Enforcement Newsletter – April 6, 2015

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This edition summarizes notable new FCC-related enforcement matters during the first quarter of 2015.  Questions or comments may be addressed to David H. Solomon at  202-383-3369 or dsolomon@wbklaw.com.

 Open Internet Enforcement

  • Enforcement of the Commission’s new open Internet rules will be a high Enforcement Bureau priority.  The order indicates that the Commission will “proactively monitor compliance and take strong enforcement action against parties who violate the open Internet rules.”
  • The Commission retained its existing three-pronged enforcement regime of informal complaints, formal complaints, and FCC investigations.  Regarding investigations, the Commission said it “continuously monitors press reports and other public information, which may lead the Enforcement Bureau to initiate an investigation of potential open Internet violations.”
  • The Commission established an Ombudsperson within the Consumer and Governmental Affairs Bureau to “serve as a point of contact to provide assistance to individuals and organizations with questions or complaints regarding the open Internet rules to ensure that small and often underrepresented groups reach the appropriate bureaus and offices to address specific issues of concern.”  In addition, the Ombudsperson may prepare reports to the Commission regarding trends in open Internet complaints and market conditions.  The Ombudsperson also “may investigate and bring attention to open Internet concerns, and refer matters to the Enforcement Bureau for further investigation.”  
  • The Commission established a process for Enforcement Bureau issuance of advisory opinions at the request of Internet Service Providers (“ISPs”) regarding prospective practices.  In addition, the Commission delegated authority to the Enforcement Bureau to request a written opinion from an outside technical organization or standards-setting body to obtain objective technical advice in formal complaint cases.  The Commission also said the Enforcement Bureau will continue periodically to issue enforcement advisories regarding the open Internet rules, stating that these advisories will “not create new policies,” but rather will be “recitations and reminders of existing legal standards.”
  • In discussing the Commission’s range of enforcement options, the Commission mentioned in passing purported authority to issue refunds under section 503(b) of the Communications Act, a section that on its face provides the Commission authority only to issue monetary forfeitures payable to the United States Treasury.
  • In public statements, Enforcement Bureau Chief Travis LeBlanc has made clear that the Open Internet Order – with its reclassification of ISPs as common carriers – gives the FCC broad authority over ISPs’ privacy practices and that the FCC expects to be an active enforcer in that area.  At the same time, some Federal Trade Commission officials have expressed concern that the reclassification of ISPs as common carriers could affect FTC jurisdiction to police ISP practices.

 Broadband Disclosures

  • The FTC entered into a $40 million settlement with a major prepaid mobile carrier regarding charges that it deceived consumers with its references to “unlimited” data plans.  Specifically, the FTC alleged that the company emphasized unlimited data in its advertisements but drastically slowed or cut off consumers’ mobile data after they used more than certain fixed limits in a 30-day period.  This was the FTC’s fourth action against a common carrier in less than a year.

 Broadcast Indecency

  • The Commission issued a $325,000 indecency Notice of Apparent Liability for Forfeiture (“NAL”) regarding a television station news report about a former adult film star who had joined a local volunteer rescue squad.  The NAL indicates that five viewers complained to the FCC about a video image of a website displayed during the 6:00 p.m. news report which, according to the NAL, included a video clip that contained the “image of sexual activity involving manipulation of an erect penis.”  The clip aired for less than three seconds.  The station indicated that its personnel had not noticed the clip during the editing process, but the Commission nevertheless found the alleged violation willful because, in its view, the station acted with “reckless disregard” for the content of the broadcast.  In the associated news release, FCC Enforcement Bureau Chief Travis LeBlanc stated that the “action here sends a clear signal that there are severe consequences for TV stations that air sexually explicit images when children are likely to be watching.” 
  • This is the first indecency NAL issued by the Commission in seven years, although there have been a few indecency Consent Decrees.  The proposed $325,000 forfeiture is the statutory maximum and the highest amount ever proposed for a single allegedly indecent broadcast on a single station.  

911 Outage/Network Outage Reporting Rules

  • The Enforcement Bureau entered into a Consent Decree with a major carrier/911 service provider regarding a 911 outage.  The outage affected delivery of 62 wireless 911 calls to 13 Public Safety Answering Points (“PSAPs”) in an area with a population of approximately 750,000.  The Consent Decree referenced Section 4.9 of the Commission’s rules regarding notifications to PSAPs of network outages and Section 64.3002 of the Commission’s rules requiring carriers to deliver all 911 calls to a PSAP, a designated statewide answering default answering point, or an appropriate local emergency authority.  The carrier agreed to pay a $3.4 million fine, agreed to an extensive compliance plan, and admitted that the rules required timely notification of the outage to PSAPs and that it did not provide such timely notice.
  • The Enforcement Bureau issued a $100,000 Forfeiture Order against a small telephone company for failure to deliver 911 calls as required by Section 64.3002 of the Commission’s rules.  The carrier routed emergency 911 calls to an automated message that directed callers to “hang up and dial 911” to report an emergency.  The $100,000 penalty was the same proposed in an NAL last year.

Rural Call Completion

  • The Enforcement Bureau entered into a Consent Decree with a major carrier regarding rural call completion matters.  The company admitted to certain facts, but not to liability.  It agreed to implement a detailed compliance plan, pay a $2 million fine, and spend an additional $3 million on industry and company rural call completion solutions.  The Consent Decree provides further evidence of the Bureau’s continued interest in rural call completion enforcement.  Of particular note, the Consent Decree seemed to respond to the company’s alleged failure to investigate low call answer rates, even when, upon later investigation, those low answer rates did not appear to result from any action or omission by the company.  This suggests that parties may be subjected to enforcement in the rural call completion area even when they do not in fact cause call completion problems. 
  •  FCC Chairman Wheeler indicated in a speech that the Commission’s rural call completion enforcement actions are having an impact and the FCC will continue to be active in this area.

Consumer Protection

  • The Commission issued a $9 million NAL against an interexchange carrier for alleged slamming and cramming, and for submitting fabricated audio recordings as evidence to government regulatory officials in an effort to prove that consumers had authorized the company to switch their long distance providers.  It also issued a $5.9 million slamming NAL.
  • The Enforcement Bureau entered into Consent Decrees with seven long distance resellers for a total of $1.2 million regarding slamming and cramming violations.  The companies admitted violations and agreed to pay civil penalties ranging from $129,000 to $228,000 each.

USF

  • The Commission issued a $1.6 million NAL against a reseller for failing to make required payments to the Universal Service Fund and related matters. 
  • The Commission issued a Policy Statement adopting a new “treble damages methodology” for assessing forfeitures when telecommunications service providers fail to pay their required share of obligations to the Universal Service Fund, the Telecommunications Relay Service Fund, the cost recovery mechanisms for Local Number Portability and the North American Numbering Plan, and regulatory fees.  Specifically, the Policy Statement indicated that the violator’s “apparent base forfeiture liability will be three times the delinquent contributor’s debts” to the various programs.  A group of trade associations filed a petition for reconsideration claiming, among other things, that the Policy Statement was a binding substantive rule that the Commission improperly adopted without notice and comment. 

Unauthorized Operation

  •  The Commission issued a $640,000 NAL against a major wireless carrier for allegedly operating 34 common carrier fixed point-to-point microwave licenses at variance from the stations’ authorizations.  The licenses had been acquired from another carrier and the licensee had discovered the issues as part of an audit and had brought the matter to the Commission’s attention.  The Commission increased the base forfeiture amount of $128,000 by four times in light of what the Commission described as the egregiousness of the violations, their duration, prior similar violations, and the company’s ability to pay.  Commissioner Pai concurred and Commissioner O’Rielly concurred in part and dissented in part; both of them expressed concern about the lack of factual details in the NAL.  Commissioner O’Rielly stated that “[i]f the Commission is attempting to signal that it intends to be aggressive on enforcement actions, it also needs to be right and just.”

Other Notable Actions

  •  Time Brokerage Agreement:  The Media Bureau entered into a Consent Decree with two noncommercial educational broadcasting entities (a proposed assignor and assignee) regarding a time brokerage agreement in which the payments to the licensee exceeded operating costs.  The two entities agreed to jointly pay a $50,000 civil penalty, and stipulated that the arrangement violated the Commission’s rule regarding noncommercial educational time brokerage agreements and constituted an unauthorized transfer of control, and that they violated Section 1.17 of the Commission’s rules by submitting false certifications in the assignment application. 
  • Interference to Wi-Fi Hot Spots:  The Enforcement Bureau issued an Enforcement Advisory regarding a “disturbing trend” in which hotels and other commercial establishments block wireless consumers from using their own personal Wi-Fi hot spots on the commercial establishment’s premises.  In this regard, it referred to a recent Consent Decree involving Wi-Fi deauthentication.  The Bureau warned that it is unlawful under Section 333 of the Communications Act for a hotel, convention center, or other commercial establishment or the network operator providing services at such establishments to intentionally block or disrupt personal Wi-Fi hot spots on the premises.  The Enforcement Advisory states that the Bureau is “aggressively investigating and acting against such unlawful intentional interference.”  Chairman Wheeler issued a statement the same day indicating that this was a “priority area” for enforcement.
  • EAS Tones:  The Enforcement Bureau entered into a $20,000 Consent Decree with a radio station for transmitting Emergency Alert System tones during a comedy sketch.  The licensee admitted liability and agreed to pay a civil penalty.  In addition, the Commission issued Forfeiture Orders of $1.12 million and $280,000 against two cable programmers for the inclusion of EAS tones in a movie trailer, rejecting all of their arguments in response to the NAL in that matter.
  • Noncommercial Underwriting:  The Enforcement Bureau entered into a $16,000 Consent Decree with a low power FM licensee regarding the noncommercial underwriting restrictions against promoting the products, services, or businesses of financial contributors.  The licensee admitted liability and agreed to pay a civil penalty.  Among other things, the Consent Decree compliance plan included a requirement that the licensee educate prospective underwriters about the Commission’s restrictions on promotions in the context of noncommercial underwriting announcements.  The Bureau indicated that the payment amount would have been higher but for consideration of the licensee’s inability to pay.
  • Field Offices:  The Commission is considering a proposal to close several Enforcement Bureau Field Offices and to substantially reduce the Field Office staff.  This could result in decreased or, at a minimum, less efficient enforcement regarding interference issues.