Regulatory Update: Wireless Licenses Issued by the Federal Communications Commission
Hotels, resorts, country clubs, and other hospitality facilities commonly utilize wireless communications systems to support security, maintenance, and other functions conducted on the relevant properties. Many private wireless radio systems used at hospitality facilities use portions of the radiofrequency spectrum that are licensed by the Federal Communications Commission (FCC). Prior to operating radio systems (which include wireless headphone sets and handheld portable radios) it is essential to determine whether an FCC license is required to operate communications equipment and whether a license has been obtained. The FCC considers unauthorized use of the radiofrequency spectrum to be a serious matter and has authority to initiate and enforcement action and impose monetary penalties for violations of its rules.
In addition to ensuring that any required FCC licenses are obtained, hospitality companies should be aware that the FCC also regulates changes in the ownership of FCC licenses or of licensees. Section 310(d) of the Communications Act (47 U.S.C. § 310(d)) prohibits the assignment or transfer of control of any FCC license, including any private wireless license used for internal business communications, prior to obtaining FCC consent (see also 47 C.F.R. § 1.948). Section 310 is applicable when an FCC license is sold to another entity in an asset sale (an assignment) and when a controlling ownership interest (50 percent or more) in a licensee is acquired (a transfer of control). The statutory prohibition of assignments and transfers of control of an FCC license is applicable when such changes occur as the result of an internal corporate reorganization (a pro forma transaction under FCC rules), as well as when a third party is involved. Obtaining FCC prior consent for transactions involving assignments and transfers of control of private wireless licenses is a relatively simple and inexpensive process. However, licensees may overlook the need for FCC approval as part of larger transactions affecting the ownership or control of FCC licenses. The importance of receiving prior consent from the FCC for assignments and transfers of control of licenses is highlighted by a recent Consent Decree entered into by the FCC and Marriott International, Inc. As part of the Consent Decree Marriott admitted liability, will implement a compliance plan, and will pay $504,000 as a civil penalty.