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Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Rules and Regulations
stages of development has created new efficiencies and investment opportunities that provide smaller entities a chance to enter the competitive marketplace. The Commissions new rule will allow innovators to take advantage of modern product development practices and better satisfy the expectations of todays consumer without diminishing the protections that the Commissions overall marketing rules provide.
In the NPRM, the Commission proposed to modify its marketing rules in a manner that would allow consumers to participate in the conditional sales of devices that have not received authorization. The Commission did not receive any comments objecting to its overall marketing proposal. Commenters did note generally that, in addition to allowing consumers to receive new devices sooner, the proposal would provide benefits throughout the supply chain that would allow production to better match expected demand, thus providing efficiencies that would lower costs and reduce waste in raw materials and energy. One comment suggests that the new marketing exception apply to the broadest category of devices and no commenters suggest excluding any devices.
The Commission remains mindful that it must continue to protect against the possibility of unauthorized RF
devices making their way to consumers and adopt rules intended to prevent such occurrences while expanding marketing opportunities for innovators.
Additionally, the rules the Commission proposed in the NPRM to allow pre-sale activities for imported devices would not have permitted similar flexibility for domestically-produced devices. Thus, in adopting rules to permit marketing activities prior to equipment certification, the Commission also provides flexibility in the Commissions marketing provisions to allow for presale activities similar to those that the Commission is allowing for imported devices. This action implements more consistent measures for similarlysituated devices with similar safeguards to prevent unauthorized devices from getting to consumers. Further, the Commissions action will also benefit consumers, who will be able to see and examine devices earlier so that they can make more timely purchase decisions, and retailers, who will gain the opportunity to become familiar with the features associated with new devices to better prepare those devices for display and sale once they are certified and may be operated.

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As proposed in the NPRM, the Commission is broadening the applicability of the prior conditional sales contract provision found in 2.803c of the Commissions rules, which now will allow for conditional sales to consumers. Specifically, the Commission is modifying 2.803c2i to allow conditional sales contracts and advertising for RF devices that have not yet received authorization, under particular delivery and physical transfer conditions and a requirement that the contracting party advises the buyer at the time of marketing that the equipment is subject to FCC rules and delivery is conditional upon successful completion of the applicable equipment authorization process.
In the NPRM, the Commission proposed to allow conditional sales contracts between manufacturers and potential customers. The intent was to broaden the rule that originally limited conditional sales to contracts between manufacturers and wholesalers or retailers, which was based on a concern that unauthorized devices that made their way to consumers could cause harmful interference to radio communications. Ensuring that unauthorized RF devices do not cause harm remains among the Commissions highest concerns. However, recognizing that product marketing and distribution methods have evolved due to the internet and new crowd-funding practices which bring the consumer into direct contact with the developer or manufacturer, and based on the comments received in response to the NPRM, the Commission is adopting a more flexible rule that does not limit conditional sales contracts to transactions only between manufacturers and potential customers.
In the NPRM, the Commission declined to propose a rule that included the term responsible party in lieu of manufacturer as suggested by CTA, and instead proposed conditional sales contracts between manufacturers and potential customers. The Commission explained its concerns that, given the specific meaning of the term, responsible party would not be appropriate in this context. Further, the Commission asked for comment on this determination and asked questions about more suitable alternatives. While no commenter suggests replacing manufacturer with responsible party, Samsung Electronics America Samsung suggests that the Commission clarifies that affiliates and related corporate entities should be considered acceptable in the context of manufacturer. Additionally, while not providing specific rule changes,
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Samsung and CTA suggest the Commission clarifies that the rule would also cover contracts between manufacturers and retailers/
wholesalers.
The Commissions intent in proposing to expand conditional sales contract to manufacturers and potential customers was to broaden the pool of parties allowed to enter into conditional sales contracts with manufacturers, specifically to include consumers.
Considering the information in the record, the Commission finds that inclusion of the phrase between manufacturers and potential customers would raise confusion as to who may enter into conditional sales contracts.
The Commission recognizes that modern product development and distribution systems can be complex and involve multiple entities in various roles. As discussed in the NPRM, the Commission understands that, with the proliferation of internet-based direct-toconsumer sales and e-commerce platforms, various entities can access multiple distribution models to reach consumers. To ensure that the language of the Commissions revised marketing regulation does not hinder innovation or provide unfair advantage or disadvantage to particular entities, the Commission finds that it is not necessary to specify the permissible parties to the conditional sales contracts. Thus, manufacturers, developers, or other entities responsible for new device creation, development, or production will be able to define their own role in the distribution and supply chain of their devices. The Commission finds this to be particularly important for smaller or new device developers who may not manufacture their devices but wish to engage in the sale and distribution process so they can appropriately plan for manufacturing and distribution. By expanding the pool of parties to the conditional sales contracts, the Commission is implementing rules that encourage and expand opportunities for innovation and allow developers or other parties that are not themselves a manufacturer to participate in the sale and marketing of a device. At the same time, as noted below, the Commission continues to prohibit delivery to consumers prior to completion of the equipment authorization process.
In this regard, the Commission modifies 2.803c2ii, a separate provision that allows limited marketing, in the form of sales, to a narrow class of specialized entities. As noted in the NPRM, CTA had asked that the provision be deleted or replaced with language specifically addressing
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