• House Oversight Hearing:  A House Energy and Commerce Subcommittee on Communications and Technology oversight hearing devoted significant attention to FCC enforcement.  Chairman Wheeler defended the FCC, stating in his written testimony that he was “proud of our Enforcement Bureau’s work to put U.S. consumers first.”  He continued:   “[T]he Bureau’s job is to hold companies accountable for their behavior and ensure they are following Commission rules.  That’s not overly aggressive; that’s basic consumer protection.”  Commissioner Pai stated in his written testimony that “the FCC’s enforcement process has gone off the rails.  Instead of dispensing justice by applying the law to the facts, the Commission has focused on issuing headline-grabbing fines regardless of the legality of its actions.”  The Chairman and Commissioners Rosenworcel and Clyburn said they would give the Enforcement Bureau an “A,” while Commissioner Pai said “not passing” and Commissioner O’Rielly said “D-.”

 

•Commissioner Pai Speech:  In a speech detailing his concerns that FCC enforcement is too focused on headlines, has the wrong priorities, and lacks accountability, Commissioner Pai suggested that the Commission should: (1) require Commission votes on Consent Decrees with payment amounts that would exceed the Enforcement Bureau’s delegated authority if a Notice of Apparent Liability for Forfeiture (“NAL”) had been issued instead; (2) require Forfeiture Orders to be issued within one year of an NAL; and (3) bring more internal and external transparency to the enforcement process.   

 

•GAO Audit:  The Chairman of the House Energy and Commerce Committee and the Chairman and Co-Chairman of the Communications and Technology Subcommittee requested that the Government Accountability Office conduct a “comprehensive look” at the management of the Enforcement Bureau.   The letter particularly noted the reduction in Telephone Consumer Protection Act citations, the reduction in pirate radio enforcement, and the planned closing of several field offices. 

 

•Senate Letter:  Several Republican members of the Senate Commerce Committee wrote a letter to Chairman Wheeler expressing concern that the Enforcement Bureau “is exceeding its authority by undertaking ‘fishing expeditions’ rather than investigating specific violations based upon tangible evidence of misconduct” and stating that “it appears that the EB is more concerned with issuing fines and grabbing headlines than it is with ensuring compliant behavior with existing FCC rules.”  The Senators requested information on a number of topics relating to enforcement processes and activities.

 

 

• Following up on NALs released in 2011 and 2012, the Commission, in a series of 3-2 votes, imposed forfeitures of $5 million each against six companies for deceptively marketing calling cards to consumers in violation of the Communications Act’s requirement that practices “for and in connection” with common carrier services be just and reasonable.  Citing a 2001 NAL that the Commission later settled through a Consent Decree, the Commission stated that, under section 201(b), “advertising associated with telecommunications services must provide clear and conspicuous disclosures on how to calculate the cost of a call and in the absence of clear and conspicuous disclosure regarding the nature and components of the rate structure, a carrier’s marketing materials would certainly be misleading to consumers….”  It found that all of the carriers’ marketing violated this standard.  

  

o Commissioner Pai’s dissent stated that the Commission’s investigation was “inadequate and incomplete,” and raised concerns about compliance with the one-year statute of limitations for an NAL and the lack of a “coherent explanation” of the amount of the forfeitures.  Commissioner O’Rielly argued in his dissent that the Commission lacks authority under section 201(b) to regulate misleading marketing practices of carriers, questioned some of the details of the forfeiture orders, and expressed concern about application of these cases in other contexts, including potentially against broadband edge providers.

 

• The Commission released a $1.44 million Forfeiture Order against a non-facilities based interexchange carrier for 14 instances of slamming ($560,000) and related misrepresentations during marketing ($880,000), the full amount proposed in the 2012 NAL.  Commissioner Pai agreed with the decision to impose a forfeiture for misrepresentation to consumers under section 201(b) of the Act, but dissented from the slamming forfeiture, arguing that the company complied with the slamming rules, or if it didn’t, the nature of the violation didn’t justify the amount of the forfeiture. Commissioner O’Rielly dissented from the entire decision.  In addition to finding no violation of the slamming rules, he stated that it is inappropriate to add on a separate, larger penalty for misrepresentation in violation of section 201(b). 

 

 

• By a 3-2 vote, the Commission issued a $718,000 NAL against a large electrical contracting company that provides telecom and Internet access/Wi-Fi at a convention center for using deauthentication to block consumers’ attempts to access the Internet through personal mobile hotspots.  The NAL alleged that the company violated section 333 of the Communications Act, which provides that “no person shall willfully or maliciously interfere with or cause interference to any radio communications of any station licensed or authorized by or under this Act.” 

 

o In their dissents, Commissioners Pai and O’Rielly argued that section 333 doesn’t prohibit the behavior here and that, in any event, the company lacked notice that its conduct was unlawful.  Commissioner Pai also used his dissent to criticize FCC enforcement more broadly.

 

o While the Enforcement Bureau had entered into two consent decrees reflecting the view that Wi-Fi devices regulated under Part 15 of the Commission’s rules are “stations” for purpose of section 333 and that Wi-Fi deauthentication constitutes unlawful interference in certain circumstances, this is the first time that the Commission itself has so decided.   It is unclear at this point what regulatory consequences may flow from (1) classifying Wi-Fi and other Part 15 devices as “stations” for purposes of section 333 and potentially other provisions of the Act and (2) deciding that in certain circumstances it is unlawful to interfere with Part 15 devices notwithstanding Part 15 rules that provide that Part 15 devices must accept interference.

 

• The Enforcement Bureau released a $25,000 NAL against a major hotel company for failing to respond fully to Bureau inquiries regarding Wi-Fi deauthentication.  The Bureau also ordered the company to produce the previously-sought information.

 

 

• The Enforcement Bureau entered into a Consent Decree with a major cable company resolving an investigation into a breach of the company’s electronic data systems.  The company agreed to pay a $595,000 civil penalty and to develop and implement a Compliance Plan to supplement its existing policies and procedures.  The Consent Decree did not include an admission of liability.  

 

o The News Release indicated that this Bureau Consent Decree is the FCC’s first privacy and data security enforcement action involving a cable operator.  The Commission had previously said that the cable privacy provision of the Communications Act is “enforced by the courts, and not by the Commission.” 

 

o Federal Trade Commissioner Ohlhausen criticized the Consent Decree in a speech.  She expressed concern that, based on the facts as reflected in the Order and Consent Decree, the FCC appeared to be taking a “strict liability” approach to data security enforcement that differs from the FTC’s “reasonable security” approach.  She also expressed concern that the FCC’s approach “will actually harm consumers,” because, if “ an enforcement action imposes costs disproportionate to the actual consumer harm, that enforcement action makes consumers worse off if prices rise or innovation slows.”  Finally, she raised concerns about the FCC’s regulation of Internet service provider data security, concluding that “there is little evidence that consumers will be better off if one portion of the internet ecosystem operates under a different set of rules from the rest.  If there are two cops on the beat, their rulebooks – both as written and enforced – should be consistent.”

 

 

 

• The Enforcement Bureau entered into a Consent Decree with the New York City Department of Education (the largest recipient of E-rate funds) regarding whether the Department violated E-rate competitive bidding rules.  The underlying issues led to the conviction of a City consultant for fraud in connection with the Department’s receipt of money from the Universal Service Fund (“USF”).  The Consent Decree indicated that in 2014 the Bureau and the Department had entered into an “Interim Compliance Plan.”  As part of the Consent Decree, the Department agreed to, among other things: (1) make a $3 million “settlement payment” to the U.S. Treasury; (2) with limited exceptions, withdraw USF funding requests for 2011-2013, which had previously been frozen; (3) withdraw claims to any further E-rate funding for services it purchased from 2002-2010; and (4) implement an extensive Final Compliance Plan.  The Final Compliance Plan provided that if the compliance officer and independent compliance examiner positions established under the Interim Compliance Plan become vacant, the Department must obtain Commission approval for their replacements, and also provides for appointment of an independent compliance monitor subject to Enforcement Bureau approval.  The Final Compliance Plan also stated that the Department has not admitted any non-compliance.  

 

• Following up on an NAL for the same amount, the Commission released an $11.9 million Forfeiture Order against a Telecommunications Relay Service (“TRS”) provider for failing to submit accurate data to the TRS Administrator and to use a reasonable process to verify registration information of TRS users.  The Commission reiterated its view that the filing of inaccurate information is a continuing violation until the filing is corrected and that the statute of limitations for inaccurate, uncorrected filings is thus effectively indefinite.  The Commission did not address court precedent taking a narrower view of what constitutes a continuing violation.

 

• The Enforcement Bureau entered into a Consent Decree settling a four-year-old NAL regarding USF payment and related issues.  The company admitted violations, agreed to pay a civil penalty of $450,000 (less than half of the NAL amount), and agreed to a Compliance Plan.  The Consent Decree indicated that the key basis for the substantial reduction was that application of a new formula in the Commission’s recent USF Forfeiture Policy Statement resulted in a significantly lower base forfeiture amount.  The Consent Decree noted that the settlement had no impact on petitions for reconsideration and stay of that policy statement filed earlier in the year by CTIA, NCTA, US Telecom, and Comptel. 

 

• The Commission released a Public Notice reminding universal service high-cost support recipients that support must be used for its intended purpose and encouraging state commissions to look carefully at information provided to them in that connection and report any areas of concern to the Commission for further investigation and potential enforcement action.  The Public Notice could signal more aggressive FCC enforcement in this area.

 

 

• The Enforcement Bureau entered into a Consent Decree with a cellular carrier that failed to register approximately 118 towers and properly to light three of them.  The carrier admitted violations, agreed to pay a civil penalty of $620,500, and agreed to a Compliance Plan.  The company discovered the violations through an audit it conducted after purchasing another carrier, and it reported the violations (as well as some violations of the environmental processing rules) to the Commission.

 

• The Enforcement Bureau entered into a Consent Decree settling a $234,000 NAL against a tower owner for antenna lighting and registration violations.  In light of the company’s “demonstrated financial hardship,” the Consent Decree provided for a payment of only $3,000.  However, the company will be required to pay the remaining amount of the NAL if the Commission finds future violations of the antenna rules in the next three years or if the Commission finds that the company materially misstated its financial condition.  The company admitted liability.  The Consent Decree included a requirement that the company implement a Compliance Plan, but, unlike most cases, did not delineate any requirements regarding the Compliance Plan.

 

 

• The Media Bureau entered into a Consent Decree with a broadcaster settling issues regarding unauthorized transfers of control, violations of the multiple ownership rules, and violations of the public files.  The licensee admitted violations, agreed to make a $62,500 voluntary contribution to the U.S. Treasury, and agreed to a Compliance Plan. 

 

• The Media Bureau entered into a Consent Decree settling issues regarding an unauthorized transfer of control that occurred when, through a Time Brokerage Agreement, the station licensee “improperly delegated core licensee financial responsibilities by allowing an affiliated corporate entity . . . to make direct payments of certain Station obligations and expenses, including a debt owed to a third party, its site lease, and the Station’s telephone line.”  The two licensees involved stipulated to violations and agreed to collectively pay a civil penalty of $8,000.

 

 

• FTC/FCC MOU:  The FCC and FCC staff issued a Consumer Protection Memorandum of Understanding outlining coordination and cooperation principles and procedures.  Contrary to prior statements by the FCC, the MOU indicated FCC staff’s agreement with the FTC’s view that the common carrier exemption to the FTC’s jurisdiction under Section 5 of the Federal Trade Commission Act is activity-based rather than status-based.  The MOU also appears to take the unprecedented position that the FCC can assert jurisdiction under section 201(b) of the Communications Act for unjust and unreasonable practices by non-common carriers “for and in connection with” common carrier service provided by a common carrier.

 

• FTC Action Against Wireless Carrier:  The FTC entered into a settlement with a nationwide wireless carrier in which the carrier agreed to pay $2.95 million in civil penalties to settle charges that it failed to give proper notice to consumers who were placed in a program for customers with lower credit scores and charged an extra monthly fee.  The FTC acted under the Fair Credit Reporting Act, which applies to companies that allow customers to be billed for services after they are used, and the “Risk-Based Pricing Rule,” which requires companies to inform consumers whenever they are offered service on less favorable terms as a result of information from their credit reports or scores. 

 

• Unauthorized Operation:  An Enforcement Bureau Consent Decree settled a $294,400 NAL against a private land mobile radio licensee for unauthorized operation in connection with late-filed renewal applications as well as unauthorized transfers of control.  The licensee admitted violations, agreed to pay a $135,000 civil penalty (less than half of the NAL), and agreed to a Compliance Plan.

 

• Satellite Queue Transfer Rule:  An Enforcement Bureau Consent Decree settled a $112,500 NAL released in 2013 regarding a rule that prohibits the assignment of places in the satellite application processing queue.  The company agreed to a $12,000 civil penalty (less than 10 percent of the NAL), admitted a rule violation, and agreed to a Compliance Plan.

 

• Broadcast Public File:  The Media Bureau entered into a Consent Decree regarding public inspection file and unauthorized construction issues.  The licensee admitted violations, agreed to make a $30,000 voluntary contribution to the U.S. Treasury, and agreed to a Compliance Plan.

 

• Pirate Radio:  The Enforcement Bureau released NALs of $15,000 and $10,000 against pirate radio operators.  As in some other recent cases, one of the NALs referenced the fact that the Bureau had sent a Notice of Unauthorized Operation to a property owner, which had resulted in removal of the antenna from that building.  

 

• 911 Reliability:  Consistent with a 2014 NAL, the Enforcement Bureau released a $100,000 Forfeiture Order for violation of the rule requiring provision of 911 service against a small local exchange carrier that the Bureau found had knowingly routed 911 calls to an automated operator message that instructed 911 callers to “hang up and dial 911.”