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Statement of Commissioner Jonathan S. Adelstein
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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
File No. EB-07-SE-023
In the Matter of )
NAL/Acct. No. 200732100036
Syntax-Brillian Corporation )
FRN # 0016507311
)
)
Notice of apparent Liability for forfeiture
Adopted: May 30, 2007 Released: May 30, 2007
By the Commission: Commissioner Adelstein issuing a statement.
I. introduction
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
Syntax-Brillian Corporation ("Syntax-Brillian") apparently liable in
the amount of $2,899,575 for its willful and repeated violations of
Section 15.117(i)(1)(i) and (ii) of the Commission's Rules ("Rules").
The apparent violations involve Syntax-Brillian's importation and
interstate shipment of television receivers that do not comply with
the Commission's rules regarding digital television ("DTV") reception
capability.
II. Background
2. The Commission adopted the DTV reception capability requirement in
2002. The DTV reception requirement, which also is often termed the
"DTV tuner requirement," requires that all new television broadcast
receivers that are imported into the United States or shipped in
interstate commerce be capable of receiving the signals of DTV
broadcast stations over-the-air. The DTV tuner requirement was
intended to facilitate the transition to digital television by
promoting the availability of DTV reception equipment and to protect
consumers by ensuring that their television receivers will provide
off-the-air television reception of digital signals just as they have
provided off-the-air television reception of analog signals.
3. In order to minimize the impact of the DTV tuner requirement on both
manufacturers and consumers, the Commission adopted a phase-in
schedule that applied the requirement first to receivers with the
largest screens and then to progressively smaller screen receivers and
other television receiving devices that do not include a viewing
screen, i.e., VCRs and DVD players. This phase-in plan was intended to
allow increasing economies of scale with production volume to be
realized so that DTV tuner costs would be lower when they are required
to be included in smaller sets and other television receiving devices.
As modified by the Commission in 2005, this phase-in schedule is as
follows:
Receivers with screen sizes 36" and above -- 50% of units imported or
shipped interstate by responsible parties were required to include DTV
tuners effective July 1, 2004; 100% of such units were required to include
DTV tuners effective July 1, 2005;
Receivers with screen sizes 25" to 35" -- 50% of units imported or shipped
interstate by responsible parties were required to include DTV tuners
effective July 1, 2005; 100% of such units were required to include DTV
tuners effective March 1, 2006;
Receivers with screen sizes less than 25" - 100% of units imported or
shipped interstate by responsible parties were required to include DTV
tuners effective March 1, 2007; and
Other video devices (videocassette recorders (VCRs), digital video
recorders such as hard drive and DVD recorders, etc.) that receive
television signals - 100% of units imported or shipped interstate by
responsible parties were required to include DTV tuners effective March 1,
2007.
4. In January 2007, the Enforcement Bureau's review of Customs
importation data indicated that Syntax-Brillian apparently was
importing television receivers with screen sizes 25" to 35" ("mid-size
receivers") that did not include DTV tuners after the applicable March
1, 2006 deadline. The Enforcement Bureau issued a letter of inquiry
("LOI") to Syntax-Brillian on March 8, 2007. On March 19, 2007,
Syntax-Brillian filed a response to the LOI.
5. In its LOI Response, Syntax-Brillian admits that it imported and
shipped interstate the following seven models of mid-size screen
television receivers that do not include DTV tuners after March 1,
2006: Model LT26HVE, Model LT26HVX, Model LT27HVX, Model LT30HV, Model
LT32HV, Model LT32HVE, and Model LT32HVM. Specifically,
Syntax-Brillian admits that on 88 dates between March 3, 2006 and
October 31, 2006, it imported a total of 28,430 units of
non-DTV-compliant mid-size screen television receivers.
Syntax-Brillian further admits that, between March 1, 2006 and October
31, 2006, it made 1,765 interstate shipments comprising a total of
43,892 non-DTV-compliant mid-size screen televisions. In addition,
Syntax-Brillian acknowledges that it shipped interstate one model of a
large-size screen television receiver that does not include a DTV
tuner after July 1, 2005: Model LT37HVE. Syntax-Brillian indicates
that, between December 9, 2005 and October 16, 2006, it made eight
interstate shipments comprising a total of 165 non-DTV compliant
large-size screen television receivers. Thus, in all, Syntax-Brillian
made a total of 1,861 importations or interstate shipments comprising
72,487 non-DTV-compliant mid-size and large-size screen television
receivers after the applicable deadlines.
6. In its LOI Response, Syntax-Brillian asserts that it was adversely
affected by the Commission's decision to advance the compliance
deadline for mid-size screen television receivers from July 1, 2006 to
March 1, 2006. Syntax-Brillian states that it was formed in November
of 2005 -- just months before the advanced March 1, 2006 deadline --
through the merger of the Syntax Groups Corporation and the Brillian
Corporation. Syntax-Brillian maintains that it is a small business
with fewer than 300 employees and that the Commission's decision to
accelerate the compliance deadline for mid-size screen television
receivers imposed an unreasonable economic burden on it by requiring
it to redesign product lines within three months of the company's
formation. Syntax-Brillian states that it was unable to accelerate its
new model production schedule on short notice and based on an
implementation schedule that was inconsistent with the traditional
July release of new models. Finally, Syntax-Brillian states that most
of its non-DTV-compliant receivers were imported and shipped
interstate in the first month following the March 1, 2006 deadline,
and that these receivers were clearly labeled as being "HD Ready" to
indicate that an integrated DTV tuner was not included.
III. DISCUSSION
A. Failure to Comply with DTV Tuner Requirement
7. We conclude that Syntax-Brillian apparently willfully and repeatedly
imported and shipped in interstate commerce television receivers that
do not comply with the DTV tuner requirement in violation of Section
15.117(i)(1)(i) and (ii) of the Rules. Syntax-Brillian admits that,
after the July 1, 2005 deadline for large-size screen receivers, it
made eight interstate shipments of a total of 165 non-DTV-compliant
large-size screen receivers. Syntax-Brillian also admits that, after
the March 1, 2006 deadline for mid-size screen receivers, it imported
on 88 dates a total of 28,430 non-DTV-compliant mid-size receivers and
made 1,765 interstate shipments of a total of 43,892 non-DTV-compliant
mid-size screen receivers. In all, Syntax-Brillian imported and
shipped interstate on 1,861 occasions a total of 72,622
non-DTV-compliant television receivers.
A. Proposed Forfeiture
8. Based on the analysis set forth below, we conclude that
Syntax-Brillian is apparently liable for a forfeiture in the amount of
$2,899,575 for willfully and repeatedly importing and shipping in
interstate commerce television receivers that do not comply with the
DTV tuner requirement in violation of Section 15.117(i)(1)(i) and (ii)
of the Rules.
9. Under Section 503(b)(1)(B) of the Act, any person who is determined by
the Commission to have willfully or repeatedly failed to comply with
any provision of the Act or any rule, regulation, or order issued by
the Commission shall be liable to the United States for a forfeiture
penalty. To impose such a forfeiture penalty, the Commission must
issue a notice of apparent liability and the person against whom such
notice has been issued must have an opportunity to show, in writing,
why no such forfeiture penalty should be imposed. The Commission will
then issue a forfeiture if it finds by a preponderance of the evidence
that the person has violated the Act or a Commission rule. We conclude
under this standard that Syntax-Brillian is apparently liable for
forfeiture for its apparent willful and repeated violations of Section
15.117(i)(1)(i) and (ii) of the Rules.
10. 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 Syntax-Brillian's conduct prior to
that time period apparently violated the 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 that Syntax-Brillian's prior conduct violated
the rules, the forfeiture amount we propose herein relates to
Syntax-Brillian's apparent violations that have occurred within the
past year. Syntax Brillian imported 21,255 non-DTV-compliant
television receivers and shipped interstate 29,163 non-DTV-compliant
television receivers more than one year prior to the date of this NAL.
The non-compliant receivers represented by these importations and
interstate shipments are beyond the applicable one-year statute of
limitations and not subject to forfeiture. Accordingly, the forfeiture
we propose relates only to the 7,175 non-DTV-compliant television
receivers imported, and the 14,894 non-DTV-compliant television
receivers shipped interstate, within the statute of limitations.
11. Under Section 503(b)(2)(D) of the Act, we may assess an entity that is
neither a common carrier, broadcast licensee or cable operator a
forfeiture of up to $11,000 for each violation or each day of a
continuing violation, up to a statutory maximum forfeiture of $97,500
for any single continuing violation. 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 require."
12. The Commission's Forfeiture Policy Statement and Section 1.80 of the
Rules do not establish a specific base forfeiture for violation of the
DTV tuner requirement. The Commission has substantial discretion,
however, in proposing forfeitures. We may apply the base forfeiture
amounts described in the Forfeiture Policy Statement and our rules, or
we may depart from them altogether as the circumstances demand.
13. The DTV tuner requirement promotes an important public policy goal of
helping to speed the transition to digital television, and we
therefore find violations of this requirement to be more egregious, in
general, than many other types of equipment marketing cases that come
before us. DTV receivers are a necessary element of digital broadcast
television service. Consumers must have the capability to receive DTV
signals for the DTV transition to move forward to successful
completion. The DTV tuner requirement is intended to protect consumers
by ensuring that their TV receivers will provide off-the-air TV
reception of digital signals when analog TV operation ceases. Thus, we
find that applying a proposed forfeiture on a per model basis, as we
have in other more routine equipment marketing cases, would result in
forfeiture amounts that are not commensurate with the seriousness of
the violation.
14. Accordingly, in cases involving the shipping or importation of
non-compliant DTV tuners, we will propose a forfeiture based on each
unit shipped or imported within the statute of limitations, regardless
of the number of models shipped or imported. This approach, in our
view, gets to the root of the apparent violation - non-compliant
televisions in the hands of American consumers. Moreover, to reflect
the increasing seriousness of the violation as the number of
non-compliant units shipped or imported rises, we will propose
forfeitures on a tier-by-tier basis, applying an increased per-unit
forfeiture separately to each successive tier.
15. We will base these tiers and per-unit penalties on our reasonable
judgment of the egregiousness of the number of non-compliant units
involved in the unlawful shipment or importation. For example, for the
first 1000 non-compliant units shipped or imported by Syntax-Brillian,
we propose a forfeiture of $50 per unit. For the next 1500 such units,
we propose a forfeiture of $75 per unit. We set forth below the
precise tiers and per-unit penalties we will apply in this and other
DTV tuner requirement cases:
0-1000 units: $50 per unit
1001-2500 units: $75 per unit
2501-5000 units: $100 per unit
5001-10,000 units: $125 per unit
10,001-20,000 units: $150 per unit
20,001-30,000 units: $175 per unit
30,001-40,000 units: $200 per unit
40,001-50,000 units: $225 per unit
50,001+ units: $250 per unit
Application of this tiered, per unit approach clearly demonstrates the
gravity with which we view this violation and our desire that the proposed
forfeitures have a strong deterrent effect. We may revisit and change our
approach if this forfeiture calculation methodology does not adequately
deter future violations or as other circumstances require. Additionally,
consistent with the Act and precedent, we may impose more severe sanctions
and/or utilize different forfeiture calculation methodologies against
companies that have a history of non-compliance with the DTV tuner
requirements.
16. Based on the record in this case, Syntax-Brillian's violations merit a
large proposed forfeiture. The regulatory deadlines at issue have been
in place for some time - importers have known about the DTV tuner
requirement since 2002. Some of Syntax-Brillian's violations involved
large-size screen television receivers, for which the deadline was
July 1, 2005. Syntax-Brillian, however, continued to ship interstate
large-size screen receivers that do not comply with the DTV tuner
requirement until October 16, 2006, more than fourteen months after
the July 1, 2005 deadline. And while the majority of importations and
interstate shipments of non-compliant mid-size DTV receivers occurred
between March 1, 2006 and June 1, 2006, Syntax-Brillian continued to
import and ship interstate non-compliant DTV mid-size screen receivers
until the end of October 2006, approximately eight months after the
deadline.
17. We also find that a substantial proposed forfeiture is warranted given
the large number of non-DTV compliant receivers imported and shipped
interstate -- more than 22,000 -- and the substantial number of
shipments and importations made by Syntax-Brillian -- a total of 351
importations and interstate shipments.
18. Finally, we consider Syntax-Brillian's high revenues and ability to
pay a forfeiture in determining the appropriate forfeiture amount. The
Commission made clear in the Forfeiture Policy Statement that
companies with higher revenues, such as Syntax-Brillian, could expect
forfeitures higher than those reflected in the base amounts.
19. We do not believe that Syntax-Brillian, as a newly merged entity and a
small business, was unduly burdened by the Commission's decision to
advance the deadline for mid-size screen television receivers. Prior
to the merger, Syntax Groups Corporation and Brillian Corporation were
both involved in the manufacture and distribution of television
receiving equipment. Thus, the two companies that formed the merged
entity had notice of the original and advanced DTV tuner deadlines
and, more importantly, had sufficient lead time to develop new product
lines to comply with the deadlines. Further, while Syntax-Brillian
asserts that most of its non-DTV-compliant receivers were imported and
shipped interstate in the first month following the March 1, 2006
deadline, the record indicates that it continued to import and ship
interstate non-DTV-compliant television receivers until the end of
October 2006 -- approximately eight months after the March 1, 2006
deadline. We also find that the company's labeling of its
non-DTV-compliant television receivers as "HD ready" is not a
mitigating factor. Most consumers are likely unaware that this means
that the equipment will not be able to receive over-the-air television
signals after February 17, 2009. In fact, many consumers believe that
this signifies that the equipment will be able to receive over-the-air
television signals after the digital transition.
20. Syntax-Brillian imported or shipped 22,069 non-compliant DTV tuners
within the statute of limitations. Applying the forfeiture calculation
methodology outlined above results in a proposed forfeiture of
$2,899,575 for Syntax-Brillian's willful and repeated importation and
interstate shipment of television receivers that do not comply with
the DTV tuner requirement in violation of Section 15.117(i)(1)(i) and
(ii) of the Rules. We believe that the proposed forfeiture reflects
the gravity of Syntax-Brillian's apparent violations, the company's
ability to pay, and the need to deter Syntax-Brillian and other
companies from future violations of the Act and the Rules.
III. ordering clauses
21. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the
Act, and Section 1.80 of the Rules, Syntax-Brillian Corporation is
NOTIFIED of its APPARENT LIABILITY FOR A FORFEITURE in the amount of
two million eight hundred ninety-nine thousand five hundred
seventy-five dollars ($2,899,575) for willful and repeated violations
of Section 15.117(i)(1)(i) and (ii) of the Rules.
22. 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, Syntax-Brillian Corporation SHALL PAY the
full amount of the proposed forfeiture or SHALL FILE a written
statement seeking reduction or cancellation of the proposed
forfeiture.
23. 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/Acct. No. and FRN No. referenced above.
Payment by check or money order may be mailed to Federal
Communications Commission, P.O. Box 358340, Pittsburgh, PA 15251-8340.
Payment by overnight mail may be sent to Mellon Bank/LB 358340, 500
Ross Street, Room 1540670, Pittsburgh, PA 15251. Payment by wire
transfer may be made to ABA Number 043000261, receiving bank Mellon
Bank, and account number 911-6106.
24. 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.
25. 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
documentation submitted.
26. Requests for payment of the full amount of the NAL under an
installment plan should be sent to: Associate Managing Director -
Financial Operations, 445 12^th Street, S.W., Room 1-A625, Washington,
D.C. 20554.
27. 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 Mr. Vincent F. Sollitto, Chairman and CEO,
Syntax-Brillian Corporation, 1600 N. Desert Drive. Tempe, AZ, 85281
and Andrew M. Beato, Esq., Stein, Mitchell & Mezines, L.L.P., 1100
Connecticut Avenue, N.W., Washington, D.C. 20036.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
STATEMENT OF
COMMISSIONER JONATHAN S. ADELSTEIN
Re: In the Matter of Regent U.S.A., Inc., Notice of Apparent Liability for
Forfeiture, EB-06-SE-320
Re: In the Matter of Syntax-Brillian Corporation, Notice of Apparent
Liability for Forfeiture, EB-07-SE-023
I strongly support these two Notices of Apparent Liability for Forfeiture.
It is my hope that the forfeitures proposed today, as well as the notice
of our tiered, per unit forfeiture scale, will serve as a deterrent to
future potential violators. We need to send a message that the FCC takes
this matter seriously and will strongly enforce our rules.
When the Commission adopted the DTV tuner compliance deadlines in June and
November 2005, we did so in consultation with the consumer electronics
industry, attempting to limit any undue impact on production cycles and
shipping schedules. We promulgated rules to protect consumers, ease the
burden on manufacturers and retailers, and foster a smooth transition to
digital broadcasting. That is why today I am appalled at the actions of
Regent U.S.A. and Syntax-Brillan for their willful and repeated violations
of Commission rules. The American people deserve better than to be sold
non-DTV-compliant television receivers.
Today's action demonstrates that, while the Commission will punish
violators after unsuspecting customers have been harmed, our enforcement
tools are a poor and inadequate substitute for proactive consumer outreach
and education. We have not done nearly enough to inform the public of the
differences between, for example, HD-ready, DTV, or even HD-TV. We owe it
to our citizens, those that will be harmed by buying a television set that
cannot receive digital signals, to help them make the right purchases. If
more citizens had known the differences, and had been aware that the
televisions in question did not have the capabilities they needed, perhaps
they would not have purchased the sets. We simply cannot fix the problem
on the back end. We need to address the problem head on. Education and
outreach are key to solving this problem.
47 C.F.R. S 15.117(i)(1)(i) and (ii).
Review of the Commission's Rules and Policies Affecting the Conversion to
Digital Television, Second Report and Order and Second Memorandum Opinion
and Order, 17 FCC Rcd 15978, 15996 (2002) ("DTV Review Second Report and
Order").
DTV reception capability involves more circuitry than just a tuner. To
provide this capability requires a tuner to receive the digital signal, an
MPEG decoder/formatter, and associated processing capability and memory.
See Requirements for Digital Television Receiving Capability, Report and
Order and Further Notice of Proposed Rulemaking, 20 FCC Rcd 11196 n. 2
(2005) ("DTV Tuner Report and Order").
DTV Review Second Report and Order, 17 FCC Rcd at 15996. The DTV tuner
requirement also applies to other devices such as television interface
devices that do not include a viewing screen, e.g., devices such as VCRs
and DVD players that are intended to provide audio-video signals to a
video monitor with an antenna or antenna terminals that can be used for
off-the-air television reception. See 47 C.F.R. S 15.117(i)(1)(i).
Id. at 15979. In this latter regard, the DTV tuner requirement ensures
that the intent of the All Channel Receiver Act of 1962 ("ACRA"), P.L. No.
87-529, 76 Stat. 150, is fulfilled. The ACRA, which is codified at 47
U.S.C. S 303(s), states that the Commission shall "[h]ave authority to
require that apparatus designed to receive television pictures broadcast
simultaneously with sound be capable of adequately receiving all
frequencies allocated by the Commission to television broadcasting ...."
See DTV Review Second Report and Order, 17 FCC Rcd at 15589-91.
Id. at 15998-99.
Id.
In June 2005, the Commission modified the rules to advance the date on
which 100% of new television receivers with screen sizes 25-36" that are
imported or shipped interstate must include DTV tuners from July 1, 2006
to March 1, 2006. DTV Tuner Report and Order, 20 FCC Rcd at 11203.
Subsequently, in November 2005, the Commission modified the rules to
advance the date on which 100% of new television receivers with screen
sizes 13-24" and certain other television receiving devices such as VCRs
and digital video recorders that are imported or shipped interstate must
include DTV tuners from July 1, 2007 to March 1, 2007. See Requirements
for Digital Television Receiving Capability, Second Report and Order, 20
FCC Rcd 18607, 18614-16 (2005) ("DTV Tuner Second Report and Order"). The
Commission also amended the rules to apply the DTV tuner requirement to
new receivers with screen sizes smaller than 13" on this same schedule.
Id.
The DTV tuner requirement applies to "responsible parties," as defined in
Section 2.909 of the Rules, 47 C.F.R. S 2.909. Under Section 2.909, the
party responsible for equipment such as television receivers that are
subject to our "verification" equipment authorization procedure is the
manufacturer or, in the case of imported equipment, the importer. If
subsequent to manufacture and importation, the equipment is modified by
any party not working under the authority of the responsible party, the
party performing the modification becomes the new responsible party.
No radio frequency device may be imported into the Customs territory of
the United States unless the importer or ultimate consignee declares that
the device meets one of the conditions for entry specified in Section
2.1204 of the Rules, 47 C.F.R. S 2.1204. See 47 C.F.R. S 2.1203. Such
import declarations are filed with the U.S. Customs and Border Patrol on
FCC Form 740, or electronically where electronic filing is available. 47
C.F.R. S 2.1205. The Enforcement Bureau, in turn, receives this
importation data from Customs and uses it to monitor compliance with the
DTV tuner requirements and other requirements applicable to radio
frequency devices.
See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
Enforcement Bureau to Vincent F. Sollitto, Jr., Chairman and CEO,
Syntax-Brillian U.S.A., Inc. (March 8, 2007).
See Letter from Andrew M. Beato, Esq. Counsel for Syntax-Brillian U.S.A.,
Inc. to Kathryn Berthot, Spectrum Enforcement Division, Enforcement Bureau
(March 19, 2007). ("LOI Response").
Id. at Exhibits 1 and 2.
Id. at Exhibit 1.
Id. at Exhibit 2.
Id. at Exhibit 3.
Id.
LOI Response at 5; see also supra n. 8.
Id. at 5, 7.
Id. at 5. Syntax-Brillian offers no explanation as to why it shipped
non-DTV-compliant large-size screen receivers after the applicable July 1,
2005 deadline.
Id.
"HDTV-ready" or "HD-ready" generally refers to television monitors or
receivers that can display HDTV programming if you have a separate HDTV
tuner, HD cable set-top box or HD satellite set-top-box receiver.
Id. at 4-5.
Section 312(f)(1) of the Act defines "willful" as "the conscious and
deliberate commission or omission of [any] act, irrespective of any intent
to violate" the law. 47 U.S.C. S 312(f)(1). The legislative history of
Section 312(f)(1) of the Act clarifies that this definition of willful
applies to both Sections 312 and 503(b) of the Act, H.R. Rep. No. 97-765,
97^th Cong. 2d Sess. 51 (1982), and the Commission has so interpreted the
term in the Section 503(b) context. See Southern California Broadcasting
Co., Memorandum Opinion and Order, 6 FCC Rcd 4387, 4388 (1991), recon.
denied, 7 FCC Rcd 3454 (1992) ("Southern California").
Section 312(f)(2) of the Act, which also applies to forfeitures assessed
pursuant to Section 503(b) 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 Callais Cablevision, Inc., Notice of
Apparent Liability for Forfeiture,16 FCC Rcd 1359, 1362 (2001); Southern
California, 6 FCC Rcd at 4388.
47 U.S.C. S 503(b)(1)(B); 47 C.F.R. S 1.80(a)(1).
47 U.S.C. S 503(b); 47 C.F.R. S 1.80(f).
See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589,
7591 (2002).
47 U.S.C. S 503(b)(6).
See 47 U.S.C. S 503(b)(2)(E), 47 C.F.R. S 1.80(b)(4); see also Behringer
USA, Inc., Notice of Apparent Liability for Forfeiture and Order, 21 FCC
Rcd 1820, 1828 (2006), response pending; Globcom, Inc. d/b/a Globcom
Global Communications, Notice of Apparent Liability for Forfeiture, 18 FCC
Rcd 19893, 19903 (2003), forfeiture ordered, 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, 37-38 (1967) recon. denied, 11 FCC 2d 193, 195
(1967).
This NAL also includes a number of violations that occurred more than a
year ago, but remain subject to enforcement action pursuant to a tolling
agreement. See Tolling Agreement between Syntax-Brillian Corp. and
Enforcement Bureau, Federal Communications Commission, dated April 27,
2007. For purposes of this NAL, references to violations that occurred
"within the last year" include violations subject to this tolling
agreement.
47 U.S.C. S 503(b)(6)(B).
47 U.S.C. S 503(b)(2)(D). The Commission twice amended Section 1.80(b)(3)
of the Rules, 47 C.F.R. S 1.80(b)(3), to increase the maximum forfeiture
amounts, in accordance with the inflation adjustment requirements
contained in the Debt Collection Improvement Act of 1996, 28 U.S.C. S
2461. See Amendment of Section 1.80 of the Commission's Rules and
Adjustment of Forfeiture Maxima to Reflect Inflation, Order, 15 FCC Rcd
18221 (2000) (adjusting the maximum statutory amounts from $10,000/$75,000
to $11,000/$87,500); Amendment of Section 1.80 of the Commission's Rules
and Adjustment of Forfeiture Maxima to Reflect Inflation, Order, 19 FCC
Rcd 10945 (2004) (adjusting the maximum statutory amounts from
$11,000/$87,500 to $11,000/$97,500).
47 U.S.C. S 503(b)(2)(E). See also 47 C.F.R. S 1.80(b)(4), Note to
paragraph (b)(4): Section II. Adjustment Criteria for Section 503
Forfeitures.
See The Commission's Forfeiture Policy Statement and Amendment of Section
1.80 of the Rules to Incorporate the Forfeiture Guidelines, Report and
Order, 12 FCC Rcd 17087, 17115 (1997), recon. denied, 15 FCC Rcd 303
(1999) ("Forfeiture Policy Statement").
See, e.g., InPhonic, Inc., Order of Forfeiture and Further Notice of
Apparent Liability, FCC 07-58 at P 24 (rel. May 3, 2007); Globcom, Inc.
d/b/a Globom Global Commun., Order of Forfeiture, 21 FCC Rcd 4710, 4723-24
(2006). We may use the base forfeiture amounts described in the Forfeiture
Policy Statement and our rules, or we may depart from them altogether if
the circumstances demand it. See 47 C.F.R. S1.80(b)(4) ("The Commission
and its staff may use these guidelines in particular cases [, and] retain
the discretion to issue a higher or lower forfeiture than provided in the
guidelines, to issue no forfeiture at all, or to apply alternative or
additional sanctions as permitted by the statute.") (emphasis added). We
find that calculating forfeitures for violations of the DTV tuner
requirement using a per-unit, tiered approach is reasonable because it
results in forfeiture amounts that reflect the egregiousness of the
violations, and that will effectively deter future misconduct. Moreover,
this forfeiture calculation methodology is consistent and predictable when
applied to different factual scenarios.
See DTV Tuner Report and Order, 20 FCC Rcd at 11199; DTV Tuner Second
Report and Order, 20 FCC Rcd at 18608.
See id..
As noted above, Syntax-Brillian shipped or imported a total of eight large
and mid-screen television receivers that did not include DTV tuners after
the applicable deadlines. See supra P 5. Application of the statutory
maximum forfeiture ($11,000) for each model would result in a proposed
forfeiture of $88,000, an amount that fails to reflect the true scope of
Syntax-Brillian's apparent violations or the public harm of importing and
shipping such large numbers of non-compliant television receivers.
See Globcom, 21 FCC Rcd at 4723-24 PP 35-38 (finding that the Commission
had authority to change its forfeiture calculation methodology for
carriers' failure to meet their universal service contribution
obligations; Commission found that previous forfeiture calculation
approach did not sufficiently deter violations). As noted above, we have
authority to propose forfeitures of up to $11,000 per violation against
any entity that is not a common carrier, broadcast licensee or cable
operator. For continuing violations, we may propose forfeitures of $11,000
per day, up to a maximum of $97,500 per violation.
See 47 U.S.C. S 503(b)(2)(E) (listing "history of prior offenses" as a
factor in forfeiture calculation). See also Ramko Distributors, Inc.,
Notice of Apparent Liability for Forfeiture, FCC 07-49 at P 23 (rel. March
30, 2007); AT&T Wireless Services, Notice of Apparent Liability for
Forfeiture, 17 FCC Rcd 7891, 7896 P 20 (2002), forfeiture ordered,
Forfeiture Order, 17 FCC Rcd 21866, 21874-75 P 25 (2002).
According to a recent company press release, Syntax-Brillian had revenues
of $492.4 million for the nine months ending March 31, 2007. See News
Release, Syntax-Brillian Corporation Reports Third Quarter Financial
Results (May 10, 2007), at
[1]http://phx.corporate-ir.net/phoenix.zhtml?c=146224&p=irol-newsArticle&ID=998957&highlight=
(visited May 16, 2007).
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. See also SBC
Communications v. FCC, 373 F.3d 140, 143 (D.C. Cir. 2004) ("a company's
ability to pay is a statutory factor that the FCC may consider, and it is
reasonable to expect that a larger fine might be necessary to deter a
large company ....").
According to Syntax-Brillian's website, the Syntax Groups Corporation was
founded in May 2003 and the Brillian Corporation was founded in 1997. See
http://www.syntaxbrillian.com/company/history.html.
See Second Periodic Review of the Commission's Rules and Policies
Affecting the Conversion To Digital Television, Second Report and Order,
FCC 07-69 at PP 4-5 (rel. May 3, 2007) (citing studies demonstrating that
many consumers are unaware that, after the digital transition, analog-only
devices will be unable to continue receiving over-the-air broadcast
television without use of an external digital tuner or converter).
We derived this amount as follows: (1000 units * $50/unit) + (1500 units *
$75/unit) + (2500 units * $100/unit) + (5000 units * $125/unit) + (10,000
units * $150/unit) + (2,069 units * $175/unit) = $2,899,575.
See 47 C.F.R. S 1.1914.
(Continued from previous page)
(continued....)
Federal Communications Commission FCC 07-106
2
Federal Communications Commission FCC 07-106
References
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