FCC Regulatory Fee Reform Highlights Rift Between Satellite, Telecom Providers

Everyone agrees that the FCC’s current system of collecting regulatory fees is “inadequate and outdated and needs to be overhauled,” USTelecom said (http://xrl.us/bnvuhh), citing a GAO report that said the FCC’s regulatory fee process “needs to be updated” (CD Sept 11 p9). USTelecom said it supported Verizon and Verizon Wireless’s recommendation that the commission try to “stem the continual rise” in fees by “operating as efficiently as possible,” lowering the burden to consumers. USTelecom also agreed with AT&T and Verizon that the commission should refrain from assessing a separate fee on ISPs. The commission should ask Congress for authority to refund past excess fees, which as of FY 2011 had amounted to $66 million, USTelecom said.

NCTA supported the FCC’s proposal to allocate regulatory fees based on current FTEs in the commission’s four core bureaus. The association noted that there’s “no opposition” to the idea of updating the FTE counts used in fee calculations. Such an approach would “meet the Commission’s goal of developing a regime that is both fair and administrable,” NCTA said (http://xrl.us/bnvuip). “The alternative -- determining the activities of each employee in each of the core bureaus and allocating the time spent by those employees across all companies that ‘benefit’ from such regulation -- would be completely impractical.” NCTA also opposed the creation of a new fee category for broadband services. The American Cable Association wants the fee assessment process revised to ensure that all multichannel video programming distributors pay fees to cover the work of the Media Bureau, rather than only cable operators and cable antenna relay system licensees, currently the only MVPDs that pay fees derived from the bureau’s costs. “To ensure fairness, the Commission must reform its fee categories” so all MVPDs, including DBS, “pay their fair share,” ACA said (http://xrl.us/bnvukk).

CTIA asked the commission to apportion the fees based on a current accounting of FTEs within the core bureaus; update the FTE data annually; and refrain from counting FTEs funded by other revenue, such as via auction proceeds. “Spectrum auction proceeds fund roughly 20 percent of the Commission’s annual budget, and it would be a mistake to double count auction-related FTEs by including them in the regulatory fee program,” CTIA said (http://xrl.us/bnvuob). It opposed proposals to add broadband as a regulatory fee category.

The Global VSAT Forum opposed comments of Verizon, Verizon Wireless and USTelecom that promote treating all work done by FTEs the same without distinguishing between direct or indirect FTEs. The commission recognizes that International Bureau(IB) FTEs are unlike FTEs of other bureaus “because the former indirectly supports services other than international services,” GVF said (http://xrl.us/bnvuna). The direct cost/indirect cost disparity is even more pronounced for satellite licensees, GVF said. The forum agreed with the Satellite Industry Association that only International Bureau Satellite Division FTEs “can fairly be considered direct costs for satellite regulatory fee payers,” it said. The FCC should accurately assess IB FTEs directly working on matters benefitting licensees of that bureau, said Sirius XM (http://xrl.us/bnvunk). The bureau should analyze its internal workflow and “reallocate the distribution of its regulatory fee burden among its five license categories,” the company said.

The Satellite Industry Association (SIA) reiterated that specialized roles of FCC divisions justify assigning their FTEs directly to the regulatory fee payers which benefit from that work. The FTEs of personnel whose work is limited to handling matters like pole attachment disputes or slamming complaints “should be considered direct costs for the industries that generate those enforcement proceedings,” SIA said (http://xrl.us/bnvunn). “Imposing any portion of those costs on satellite operators is demonstrably unfair and inconsistent with the statutory purpose."

The satellite community pushed back against proposed regulatory fees that it said are three times what it currently pays. Section 9 of the Communications Act requires the commission to collect fees to recover the regulatory costs associated with enforcement, policy and rulemaking, user information and international activities, the FCC’s website noted. Regulatory fees paid by satellite operators “already exceed the commission resources expended on those licensees and run counter to Section 9’s mandate that regulatory fees reasonably relate to the benefits provided the payor,” Sirius said. A proposal that would more than triple the bureaus’ share of regulatory fees “further exacerbates this inequity and must be rejected,” it said. A satellite license generally requires little ongoing regulation by the IB once it is authorized, Intelsat said (http://xrl.us/bnvunr). Satellite operators “continue to pay increasingly high application fees, even as the commission has streamlined licensing processes and requirements for space and earth stations,” it said. Intelsat said it pays about $120,000 for a satellite authorization and about $8,500 to request modification of a license. Space station licensees are burdened with 51 percent of IB regulatory fees, while earth station licensees account for 3.9 percent, it added. Globalstar said it’s concerned that the proposed revisions “could result in a significant and unjustified increase in the fees paid by satellite operators, contrary to Congress’ regulatory fee mandate” (http://xrl.us/bnvuoh).

Intelsat and GVF also echoed concerns from SIA about what they said is a lack of transparency and data in the process. More data is needed “for the commission to appropriately allocate FTEs among the core bureaus,” Intelsat said. GVF said it agrees with NAB’s suggestion that more relevant information is needed in the regulatory fee process.

The proposed increase in fees run counter to the commission’s recent approval of a rulemaking notice to streamline and eliminate earth and space station licensing requirements under Part 25 rules (CD Oct 1 p10), some replies said. That item provides an opportunity for IB “to revise its internal FTE allocation without expending additional resources,” Sirius said. An analysis of the bureau’s workflow “would not justify requiring geostationary space station operators to pay more than 483 times as much in regulatory fees per unit than earth station licensees,” it added. The satellite industry “cannot absorb the costs of a major flash-cut increase in regulatory fees,” SIA said: A delayed implementation of any significant increase “would allow the commission to reflect the impact of ongoing streamlining in satellite regulation."

SIA, GVF and Intelsat asked the FCC to seek refund authority from Congress to avoid collecting more fees than required. A GAO report found that the commission collected $66 million in excess fees between 2002 and 2011 (http://xrl.us/bnvum4).