On July 7, 2014, the FCC issued a Forfeiture Order fining TV Max $2,250,000 for retransmitting six broadcast station signals without the broadcaster’s consent.  The FCC’s action this week affirmed the forfeiture originally proposed last summer in a Notice of Apparent Liability. 

            Background.  The Communications Act and FCC rules prohibit cable operators from retransmitting a broadcast signal without the station’s “express authority.”  Receiving this authority is referred to as “retransmission consent.”

In this case, cable operator TV Max served more than 10,000 subscribers in approximately 250 apartment and other multiple-dwelling unit buildings (MDUs).  The cable operator had retransmission consent agreements with each of the six broadcast stations whose signals it was providing to its customers for the 2008-2011 carriage cycle, but the agreements expired in late 2011 and early 2012.  For the 2012-2014 cycle, each of these broadcasters exercised their right to elect retransmission consent on the cable operator’s system.

The cable operator did not extend or enter into new agreements for the 2012-2014 cycle, and instead continued carrying the stations’ signals.  Each of the six broadcasters filed complaints with the FCC.  In response, the cable operator claimed that retransmission consent was not required because it was carrying the signals under the master antenna television (MATV) exception to the retransmission consent rules. 

MATVs are defined as video distribution facilities that use closed transmission paths without using any public right-of-way.  Under the MATV exception, a broadcaster’s consent is not required if, among other things, the broadcast signal distributed to MATV subscribers is directly received by the MATV facilities.  The MATV exception applies only when an operator merely facilitates a subscriber’s access to an over-the-air television signal received by a MATV antenna and where the signal made available to subscribers, without charge and consistent with the exception’s other requirements, is the same over-the-air signal received by the MATV antenna.

In this case, the cable operator received the signals from an off-site headend and delivered them to the MDUs over a fiber ring connection. The FCC found that the MATV exception did not apply under these circumstances.  The operator also claimed that it was in the process of converting its MDU systems to allow reception of broadcast signals at each MATV facility and intended to complete that process before its retransmission consent agreements expired.  However, that process was not complete by the time its agreements had expired and the FCC did not find the cable operator’s intentions to convert from cable operations to MATV operations to provide a viable excuse for continuing to retransmit the broadcast stations without consent.  The FCC acknowledged that the cable operator did not charge for the broadcast stations, but found this fact unavailing as well.  The FCC further found that the violations continued even after the MATV conversion process was complete in July 2012 (almost seven months after most of the retransmission consent agreements expired) because the cable operator did not deliver the broadcast signals solely through the MATV system in even those MDUs that had undergone conversion.

Proposed Forfeiture.  The base fine for violation of the FCC’s broadcast carriage rules is $7,500, with a maximum of $37,500 for each violation or each day of a continuing violation, up to a total of $375,000.  In this case, the FCC increased the proposed fine amount to $2,250,000 ($375,000 for each station) based on several factors.  First, the violations involved six separate stations.  Second, the FCC found that the violations were not only willful – because the cable operator “consciously and deliberately retransmitted” the signals without retransmission consent agreements – but also repeated, because they are continuing and have lasted for over a year.  Third, and perhaps most significantly, the cable operator continued the unauthorized retransmissions even after the FCC’s Media Bureau initially found that the retransmissions did not comply with the Communications Act and FCC rules.

Forfeiture Order.  The FCC concluded that the proposed $2,250,000 forfeiture was warranted given the longstanding and repeated nature of the unauthorized carriage, and since the unauthorized carriage continued even after the Media Bureau initially found that the retransmissions did not comply with the Communications Act and FCC rules. 

The FCC further directed TV Max to submit a written statement no later than 30 days after the release of the Forfeiture Order, detailing the steps it had taken to come into compliance, or, in the alternative, to confirm that TV Max has converted to DISH Network programming as it claimed it would do by December 31, 2013.  This direction came with a warning that continued carriage of the broadcast stations’ signals without the station’s consent would potentially subject TV Max to additional enforcement action.

If you have questions about the broadcast carriage rules or retransmission consent agreements, please contact Scott Friedman at (312) 372-3930 or sfriedman@cinnamonmueller.com.

FCC Cites Florida Motel for Signal Leakage and Aeronautical Frequency Violations

The FCC Enforcement Bureau’s Miami Office recently cited the Miami Airport North Days Inn for failing to notify the FCC of the operation of its MVPD system in the aeronautical band and also for exceeding the FCC’s signal leakage limits.

Under the FCC’s signal leakage rules, cable and non-cable MVPDs operating within frequency bands 108-137 MHz and 225-400 MHz must comply with specific reporting and technical requirements.  In this case, on June 20, 2014, an agent from the Enforcement Bureau’s Miami Office found that the Days Inn MVPD system was using aeronautical frequencies, but had not filed FCC Form 321 (Aeronautical Frequency Notification) to notify the FCC of its operation in the aeronautical band.  The agent further found that the Days Inn MVPD system was emitting a radio carrier signal above allowed limits.

The citation requires the Miami Airport North Days Inn, within 30 days, to describe the steps it has taken or plans to take to come into compliance with the cable signal leakage and notification rules, as well as a timeline for any pending corrective actions immediate steps to come into compliance and to provide to the FCC.  Failing to respond in writing, or an inadequate, incomplete, or misleading response, may subject the Miami Airport North Days Inn to additional sanctions. 

While the FCC has generally targeted non-cable MVPDs over the past few years for signal leakage enforcement, cable operators should take appropriate steps to be prepared if the FCC shifts its enforcement focus to cable operators.  Failure to comply with the Form 321 filing requirements or failure to monitor for signal leakage and file Form 320 (Annual Signal Leakage Report) may subject MVPDs to fines up to $37,500 for each violation or day of a continuing violation.

If you have questions regarding the FCC’s signal leakage rules, please contact Scott Friedman at (312) 372-3930 or sfriedman@cinnamonmueller.com.