Part 15 of the FCC’s rules allow unlicensed white space devices to operate at locations on frequencies not in use by licensed services. Twelve years ago, the FCC authorized unlicensed white space device operations for the first time on television channels not being used locally by broadcasters and associated service licensees. The devices are required to obtain a list of available channels and power levels for use at their particular location from FCC-approved entities that maintain accessible databases. Fixed devices must also incorporate geo-location capability. Portable devices must include geo-location and database access capabilities or, alternatively, acquire a list of available channels via another device with geo-location ability and access to a database. While several orders in the intervening years have been designed to increase flexibility and promote additional opportunities for deployment of such devices, such as relaxed technical accommodations for devices in rural and underserved areas, their use has fallen somewhat below initial aspirations.

Last May, Microsoft Corporation filed a petition for rulemaking requesting that the FCC provide yet additional flexibility for white space device operations. Many commenters filed in support, but the National Association of Broadcasters (“NAB”) raised concerns, as did stakeholders with interests in Wireless Medical Telemetry Service (“WMTS”) operations on Channel 37 and proponents of wireless microphones using spectrum not being used by other licensed services.

Proposed New Power and Height Limits for White Space Devices in “Less Congested” Areas

Now, after the NAB and Microsoft have worked together to resolve most of their differences, the FCC proposes to permit fixed white space devices in spectrally “less congested” areas over larger distances through using higher transmit powers (16 v. 10 W EIRP) and deploying antennas at greater heights above average terrain (up to 500 meters from a maximum of 250 meters) – while maintaining the existing one-watt transmitter conducted power limit for fixed devices and proposing certain adjustments when higher gain antennas are used. This flexibility would come with the need to maintain greater separation distances from authorized services, although the FCC also invites comment about even greater flexibility in powers used and antenna heights and whether coordination or notification procedures should be adopted in combination with the proposed relaxed requirements.

Given the foregoing proposals, the FCC, in the NPRM, additionally inquires whether it should relax the limit on antenna height above ground level, including potentially in all areas within the United States. But current power and height limits would remain in Channel 36, which the FCC believes would be adequate to protect WMTS and Radio Astronomy operations in Channel 37.

As an overarching matter, the FCC also inquires whether it should change the definition of “less congested” areas which now are those areas where, within the band of intended operation, at least half of the TV channels that will continue to be allocated and assigned only for broadcast service are unused for broadcast and other protected services, and are thus available for white space device use. For example, the FCC asks whether “less congested” areas should be defined, in part, based on population density.

In conjunction with these proposals, the FCC will consider making additional changes to the protection criteria for operations in the TV bands other than broadcasting, such as TV translator receive sites, Low Power TV (including Class A) receive sites, Multichannel Video Programming Distributor (“MVPD”) receive sites, fixed Broadcast Auxiliary Service (“BAS”) links, the private land mobile radio and commercial mobile radio services (“PLMRS” and “CMRS”), and licensed wireless microphones.

Potential Operation of White Space Devices on Mobile Platforms in Geo-Fenced Locations

Additionally, the NPRM proposes to permit higher-power operation of white space devices on TV Channels 2-35 on mobile platforms inside “geo-fenced” areas (within “less congested” areas) enforced by incorporated geo-location capabilities, e.g., GPS coupled with a database, and new operational requirements, such as prohibiting operation on board aircraft or satellites to limit the potential for interference. The FCC seeks comment on a wide variety of other questions related to permitting wider deployment of white space devices on mobile platforms, including limitations on the size of the area over which a higher-power mobile device could operate, changes to the databases used for white space devices, and other possible safeguards.

Prospective Changes That Might Propose Use of White Space Devices for IoT

The FCC also hopes to facilitate innovative narrowband IoT services by considering certain changes to the power spectral density (“PSD”) limits applicable to white space devices in the TV bands. Matters raised by the NPRM include a revised definition of “narrowband” white space devices and spectrum utilization limits, while the FCC leans toward permitting manufacturers and standards groups to develop their own protocols to prevent multiple devices from transmitting simultaneously and interfering with each other without a regulatory mandate. As with all of the other areas under consideration in the proceeding, the FCC asks whether there are other rule modifications needed to promote narrowband operations while ensuring protection of authorized services that operate in the TV bands from harmful interference potentially caused by narrowband white space devices.

Possible Flexibility for White Space Devices to Operate Adjacent to Occupied TV Channels

Further, the FCC seeks comment about higher-power white space device operation within the service contour of an adjacent-channel TV station. Generally, white space device operations above 40 milliwatts EIRP must generally operate outside the protected contours of adjacent-channel TV stations, although fixed white space devices may operate within the protected contour of adjacent-channel TV stations with a power level of 100 milliwatts EIRP when the white space device operates in a six-megahertz band centered on the boundary of two contiguous vacant channels, which requires three contiguous vacant channels available for use. Microsoft noted that these conditions are not always present and the FCC should therefore consider other ways to permit higher-power operation of white space devices when adjacent TV channels are occupied, such as more sophisticated location-determining computer models (e.g., Longley-Rice) and consideration of improved selectivity in next-generation TV receivers. NAB opposes any consideration of this matter – the primary area where Microsoft and the broadcasters could not reconcile their differences over Microsoft’s proposals.

Interest in Microsoft’s proposals has already been considerable, with almost two dozen parties commenting. There is every reason to expect that a similar level of participation will emerge during the rulemaking. Manufacturers of white space devices, developers of agricultural, mining, construction, and other IoT applications, and potential users of these devices should be especially interested, as well as broadcasters and those operating in the authorized services in the TV bands.

The Mobility Fund provides financial support to wireless service providers to maintain and extend mobile broadband and voice services in unserved and underserved areas. The FCC plans to give out over $4.5 billion in support through the MF-II auction to expand 4G LTE coverage in places lacking such service. The Order addresses four key issues:

1) Relaxing Letter of Credit Requirement: The FCC requires a MF-II auction winner to obtain a letter of credit covering the support received, which allows the FCC to recover funding in the event the service provider fails to meet its performance milestones. Recognizing the significant costs of obtaining a letter of credit, the FCC will allow a service provider to significantly reduce the letter of credit’s value (and simultaneously reduce the letter of credit’s cost) once the service provider meets its 80 percent service milestone. The FCC also stated that a service provider can cancel the letter of credit once it meets its final performance milestone. With these changes, the letter of credit obligations for the MF-II auction match the letter of credit obligations imposed in the Connect America Fund Phase II (“CAF-II”) auction, which covers fixed broadband deployment.

2) Clarifying Collocation Obligation: The FCC initially indicated that funding recipients would be required to provide reasonable collocation by other service providers on “all” towers that the recipients owned or managed. A number of service providers asked the FCC to reconsider this requirement, pointing out that a similar collocation requirement applicable to earlier auction winners only covered “newly constructed” towers. The FCC resolved this discrepancy by clarifying that the collocation requirement only applies to newly constructed towers in the areas where the service provider receives MF-II support.

3) Maintaining Budget and Disbursement Schedule: The FCC refused to increase the budget for the MF-II auction in response to wireless industry claims that it did not provide enough money to achieve full 4G LTE coverage in all eligible areas. The FCC affirmed its budget calculation methodology and stated that it would re-evaluate if more funding is necessary in the future. The FCC denied requests to base the budget on wireless carriers’ projected costs, expressing concern that such a system would encourage inflated claims and waste. The FCC also affirmed its monthly disbursement schedule after carriers asked it to allow larger support payments early in the network construction process. While the FCC recognized that carriers would likely incur most costs early in the network construction process, it found that trying to match each carriers’ costs during the deployment process would strain the MF-II budget. The FCC also noted that CAF-II will operate on a monthly disbursement schedule.

4) Preserving Performance Requirements: The FCC rejected calls to lower the minimum level of service required from MF-II auction winners from the current 10/1Mbps median data speed and 100 ms latency benchmarks. The FCC found such benchmarks necessary to ensure that rural offerings keep pace with their urban counterparts and do not become a “second-class” service.

The FCC also declined to extend bidding preferences to small businesses in the MF-II auction, which Commissioner Clyburn supported, or adopt new limitations on winning carriers entering into equipment exclusivity arrangements. In addition, the FCC retained the role played by the Universal Service Administrative Company in verifying the data wireless providers submit to demonstrate compliance with their MF-II auction buildout requirements.

With the last MF-II auction reconsideration petitions resolved, the FCC can move on to finalizing the set of areas eligible for funding. The FCC recently issued an initial map of areas presumptively eligible for funding. The FCC’s eligibility determinations will be subject to a challenge process, which is scheduled to begin on March 29, 2018. However, it remains unclear when the challenge process will conclude and the FCC will announce the final list of areas eligible for support through the MF-II auction. Whenever it occurs, the MF-II auction will have transformative impacts on rural wireless broadband deployment, so stakeholders should assess whether funding opportunities exist in their service areas and consider participating in the auction process.

The Commission granted the petitions of wireless microphone manufacturers to relax the limit on spurious emissions. The FCC concluded that its prior specification in the Wireless Microphones Order of a -90 dBc limit at all frequencies more than one megahertz above and below the carrier frequency is not necessary to protect radio services in shared or adjacent bands. In its place, the Commission adopted the European Telecommunications Standards Institute (“ETSI”) spurious emission limits for licensed and unlicensed wireless microphones, such that emissions more than one megahertz above and below a wireless microphone carrier frequency must comply with the limits in Section 8.4 of ETSI EN 300 422-1.

With respect to output power measurement applicable to both licensed and unlicensed wireless microphone operations in the VHF TV bands, the Commission clarified that manufacturers may show compliance with the 50 mW equivalent isotropically radiated power (“EIRP”) limit for licensed wireless microphones operating in the VHF band by making either radiated or conducted measurements.

The Commission denied the requests of manufacturers to increase the EIRP limit of wireless microphones (20 mW) that operate in the 600 MHz guard band and duplex gap. The agency found the proponents of change had not adequately substantiated their request, observing that “[n]o party provided an analysis demonstrating that the maximum power could be increased without causing harmful interference to licensed wireless services.”

However, in a long sought victory for manufacturers, the FCC also decided on reconsideration to exempt unlicensed wireless microphone operations in the TV bands from antenna connector restrictions. Specifically, the Commission waived a requirement in Section 15.203 of its rules that unlicensed wireless microphones utilize either a permanently attached antenna or an antenna that is uniquely coupled to the device. The Commission’s rationale for doing so reflected both the fact that some microphones require detachable antennas in order to function effectively, and its assessment that the other unique connector requirement would not be necessary to prevent harmful interference to authorized services. This result is limited to unlicensed wireless microphones and does not extend to other Part 15 devices which are not already exempt from the still generally applicable integrated or unique antenna requirement.

For operations of legacy wireless microphone equipment, the Commission clarified that unlicensed users can continue to operate equipment that had been certified under Part 74 in portions of the 600 MHz service band until the end of the 39-month post auction transition period. After that time, however, unlicensed wireless microphone users are only authorized to operate wireless microphone equipment that has been certified under the Part 15 rules. The Commission will also allow operation of legacy wireless microphone equipment that was originally certified under Part 74, but can be modified and certified to operate in portions of the 600 MHz service band under the new Part 15 rules, to do so.

The Commission declined to adopt Shure’s proposal to allow unlicensed wireless microphone users to register for protection from other unlicensed operations in the TV bands on the grounds that doing so would be inconsistent with their fundamental status as unlicensed services. Instead, the Commission sought to accommodate mid-sized professional theater, music, performing arts, or similar organizations by issuing a further notice on creating a regime for such parties to attain licenses for their wireless microphone operations, as discussed below.

In the 169-172 MHz band, the Commission revised the center frequencies for two of the 200-kilohertz wireless microphone channels, shifting the authorization to operate on channels centered at 169.475 and 170.275 MHz to 169.575 MHz and 170.025 MHz. They also permitted 54-kilohertz operations on four new channels that would correspond with these 200-kilohertz channels, specifically authorizing such wireless microphone operations on frequencies centered at 169.545 MHz, 169.605 MHz, 169.995 MHz, and 170.055 MHz.

In the 1435-1525 MHz AMT band, the Commission, denying several petitions for reconsideration on the issue by manufacturers, affirmed a decision establishing a 30 MHz limit on the amount of spectrum available for wireless microphone operations at a particular location and clarified how that limit would work with multiple wireless microphone users in the same geographic area. Specifically, the FCC clarified that that the 30-megahertz limit applies to each licensed wireless microphone user seeking access to spectrum in the 1435-1525 MHz band for its own wireless microphone operations at a particular location or venue. Licensed wireless microphone users seeking access first need to coordinate with the Aerospace and Flight Test Radio Coordinating Council (“AFTRCC”), which must determine whether to permit access to the 1435-1525 MHz band in that area during the specified period and to indicate whether any specific frequencies in the 90 megahertz of spectrum of the band is unavailable for use. The Commission also clarified that, in extraordinary circumstances in which a wireless microphone user demonstrates that access to more than 30 megahertz for “a specified event” is merited, an STA process will be available which requires prior coordination with AFTRCC. For example, the Commission suggested that isolated, “super-scale” professional entertainment productions, such as a seasonal holiday production at Radio City Music Hall, may qualify for an STA.

The Commission also sought to facilitate coordination between wireless microphone operations and incumbent primary Federal fixed services in the 941.5-944 MHz band. Ultimately, the FCC decided that, after coordination of proposed wireless microphone operations with incumbent non-Federal users through the local SBE coordinator, a license applicant is to file its application for an LPAS license with the Commission. In addition to basic technical information, the applicant must provide a description of the proposed location and area (or areas) of operation.

In the companion Further Notice of Proposed Rulemaking (“FNPRM”), the Commission proposed to permit certain professional theater, music, performing arts, or similar organizations that operate unlicensed wireless microphones to obtain Part 74 licenses to operate in the TV bands, thereby gaining the ability to register in the white spaces database and gain protection from unlicensed white space devices at the same venues. The Commission proposes a 50 microphone license eligibility threshold for such entities, but seeks comment on whether the threshold should be even smaller. The FNPRM seeks comment on whether such users should also be able to obtain a Part 74 licenses to operate in other bands available for use by Part 74 wireless microphone licensees, provided that they meet all applicable requirements in the respective bands. Specifically, the Commission seeks comment on allowing professional theater, music, and performing arts organizations under the proposed definitions access to portions of the 900 MHz band, the 1435-1525 MHz band, and the 6975-7125 MHz band. Comments will be due 30 days after publication in the Federal Register, which hasn’t yet occurred.

We review the highlights of the wireless infrastructure NPRM and NOI below. In our companion client advisory, we explore in depth the proposed modifications and areas sought for comment in the NPRM and NOI.

Comments will be due 30 days after publication in the Federal Register and reply comments 60 days after publication.

I. NPRM

The FCC’s NPRM focuses on the process affecting wireless facility deployment applications that are conducted by State and local regulatory agencies, the subject of Section 332 of the Communications Act. Section 332, while recognizing state and local authority over antenna siting review, also places a limitation on this authority by requiring decisions on applications be made within “a reasonable period of time” so as to limit impediments to deployment of wireless facilities. The Commission solicits comment on the effectiveness of the Commission’s efforts to date implementing Section 332 – principally a 90 or 150-day shot clock, depending on the circumstances, which creates a presumption that a state or local government has failed to act within a reasonable period of time – and additional measures or clarifications that might further expedite Section 332 review processes. The FCC proposes

• Ways to craft and implement a “deemed granted” remedy when state and local agencies fail to act on antenna siting applications within a reasonable time – not just a presumption that the delay is unreasonable;
• Adopting shorter review time periods for facility deployment reviews under Section 332; and
• Issuing an order or adopting other regulatory measures clarifying the status of local moratoria that have the effect of slowing down or suspending wireless application processing.

II. NOI

In the NOI, the Commission focuses on Sections 253 and 332(c)(7) of the Act. Section 253 states that “[n]o State or local statute or regulation or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.” Section 332(c)(7) preserves the authority of State and local entities to make decisions about antenna facilities in their communities but imposes certain constraints and require action in a reasonable time. The NPRM states that these two statutory provisions were intended to balance the desire to streamline regulations that could slow down the deployment of broadband facilities with the ability of localities to retain an appropriate measure of control over land use decisions.

The FCC explores the scope of each provision and how it should be interpreted in relation to the other to further the goal of facilitating wireless broadband deployment.

If you are interested in learning more about the NPRM and/or NOI, or would like to get involved in this proceeding, please contact the authors of this post or your regular Kelley Drye attorney at any time.

Comments are due on or before September 8, 2015 and reply comments are due on or before September 21, 2015.

The communications industry and the “RF equipment ecosystem” has changed dramatically since the last Commission’s last comprehensive review of its equipment authorization rules in 1998. Recognizing that it is easier than ever to design, manufacture and bring new RF equipment to market, the Commission has attempted to respond to these trends by taking actions aimed at streamlining and simplifying the equipment authorization program. In a recent blog post, we reported that new rules took effect in early July 2015 to expand the role of Telecommunications Certifications Bodies (“TCBs”) in the certification process. In the current NPRM, the Commission issues proposals to further streamline equipment authorization procedures while being mindful of maintaining sufficient safeguards to ensure that these RF devices comply with FCC rules and do not cause harmful interference.

The NPRM includes several key proposals:

• Unify the self-approval procedures. The Declaration of Conformity (“DoC”) and verification procedures are currently independent requirements for authorization. The NPRM proposes to combine them into one self-approval program for all equipment currently subject to one of those two procedures. The proposed new process, tentatively called a Suppliers Declaration of Conformity (“SDoC”), would eliminate the current obligation to use accredited laboratories but would clarify that all devices currently subject to the DoC or verification procedures must be tested. The proposed process would incorporate some but not all elements of the SDoC processes used for Telephone Network Terminal Equipment under Part 68.
• Update Certification Procedures. The Commission proposes updates to the certification requirements to respond to the trend of authorizing components, including modular transmitters, that will be used as part of more complex designs or in third-party host devices. The proposals focus on the parties responsible for submitting applications. The Commission proposes to amend the basic certification rules to allows for the certification of a group of related devices under a single FCC ID. Additionally, the Commission proposes to relocate the rules for modular transmitters from Part 15 to Part 2 in light of the increasing use of modular transmitters in RF devices intended for operation within licensed radio services. The NPRM also proposed changes to the software defined radio (“SDR”) rules to increase flexibility in certifying devices where the RF elements are controlled by software.
• Updated Certification Modification Process. The NPRM proposes to eliminate the current “electrically identical” framework for determining whether a device requires a new certification. Instead, there would be two categories of changes, those that require a new FCC ID and those that do not. The proposed rule changes would require an evaluation of the modifications, and potentially testing, to determine the change category. Changes that do not substantially alter the overall function of the device will not require a new FCC ID, but in some cases may still require a new application for certification. Where a new FCC ID is required, due to substantial changes to design or layout, or replacement of components, a new certification would be a prerequisite.
• Clarification of Responsible Party. The NPRM proposes to clarify who the responsible party is for obtaining certification in a number of scenarios, including when end products incorporate modular transmitters, third parties modify equipment , parties intend to market repaired or refurbished devices, and importers bring products into the U.S.
• Streamlined Certification Application Requirements. The NPRM seeks comment on reducing the information that must be provided when applying for certification. The FCC proposes to reduce duplicative information requirements as well as only require applicants to submit specific information based on the type of device to be certified. The NPRM proposes to codify existing short-term confidentiality practices for certain types of information allowing for a standard 45 day period upon request and seeks comment on extending that period to 180 days. Further, long-term confidentiality would be provided automatically for certain information categories (such as exhibits of schematics or operational descriptions) in all certification applications.
• The E-LABEL ACT. The NPRM also seeks comment on a series of updates to the equipment labeling obligations to recognize and codify the requirements of the E-LABEL Act. For example, the proposed rules will generally allow an RF device with an integrated electronic display to electronically display the labels required by the FCC rules. However, even where devices have integrated displays, parties would still be required to place warning statements or other information on device packaging, within user manuals, or at the point of sale as otherwise required under FCC regulations.
• Importation Requirements. The NPRM questions the usefulness of the information provided on the current FCC Form 740 declaration for imported devices, particularly since much of the information is already collected by the U.S. Customs and Border Patrol and may also be available on the internet. The FCC seeks comment on the continued use of collecting Form 740 information. The NPRM also proposes changes, among other things, to the number of imported devices permitted for demonstrations at trade shows and in other instances prior to satisfaction of the relevant equipment authorization procedure.

Among other changes, existing unaccredited laboratories that have heretofore been recognized as providing testing services to support certification applications under criteria in Section 2.948 of the FCC’s Rules will be recognized only through the expiration date of their submissions for recognition as such, after which time they will have to be accredited under the FCC's rules to continue to perform testing for certification applications. Testing from such Section 2.948 laboratories will only be accepted through July 13, 2016, and may support certification applications only until 15 months after the effective date. Manufacturers and other responsible parties should take heed of this change and ensure that they choose laboratories with the proper qualifications for the certification and Declaration of Conformity procedures.

Further, the new rules update references to industry measurement procedures in the Commission’s rules for Part 15 unintentional and intentional radiators, specifically ANSI C63.4-2014 and ANSI C63.10-2013 (subject to certain limited qualifications). Transition provisions apply by which earlier currently acceptable versions of these standards (e.g., ANSI C63.4–2003, ANSI C63.4–2009, and ANSI C63.10-2009) may still be used through July 13, 2016.

Additional changes are discussed in our earlier blog post and in the Order itself, summarized in the Federal Register.

The modified equipment authorization rules will take effect 30 days after publication in the Federal Register, which has yet to occur. The FCC will stop accepting equipment certification applications as of the effective date.

The Report and Order adopts a number of other changes, many of which impact TCBs directly:

• TCBs will be required to submit all information related to certification applications and grants to the FCC’s Equipment Authorization System (“EAS”), including pre-approval guidance inquiries made to OET.
• TCBs will be free to establish their own procedures with clients regarding the use of electronic filing and issues of documentation authenticity. The Commission declined to codify any requirements regarding the cost of applications made to TCBs, including charges for expediting applications preferring to let the market decide among TCBs.
• The guidance OET has provided TCBs regarding post-market surveillance has been codified and clarified, including the amount of surveillance (a sample rate of at least 5% of all of a TCB’s certified devices, including permissive changes), the responsibilities related to testing in connection with surveillance, and the timing and content of periodic reports to the FCC. TCBs are required to conduct post-market surveillance only related to those devices for which they have issued grants of certification. Under the rule changes, OET may select the devices for a TCB to test, and the Commission will be the final arbiter in any disputes between TCBs and grantees about whether certain devices comply with the rules.
• Where post-market surveillance testing of a device finds it to be non-compliant, OET will work with the grantee to resolve the matter and ensure compliance going forward, and will refer items to enforcement where non-compliance is the result of willful action as opposed to, for example, changes to the manufacturing process leading to inadvertent non-compliance.
• TCBs may initiate requests for devices for post-market testing from grantees through the EAS system, improving the Commission’s ability to monitor and intervene if necessary.
• Grantees will be responsible, upon request, to issue vouchers to the TCBs and the Commission to allow them to select samples for testing from the marketplace free of charge, or, as an alternative, grantees may allow the TCB or FCC to select a product randomly from the manufacturing or warehousing location. Furthermore, if special software or specialized mechanisms, methods, or modifications are required to test such unmodified production devices, the manufacturer must make these available (at no cost) along with any necessary instructions to the Commission or TCB upon request.
• The National Institute of Standards and Technology's ("NIST’s") role as the Designating Authority for TCBs located in the United States was confirmed.
• Organizations outside the U.S. acting under a Mutual Recognition Agreement may accredit and designate TCBs, but the Commission reserved the ultimate determination of whether to recognize a designated TCB before permitting that TCB to operate. The FCC codified criteria to guide OET’s acceptance of new laboratory accreditation bodies.
• Rules related to TCB performance and withdrawal of TCB recognition were modified. Specifically, the Commission maintained the 60-day notice period prior to withdrawal but noted that circumstances may warrant a shorter notice period, for example if there is an immediate concern regarding a TCB’s capability or its intention to comply with requirements to ensure appropriate certification of devices. The sanctions that FCC can impose vary and may include requiring the TCB to follow the pre-approval guidance procedure for all applications for certification before they can be granted or immediately suspending recognition at the other extreme.

The Report and Order also updates references to industry measurement procedures in the Commission’s rules for Part 15 unintentional and intentional radiators, specifically ANSI C63.4-2014 and ANSI C63.10-2013; provides that revisions to these cross-referenced standards will not take effect until the Commission or OET on delegated authority completes a rulemaking adopting any such change; and establishes specific site validation criteria for test facilities used for making radiated emissions at frequencies above 1 GHz. The Report and Order reflects the FCC’s decision to give the Chief of OET delegated authority to engage in limited rulemaking action, following notice in the Federal Register and an opportunity for comment, in order to modify Parts 2, 5, 15, and 18 of rules to reference updated versions of standards where such standards are already referenced in the rules and to adopt any appropriate transition periods. This process should permit the FCC to better and more rapidly keep pace with changing industry standards than if the Commission were required to complete a full rulemaking proceeding for every widely-accepted and expertly-considered update to references in its rules regarding equipment measurement practices. The Report and Order acknowledges that it is possible that incorporation of some standards updates will be matters more appropriately considered by the full Commission, and OET will be directed to refer matters for review and decision by the Commission if use of an updated standard may raise major compliance issues.

The Commission’s Report and Order is a further step in the evolution of the equipment authorization procedures. By relying more heavily on TCBs, the Commission no doubt hopes that, on average, radiofrequency devices subject to certification can be authorized and, thus, marketed sooner. But the rule changes also make clear the FCC simultaneously intends to keep its hands on the reins to ensure the potential for interference is minimized as ever increasingly advanced products are brought to market and the testing requirements for those products become correspondingly more complex.

Statements opposing or supporting the AHLA Petition are requested by December 19, 2014.

The Public Notice comes roughly six weeks the FCC announced a settlement with Marriott International, Inc., one of the petitioners, resolving an investigation in the hotel operator’s use of a Wi-Fi management system that blocked access of unauthorized hotspots on the hotel premises. (Find our blog post on that settlement here. )

Specifically, the AHLA Petition requested that the FCC declare that a Wi-Fi network operator’s use of FCC-authorized equipment to monitor and mitigate threats to the security and reliability of its network does not violate 47 U.S.C. §333, even when the management system may result in interference to unlicensed Part 15 (radio frequency devices) device being operated by others. Section 333 prohibits willful or malicious interference with or the causing of interference to radio communications “of any station licensed or authorized” under the Communications Act or operated by the federal government.

The Petitioners argue that Section 333 only protects licensed operations, not unlicensed devices. They state that interpreting Section 333 to also prohibit interference to Part 15 devices would have absurd results and is inconsistent with the FCC’s Part 15 rules which require unlicensed devices to accept any interference received. The particular focus of the AHLA Petition are devices that can function as mobile hotspots. The AHLA Petition provides the FCC with two options for providing guidance on this issue: 1) issue a declaratory ruling or 2) commence an industry-wide rulemaking proceeding to amend Part 15 to specify what, if any, interference to Part 15 devices that the statute prohibits.

What is at stake, according to the Petitioners is a matter of potential interest to any manner of Wi-Fi operation: in short, may Wi-Fi operators be able to take necessary steps to protect against operation of unlicensed devices, such as mobile hotspots, interfering with secure and reliable Wi-Fi connections. The Commission’s resolution of the petition could have a broad impact since the vast majority of unlicensed Part 15 devices, such as iPads and tablets, can function as separate Wi-Fi access points. Businesses, enterprises, and institutions that operate their own Wi-Fi networks for employees, guests, patrons, students, and others may wish to monitor the FCC’s action in this docket and consider submitting comments or reply comments.

This consent decree is the latest example of recent FCC enforcement against so-called “jamming” activities by companies and individuals. In 2012, the Bureau conducted a campaign and issued an enforcement advisory and notice to raise awareness across industries that it is illegal to own, operate, sell, or manufacture devices that jam signals of commercial mobile radio service (“CMRS”) operators and global positioning satellite (“GPS”) system operations. In recent years, the Enforcement Bureau has launched multiple enforcement actions against companies manufacturing, marketing, or operating jamming devices that can target CMRS or GPS operations.

This newest consent decree comports with the new policy shift for enforcement settlements. As with several other consent decrees we blogged about in the past several weeks, the settlement included an admission of liability and the monetary payments were characterized as “civil penalties,” rather than as “voluntary contributions,” as was Commission practice formerly.

The Consent Decree and adopting Order give little information regarding what prompted the Bureau to launch an investigation into the marketing of wireless microphones by Wal-Mart Stores in November 2010. Notably, the Bureau’s investigation commenced shortly after the FCC adopted new rules permitting operation of wireless microphones and low power auxiliary stations within the core TV bands pursuant to certain conditions on a non-interference basis. The Bureau may have been examining random websites of retailers offering wireless microphones for sale. While the number of unauthorized wireless microphones Wal-Mart.com USA sold or offered for sale was not revealed, the Consent Decree makes clear that none of the microphones the company offered for sale on its website operated within the prohibited 700 MHz band. Rather, Wal-Mart.com USA offered a device for sale which (presumably) was otherwise complaint with the rules but the supplier had not put it through the FCC’s equipment authorization process for intentional unlicensed transmitters – certification – before it was marketed, and only after the investigation commenced did Wal-Mart.com USA put the required consumer advisory regarding wireless microphones at “the point of sale.” For online sales, the FCC’s orders required that the advisory be “prominently displayed in close proximity to the images and descriptions” of each product, i.e., the online point of sale.

The three-year compliance plan Wal-Mart.com USA agreed to follows the same structure as other such plans that we have described in other recent blog posts, such as one regarding Skybeam Acquisition Corporation and Digis, LLC. Retailers may want to take note that the compliance plan extends to the marketing of all radiofrequency devices, not just wireless microphones. Wal-Mart.com USA must appoint a knowledgeable compliance officer, develop operating procedures to help ensure compliance as well as a compliance manual within 60 days (to be updated at least once annually), implement a compliance training program for all employees that perform or supervise, oversee, or manage those who perform duties that relate to Wal-Mart.com USA’s regulatory duties concerning the marketing of radiofrequency devices generally within 90 days and conduct annual training, report non-compliance with the law and rules regarding marketing of radiofrequency devices as well as with the consent decree itself, and provide more general compliance reports to the FCC four times over the thirty-six month compliance plan term. The marketing of any unauthorized or improperly labeled device would trigger internal and Commission notification obligations and may be considered a violation of the Consent Decree, as well as the rules, leading to potentially further enforcement action. For a company selling as many diverse electronic products as Wal-Mart.com USA, the compliance plan may require training of a large number of employees and require a close eye on the many electronic products that are sold on its website. And while Wal-Mart.com USA required its wholesalers and distributors to comply with all applicable FCC requirements, the Bureau’s investigation and the Consent Decree make clear that retailers can bear regulatory responsibility for the failures of their wholesalers and distributors.

With the rise in class action cases for alleged TCPA violations, businesses engaging in telemarketing should review their practices for obtaining customer consent prior to implementation of the new rules on October 16, 2013.

Please click here to read the complete Kelley Drye Client Advisory.

On Tuesday, the FCC stepped up its enforcement efforts against unlicensed wireless broadband devices causing interference by releasing a Notice of Apparent Liability (“NAL”) against Florida’s Towerstream Corporation in the amount of $202,000 for unauthorized operation of, and interference caused by, Wi-Fi and rooftop tower devices in New York City and Miami. The devices operated in or near the 5 GHz spectrum set aside for operation of Unlicensed National Information Infrastructure (“U-NII”) transmission systems on a non-interference basis that many providers of broadband internet access, including mobile operators and cable service providers, among others, reply upon to give customers Internet access over extended areas. The Bureau concluded that Towerstream operated six U-NII devices without authorization and in a manner that caused interference to the Federal Aviation Administration’s (“FAA’s) Terminal Doppler Weather Radar (“TDWR”) systems that were within line-of-sight, and that another U-NII device operated on frequencies where such devices are not permitted. The Commission concluded that Towerstream operated the devices without authorization because Towerstream knew that “operations within 30 MHz of the TDWR operating frequencies within line-of-sight of the airports could cause harmful interference to those TDWR systems” and “[b]ecause Towerstream caused harmful interference to TDWR systems after being directed to cease operations” by Bureau staff.

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This matter represents a new chapter in the FCC’s efforts to manage through enforcement activity the shared use of the 5.6-5.65 GHz band by the primary TDWR systems and unlicensed broadband devices. As we reported earlier in our blog, the Commission has taken a variety of actions, including both advisories and enforcement proceedings against AT&T, among others, to protect the federal systems. TDWR systems are used at forty-five major U.S. airports to assist air traffic controllers in detecting low-altitude wind shear that poses potential risks to aircraft. In the FCC earlier actions involving U-NII devices at 5 GHz, the principal focus was the failure of equipment used by unlicensed broadband providers to comply with the requirement that the devices possess and have activated Dynamic Frequency Selection (“DFS”) radar detection functionality. In the Towerstream situation, as reported in the NAL, the infractions did not implicate DFS functionality. Instead, Towerstream, after being the subject of Enforcement Bureau inquiries and warnings in 2009 when Towerstream devices in three cities were found to cause interference to TDWR systems and after agreeing with the Bureau to avoid “frequencies around TDWR frequencies,” was found by Enforcement Bureau field personnel at various times between August and October 2012 to operate six U-NII devices on frequencies near those used by the TDWR in such a way that they caused actual interference to the federal safety operations. A seventh broadband transceiver was found to operate without authorization at 4.965 GHz, a channel not available for U-NII devices. The NAL underscores that the Commission’s authorization to operate “unlicensed” devices under its rules “does not extend to devices that are not operated in accordance with Part 15 regulations, and that such operations must be licensed (or otherwise be exempted from licensing despite such non-compliance).”

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Based on three factors, the Commission concluded that the proposed forfeiture should be assessed on a per device basis and almost doubled from a base amount of $112,000 for the thirteen violations (seven instances of operating without authorization and six instances of actual interference) to $202,000. By inflating the penalties, with the exception of the device operating at 4.965 GHz, to the maximum per diem forfeiture per violation, the Commission cited the public safety impact of the interference to TDWR operations, Towerstream’s prior history of causing interference to such operations, and “the seriousness of the violations.” Towerstream may well challenge the NAL and possibly succeed in reducing the forfeiture, but this matter both underscores the Commission’s level of penalizing those that interfere with TDWR systems and the importance of parties’ subject to adhere to their commitments to follow a compliance plan, even one voluntarily assumed, especially if subject to prior enforcement action. (There was no reference in the NAL to a consent decree as a result of the earlier enforcement activity.) As the Commission considers additional spectrum bands in which to permit unlicensed operations to support greater wireless broadband access, cases like Towerstream’s bear close watching by providers that seek to develop and implement best practices. There is no doubt that incumbent operators being asked to share with unlicensed operators are giving situations like that presented in the NAL a good look as well.

The court noted that the IRS class lives are defined by reference to the FCC’s Uniform System of Accounts for Class A and Class B Telephone Companies (USOA). In its review, the court applied what it describes as the plain language of the USOA to the various categories of wireless cellular assets. The taxpayer argued that the IRS rules did not apply to the wireless cellular assets because those rules ignore the physical, technological and practical differences between wireless cellular equipment and traditional landline telephone equipment. The court, however, was unconvinced and indicated that the IRS rules apply to telephone communications equipment used to provide commercial and contract telephonic services like those which the taxpayer was providing. Based on its legal conclusions and a more in-depth analysis of the specifications and use of the various assets, the court held that the applicable class life for the taxpayer’s antenna support systems is fifteen years; for its cell site equipment (other than the switch which has a five year class life) is ten years; and for its leased digital equipment is ten years. The decision applies to years before 2011 as the IRS recently issued new guidance to provide updated class life guidance for the ever-changing cellular service industry and an opportunity to change accounting methods to conform to the new guidance. [See Rev. Proc. 2011-22]

Kelley Drye Tax partner Allan Weiner and Telecom partner Chip Yorkgitis authored this special report.