The investigation into Constellium’s licenses arose in August 2013 after the company filed applications in April 2013 for special temporary authority for a number of PLMRS station licenses, which included an admission that the company had been operating without authority following the expiration of its eight PLMRS station licenses. While the Commission’s investigation into the operations after license expiration was ongoing, Constellium discovered and then reported that eight special temporary authorizations and four other PLMRS authorizations held by Constellium underwent a transfer of control without receiving the FCC’s prior consent due to an initial public offering involving its parent that resulted in the indirect parent of Constellium dropping from above 50% ownership to less than a majority interest, i.e., loss of positive control.

The FCC’s May 2014 NAL sought a forfeiture of $294,400 – more than twice the settlement amount – for Constellium’s apparent violations of Sections 301 and 310(d) of the Communications Act, as amended, and Sections 1.903(a) and 1.948(a) of the FCC’s rules. The Enforcement Bureau agreed to reduce the proposed penalty in part noting that, as a result of the post-NAL negotiation, it accepted Constellium’s argument, which the Bureau had rejected leading up to the NAL, that the penalty should reflect operation of four unauthorized operations rather than eight based on the fact that the company eventually was able to consolidate eight of its PLMRS authorizations (i.e., those that had previously expired) into only four permanent authorizations. It also appears likely that Constellium’s agreement to enter into a consent decree had a salutary effect on the penalty reduction. In the consent decree, the company agreed to obligations common to such decrees, and it also specifically agreed to develop a database to track all of the company’s FCC licenses and the corresponding expiration dates. The common terms with most other decrees include development of a compliance training program that includes annual training obligations for all covered employees. Constellium also made an admission of liability, a standard term for settlements during Enforcement Bureau Chief Travis LeBlanc’s tenure.

Under the FCC’s rules, operation of wireless radio stations must be authorized by the FCC prior to commencing operations and any transfers of control of wireless radio authorizations, no matter what form the transfer of control takes, must receive prior FCC consent. The Bureau noted that these rules are in place to protect licensees from harmful interference and to promote the efficient administration of spectrum. In light of the FCC’s continued enforcement efforts, it is imperative that any company operating wireless facilities be aware of the FCC’s licensing requirements and their regulatory obligations attendant to their day-to-day operations. Similarly, companies should remain vigilant to follow preapproval filing and consent regulatory requirements not only in the context of traditional sales and acquisition transactions, but also other corporate activities, such as an IPO, which may result in the transfer of control of FCC licenses.

In mid-2012, the two companies, subsidiaries of JAB Wireless, Inc., which claims to be the largest fixed wireless broadband provider, acquired microwave licenses from third parties. Skybeam acquired ten licenses from KeyOn Communications, and Digis acquired forty licenses from HJ LLC. The parties proceeded without communications’ counsel and failed to seek approval from the FCC for the assignments. Once they realized in early 2013 that they had failed to obtain approval for the acquisitions, they proceeded to remedy the situation after the fact and voluntarily disclosed the earlier failure, attributing it to inadvertence, lack of experience in such matters, and not having counsel. While the Consent Decree states the two companies will pay a combined voluntary contribution of $50,000, there is no indication whether this number reflects the unlawful assignment of 50 licenses or the failure to obtain authority for two transactions, each involving multiple licenses. The entities selling the licenses are not the subject of the enforcement action.

The three-year compliance plan does not contain any surprises, but reiterates the burden that parties risk should they fail to obtain FCC approval for transactions involving wireless authorizations, even if inadvertently, because the compliance plan extends to compliance with the communications laws generally, not just law and regulations related to transactions involving the transfer or assignment of wireless licenses. The companies must appoint a knowledgeable compliance officer, develop operating procedures to help ensure compliance as well as a compliance manual within 60 days (to be updated at least once annually), implement a compliance training program for all employees that perform or oversee those who perform duties relate to compliance with the communications laws generally – whether or not they are involved in corporate transactions that may involve license transfers – within 90 days and conduct annual training, report non-compliance with the law and rules regarding license assignments and transfers as well as with the consent decree itself, and provide more general compliance reports four times over the thirty-six month compliance plan term. Depending upon how dispersed responsibility for compliance with the communications laws is within a company, administration of such a plan could easily prove to be more costly, especially in the long-run, than the voluntary contribution.

In February 2010, ViaSat Inc. filed a space station application seeking to use spectrum overlapping the Galaxy KA application. Accordingly, it assumed a position behind Intelsat in the queue. On March 2, 2010, Intelsat amended its application to eliminate the overlap in such a way to allow ViaSat to assume a first in line position. Subsequently, on October 18, 2012, more than thirteen months prior to the Notice, Intelsat withdrew the March 2, 2010, amendment and assumed a place in the queue behind ViaSat. Then, on December 13, 2012, ViaSat withdrew its application, moving Intelsat back to its original first-in line position. Given that the NAL was adopted a year, minus a day, after ViaSat’s withdrawal, ViaSat’s withdrawal and Intelsat’s resumption of its position at the front of the queue apparently caused the one-year statute of limitations to run, at least from the Commission’s perspective.

Several important facts in the NAL are not made available to the public which, if known, might shed a different light on the subject for the public. A careful reading sheds a few details, as the Commission notes that “[a]n applicant’s identity is particularly material” and generally alludes to “undisclosed private transactions between applicants” and “surreptitious transactions.”