Paying regulatory fees is a part of the yearly calendar for broadcasters and other entities that do business before the FCC. These fees are usually due in August or September, to be paid before the start of the FCC’s fiscal year on October 1. And each year, about this time, the FCC puts out a Notice of Proposed Rulemaking (NPRM), asking about its system for collecting royalties and what changes should be made before fee collection begins in a few months. That order came out yesterday. It resolves some issues left over from last year (deciding, for instance, to assess fees for Direct Broadcast Satellite television providers), and asks many questions – including some about broadcasters. For broadcasters, questions include whether the FCC should adjust the relative percentages of its collections from radio and TV (a question that could pit broadcasters against each other) and whether changes should be made in allocation of fees within a service, adjusting the rates currently paid by different classes of radio and TV stations. The FCC also asks whether it should adopt rules that allow stations in economically depressed areas to get relief from regulatory fees. The fees proposed for broadcasters for this year are set out at the end of this article. Comments on the FCC proposals are due on June 22, and replies by July 6.
Regulatory fees (or “reg fees” to most folks in the communications world) are assessed to recapture from those being regulated the costs of that regulation. To figure out what each regulated commercial entity must pay, the FCC has to try to allocate its budget among the various services that it regulates, based on how many of its employees spend their time regulating a particular industry (based on Full Time Employees – or “FTEs” – an FTE being a person working full-time at the FCC, or, for instance, two half-time employees who together count as a single FTE). So the FCC each year has to go through a complex analysis of the work that it does, and try to allocate the time spent by each of its employees on particular regulated services. As these NPRMs on reg fees make clear, this can be a very difficult process, as there will obviously be some employees who spend time on projects that cut across service lines – e.g. those in the International Bureau who negotiate with foreign governments may benefit broadcasters in some negotiations, and wireline or wireless companies in others. Or the Enforcement Bureau, the Office of the General Counsel and the Commissioner’s staffs may handle a diversity of matters covering all sorts of services. The allocations that are arrived at can be interesting and debatable – and have little to do with the economics of the industries involved or their revenue base.This year, in the NPRM, the FCC notes that those principally regulated by the Media Bureau (broadcasters and cable companies) will pay 34.75% of all fees, second only to those regulated by the FCC’s Wireline Bureau (38.57% of the fees). Those regulated by the Wireless Bureau (e.g. mobile phone companies) pay 20.4%, and those regulated by the International Bureau (e.g. satellite companies) about 6.28%.
How each of these Bureaus then divides their allocation becomes an even more difficult exercise. In the NPRM, the FCC asks many questions about how to divide the fees paid by the companies regulated by the Media Bureau, and in particular asks whether the split between radio and TV is fair (currently, radio pays about $28.3 million and TV $23.6 million). The FCC notes that there are over twice as many radio stations that are regulated, and the number of exempt entities (including noncommercial groups and government agencies), whose regulatory costs have to be picked up by the commercial entities that pay fees, are more numerous in radio than in television. Seemingly, the FCC is suggesting that radio may need to pay more.
Even within the ranks of broadcast stations, the FCC asks if it should reassess the way that it calculates payments. For TV, the amount of the fees that a station pays is determined by the ranking of the market in which it operates. For radio, those fees are instead based on population served by the station. The FCC asks if it should adjust radio to a market-based approach. It also asks whether the allocation among classes of radio stations, and between AM and FM stations, is proper. These questions seemingly will be ones for resolution for the 2016 fees – but they pose many interesting issues for broadcasters to ponder – and on which they should offer comments.
The FCC, at the request of the Puerto Rico broadcasters, has also been asked to provide fee relief to stations in economically depressed regions. The Puerto Rico broadcasters specifically asked for an exemption for stations on their island, where economic conditions have reportedly not been good, and where, according to the petition, there has been a loss of population from the last census on which the fees were based. The FCC asks if it should make an exception for Puerto Rico broadcasters, or if it should instead allow fee waivers more generally when a station can show that it is serving an area that has been particularly hard hit by bad economic conditions – and by what standards such a waiver should be judged.
Finally, the FCC points out some procedural rule changes. Credit cards payment of fees will now be limited to transactions under $25,000 (the limit used to be $49,999). So the frequent flyer miles that you can get from paying your reg fees would be limited to those that accrue from a payment of no more than $24,999. Try to pay more (even by splitting up the transactions into multiple payments), and the payment will be rejected. The Commission also notes that fees that are more than 120 days overdue will be referred to the Treasury Department for collection. As application processing can be delayed because of unpaid fees, you don’t want your unpaid fees to be transferred outside of the FCC, as it is far more difficult and time-consuming to resolve back-fee issues when the fees are no longer being handled by the FCC.
Here are the fee proposals for broadcasters:
Click here to view the table.