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Before the
Federal Communications Commission
Washington, D.C. 20554
)
File No. EB-09-SE-160
In the Matter of )
NAL/Acct. No. 201032100010
ZTE Corporation )
FRN 0009043175
)
Notice of apparent Liability for forfeiture
Adopted: January 14, 2010 Released: January 14, 2010
By the Chief, Spectrum Enforcement Division, Enforcement Bureau:
I. introduction
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
that ZTE Corporation ("ZTE") apparently willfully and repeatedly
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") and the public web site posting
requirements set forth in Section 20.19(h) of the Rules. For these
apparent violations, we propose a forfeiture in the amount of
eighteen thousand dollars ($18,000).
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, including on the Internet. 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 even apply to manufacturers and
service providers that fit the de minimis exception. In addition, the
Commission instituted a requirement that manufacturers and service
providers with publicly-accessible web sites maintain a list of
hearing aid-compatible handset models and certain information
regarding those models on their web sites. The web site postings,
which must be updated within 30 days of a change in a manufacturer's
or service provider's offerings, will enable consumers to obtain
up-to-date hearing aid compatibility information from their service
providers.
4. ZTE, a handset manufacturer, failed to file the required reports for
the periods July 1, 2008 through December 31, 2008 (due January 15,
2009) and January 1, 2009 through June 30, 2009 (due July 15, 2009).
ZTE also failed to list available hearing aid-compatible handset
models on its web site. The Wireless Telecommunications Bureau
("WTB") referred ZTE's apparent violations to the Enforcement Bureau
for action.
5. On November 4, 2009, the Enforcement Bureau's Spectrum Enforcement
Division issued a Letter of Inquiry ("LOI") to ZTE USA, Inc. ("ZTE
USA"), a U.S. subsidiary of ZTE Corporation, to which ZTE USA
responded on November 25, 2009. In ZTE USA's LOI Response, filed on
behalf of ZTE, it acknowledged that ZTE did not file the required
reports. ZTE USA explained that ZTE did not file "due to a mistake in
understanding the new process." ZTE USA noted that ZTE does provide
hearing aid compatibility information in the equipment authorization
test data submitted for each handset. ZTE USA further admitted that
ZTE did not post the required information on its web site.
III. DISCUSSION
A. Failure to File Timely Hearing Aid Compatibility Status Reports
6. Section 20.19(i)(1) of the Rules requires all handset manufacturers
to file hearing aid compatibility status reports under the current
rules initially on January 15, 2009 (covering the six month period
ending December 31, 2008) and then annually beginning July 15, 2009.
These reports are necessary to enable the Commission to perform its
enforcement function and evaluate whether ZTE 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. ZTE did not timely file the reports covering the six month
periods ending December 31, 2008 and June 30, 2009. Accordingly, we
find that ZTE failed to timely file the hearing aid compatibility
status reports due on January 15, 2009 and July 15, 2009 in apparent
willful and repeated violation of the requirements set forth in
Section 20.19(i)(1) of the Rules.
B. Failure to Post Required Information Concerning Hearing Aid-Compatible
Handset Models on its Web Site
7. Section 20.19(h) of the Rules requires that, beginning January 15,
2009, each manufacturer and service provider that operates a
publicly-accessible web site make available on its web site a list of
all hearing aid-compatible handset models currently offered, the
ratings of those models, and an explanation of the rating system. In
addition, the Commission has stated that any changes to a
manufacturer's or service provider's offerings must be reflected on
its public web site listing within 30 days of the change. These web
site postings provide consumers up-to-date hearing aid compatibility
information.
8. ZTE admitted that it failed to list all available hearing
aid-compatible handset models and the ratings for those models on its
web site within the required timeframe. ZTE also took no action to
address this violation until after it received the Division's LOI.
Accordingly, we find that ZTE apparently willfully and repeatedly
violated the web site posting requirements set forth in Section
20.19(h) of the Rules.
C. Proposed Forfeiture
9. 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 ZTE is
apparently liable for forfeiture for its failure to timely file the
required hearing aid compatibility status reports in apparent willful
and repeated violation of Section 20.19(i)(1) of the Rules, and for
its failure to post the required information regarding its hearing
aid-compatible handsets on its web site in apparent willful and
repeated violation of Section 20.19(h) of the Rules.
10. 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
requirements are guidelines lending 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."
11. 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 the 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 upwardly adjusted the base forfeiture
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 a hearing aid
compatibility report. Consistent with ASTCA, we believe the
established $6,000 base forfeiture for each hearing aid compatibility
reporting violation should apply here, for an aggregate forfeiture of
$12,000 ($6,000 * 2 reporting violations).
12. 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. We do not believe that the circumstances
presented by the company warrant any downward adjustment of the
proposed forfeiture amount. It is well established that a violator's
lack of knowledge or erroneous beliefs are not a mitigating factor
warranting a forfeiture reduction. Accordingly, we propose a
forfeiture of $12,000 against ZTE for apparently willfully and
repeatedly failing to timely file its January 15, 2009 and July 15,
2009 hearing aid compatibility status reports in violation of Section
20.19(i)(1) of the Rules.
13. Turning to the violation of the web posting requirements, no base
forfeiture amount has previously been established for violation of
Section 20.19(h) of the Rules. The fact that the Forfeiture Policy
Statement does not specify a base amount does not indicate that no
forfeiture should be imposed. The Forfeiture Policy Statement states
that "any omission of a specific rule violation" from the forfeiture
guidelines "should not signal that the Commission considers any
unlisted violation as nonexistent or unimportant." The Commission
retains the discretion, moreover, to depart from the Forfeiture
Policy Statement and issue forfeitures on a case-by-case basis,
under its general forfeiture authority contained in Section 503 of
the Act. As noted above, the base forfeiture amount for "failure to
file required forms or information" is $3,000. In determining the
appropriate forfeiture amount for violation of the web site
information posting requirements, we take into account that these
requirements are "essential to the proper functioning of our hearing
aid compatibility rules" and serve to increase the availability of
up-to-date hearing aid compatibility information to consumers and
service providers. Thus, we view a manufacturer's or service
provider's failure to list the required hearing aid-compatible
handset information on its web site as similar to its failure to
submit the required hearing aid compatibility status report.
14. In particular, we find that the web site may be the primary means
through which consumers obtain information, and that the updated
information between status reports is likely to be critical to both
consumers and service providers. As the Commission noted in the 2008
Hearing Aid Compatibility First Report and Order, information
provided in the status reports will inevitably become dated over the
course of a year. The web site postings, which must be updated within
30 days of a change in a manufacturer's or service provider's
offerings, will enable consumers to obtain up-to-date hearing aid
compatibility information from their service providers and will also
enable service providers to readily obtain up-to-date information
from their manufacturer suppliers. Accordingly, the same
considerations that lead us to increase the base forfeitures for
hearing aid compatibility status reporting violations also apply to
the requirement for web posting. We therefore establish $6,000 as the
base forfeiture for violation of Section 20.19(h).
15. As noted above, ZTE acknowledged that it did not post the required
information on its web site within the required timeframe and did not
correct this failure until after it received the Division's LOI, and
ZTE presented no mitigating factors in its LOI Response justifying a
downward adjustment to the $6,000 base forfeiture. Accordingly, we
propose a forfeiture of $6,000 against ZTE for apparently willfully
and repeatedly failing to list its hearing aid-compatible models on
its public web site in violation of Section 20.19(h) of the Rules.
16. Accordingly, we propose a total forfeiture of $18,000 against ZTE for
its apparent willful and repeated violations of Sections 20.19(i)(1)
and 20.19(h) of the Rules.
IV. ORDERING clauses
17. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the
Act, and Section 1.80 of the Rules, ZTE Corporation IS NOTIFIED of
its APPARENT LIABILITY FOR A FORFEITURE in the amount of eighteen
thousand dollars ($18,000) for failing to file its hearing aid
compatibility status reports in apparent willful and repeated
violation of the requirements set forth in Section 20.19(i)(1) of the
Rules, and for failing to post required information concerning its
hearing aid-compatible handset models on its public web site in
apparent willful and repeated violation of Section 20.19(h) of the
Rules.
18. 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, ZTE Corporation SHALL PAY the full amount
of the proposed forfeiture or SHALL FILE a written statement seeking
reduction or cancellation of the proposed forfeiture.
19. 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.
ZTE will also send electronic notification on the date said payment
is made to Susan.Stickley@fcc.gov and Ricardo.Durham@fcc.gov.
20. 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 Ricardo Durham at
Ricardo.Durham@fcc.gov and Susan Stickley at Susan.Stickley@fcc.gov.
21. 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.
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. Yin Yimin, President
and CEO, ZTE Corporation, ZTE Plaza, Keji Road South, Hi-Tech
Industrial Park, Nanshan District, Shenzhen, The People's Republic of
China, and to Mr. Xiang-Yang Jiang, CEO, ZTE USA, Inc., 2425 North
Central Expressway, Suite 323, Richardson, Texas 75080.
FEDERAL COMMUNICATIONS COMMISSION
Kathryn S. Berthot
Chief, Spectrum Enforcement Division
Enforcement Bureau
47 C.F.R. S:S: 20.19(i)(1) and 20.19(h).
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) ("Hearing Aid Compatibility
Reconsideration Order").
See Hearing Aid Compatibility Order, 18 FCC Rcd at 16777 P: 56; 47 C.F.R.
S:S: 20.19(b)(1) and (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 Dispatch 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), (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).
This provision was affirmed in Amendment of the Commission's Rules
Governing Hearing Aid-Compatible Mobile Handsets, First Report and Order,
23 FCC Rcd 3406, 3435 P: 72 (2008) ("Hearing Aid Compatibility First
Report and Order"), Order on Reconsideration and Erratum, 23 FCC Rcd 7249
(2008).
Id., Hearing Aid Compatibility First Report and Order.
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
P:P: 97-99.
Id. at 3446 P: 99.
Id. at 3450 P: 112.
Id.
See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
Enforcement Bureau, Federal Communications Commission to Mr. Xiang-Yang
Jiang, CEO, ZTE USA, Inc. (November 4, 2009).
See Letter from Xiang-Yang Jiang, CEO, ZTE USA, Inc. to Susan M. Stickley,
Esq., Spectrum Enforcement Division, Enforcement Bureau, Federal
Communications Commission (November 25, 2009) ("LOI Response").
Id. at 1. ZTE filed the report due July 15, 2009 on December 1, 2009, but
to date has not filed the report due January 15, 2009.
Id.
Id. at 2. Following receipt of the Division's LOI, ZTE USA posted the
required information for its hearing aid-compatible handset models on its
web site at www.zteusa-support.com.
47 C.F.R. S: 20.19(i)(1).
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); 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).
Section 312(f)(2) defines "repeated" as "the commission or omission of
such act more than once or, if such commission or omission is continuous,
for more than one day." 47 U.S.C. S: 312(f)(2). As with the definition of
"willful," the Commission has interpreted the term to apply to forfeiture
proceedings. See Southern California, supra.
47 C.F.R. S: 20.19(i)(1).
See Hearing Compatibility First Report and Order, 23 FCC Rcd at 3450 P:
112.
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: 20.19(i)(1).
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").
See ASTCA, 23 FCC Rcd at 16436-7 P: 10.
Id.
Id.
Id.
See, e.g., Profit Enterprises, Inc., 8 FCC Rcd 2846, 2846 P: 5 (1993)
(denying the mitigation claim of a manufacturer/distributor who thought
that the equipment certification and marketing requirements were
inapplicable, stating that its "prior knowledge or understanding of the
law is unnecessary to a determination of whether a violation existed ...
ignorance of the law is [not] a mitigating factor"); Lakewood Broadcasting
Service, Inc., 37 FCC 2d 437, 438 P: 6 (1972) (denying a mitigation claim
of a broadcast licensee who asserted an unfamiliarity with the station
identification requirements, stating that licensees are expected "to know
and conform their conduct to the requirements of our rules"); Kenneth Paul
Harris, Sr., 15 FCC Rcd 12933, 12935 P: 7 (Enf. Bur. 2000) (denying a
mitigation claim of a broadcast licensee, stating that its ignorance of
the law did not excuse the unauthorized transfer of the station); Maxwell
Broadcasting Group, Inc., 8 FCC Rcd 784, 784 P: 2 (MMB 1993) (denying a
mitigation claim of a noncommercial broadcast licensee, stating that the
excuse of "inadverten[ce], due to inexperience and ignorance of the rules
... are not reasons to mitigate a forfeiture" for violation of the
advertisement restrictions).
47 C.F.R. S: 20.19(i)(1).
See Forfeiture Policy Statement, 12 FCC Rcd at 17099.
Id.
47 C.F.R. S: 1.80(b).
See Hearing Compatibility First Report and Order, 23 FCC Rcd at 3450 P:
112.
Id.
Id.
In this regard, we note that each manufacturer and service provider is
required to continuously maintain the required information concerning its
hearing aid-compatible handset models on its web site and to update the
web sites within 30 days of a change in its handset offerings.
47 C.F.R. S: 20.19(h).
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Federal Communications Commission DA 10-80