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                           Before the
                Federal Communications Commission
                     Washington, D.C. 20554

In the Matter of                )
                                )
Skywave Electronics, Inc.       )    File No. EB-00-AT-289
Rockford, Illinois             )     NAL/Acct. No. X3248003      
                                     
                  MEMORANDUM OPINION AND ORDER 

Adopted:  March 13, 2001                     Released:  March 15, 
2001  

By the Chief, Enforcement Bureau:

                        I.  INTRODUCTION

1.        In this Memorandum  Opinion and  Order (``Order''),  we 
  set aside the previously released Memorandum Opinion and  Order 
  in  this matter,1  deny  a Petition  for  Reconsideration,  and 
  affirm   the   Forfeiture   Order2   issued   against   Skywave 
  Electronics,  Inc.  (``Skywave'').  We  issued  the  Forfeiture 
  Order against Skywave  in the amount of seven thousand  dollars 
  ($7,000) for  violating Section 302  of the Communications  Act 
  of  1934,  as  amended (``Act'')3  and  Section  2.907  of  the 
  Commission's Rules  (``Rules''),4 by marketing a  non-compliant 
  device for use in the FM broadcast band. 

2.        On May 9, 2000, the  District Director of the  Atlanta, 
  Georgia Field Office issued a Notice of Apparent Liability  for 
  Forfeiture (``NAL'')  in the amount  of seven thousand  dollars 
  ($7,000)  to Skywave  for the  referenced violations.   Skywave 
  filed a response to the NAL.  On December 14, 2000, the  Chief, 
  Enforcement  Bureau (``Bureau'')  released a  Forfeiture  Order 
  issuing a $7,000 forfeiture to Skywave.  On February 26,  2001, 
  the Bureau released  a Memorandum Opinion and Order  dismissing 
  a   Petition   for  Reconsideration   (``Petition'')   of   the 
  Forfeiture Order,  because the petition  was not timely  filed.  
  The copy  of the  Petition in  the Bureau's  possession bore  a 
  January  18, 2001,  date stamp  by the  Commission's  mailroom.  
  Unbeknownst to the  Bureau, Skywave had, in fact, timely  filed 
  a Petition  for Reconsideration with  the Commission.   Skywave 
  submits a copy of the Petition bearing the Secretary's  January 
  16,  2001, date  stamp.  However,  the  Bureau did  not  become 
  aware that the Petition  was timely filed until March 1,  2001, 
  when Skywave  filed a  request that  the Bureau  set aside  its 
  Memorandum Opinion and  Order and consider the Petition on  its 
  merits.  Because  Skywave actually did  file a timely  Petition 
  for Reconsideration, we  will set aside the Memorandum  Opinion 
  and  Order released  on February  26,  2001, and  consider  the 
  merits  of  the  arguments  Skywave  raises  in  its  Petition.  
  Accordingly,  Skywave's  request  to  set  aside  the  previous 
  Memorandum Opinion and Order in this matter is granted, and  we 
  proceed to consider its arguments.

                         II.  BACKGROUND     

3.        Skywave  holds  a  Grant  of  Equipment   Authorization 
  (``Authorization'') for the  manufacture and distribution of  a 
  low-power   transmitter  device,   the  SKY-2000   Digital   FM 
  Transmitter.5  On August 6, 1999, an agent in the  Commission's 
  Denver Field Office  investigated a complaint of an illegal  FM 
  broadcast station.   In the course  of that investigation,  the 
  agent  found that  the  station was  using  Skywave's  SKY-2000 
  digital  FM  transmitter.  Field  strength  measurements  taken 
  during  the   investigation  showed  that   the  SKY-2000   was 
  operating  at  29  times  the  permitted  level  authorized  by 
  Section 15.239  of the  Rules6 for  a non-licensed  low-powered 
  transmitter.    Subsequently,  the   Commission's   Office   of 
  Engineering  and Technology  (``OET'') requested  and  obtained 
  two  sample  transmitters from  Skywave  to  be  evaluated  for 
  compliance with  its Authorization, and found  that one of  the 
  units failed  to conform  to the emission  requirements of  the 
  Authorization.  OET issued a citation to Skywave on October  5, 
  1999 for marketing a non-compliant device.

4.        On September  28, 1999,  agents from  the  Commission's 
  Atlanta Field Office began an investigation into the  marketing 
  of  Skywave low  power FM  transmitters, following  local  news 
  reports featuring the transmitters.  Agents found several  non-
  compliant SKY-2000  FM transmitters distributed  by Skywave  in 
  operation throughout the  Atlanta metropolitan area.  During  a 
  telephone conversation that same day, the president of  Skywave 
  advised an  agent of the  Atlanta Field Office  that all  units 
  shipped from  Skywave after  July 13, 1999  were in  compliance 
  with the revised Authorization issued July 13, 1999.   However, 
  FCC agents obtained  evidence that several non-compliant  units 
  were shipped after July 13, 1999.

5.        On May 9, 2000, the Atlanta Office issued a NAL in  the 
  amount $7,000 to Skywave  for violations of Section 302 of  the 
  Act  and Section  2.907  of  the Commission's  Rules.   In  its 
  response  to the  NAL,  Skywave requested  waiver  or  dramatic 
  reduction of the forfeiture but did not deny violating  Section 
  302 of the Act and Section 2.907 of the Commission's Rules. 

6.        In its Forfeiture  Order, released  December 14,  2000, 
  the Bureau concluded  that Skywave violated Section 302 of  the 
  Act and Section 2.907 of the Commission's Rules by marketing  a 
  non-compliant device for  use in the FM broadcast band.   These 
  violations involved  the sale and distribution  of at least  11 
  FM  transmitters  that   exceeded  the  power  limitations   of 
  Skywave's FCC authorization.   The Forfeiture Order assessed  a 
  $7,000  forfeiture for  the violations.   The Forfeiture  Order 
  also found that as the holder of the Authorization, Skwyave  is 
  responsible for the  compliance of its radio frequency  devices 
  with the  applicable standards.7  In  addition, the  Forfeiture 
  Order  stated  that although  Skywave  may  have  taken  prompt 
  action to  rectify the problems, remedial  action to correct  a 
  violation,  while commendable,  will  generally not  nullify  a 
  forfeiture  penalty.8  The  Forfeiture Order  also stated  that 
  Skywave's  contention that  it  merely distributes  the  device 
  does not  excuse the  offense.  Finally,  the Forfeiture  Order 
  concluded  that there  was no  evidence in  Skywave's  response 
  that would support an inability to pay claim.

7.        In its Petition, Skywave argues that we should  rescind 
  the forfeiture  because of  Skywave's financial  circumstance.9  
  In support  of its  inability to pay  claim, Skywave  submitted 
  copies of its tax returns for 1997, 1998, and 1999, as well  as 
  an income statement and  balance sheet for 1998 and profit  and 
  loss statement for 1999.  These documents reflect that  Skywave 
  had gross revenues of  $128,289 in 1997, $190,879 in 1998,  and 
  $233,795 in  1999.  Skywave also  includes a copy  of a  letter 
  from  its bank  stating that  Skywave's  loan matured  in  June 
  2000, and  that it  still owes $61,689.17  in unpaid  principal 
  and $3,310.49  in post maturity  interest.  Skywave points  out 
  that according  to the bank's  letter, the amount  of the  loan 
  ``is  secured  by  several  mortgages  as  well  as  inventory, 
  accounts  and equipment.''   Skywave argues  that if  its  bank 
  ``calls  the  loan''  and it  cannot  pay,  ``Skywave  will  go 
  under.''   Skywave also  contends that  the  facts of  the  two 
  cases  cited  in  the  Forfeiture  Order  are  inapposite  with 
  respect to the  amount of money involved.10  Skywave  complains 
  that the cited case law fails to prove that Skywave, a  company 
  that loses money annually, is not entitled to leniency  because 
  it cannot afford to pay a forfeiture.  If we deem a  forfeiture 
  appropriate  on  the basis  of  facts  unrelated  to  Skywave's 
  financial  circumstance,  Skywave asserts,  the  Bureau  should 
  consider reducing the forfeiture amount.

                      III.      DISCUSSION

8.        As the NAL explicitly states, the forfeiture amount  in 
  this case  was assessed  in accordance with  Section 503(b)  of 
  the Act,11  Section 1.80 of the  Rules,12 and The  Commission's 
  Forfeiture Policy  Statement and Amendment  of Section 1.80  of 
  the Rules to Incorporate the Forfeiture Guidelines, 12 FCC  Rcd 
  17087 (1997),  recon. denied,  15 FCC  Rcd 303  (1999)(``Policy 
  Statement'').   Section 503(b)  of the  Act requires  that  the 
  Commission take into account the nature, circumstances,  extent 
  and  gravity  of  the  violation  and,  with  respect  to   the 
  violator,  the degree  of  culpability, any  history  of  prior 
  offenses, ability  to pay,  and other such  matters as  justice 
  may require.13

9.        Skywave's  arguments  do  not  justify  rescission   or 
  reduction of  the forfeiture amount on  the basis of  financial 
  losses.   When a  licensee has  presented no  other  persuasive 
  evidence that  payment of  a forfeiture  would cause  financial 
  difficulty, the presence  of financial loss does not by  itself 
  necessarily  establish   a  licensee's  inability   to  pay   a 
  forfeiture.14  Skywave  presents a  copy of a  letter from  its 
  bank regarding  an outstanding  loan, and states  that it  will 
  ``go under'' if its bank ``calls the loan''.  However,  Skywave 
  does not indicate that its bank has already seized its  assets.  
  Thus, although Skywave claims that it cannot afford to pay  the 
  forfeiture,  it has  provided no  persuasive information  other 
  than financial losses to support this claim.

10.       We disagree  with  Skywave's contention  that  the  two 
  cases  cited in  the  Forfeiture  Order, Hinton  and  PJB,  are 
  inapposite.  The  Forfeiture Order  did not cite  the cases  to 
  compare  the underlying  facts  of  those cases  to  the  facts 
  herein.   The  Forfeiture   Order  cited  the  cases  for   the 
  proposition that financial  losses alone do not establish  that 
  a business  cannot pay  a forfeiture where  its gross  revenues 
  are sufficiently great.

11.       We have examined Skywave's petition for reconsideration 
  pursuant  to the  statutory factors  set  forth above,  and  in 
  conjunction with the Policy Statement as well.  As a result  of 
  our reconsideration,  we conclude  that Skywave  has failed  to 
  provide  a  sufficient  justification  for  reduction  of   the 
  forfeiture amount.

                        IV.  ORDERING CLAUSES

12.         Accordingly,  IT  IS  ORDERED  that,  the  Memorandum 
  Opinion and  Order, DA  01-495, (Enf.  Bur., released  February 
  26, 2001), IS SET ASIDE 

13.       IT IS FURTHER ORDERED that, pursuant to Sections  1.106 
  of the  Rules, Skywave's  Petition for  Reconsideration of  the 
  Forfeiture  Order (NAL/Acct.  No. X3248003)  released  December 
  14, 2000, IS DENIED.

14.       IT IS FURTHER ORDERED that, pursuant to Section  503(b) 
  of  the Act15  and  Section  1.80(f) of  the  Rules,16  Skywave 
  Electronics,  Inc., shall,  within 30  days of  the release  of 
  this Memorandum  Opinion and  Order, pay the  amount of  $7,000 
  for violating  Section 302 of the  Communications Act of  1934, 
  as amended  (``Act'')17 and Section  2.907 of the  Commission's 
  Rules.  If the  forfeiture is  not  paid within  the  specified 
  period, the case may  be referred to the Department of  Justice 
  for  collection  pursuant  to  Section  504(a)  of  the  Act.18  
  Payment may  be made  by credit card  through the  Commission's 
  Chief, Revenue and  Receivables Operations Group at (202)  418-
  1995 or  by mailing a check  or similar instrument, payable  to 
  the  order of  the Federal  Communications Commission,  to  the 
  Federal  Communications Commission,  P.O. Box  73482,  Chicago, 
  Illinois  60673-7482.  The  payment should  note the  NAL/Acct. 
  No. 915OR0003.  Requests for full payment under an  installment 
  plan  should be  sent to:   Chief, Credit  and Debt  Management 
  Center, 445 12th Street, S.W., Washington, D.C. 20554. 19

     15.  IT IS FURTHER ORDERED that,  a copy of this  Memorandum 

Opinion and Order shall be sent by certified mail, return receipt 

requested, to  counsel for  Skywave Electronics,  Inc., Lewis  H. 

Goldman, Esq., Law Offices, Lewis  Goldman, P.C., Plaza Suite  9, 

4141 North  Henderson Road,  Arlington, Virignia,  22203, and  to 

Skwyave Electronics,  Inc.,  1205  N.  Horace  Avenue,  Rockford, 

Illinois 61101.
                    
                              FEDERAL COMMUNICATIONS COMMISSION  



                              David H. Solomon
                              Chief, Enforcement Bureau
_________________________

  1   Memorandum  Opinion  and  Order,  DA  01-495,  (Enf.  Bur., 
released February 26, 2001) (``MO&O'').

  2   Forfeiture  Order,  NAL/Acct.  No.  X3248003  (Enf.   Bur., 
released December 14, 2000).

  3  47 U.S.C.  302a.

  4  47 C.F.R.  2.907.

5                FCC   Identifier  NX3SKY2000.   The  grant   was 
originally issued on August 18, 1998, and was updated to  reflect 
a modification of the device on July 13, 1999.

  6 47 C.F.R. 15.239.

  7  See 47 C.F.R.  2.909.

  8  See Station KGVL, Inc., 42 FCC 2d 258, 259 (1993).

  9  Skywave acknowledges that in its response to the NAL  issued 
in this  proceeding, it  included  documentation to  support  its 
inability to pay claim, and requested that we keep its  financial 
information  confidential.   Specifically,  it  argues  that  the 
Forfeiture Order did not adequately address its argument on  this 
issue.  For this reason, Skywave now withdraws its prior  request 
for confidentiality of its  financial information, and urges  the 
Bureau to  revisit its  financial  documents, and  to  reconsider 
whether  a  forfeiture  is  appropriate  in  light  of  Skywave's 
financial condition.

  10  The  Hinton Telephone Co.  of Hinton, Oklahoma,  8 FCC  Rcd 
5176 (1993)(``Hinton''); PJB Communications of Virginia, Inc.,  7 
FCC Rcd 2088 (1992)(``PJB'').

  11  47 U.S.C.  503(b)(2)(D).

  12  47 C.F.R.  1.80.

  13  47 U.S.C.  503(b)(2)(D).

  14   See Independent  Communications, Inc.,  14 FCC  Rcd  9605, 
9610 (1999).

  15 47 U.S.C.  503(b) 

  16 47 C.F.R.  1.80(f) 

  17  47 U.S.C.  302a.

  18 47 U.S.C.  504(a).



  19 See 47 C.F.R.  1.1914.