Equipment Authorization

In February 2019, the FCC issued an Enforcement Advisory warning marketers of LED signs that their products must be authorized, properly labeled, and contain the required user disclosures before being marketed in the United States. The Enforcement Advisory followed a slew of enforcement actions in 2018 totaling hundreds of thousands of dollars in penalties against

After multiple enforcement actions totaling hundreds of thousands of dollars in penalties against importers and retailers of LED signs last year, it appears that the message has not been fully received. To the contrary, the FCC is back at it in enforcing its equipment marketing rules against importers and retailers of LED signs in 2019. In a recent Enforcement Advisory, the FCC again warned companies marketing noncompliant LED displays that they may be subject to costly investigations and significant monetary penalties. As we previously reported, these warnings should put all importers and retailers of LED signs – many of whom may not know FCC rules apply to them – on notice that their products should be authorized, properly labeled, and contain the required user disclosures before being marketed in the United States. The FCC often uses Enforcement Advisories to set the stage for future enforcement action and the agency appears poised to move forward with another wave of enforcement actions in the coming months. It is therefore critical that companies assess their equipment marketing compliance procedures now to avoid Commission enforcement later.

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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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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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On November 2, 2017, the FCC’s revised equipment authorization rules were published in the Federal Register and took effect immediately.  Our advisory details those rule revisions.  The Office of Management and Budget (“OMB”) had earlier determined that the new rules included no changes to the existing information collection requirements that required further OMB review before they could take effect.
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The Federal Communications Commission (“FCC” or “Commission”), at its July 13, 2017, Open Meeting updated its equipment authorization procedures and rules in a number of ways that will be of great interest to everyone in the supply chain for both licensed and unlicensed radio frequency (“RF”) equipment, including manufacturers, importers, wholesalers, distributors, and retailers.  The First Report and Order changes the regulatory landscape applicable to the approval, labeling, and other compliance matters for RF equipment in a variety of ways that will take place immediately upon publication of the First Report and Order in the Federal Register except that some will be delayed to the extent they implicate Office of Management and Budget, OMB, review of new or modified information collection requirements.

We examine the First Report and Order and the principal changes in more detail in the referenced advisory. 
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Wireless carriers are a major step closer to using unlicensed spectrum to ease network congestion and boost speeds following the FCC’s authorization of the first LTE-Unlicensed (“LTE-U”) devices on February 22, 2017.  LTE-U technology allows carriers to deliver mobile traffic over unlicensed spectrum in the 5 GHz band already occupied by Wi-Fi, Bluetooth, and other technologies.  The recipients of the equipment authorizations are Ericsson and Nokia.  The certifications by the FCC’s Office of Engineering and Technology (“OET”) mean that the devices in question satisfy the technical criteria of the FCC designed to prevent harmful interference to radio communications services.  Those rules stipulate that unlicensed devices must accept any harmful interference they receive from any source.  Unlicensed devices have been certified for decades.  The announcement of the certifications of the LTE-U devices represents an important milestone in the FCC’s recent focus on spectrum sharing and broadband deployment because these devices are specifically designed to support broadband and work in an integrated fashion with commercial mobile broadband providers’ networks.  In short, this is not just a pumped up version of Wi-Fi offload, which carriers have used for years to relieve congestion on mobile networks.  These devices mean that the hundreds of megahertz of 5 GHz spectrum that the cable and unlicensed communities fought for years to gain access to – the so-called Unlicensed National Information Infrastructure (“U-NII”) bands – will now be available for LTE technologies.

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Imported Radio Frequency (RF) devices must be compliant with the Federal Communications Commission’s (FCC or Commission) equipment authorization rules, but importers can look forward to some relief in their paperwork next year.  These entities will receive a 6-month and possibly longer break from filing FCC Form 740 (Form 740) documentation with Customs and Border Protection (CBP) or the FCC.  Today, the FCC published a Suspension Order in the Federal Register announcing it will temporarily waive the filing requirements associated with Form 740 on imported RF devices, effective July 1, 2016 through December 31, 2016. 
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