Congress Makes Sweeping Changes to Spectrum Policy; Authorizes TV Band Incentive Auctions

Posted by Rini O'Neil, PC on February 21, 2012

On Friday, overwhelming majorities of both the House and the Senate passed a payroll extension bill that includes important changes to spectrum policy.  The legislation is expected to raise $15 billion for the Federal Treasury and to create hundreds of thousands of jobs. The details of the legislation are now delegated to the NTIA, the FCC and other agencies to develop reports and to adopt rules to implement Congress' objectives. 

Below is our take on some of the main provisions of the legislation as it applies to spectrum policy and wireless broadband services. 

Incentive Auctions and Band Clearing

Aside from public safety, the main driver of spectrum legislation was the need to address the spectrum crunch (real or imagined) for mobile wireless interests. To do this, Congress decided to offer TV broadcasters compensation to voluntarily relinquish their spectrum for repurposing by the FCC for broadband uses. Congress granted specific authority for a two-phase voluntary "incentive auction" that would clear a portion of the TV band (Channels 2-51) for mobile interests and, as part of that process, change the TV "white space" landscape. Because Channel 51 is adjacent to the Lower 700 MHz A Block (formerly Channel 52), the FCC is expected to attempt to "re-pack" the TV stations into the lower portion of the UHF band (beginning with Channel 14). The auction process is expected to take several years.

Under the legislation's language, "relinquishment" of a TV station means (1) relinquishing all usage rights to a channel, (2) relinquishing a UHF channel for a VHF channel, or (3) sharing a channel with another TV station. In lieu of relocation reimbursement, TV stations can obtain, as appropriate, a waiver of FCC rules to make flexible use of their spectrum so long as the TV broadcaster provides at least one programming stream at no charge. Depending on how the FCC ultimately interprets this provision, TV broadcasters could obtain a limited right to offer broadband on their spectrum alongside video service, but only if they forego relocation reimbursement.

Significantly, the FCC is required to reallocate and auction the T-Band (470-512 MHz, i.e., Channels 14-20) used by public safety in 11 major markets, with the spectrum sale used to cover relocation costs. Although not stated in the legislation, the FCC can also clear other users -- land mobile, for instance -- out of the TV bands. The FCC also can relocate radioastronomy users on Channel 37 at a cost of up to $300 million. The ability to relocate Channel 37 users could be a significant band-clearing opportunity because that channel operates as a nationwide encumbrance in the heart of the TV band.

TV White Spaces

Early House Majority versions of the bill would have required the FCC to auction all unlicensed spectrum (though it was unclear whether this included white space spectrum that had previously been allocated). The version of the legislation that passed essentially creates two flavors of white space.

  • First, the existing TV white space and the TV white space remaining after the re-packing -- remember, that's several years away -- will be available for fixed and mobile wireless use. There will no doubt be a loss of TV white space in many markets as a result of the incentive auction, but Congress and FCC staff expect that there will vacant TV channels will remain in many rural areas after the re-packing. The re-allocation of Channels 14-20 will create additional spectrum in major markets for TV stations to relocate, and the possible relocation of Channel 37 radioastronomy users will also clear spectrum.
  • Second, the FCC has the discretion to use relinquished spectrum or other spectrum to implement guard bands that would, in practice, create a nationwide unlicensed allocation as recommended in the National Broadband Plan. The FCC may "permit" the use of guard band for unlicensed use, but is not required to, and the guard bands must "be no larger than is technically reasonable to prevent harmful interference between licensed services outside the guard bands." (Reports were that earlier versions of the bill used the phrase "technically necessary.") Based on our discussions with the FCC, they see a guard band acting as a "duplex gap" band between LTE-Advanced uplink/downlink spectrum allocations, though this thinking is only preliminary and the ultimate band plan, channel sizes and technical rules will be determined through an FCC rulemaking proceeding. The limits of the FCC's discretion on guard bands appear to be subject to interpretation.

3550-3650 MHz

Earlier versions of both the Senate and House bills would have required the FCC to auction the 3550-3650 MHz band (with certain exceptions). The band is not allocated for commercial use; rather, the Department of Defense uses it at present. The final version removed the auction mandate, but requires NTIA to give priority to options involving exclusive non-Federal use and to choose sharing only if NTIA and OMB determine that relocation of a Federal user is not feasible because of technical or cost constraints. Thus, the 3550-3650 MHz band could be subject to auction ("exclusive use") unless it is not feasible to relocate Federal users.  If that's the case, commercial and Federal users could share the band under technical rules the FCC would adopt. The radar uses in the 3550-3650 MHz band may be difficult to relocate, which would make the case for shared unlicensed use easier.

Other Unlicensed Bands

The spectrum legislation identifies two additional bands for possible unlicensed use. First, NTIA, the Department of Defense and other agencies will study spectrum-sharing and risks to incumbent Federal users if unlicensed U-NII devices were allowed to operate in the 5350-5470 MHz and 5850-5925 MHz bands – a total of 195 MHz of spectrum. The agencies will issue reports on their findings. The report for the 5350-5470 MHz band is due in eight months, and the report on the 5850-5925 MHz band is due in 18 months.

Wireless Facilities Deployment

An under-appreciated section of the bill provides significant benefits to wireless companies, fixed and mobile, that want access to towers owned by state and local governments. Under the legislation, a local government must approve an "eligible facilities request" to modify an existing wireless tower or base station that does not "substantially change" the physical dimensions of the tower or base station. An "eligible facilities request" is a request to collocate new transmission equipment, remove transmission equipment or replace transmission equipment. The FCC will decide how to interpret "substantial change" pursuant to a rulemaking proceeding. In addition, GSA is required to develop master contracts for wireless antenna structures on property owned by the Federal government.

Conclusion

The new spectrum legislation is a beginning, not an end. Many details have yet to be determined, but many interests – including broadband providers, whether fixed or mobile, broadcasters, public safety users and others -- can find something to like in the new legislation.

Rebecca Rini addresses meeting of Educators about Congressional anti-piracy legislation

Posted by Rini Coran, PC on February 20, 2012

Rini Coran attorney Rebecca Rini addressed an audience of K-12 schools, Universities, Colleges and other non-profit educational organizations who hold EBS licenses from the FCC, FCC staff and others at the national EBS Association or NEBSA annual meeting in Newport Beach, California on Monday February 20th. She challenged the conventional wisdom that we don't have effective copyright enforcement on the Internet because we just haven't tried hard enough. She traced the history of copyright legislation and its impact on secondary education.

FCC Fines Radio Broadcaster $44,000 For Lack of Sponsorship Identification

Posted by David G. O’Neil on February 10, 2012

Last week the Federal Communications Commission fined a radio broadcaster $44,000 for violating the Commission’s sponsorship identification rules. Even more of an attention getter than the amount of the fine is the way FCC determined the fine -- by fining the broadcaster for each violation. 

In response to an FCC inquiry, the broadcaster stated that between March 2009 and May 2009, it aired program matter on behalf of Workers Independent News (“WIN”) in exchange for consideration.   The program matter consisted of 45 ninety-second spots, 27 fifteen-second promotional announcements, 2 two-hour programs and 1 one-hour program.  The broadcaster claimed that the appropriate sponsorship identifications were made for 34 of the 45 ninety-second spots.  The broadcaster stated that these 11 spots referenced WIN and the narrator but did not specifically state that the program was sponsored, paid for or furnished by WIN.  The announcements were directed toward a state legislative issue impacting the local economy.

The broadcaster argued that it had satisfied the sponsorship identification requirements by 1) identifying the sponsor by name in each announcement and 2) including each announcement within the other commercial matter for WIN, not within the station’s news content.  The FCC rejected each argument.  The FCC reminded the broadcaster that the purpose of the sponsorship identification rule is to provide listeners and viewers with information concerning who is attempting to persuade them.  The FCC determined that the mere mention of WIN did not provide sufficient information to the listener.  The FCC determined that Section 73.1212(f) of the Commission’s Rules, which considers mentioning the sponsor’s corporate or trade name during commercial matters as acceptable sponsorship identification, did not apply in this instance.

The FCC similarly rejected the broadcaster’s argument that the announcements were included within other commercial matter and not within the station’s news programming.  The FCC concluded that because the 11 announcements focused on a state legislative issue impacting the local economy, it would not be apparent to the listeners that the announcements were indeed sponsored programming, even if commercial programming surrounded the announcements.

The FCC’s analysis and determination is not surprising, but the way the FCC arrived at the $44,000 fine is.  The FCC relied upon its forfeiture guidelines, which establish a base forfeiture amount of $4,000 for each sponsorship identification violation.  The FCC multiplied this amount by the 11 announcements to arrive at the $44,000 fine, thereby treating each announcement as a separate violation.  While the FCC has discretion here, the fine seems somewhat excessive given that the broadcaster complied with the sponsorship identification requirements for the program length material and for an overwhelming majority of the announcements.  The FCC should have taken this into consideration and imposed a lesser fine.  This could represent a shift in how the FCC determines forfeitures in the future.  Regardless, this decision should serve as a wake up for broadcasters of the importance of complying with the Commission’s rules.

The message from the Commission is clear and unmistakable.   The agency will fine broadcasters for each violation regardless of mitigating circumstances.  Substantial or good faith compliance will not be enough.  Broadcasters should review their procedures for broadcasting commercial matter both to determine compliance with the sponsorship identification rules and to make sure that no commercial matter slips through which inadvertently does not include the requisite sponsorship identification.

Will M.I.A.'s "Middle Finger Malfunction" at the Super Bowl Lead to FCC Fines?

Posted by Rini Coran, PC on February 06, 2012

Stop me if you’ve heard this before.  An entertainer’s provocative gesture during the Super Bowl halftime show riles viewers and leads to calls for action by the Federal Communications Commission. Sound familiar? 

This football season, the entertainer in question is musical artist M.I.A., who drew attention when she “flipped off millions of viewers during TV’s most-watched telecast of the year.”  During her halftime performance, she made the “middle finger” gesture while singing a song in which the “S-Word” was implied but not clearly sung. The incident, which some have called a “middle finger malfunction,” recalls the 2004 Super Bowl halftime show involving Janet Jackson.  The FCC imposed $550,000 in fines ($27,500 per station) against Viacom-owned CBS broadcast stations for Ms. Jackson’s infamous “wardrobe malfunction,” only to have the fines twice stricken by an appellate court – once on appeal from the FCC, and once on remand from the U.S. Supreme Court. 

So far, the FCC has not commented regarding whether any indecency complaints have been filed with the Commission about last night's program. Thanks to statutory changes made a few years ago, the maximum forfeiture penalty for broadcasts of indecent, obscene or profane material is now higher than when the Jackson case was decided: $325,000 for each violation or each day of a continuing violation, capped at $3 million for a single act or failure to act. 

I've previously blogged about the U.S. Supreme Court's review of the FCC’s authority to regulate broadcast indecency with respect to “fleeting expletives” (language such as the “F-Word” or the “S-Word”) and nude buttocks. The “middle finger” gesture, however, involves neither nudity nor spoken language and is not at issue in those cases. So, does a middle finger gesture on broadcast TV violate the FCC’s rules?

While many use the terms “indecency” and “obscenity” interchangeably, in fact the FCC enforces laws that target discrete categories of obscene or indecent programming on broadcast (not cable or satellite) TV: 

  • The FCC defines indecent material as “language or material that, in context, depicts or describes, in terms patently offensive as measured by contemporary community standards for the broadcast medium, sexual or excretory organs or activities.”  Such material may only be broadcast during safe harbor hours (i.e., 10 p.m. to 6 a.m.).
  • The Supreme Court defines obscene material (which cannot be broadcast at any time) as material that meets a three-pronged test: 
    • An average person, applying contemporary community standards, must find that the material, as a whole, appeals to the prurient interest;
    • The material must depict or describe, in a patently offensive way, sexual conduct specifically defined by applicable law; and 
    • The material, taken as a whole, must lack serious literary, artistic, political or scientific value.

With respect to specific FCC guidance, the FCC does not appear to have issued any order finding the “middle finger” gesture to be obscene or indecent. A few years ago, the FCC briefly mentioned the gesture (fn. 94) in assessing a fine against Fox for “fleeting expletives” used by entertainer Nicole Richie during a televised awards show. The FCC argued that Fox was on notice that Ms. Richie had demonstrated a “penchant for vulgarity” by using the middle finger gesture during a previous broadcast. Separately, press reports indicate that the FCC received complaints about a 2009 awards show broadcast on NBC where director film Darren Aronofsky made the gesture on camera, but no FCC decision has been issued in connection with this broadcast. Alternatively, some have questioned whether FCC policies regarding the use of certain “visual images” in conjunction with song lyrics would encompass the middle finger gesture.

In my view, this sort of "Flying Fickle Finger of Fate" should not be deemed an FCC violation. There are definitional issues, First Amendment concerns and questions of whether the FCC has given fair, adequate notice.  Given the uncertainty about the FCC’s authority to enforce broadcast indecency policies due to the pending U.S. Supreme Court case, even if complaints are filed with the FCC, it is unlikely that the FCC would reach a decision on the complaints before the Court issues its decision.  In the meantime, it remains to be seen whether this halftime performance will sway public opinion on the issue or will influence the Court’s decision.