FCC ADJUSTS REGULATORY FEE SCHEDULES

Among changes in the order it released Fri., the FCC: (1) Adjusted the fee grid for AM and FM radio to add more levels for stations that served more than one million people. The old grid made “one million plus” the highest category of payment. Then new grid adds 2 more levels, ending at “3 million plus.” The agency said “a trend toward more powerful stations and increases in the overall… population have resulted in an ever-increasing number of stations grouped in the one million-plus category.” (2) Made LMDS a separate category for fee purposes and said it would open a proceeding to address the fee policy for LMDS and other wireless services. The agency didn’t agree with several suggestions to reclassify it in the microwave category. “Recent technological and commercial applications using LMDS service indicate that this service may develop on a separate track from current microwave services,” the FCC said. Adelstein said he was concerned about creating a separate category because such action wasn’t based on actual regulatory cost to the FCC.

(3) Maintained the FY 2002 fee level for wireless messaging companies, which had pleaded for relief because their industry wasn’t expanding. “Commenters have persuasively argued that this decline in subscribership may not be just a temporary phenomenon, but a more long-lasting one and… it is very difficult for this industry to pass on increases in costs to its subscribers” because of the way the business is structured, the FCC said. Adelstein said he was pleased with that action but he disagreed with the rationale: “I believe that the fee should have been maintained or reduced based on the level of regulatory activities expended by the Commission… not on the economic status of the industry, as this item does.”

(4) Adopted a $500,000 cap on fee waivers based on financial hardship such as bankruptcy. Waivers above that amount “would tend to have a negative impact on our ability to meet our statutory responsibilities,” the Commission said. To compute the cap, the agency will aggregate all subsidiaries of a regulated company, it said. The agency said it might consider waivers above the cap on a case-by- case basis. The FCC said it thought Verizon’s proposals not to grant any fee waivers based on bankruptcy “go too far.” It said “we continue to believe that in appropriate circumstances the public is served by assisting financially distressed telecommunications companies, especially small entities, by granting them relief.” Verizon had argued that giving bankrupt companies a break was unfair to competitors that would have to make up the shortfall in regulatory fee revenue.

Copps in a terse statement said he was concerned that the Commission hadn’t based its regulatory fee adjustments on the actual cost of regulating services. “The Commission merely relies on across-the-board proportionate increases from the previous year’s schedule of fees,” he said. Copps said he was “encouraged” that the agency planned to start a proceeding to consider the fee structure for LMDS and other wireless services. Adelstein said he concurred “because I disagree with the methodology used to determine the actual fees assessed in this item.” Adelstein, like Copps, said the Communications Act “requires the Commission to assess and collect regulatory fees to recover the costs of regulatory activities” and he was concerned that the agency hadn’t done so: “We essentially rely on repeated proportionate increases of the preceding year’s schedule, adjusted to reflect increases or decreases in payment units.” He said the LMDS decision wasn’t based on the number of full-time equivalent (FTE) employees used to regulate LMDS, as was required. “Unfortunately, I am forced to concur to this portion because I understand that a decision to change the regulatory fee for LMDS at this time would make it impossible to both collect regulatory fees this fiscal year and provide Congress with 90 days’ notice of the amendment, as required by the Act.”

(5) Adopted its proposal to stop mailing regulatory fee public notices to companies, other than to Interstate Telecommunications Service Providers (ITSPs), which would continue to get a customized work sheet. The Industrial Telecommunications Assn. had objected to the proposal, saying small wireless and radio services providers might otherwise miss the deadline for payment. The FCC countered that the smallest regulatory fees -- Sec. 8 application fees -- were paid upfront by entities at the time of their initial application or renewal of their multiyear licenses. In addition, the agency said, govt. and public safety entities were exempt from regulatory fees and the rest could see it in the Federal Register or the FCC’s Website. The agency added that a pilot program involved mailing postcards to media services entities and if that was successful it might be expanded to other services.

(6) Turned down a proposal by Sky TV (WSKY-TV) Manteo, N.C., to create an additional regulatory fee category for single-channel analog full-service stations and assess a fee that was 50% of the amount assessed against stations that had paired analog/digital allotments. WSKY-TV said a reduction should be given because much of the FCC’s activity now concerned stations with paired allotments. The Commission responded that actually its regulatory fees were designed only to capture the costs of analog broadcast activities: “Although DTV licensees are subject to Section 8 application fees, the Commission does not yet assess Section 9 regulatory fees to recover the costs of the agency’s DTV-related activities.”