The Federal Communications Commission last week adopted a Report and Order updating its equipment rules to allow more radiofrequency devices to be imported prior to equipment authorization for pre-sale activities, and to expand the scope of conditional sales contracts prior to equipment authorization, acknowledging that developments in the device marketplace have outpaced the FCC's rules.

The new rules require approval by OMB and will take effect after the FCC publishes a notice in the Federal Register announcing OMB approval and the relevant effective date.

Longstanding FCC rules generally require that RF devices may not be imported to or marketed within the United States until they have been subjected to the appropriate equipment authorization procedure — either certification (which involves compliance testing by an FCC-recognized testing lab and submitting an application to a Telecommunication Certification Body (TCB)) or supplier's declaration of conformity (SDoC) (a self-certification process that gives the manufacturer greater control over determining when a product meets authorization requirements). These rules include limited exceptions for devices that have not yet completed equipment authorization. The revised rules change the existing exceptions to the general rule to:

Allow the importation, for pre-sale activities, of up to 12,000 RF devices before the equipment has been certified. Pre-sale activities include packaging and transferring physical possession of devices to distribution centers and retailers, but do not include display or demonstration of devices. The new limit – far above the 4000-device limit the FCC had proposed last year – is intended to account for the number of potential retailers throughout the U.S., including “big box” stores and wireless provider locations, and to increase the likelihood of more even distribution to urban and rural areas. Importation of more than 12,000 devices prior to certification requires prior written approval from the FCC's Office of Engineering and Technology.

Allow conditional sales contracts (including agreements to produce new devices manufactured in accordance with designated specifications), and advertising for such sales, that provide for transfer of physical possession of devices to entities other than end users for the sole purpose of pre-sale activities. The updated rules encompass conditional sales to all parties, including business, commercial, industrial, scientific, and medical users, recognizing that current product development and distribution systems may involve multiple entities, and that Internet-based direct-to-consumer sales and e-commerce platforms allow various entities to access multiple distribution models to reach consumers, and are intended to enable all entities responsible for new device creation, development, or production to define their own role in the distribution of their devices.

Both exceptions are subject to a number of conditions, including that compliance testing of the devices must be complete and an application for certification must have been submitted to a TCB. Other conditions address labeling, disclosures to prospective buyers, legal ownership, device retrieval if certification is not completed, and recordkeeping.