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Before the
Federal Communications Commission
Washington, D.C. 20554
)
In the Matter of ) File No. EB-07-SE-258
Philips Consumer Electronics North ) Acct. No. 200832100026
America
) FRN No. 0004500187
)
ORDER
Adopted: April 9, 2008 Released: April 10, 2008
By the Chief, Enforcement Bureau:
1. In this Order, we adopt the attached Consent Decree entered into
between the Enforcement Bureau ("Bureau") and Philips Consumer
Electronics North America ("Philips"). The Consent Decree terminates
an investigation by the Bureau against Philips for possible 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"),
regarding the interstate shipment, after March 15, 2006, of digital
television receivers that do not comply with the V-Chip technology
requirements because they lack the ability to adapt to new rating
systems.
2. The Bureau and Philips have negotiated the terms of the Consent Decree
that resolve this matter. A copy of the Consent Decree is attached
hereto and incorporated by reference.
3. After reviewing the terms of the Consent Decree and evaluating the
facts before us, we find that the public interest would be served by
adopting the Consent Decree and terminating the investigation.
4. In the absence of material new evidence relating to this matter, we
conclude that our investigation raises no substantial or material
questions of fact as to whether Philips possesses the basic
qualifications, including those related to character, to hold or
obtain any Commission license or authorization.
5. Accordingly, IT IS ORDERED that, pursuant to section 4(i) of the Act,
and sections 0.111 and 0.311 of the Rules, the Consent Decree attached
to this Order IS ADOPTED.
6. IT IS FURTHER ORDERED that the above-captioned investigation IS
TERMINATED.
7. IT IS FURTHER ORDERED that all third-party complaints against Philips
before the Bureau related to the above-captioned-investigations as of
the date of this Consent Decree ARE DISMISSED.
8. IT IS FURTHER ORDERED that Philips shall make its voluntary
contribution to the United States Treasury, as specified in the
Consent Decree, by credit card through the Commission's Revenue and
Receivables Operations Group at (202) 418-1995, or by mailing a check
or similar instrument payable to the order of the Federal
Communications Commission, 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 Account number in block number 23A (call sign/other
ID), and enter the letters "FORF" in block number 24A (payment type
code).
9. IT IS FURTHER ORDERED that Philips will file reports with the
Commission ninety days after the Effective Date, twelve months after
the Effective Date, and two years after the Effective Date. Each
report shall include a compliance certificate from an officer, as an
agent of Philips, stating that the officer has personal knowledge that
Philips has established operating procedures intended to ensure
compliance with this Consent Decree, together with an accompanying
statement explaining the basis for the officer's compliance
certification. All reports shall be submitted to the Chief, Spectrum
Enforcement Division, Enforcement Bureau, Federal Communications
Commission, 445 12th Street, S.W., Washington, D.C. 20554.
10. IT IS FURTHER ORDERED that a copy of this Order and Consent Decree
shall be sent by first class mail and certified mail, return receipt
requested, to Philips' counsel, David Siddall, Esq. and Lawrence R.
Sidman, Esq., Paul, Hastings, Janofsky & Walker, 875 15th Street, NW,
Washington, DC 20005.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Chief, Enforcement Bureau
Before the
Federal Communications Commission
Washington, D.C. 20554
)
In the Matter of ) File No. EB-07-SE-258
Philips Consumer Electronics North ) Acct. No. 200832100026
America
) FRN No. 0004500187
)
CONSENT DECREE
The Enforcement Bureau ("Bureau") and Philips Electronics North America
Corporation ("Philips"), by their authorized representatives, hereby enter
into this Consent Decree for the purpose of terminating the Bureau's
investigation into whether Philips violated Section 330(c) of the
Communications Act of 1934, as amended ("Act"), and Section 15.120(d)(2)
of the Commission's Rules ("Rules"), regarding the interstate shipment,
after March 15, 2006, of digital television receivers that do not comply
with the V-Chip technology requirements because they lack the ability to
adapt to new rating systems.
I. DEFINITIONS
1. For the purposes of this Consent Decree, the following definitions
shall apply:
a. "Act" means the Communications Act of 1934, as amended U.S.C. S:S: 151
et seq.
b. "Bureau" means the Enforcement Bureau of the Federal Communications
Commission.
c. "Commission" and "FCC" mean the Federal Communications Commission and
all of its bureaus and offices.
d. "Complaints" means third-party complaints that may have been received
by, or are in the possession of, the Commission or Bureau alleging
violations of the V-Chip technology requirements.
e. "Compliance Plan" means the program described in this Consent Decree
at paragraph 8 and, as summarized in Appendix A, attached to this
Consent Decree.
f. "Digital Television Receivers" or "DTV Receivers" means (i) digital
television broadcast receivers with display screens in the 4:3 aspect
ratio measuring 13 inches or larger diagonally, (ii) digital
television broadcast receivers with display screens in the 16:9 aspect
ratio measuring 7.8 inches or larger vertically, and (iii) devices
with digital television broadcast tuners sold without an accompanying
display device, such as DVR recorders.
g. "Effective Date" means the date on which the Bureau releases the
Adopting Order.
h. "Investigation" means the investigations commenced by the Bureau's
August 6, 2007 and November 26, 2007 Letters of Inquiry regarding
whether Philips violated section 330(c) of the Act, and section
15.120(d)(2) of the Rules, by shipping interstate digital television
receivers that do not comply with the V-Chip technology requirements
because they lack the ability to adapt to new rating systems.
i. "Order" or "Adopting Order" means an Order of the Bureau adopting the
terms of this Consent decree without change, addition, deletion, or
modification.
j. "Parties" means Philips and the Bureau.
k. "Philips" means Philips Electronics North America Corporation.
l. "Rules" means the Commission's regulations found in Title 47 of the
Code of Federal Regulations.
II. BACKGROUND
2. Section 303(x) of the Act directs the Commission to prescribe rules
that require television receivers with picture screens 13 inches or
greater shipped in interstate commerce or manufactured in the United
States to be equipped with a feature designed to enable viewers to block
the display of all programs with a common rating. Section 330(c) of the
Act 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
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 and be able to respond to changes in the content advisory rating
system.
3. On August 6, 2007, the Bureau issued a letter of inquiry (LOI) to
Philips. The August 6, 2007 LOI directed Philips, among other things, to
submit a sworn written response to a series of questions relating to its
compliance with the DTV V-Chip technology requirements. Philips responded
to the August 6, 2007 LOI on October 19, 2007, and submitted a follow-up
response on November 9, 2007. On November 26, 2007, the Bureau issued a
second LOI to Philips. Philips responded to the November 26, 2007 LOI on
January 18, 2008, and submitted a follow-up response on January 28, 2008.
III. TERMS OF AGREEMENT
4. Adopting Order. The Parties agree that the provisions of this Consent
Decree shall be subject to final approval by the Bureau by incorporation
of such provisions by reference in the Adopting Order without change,
addition, modification, or deletion.
5. Jurisdiction. Philips agrees that the Bureau has jurisdiction over it
and the matters contained in this Consent Decree and has the authority to
enter into and adopt this Consent Decree.
6. Effective Date; Violations. The Parties agree that this Consent Decree
shall become effective on the date on which the Bureau releases the
Adopting Order. Upon release, the Adopting Order and this Consent Decree
shall have the same force and effect as any other final Order of the
Bureau. Any violation of the Adopting Order or of the terms of this
Consent Decree shall constitute a separate violation of a Bureau Order,
entitling the Bureau to exercise any rights and remedies attendant to the
enforcement of a Commission Order.
7. Termination of Investigation. In express reliance on the covenants and
representations in this Consent Decree and to avoid further expenditure of
public resources, the Bureau agrees to terminate the Investigation and
dismiss the Complaint. In consideration for termination by the Bureau of
the Investigation and dismissal of the Complaint in accordance with the
terms of this Consent Decree, Philips agrees to the terms, conditions, and
procedures contained herein. The Bureau further agrees that in the absence
of new material evidence, the Bureau will not use the facts developed in
this Investigation through the Effective Date of the Consent Decree, or
the existence of this Consent Decree, to institute, on its own motion, any
new proceeding, formal or informal, or take any action on its own motion
against Philips concerning the matters that were the subject of the
Investigation. The Bureau also agrees that it will not use the facts
developed in this investigation through the Effective Date of this Consent
Decree, or the existence of this Consent Decree, to institute on its own
motion any proceeding, formal or informal, or take any action on its own
motion against Philips with respect to Philips' basic qualifications,
including its character qualifications, to hold Commission authorizations.
8. Compliance Plan. For purposes of settling the matters set forth herein,
Philips agrees to maintain a Compliance Plan related to future compliance
with the Act, the Commission's Rules, and the Commission's Orders. The
Compliance Plan will include the following components.
a. Interstate Shipment of New DTV Receivers. Philips agrees that every
new model of DTV receiver shipped interstate by Philips on or after
the Effective Date of this Consent Decree will be compliant with
Section 15.120(d)(2) of the Rules.
b. Design, Development and Manufacture of DTV Receivers. Philips agrees
to implement a Compliance Plan (summarized in Appendix A attached
hereto and incorporated by reference) to ensure that the design,
development, and manufacture of new DTV receivers that it ships in
interstate commerce complies with the Act and the Rules.
c. Receiver Upgrades. Philips agrees, for a period of five years after
the Effective Date of this Consent Decree, to post a notice on its
website that advises consumers that upgradeable models are capable of
obtaining enhanced ratings blocking capability via downloadable
software from Philips' website to a computer which could then be used
to update the DTV receiver's software. Philips agrees to provide an
email notification to customers who have registered their DTV Receiver
with Philips as of the Effective Date of this Consent Decree of the
availability of this downloadable software for upgradeable models. In
addition, Philips will provide, upon consumer request, for a period of
five years after the Effective Date of this Consent Decree, a memory
stick that can be used to plug into an applicable DTV receiver's USB
port which would automatically update the receiver's software when the
receiver is turned on.
d. Compliance Reports. Philips will file compliance reports with the
Commission ninety days after the Effective Date, twelve months after
the Effective Date, and twenty-four months after the Effective Date.
Each compliance report shall include a compliance certificate from an
officer, as an agent of Philips, stating that the officer has personal
knowledge that Philips has established operating procedures intended
to ensure compliance with this Consent Decree, together with an
accompanying statement explaining the basis for the officer's
compliance certification. All compliance reports shall be submitted to
Chief, Spectrum Enforcement Division, Enforcement Bureau, Federal
Communications Commission, 445 12th Street, S.W., Washington, D.C.
20554.
e. Termination Date. Unless stated otherwise, the requirements of this
Consent Decree will expire twenty-four months after the Effective
Date.
9. Voluntary Contribution. Philips agrees that it will make a voluntary
contribution to the United States Treasury in the amount of $450,000. The
payment will be made within 30 days after the Effective Date of the
Adopting Order. The payment must be made by check or similar instrument,
payable to the order of the Federal Communications Commission. The payment
must include the Account Number and FRN Number referenced in the caption
to the Adopting Order. 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 Account number in block number 23A (call
sign/other ID), and enter the letters "FORF" in block number 24A (payment
type code).
10. Waivers. Philips waives any and all rights it may have to seek
administrative or judicial reconsideration, review, appeal or stay, or to
otherwise challenge or contest the validity of this Consent Decree and the
Order adopting this Consent Decree, provided the Bureau issues an Order
adopting the Consent Decree without change, addition, modification, or
deletion. Philips shall retain the right to challenge Commission
interpretation of the Consent Decree or any terms contained herein. If
either Party (or the United States on behalf of the Commission) brings a
judicial action to enforce the terms of the Adopting Order, neither
Philips nor the Commission shall contest the validity of the Consent
Decree or the Adopting Order, and Philips shall waive any statutory right
to a trail de novo. Philips hereby agrees to waive any claims it may
otherwise have under the Equal Access to Justice Act, 5 U.S.C. S: 504 and
47 C.F.R. S: 1.1501 et seq., relating to the matters addressed in this
Consent Decree.
11. Severability. The Parties agree that if any of the provisions of the
Adopting Order or the Consent Decree shall be invalid or unenforceable,
such invalidity or unenforceability shall not invalidate or render
unenforceable the entire Adopting Order or Consent Decree, but rather the
entire Adopting Order or Consent Decree shall be construed as if not
containing the particular invalid or unenforceable provision or
provisions, and the rights and obligations of the Parties shall be
construed and enforced accordingly. In the event that this Consent Decree
in its entirety is rendered invalid by any court of competent
jurisdiction, it shall become null and void and may not be used in any
manner in any legal proceeding.
12. Subsequent Rule or Order. The Parties agree that if any provision of
this Consent Decree conflicts with any subsequent rule or Order adopted by
the Commission (except an Order specifically intended to revise the terms
of this Consent Decree to which Philips does not expressly consent) that
provision will be superseded by such Commission rule or Order.
13. Final Settlement. The Parties agree and acknowledge that this Consent
Decree shall constitute a final settlement between the Parties. The
Parties further agree that this Consent Decree does not constitute either
an adjudication on the merits or a factual or legal finding or
determination regarding any compliance or noncompliance with the
requirements of the Act or the Commission's Rules and Orders.
14. Modifications. This Consent Decree cannot be modified without the
advance written consent of both Parties.
15. Paragraph Headings. The headings of the Paragraphs in this Consent
Decree are inserted for convenience only and are not intended to affect
the meaning or interpretation of this Consent Decree.
16. Authorized Representative. Each party represents and warrants to the
other that it has full power and authority to enter into this Consent
Decree.
17. Counterparts. This Consent Decree may be signed in any number of
counterparts (including by facsimile), each of which, when executed and
delivered, shall be an original, and all of which counterparts together
shall constitute one and the same fully executed instrument.
_______________________________
Kris Anne Monteith
Chief
Enforcement Bureau
________________________________
Date
________________________________
Joseph Innamorati
Senior Vice President, Chief Legal Officer
Philips Electronics North America Corporation
________________________________
Date
APPENDIX A
Compliance Plan
of
Philips Electronics North America Corporation ("Philips")
I. Philips has established, on or as of the Effective Date of this Consent
Decree, an updated management process to ensure ongoing and future
compliance with Commission Rules and regulations. The Philips management
personnel delineated in paragraph II below have been charged with
monitoring, on an on-going basis, all relevant Commission Rules and
regulations applying to digital television ("DTV") receivers shipped in
interstate commerce. This process is to ensure the dissemination of such
Rules and regulations globally for Philips, as well as the implementation
of such Rules and regulations in the design, development and manufacture
of all DTV receivers.
II. Philips has designated two of its management personnel to administer
this Compliance Plan and be directly responsible for Philips' DTV
receivers compliance with the Commission's Rules and this Consent Decree.
One of these management personnel will have substantial technical
experience and the other will have substantial commercial experience. In
the event one of these management personnel is unable to continue
performing these functions, these functions will be performed by
management personnel with similar responsibilities. Each of the management
personnel will engage in an on-going review of Commission Rules, orders,
and regulations in order to create a check and balance approach to
compliance.
III. Both management personnel will be responsible for communicating
Commission Rules and regulations applicable to DTV receivers to Philips'
design and manufacturing centers. Then, the completed design and
specifications for each new DTV receiver model will be analyzed by the
Design Center and the results reviewed by both management personnel
independently to ensure compliance with Commission Rules, orders, and
regulations applicable to DTV receivers. Any findings of noncompliance
with Commission Rules or regulations in the design of any DTV receiver
will result in a change of the design and specifications for that DTV
receiver in order to bring such DTV receiver into compliance.
IV. In addition, DTV receiver models will be sampled for compliance with
Commission Rules and regulations in Philips' testing center. This testing
process is reviewed by both management personnel independently to ensure
compliance with Commission Rules, orders, and regulations applicable to
DTV receivers. Any findings of noncompliance with Commission Rules or
regulations in the testing of any DTV receiver will result in an immediate
hold on such DTV receiver.
V. In the event of any question concerning appropriate compliance with the
Commission Rules or regulations in either the design phase or the testing
phase, either of the two management personnel identified in section II
above will consult with regulatory counsel.
VI. This process includes the verification of RRTx1 and RRTx5
functionality for DTV receiver models at two steps: (1) during the design
verification phase (field test) and (2) during the manufacturing phase.
This process will apply to all Philips-designed or manufactured digital
televisions shipped in interstate commerce on or after the Effective Date.
VII. Any new DTV receiver found not to be in compliance with the
Commission's Rules and requirements will not be shipped interstate by
Philips unless all necessary corrections have been made.
47 U.S.C. S: 303(c).
47 C.F.R. S: 15.120(d)(2).
47 U.S.C. S: 154(i), 503(b).
47 C.F.R. S:S: 0.111 and 0.311.
47 U.S.C. S: 303(c).
47 C.F.R. S: 15.120(d)(2).
See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
Enforcement Bureau, to Rick Dorl, General Counsel, Consumers Electronics
Division, Philips Consumer Electronics North America (August 6, 2007)
("August 6, 2007 LOI"); Letter from Kathryn S. Berthot, Chief, Spectrum
Enforcement Division, Enforcement Bureau, to Rick Dorl, General Counsel,
Consumers Electronics Division, Philips Consumer Electronics North America
(November 26, 2007) ("November 26, 2007 LOI").
47 U.S.C. S: 303(x).
47 U.S.C. S: 330(c).
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).
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). The V-Chip technology requirements also apply to
devices sold without an accompanying display device. Id. at 18348.
47 C.F.R. S: 15.120(d)(2).
See August 6, 2007 LOI.
See Letter from James E. Galese, Senior Vice President and Chief Financial
Officer, Philips Consumer Electronics North America, to Kathryn Berthot,
Chief, Spectrum Enforcement Division, Enforcement Bureau (October 19,
2007).
See Letter from James E. Galese, Senior Vice President and Chief Financial
Officer, Philips Consumer Electronics North America, to Kathryn Berthot,
Chief, Spectrum Enforcement Division, Enforcement Bureau (November 9,
2007).
See November 26, 2007 LOI.
See Letter from Andrew R. Mintz, Senior Vice President, Philips Consumer
Electronics North America, to Kathryn Berthot, Chief, Spectrum Enforcement
Division, Enforcement Bureau (January 18, 2008).
Letter from James E. Galese, Senior Vice President and Chief Financial
Officer, Philips Consumer Electronics North America, to Kathryn Berthot,
Chief, Spectrum Enforcement Division, Enforcement Bureau (January 28,
2008).
Federal Communications Commission DA 08-842
1
Federal Communications Commission DA 08-842