CLICK HERE TO VIEW THE OCTOBER 2014 ENFORCEMENT NEWSLETTER

This edition summarizes notable new FCC-related enforcement matters during the third quarter of 2014. Questions or comments may be addressed to David H. Solomon at 202-383-3369 or dsolomon@wbklaw.com.

Consent Decrees

• Pursuant to new Enforcement Bureau policy, many (but not all) Consent Decrees now include admissions of liability. All Enforcement Bureau Consent Decrees now characterize the payment as a “civil penalty,” “civil fine,” or “payment” rather than as a “voluntary contribution.”

Consumer Protection

•  The Commission issued a $7.62 million Notice of Apparent Liability (“NAL”) regarding slamming and cramming, and a $1.6 million cramming NAL. The Enforcement Bureau entered into a $1.3 million cramming Consent Decree.

• The Enforcement Bureau entered into a $7.4 million Consent Decree with a major carrier whose billing systems, over an eight-year period, did not generate Customer Proprietary Network Information (“CPNI”) opt-out notices to approximately two million customers in their first bills. (Such customers did receive biannual notice in the normal course of business, however.) The carrier may have used some of these customers’ CPNI in marketing campaigns prior to the customers receiving an opt-out notice. The Consent Decree was by far the largest CPNI-only enforcement action. The accompanying News Release emphasized the privacy protection nature of the matter.

Unauthorized Operation

• The Enforcement Bureau entered into a $5.25 million Consent Decree with a railroad for the company’s unauthorized acquisition and operation of hundreds of wireless radio facilities to support its railroad operations over nearly 20 years. The accompanying News Release referred to the scope and duration of the unauthorized operations and transfers of control as “unprecedented” and described the $5.25 million amount as the largest payment in FCC history for unauthorized operations and transfers of control.

Network Outage Reporting 

• The Enforcement Bureau entered into a $1.1 million Consent Decree with a major cable operator regarding compliance with the wireline and VoIP network outage reporting rules.

Wi-Fi

• The Enforcement Bureau entered into a $600,000 Consent Decree with a hospitality company relating to the company’s use of a Wi-Fi system’s containment/de-authentication capability to “prevent users from connecting to the Internet via their own personal Wi-Fi networks when these users did not pose a threat to the security of the [company’s] network or its guests.” The company made available its own Internet services for use in meeting rooms and its convention center, with charges of $250 to $1,000. The Consent Decree settled the Bureau’s investigation into whether the company’s conduct violated Section 333 of the Communications Act, which prohibits willful or malicious interference with any “station.” The accompanying News Release categorized the matter as relating to Wi-Fi “blocking.”

• The Consent Decree tees up a host of new and potentially complex and controversial legal and policy issues. Specifically, the Consent Decree treats Wi-Fi networks as “stations” subject to interference protection under Section 333, rather than simply as Part 15 devices that are required to accept interference under the FCC’s Part 15 rules. In addition, the Consent Decree treats containment/de-authentication as “interference” for purposes of Section 333. Those issues may be addressed in connection with a pending petition for declaratory ruling/petition for rulemaking filed by the American Hospitality & Lodging Association and others. 
 

Open Internet

• The Enforcement Bureau released an Enforcement Advisory stating that the open Internet transparency rule requires broadband Internet access providers to ensure that advertisements and other public statements they make about their services are accurate and consistent with any official disclosures made pursuant to the rule. The Advisory states that the rule requires accuracy wherever statements regarding network management practices, performance, and commercial terms appear – in mailings, on the sides of buses, on website banner ads, or in retail stores. For instance, “a provider making an inaccurate assertion about its service performance in an advertisement … could not defend itself against a Transparency Rule violation by pointing to an ‘accurate’ official disclosure in some other public place.” The Advisory states that the FCC “takes the requirements of the Transparency Rule seriously, and … intend[s] to take enforcement action against providers that do not comply with it.” Both the Chairman and the Bureau Chief issued separate statements warning about potential enforcement action for violations.

Sponsorship ID

• The Media Bureau dismissed complaints alleging that stations had violated sponsorship identification requirements by failing to fully and fairly disclose the true identity of certain political ads. The complainant had claimed that the stations should have tagged the ads with the name of the individuals who had provided virtually all of the money for the Political Action Committees (“PACs”) as the true sponsors. Instead, the stations had run sponsorship identifications identifying the PACs as the sponsors of the ads. The Bureau indicated that, in light of the “need to balance the ‘reasonable diligence’ obligations of broadcasters in identifying the sponsor of an advertisement with the sensitive First Amendment issues present here,” it exercised discretion not to pursue enforcement action here. It said its approach might have been different had the complainants approached the stations directly to furnish them with evidence calling into question that the identified sponsors were the true sponsors.

Other Notable Actions

• E-Rate: In a Report and Order modernizing the E-rate program, the Commission directed the Enforcement Bureau to devote additional resources to investigating and, where appropriate, bringing enforcement actions against service providers that violate the Lowest Corresponding Price rule, which requires that service providers offer and charge E-rate participants prices no higher than the lowest price they charge to similarly situated non-residential customers for similar services.

• Calling Card Provider: The Commission issued an NAL of almost $500,000 against a calling card provider for “disregard of virtually all of its regulatory obligations for over three years.”

• Equipment Marketing: The Enforcement Bureau entered into a $240,000 Consent Decree with an equipment manufacturer regarding the marketing of wireless routers and other related products (e.g., Wi-Fi bridge/range extenders and wireless adapters) that had been modified after FCC authorization.

• 911: The Enforcement Bureau issued a $100,000 NAL against a rural telephone company that directed 911 calls to a recorded operator message that instructed the caller to “hang up and dial 911.”

• Indecency: The Enforcement Bureau entered into a $37,500 Consent Decree regarding the broadcast of a DJ’s reference to a “blow job” and “other sexual related vulgar language.”

• Tariff Rejection: The Wireline Competition Bureau rejected a Competitive Local Exchange Carrier (“CLEC”) tariff because (1) its mandatory arbitration provision prohibited Interexchange Carrier (“IXC”) purchasers from seeking relief at the Commission through the Section 208 complaint process, and (2) it violated the prohibition on call blocking by requiring IXCs seeking to cancel service under the tariff to block and traffic originating from or terminating to the CLEC.

• Compliance with Statutory Forfeiture Procedures: Apparently without regard to requirements of the Communications Act that a Forfeiture Order must be preceded by an NAL, the Media Bureau issued a Forfeiture Order in which it found as an “alternative basis” for a forfeiture a violation that had not been mentioned in the NAL. This follows prior forfeiture actions by the Media Bureau earlier this year that appear in tension with other procedural protections of the Communications Act. See FCC Enforcement Update, April 9, 2014.