On August 12, 2013, the Federal Communications Commission ("FCC" or "Commission") released a Report and Order1 announcing its annual regulatory fees for FY 2013. The Order reflects several notable fee changes compared to 2012, and outlines modifications to the Commission's fee allocation process. In particular, the FCC has adopted proposed changes to its fee allocation process and imposed a cap on fee increases. Additionally, the Order announces several administrative changes that will affect collection of the FCC's annual fees starting in FY 2014.
Section 9 of the Communications Act requires the Commission to collect fees from regulated entities to offset costs associated with the Commission's enforcement, public service, international, policy, and rulemaking activities. FCC regulatory fees collect roughly $330 million per year toward the Commission's budget. Most federal licensees and other regulated entities must pay these regulatory fees as set by the FCC. The fees vary by type of activity.
2013 Annual FCC Regulatory Fees
The Order adopts a schedule of annual FCC fees for 2013. Fee categories common for Kelley Drye clients include the following:
|Interstate Telephone Service Providers fee (per revenue dollar)
||This is a 10% decrease from the 2012 fee.
|Commercial Mobile Radio Service (“CMRS”) Cellular/Mobile Services fee (per subscriber)
||This is a 5% increase from the 2012 fee.
|CMRS Messaging fee (per subscriber)
||This is the same as the 2012 fee.
|Earth Stations fee (per authorization or registration)
||This is the same as the 2012 fee.
Submarine Cable Systems2 annual fee
(10 Gbps or greater, but less than 20 Gbps)
||This is an increase of approximately 2% from the 2012 fee.3 [Other fees apply for smaller carriers]
Submarine Cable Systems annual fee
(20 Gbps or greater)
||This is an increase of approximately 2% from the 2012 fee.
A full schedule of the FY 2013 Schedule of Regulatory Fees is available here.
Most of the changes in fees result from the Commission’s decision to calculate regulatory fees using full time [Commission] employee (“FTE”) data from FY 2012 rather than continuing to use data from FY 1998. The Commission found that utilizing this updated information would more accurately reflect the FCC’s current activities. The Commission recognized, however, that this would have a disparate impact on some regulated entities, and made adjustments to remedy this. For example, under the new allocation, some International Bureau licensees were facing fee increases of up to 300%, while licensees in the Wireline Competition Bureau would see their fees decrease by about 40%. To address this, the Commission reallocated FTEs in several of the divisions within the International Bureau, which allowed for a more balanced fee revision. As a result of this reallocation, and a cap on fee increases (see discussion below), the allocations for FY 2013 are as follows:
|| FY 2013 Allocation
|Wireline Competition Bureau
|Wireless Telecommunications Bureau
Cap on Fee Increases
The Order adopts a 7.5% cap on fee increases. Despite objections from some members of the industry, the Commission found that the cap was a reasonable approach to ensure that no entity or group faced exorbitant changes in fees as a result of the decision to calculate fees using FTE data from FY 2012. The Commission previously indicated that it may also impose a cap on fee decreases, but ultimately chose not to adopt that proposal in the Order.
Changes Starting in FY 2014
In addition to the FTE reallocation and cap on fee increases, the Order also outlines several administrative changes related to the assessment of regulatory fees that will be implemented beginning in FY 2014. Those changes include the following:
- Electronic Fee Payment: The Commission will no longer accept checks and hardcopy Form 159 remittance advice forms to pay regulatory fee obligations;
- Invoicing of Fees: The Commission will no longer mail out initial assessments to CMRS providers and instead will require licensees to log into the FCC's website to view and revise their subscriber accounts. This change mirrors for CMRS providers the treatment provided to wireline and VoIP carriers a few years ago; and
- Transfer of Debt: The Commission will begin transferring appropriate receivables (unpaid regulatory fees) to the Treasury at the end of the payment period instead of waiting for a period of 180 days from the date of delinquency to transfer a delinquent debt to Treasury for further collection action.
The Order did not include the due date for the 2013 annual regulatory fees, but the Commission will likely release that information in late August. Fees are typically due in mid-September. It is important to pay these fees by the due date. Failure to meet the payment deadline will result in late payment penalties of 25% of the fee being applied. The FCC does not waive late payment penalties. Kelley Drye will issue another advisory when the due date is announced. For further information, please contact your Kelley Drye attorney or any other member of the firm's Communications practice group.
1 Procedures for Assessment and Collection of Regulatory Fees; Assessment and Collection of Regulatory Fees for Fiscal Year 2013, Report and Order, MD Docket Nos. 13-140, 12-201, and 08-05, FCC 13-110 (2013) ("Order").
2 Capacity as of December 31, 2012.
3 The 2% increase in the Submarine Cable Systems annual fee is far lower than the proposed change, and is the result of changes to the Commission’s FTE allocation method.