Womble Carlyle Sandridge & Rice, PLLC attorney Peter Gutmann has broken down the latest schedule of regulatory fees issued by the FCC, and also looks into the process to assess possible changes down the road. So without further ado:
2008 Annual Regulatory Fees – Update
The FCC has generally confirmed the schedule of 2008 annual regulatory fees that it had proposed in early May. It has also launched a further notice of proposed rule making to explore potentially significant changes in regulatory fees for future years. In response to the Congressional requirement that the FCC collect $312,000,000 in regulatory fees for Fiscal Year 2008 (as compared to $290,000,000 for FY 2007), the Commission has increased most categories of broadcast regulatory fees by an average of 7.5%.The Commission adopted its proposed schedule of fees for licensed radio stations without alteration, while the rates for larger TV markets rose considerably more than had been planned. We attach a revised table which shows the regulatory fee to be paid for an authorization in each category. Television fees continue to be based upon market size and band (VHF or UHF), while radio fees remain based upon type of service (AM or FM), class of station and population served. The Commission still does not impose fees upon AM expanded band licensees, but cautions that the exemption is not permanent, as expanded and standard band stations should be treated similarly for purposes of regulatory fees. Should the Commission permit AM licensees to continue to hold both standard and expanded band authorizations, it will also need to confront whether to assess separate regulatory fees for dual operation.
As in past years, the Commission plans to send an assessment notification via surface mail to the licensee or permittee of each facility. In the meantime, we will let you know once the Commission eleases details of this year’s payment procedures and deadlines.
Looking toward the future, the Commission seeks rulemaking comment on a possible extensive reformation of its regulatory fee program.
First, it notes that while regulatory fees cannot be precisely calibrated, they are intended to match the annual cost of its regulatory activities in each area yet continue to be based upon a 1994 analysis of its resource allocations. The Commission notes that since that time the percentage of fees collected from various categories has changed considerably. Thus, the percentage collected from broadcast services between 1995 and 2008 fell from 18.04% to 13.64%, while cable fell from 25.69% to 16.59%, with the difference being made up by growth in fees from wireless, wireline and international services. The Commission seeks information on categories that now bear a regulatory burden disproportionate to the resources that the Commission devotes to regulation of such entities. Beyond that, the Commission questions whether it should continue to use different bases to allocate regulatory fees among entities in different categories. Thus, fees for wireline companies are based on revenues, fees for wireless companies and cable systems are based on subscribers, and fees for broadcasters are based upon presumed potential market reach.
The Commission requests specific comment as to regulatory fee obligations for digital broadcasters. Until now, fees have only been imposed upon analog broadcasting, but full-power television is to be fully transitioned to digital operation during the next fiscal year. The Commission does not intend to assess regulatory fees for both digital and analog authorizations from a licensee in the process of transitioning from one mode to the other, but it does need to collect a regulatory fee from each affected broadcaster without discouraging either early or late transitioners.
Another issue on which the Commission seeks comment is whether Direct Broadcast Service providers should pay the same per-subscriber fee as cable operators, or whether DBS should continue to pay fees only with respect to their space stations.
Although some of these changes may appear to affect only licensees in a specific service, their impact (as well as many others affecting non-broadcast entities) will be felt far more widely. One way or the other, the Commission is required to collect the total amount of fees specified by Congress each year. Therefore, a reassessment by the Commission of the allocation of its resources devoted to each category of regulated entity, or any other change in the fees paid by one type of entity, necessarily will affect the fees that remain to be collected from all others.