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.
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.
Echoing concerns raised by other parts of the federal government over the past several years, the FCC, at its open meeting on April 17, 2018, adopted a Notice of Proposed Rulemaking (“NPRM”) to consider a rule which would prohibit Universal Service Fund (“USF”) support from being used “to purchase or obtain any equipment or services produced or provided by a company posing a national security threat to the integrity of communications networks or the communications supply chain.” The NPRM seeks comment on issues such as how such a rule can be implemented and enforced, what types of equipment and services should be covered, and how manufacturers covered by the rule are to be identified and made known to USF recipients. Although this is only the start of the proceeding, the FCC’s action could have a broad-reaching impact for some communications equipment manufacturers and create potential liabilities for entities participating in any of the federal USF programs. All companies purchasing equipment from certain countries – principally China and Russia – may be affected, even if they don’t receive federal USF money.
On October 24, the FCC Laboratory published a number of new and updated documents through its Knowledge Database (“KDB”) that liberalize further the equipment authorization process for a number of product types, including Software Defined Radios (“SDRs”). That same day, the Lab released numerous other KDB publications providing guidance regarding both its RF exposure test procedures applicable to cellphones, smartphones, laptops, tablets, and other categories of devices, and the Commission’s “Permit But Ask” (“PBA”) procedures, which enable telecommunications certification bodies (“TCBs”) to test equipment for compliance with RF emissions limits even though the Commission has issued only partial guidance or where a certain amount of FCC oversight is still considered necessary. Together, these changes are designed to allow a broader range of consumer devices subject to equipment authorization requirements prior to their being offered for sale, imported, or otherwise marketed to reach the marketplace quickly by allowing importers, manufacturers, and service providers to get them certificated more rapidly than in the past through the TCB process.
This wave of KDB publications, which are effective immediately subject to certain conditions in some cases, comes only one week after the FCC announced that a draft Notice of Proposed Rulemaking (“NPRM”) is on circulation among the Commissioners that would consider (a) codification of and refinements to the FCC’s permit-but-ask (“PBA”) procedure, (b) further articulating the post-grant obligations of TCBs, (c) requiring labs that manufacturers and importers use to test radiofrequency equipment to be accredited, and (d) officially recognizing the latest industry testing standards. The text of the NPRM is not yet available and it is uncertain when the Commission will adopt the NPRM, which it is expected to do.
One of the central issues in any spectrum sharing environment is the ability to enforce compliance with the regulations governing operation of the devices in the band, particularly the operation of secondary devices sharing spectrum on a non-interference basis with primary services. This is equally the case when new categories of unlicensed users gain access to share a band with incumbent operators. Currently, the exploration of what spectrum bands the federal government may be able to make available for access by private sector broadband providers and users, whether as a result of spectrum sharing or band clearing, has assumed center stage among policy makers. Last week’s meeting of the Commerce Spectrum Management Advisory Committee (CSMAC) underscored the importance of rule enforcement when maximizing access to spectrum and the need for trust and confidence among users in a spectrum sharing environment.
At the end of September, the Federal Communications Commission (FCC) took several coordinated steps to enhance the better operation of a spectrum sharing framework adopted several years ago. Terminal Doppler Weather Radars (TDWRs) maintained by the Federal Aviation Administration (FAA) operate at airports in the 5600-5650 MHz band to obtain a variety of data used in real time by aviation operations, such as gust fronts, wind shear, and microbursts. The band is also used by wireless ISPs operating IEEE-802.11a devices on an unlicensed, non-interference basis as part of the Unlicensed National Information Infrastructure (U-NII) framework.
On September 27, the Commission issued an enforcement advisory (Advisory) directed to not just wireless ISPs operating U-NII equipment in the 5600-5650 MHz band, but to manufacturers, retailers, and marketers of U-NII devices. The multi-faceted target audience serves as a reminder that FCC enforcement actions to preserve the viability of sharing frameworks, especially when they involve unlicensed operations, will not be limited to the persons or entities operating the radio devices.
On July 7, in a case of first impression, the US Tax Court (Broz v. Commissioner) reviewed the class lives (depreciation periods) applicable to wireless cellular assets to establish the permissible depreciation deductions of the taxpayer. In general, the court determined that the taxpayer should have followed the rules the Internal Revenue Service applied to determine the class lives for telephone communications equipment. The decision will affect depreciation deductions for tax years prior to 2011.