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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
) File No. EB-07-SE-126
In the Matter of
) NAL/Acct. No. 200832100019
Hauppauge Computer Works, Inc.
) FRN No. 0014106520
)
)
Notice OF apparent liability for forfeiture AND Order
Adopted: March 3, 2008 Released: March 5, 2008
By the Chief, Spectrum Enforcement Division, Enforcement Bureau:
I. introduction
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
that Hauppauge Computer Works, Inc. ("Hauppauge") apparently willfully
and repeatedly violated a Commission order by failing to respond to a
directive of the Enforcement Bureau ("Bureau") to provide certain
information. Upon our review of the facts and circumstances
surrounding this apparent violation, we find that Hauppauge is
apparently liable for at forfeiture in the amount of $11,000.
II. background
2. The Commission adopted the digital television ("DTV") reception
capability requirement in 2002. The DTV reception capability
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 also applies to other video devices that include
television receivers but do not include a viewing screen. 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. 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 March 2007, the Bureau received a complaint alleging that Hauppauge
was marketing in the United States, and apparently shipping
interstate, analog-only broadcast receiver products for personal
computers. On July 18, 2007, the Bureau issued a Letter of Inquiry
("LOI") directing Hauppauge to provide certain information regarding
17 of its devices that apparently receive analog television signals
but are not capable of receiving digital television signals.
5. In its response to the LOI, Hauppauge admitted that it sells TV boards
for personal computers, some of which include both an analog and DTV
tuner and some of which include only an analog TV tuner. Hauppauge
indicated its belief that its analog-only TV boards should not be
covered under the Commission's requirements for DTV tuners. In support
of this belief, Hauppauge asserted that its products are not
stand-alone TV receivers but are components that are added to a
personal computer to provide TV capabilities; that personal computers
are "open" so an end user can add a DTV tuner at any time; that its
software is designed to support multiple TV boards in a media personal
computer; that there are some software applications which do not yet
support DTV; and that its products are designed to be added to
existing personal computer systems, some of which do not have the
technical capabilities needed to support DTV reception without the
addition of expensive hardware. Hauppauge added that it believes an
"open approach," one that allows consumers to choose how many and
which type of tuner to select for their personal computers, is the
most "consumer friendly" approach. Hauppauge did not respond to most
of the questions in the LOI, including questions concerning whether
the 17 devices identified in the LOI included DTV tuners, the total
number of such devices imported and shipped interstate, the dates on
which the devices were imported and shipped interstate, and the
entities to whom the devices were shipped interstate.
6. On August 28, 2007, the Bureau issued a follow-up LOI to Hauppauge,
notifying it that its response to the LOI was insufficient and
directing it to respond fully and completely to each question asked in
the LOI within 15 business days. The follow-up LOI explicitly warned
Hauppauge that failure to provide complete responses may result in
enforcement action. On October 10, 2007, approximately 29 business
days after the follow-up LOI was issued, the Bureau received a
response from Hauppauge stating that "Due to our annual audit, we have
been unable to finish processing your request. We expect that we will
be able to do so within the next 30 days." To date, however, Hauppauge
has not complied with the Bureau's directive to provide the requested
information.
III. discussion
A. Failure to Respond to the LOI
7. We find that Hauppauge apparently violated Commission orders by
failing to respond to a Bureau inquiry. Sections 4(i), 4(j), and 403
of the Communications Act of 1934, as amended, ("Act") afford the
Commission broad authority to investigate the entities it regulates.
Section 4(i) authorizes the Commission to "issue such orders, not
inconsistent with this Act, as may be necessary in the execution of
its functions," and Section 4(j) states that "the Commission may
conduct its proceedings in such manner as will best conduce to the
proper dispatch of business and to the ends of justice." Section 403
likewise grants the Commission "full authority and power to institute
an inquiry, on its own motion ... relating to the enforcement of any
of the provisions of this Act."
8. As indicated above, the Bureau twice directed Hauppauge to provide
certain information related to its TV boards for personal computers.
Such information was necessary to enable the Commission to perform its
enforcement function and evaluate whether Hauppauge violated
Commission rules. There is no question that Hauppauge received the
LOIs. To date, however, Hauppauge has failed to provide full and
complete responses. Hauppauge's failure to fully respond to the
Bureau's inquiry constitutes an apparent willful and repeated
violation of a Commission order.
A. Proposed Forfeiture
9. Section 503(b)(1) of the Act and Section 1.80(a)(1) of the Rules
authorize 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 determining the appropriate
forfeiture amount, Section 503(b)(2)(E) of the Act directs us to
consider factors, such as "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. Under Section 503(b)(2)(C) of the Act and Section 1.80(b)(3) of the
Rules, the Commission is authorized to assess a maximum forfeiture of
$11,000 for each violation, or each day of a continuing violation, by
an entity not specifically designated in Sections 503(b)(2)(A) or
503(b)(2)(B), up to a statutory maximum forfeiture of $97,500 for any
single continuing violation.
11. Section 1.80 of the Rules and the Commission's Forfeiture Policy
Statement establish a base forfeiture amount of $4,000 for failure to
respond to Commission communications. We find that Hauppauge's failure
to respond to the LOIs in the circumstances presented here warrants a
substantial increase to this base amount. Misconduct of this type
exhibits a disregard for the Commission's authority and, more
importantly, threatens to compromise the Commission's ability to
adequately investigate violations of its rules. In this case, such
misconduct inhibits our ability adequately to detect and deter
potential rule violations in an area of critical importance to the
Commission -- the DTV transition. Prompt and full responses to Bureau
inquiry letters are essential to the Commission's enforcement
function. We therefore propose an $11,000 forfeiture against Hauppauge
for failing to respond to Commission communications. This forfeiture
amount is consistent with recent precedent in similar cases, where
companies failed to provide responses to multiple Bureau inquiries
concerning compliance with the Commission's rules despite evidence
that the LOIs had been received.
12. We also direct Hauppauge to respond fully to the July 18, 2007 LOI
within 20 days of the release of this NAL. Failure to do so may
constitute an additional violation subjecting Hauppauge to further
penalties, including potentially higher monetary forfeitures.
IV. ordering clauses
13. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the
Act, and Section 1.80 of the Rules, Hauppauge Computer Works, Inc. is
NOTIFIED of its APPARENT LIABILITY FOR A FORFEITURE in the amount
eleven thousand dollars ($11,000) for willful and repeated violations
of a Commission order.
14. 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, Hauppauge Computer Works, Inc. SHALL PAY the
full amount of the proposed forfeiture or SHALL FILE a written
statement seeking reduction or cancellation of the proposed
forfeiture.
15. 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.
16. IT IS FURTHER ORDERED that, pursuant to Sections 4(i), 4(j) and 403 of
the Act, Hauppauge Computer Works, Inc. shall fully respond to the
July 18, 2007 Letter of Inquiry sent by the Enforcement Bureau within
twenty (20) days of the release of this NAL.
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
documentation submitted.
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 Mr. Ken Plotkin, President
and CEO, Hauppauge Computer Works, Inc., 91 Cabot Court, Hauppauge,
NY, 11788.
FEDERAL COMMUNICATIONS COMMISSION
Kathryn S. Berthot
Chief, Spectrum Enforcement Division
Enforcement Bureau
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 Review Second Report and Order, 17 FCC Rcd at 15996.
See 47 C.F.R. S: 15.117(i)(1)(iv).
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.
See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
Enforcement Bureau, to Hauppauge Computer Works, Inc. (July 18, 2007)
("LOI").
See Letter from Ken Plotkin, President and CEO, Hauppauge Computer Works,
Inc., to Neal McNeil, Federal Communications Commission, Enforcement
Bureau, Spectrum Enforcement Division (August 15, 2007) at 1.
Id.
Id. at 1-2.
Id. at 2.
See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
Enforcement Bureau, to Ken Plotkin, Chief Executive Officer, Hauppauge
Computer Works, Inc. (August 28, 2007) ("Follow-up LOI").
See Letter from Ken Plotkin, President and CEO, Hauppauge Computer Works,
Inc., to Neal McNeil, Federal Communications Commission, Enforcement
Bureau, Spectrum Enforcement Division (October 9, 2007) at 1.
47 U.S.C. S: 154(i).
47 U.S.C. S: 154(j).
47 U.S.C. S: 403.
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 indicates that this definition of willful
applies to both Sections 312 and 503(b) of the Act, H.R. Rep. No. 97-765,
97th Cong. 2d Sess. 51 (1982), and the Commission has so interpreted the
term in the Section 503(b) context. See, e.g., Southern California
Broadcasting Co., Memorandum Opinion and Order, 6 FCC Rcd 4387, 4387-88 P:
5 (1991) ("Southern California Broadcasting").
The Commission may also assess a forfeiture for violations that are merely
repeated, and not willful. See, e.g., Callais Cablevision, Inc., 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 leakage).
"Repeated" means that the act was committed or omitted more than once.
Southern California Broadcasting, 6 FCC Rcd at 4388 P: 5; Callais
Cablevision, 16 FCC Rcd at 1362 P: 9.
See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589,
7599-7600 P:P: 23-28 (ordering $100,000 forfeiture for egregious and
intentional failure to certify the response to a Bureau inquiry); Globcom,
Inc., Notice of Apparent Liability for Forfeiture and Order, 18 FCC Rcd
19893, 19898 n. 36 (2003) (noting delayed response to an LOI is considered
dilatory behavior which may result in future sanctions) (subsequent
history omitted); BigZoo.Com Corporation, Notice of Apparent Liability for
Forfeiture and Order, 19 FCC Rcd 24437 (Enf. Bur. 2004), forfeiture
ordered, 20 FCC Rcd 3954 (Enf. Bur. 2005) ("BigZoo") (ordering $20,000
forfeiture for failure to respond to an LOI); World Communications
Satellite Systems, Inc., Notice of Apparent Liability for Forfeiture, 18
FCC Rcd 18545 (Enf. Bur. 2003), forfeiture ordered, 19 FCC Rcd 2718
(ordering a $10,000 forfeiture for non-responsive reply to an LOI); Donald
W. Kaminski, Jr., Notice of Apparent Liability for Forfeiture, 16 FCC Rcd
10707 (Enf. Bur. 2001), forfeiture ordered, 18 FCC Rcd 26065 (Enf. Bur.
2003) (ordering $4,000 forfeiture for individual's failure to respond to
an LOI).
47 U.S.C. S: 503(b)(1); 47 C.F.R. S: 1.80(a)(1).
47 U.S.C. S: 503(b)(2)(E).
47 U.S.C. S: 503(b)(2)(C); 47 C.F.R. S: 1.80(b)(3).
In 2004, the Commission 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, 19 FCC Rcd 10945 (2004) (adjusting the
maximum statutory forfeiture amounts from $11,000/$87,500 to
$11,000/$97,500); see also 47 C.F.R. S: 1.80(c).
See 47 C.F.R. S: 1.80(b)(4); 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 (1997), recon. denied, 15
FCC Rcd. 303 (1999).
See, e.g., BigZoo, 20 FCC Rcd at 3955 (ordering a $20,000 forfeiture for
failure to respond to an LOI); Universal Telecommunications, Inc., Notice
of Apparent Liability for Forfeiture and Order, 21 Rcd 6579 (Enf. Bur.
2006) (proposing a $20,000 forfeiture for failure to respond to an LOI);
Liberty Phones, Inc., Notice of Apparent Liability for Forfeiture and
Order, 22 FCC Rcd 17264 (Enf. Bur., Inv. & Hearings Div., 2007) (proposing
a $20,000 forfeiture for failure to respond to an LOI). Each of these
cases ordered or proposed forfeitures of $20,000 for failure to respond to
Commission communications. We note, however, that these cases involved
common carriers, which are subject to a higher maximum statutory
forfeiture amount than non-common carriers like Hauppage. See 47 U.S.C.
503(b)(2)(B)-(C). We do not decide here whether failure to respond to an
LOI constitutes a continuing violation.
(Continued from previous page)
(continued ...)
Federal Communications Commission DA 08-493
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Federal Communications Commission DA 08-493