FCC Adopts 2004 Regulatory Fee Schedule; Regulatory Fee Payment Deadline Is August 19, 2004

The FCC released its annual Report and Order ("Order") last week containing the revised schedule of regulatory fees due for fiscal year ("FY") 2004. Congress has mandated that the FCC collect these fees in order to recover the costs associated with the Commission’s regulatory activities. In FY 2004, the FCC will collect almost $273 million in regulatory fees, which exceeds the previous year’s requirements by $4 million. With some minor adjustments, the Commission has prorated the required increase (approximately 1.5 percent) across all services, although some fees are actually less than they were last year. Historically, annual regulatory fee payments were due to be paid during the month September, but this year the fees are due no later than Aug. 19, 2004. Any late fees will be assessed a 25 percent penalty.

This update highlights regulatory fees due for, and new procedures applicable to, four of the primary classes of FCC regulated entities that are required to pay annual regulatory fees. The update does not contain an exhaustive list of regulatory fees due. The FCC’s annually updated regulatory fee order and other relevant materials can be found online at http://www.fcc.gov/fees/regfees.html.

A. CABLE SERVICES

1. Cable Television Systems:  70¢ per subscriber (2003 = 66¢)
2. Cable Antenna Relay Service (CARS):  $135 per call sign (2003 = $90)

For FY 2004, the FCC has changed the method that it will use to calculate the per subscriber regulatory fees assessed on each cable operator, by relying on subscriber data reported in the "Broadcasting and Cable Yearbook 2003-2004," and industry statistics published by the National Cable and Telecommunications Association (“NCTA”). NCTA’s list of 25 largest MSOs, and cable operators reported in the 2003-2004 edition of the Yearbook, will receive two rounds of fee assessment letters via U.S. mail—an initial assessment and a final assessment. The first assessment will be based on the number of basic cable subscribers reported by NCTA or in the Yearbook—the 25 largest MSOs shall refer to the subscriber counts reported by NCTA and all other operators shall refer to the subscriber counts reported in the Yearbook. If a cable operator disagrees with the subscriber count specified in the initial assessment letter, the operator should amend the assessment letter and return it to the FCC by July 21, 2004. The amended assessment letter should indicate the specific reasons for the subscriber difference and indicate how and when the difference occurred (e.g., acquisition or sale of cable system, name of buying/selling entity, date of transaction, etc.). If a cable operator does not contact the FCC and amend the initial assessment, the FCC will assume the initial assessment is correct and will expect the fee payment to be based on the number of subscribers on the initial assessment.

If a cable operator is not on the list of NCTA’s 25 Largest MSOs, and is not reported in the Yearbook, it will not receive an assessment letter. Cable operators in this position should simply provide their aggregate basic subscriber count as of Dec. 31, 2003, and certify this subscriber count in Block 30 of the FCC Form 159 Remittance Advice, which is the form that accompanies all regulatory fee payments. It is not necessary to provide a listing of the Community Unit Identifier Numbers (“CUIDs”), nor a breakdown of individual subscriber counts for each CUID. A certified aggregate subscriber count for the system(s) will suffice.

B. BROADCAST

1. FM and AM Radio

The Commission’s annual radio fees differentiate between stations based on class of station and population served within each station's protected service area. Since 1998, the FCC divided broadcast station regulatory fees by class of service, population, and type of service. Modifications to radio stations, increasing populations and a trend toward more powerful stations have prompted the Commission to modify the fees for this category. The population caps have been increased and an additional category has been added “greater than three million people." Fee information for specific stations can be obtained from us or from the FCC.

Radio Station Regulatory Fees

AM Construction Permits:  $ 465
FM Construction Permits:  $1,650

2. VHF Commercial Television

3. UHF Commercial Television

4. LPTV, TV Translator & TV Booster:  $385 per license (2003 = $365)

5. Broadcast Auxiliary Stations:  $10 per license (NO CHANGE)

6. Multipoint Distribution Services:  $270 per call sign (2003 = $265)

C. WIRELESS SERVICES

Similar to its new approach with regulatory fees for cable services, the FCC will be mailing subscriber assessment forms to CMRS cellular and mobile service providers. These subscriber assessment figures will be based on the subscriber data reported by CMRS carriers in the annual Numbering Resource Utilization Forecast (“NRUF”) report (specifically, the assigned telephone number counts reported, adjusted to account for number portability). The FCC will send out two assessment reports. The first assessment letter will include assigned number counts (netted for porting), which will include a list of the carrier’s Operating Company Numbers (OCNs) upon which the assessment is based. The letters will not include assigned number counts by OCNs, but rather an aggregate of assigned numbers for each carrier. If after receiving the first letter, the CMRS carrier believes there is a discrepancy in the subscriber count numbers, the carrier may correct the discrepancy directly on the letter, and the corrected letter must be returned to the FCC no later than July 21, 2004. The FCC will then send out a second assessment letter that will coincide with the August 2004 payment period for regulatory fees. This second assessment letter with aggregate totals will constitute the basis upon which FY2004 regulatory fees will be paid. Carriers will not have an opportunity to correct the aggregate subscriber count on the second assessment letter.

1. CMRS Mobile/Cellular Services

All commercial mobile radio services ("CMRS") are assessed a regulatory fee of 25¢ per unit (each mobile or cellular telephone number is considered a "unit"), down from 26¢ per unit last year. CMRS Mobile/Cellular Services include: Cellular Radio Service, Specialized Mobile Radio Services (“SMR”), Personal Communications Services ("PCS"); Public Coast Stations; and Public Mobile Radio.

2. CMRS Messaging Services

CMRS messaging services (formerly "one-way paging" services) must pay a regulatory fee of 8¢ for each paging unit under the Commission's order. CMRS Messaging Services include Private Paging; qualifying interconnected Business Radio Services; 220-222 MHz Land Mobile Systems; Public Mobile One-Way Paging; PCS one-way and two-way paging; and 900 MHz Specialized Mobile Radio Services.

3. Microwave (includes Domestic Public Fixed Radio)

Microwave licensees will continue to pay a $50 annual regulatory fee per license, payable for an entire ten-year license term at the time of application for a new, renewal or reinstatement license.

4. Rural Radio (previously listed under the Land Mobile category)

Licensees for rural radio services (all stations not covered by CMRS or PMRS) will pay a $5 annual regulatory fee per license, payable for an entire ten-year license term at the time of application for a new, renewal or reinstatement license. The total regulatory fee due is $50 for the ten-year license term.

D. INTERNATIONAL SERVICES

1. Earth Stations:  $200 (2003 = $210)*
2. International Bearer Circuits:  $2.52 per active 64KB circuit
*NO FEE FOR RECEIVE-ONLY EARTH STATIONS

E. PROCEDURES FOR PAYMENT OF FEES

Responsibility for payment of regulatory fees generally rests with the holder of the permit, license, authorization, or with the company providing service to the subscribers, as of a certain date. That date varies by service category. When the regulatory fee payment is based on a license, authorization, etc., the entity that held the license as of Oct. 1, 2003, is responsible for paying the regulatory fees (unless separate arrangements have been negotiated by parties to a sale or other assignment). Regulatory fees that are based on numbers of subscribers or units (such as with Cable Services or Wireless Services) are to be based on subscriber numbers as of Dec. 31, 2003, and to be paid by the entity providing service at that time.

The Commission highly recommends that entities submitting more than 25 Continuation Forms (Form 159C) pay regulatory fees online using the electronic fee filer program.

The use of the FCC’s Federal Registration Number (FRN) is now mandatory for anyone doing business with the FCC, including those subject to regulatory fee payments.

Government entities, nonprofit entities under Section 501 of the Internal Revenue Code, and all noncommercial AM, FM, and TV licensees and permitees are exempt from paying regulatory fees and need not submit payment. Regulatees whose total fee liability amounts to less than $10 are also exempt from fee payment obligations.

As noted above, the FCC recently has begun mailing regulatory fee assessment cards to various types of regulated entities (e.g., media service entities, CMRS and cable operators), but is not following this approach for all entities that owe regulatory fees. In the future, the FCC is considering moving towards sending regulatory fee bills to all entities, including “e-billing” through the Internet.

If you have any questions concerning the FCC's regulatory fees (including calculations or payment procedures), please contact us.