Cable, DBS Again at Odds Over Regulatory Fee Parity; Wireline Reallocation Debated
Direct broadcast satellite and cable interests, which clashed over DBS regulatory fees in FY 2015 and 16 (see 1507080013 and 1607060023) are doing so again with the FCC FY 2017 fee proposal, as expected (see 1706050038). wireline interests -- saying they bear a disproportionate regulatory fee burden compared with other industries -- are backing FCC plans for reallocation of Wireline Bureau full-time equivalents (FTE), though the satellite industry is opposing. Comments on the fee proposals were due Thursday, replies July 7. The FCC Received support for its plan to hike the de minimis regulatory fee threshold and pushback on hiking the submarine cable regulatory fee.
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"There is no justification for this disproportionately low" direct broadcast satellite rate, with cable and IPTV providers bearing an unfair share of Media Bureau regulatory costs, NCTA said in docket 17-134. It said the fee structure gives DBS a competitive advantage over cable and IPTV operators. "Claims of 'rate shock' over a few pennies" are belied by their much-higher rate increases to consumers, it said. American Cable Association said the increased DBS fee brings them "closer to regulatory parity," but that they should pay the same for FY 2017 since cable, IPTV and DBS impose similar Media Bureau burdens. Even if Media Bureau proceedings participation isn't equal among all MVPDs, Section 9 of the Communications Act doesn't require the agency do a company-by-company assessment of regulatory costs, ACA said. It said all MVPDs assessed Media Bureau fees equally would each pay 76 cents per subscriber for FY 2017 -- making a 32 cents-per-subscriber-per-month increase for DBS. "An amount this small ... would likely be unnoticed by most consumers," it said.
With the proposed 38 cents per subscriber fee on DBS representing "a staggering 217 percent increase" since the FCC imposed DBS fees in FY 2015, DirecTV and Dish Network jointly said the FCC still hasn't demonstrated what has changed regulatorily to warrant an 11 cents hike from last year. They "have never generated and do not generate now, anything approaching the regulatory costs that hundreds of cable operators do." Since the FCC has acknowledged in regulatory fee contexts that DBS and cable aren't identical, the move toward regulatory fee parity "is puzzling," DirecTV and Dish said. They said the Media Bureau's applying rulemakings equally to cable and DBS doesn't mean the regulatory and oversight burden of the industries is equal.
The FCC-proposed reallocation of 38 FTEs doing USF work as indirect and four FTEs doing wireless numbering issues to the Wireless Bureau notably cuts the share of FCC regulatory fees borne by Wireline Bureau regulatees, CenturyLink said. Frontier Communications also backed the reallocation "as a clear step in the right direction" toward broader fee overhaul. Beyond that reallocation, ITTA urged putting wireline providers into the interstate telecom service provider category alongside wireless providers, since both often are subject to similar obligations, policies and procedures. The Satellite Industry Association opposed any reclassification of FTEs working on the USF matters in the Wireline and Wireless bureaus to indirect FTEs, since satellite operators don't benefit from FTEs working on USF programs and thus shouldn't bear greater regulatory costs for them.
ACA, the Enterprise Wireless Alliance and NAB backed increasing the de minimis threshold from $500 to $1,000. NAB said small broadcasters can't pass those fees on in consumer bills." EWA supported the NPRM suggestion of eliminating the commercial mobile radio service messaging services regulatory fee category.
AT&T pushed for international bearer circuit fee parity by having all terrestrial circuits be charged the same terrestrial per circuit IBC fees regardless of regulatory classification. That would entail extending existing fees rather than going for a flat per-provider fee, which could serve as a disincentive to expansion of capacity given the current low amount of IBC per circuit fees, AT&T said. SIA backed eliminating the satellite IBC regulatory fee since satellite provision of IBCs doesn't create any regulatory costs. Level 3, calling the existing IBC fee structure "difficult to administer, not competitively neutral and incent[ing] noncompliance," said the FCC should adopt a flat fee for terrestrial IBCs regardless of whether they are on a common-carrier or non-common-carrier basis.
The Submarine Cable Coalition repeated arguments it also made last year about submarine cable regulatory fees being unjustifiably high (see 1606210021) and urged the 17 rates be no higher than the FY 2015 levels, with the FCC also "reform[ing] its flawed methodology for calculating fees going forward. It said the NPRM doesn't give justification for the 1.9 percent fee hike submarine cable operators would face while aggregate regulatory fees are decreasing by 7 percent.