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Before the
Federal Communications Commission
Washington, D.C. 20554
)
) File No. EB-09-SE-172
In the Matter of
) NAL/Acct. No. 201132100006
MGA Entertainment, Inc.
) FRN 0020283297
)
Order and Notice of apparent Liability for forfeiture
Adopted: October 25, 2010 Released: October 26, 2010
By the Chief, Spectrum Enforcement Division, Enforcement Bureau:
I. introduction
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
that MGA Entertainment, Inc. ("MGA"), a reseller of wireless services
through its Bratz Mobile phone offering, apparently willfully
violated the wireless handset hearing aid compatibility status report
filing requirements set forth in Section 20.19(i)(1) of the
Commission's Rules ("Rules"). For this apparent violation, we propose
a forfeiture in the amount of six thousand dollars ($6,000). We also
direct MGA to file the required wireless handset hearing aid
compatibility status report within thirty (30) days of the release of
this NAL.
II. BACKGROUND
2. In the 2003 Hearing Aid Compatibility Order, the Commission adopted
several measures to enhance the ability of individuals with hearing
disabilities to access digital wireless telecommunications. The
Commission established technical standards that digital wireless
handsets must meet to be considered compatible with hearing aids
operating in acoustic coupling and inductive coupling (telecoil)
modes. The Commission further established, for each standard,
deadlines by which manufacturers and service providers were required
to offer specified numbers or percentages of digital wireless
handsets per air interface that are compliant with the relevant
standard if they did not come under the de minimis exception. In
February 2008, as part of a comprehensive reconsideration of the
effectiveness of the hearing aid compatibility rules, the Commission
released an order that, among other things, adopted new compatible
handset deployment benchmarks beginning in 2008.
3. Of primary relevance, the Commission also adopted reporting
requirements to ensure that it could monitor the availability of
these handsets and to provide valuable information to the public
concerning the technical testing and commercial availability of
hearing aid-compatible handsets. The Commission initially required
manufacturers and digital wireless service providers to report every
six months on efforts toward compliance with the hearing aid
compatibility requirements for the first three years of
implementation (May 17, 2004, November 17, 2004, May 17, 2005,
November 17, 2005, May 17, 2006 and November 17, 2006), and then
annually thereafter through the fifth year of implementation
(November 19, 2007 and November 17, 2008). In its 2008 Hearing Aid
Compatibility First Report and Order, the Commission extended these
reporting requirements with certain modifications on an open ended
basis, beginning January 15, 2009. The Commission also made clear
that these reporting requirements apply to service providers that fit
within the de minimis exception.
4. MGA failed to file a hearing aid compatibility status report for the
period from July 1, 2008 through December 31, 2008 (due January 15,
2009). The Wireless Telecommunications Bureau referred MGA's apparent
violation of the hearing aid compatibility reporting requirements to
the Enforcement Bureau for possible enforcement action. On November
3, 2009, the Enforcement Bureau's Spectrum Enforcement Division
issued MGA a Letter of Inquiry ("LOI"). In response to the LOI, MGA
provided the Division a copy of a letter it sent to Ztar Mobile, Inc.
("Ztar"), in which MGA asserted that it is not responsible for any
violations of Section 20.19(i)(1) of the Rules pursuant to its
license agreement with Ztar and requested that Ztar provide it with
written confirmation that Ztar either timely filed or failed to file
the required report by the filing date. This letter also asks Ztar to
confirm to MGA that it had notified the Commission that it is
responsible for filing the required form on behalf of MGA and that it
will indemnify MGA with regard to "potential or actual violation of"
the Rules.
III. DISCUSSION
A. Failure to File Hearing Aid Compatibility Status Report
1. Section 20.19(i)(1) of the Rules requires all service providers to
file hearing aid compatibility status reports on January 15, 2009
(covering the six month period ending December 31, 2008) and then
annually thereafter. These reports are necessary to enable the
Commission to perform its enforcement function and evaluate whether
MGA is in compliance with Commission mandates that were adopted to
facilitate the accessibility of hearing aid-compatible wireless
handsets. These reports also provide valuable information to the
public concerning the technical testing and commercial availability
of hearing aid-compatible handsets.
2. MGA questions the applicability of Section 20.19(i)(1) of the Rules.
In this regard, we note that MGA purchases wireless service from Ztar
and then resells this service to customers through marketing of its
prepaid Bratz Mobile phone. The Commission has made clear that the
hearing aid compatibility handset requirements apply to service
providers such as resellers. We also find unpersuasive MGA's
assertion that it was not responsible for compliance with Section
20.19(i)(1) of the Rules because, pursuant to its license agreement
with Ztar, Ztar was responsible for filing the required reports. As a
provider of digital wireless service, MGA is responsible for
complying with applicable Commission's rules, including the hearing
aid compatibility reporting requirements. Moreover, consistent with
Commission precedent, MGA is responsible for the acts and omission of
its employees and third party contractors, such as Ztar. To date,
Commission records show no January 15, 2009 hearing aid compatibility
status report on file for MGA. Accordingly, we find MGA in apparent
willful violation of the requirements set forth in Section
20.19(i)(1) of the Rules.
B. Proposed Forfeiture
3. 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. Under this standard, we conclude that MGA is
apparently liable for forfeiture for its failure to timely file the
required hearing aid compatibility status report in apparent willful
violation of Section 20.19(i)(1) of the Rules.
4. The Commission's Forfeiture Policy Statement and Section 1.80(b) of
the Rules set a base forfeiture amount of $3,000 for the failure to
file required forms or information. While the base forfeiture
guidelines lend some predictability to the forfeiture process, the
Commission retains the discretion to depart from these guidelines and
issue forfeitures on a case-by-case basis, under its general
forfeiture authority contained in Section 503 of the Act. In
exercising such discretion, 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."
5. We have exercised our discretion to set a higher base forfeiture
amount for violations of the wireless hearing aid compatibility
reporting requirements. In the American Samoa Telecommunications
Authority NAL, we found that status reports are essential to the
implementation and enforcement of the hearing aid compatibility
rules. The Commission relies on these reports to provide consumers
with information regarding the technical specifications and
commercial availability of hearing aid-compatible digital wireless
handsets and to hold the digital wireless industry accountable to the
increasing number of hearing-impaired individuals. We noted that when
setting an $8,000 base forfeiture for violations of the hearing
aid-compatible handset labeling requirements, the Commission
emphasized that individuals with hearing impairments could only take
advantage of critically important public safety benefits of digital
wireless services if they had access to accurate information
regarding hearing aid compatibility features of handsets. We also
noted that the Commission has adjusted the base forfeiture upward
when noncompliance with filing requirements interferes with the
accurate administration and enforcement of Commission rules. Because
the failure to file hearing aid compatibility status reports
implicates similar public safety and enforcement concerns, we
exercised our discretionary authority and established a base
forfeiture amount of $6,000 for failure to file hearing aid
compatibility reports. Consistent with ASTCA, we believe the
established $6,000 base forfeiture for each hearing aid compatibility
reporting violation should apply here.
6. Failure to file these reports, as is the case here, can have an
adverse impact on the Commission's ability to ensure the commercial
availability of hearing aid-compatible digital wireless handsets, to
the detriment of consumers. Furthermore, in ASTCA, we made clear that
failure to file a hearing aid compatibility status report constitutes
a continuing violation that continues until the violation is cured.
MGA's failure to file the 2009 report on time had an adverse impact
on the Commission's ability to monitor and ensure the commercial
availability of hearing aid-compatible digital wireless handsets.
Accordingly, we propose a forfeiture of $6,000 against MGA for
apparently willfully failing to file its hearing aid compatibility
status report by the January 15, 2009 deadline in violation of
Section 20.19(i)(1) of the Rules.
7. Finally, as noted above, it appears that MGA still has not filed its
hearing aid compatibility status report for the six-month period
ending December 31, 2008, which was due on January 15, 2009. This
report is necessary to enable the Commission to monitor the
commercial availability of hearing aid-compatible handsets and to
assess MGA's compliance with the hearing aid compatibility handset
requirements during that period. We accordingly direct MGA to submit
the report within thirty (30) days of the release of this NAL.
IV. ORDERING clauses
8. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the
Act, and Section 1.80 of the Rules, MGA Entertainment, Inc. IS
NOTIFIED of its APPARENT LIABILITY FOR A FORFEITURE in the amount of
six thousand dollars ($6,000) for failing to timely file its hearing
aid compatibility status report in apparent willful violation of
Section 20.19(i)(1) of the Rules.
9. 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, MGA SHALL PAY the full amount of the
proposed forfeiture or SHALL FILE a written statement seeking
reduction or cancellation of the proposed forfeiture.
10. 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.
MGA also shall send electronic notification to JoAnn Lucanik at
JoAnn.Lucanik@fcc.gov and Karen Mercer at Karen.Mercer@fcc.gov on the
date said payment is made.
11. The written statement seeking reduction or cancellation of the
proposed forfeiture, if any, must include a detailed factual
statement supported by appropriate documentation and affidavits
pursuant to Sections 1.80(f)(3) and 1.16 of the Rules. The written
statement 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. The
statement should also be emailed to JoAnn Lucanik at
JoAnn.Lucanik@fcc.gov and Karen Mercer at Karen.Mercer@fcc.gov.
12. 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.
13. IT IS FURTHER ORDERED that, pursuant to Sections 4(i) and 4(j) of the
Act, MGA SHALL SUBMIT the report described in paragraph 11 within
thirty (30) days of the release of this NAL. The report 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. A copy of the report
must also be emailed to JoAnn Lucanik at JoAnn.Lucanik@fccgov, Karen
Mercer at Karen.Mercer@fcc.gov and Weiren Wang at
Weiren.Wang@fcc.gov.
14. 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 Ellie Trope, Counsel, MGA
Entertainment, Inc., 16300 Roscoe Boulevard, Suite 150, Van Nuys,
California 91406.
FEDERAL COMMUNICATIONS COMMISSION
Kathryn S. Berthot
Chief, Spectrum Enforcement Division
Enforcement Bureau
MGA Entertainment's wholly owned subsidiary, MGA Entertainment HK Ltd.,
holds equipment certifications granted by the Commission.
47 C.F.R. S: 20.19(i)(1).
The Commission adopted these requirements for digital wireless telephones
under the authority of the Hearing Aid Compatibility Act of 1988, codified
at Section 710(b)(2)(C) of the Communications Act of 1934, as amended, 47
U.S.C. S: 610(b)(2)(C). See Section 68.4(a) of the Commission's Rules
Governing Hearing Aid-Compatible Telephones, Report and Order, 18 FCC Rcd
16753, 16787 P: 89 (2003); Erratum, 18 FCC Rcd 18047 (2003) ("Hearing Aid
Compatibility Order"); Order on Reconsideration and Further Notice of
Proposed Rulemaking, 20 FCC Rcd 11221 (2005).
See Hearing Aid Compatibility Order, 18 FCC Rcd at 16777 P: 56; 47 C.F.R.
S: 20.19(b)(1), (2).
The term "air interface" refers to the technical protocol that ensures
compatibility between mobile radio service equipment, such as handsets,
and the service provider's base stations. Currently, the leading air
interfaces include Code Division Multiple Access (CDMA), Global System for
Mobile Communications (GSM), Integrated Digital Enhanced Network (iDEN)
and Wideband Code Division Multiple Access (WCDMA) a/k/a Universal Mobile
Telecommunications System (UMTS).
See Hearing Aid Compatibility Order, 18 FCC Rcd at 16780 P: 65; 47 C.F.R.
S:S: 20.19(c) and (d). The de minimis exception provides that
manufacturers or mobile service providers that offer two or fewer digital
wireless handset models per air interface are exempt from the hearing aid
compatibility deployment requirements, and manufacturers or mobile service
providers that offer three digital wireless handset models per air
interface must offer at least one compliant model. 47 C.F.R. S: 20.19(e).
See Amendment of the Commission's Rules Governing Hearing Aid-Compatible
Mobile Handsets, First Report and Order, 23 FCC Rcd 3406 (2008) ("Hearing
Aid Compatibility First Report and Order"), Order on Reconsideration and
Erratum, 23 FCC Rcd 7249 (2008).
See Hearing Compatibility First Report and Order, 23 FCC Rcd at 3443 P:
91.
Hearing Aid Compatibility Order, 18 FCC Rcd at 16787 P: 89; see also
Wireless Telecommunications Bureau Announces Hearing Aid Compatibility
Reporting Dates for Wireless Carriers and Handset Manufacturers, Public
Notice, 19 FCC Rcd 4097 (Wireless Tel. Bur. 2004).
See Hearing Aid Compatibility First Report and Order, 23 FCC Rcd at
3445-46 P:P: 97-99.
Id. at 3446 P: 99.
See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
Enforcement Bureau, to Isaac Larian, President and CEO, MGA Entertainment
(November 3, 2009) ("LOI").
See Letter from Ellie Tope, Counsel, MGA Entertainment, to Kevin Haddad,
Ztar Mobile, Inc. (November 11, 2009) ("MGA Letter"), at 1-2.
Id. at 2.
47 C.F.R. S: 20.19(i)(1).
See e.g., Hearing Aid Compatibility First Report and Order, 23 FCC Rcd at
3424 P: 46 (concluding that a three-month extension of deadlines for
meeting the handset deployment benchmarks is appropriate with regard to
"service providers that are not Tier I nationwide providers, including
regional and smaller providers, such as Tier II and Tier III carriers, and
other service providers such as resellers and MVNOs."). Accordingly, as a
reseller of wireless services, MGA is a service provider subject to the
wireless hearing aid compatibility handset requirements.
See, e.g., Eure Family Limited Partnership, Memorandum Opinion and Order,
17 FCC Rcd 21861, 21863-64 (2002) ("Eure"); MTD, Inc., Memorandum Opinion
and Order, 6 FCC Rcd 34, 35 (1991); Wagenvoord Broadcasting Co.,
Memorandum Opinion and Order, 35 FCC 2d 361 (1972).
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,
97th 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 P: 5 (1991),
recon. denied, 7 FCC Rcd 3454 (1992) ("Southern California"); see also
Telrite Corporation, Notice of Apparent Liability for Forfeiture, 23 FCC
Rcd 7231, 7237 P: 12 (2008) ("Telrite"); Regent USA, Notice of Apparent
Liability for Forfeiture, 22 FCC Rcd 10520, 10523 P: 9 (2007); San Jose
Navigation, Inc., Forfeiture Order 22 FCC Rcd 1040, 1042 P: 9 (2007).
47 C.F.R. S: 20.19(i)(1).
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 C.F.R. S: 1.80(b).
See Forfeiture Policy Statement, 12 FCC Rcd at 17099 P: 22, 17101 P: 29.
See also 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).
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 American Samoa Telecommunications Authority, Notice of Apparent
Liability for Forfeiture, 23 FCC Rcd 16432 (Enf. Bur., Spectrum Enf. Div.
2008), response pending ("ASTCA NAL").
See ASTCA NAL, 23 FCC Rcd at 16436-47 P: 10.
Id.
Id.
Id.
Id. at 16437 P: 11. See also Telrite, 23 FCC Rcd at 7244-45 P: 30
(determining that the failure to file Telecommunications Reporting
Worksheets was a continuing violation); Compass Global, Inc., Notice of
Apparent Liability for Forfeiture, 23 FCC Rcd 6125, 6138 P: 29 (2008)
(same); VCI Company, Notice of Apparent Liability for Forfeiture and
Order, 22 FCC Rcd 15933, 15940 P: 20 (2007) (determining that the failure
to file Lifeline and Linkup Worksheets was a continuing violation).
47 C.F.R. S: 20.19(i)(1).
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Federal Communications Commission DA 10-2046
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Federal Communications Commission DA 10-2046