regarding the FCC’s ability to collect the unprecedented fine, there is no question that the FCC and Congress intend to take a hard look at robocalling issues this year, with significant reforms already teed up for consideration.

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In 2017, the Government Accountability Office (GAO) released a report focusing on the Lifeline program. Tucked away in that report was a significant discussion of Universal Service Fund (USF) contributor audits that has received little attention. In a recent episode of Kelley Drye’s Full Spectrum podcast, Partner Steve Augustino and Special Counsel Denise Smith discussed

The Rural Health Care Program (“RHCP”) is sure to face increased scrutiny in the wake of a $18.7 million proposed fine issued by the Federal Communications Commission (“FCC”) at its January meeting against a telecommunications reseller for allegedly defrauding the program.  The FCC claims that DataConnex, one of the top five recipients of RHCP funding, violated the program’s competitive bidding rules and submitted falsified documents to increase the support it received.  The FCC recently ramped up enforcement involving the RHCP and proposed significant reforms last month aimed at improving oversight and deterring fraud.  The FCC’s actions potentially foreshadow additional restrictions on the use of RHCP consultants and the amount of available funding.


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