The Federal Communications Commission is proposing to bring a $2.8 million penalty against HobbyKing for marketing drone-attachable audio/video (AV) transmitters that operate on unauthorized frequencies.

For marketers and retailers of unmanned aircraft systems (“UAS”) and attachable devices, this penalty signals that the FCC is cracking down on the makers and marketers of noncompliant UAS and UAS-attachable devices. This penalty also serves as a reminder to operators, who are required to have an FCC license to operate a drone, even if it only operates on amateur frequencies.

According the FCC’s Notice of Apparent Liability, HobbyKing purported to offer UAS-attachable AV devices that operate on amateur radio frequencies (which do not require FCC certification).  On closer inspection, though, those devices also operated on additional frequencies, including some that require certification.  Moreover, as the notice states, some of the devices also apparently operated at power levels in excess of what is permitted for amateur equipment.

HobbyKing argued that it did not market its devices to customers based in the U.S.  The FCC was not persuaded, however, finding that HobbyKing had a record of sales in the U.S. and did not place limitations on shipping to the U.S.  The Commission was also not persuaded by Hobby King’s argument that the burden was on the customers to comply with local laws, stating that the burden of device compliance falls on the makers and marketers of the devices.

The Commission also took issue with:

  • Repeated violations after the FCC informed HobbyKing of the compliance issues;
  • Intentional marketing of the devices; and
  • Untimely and incomplete responses to the FCC’s letter of inquiry.

The FCC found particularly problematic that twelve of the devices operated on restricted frequencies used by the FAA, creating a risk to public safety and that another three devices operated at impermissibly high power levels.

The base forfeiture for violating these FCC rules is $7,000 for each violation or each day of continuing violation. The Commission adjusted this base upward to $12,500 for each of the 50 of the AV transmitters, due to the repeated violations, intentional marketing of unauthorized devices, and untimely/incomplete responses. For the remaining 15 transmitters that operated on restricted frequencies or at impermissible power levels, the FCC raised the penalty to the statutory maximum of $147,290. Adding another $39,278 for HobbyKing’s failure to fully respond to the Letter of Inquiry or to respond at all to the Letter of Inquiry Citation, the Commission proposed total forfeiture of $2,861,128.

Typically when a Notice of Apparent Liability is filed, the recipient has the option of paying the fine, petitioning for reconsideration of the facts or legal bases of the notice, or entering into a consent decree with the Commission.

To assist consumers, marketers, and manufacturers of drone AV transmitter accessories, the FCC’s Enforcement Bureau also issued an enforcement advisory.  For marketers and operators of AV transmitters, here are a few important takeaways:

  1. Only manufacture or market devices that operate on amateur frequencies, unless you receive FCC certification for operating on other bands;
  2. Keep transmitter power within the levels of the Commission’s rules;
  3. If the FCC contacts you regarding devices you’re marketing, seek legal counsel;
  4. If you receive a Letter of Inquiry, respond in a timely, complete, and accurate manner; and
  5. Both commercial and amateur drone operators have a responsibility to ensure that the equipment they are using complies with applicable FCC regulations because they could also be subject to FCC civil penalties for operating drones with noncomplying radio frequency devices.

For clients who operate at the intersection of communications, transportation, and data collection and use, Hogan Lovells provides a deep bench of experienced global regulatory practitioners. For more information on the laws and regulations concerning UAS and UAS-attachable devices or other connected device and communications issues, please contact Lisa Ellman at Lisa.Ellman@hoganlovells.com, Mark Brennan at Mark.Brennan@hoganlovells.com, or Trey Hanbury at Trey.Hanbury@hoganlovells.com.

The authors wish to thank Ryan Thompson in our Washington D.C. office for his assistance in preparing this article. 

 

Last year, for the first time, the FAA broadly authorized commercial drones here in the United States. Since that time, the commercial drone industry has grown to a level few could have imagined only a couple of years ago. Technology has moved quickly forward, and what used to be considered toys are now powerful commercial tools that are bringing economic and safety benefits to a wide range of industries.

As drone technology has improved, we have also seen increasing numbers of headlines raising legitimate drone security issues. We discussed many of these drone security issues at the Domestic Drone Securities Event in Washington, DC in November, 2017. There have been near-misses between drones and manned aircraft, and rogue drones flying where they should not lawfully fly—including at airports, military bases, critical infrastructure, and large outdoor sporting events.

Recognizing the potential safety and security benefits of a requirement that would allow public officials to remotely identify and track UAS, the FAA established the UAS ID and Tracking Aviation Rulemaking Committee (the ARC) in May 2017 to provide recommendations to the agency. Yesterday, the FAA publicly released the ARC’s final recommendations report (“Report”).

The most controversial section of the Report recommended that the FAA carve out model aircraft explicitly, or by design, from remote ID and tracking requirements. Notably, less than half of the ARC’s voting members affirmatively supported this threshold applicability recommendation. The Commercial Drone Alliance, along with several other ARC members, dissented on this critical point. The text of the Alliance press release is included below:

 

THE COMMERCIAL DRONE ALLIANCE DISSENTS FROM THE KEY RECOMMENDATIONS OF THE

UAS ID AND TRACKING AVIATION RULEMAKING COMMITTEE

To promote safety, security and innovation, group strongly disagrees with ARC’s recommendation to carve out model aircraft from Remote ID requirements

Washington D.C. and Silicon Valley, California, December 19, 2017 – The FAA established the UAS ID and Tracking ARC in May 2017 in response to concerns of the national security community around expanding drone operations nationwide. Only about half of the ARC’s voting members affirmatively supported the ARC’s recommendation on threshold applicability (Section 6.1 of the report). Several organizations and ARC voting members from the manned aviation, law enforcement and commercial drone communities concurred with the Alliance’s dissent. The Alliance appreciates the opportunity to have actively participated in the UAS ID and Tracking ARC, but fundamentally disagrees with the ARC report’s recommendation that model aircraft be carved out from Remote ID requirements.

The nascent drone industry is a revolution in the making. Technology has moved quickly forward, and what used to be considered toys are now tools of public safety agencies and industry. But while technology has moved quickly forward, policymaking has lagged behind, including on security issues.  Expanded UAS operations – including flights at night, beyond visual line of sight, and over people – essentially remain grounded until the law enforcement and national security communities are comfortable with their ability to identify and track unmanned aircraft. A robust “drone license plate” requirement is a critical prerequisite for unleashing the enormous potential of the commercial UAS marketplace. Such a requirement, properly tailored, would meet the security and public safety needs of the law enforcement and national security communities, while promoting innovation and propelling the growing drone economy forward.

The Alliance was therefore strongly disappointed with the ARC’s chosen approach, which excludes model aircraft from remote ID requirements. In identifying a threshold for applicability, the ARC recommended two options to the FAA. The first (“Option 1”) explicitly carves out model aircraft, while the second (“Option 2,” a “capabilities-based approach”) was similarly designed to carve out model aircraft.

The Alliance disagrees with any approach that would permit a huge segment of the drone community to avoid participating in the UAS ID and tracking system and complying with the corresponding ID and Tracking regulations. The number of vehicles registered for commercial use is a small fraction of the number of vehicles registered for hobbyist use. The percentages may change slowly over the next several years as commercial activity grows, but recreational drone activity is growing as well.

For decades, model aircraft use has captivated the imagination of the American public in a safe and secure way. But as technology has improved and times have changed, hobbyists are no longer flying alone. Unmanned Traffic Management (“UTM”) systems, being developed now as “highways in the sky,” will be less effective for everyone if anonymous non-participants clog the sky. For the new drone economy to truly take off, we all need to abide by some low-cost and unburdensome “rules of the road.”

The Alliance believes any remote ID solution must be simple, sustainable and scalable. The Alliance therefore supported a common-sense, weight-based threshold for Remote ID and Tracking applicability. As a rule, any UAS or model aircraft weighing 250 grams or more would have to comply with the ID and Tracking regulations. Including UAS weighing 250 grams or more is comprehensive, encompassing the majority of UAS except for very small and unsophisticated UAS, which would support robust UTM systems. The weight threshold is also familiar, building upon the existing UAS registration database, and future-proofs the ID and Tracking rules by accommodating technological development and enabling the continued growth of this new and exciting drone industry.

Notably, Congress must eliminate or amend Section 336 of the FAA Modernization and Reform Act in order to enable the FAA to properly regulate drone security issues. Section 336 currently carves out model aircraft from the law, but the provision is antiquated and harmful.

“Remote identification is a critical issue for the industry, and the key next step to unlocking the amazing promise of commercial drones. We look forward to working with the FAA and policymakers on this critical issue during the next stage of rulemaking, and will continue to provide input and formal comments at the appropriate time,” said Lisa Ellman, who represented the Alliance and its members on the Remote ID ARC.

For a more detailed explanation of the Commercial Drone Alliance view on remote identification and the ARC report, please see this op-ed in The Hill.

About the Commercial Drone Alliance

Founded in 2016, the Commercial Drone Alliance is an independent 501c6 non-profit led by the commercial drone industry co-located in Silicon Valley, CA and Washington, DC. The overarching vision of the Alliance is to support commercial enterprise end users and assist them with adopting drone technology into their businesses, reducing barriers to entry, addressing public education, and merging policy with innovation to develop relevant rules for operation. www.commercialdronealliance.org