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Before the
Federal Communications Commission
washington, D.C. 20554
)
)
)
File No. EB-07-SE-259
In the Matter of )
NAL/Acct. No. 200832100005
Funai Corporation, Inc. )
FRN No. 0017000423
)
)
)
notice of apparent liability for forfeiture
Adopted: October 31, 2007 Released: November 1, 2007
By the Commission:
I. introduction
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
Funai Corporation, Inc. ("Funai") apparently liable for a forfeiture
in the amount of seven million, seven hundred forty-five thousand, six
hundred eight-seven dollars ($7,745,687) for its willful and repeated
violations of Section 330(c) of the Communications Act of 1934, as
amended, ("Act"), and Section 15.120(d)(2) of the Commission's Rules
("Rules"). The apparent violations involve Funai's interstate
shipment, after March 15, 2006, of digital television receivers that
do not comply with the Commission's rules requiring that such
receivers have the capability to receive program rating descriptors
and block programs from viewing when the program rating meets
pre-determined user requirements and to respond to changes in the
program rating system.
II. background
2. Sections 303(x) and 330(c) of the Act were added by the
Telecommunications Act of 1996. Section 303(x) directs the Commission
to prescribe rules requiring that television receivers shipped in
interstate commerce or manufactured in the United States be equipped
with a feature designed to enable viewers to block the display of all
programs with a common rating. Section 330(c) provides that no person
shall ship in interstate commerce or manufacture in the United States
television receivers that do not comply with rules prescribed by the
Commission pursuant to Section 303(x). The Commission adopted program
blocking capability requirements for both analog and digital
television ("DTV") receivers in 1998. In 2004, the Commission adopted
specific technical standards to implement V-Chip functionality for DTV
receivers ("V-Chip technology requirements"). The DTV V-Chip
technology requirements provide that, effective March 15, 2006,
digital television receivers with picture screens 13 inches or greater
("covered television receivers") that are shipped in interstate
commerce must be equipped with V-Chip technology to allow blocking of
the display of programming based on its content. Specifically, Section
15.120(d)(2) provides that:
Digital television receivers shall react in a similar manner as analog
televisions when programmed to block specific rating categories. Effective
March 15, 2006, digital television receivers will receive program rating
descriptors transmitted pursuant to industry standard EIA/CEA-766-A "U.S.
and Canadian Region Rating Tables (RRT) and Content Advisory Descriptors
for Transport of Content Advisory Information using ATSC A/65-A Program
and System Information Protocol (PSIP)," 2001 (incorporated by reference,
see S: 15.38). Blocking of programs shall occur when a program rating is
received that meets the pre-determined user requirements. Digital
television receivers shall be able to respond to changes in the content
advisory rating system.
To account for manufacturers' product development cycles, the Commission
allowed an 18-month transition period for implementation of the DTV V-Chip
technology requirements.
3. The V-Chip technology requirements implement Congress's determination,
in the Telecommunications Act of 1996, that parents should be provided
with "timely information about the nature of upcoming video
programming and with the technological tools that allow them easily to
block violent, sexual, or other programming that they consider harmful
to their children." This determination was based on Congress's finding
that television broadcast and cable programming have established a
"uniquely pervasive presence in the lives of American children."
Further, Congress found that empowering parents to control the
presence and influence of television in their children's lives was a
compelling government interest. Finally, Congress concluded that
requiring television receiver manufacturers to include V-Chip
technology in their products is a nonintrusive and narrowly tailored
means of achieving that compelling government interest.
4. In July 2007, the Enforcement Bureau ("Bureau") received a complaint
alleging that Funai was shipping in interstate commerce covered
television receivers that did not include the required V-Chip
technology. On August 7, 2007, the Bureau issued a letter of inquiry
("LOI") to Funai. Funai filed a response to the LOI on September 7,
2007. Funai requested confidentiality of portions of its LOI response
and that request remains pending. Accordingly, portions of Funai's LOI
response are discussed in an Appendix hereto, and we are treating the
Appendix as confidential at this time.
III. discussion
A. Funai Apparently Shipped Interstate Digital Television Receivers
In Violation of Section 330(c) of the Act and Section
15.120(d)(2) of the Rules
5. Based on our review of Funai's LOI response, we find that the company
apparently willfully and repeatedly shipped in interstate commerce
covered television receivers that did not comply with the DTV V-Chip
technology requirements in apparent violation of Section 330(c) of the
Act and Section 15.120(d)(2) of the Rules. Specifically, we find that,
after the March 15, 2006 deadline, Funai shipped in interstate
commerce digital television receivers that are not capable of
receiving any program rating descriptors and blocking programs from
viewing when the program rating meets pre-determined user
requirements. Additionally, we find that these same digital television
receivers were not capable of responding "to changes in the content
advisory rating system" as further required by Section 15.120(d)(2).
Funai admits to these facts.
A. Proposed Forfeiture
6. Based on the analysis set forth below, we conclude that Funai is
apparently liable for a forfeiture in the amount of $7,745,687 for
willfully and repeatedly shipping in interstate commerce television
receivers that do not comply with the DTV V-Chip technology
requirements in violation of Section 330(c) of the Act and Section
15.120(d)(2) of the Rules.
7. 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 Funai is apparently liable for forfeiture for
its apparent willful and repeated violations of Section 330(c) of the
Act and Section 15.120(d)(2) of the Rules.
8. 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 a NAL. Section 503(b)(6) does not, however, bar the
Commission from assessing whether Funai'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 Funai's prior conduct violated the rules, the forfeiture
amount we propose herein relates to Funai's apparent violations that
have occurred within the past year. Funai shipped in interstate
commerce a number of digital television receivers that do not comply
with the V-Chip technology requirements more than one year prior to
the date of this NAL. The non-compliant receivers represented by these
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 non-compliant digital television
receivers shipped in interstate commerce within the statute of
limitations.
9. 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."
10. 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 V-Chip technology requirements. 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.
11. The DTV V-Chip technology requirements promote the compelling
government interest of providing parents with the capability of
blocking the display of violent, sexual, or other programming they
believe is harmful to their children. We conclude that cases involving
the failure to include any sort of V-Chip blocking technology are more
egregious, in general, than many other types of equipment marketing
cases that come before us. In such cases, therefore, we conclude 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.
12. In the Regent NAL and the Syntax-Brillian NAL, we determined that, in
cases involving the interstate shipping or importation of television
receivers that did not comply with the DTV tuner requirements, 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, we noted, "gets to the root of the apparent
violation - non-compliant televisions in the hands of American
consumers." Furthermore, to reflect the increasing seriousness of the
violation as the number of non-compliant units shipped or imported
rises, we concluded that we will propose forfeitures on a tier-by-tier
basis, applying an escalating per-unit forfeiture amount separately to
each successive tier.
13. In Syntax Brillian and Regent, we applied the following tiers and
per-unit penalties for violation of our DTV tuner requirements:
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
14. We propose a similar approach for violations of our DTV V-Chip
technology requirements involving the interstate shipment of receivers
that are incapable of receiving program rating descriptors and
blocking programs from viewing when the program rating meets
pre-determined user requirements. We recognize, however, that
television receiving devices without digital tuners lack the ability
to receive digital television broadcast signals altogether, whereas
devices without V-Chip functionality deprive consumers of the
important capability to block unwanted programming but may still
receive digital television signals. Accordingly, in this and similar
cases we will impose a lower per unit forfeiture for each tier than in
our DTV tuner cases. Therefore, we establish the following tiers and
per-unit penalties for violations of the requirement that digital
television receivers be capable of receiving program rating
descriptors transmitted pursuant to industry standard EIA/CEA-766-A:
1-1000 units: $12.50 per unit
1001-2500 units: $18.75 per unit
2501-5000 units: $25 per unit
5001-10,000 units: $31.25 per unit
10,001-20,000 units: $37.50 per unit
20,001-30,000 units: $43.75 per unit
30,001-40,000 units: $50 per unit
40,001-50,000 units: $56.25 per unit
50,001+ units: $62.50 per unit.
We find that calculating forfeitures for the failure to include basic DTV
V-Chip functionality using this per-unit, tiered approach is reasonable
because it results in forfeiture amounts that reflect the egregiousness of
the violations and will deter future misconduct.
15. Due to Funai's confidentiality request, we will not specify in the NAL
the precise number of non-compliant units that Funai shipped
interstate in apparent violation of our rules. Based on the record in
this case, however, Funai's violations merit a large proposed
forfeiture. The regulatory requirements at issue have been in place in
some form since 1998. The Commission announced specific technical
standards to implement V-Chip functionality in digital television
receivers in 2004 and gave manufacturers 18 months, consistent with
the industry's design cycle for a television receiver model, to
comply. For more than 16 months after the March 1, 2006 deadline,
however, Funai continued to ship in interstate commerce large numbers
of digital television receivers that did not comply with the V-Chip
technology requirements. These unlawful shipments were substantial
both in terms of the number of non-compliant models and the total
number of non-compliant units. For these reasons, and based on the
tiered, per unit approach described above, we propose a forfeiture of
$7,745,687 for Funai's willful and repeated interstate shipment of
television receivers that do not comply with the DTV V-Chip technology
requirements in violation of Section 330(c) of the Act and Section
15.120(d)(2) of the Rules.
IV. ordering clauses
16. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the
Act, and Section 1.80 of the Rules, Funai Corporation Inc. is NOTIFIED
of its APPARENT LIABILITY FOR A FORFEITURE in the amount of seven
million, seven hundred forty-five thousand, six hundred eighty-seven
dollars ($7,745,687) for willful and repeated violations of Section
330(c) of the Act and Section 15.120(d)(2) of the Rules.
17. 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, Funai Corporation Inc. SHALL PAY the full
amount of the proposed forfeiture or SHALL FILE a written statement
seeking reduction or cancellation of the proposed forfeiture.
18. 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.
19. 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.
20. 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.
21. Requests for payment of the full amount of the NAL under an
installment plan should be sent to: Associate Managing Director -
Financial Operations, 445 12th Street, S.W., Room 1-A625, Washington,
D.C. 20554.
22. 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. Yoshikazu Uemura, Executive Vice
President, Funai Corporation Inc., 201 Route 17 North, Suite 903,
Rutherford, NJ 07070.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
47 U.S.C. S: 330(c).
47 C.F.R. S: 15.120(d)(2).
See Pub. L. No. 104-104, 110 Stat. 56 (1996).
In the Matter of Technical Requirements to Enable Blocking of Video
Programming Based on Program Rating, Implementation of Sections 551(c),
(d), and (e) of the Telecommunications Act of 1996, Report and Order, 13
FCC Rcd 11248 (1998) ("V-Chip Report and Order"). The rule adopted in 1998
provided that digital television receivers shall react in a similar manner
as analog televisions when programmed to block specific rating categories,
but did not specify technical standards to achieve this objective. Id. at
11258-59 P:P: 28-29.
In the Matter of Second Periodic Review of the Commission's Rules and
Policies Affecting the Conversion to Digital Television, Report and Order,
19 FCC Rcd 18279 (2004) ("Second DTV Periodic Review Report and Order").
The V-Chip technology requirements also apply to devices sold without an
accompanying display device. Id. at 18348 ("Similar to our requirements
for closed caption capabilities in digital television receivers, the rules
will also be applicable to DTV tuners which are sold without an associated
display device.").
Id. at 18347-49 P: 155-59.
Id. at 18348-49 P: 159.
V-Chip Report and Order, 13 FCC Rcd at 11248 P: 2.
Pub. L. No. 104-104, 110 Stat. 56 (1996).
Id.
Id.
See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
Enforcement Bureau to Funai Corporation (August 7, 2007) ("LOI").
See Letter from Yoshikazu Uemura, Executive Vice President, Funai
Corporation to Brett Greenwalt, Spectrum Enforcement Division, Enforcement
Bureau (September 7, 2007) ("LOI Response").
47 C.F.R. S: 15.120(d)(2).
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 P: 4 (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, 1827-28 P: 22 (2006), forfeiture ordered, 22 FCC Rcd 10451
(2007); Globcom, Inc. d/b/a Globcom Global Communications, Notice of
Apparent Liability for Forfeiture, 18 FCC Rcd 19893, 19903 P: 23 (2003),
forfeiture ordered, 21 FCC Rcd 4710 (2006) ("Globcom"); Roadrunner
Transportation, Inc., Forfeiture Order, 15 FCC Rcd 9669, 9671-72 P: 8
(2000); Cate Communications Corp., Memorandum Opinion and Order, 60 RR 2d
1386, 1388 P: 6 (1986); Eastern Broadcasting Corp., Memorandum Opinion and
Order, 10 FCC 2d 37, 37-38 P: 3 (1967) recon. denied, 11 FCC 2d 193, 195
P: 6 (1967).
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, 22 FCC Rcd 8689, 8699 P: 24 (2007); Globcom, 21 FCC
Rcd at 4723-24 P: 34. 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. S:1.80(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).
Pub. L. No. 104-104, 110 Stat. 56 (1996). See also Fox Television
Stations, Inc. v. Federal Communications Commission, 489 F.3d 444, 466 (2d
Cir. 2007) ("[B]locking technologies such as the V-chip have empowered
viewers to make their own choices about what they do, and do not, want to
see on television.").
Syntax-Brillian Corporation, Notice of Apparent Liability for Forfeiture,
22 FCC Rcd 10530 (2007), response pending ("Syntax-Brillian NAL"); Regent
U.S.A., Inc., Notice of Apparent Liability for Forfeiture, 22 FCC Rcd
10520 (2007) (forfeiture paid) ("Regent NAL").
Syntax-Brillian NAL, 22 FCC Rcd 10530,at 10535-36 P:P: 13-15 (concluding
that applying a proposed forfeiture on a per-model basis for shipment of
television receivers that were not compliant with the DTV tuner mandate
would result in forfeiture amounts incommensurate with the seriousness of
the violations); Regent NAL, 22 FCC Rcd 10520,at 10525-26 P:P: 13-15
(same).
Id.
Syntax-Brillian NAL, 22 FCC Rcd at 10535 P: 14; Regent NAL , 22 FCC Rcd at
10525 P: 14.
Syntax-Brillian NAL , 22 FCC Rcd at 10535-36 P: 15; Regent NAL , 22 FCC
Rcd at 10525-26 P: 15.
Syntax-Brillian NAL, 22 FCC Rcd at 10535 P: 15; Regent NAL , 22 FCC Rcd at
10525 P: 15.
Second DTV Periodic Review Report and Order, 19 FCC Rcd at 18348-49 P:159.
For simplicity's sake, we have rounded the proposed forfeiture amount to
the nearest dollar.
See 47 C.F.R. S: 1.1914.
(Continued from previous page)
(continued....)
Federal Communications Commission FCC 07-191
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Federal Communications Commission FCC 07-191