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Circuit City Challenges FCC Fine

A major retailer is challenging the Federal Communications Commission on its digital-TV-transition rules.

Circuit City Stores asked the FCC to cancel its $712,000 fine for not labeling analog-only TVs, saying that the agency lacked the power to impose the TV-labeling requirement on retailers, which are not FCC licensees, and even if it did, Circuit City's alleged violations were not "willful or repeated," which is the commission's threshold for fines.

The FCC requires all retailers to prominently label analog-only sets to make sure consumers know they are unable to receive digital signals without aid.

"The commission has no direct jurisdiction over products aside from the operation of the tuning function itself," Circuit City said in a filing Tuesday, "and the Court of Appeals has been clear that jurisdiction over the tuning function is an insufficient basis for ancillary jurisdiction."

The company, which was hit with the fine last month, said the FCC never put out its labeling requirement for public comment, so it never had a chance to point out that it was unfair and unworkable.

Circuit City said it has made "good-faith" efforts to comply "despite the lack of notice or a baseline for compliance.”

The retailer added that it has already taken actions related to settlement discussions over the past several months in an effort to get out from under the fine, saying, "Over a 10-month period, as a result of good-faith-settlement discussions with the commission, Circuit City has committed to and performed voluntary undertakings to assist in the DTV transition, including measures it would not have performed but for its dealings with the commission."

For example, the FCC does not allow analog-only sets to be shipped, but stores can sell remaining inventory if they are labeled. After the FCC issued a citation to Circuit City in July 2007, the company recalled its analog product lines at a cost comparable to the amount of the proposed fine, it said, which alone should reduce its fine to zero.

The FCC had no comment at press time.