FCC Regulatory Fee Order Dismisses Some, Not All, Satellite Concerns

Broadcasters and satellite operators got some of what they wanted in the FCC FY 2019 regulatory fees order. As expected (see 1908220040), there's no sign of overhaul both sectors want in the unanimous ruling. An accompanying Further NPRM tees up issues like the assessing regulatory fees on foreign satellites allowed to communicate with U.S. earth stations. Some say history shows the agency isn't likely to go that route. The money is due Sept. 30.

The satellite industry opposed the fee hike (see 1907160061). The FCC dismissed the satellite arguments. International Bureau regulatees had a "non-trivial" increase, it said, but regulatory fees "are a zero-sum situation" and decrease in what satellite operators pay would mean higher fees for others.

A satellite company lawyer said the agency isn't likely to adjust its satellite regulatory fees because they're based on full-time equivalents (FTEs), but the FNPRM raises hopes the agency will reallocate such expenses so foreign satellite system operators shoulder more of the cost.

The 2019 fee order includes several changes broadcasters requested (see 1908090057). NAB challenged the FCC’s calculation of the number of radio stations, and the order uses a different number, reducing the fees each pays. “The Commission made a conservative estimate of the number of radio stations in the FY 2019 NPRM,” the order said. Radio stations accounted for in the order increased by 553 as a result.

The changes favor stations, but Pillsbury broadcast attorney Scott Flick described the order as largely the same as proposed. Broadcasters would like the agency to reassess its entire approach to regulatory fees, Flick said. Many entities that aren’t FCC licensees file comments and use commission resources without paying regulatory fees, he said. Of licensees required to pay regulatory fees, small radio broadcasters are among the smallest entities and the least able to afford additional costs, he said: “It can be a challenging thing.”

The FCC also looked at levying regulatory fees on non-U.S. licensed satellites in 2013 and 2014 but opted not to because of questions about its authority to do so under the Communications Act, said the NPRM. A satellite company outside counsel said the FCC also didn't go that route because U.S. fees on satellite systems licensed by other nations could lead to those nations imposing such fees on U.S. satellites. Multiple nations deciding to assess such fees could mean astronomical costs for U.S. operators, the lawyer said.

The NPRM cites Ray Baum's Act as potentially giving the agency authority to impose fees. Outside counsel said operators of non-U.S. licensed satellite systems will undoubtedly argue it's a gross misread that Congress wanted to give the agency additional authority over those systems. He said if that were lawmakers' intent, it would have been expressed more explicitly.

The FNPRM asked whether the agency can assess those fees, as well as how to calculate such fees and what policy implications of such a fee might be. It asked about possible reallocation of FTEs within the International Bureau.

Given arguments about spreading out regulatory costs, it makes sense to at least take comment, but it's doubtful it will make changes, an outside counsel said. He said the sense among many satellite operators is that FTE expenses are out of whack because they're based on historical data. Satellite operators hope to see a broader overhaul of the allocation process, but that's not part of the FNPRM.

New regulatory fees for small satellites aren't in the order. The smallsat licensing order adopted at commissioners' Aug. 1 meeting (see 1908010011) includes discussion of such fees. Those would be due at the earliest in FY '21. The earlier-August order said it will consider regulatory fee amounts for the new smallsat category in future regulatory fee proceedings.

The new order adopts a transition fee structure for broadcast stations to take into account the shift from a designated market area-based calculation to a contour-based system. In the earlier NPRM, the shift to the contour-based system would have meant high fees for some broadcast satellite stations. The final order uses an average of both systems as an interim, transition method to lessen sticker shock.

The FNPRM seeks comment on regulatory fees for VHF stations under the contour fee structure, another point of contention from the NPRM. “Should we adjust population counts in our contour modeling to address such concerns, and if so, how?” the FNPRM asked. It seeks comment on whether AM's and FM's being incubated under the new broadcast incubator program should pay lower regulatory fees. The Multicultural Media, Telecom and Internet Council “asserts that regulatory fees may make it more difficult for the incubator stations to thrive, and the Commission should exempt them from regulatory fees for the term of the license,” the order noted.

The regulator rejected arguments against DBS regulatory fee hikes, saying Media Bureau employees dedicate "substantially similar amounts of time and resources to DBS regulation as they do to cable TV and IPTV." It rejected decreasing the regulatory fees paid by the largest submarine cable operators and adopted a $1,000 de minimis exemption from paying regulatory fees.

Commissioner Mike O'Rielly is "sympathetic" to concerns raised by satcom, broadcasters and others about fee increases, and wants the agency to pursue every step necessary to limit its spending. Pointing to past suggestions about cost reforms (see 1812200061), he said he's open to further suggestions. "Left to its own devices, federal agency spending will continue to creep like an intrusive backyard vine," he said.