While I was away for the last few weeks, there have been a number of actions important to broadcasters and other media companies that we’ll be covering in the next few days. For broadcasters, one annual notice that recently was released by the FCC is the proposal for this year's annual regulatory fees which will be payable in August or September to reimburse the government for the cost of the FCC's regulation of the industry. Each year, prior to implementing the new fees, the FCC asks for comments on the fees to be paid by licensees – teeing up specific issues where procedures or allocations of fees for public comment before such changes are implemented. This year is no exception. What is slightly different is that, instead of simply making its proposal for the fees to be paid by broadcasters, the FCC has instead proposed two different sets of rates, based on different ways of computing the costs of the regulation of broadcasters.
Regulatory fees are based on the FCC’s costs of regulating its licensees and other companies subject to FCC jurisdiction. The allocation is based on the number of FCC employees who work on matters relating to that particular class of service. In the past, the FCC has had five categories of licensees – including one for broadcasters who are regulated by the Media Bureau. The FCC has proposed to reduce that number to four, reasoning that the work done by the International Bureau ("IB") benefits many different types of regulated entities, not just those satellite licensees directly regulated by that Bureau (e.g. the IB is responsible for actions including treaty negotiations and cross-border issues involving all kinds of licensees, including broadcasters). By eliminating the separate allocation for the IB, and reallocating their employees to other bureaus for fee purposes, the FCC suggests that a fairer allocation of fees will result. Whether or not the FCC makes the proposed reallocation will most likely result in one of the possible fee schedules set forth below.
For broadcasters, getting rid of the IB allocation would mean an increase in fees. The proposed fees, with an IB reallocation, and the fees without such an allocation, are set forth below. First, here are the proposed annual fees for broadcasters without the reallocation of the IB employees:
Click here to view table.
With the reallocation, the fees would be slightly higher, as set forth below:
Click here to view table.
The fees as set out in this second chart only represent the increase caused by the reallocation, capped at a 7% increase, so as to not unduly surprise and burden regulated entities. In other words, for the full reallocation to take place, these fees will probably rise more in the future.
For broadcasters, the FCC also proposes, for future years, to change the fee distinction between VHF and UHF TV stations – treating them all as one category. The fees still reflect the analog world, when VHF stations were more valuable, so their fees were higher. Now, as UHF stations perform better in the digital environment, the FCC proposes to remove the distinction – but not until next year.
One final matter on which the FCC seeks comments that could have a future impact on broadcasters, the FCC asks if some Media Bureau employees should be allocated for fee purposes to satellite television providers. The FCC notes that, while these entities are primarily regulated by the International Bureau, Media Bureau employees often deal with the issues raised by such services. Obviously, as the fees are determined by the number of employees who regulate them, such a reallocation could slightly reduce the fees that broadcasters pay. But other reallocations from other bureaus at the FCC could also be made by function, so broadcasters should not count on any future savings just yet.
Comments on all of these proposals are due on June 19 and replies on June 26. Obviously, this is a quick turnaround, but with the fees due before the October 1 start of the next fiscal year, the FCC needs to quickly process the comments, and set up a fee payment schedule very soon. So watch for that schedule in the coming months, and be prepared to pay your fees in August or September.