FCC Releases R&O Modifying RF Equipment Import and Sale Rules

On Thursday, June 17, 2021, the FCC released a Report & Order (“R&O”) in the Allowing Earlier Equipment Marketing and Importation Opportunities (ET Docket No. 20-382) proceeding.  The R&O modernizes the FCC’s marketing and importation rules to permit manufacturers to import and market certain RF devices prior to authorization.  The R&O was unanimously adopted at the June Open Meeting and adopts the following provisions:

• Importation of RF Devices Prior to Authorization:  The FCC adopts new conditions under section 2.1204, which will allow manufacturers to import a maximum of 12,000 RF devices subject to the equipment authorization process for pre-sale activity, such as packaging and transferring physical possession to retail locations, if:
  1. Compliance testing has been completed and a certification application has been submitted to a Telecommunication Certification Body (“TCB”);
  2. The devices include an externally-visible temporary label prohibiting display to consumers, operation, and delivery of the device prior to the grant of certification; and
  3. The devices remain under legal ownership of the device manufacturer, developer, importer or ultimate consignee, or their designated customs broker (who has a device retrieval process in place).
• Marketing of RF Devices Prior to Equipment Authorization:  The FCC amends the prior conditional sales contract provision in section 2.803(c) to allow for conditional sales contracts and advertising to consumers for RF devices that have not yet received authorization, subject to certain delivery and physical transfer conditions.  At the time of sale, the prospective buyer must be informed that the equipment is subject to FCC rules and that delivery is conditional upon successful completion of the applicable equipment authorization process.
• Device Delivery and Possession:  The FCC’s rules will continue to prohibit delivery of RF devices to consumers prior to completion of the equipment authorization process.  Manufacturers will be permitted, however, to engage in the same pre-sale activities as those outlined above for imports, allowing devices subject to certification to be packaged and transferred to distributors and retailers, subject to the same limitations.
• Disclosures and labeling:  The FCC adopts rules requiring that prospective buyers be alerted at the time of marketing that the equipment is subject to FCC rules and delivery is conditional upon successful completion of the appropriate equipment authorization process.  Manufacturers must provide temporary labels for RF devices when parties engage in pre-sale activities, as outlined above for the import process.
• Retrieval and Tracking of Unauthorized Devices: The FCC adopts rules requiring manufacturers to develop a process to retrieve equipment when pre-sale activities are conducted and implement this process in the event that authorization is not successfully completed.
• Recordkeeping: The FCC adopts rules requiring manufacturers/importers/developers/etc. to maintain records identifying the recipient of the devices along with information about the devices and shipping for a minimum of five (5) years.

On May 27, 2021, the FCC released a Draft Report and Order (“Draft R&O”). The following changes were made from the Draft FNPRM:

• ¶ 40 – Adding a requirement that a party initiating a conditional sales contract must include in the disclosure notifications their responsibilities to the buyer in the event the applicable equipment authorization process is not successfully completed, including any information regarding any applicable refund party.   The FCC anticipates that this will help minimize confusion for customers that are unfamiliar with conditional sales.
• ¶ 44 – Adding language that clarifies that procedures to retrieve equipment that is not approved must be in place prior to the commencement of pre-sale activities.

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