FCC Self-Audit Can Identify and Rectify Compliance Problems

FCC Self-Audit Can Identify and Rectify Compliance Problems

By Tim Fitzgibbon, Carter, Ledyard & Milburn

Wireless telecommunications services licensed by the Federal Communications Commission (FCC) enable electric and gas utilities and their affiliates to provide existing services more efficiently and to introduce new services to their customers. Multiple address systems, SCADA and other wireless telecommunications services facilitate AMR, distribution system management and DA. Paging, mobile data and mobile radio services keep utility service teams in contact with dispatchers and customer service representatives. Some electric and gas companies now provide commercial telecommunications services through personal communication system (PCS), specialized mobile radio (SMR) or other wireless systems.

As a result, a utility may hold numerous FCC licenses that are subject to rules unrelated to its core business. FCC licenses impose a variety of regulatory obligations on the licensee, and the Communications Act provides a wide range of sanctions, including monetary forfeitures and license revocation, if a licensee fails to comply with applicable license requirements or other FCC rules. As a utility or holding company expands its involvement in telecommunications, it should adopt and implement procedures to monitor regulatory compliance and identify and correct any problems as early as possible.

Common Compliance Problems

For a small utility with only a few radio or microwave licenses, FCC compliance should be relatively simple. A large utility or holding company, however, may have dozens or even hundreds of different licenses, often covering a variety of radio operations conducted by several different subsidiaries. For these companies and any entity offering telecommunications services to the general public, a periodic self-audit for compliance can be very effective at preventing regulatory problems or identifying problems before they get out of control. Regulatory problems generally arise in three areas–licensing, operations and antenna structure maintenance–and an effective compliance audit should address all three areas.


Section 301 of the Communications Act of 1934, 47 U.S.C. ?, establishes federal jurisdiction “over all the channels of radio transmission” and provides for “the use of such channels … by persons for limited periods of time, under licenses granted by Federal authority.” That section also prohibits operation of “any apparatus for the transmission of energy or communications or signals by radio” except in accordance with a license granted by the FCC. Thus, with the exception of certain spread spectrum operations permitted on an unlicensed basis, wireless operations require a FCC issued license. Consequently, the first task in any compliance audit is to determine the scope and nature of the company`s and its subsidiaries` radio operations and to ensure that the facilities used in those operations are covered by the necessary FCC licenses.

An effective audit should include FCC database searches for all licenses issued in the company`s name and/or any of its subsidiaries` or affiliates` names, as well as any pending applications. Information also should be solicited from the company and its subsidiaries and affiliates in questionnaire form regarding current radio operations, equipment and licenses. Copies of the questionnaire should be provided to the company`s officers and directors and its subsidiaries and affiliates because in some cases their radio holdings may be relevant to ownership restrictions affecting certain license types. A comparison of the licenses obtained from the FCC`s records with the actual radio operations reported by the company and its subsidiaries should reveal any unlicensed operations and any current licenses that are not operational.


The next step in an effective compliance audit is to ensure that the authorized facilities are being operated in accordance with the license specifications and any other applicable FCC regulations. Although each license`s particulars will vary depending upon the type of radio service, an FCC license generally sets forth the authorized service`s nature, the licensed frequencies, the facilities` geographic location, the antenna height and equipment type, and any restrictions on facilities operation. A brief site visit should be sufficient to confirm that facilities are in place and operating in accordance with license specifications. A thorough audit also should include a review of the company`s records regarding the licensed facilities, confirming that the company has made any other filings required under the applicable regulations. For example, there have been numerous recent notices of apparent liability for forfeiture issued to paging and mobile radio licensees for failure to file the required FCC Form 489 prior to commencing operations on the licensed facilities.

Antenna Structure Maintenance

Effective July 1, 1996, the FCC amended its rules, requiring the owner of any antenna structure for which Federal Aviation Administration notification is required (generally any antenna structure in excess of 200 feet above ground, although a smaller structure may be subject to regulation if it is within a specified distance of an airport) to register that structure with the FCC. The FCC also requires compliance with its rules requiring painting, lighting and monitoring of antenna structures (see generally 47 C.F.R. Part 17). Because utilities owning antenna support facilities may be subject to these regulations even if it is not an FCC licensee, a good compliance audit should include a review of any antenna structures owned by the company, as well as any tower lease agreements to which the company is a party.

Identifying Problems

In an ideal world, a company`s information matches perfectly with information obtained from the FCC`s records; all facilities are operating precisely in accordance with their license`s terms; and every antenna structure is registered, freshly painted, brilliantly lighted and monitored daily. Rarely is such perfection achieved. Almost inevitably there are discrepancies between FCC records and the company`s records or between actual operation and license specifications. In some cases, discrepancies can be reconciled easily. Licenses may have been obtained but facilities were never constructed; equipment may have been taken out of service during the license term; or a license may have been modified recently and the modification has not yet been received by the company.

In other cases, discrepancies are not as easily explained. Equipment may have been placed in operation without obtaining an appropriate license or license modification. Operations may have continued at certain facilities after applicable license`s expiration and without filing an appropriate renewal. Facilities now considered essential may not have been constructed within the applicable construction period. Equipment may have been moved from one location to another without appropriate regulatory filings. In these cases, a well performed compliance audit will identify the problem, then the company must determine how to deal with it.

Addressing Problems

There are four things to keep in mind when addressing regulatory problems identified during a compliance audit: counsel, completeness, candor and correction. Unless the company is exceptional, the audit is likely to reveal some discrepancies. Therefore, when considering a compliance audit, get in-house or outside counsel involved before starting. Then be sure counsel is involved in planning, performing and reviewing the audit, evaluating the results and making corrective and preventative action recommendations.

A compliance audit is valuable only if it is complete and thorough. If initial auditing efforts indicate problems, continue the audit until every existing license is reviewed for compliance. Resist the temptation to stop the audit at the first sign of a problem and implement a quick fix. It is important to know not only what problems exist, but also why they exist. A quick fix that corrects the immediate problem but leaves in place shoddy procedures or ineffective personnel will only create bigger problems.

Candor is critical. The odds are that problems revealed by the audit will be minor ones, correctable through operational changes, existing licenses` modifications, data corrections or other simple procedures. But if the audit reveals more serious problems, the company must deal candidly with the FCC and other authorities. Because companies act through individuals and humans are not infallible, regulators recognize that mistakes–even egregious mistakes– are going to happen. The FCC, however, cannot permit a licensee that has discovered serious wrongdoing or a continuing pattern of misconduct to ignore or hide those problems. The FCC demands candor from all licensees, and any attempt to mislead or conceal material information intentionally can lead to license revocation and other serious sanctions (see 47 C.F.R. àšâ€¡.17 “No applicant, permittee or licensee shall in response to any Commission correspondence or inquiry or in any application, pleading, report or other written statement submitted to the Commission, make any misrepresentation or willful material omission bearing on any matter within the jurisdiction of the Commission.”).

Finally, corrective action must be taken. It is not enough, however, to simply correct the technical licensing or regulatory problems and leave in place the policies, personnel and internal procedures that led to the problems in the first place. Working with counsel, the company should review carefully the facts and circumstances that led to the problems, determining whether the problems resulted from failure to follow established policies and procedures, the absence or inadequacy of applicable policies and procedures, or a combination of those factors. The company then must identify and implement remedial and preventative actions that will address the problems directly and effectively. The remedial measures should be carefully crafted to protect against any recurrence of the problems, thereby ensuring the FCC that it can reasonably rely upon the licensee to comply with future regulatory obligations. Those measures should be documented and updated periodically to ensure ongoing compliance with changing regulations.


Electric and gas utilities can achieve significant efficiencies and offer new services using wireless technologies licensed by the FCC, but diligence is required to ensure ongoing compliance with FCC license requirements. Radio communication is not those utilities` primary business, therefore, FCC regulations compliance does not always receive the attention it deserves. Periodic self-audits can effectively ensure ongoing compliance, avoiding embarrassing and potentially expensive regulatory problems.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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