RFID Device Suppliers: Beware the FCC’s New Authorization, Marketing and Importation Rules

By Ronald E. Quirk

The Federal Communications Commission has voted to approve new rules impacting how RF equipment, manufacturers, vendors, importers and distributors may conduct business.

During its July 2017 Open Meeting, the Federal Communications Commission (FCC) voted to approve a Report and Order (R&O) containing new rules that impact how RF equipment, manufacturers, vendors, importers and distributors may conduct their businesses. These rules affect RFID equipment suppliers, which are subject to virtually all the new regulations.

Prior to finalizing the new rules, the FCC emphasized their importance to the RF equipment industry, stating that the rules overhaul consists of a "wide range of equipment approval issues of a technical, legal, and practical nature, impacting a diverse set of stakeholders, each of whom will need to closely analyze and consider the potential impact of the rule changes."

FCC Severely Penalizes Non-Compliant Equipment Suppliers
Because the Communications Act and the FCC's rules strictly prohibit (with limited exceptions) the marketing, testing and operation of unauthorized RF equipment, it is critical that RFID stakeholders at all levels of the equipment supply chain be aware of the new rules. The FCC's Enforcement Bureau will not hesitate to impose substantial monetary forfeitures and other sanctions on parties that violate the RF equipment rules.

For example, the FCC recently issued an Order and Consent Decree, imposing a steep fine and other sanctions on a manufacturer and distributor of LED light fixtures that failed to comply with its equipment authorization rules before marketing a line of light fixtures. The devices reportedly caused interference with radio transmissions, resulting in the FCC conducting an investigation of the manufacturer, which was found guilty of serious violations.

After the manufacturer fixed the interference problem and proactively complied with the FCC's RF equipment rules, the commission agreed to a consent decree to resolve the case. Specifically, the FCC agreed to terminate the investigation in exchange for the manufacturer paying $90,000 to the U.S. Treasury and implementing a strict compliance program.

More importantly for RFID suppliers, the FCC issued a threat to future RF equipment manufacturers and other responsible parties that market unauthorized equipment. Specifically, the FCC asserted its authority to conduct hearings and declare non-compliant RF equipment suppliers unqualified to hold any type of FCC authorization.

In other words, the FCC threatened to prevent RF equipment suppliers that violate its rules from ever legally marketing their products in the United States, by denying them equipment authorizations.

This is a critically important development. Because virtually all devices that generate RF energy are subject to FCC rules, this case underscores the importance of ensuring full compliance with such regulations prior to marketing RF equipment in the United States.

New Rules Are Just the Beginning of Equipment Regulatory Changes
The rules put forth in the R&O are only the start of many new regulatory changes for RF equipment suppliers. Rule changes affecting the following topics will be addressed in subsequent FCC proceedings: modular component certification, responsible parties for refurbished devices, software and firmware security requirements, and confidentiality of information contained in RF equipment certification applications.

"Self-Approval" Authorization for Non-Transmitting RF Devices

Current Rules
Most non-transmitting RF devices (unintentional radiators) are "self-authorized" by one of two procedures, depending on the specific type of the device: verification and declaration of conformity (DoC). These procedures are very similar, wherein the responsible party (RP) submits a prototype to a lab for testing for compliance with FCC technical rules. If the device passes, it is labeled and marketed. Nothing is submitted to the FCC unless audited. The main differences are that with a DoC, the RP must use an FCC-accredited testing lab, include a "compliance information statement" with each device, and include the FCC logo on the device's label.

New Rules
1. The elements of DoC and verification are now combined into a single procedure, known as the supplier's declaration of conformity (SDoC).

2. The FCC-accredited lab requirement for any device subject to SDoC has been eliminated.

3. The FCC logo is no longer required.

4. All devices subject to SDoC must contain lengthy compliance statements.

Importation Rules

Current Rules
Importers of RF devices must declare that their devices have been tested and approved via the applicable authorization procedure, or are being imported pursuant to one of the FCC-approved specific exemptions.

Declaration requirements: No RF device may be imported unless the importer declares that the device meets the FCC rule requirements via electronic declaration at points of entry at which electronic filing at U.S. Customs & Border Protection (CBP) is available. When electronic filing is not available, the importer must use FCC Form 740 and attach it to the CBP-required papers.

Trade show exemption for unauthorized devices: The FCC permits the importation of 200 unauthorized devices for use in licensed service to be imported for trade show demonstration purposes, and 10 unauthorized devices intended for unlicensed use.

Importation of unauthorized devices for personal use only: A total of three unauthorized devices for use in unlicensed services may be imported for personal use

New Rules
1. The Form 740 filing requirements have been eliminated. Importers no longer have to file information with the FCC specifying the import conditions on which they are relying.

2. The permitted number of unauthorized devices for trade show demonstration purposes has been increased to 400.

3. A total of three unauthorized devices intended for use in licensed services will be permitted, as long as those devices are for personal use only.

Measurement Requirements for RF Equipment Authorization

Current Rules
The FCC will accept measurement data in accordance with three types of measurement procedures: OET bulletins or reports published in its Knowledge Database (KDB), those published by national engineering societies and acknowledged by the FCC, and current measurement procedures accepted by the FCC.

New Rules
1. Acknowledgement has been added to permit reliance on advisory information contained in the FCC's online KDB publications.

2. References have been added to specific sections of American National Standard for Compliance Testing of Transmitters (ANSI) C63.4-2014 and ANSI C63.10-2013, to address certain measurements for some unlicensed devices.

3. The current rules for RF measurement of composite systems have been combined into a single rule, while some references to applicable regulations have been retained.

4. ANSI C63.26 is the new standard for compliance testing for licensed devices. References to this standard will replace measurement in FCC rules for RF power output, modulation characteristics, occupied bandwidth, spurious emission at antenna terminals, field strength of spurious radiation, frequency stability and frequency spectrum.

The FCC has very strict rules about properly labeling RF devices before they are placed on the market. Manufacturers of RF devices and other responsible parties have been subject to fines and sanctions by the FCC for improper labeling of their devices.

Current Rules
The FCC requires that all RF equipment have "permanently affixed" labels containing specific compliance information. The information varies, depending on the category of the device. If the device is too small to accommodate a proper label, the FCC permits the information to be listed in the user's manual or on the box in which that device is contained. The "FCC identifier" must be on the device itself, regardless of how small the device is.

New Rules
Any RF device that is equipped with an integrated electronic display screen, or one without such a screen that can operate in conjunction with a device that has a screen, may display any labeling information required by the FCC.

This is a high-level overview of some of the FCC's equipment regulation changes. Due to the complexity and comprehensive nature of the proposed regulation changes, an exhaustive report is beyond the scope of this article. All information provided in this article is informational only, and should not be relied upon as legal advice. Decisions should not be made without first seeking the advice of experienced telecommunications counsel.

If you would like additional information concerning the RF equipment rule changes or related matters, please contact IoT attorney Ronald E. Quirk, Jr. at (703) 714-1305 or req@commlawgroup.com. Ronald is the head of the Internet of Things & Connected Devices Practice Group at Marashlian & Donahue PLLC, The CommLaw Group, where he focuses his practice on serving the comprehensive needs of the burgeoning and complex IoT industry, including contracts and commercial law, privacy and cybersecurity, spectrum access, equipment authorization, tax, regulatory compliance planning and more. His career has spanned more than 20 years, including several years at AMLAW 100 firms and the FCC.