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Not Just the Cost of Doing Business: Large FCC Fine Spotlights Risks from Two-Way Radios

Not Just the Cost of Doing Business: Large FCC Fine Spotlights Risks from Two-Way Radios

Handheld two-way radios can be an important tool at worksites and facilities across the country, but they can also be a hidden risk to the businesses that rely on them. The Federal Communications Commission ("FCC") refers to them as Private Land Mobile Radio Service ("PLMRS") radios, but to most of us, they're just radios, everyday workhorse tools used to communicate on jobsites and facilities for coordinating people and materials, safety, and security. In an order released last week, the FCC fined a manufacturer $135,000 for failing to keep its PLMRS licenses current and for transferring control of them without permission. This fine follows an increasing trend of FCC enforcement actions, as well as signaling closer scrutiny of these mission-critical but often overlooked tools.

Overlooked, but Not Unregulated

In its December 30, 2015 Consent Decree with Constellium Rolled Products Ravenswood, LLC, a 1,000-employee aluminum manufacturing company, the FCC initially issued a notice of apparent liability for $294,400, primarily for operating its radio system after the license had expired and also for failing to seek authorization for a change in control of the radio system, presumably due to a sale of the company.

It is not hard to see how this happened. The FCC's database lists hundreds of thousands of PLMRS licenses representing millions of radios, and usually no one—including the FCC—thinks too much about them. They make possible many day-to-day activities upon which organizations across the United States have come to rely. Public safety agencies, utilities, railroads, manufacturers, hospitals, and a wide variety of other businesses—from delivery companies to landscapers to building maintenance firms—rely on business radio systems every day. Unfortunately, such systems are often set up by operations-level employees or outside vendors, with limited oversight by company management, legal counsel, or compliance personnel. As a result, PLMRS radios may not always be properly licensed, licenses may have lapsed, or systems may grow beyond what is allowed by the original authorization.

Increasing Enforcement

As the FCC notes, operators have always had an obligation to keep their systems licensed and operating within the bounds of their authorization. The ubiquity of these systems and their relatively low power levels, however, has historically resulted in only modest interest from the FCC's Enforcement Bureau. The Constellium fine demonstrates that the FCC's new get-tough policy extends even to companies that might not realize they are in the communications business.

After settlement discussions, the FCC reduced the Constellium fine to $135,000 but imposed a compliance plan, training, and reporting requirements extending for three years. Such compliance plans can be costly and cumbersome to implement, and they have previously been reserved primarily for bad actors and substantial violations of the FCC rules. The legal fees and compliance costs associated with such requirements can be just as substantial as the already high cost of the monetary fines.

Incomplete compliance policies may also hold up mergers or other business before the FCC, forcing companies to engage in costly remediation programs before proceeding with business goals.

Stay Organized, Stay Safe

The Constellium fine is a reminder that all companies, particularly large enterprises with multiple sites, should ensure that they have identified all the radio systems that they use and confirm that they are properly authorized by an up-to-date FCC license. This oversight typically requires the supervision of a senior management-level official or a dedicated compliance officer. If you have any question about your organization's compliance with the FCC's rules for PLMRS radios or other wireless devices, we recommend undertaking an internal audit or contacting an FCC law professional for assistance.

Lawyer Contacts

For further information, please contact your principal Firm representative or one of the lawyers listed below. General email messages may be sent using our "Contact Us" form, which can be found at www.jonesday.com/contactus/.

Bruce A. Olcott
Washington
+1.202.879.3630
bolcott@jonesday.com  

Preston N. Thomas
Washington
+1.202.879.5579
pthomas@jonesday.com 

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