The Federal Communications Commission (FCC) has released a Report and Order adopting the schedule of regulatory fees for Fiscal Year (FY) 2014. The Report and Order also discusses certain changes to the regulatory fee rules that were proposed last year and will take effect in Fiscal Year 2015, including an increase in the “de minimis fee” exception from $10 to $500. Finally, the Commission adopted a Notice of Proposed Rulemaking to consider further changes to the fee schedule, most notably the adoption of a per subscriber regulatory fee for DBS operators.

FY 2014 Fee Schedule. A copy of the complete schedule of fees for FY 2014 is attached. Fees which may be of particular interest include:

Click here to view table.

Payment Window. The regulatory fees adopted for FY 2014 will be due during a filing window that runs from August 29, 2014 until 11:59 pm (eastern daylight time) on September 23, 2014. Payments that are not received and stamped at the lockbox bank will be subject to a late payment penalty of 25 percent of the overdue balance. In addition, failure to pay regulatory fees may subject the regulated entity to additional sanctions and administrative fees. 

Payment Calculation. As a general matter, regulatory fees for licenses, permits and other authorizations that are not based on a subscriber, unit, or circuit count must be submitted for any authorization held as of October 1, 2013. Where a permit or license is transferred or assigned after October 1, 2013, responsibility for payment of the fee rests with the holder of the license or permit on the due date. Cable operators, whose fees are computed on a per subscriber basis, may determine their fees based on the number of subscribers on a “typical day in the last full week” of December 2013 and should reflect the sum of (a) the number of single family dwellings; (b) the number of individual households in multiple dwelling units (e.g., apartments, condominiums, etc.) that are charged the basic subscriber rate; (c) the number of bulk rate customers (computed by dividing the total annual bulk-rate charge by the annual basic subscription rate for individual households); and (d) free and courtesy service households. 

Changes in Regulatory Fee Rules Being Implemented This Year. Certain changes announced by the Commission last year will be taking effect this year. These include the assessment of per subscriber fees on providers of IPTV service (digital television delivered through a high speed Internet connection instead of by the “traditional cable method”) at the same rate as the fee assessed on cable operators. (As discussed below, the Commission is considering whether to add DBS to this “MVPD” category of fee payers for future years). In addition, starting with this year’s payments, VHF and UHF broadcast television stations will pay the same fees. Also, the Commission will implement its previously announced policy of requiring that fee payments by online ACH payment, online credit card, or wire transfer. Payments made by checks (including cashier’s checks or money orders) will be rejected and returned to the payor. For payments made by wire, a Form 159-E should still be transmitted via fax so that the Commission can associate the wire payment with the correct regulatory fee information. 

Changes in Regulatory Fee Rules To Be Implemented Next Year. As noted above, the FCC is raising the minimum fee threshold from $10 to $500. (The Commission rejected ACA’s proposal that the minimum fee threshold be set at 1000 subscribers for cable systems, but indicated it would continue to review the minimum fee issue). This increase in the minimum fee threshold will take effect with the FY 2015 regulatory fee payments. The minimum fee threshold is computed on a cumulative basis; that is, a fee payor must combine all of its fee payments for the year for any services it provides in determining whether it falls below the minimum fee payment threshold. The Commission also announced that, effective FY 2015, it would implement a new fee category for toll-free numbers. 

Request for Comment on Proposed Changes in DBS Regulatory Fees. The DBS industry currently pays regulatory fees based on the number of operational geostationary earth stations that they use, but do not pay a per subscriber fee. As a result, DBS regulatory fees are a fraction of those paid by the cable industry. (Earlier this year, the Commission estimated that under the current approach, the total fees due from the cable/IPTV industry would be over $65 million, while the DBS industry would pay slightly more than $2 million in fees). The cable industry has tried for years to convince the Commission that DBS providers should be assessed a per subscriber fee in the same manner as cable operators. The DBS industry has opposed such proposals, arguing that DBS providers are not subject to the same level of regulation as cable operators. This year, the Commission appears to have come around to the view that it may be appropriate to create a new fee category to recover costs incurred by the Media Bureau with respect to DBS operations. Among the issues upon which the Commission is seeking comment is whether a DBS per subscriber fee should be set a substantially lower level than the fee imposed on cable operators in order to reflect the fees that would still be due for each operational earth station used by DBS, the risk of “rate shock,” the financial impact the fee might have on the economic wellbeing of the DBS industry. In this regard, the Commission has estimated that if DBS was combined with cable and IPTV in setting a per subscriber fee, the amount of the fee that fee would drop to less than $0.70 per subscriber; the total fee due from cable and IPTV would drop from over $65 million to around $44 million and the total amount of the fees due from DBS would increase from around $2 million to more than $23 million per year. 

Comments on the proposal to modify the DBS regulatory fee will be due 30 after the Notice of Proposed Rulemaking appears in the Federal Register. Reply comments will be due 30 days after the initial comment deadline.