Click here for Adobe Acrobat version
Click here for Microsoft Word version

******************************************************** 
                      NOTICE
********************************************************

This document was converted from Microsoft Word.

Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.

All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.

Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.

If you need the complete document, download the
Microsoft Word or Adobe Acrobat version.

*****************************************************************



                                   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

   4

   Federal Communications Commission DA 08-493