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FCC Imposes $240,000 Fine on Wireless Equipment Provider For Violating Marketing and Authorization Rules

On August 26, 2014, the Federal Communications Commission’s (“FCC”) Enforcement Bureau (“Bureau”) released an Order containing a Consent Decree with international equipment importer ASUSTeK Computer Inc. (“ASUSTeK”), wherein ASUSTeK was ordered to pay a $240,000 fine for violating the FCC’s rules and a provision of the Communications Act of 1934 (“Act”) governing the authorization and marketing of radio frequency (“RF”) equipment. See In the Matter Of ASUSTeK Computer Inc., File Nos. EB-SED-14-00013341, EB-SED-13-00008785, Order, DA 14-1044.

This Order and Consent Decree is another prime example of the extremely stringent Bureau enforcement policies as forecasted by our firm in a previous Client Advisory and Memorandum.

This Advisory summarizes the ASUSTeK Consent Decree, and compares the imposed penalty with previous fines, consent decrees, and forfeitures related to an equipment provider’s failure to comply with the Commission’s marketing and authorization rules.

Section 302(b) of the Act and Section 2.803 of the FCC’s rules prohibit the marketing of RF devices in the U.S. unless the devices have been properly authorized (i.e., tested and subject to FCC certification or related procedure) and comply with the FCC’s RF emissions limits and other technical standards.  Section 2.1043 of the FCC’s rules prohibits the marketing of a modified RF device without FCC approval.   Equipment manufacturers, importers, and/or parties that modify a device are responsible for ensuring compliance with the Act and FCC rules.

In December 2012, the FCC was notified that ASUSTeK was marketing a handheld computer tablet that did not comply with the FCC’s rules regarding specific absorption rate (“SAR”) limits.  In July 2013, the FCC received a complaint that ASUSTeK was marketing two wireless routers that exceeded the FCC’s maximum allowed output power, and had, without FCC authorization, modified the devices to utilize an antenna configuration different from that which had been previously reported to the FCC.

After a lengthy enforcement proceeding involving meetings and communications between the Bureau and ASUSTeK’s legal counsel, and extensive retesting of the subject devices, the Bureau and ASUSTeK agreed to the Consent Decree.  In addition to the substantial fine the Bureau levied on ASUSTeK, the Bureau also ordered ASUSTeK to publicly admit liability for violating the Act and FCC rules.   ASUSTeK was further ordered to  implement a long-term compliance plan, subject to FCC supervision.  Any failure by ASUSTeK to abide by the compliance plan could result in the Bureau imposing additional financial penalties, and other sanctions.

Our clients should take note of this consent decree for several reasons.   First, the staggering civil penalty of $240,000 is well above the amounts that the Bureau used to be impose on RF equipment providers that were found to violate the FCC’s rules.   For example, as recently as  February 2014, the Bureau negotiated a consent decree with an RF equipment provider that was alleged to have marketed a non-compliant device in violation of FCC rules that resulted in a small $13,000 fine. See In the Matter of EnerTrac, Inc. File No.: EB-SED-12-00001038, Order, DA 14-102 (rel. Feb. 7, 2014).  Moreover, in that case, there was no requirement that the equipment provider publicly admit that it had violated any rule or law.    A similar proceeding that concluded in November 2013 resulted in an $18,500 forfeiture.  See In the Matter of Gallien Technology, Inc.File No.: EB-SED-13-000087321,Order, DA 13-2167 (Rel. Nov. 14, 2013).

Accordingly, the ASUSTeK Consent Decree is an instructive example of a new hard line stance by the Bureau regarding forfeitures and other sanctions for violations of the FCC’s rules.

It is important to note that enforcement proceedings involving alleged violations of the FCC’s RF equipment technical and marketing rules adversely affect not only the “responsible parties,” e.g., importer or manufacturer, but seller or user of such equipment.   For example the FCC has the authority to order noncompliant equipment off the market and prohibit the sale and use of such equipment.   This can result in devastating financial consequences for manufacturers and parties that contract with them.   It is critical that any party to a contract for RF equipment include protective provisions in the agreement.   This includes responsible parties and  those who contract with them.

In light of our Firm’s prior guidance on the new, more stringent policies of the Bureau, as confirmed by the ASUSTeK Consent Decree, we again caution clients and other communications providers of their potential exposure to the crippling consequences of failing to comply with their FCC compliance obligations.

Should you have any questions regarding this Advisory, the FCC’s new enforcement policies, or outage reporting, you may contact Ronald E. Quirk, Jr. at req@commpliancegroup.com or by phone at 703-714-1305.  For more information about The Commpliance Group’s Equipment Authorization services, please visit us at: www.CommplianceGroup.com.

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