FCC Proposes 2017 Regulatory Fees

from Fletcher, Heald & Hildreth

Just in time for the unofficial start of summer, the FCC has issued its 2017 Regulatory Fee Notice of Proposed Rulemaking (NPRM), beginning a process that culminates with the payment of regulatory fees sometime between late August and the end of September.

Although there aren’t any big fee hikes like we saw last year, the Commission is putting on notice those TV stations that claim the satellite television fee. Satellite television station regulatory fees are much lower than fees for full-power stations; for FY2016, the satellite television fee was roughly just 35% of the lowest fee category for a full-power television station. Satellite station status can only be obtained as a result of Commission action. To ensure that only those stations that have been granted satellite status by the Commission reap the benefits of the reduced satellite television regulatory fee, the FCC has attached to the NPRM a list of eligible satellite television stations and invites comment on the accuracy of the list. The Commission also seeks comment on whether the satellite fee should be increased to 50-75% of the fee that would be due if the satellite station were a full power television station.

Direct broadcast satellite (DBS) licensees are unlikely to be happy with the NPRM. DBS licensees pay two separate fees:  a fee calculated according to the physical satellites they operate and another fee calculated according to the number of subscribers (this subscriber-based fee was not instituted until 2014). For the second year in a row, DBS fees calculated on a per subscriber basis may increase significantly. While the NPRM notes that the fees are still far lower than those paid by cable television/IPTV companies, DBS operators now pay 38 cents per subscriber per year.

So, if that’s the bad news, what’s the good news?

In 2014, the FCC instituted a $500 de minimis floor.  A licensee received a “get out of Regulatory Fee Payment free” card if its total fees due were less than $500 in a given year. This year, the FCC is considering raising that de minimis threshold from $500 to $1,000. (We remind everyone that this exemption applies only to filers of annual regulatory fees, not any application filing fees, and it is not a permanent exemption, meaning a licensee that may have been exempt last year will not automatically be exempt this year, whether or not the floor changes)  For telecommunications carriers (or Interstate Telecommunications Service Providers – ITSPs – in FCC Regulatory Fee parlance), the FCC is also proposing a fee reduction this year. Last year, ITSPs paid 3.71 cents per revenue dollar (as reported on the carrier’s Form 499-A). This year, the proposed ITSP has been reduced to 3.02 cents per revenue dollar.

Other proposals include redistribution of FCC full time employees working on Universal Service Fund (USF) issues whose salaries are funded via Wireline Bureau regulatory fees to an “indirect status” reflecting the changing nature of the FCC’s oversight of the USF; adopting a flat, per provider fee with tiered regulatory fee methodology for International Bearer Circuits, regardless of their common-carrier/non-common carrier status; and revising the fee ratios for AM and FM broadcasters. The table below shows the proposed 2017 radio station fees using the proposed ratios:

2017 reg fees table

When it comes to paying, remember that the Commission has an all-electronic payment requirement: no cash or paper checks are accepted. Also, the maximum payment that can be charged to a credit card remains at $24,999.99, which applies to both single and bundled payments. If you owe more than $24,999.99, you will not be permitted to split up the payment into multiple payment transactions, nor will you be permitted to pay over several days by using one or more credit cards. The FCC recommends that anyone expecting a fee obligation of $25,000 or more consider using debit cards, Automated Clearing House (ACH) debits from a bank account, or wire transfers.

Comments on all of the proposals set out in the NPRM are due by June 22, 2017; reply comments are due by July 7, 2017. You can submit your comments at this FCC website (enter Docket Number 17-134).

Again, the NPRM – and the fees described in it – are only proposals. We won’t know the final fees until sometime this summer, and we won’t know the deadline for paying the fees until sometime later, although fees are generally due in late August or early/mid-September. Check back here for updates.