Enforcement Newsletter – June 3, 2013
This edition first provides an overview of FCC-related enforcement matters during Chairman Genachowski’s tenure and potential enforcement priorities under Acting Chairwoman Clyburn. It then summarizes notable FCC-related enforcement matters from January 1, 2013 through May 31, 2013. Questions or comments may be addressed to David H. Solomon at 202-383-3369 or firstname.lastname@example.org.
Enforcement During Chairman Genachowski’s Tenure
- While Chairman Genachowski focused largely on broadband and other policy initiatives, the Commission did take numerous significant enforcement actions during his tenure.
- Of particular note, the Commission actively engaged in consumer protection enforcement, including major enforcement actions on billing, slamming, robocalls, cramming, misleading marketing by prepaid calling card companies, do-not-call rules, and junk faxes.
- The Commission also took major enforcement actions regarding accessibility matters, including hearing aid compatibility (“HAC”) of wireless phones, over-collection from the Telecommunications Relay Service (“TRS”) fund, and television closed captioning.
- The Commission entered into merger-related Consent Decrees, and, for the first time, extended merger conditions as part of such an enforcement action.
- The Commission took enforcement action for the first time in the rural call completion area, and began stepping up enforcement regarding cellular jammers.
- In part because of pending court litigation, the Commission did not issue any forfeitures or proposed forfeitures involving broadcast indecency. The staff also initiated a proceeding to consider potential changes in the Commission’s indecency policy. The Commission did, however, continue to take enforcement action against broadcasters in numerous other areas – e.g., public inspection file, children’s television, sponsorship identification, tower lighting and painting, contests, noncommercial underwriting, and Emergency Alert System requirements. It also continued to take enforcement action against “pirate” radio broadcasters.
Potential Enforcement Priorities Under Acting Chairwoman Clyburn
- Acting Chairwoman Clyburn will likely continue or step up the Commission’s emphasis on consumer protection, accessibility, merger conditions, and rural call completion enforcement, as suggested by the following statements during her tenure as a Commissioner:
- Consumer Protection: “Consumer protection is at the core of the Commission’s public interest mission, and ensuring that consumers are treated fairly and reasonably is critically important to me.”
- Accessibility: Implementing accessibility legislation “has been one of the most meaningful and gratifying experiences of my life, and it is illustrative of what I always wanted my impact to be when I decided to become a public servant.”
- Merger Conditions: “I encourage people to speak out should they see the slightest bit of … any … type of questionable behavior from the soon-to-be-formed entity. My door will remain open and I will be perpetually available to field any and all future concerns in this regard…. I expect the parties to live up to the letter and spirit of their commitments. I, and the American people, will be watching.”
- Rural Call Completion: “Call completion failures stifle entrepreneurship and economic development in rural communities, and public safety is jeopardized when consumers cannot reliably complete a call, which can literally make a life or death difference…. In order to better protect consumers, the Commission must continue its efforts in this area, taking any and all actions that may be necessary to address this issue once and for all. I urge the staff to press forward on any other related investigations.”
The following identifies notable enforcement matters from January 1, 2013 through May 31, 2013, shortly after Chairman Genachowski’s departure on May 17, 2013.
- Deceptive Practices: The Commission issued a $7.6 million Notice of Apparent Liability for Forfeiture (“NAL”) against a non-facilities based interexchange carrier for deceptive marketing, slamming, cramming, and violation of the truth-in-billing rules.
- Robocalls: The Enforcement Bureau issued Citations against two providers of automatically dialed calls using prerecorded or artificial voice messages for making millions of robocalls to wireless phones without prior authorization from the recipient and without providing required identification information. The Citations required the companies to certify within 15 days that they had ceased making such robocalls in order to avoid monetary forfeitures in the millions of dollars.
- Junk Faxes: The Enforcement Bureau entered into a $50,000 Consent Decree regarding unsolicited faxes, which settled four NALs from 2008 totaling over $1.1 million.
- TRS: The Enforcement Bureau entered into three Consent Decrees regarding compliance with TRS rules and over-compensation from the TRS fund. In addition to reimbursing the fund, the companies agreed to make payments to the U.S. Treasury of $11.5 million, $11.25 million, and approximately $59,000.
- HAC: The Enforcement Bureau entered into a $65,000 Consent Decree with a wireless provider regarding compliance with the HAC rules and issued a $12,000 NAL against a manufacturer for failing to timely file its annual HAC report.
Rural Call Completion
- In the FCC’s first enforcement action ever relating to rural call completion, the Enforcement Bureau entered into a $975,000 Consent Decree with an interexchange carrier. In addition to the $975,000 payment to the U.S. Treasury, the IXC agreed, among other things, that it would: (1) complete long distance calls to incumbent local exchange carriers in rural areas at a rate within five percent of that in non-rural areas; (2) beginning in January 2014, report compliance with the five percent benchmark every quarter; and (3) pay an additional $1 million if it misses the five percent benchmark in any quarter.
- Lifeline/Linkup: The Enforcement Bureau entered into two Consent Decrees involving receipt of duplicative Lifeline/Linkup payments. In addition to reimbursement to the fund, the Consent Decrees involved payments to the U.S. Treasury of $440,000 and $160,000. The Bureau also issued Citations against approximately 250 individuals who received Lifeline service (subsidies for low-income consumers) from multiple carriers. It also ordered them to cease and desist from applying or receiving more than one Lifeline-supported phone service. To the extent the individuals continue to receive Lifeline Service from multiple carriers, they may be subject to monetary forfeitures.
Cell Phone Jammers
- The Commission issued NALs of $144,000 and $126,000 against two businesses that used cell phone jammers to keep their employees from using cell phones at work. These NALs represented a significantly more aggressive approach to enforcement in this area. Previously, the Enforcement Bureaus had issued Citations in the first instance. The Commission indicated that the amounts would have been higher had the companies not voluntarily relinquished the jamming devices.
- The Chief of the Enforcement Bureau and the General Counsel issued a Public Notice indicating that the Bureau had reduced its backlog of indecency complaints by more than 50 percent (one million complaints) since September 2012 through closing complaints that were beyond the statute of limitations or too stale to pursue, that involved cases outside FCC jurisdiction, that contained insufficient information, or that were foreclosed by settled precedent.
- The Public Notice also announced that the Enforcement Bureau is “actively investigating egregious indecency cases and will continue to do so.” The Public Notice requested comment on whether the Commission should return to its policy that expletives would be deemed to be indecent only if used deliberately and repetitively and that isolated nudity would be treated similarly.
Other Notable Actions
- Program Carriage: The D.C. Circuit reversed the Commission’s only decision to date granting a program carriage complaint against a cable operator. The court held that there was no evidence (let alone substantial evidence) that the cable operator had engaged in affiliation-based discrimination. In this regard, the court concluded that neither the Commission nor the complainant had provided evidence showing any benefit to the cable operator of moving the complainant’s cable network to a more widely penetrated tier, as requested by the complainant and ordered by the Commission. In another case, the 9th Circuit affirmed the FCC’s denial of a program carriage complaint against four cable operators.
- Equipment Marketing Rules: The Enforcement Bureau entered into a $450,000 Consent Decree with a company that markets unintentional radiators such as amplifiers.
- Merger Enforcement: The Enforcement Bureau entered into a $250,000 Consent Decree with a telephone company regarding a condition in a merger order requiring it to offer a special broadband Internet access rate for low-income persons. As part of the Consent Decree, the company agreed to extend the condition for an additional year.
- Auction Collusion: The Enforcement Bureau entered into two related Consent Decrees with the winner of an auction for an FM radio license and a related individual regarding violation of the anti-collusion rules. The auction winner agreed to surrender its construction permit and forfeit all auction-related payments it had made. It and related individuals agreed not to participate in future auctions. The Consent Decrees also provided for payments to the U.S. Treasury of $12,500.
- Ex Parte Rules: The Enforcement Bureau entered into a $10,000 Consent Decree regarding non-compliance with the ex parte rules applicable to permit-but-disclose (e.g., rulemaking) proceedings. This was the FCC’s first action enforcing the recently revised (2011) ex parte rules and appears to have been the first FCC enforcement action ever enforcing the ex parte rules in a permit-but-disclose (as opposed to restricted) proceeding. In this case, the company had ignored two staff emails advising the company that an email it sent had to be placed in the relevant docket. The Consent Decree serves as a reminder that it is important to comply with the ex parte rules and to respond promptly to Commission staff instructions regarding those rules.
- Class A Television Audits: The Media Bureau took several additional actions regarding the compliance records of Class A television licensees, often resulting in the loss of Class A regulatory status or outright cancellation of licenses for violations of the main studio rule, children’s television requirements, and/or a Class A-specific obligation to air a minimum amount of locally produced programming each week. Loss of Class A status leaves the broadcaster with a license to operate the station as a low-power facility, but the licensee no longer is eligible to sell its station in the upcoming broadcast incentive auction.
- Closure Letters: The Commission rejected a recommendation by the Government Accountability Office (in the context of sponsorship identification) that it routinely inform targets of an investigation when the investigation has been closed without enforcement action.
- Student-Run Noncommercial Educational Radio Stations: The Media Bureau issued a Policy Statement indicating that, for first-time violations of documentation requirements (e.g., public inspection file, ownership reports) by student-run noncommercial educational stations that come to the attention of the Bureau in its processing of a license renewal or other application, the Bureau will notify such licensees of the opportunity to enter into a Consent Decree rather than proceed with a forfeiture proceeding. As with other Consent Decrees, such Consent Decrees will typically include a compliance plan and a “voluntary contribution” to the U.S. Treasury. Rather than taking into account the financial resources of the licensee (i.e., the school) as in other cases involving educational institutions, in negotiating these Consent Decrees, the Bureau will take into account only those resources budgeted to the station.