Earlier this month, the Federal Communications Commission (“FCC”) asked for comment on a Petition for Rulemaking filed by the Consumer Technology Association (“CTA”) that proposes to modify the FCC’s device authorization rules to allow the importation and conditional, preauthorization marketing and sales of radiofrequency (“RF”) devices that have not yet been approved under the FCC’s rules.  The deadline for filing comments supporting or opposing the petition is July 9, 2020.

Section 302 of the Communications Act grants the FCC authority to prevent RF devices from causing harmful radiofrequency interference.  The FCC has exercised this authority by adopting rules regulating all phases of an RF device’s lifecycle, from manufacturing or import to marketing and sales.  Generally, no device capable of emitting radiofrequency energy may be manufactured, imported, marketed, or sold unless that device has been determined to meet FCC rules concerning authorization, identification and labeling, and recordkeeping.  The FCC’s authorization requirements vary somewhat depending on the class of RF device, but authorization typically requires the completion of emissions and interference testing.

Section 2.803 of the FCC’s rules generally prohibits the marketing of any unauthorized RF device.  See 47 C.F.R. § 2.803.  The FCC’s definition of “marketing” extends to any sale or lease, or offering for sale or lease, including advertising, as well as any importation, shipment, or distribution for the purpose of selling or leasing.  See id. § 2.803(a).  However, there are limited exceptions to this blanket prohibition. Specifically, the FCC’s rules permit:

  1. conditional sales contracts between manufacturers and wholesalers or retailers provided delivery is made contingent upon compliance with the Commission’s authorization and technical requirements;
  2. offering for sale an RF device that is in the conceptual, developmental, design, or preproduction stage provided that device is offered for sale solely to a business, commercial, industrial, scientific, or medical user and the prospective buyer is advised in writing at the time of the offer that the equipment is subject to FCC rules and that the equipment will comply with these rules prior to delivery to the buyer or distribution centers;
  3. advertising or displaying an unauthorized device (e.g., at a trade show or exhibition) provided the advertisement or display is accompanied by a conspicuous notice stating that the device is unauthorized and is not, and may not be, offered for sale until authorization is obtained; and
  4. selling an evaluation kit (an assembly of components, subassemblies, or circuitry, including software) provided the sales are limited to product developers, software developers, and system integrators, and the kit includes a notice stating that the kit is not a finished product and, when assembled, may not be resold or otherwise marketed until authorization is obtained.

Id. § 2.803(c) (emphasis added).

CTA’s petition focuses on the first two exceptions and seeks revisions—or, in the alternative, a waiver—of these exceptions to allow conditional sales of unauthorized RF devices directly to consumers.  Specifically, CTA’s petition proposes that the FCC revise the first exception to expand permissible pre-authorization conditional sales to “potential customers” instead of just “wholesalers or retailers” and delete the second exception—which CTA argues addresses an even smaller class of prospective buyers—altogether.

In addition to the general prohibition on pre-authorization sales of RF devices, the FCC’s rules also broadly prohibit the importation of unauthorized devices.  Under section 2.1204 of the FCC’s rules, the importation of unauthorized RF devices generally is prohibited, and manufacturers may import only a certain number of unauthorized devices for use in limited contexts such as trade shows, testing to determine compliance with FCC rules, and product development.  See 47 C.F.R. § 2.1204(a).

CTA’s petition seeks to revise section 2.1204 to permit the importation of limited numbers of RF devices prior to authorization for the specific purpose of preparing the devices for retail sales.  These permissible “pre-marketing activities” would include sales preparation such as loading devices with software to demonstrate specific features of the devices when used in retail locations, packaging devices, and delivering limited quantities of the devices to retail locations.  However, these activities would exclude any display of the devices prior to authorization.

To ensure that any devices imported under this proposed “pre-marketing activities” exception would not cause harmful interference or fall into the hands of consumers, CTA’s petition proposes the following safeguards:

  • Imports would be limited to RF devices for which manufacturers have a reasonable basis to believe authorization will be granted within 30 days of importation;
  • Imported devices would not be displayed or advertised at retail locations prior to equipment authorization and would bear labels indicating this display and advertisement restriction
  • Imported devices would remain under the ownership of the device manufacturer;
  • Manufacturers would be required to have processes in place allowing retrieval of the equipment from retailers should equipment authorization be denied; and
  • Imports for “pre-marketing activities” would be limited to 4,000 devices unless otherwise permitted by the Chief of the Commission’s Office of Engineering and Technology.

If the FCC is persuaded by commenters, the next step will be for the agency to issue a Notice of Proposed Rulemaking formally proposing to loosen the marketing and importation restrictions.

Print:
EmailTweetLikeLinkedIn
Photo of Matthew DelNero Matthew DelNero

Matt DelNero works with companies in the telecommunications, technology and media sectors—advising them in policy development, regulatory compliance, and commercial transactions, among other settings.

Photo of Yaron Dori Yaron Dori

Yaron Dori has over 20 years of experience in telecommunications, privacy, and consumer protection law, advising telecom, technology, life sciences, media and other types of companies on their most pressing business challenges. He is a former chair of the Communications and Media practice…

Yaron Dori has over 20 years of experience in telecommunications, privacy, and consumer protection law, advising telecom, technology, life sciences, media and other types of companies on their most pressing business challenges. He is a former chair of the Communications and Media practice group and currently serves as a member of the firm’s eight-person Management Committee.

Yaron’s practice focuses on strategic planning, policy development, transactions, investigations and enforcement, and regulatory compliance.

He represents clients before federal regulatory agencies—including the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC)—and the U.S. Congress in connection with a range of policy issues under the Communications Act, the Federal Trade Commission Act, and similar statutes. He also represents clients on state regulatory and enforcement matters, including those that pertain to telecommunications and data privacy regulation. His unique experience in telecommunications, privacy, and consumer protection enables him to advise clients on key business issues in which these areas intersect.

With respect to telecommunications matters, Yaron advises clients on a broad range of business, policy and consumer-facing issues, including:

  • Broadband deployment and regulation;
  • IP-enabled applications, services and content;
  • Equipment and device authorization procedures;
  • The Communications Assistance for Law Enforcement Act (CALEA);
  • Customer Proprietary Network Information (CPNI) requirements;
  • The Cable Privacy Act
  • Net Neutrality; and
  • Local competition, universal service, and intercarrier compensation.

Yaron also has extensive experience in structuring transactions and securing regulatory approvals at both the federal and state levels for mergers, asset acquisitions and similar transactions involving large and small FCC and state licensees.

With respect to privacy and consumer protection matters, Yaron advises clients on a range of business, strategic, policy and compliance issues, including those that pertain to:

  • The California Consumer Privacy Act (CCPA);
  • The Electronic Communications Privacy Act (ECPA);
  • Location-based services that use WiFi, beacons or similar technologies;
  • Online Behavioral Advertising;
  • Online advertising practices, including native advertising and endorsements and testimonials; and
  • The application of federal and state telemarketing, commercial fax, and other consumer protection laws, such as the Telephone Consumer Protection Act (TCPA), to voice, text, and video transmissions.

Yaron also has experience advising companies on FCC (Enforcement Bureau), FTC and state attorney general investigations into various consumer protection and communications matters, including those pertaining to social media influencers, digital disclosures, product discontinuance, and advertising claims.

Photo of Jennifer Johnson Jennifer Johnson

Jennifer Johnson is a partner specializing in communications, media and technology matters who serves as co-chair of Covington’s global and multi-disciplinary Internet of Things (IoT) group. She represents and advises content distributors, broadcast companies, trade associations, and other media and technology entities on…

Jennifer Johnson is a partner specializing in communications, media and technology matters who serves as co-chair of Covington’s global and multi-disciplinary Internet of Things (IoT) group. She represents and advises content distributors, broadcast companies, trade associations, and other media and technology entities on a wide range of issues. Jennifer has more than two decades of experience advising clients in the communications, media and technology sectors, and has served as a co-chair for these practices for more than 15 years. On IoT issues, she collaborates with Covington’s global, multi-disciplinary team to assist companies navigating the complex statutory and regulatory constructs surrounding this evolving area, including legal issues with respect to connected and autonomous vehicles, internet connected devices, smart ecosystems, and other IoT products and services.

Jennifer assists clients in developing and pursuing strategic business and policy objectives before the Federal Communications Commission (FCC) and Congress and through transactions and other business arrangements. She regularly advises clients on FCC regulatory matters and advocates frequently before the FCC. Jennifer has extensive experience negotiating content acquisition and distribution agreements for media and technology companies, including program distribution agreements with cable, satellite, and telco companies, network affiliation and other program rights agreements for television companies, and agreements providing for the aggregation and distribution of content on over-the-top app-based platforms. She also assists investment clients in structuring, evaluating, and pursuing potential investments in media and technology companies.

Photo of Gerard J. Waldron Gerard J. Waldron

Gerry Waldron represents communications, media, and technology clients before the Federal Communications Commission and Congress, and in commercial transactions. Mr. Waldron served as chair of the firm’s Communications and Media Practice Group from 1998 to 2008. Prior to joining Covington, Mr. Waldron served…

Gerry Waldron represents communications, media, and technology clients before the Federal Communications Commission and Congress, and in commercial transactions. Mr. Waldron served as chair of the firm’s Communications and Media Practice Group from 1998 to 2008. Prior to joining Covington, Mr. Waldron served as the senior counsel on the House Subcommittee on Telecommunications. During his work for Congress, he was deeply involved in the drafting of the 1993 Spectrum Auction legislation, the 1992 Cable Act, the Telephone Consumer Protection Act (TCPA), CALEA, and key provisions that became part of the 1996 Telecommunications Act.

Mr. Waldron’s practice includes working closely on strategic and regulatory issues with leading IT companies, high-quality content providers in the broadcasting and sports industries, telephone and cable companies on FCC proceedings, spectrum entrepreneurs, purchasers of telecommunications services, and companies across an array of industries facing privacy, TCPA and online content, gaming, and online gambling and sports betting-related issues.

Mr. Waldron has testified on communications and Internet issues before the FCC, U.S. House of Representatives Energy & Commerce Committee, the House Judiciary Committee, the Maryland Public Utility Commission, and the Nevada Gaming Commission.