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Federal Communications Commission
Washington, D.C. 20554
File No. EB-08-SE-819
In the Matter of )
NAL/Acct. No. 200932100066
Midland Radio Corporation )
Notice of apparent Liability for forfeiture
Adopted: June 23, 2009 Released: June 25, 2009
By the Chief, Spectrum Enforcement Division, Enforcement Bureau:
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
Midland Radio Corporation. ("Midland") apparently liable for a
forfeiture in the amount of twenty-one thousand dollars ($21,000) for
willful and repeated violation of Section 302(b) of the Communications
Act of 1934, as amended ("Act") and Section 2.803(g) of the
Commission's Rules ("Rules"). The noted apparent violations involve
Midland's marketing of noncompliant General Mobile Radio Service
2. Section 95.183(a)(4) of the Rules prohibits GMRS operators from
transmitting coded messages and messages with hidden meanings. The
Enforcement Bureau's Spectrum Enforcement Division ("Division")
received information indicating that Midland was marketing GMRS
transmitters that have a voice scrambling feature. After its receipt
of this information, the Division began an investigation. In pursuance
of the investigation, the Division conducted internet research on
February 24, 2009, on the website www.midlandradio.com. During the
internet research, Division personnel observed that Midland was
offering for sale the following GMRS transmitter models described as
having a "Voice Privacy Scramble" feature: GXT900VP4 and GXT950VP4.
3. The Division directed a letter of inquiry ("LOI") to Midland on March
3, 2009. Midland responded on April 2, 2009. In its response, Midland
states that its scrambling feature "utilizes voice inversion, an
encoding/decoding circuit technology that mixes the voice signal with
a high frequency tone, resulting in upper and lower sidebands added to
the voice signal and tone. One of the sidebands is removed when the
transmission is sent. In a receiver equipped with the appropriate
descrambling capability, the missing sideband is restored, recovering
the full voice transmission."
4. Additionally, Midland's response indicates that Midland has imported
and marketed a large quantity of the following GMRS transmitter models
that have the scrambling feature: GXT900VP4, GXT950VP4, GXT800VP4,
GXT808VP3, GXT850VP4B and GXT900VP4K. The GXT900VP4, GXT900VP4K and
GXT950VP4 are apparently certified under the FCC ID MMAGXT950, while
the GXT800VP4, GXT808VP3 and GXT850VP4B appear to be certified under
the FCC ID MMAGXT850Z. Midland contends the use of its scrambling
feature is not prohibited by Section 95.183(a)(4) of the Rules.
A. Midland Apparently Marketed Noncompliant Devices
5. Section 302(b) of the Act provides that "[n]o person shall
manufacture, import, sell, offer for sale, or ship devices or home
electronic equipment and systems, or use devices, which fail to comply
with regulations promulgated pursuant to this section." Section
2.803(g) provides in pertinent part:
The provisions in paragraphs (b) through (f) of this section do not apply
to radio frequency devices that could not be authorized or legally
operated under the current rules. Such devices shall not be operated,
advertised, displayed, offered for sale or lease, sold or leased, or
otherwise marketed absent a license issued under part 5 of this chapter or
a special temporary authorization issued by the Commission.
Additionally, Section 95.183(a)(4) of the Rules provides in pertinent part
that "[a] station operator must not communicate ... coded messages or
messages with hidden meanings."
6. Midland admits that it imported and marketed a large quantity of GMRS
transmitters that have a voice scrambling feature but contends that
the use of the voice scrambling feature does not violate Section
95.183(a)(4) of the Rules. Specifically, Midland argues that, while
its "voice privacy scramble" feature makes voice communications
unintelligible to users of radios without this feature, all users of
radios that have the scrambling feature can decipher scrambled
communications. Additionally, Midland claims its voice scrambling
feature does not fit the dictionary definition of a coded message.
Midland further argues that it made a full disclosure of the
scrambling feature when it applied for the certification FCC ID
MMAGXT950, that the scrambling feature is available on a wide variety
of GMRS devices marketed by its competitors and that it must offer a
similar feature to remain competitive. Finally, Midland asserts that
during 2006 it discussed the permissibility of GMRS voice scrambling
with a member of the Commission's Wireless Telecommunications Bureau
staff; that during this discussion it pointed out that a number of
competing GMRS products had the voice scrambling feature; and that,
because no enforcement action was taken and one of these products
remained certified, it was "justified in assuming" that "the
Commission had decided not to require the products to come off the
7. Midland's arguments are unconvincing. It was not justified in its
assumption that the Commission decided not to require the removal from
the market of GMRS devices with voice scrambling. In 2007, the
Commission staff publicly interpreted its rules to advise that voice
scrambling constitutes coded messaging and, therefore, is not allowed
for GMRS devices. Additionally, in 2004 the former Public Safety and
Critical Infrastructure Division of the Wireless Telecommunications
Bureau granted Garmin International, Inc. ("Garmin") a waiver of
Section 95.183(a)(4) of the Rules to permit the manufacture and
marketing of GMRS devices capable of transmitting and receiving Global
Position System (GPS) location information. In the absence of a
waiver, the transmission of GPS location information over the radios
marketed by Garmin would have been prohibited by Section 95.183(a)(4)
of the Rules. Although Midland's voice scrambling technology differs
from Garmin's technology, it has an analogous effect - the
transmission of messages that are undecipherable to many GMRS users.
In both circumstances, the undecipherable messages are coded messages
within the meaning of Section 95.183(a)(4) of the Rules.
8. A device equipped with a prohibited capability must be classified as
noncompliant notwithstanding any approval by a Telecommunication
Certification Body (TCB). We find that the GMRS devices authorized by
the equipment authorizations FCC ID MMAGXT950 and FCC ID MMAGXT850Z
are noncompliant with the requirements of Section 95.183(a)(4) of the
9. Midland requests that, if the Commission decides that voice scrambling
is prohibited in GMRS devices, this should be done "prospectively,
with time allowed to update product design and to dispose of existing
inventories." We will not rule prospectively. Section 95.183(a)(4) of
the Rules has been previously construed to prohibit voice scrambling
in the GMRS.
10. We, accordingly, find that Midland apparently marketed noncompliant
radio frequency devices, in willful and repeated violation of Section
302(b) of the Act and Section 2.803(g) of the Rules.
B. Proposed Forfeiture
11. Section 503(b) of the Act authorizes the Commission to assess a
forfeiture for each willful or repeated violation of the Act or of any
rule, regulation, or order issued by the Commission under the Act. In
exercising such authority, we are required to 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 such other matters as justice may
12. Section 503(b)(6) of the Act bars the Commission from proposing a
forfeiture for violations that occurred more than a year prior to the
issuance of an NAL. Section 503(b)(6) does not, however, bar the
Commission from assessing whether Midland's conduct prior to that time
period apparently violated the provisions of the Act and Rules and
from considering such conduct in determining the appropriate
forfeiture amount for violations that occurred within the one-year
statutory period. Thus, while we may consider the fact that Midland's
conduct has continued over a period that began during 2007, the
forfeiture amount we propose herein relates only to Midland's's
apparent violations that have occurred within the past year.
13. Under the Forfeiture Policy Statement and Section 1.80 of the Rules,
the base forfeiture amount for the marketing of unauthorized equipment
is $7,000. Midland apparently marketed two distinct models of GMRS
transmitters that were equipped with the voice scrambling feature: the
model certified under FCC ID MMAGXT950 (designated by Midland as
models GXT900VP4, GXT900VP4K and GXT950VP4) and the model certified
under FCC ID MMAGXT850Z (designated by Midland as models GXT800VP4,
GXT808VP3 and GXT850VP4B). We find that the base forfeiture amount of
$7,000 is apparently warranted for each of these two models for total
of $14,000. Based on the record before us, and having considered the
statutory factors enumerated above, we believe that an upward
adjustment of the $14,000 base forfeiture amount is warranted here.
First, we believe that an upward adjustment is warranted in view of
the substantial number of non-compliant devices Midland imported, sold
and distributed in the United States and the fact that the violations
continued over a significant period. Further, we take into account
Midland's ability to pay a forfeiture in determining the appropriate
forfeiture amount. As the Commission made clear in the Forfeiture
Policy Statement, large or highly profitable entities, such as Midland
could expect forfeitures higher than those reflected in the base
amounts. Accordingly, applying the Forfeiture Policy Statement and
statutory factors to the instant case, we conclude that Midland is
apparently liable for a monetary forfeiture of $21,000.
iV. ordering clauses
14. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the
Act, and Sections 0.111, 0.311 and 1.80 of the Rules, Midland, IS
NOTIFIED of its APPARENT LIABILITY FOR A FORFEITURE in the amount of
twenty-one thousand dollars ($21,000) for marketing noncompliant GMRS
transmitters, in willful and repeated violation of Section 302(a) of
the Act and Section 2.803(g) of the Rules.
15. IT IS FURTHER ORDERED that, pursuant to Section 1.80 of the Rules,
within thirty days of the release date of this Notice of Apparent
Liability for Forfeiture, Midland SHALL PAY the full amount of the
proposed forfeiture or SHALL FILE a written statement seeking
reduction or cancellation of the proposed forfeiture.
16. Payment of the forfeiture must be made by check or similar instrument,
payable to the order of the Federal Communications Commission. The
payment must include the NAL/Account Number and FRN Number referenced
above. Payment by check or money order may be mailed to Federal
Communications Commission, P.O. Box 979088, St. Louis, MO 63197-9000.
Payment by overnight mail may be sent to U.S. Bank - Government
Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO
63101. Payment by wire transfer may be made to ABA Number 021030004,
receiving bank TREAS/NYC, and account number 27000001. For payment by
credit card, an FCC Form 159 (Remittance Advice) must be submitted.
When completing the FCC Form 159, enter the NAL/Account number in
block number 23A (call sign/other ID), and enter the letters "FORF" in
block number 24A (payment type code). Requests for full payment under
an installment plan should be sent to: Chief Financial Officer --
Financial Operations, 445 12th Street, S.W., Room 1-A625, Washington,
D.C. 20554. Please contact the Financial Operations Group Help Desk
at 1-877-480-3201 or Email: ARINQUIRIES@fcc.gov with any questions
regarding payment procedures. Midland will also send electronic
notification on the date said payment is made to
17. The response, if any, must be mailed to the Office of the Secretary,
Federal Communications Commission, 445 12th Street, S.W., Washington,
D.C. 20554, ATTN: Enforcement Bureau - Spectrum Enforcement Division,
and must include the NAL/Acct. No. referenced in the caption.
18. The Commission will not consider reducing or canceling a forfeiture in
response to a claim of inability to pay unless the petitioner submits:
(1) federal tax returns for the most recent three-year period; (2)
financial statements prepared according to generally accepted
accounting practices; or (3) some other reliable and objective
documentation that accurately reflects the petitioner's current
financial status. Any claim of inability to pay must specifically
identify the basis for the claim by reference to the financial
19. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability
for Forfeiture shall be sent by first class mail and certified mail
return receipt requested to Midland Radio Corporation, 5900 Parretta
Drive, Kansas City, MO 64120, and to its attorneys, Peter Tannenwald
and Davina Sashkin, Fletcher, Heald & Hildreth, PLC, 1300 North 17th
Street, 11th Floor, Arlington, VA22209.
FEDERAL COMMUNICATIONS COMMISSION
Kathryn S. Berthot
Chief, Spectrum Enforcement Division
47 U.S.C. S: 302a(b).
47 C.F.R. S: 2.803(g).
47 C.F.R. S: 95.183(a)(4).
Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
Enforcement Bureau, Federal Communications Commission to Midland Radio
Corporation. (March 3, 2009).
Letter from Peter Tannenwald and Davina Sashkin, Counsel for Midland Radio
Corporation., to Thomas D. Fitz-Gibbon, Esq., Spectrum Enforcement
Division, Enforcement Bureau, Federal Communications Commission (April 3,
2009) ("LOI Response").
"Response of Midland Radio Corporation to FCC Letter of Inquiry"
(Attachment to LOI Response, hereinafter referred to as "First
Attachment") at 1-2.
Midland requested confidential treatment of portions of its LOI response,
including the exact number of GMRS devices imported and the dates of
importation. Accordingly, this information is discussed in an Appendix,
which we are treating as confidential at this time. The request for
confidentiality remains pending.
Id. at 2.
Marketing, as defined in 47 C.F.R. S: 2.803(e)(4), "includes sale or
lease, or offering for sale or lease, including advertising for sale or
lease, or importation, shipment, or distribution for the purpose of
selling or leasing or offering for sale or lease."
LOI Response at 2.
Id. at 2.
Id. at 2-4.
Id. at 3.
Office of Engineering and Technology KDB Publication number 791760 at
Garmin International, Inc., Request for Waiver of Sections 95.29(f),
95.119(a)(1), 95.181(a), 95.13(a)(4) and 95.631(a) and (f) of the
Commission's Rules to Authorize the Manufacture, Sale and Use of GPS
Transmission Enhanced GMRS Units, Order, 20 FCC Rcd. 982 (WTB, Public
Safety and Critical Infrastructure Division 2004) (waiver granted); waiver
extended, Order, 21 FCC Rcd. 15072 (WTB, Public Safety and Critical
Infrastructure Division 2006): waiver extended, Order, 23 FCC Rcd 18325
(WTB, Public Safety and Critical Infrastructure Division 2008).
Since GPS location information cannot be deciphered by GMRS users who
don't have the necessary equipment, it is considered to be a coded
See 47 C.F.R. S: 2.939(a)(2), which authorizes the Commission to revoke an
equipment authorization if it is determined that the equipment does not
conform to the pertinent technical requirements.
Id. at 4.
Section 312(f)(1) of the Act, 47 U.S.C. S: 312(f)(1), which applies to
violations for which forfeitures are assessed under Section 503(b) of the
Act, provides that "[t]he term `willful', ... means the conscious and
deliberate commission or omission of such act, irrespective of any intent
to violate any provision of this Act or any rule or regulation of the
Commission authorized by this Act ...." See Southern California
Broadcasting Co., Memorandum Opinion and Order, 6 FCC Rcd 4387 (1991).
Section 312(f)(2) of the Act provides that "[t]he term `repeated', ...
means the commission or omission of such act more than once or, if such
commission or omission is continuous, for more than one day." 47 U.S.C. S:
312(f)(2). See, e.g., Callais Cablevision, Inc., Grand Isle, Louisiana,
Notice of Apparent Liability for Monetary Forfeiture, 16 FCC Rcd 1359,
1362 P: 10 (2001) ("Callais Cablevision") (issuing a Notice of Apparent
Liability for, inter alia, a cable television operator's repeated signal
47 U.S.C. S: 503(b).
47 U.S.C. S: 503(b)(2)(E).
47 U.S.C. S: 503(b)(6).
See 47 U.S.C. S: 503(b)(2)(D), 47 C.F.R. S: 1.80(b)(4); see also Behringer
USA, Inc., Notice of Apparent Liability for Forfeiture, 21 FCC Rcd 1820,
1825 (2006), forfeiture ordered, Forfeiture Order, 22 FCC Rcd. 1051 (2007)
(forfeiture paid); Globcom, Inc. d/b/a Globcom Global Communications,
Notice of Apparent Liability for Forfeiture, 18 FCC Rcd 19893, 19903
(2003), forfeiture ordered, Forfeiture Order, 21 FCC Rcd 4710 (2006);
Roadrunner Transportation, Inc., Forfeiture Order, 15 FCC Rcd 9669,
9671-71 (2000); Cate Communications Corp., Memorandum Opinion and Order,
60 RR 2d 1386, 1388 (1986); Eastern Broadcasting Corp., Memorandum Opinion
and Order, 10 FCC 2d 37 (1967), recon. den.,11 FCC 2d 193 (1967); Bureau
D'Electronique Appliquee, Inc., Notice of Apparent Liability for
Forfeiture, 20 FCC Rcd 3445, 3447-48 (Enf. Bur., Spectrum Enf. Div. 2005),
forfeiture ordered, Forfeiture Order, 20 FCC Rcd 17893 (Enf. Bur.,
Spectrum Enf. Div. 2005).
The Commission's Forfeiture Policy Statement and Amendment of Section 1.80
of the Rules to Incorporate the Forfeiture Guidelines, 12 FCC Rcd 17087,
17113 (1997) ("Forfeiture Policy Statement"), recon. denied, 15 FCC Rcd
47 C.F.R. S: 1.80.
See e.g., Samson Technologies, Inc., Notice of Apparent Liability for
forfeiture, 19 FCC Rcd 4221, 4225 (2004); Consent Decree, 19 FCC Rcd 24542
See, e.g., San Jose Navigation, Inc., 21 FCC Rcd 2873, 2876 (2006)
(upwardly adjusting a proposed forfeiture based on the volume of
non-compliant devices distributed, and the three-year span in which such
devices were marketed), forfeiture ordered, Forfeiture Order, 22 FCC Rcd
1040 (2007); Bureau D'Electronique Appliquee, 20 FCC Rcd at 3448 (2005)
(upwardly adjusting a proposed forfeiture based on the volume of
unauthorized devices distributed, and the five-year span in which such
devices were marketed), forfeiture ordered, Forfeiture Order, 20 FCC Rcd
Midland's estimated annual revenues are $9,900,000. Company profile,
Specifically, the Commission stated:
[O]n the other end of the spectrum of potential violations, we recognize
that for large or highly profitable communication entities, the base
forfeiture amounts ... are generally low. In this regard, we are mindful
that, as Congress has stated, for a forfeiture to be an effective
deterrent against these entities, the forfeiture must be issued at a high
level .... For this reason, we caution all entities and individuals that,
independent from the uniform base forfeiture amounts ..., we intend to
take into account the subsequent violator's ability to pay in determining
the amount of a forfeiture to guarantee that forfeitures issued against
large or highly profitable entities are not considered merely an
affordable cost of doing business. Such large or highly profitable
entities should expect in this regard that the forfeiture amount set out
in a Notice of Apparent Liability against them may in many cases be above,
or even well above, the relevant base amount.
Forfeiture Policy Statement, 12 FCC Rcd at 17099-100.
47 C.F.R. S: 0.111, 0.311 and 1.80.
(Continued from previous page)
Federal Communications Commission DA 09-1390
Federal Communications Commission DA 09-1390