Universal Support for Reform of FCC Assessment of Regulatory Fees, Though Details Vary

Revised rules for regulatory fees shouldn’t force carriers to pay a higher percentage than they do now to pay for the FCC, CTIA said. A proposal to combine wireless and wireline companies into the single category of interstate telecom service providers (ITSP) could mean fees hikes of 24 percent or more for the sector, CTIA said. “To the extent the Commission seeks to determine some notion of a ‘fair share,’ it must consider industry segments’ overall contributions to the Commission’s budget -- including spectrum auction proceeds that account for more than 20 percent of the Commission’s FY 2013 budget” (http://bit.ly/11DydE2). The FCC’s overall budget for FY 2013 is paid for through both fees ($339.8 million) and auction proceeds ($98.7 million), CTIA said. Auction proceeds pay for 194 FTE employees at the commission, more than the 122 assigned to the Wireless Bureau, the filing said.

The proposal to require wireless operators to pay in as ITSPs would violate federal law governing regulatory fees and “is also ill-conceived,” CTIA said. “Tellingly, the Notice does not even attempt to analyze or quantify the impact of combining wireless providers and ITSPs into one uniform fee category, but CTIA estimates that it would result in a 24 percent increase in overall regulatory fees paid by wireless regulatees. This result would be unjustifiable and arbitrary and capricious."

The Competitive Carriers Association raised similar concerns. “Wireless carriers are unique among fee payors in that they are the only entities required to purchase space from the federal government on which to deploy the infrastructure necessary to provide service to their customers,” CCA said (http://bit.ly/11DyU0n). “Wireline carriers aren’t required to purchase licenses from the federal government to erect utility poles or lay conduit. And wireless carriers pay handsomely for the ability to do business: auction revenues not only fund FTEs attributable to auction activities, but also cover roughly 20 percent of the Commission’s budget.”

CCA said telcos receive significantly more USF support than carriers and that disparity is written into program rules. “If the Commission treats wireless and wireline carriers similarly for purposes of assessing regulatory fees, it cannot in good conscience continue its disparate treatment of the two when allocating universal service support,” CCA said. “But more fundamentally, the growth of the wireless industry is an inappropriate factor for the Commission to consider in setting regulatory fees."

AT&T expressed “grave concerns” about combining wireless and wireline carriers into a single category. “While it is true that these services share some similarities and issues, it is equally true that they each have unique regulatory concerns, as well,” AT&T said (http://bit.ly/11Sxw9V). “While both include voice services and have some similar obligations (e.g., access to emergency services, CALEA, and universal service fees), they provide services in significantly different ways, which translates into different regulatory issues -- such as, tariffing and pricing requirements (price cap or rate of return), accounting regulations, section 251(b) obligations, and the like for wireline telecommunications service providers; and spectrum auctions, pole siting rules, 911 location accuracy measurements, radio frequency regulations, and the like for CMRS providers."

The Satellite Industry Association said satellite operators should be assessed regulatory fees based on the actual costs of regulating the industry. “The statute that established the regulatory fee framework requires the Commission to allocate the costs of personnel among categories of fee payers based on ’the benefits provided to the payer of the fee by the Commission’s activities,'” SIA said (http://bit.ly/15r2WVX). “SIA has long been concerned that the high regulatory fees for satellite network operators do not meet this standard, given the low and decreasing regulatory burdens associated with Commission oversight of the satellite industry.”

DirecTV said the FCC should reject a proposal in the NPRM to treat DBS and cable with more parity in assigning regulatory fees. “This proposal now marks the fifth time in eight years that the Commission has considered a cable industry proposal not to lower its own regulatory fees but to raise the regulatory fees paid by Direct Broadcast Satellite rivals such as DIRECTV,” the company said (http://bit.ly/19o3GiU). “The Commission was right to reject cable’s attempt to raise its rivals’ costs. Nothing has changed to warrant revisiting that final, well-reasoned and procedurally sound decision."

"It is well past the time for the Commission to implement a revised and equitable regulatory fee structure,” USTelecom said (http://bit.ly/13YvY18). There’s no time for delay, or even for a transition period, it said. The commission should “immediately” implement a new fee structure that ensures greater equity for all stakeholders,” the association said. “Commission inaction on changing the regulatory fee structure has resulted in an egregiously unfair and lengthy subsidization for other service providers borne exclusively by traditional wireline providers.” As the number of consumers remaining on the public switched telephone network continues its steady decline, fewer customers have to bear the costs of the regulatory fees, USTelecom said. But broadband services should not be subject to the regulatory fee structure, it said, given its “unregulated treatment.” USTelecom urged the commission to reject its proposal to implement a 7.5 percent cap on rate increases for FY 2013. It called such transitional measures “inherently unfair” to interstate telecom service providers, as they “perpetuate the unfair regulatory fee structure that has been in place for at least the last decade.”

The Independent Telephone & Telecommunications Alliance said it supports reform of the fee structure, which “relies on obsolete fee categories” from 1998, and “inconsistent methods for calculating payments” among different providers (http://bit.ly/13YwBYP). The result, ITTA said, “lacks any relationship to current marketplace realities.” The commission should update its FTE employee analysis to ensure it accurately reflects the expenditure of commission resources for each fee category, ITTA said. All voice service providers should be assessed fees based on revenue, it said: This would “establish regulatory parity among such providers.”

The American Cable Association asked the commission to assess regulatory fees on IPTV providers as it does on cable operators (http://bit.ly/12Skqyt). “IPTV providers offer a service substantially similar to ‘cable service’ and are subject to, and benefit, from Media Bureau regulation; these providers should remit commensurate regulatory fees,” the association said. Including IPTV providers in the fee base will help “avoid distortions in the marketplace” where some competitors must pay fees while other similar competitors are exempt, it said. ACA asked the commission to continue assessing cable fees on a per-subscriber basis, and to apply this methodology to all multichannel video programming distributors including IPTV providers. A new regulatory fee category for MVPDs that includes DBS providers would help “ensure regulatory parity” between cable and DBS, the association said.

The North American Submarine Cable Association urged the commission to adopt lower submarine cable system fees, consistent with the NPRM’s data (http://bit.ly/13YrOX2). “Submarine cable operators account for 0.44 percent of direct FTEs but pay 2.8 percent of all annual regulatory fees,” the association said. The group also asked the commission to implement its reclassification of International Bureau FTEs effective for FY 2013. “The Commission has offered no legal or policy reason for delaying the implementation of the reallocation,” it said. By limiting regulatory fee increases to 7.5 percent in any given fiscal year, the commission could let providers “price their services and recover their costs” without undue distortion of economic and investment decisions, the association said.