Best Buy Challenges FCC's Analog-TV-Labeling Authority

Consumer-Electronics Retailer Joins Circuit City Stores in Taking On Federal Communications Commission

By John Eggerton -- Broadcasting & Cable, 5/14/2008 5:57:00 PM

Best Buy has challenged the Federal Communications Commission's authority to require it to label analog-only TV sets, suggesting that major retailers are beginning to present a united front on the issue.

Circuit City also challenged the commission on the issue. The two companies' filings were essentially identical in the arguments they made, saying that the FCC didn't have the authority to impose the labeling requirement in the first place, much less to impose the fines it did last month -- $280,000 against Best Buy, $712,000 against Circuit City.

Wal-Mart Stores, which was fined $992,000, had not returned a call about what its plans were.

The FCC imposed the labeling requirement so that consumers would know that sets with only analog tuners would need to be hooked up to converter boxes or multichannel-video service to continue to receive full-power TV signals after the Feb. 17, 2009, switch to digital broadcasting.

While the FCC and retailers presented a united DTV front at a Feb. 7 rollout event for the DTV-converter-box coupon program, both Best Buy and Circuit City said the agency was out of line to fine them last month.

Best Buy said in its filing that the FCC was also off base not to provide a period for comment on the labeling requirement, adding that this was a violation of the Administrative Procedure Act and, thus, that it was "invalid an unenforceable," even if the FCC did have the authority to impose it, which they said it doesn't.

Best Buy also said that since it is not a commission licensee, the FCC was not authorized to fine it.

Best Buy also took aim at FCC personnel monitoring the stores sales, saying that they issued citations for sets that actually did have DTV tuners or had no tuners at all.

"Neither Best Buy nor the commission inspectors had accurate and complete information concerning the products to be labeled before (or after) the regulation took effect," Best Buy said.

And like Circuit City, Best Buy argued that even if the FCC does conclude that it has the authority, it should reduce the fine to zero. The retailer added that it already spent money to scrap "tens of thousands" of labels after the FCC changed the required message.

And like Circuit City, it said it spent more than the fine to pull the analog sets from its product line, even though they were still legal to sell out of inventory, but not to ship. In fact, Best Buy said that move alone cost it $6 million, more than 20 times the fine.

And those actions were taken while Best Buy was negotiating a settlement with the FCC that its actions were meant to facilitate.

Best Buy also pointed to the Feb. 7 converter-box event, saying that the commission paid it a "high compliment" by holding it at a Best Buy in Washington, D.C.