It happens every spring: the annual announcement of proposed regulatory fees that the FCC’s regulatees will be called upon to shell out toward the end of summer. While the Notice of Proposed Rulemaking (“NPRM”) laying out the proposed fees has in recent years tended to pop up in early May (or even April, back in 2010), the Commission is running a tad late this time around.
Never fear – the proposed 2014 reg fees are here!
While the final figures (usually adopted in July or early August, payable in late August or September) may vary here and there from the proposals, generally any changes will be minor. The issuance of this year’s NPRM gives one and all an opportunity to comment on the proposals before they get etched in stone (although many may question the utility of trying to sway the Commission on the fee front).
There’s some interesting news for both TV folks and radio folks in the FCC’s proposals.
TV-wise, the Commission has tossed out the differential treatment of VHF and UHF stations. (Technically, this decision was made last year, but the Commission promised not to put it into effect until 2014.) This year there will be one generic class of TV licensees – dubbed simply “Digital TV” – although the fees within that class will still be tiered according to market size. Licensees operating on channels south of 14 should be happy, unlike their confrères on 14 and up.
The “Digital TV” fees this year for VHF stations will drop at least 24% (for the smallest markets and construction permits); for the top 25 markets, the reduction will be nearly 50%. Because UHF stations have historically been subject to significantly lower reg fees than VHF’s, this year’s proposal won’t be greeted as happily by UHF licensees: UHFs in the top 25 markets are set for an uptick of approximately 20% and, in the smallest markets, 30%.
But there is hope for those UHF folks: the Commission is also considering capping increases that are attributable to its general fee reforms. The increase in UHF fees would fall into that category. The Commission has previously used a 7.5% cap on reg fee increases, but is open to considering a higher figure (10% is the suggested alternative).
On the radio side, the big news is that the Commission does not appear to be proposing any changes from last year’s fees.
We’ve prepared a handy table listing the proposed fees (and last year’s TV fees, for comparison purposes) – you can check it out here.
By the way, when the time comes to pay the fees, be prepared to do it electronically. That’s another change that was adopted last year and set to take effect this year. It’s in keeping with an overall governmental shift toward a “paperless Treasury”: the Commission will not accept payments by check (not even cashier’s checks!) or any accompanying hardcopy forms (e.g., Form 159) in connection with reg fee payments.
In addition to the new fee schedule, the NPRM proposes a number of other changes to the reg fee landscape. Some involve highly arcane matters affecting the calculation of fees overall, such as the internal reallocation of FTEs (that would be “full time employees” to those unfamiliar with the Commission’s FedSpeak) for purposes of figuring out how much it costs to regulate the various services. (Reg fees are intended to cover the costs of regulation, with each service bearing its pro rata share.) If you’re into that kind of stuff, you’ll have a good time reading the NPRM.
Other proposals are likely more accessible to the mainstream reader. For example, the Commission is thinking that AM expanded band stations should be subject to their own reg fees. Historically, such stations got a free ride because the Commission was trying to encourage AM licensees to embrace the expanded band by allowing them to operate two stations – an expanded band and a non-expanded band – for a period of time. Since the theory was that the licensee would have to pick one to keep and ditch the other, the Commission figured it shouldn’t charge double. But by 2008 – yes, that would be six years ago – the FCC concluded that there was “no compelling reason” to continue that exemption. Compelling reason or no, the exemption has continued to date. But now the Commission appears to be serious about closing that loophole starting with FY 2014.
Another proposed change that everybody should be able to grasp: upping the “de minimis” level from $10 to a considerably higher number – $100, $500, $750, even $1,000 are all mentioned as possibilities. That means that, once the FCC has calculated the costs of regulation for each service, if a particular service’s figure is less than the “de minimis” number, the Commission would not impose a reg fee. At $10, not too many services have historically enjoyed that exemption. That would change if the “de minimis” level is jacked up by a factor of 10 or more.
Along the same lines, the Commission is proposing to ditch entirely a number of reg fee categories that “account for such a small amount of regulatory fees.” Those would include such things as Satellite TV, Satellite TV Construction Permits, Broadcast Auxiliaries, LPTV/Class A Television and FM Translators/Boosters, and CMRS Messaging (Paging).
There are various other changes proposed. If you think you might want to chip in your two cents’ worth on the proposed fees or related matters covered in the NPRM, heads up – you don’t have much time to work with. Comments on all of the proposals set out in the NPRM are due by July 7, 2014; reply comments are due by July 14. Again, the NPRM – and the fees described in it – are still only proposals. We won’t know the final fees until sometime this summer, and we won’t know the deadline for paying the fees until sometime later – although the fees are generally due in late August or early/mid-September. Check back here for updates.