The enforcement action highlights the importance of complying with FCC rules with respect to a company’s wireless facilities and devices.

The Federal Communications Commission (FCC) announced this week a $1.2 million fine, together with obligations to take certain internal compliance steps, imposed on a large Canadian-US railway company whose subsidiaries hold various wireless licenses and operate a wireless network for company purposes. The penalties were issued for unauthorized transfer of control and assignment of licenses in connection with a prior acquisition of two railroad lines and for operating wireless radio facilities without prior approval.

Many Non-Telecom Businesses Have Wireless License Compliance Obligations

The FCC’s order is a sharp reminder to the many companies in non-telecom industries that operate wireless facilities and devices for internal purposes how important ensuring compliance is with FCC wireless licensing regulations. These facilities typically involve business radios (the FCC refers to these as “private mobile radio service” or PMRS radios), a type of company-only mobile radio that large enterprises often use for internal communications. Utilities, railroads, large manufacturing operations, airlines, delivery businesses, and similar businesses with a need for employees to communicate at a distance use business radios in their everyday operations. Wireless devices are also used for monitoring, for telemetry, in industrial control systems such as supervisory control and data acquisition (SCADA), or for radio communications in private company aircraft.

Transactions and Changes in Facilities Can Trigger FCC Approval Requirements

Companies must obtain and update the necessary FCC licenses to reflect new construction, modifications, and relocations of wireless facilities. In addition, companies with wireless licenses may be required to obtain advance FCC approval for certain types of corporate transactions, including a change in a company’s direct or indirect ownership or control or the assignment of a license. Even innocuous pro forma changes in the ownership chain may require further approval (such as the simple insertion of a new holding company or consolidation of holding companies or operating entities). Further, licensees must consider whether antennas or towers used with their wireless facilities may need to be registered with the FCC.

Burdensome Penalties May Apply for Noncompliance

In the railway licensee case before the FCC, the company had failed to obtain FCC consent for the transfer of control of licenses associated with a 2008 acquisition of two railroads and a subsequent pro forma change. The company had also operated more than 100 wireless facilities for which licensing was incomplete or out-of-date. In addition to imposing the monetary penalty, the FCC ordered the company to adopt internal compliance procedures, develop and distribute a compliance manual, establish a compliance training program for covered employees, report any noncompliance within 15 days, and submit annual reports for three years. Such reports must be certified under penalty of perjury by the company compliance officer.

Recommendations to Avoid Compliance Issues

To avoid or mitigate the impact of these issues, we recommend that companies periodically audit their compliance with the FCC rules applicable to their wireless facilities and licenses. It is also helpful for businesses to designate an internal compliance officer responsible for overseeing such compliance and to establish a written compliance manual that engineers and personnel can consult before deploying wireless facilities to be sure that they are deployed and operated in compliance with FCC requirements.