Last Thursday, the Federal Communications Commission (“FCC”) announced that it will consider a Report and Order at its June 21, 2021 open meeting that would permit the importation and conditional sale of radiofrequency (RF) devices prior to obtaining equipment authorization in some circumstances.  The consumer electronics industry has advocated for this rule change, which will facilitate pre-sales and other marketing of new devices in the marketplace.

If adopted, the Report and Order would afford manufacturers and developers of RF devices significant flexibility in conducting pre-sale activities and potentially reduce the time required to deliver devices to market.  These revisions represent a significant change to the FCC’s equipment and marketing rules and bring the FCC’s equipment marketing and pre-sales regime in line with many other industries.   

Importation

Under the FCC’s current rules, it is unlawful for equipment to be imported until the equipment has been fully authorized under the FCC’s rules.  The Report and Order, if adopted, would modify the FCC’s equipment authorization rules to permit up to 12,000 devices with a single FCC ID to be imported prior to obtaining certification if certain conditions are met.  (That number was designed so that manufacturers or retailers could display sample devices in brick-and-mortar stores across the country to gauge, or promote, consumer interest in the devices.)  These conditions would include:

• Completing compliance testing and submitting a certification application to the Telecommunications Certification Body;
• Appropriately labeling the devices;
• Retaining legal ownership of the devices with the manufacturer, developer, importer, or ultimate consignee or their designated customs broker; and
• Maintaining a retrieval process for devices that are not ultimately authorized, with the burden falling on the manufacturer, developer, importer, or ultimate consignee or their designated customs broker.

The Report and Order would not permit devices to be imported prior to authorization if they are subject to the Suppliers Declaration of Conformity (SDoC) process, because the SDoC process provides manufacturers greater flexibility in determining whether a device complies with FCC requirements.

Conditional Sales

Under the FCC’s current rules, which have been in place for decades, it is unlawful for any person to offer for sale to consumers or generally to advertise a device until the device has been fully authorized by the FCC.  The Report and Order would revise the FCC’s rules to permit conditional sales and advertisement of FCC-regulated devices to consumers prior to obtaining equipment authorization, on several conditions, including:

• Providing appropriate disclosures to buyers;
• Retaining legal ownership of the initiating party (i.e., manufacturer or developer) over the devices;
• Delaying delivery of devices until the equipment authorization process is successfully completed;
• Affixing appropriate temporary labels on devices indicating that authorization has not yet been obtained; and
• Maintaining required recordkeeping practices with respect to the devices.

In addition, the scope of permitted pre-sale activity would not include the display or demonstration of the device to consumers.

And in a further break from its decades of practice, the FCC will allow physical transfer of RF devices prior to authorization where devices are subject to certification (rather than the SDoC process) and transferred to contracting parties other than the ultimate user for qualified pre-sale activities, such as packaging and transferring devices to distribution centers or retailers.  Additionally, the Report and Order would adopt rules that ensure that consistent measures apply to devices regardless of their origin, whether imported or manufactured in the U.S.