Last year, the FCC announced that it would begin collecting FCC Regulatory Fees from a new class of contributors – "Responsible Organizations" or "RespOrgs." Carrier-affiliated RespOrgs already are subject to FCC regulation, but for those RespOrgs that are not carriers (including large enterprise customers that manage their own numbers), these fees represent a new obligation to a new entity (the FCC). The FCC announced this policy last year, effective with fees for fiscal year 2015 (October 1, 2014 through September 30, 2015). In the next few weeks, the FCC is poised to collect these new fees. This Client Advisory summarizes the new obligations, particularly for entities that are not currently licensed by the FCC.
The FCC's Regulatory Fee Regime
Regulatory fees are authorized by Congress to recover much of the cost of the FCC's operations, from the entities it regulates. Congress sets the amount the FCC must collect, and the FCC allocates that amount among its operations and regulated entities, according to a formula it adopts each year. On August 29, 2014, the FCC adopted a Regulatory Fee Report and Order that created a new category of payor ("Responsible Organizations" or "RespOrgs") to cover entities that control or manage toll free numbers. Previously, the Commission did not assess regulatory fees on toll free numbers because the entities controlling these numbers were usually wireline or wireless carriers who were already paying regulatory fees to the Commission based on the companies' revenue or subscribers. The Commission decided to impose a fee on all RespOrgs – including non-carrier RespOrgs – in order to ensure equal treatment in the market. The FCC announced that its new category would be effective with fiscal year 2015 (October 1, 2014 through September 30, 2015), but did not specify the amount that RespOrgs would be assessed.
In the Notice of Proposed Rulemaking setting this year's Regulatory Fees, the FCC proposed to assess regulatory fees for each toll free number (accessible in the United States) managed by a RespOrg. The Commission stated it would collect approximately $4 million from RespOrgs in fiscal year 2015, but has yet to specify the amount it will assess per toll free number. The exact amount will be set in an Order to be released within the next week or so. RespOrgs, like all other entities subject to Regulatory Fees, must pay their regulatory fees by a specified date, which by law can be no later than September 30, 2015, the end of the Commission's fiscal year.
Since this is a new category of payor, many entities may not be registered with the FCC yet. To pay the new regulatory fee, RespOrgs must register with the Commission for an "FCC Registration Number" ("FRN") in the Commission's CORES registration database. Once a RespOrg has created an FRN, the FCC will use the FRN to establish a bill for the toll free number regulatory fee. FCC staff has begun sending inquiries to RespOrgs that do not appear to be registered in order to facilitate this payment obligation.
What RespOrgs Should Do
We urge RespOrgs to register for an FRN as soon as possible and keep a careful eye on their CORES account. Even if a RespOrg does not secure an FRN, it will still be responsible for paying the FCC's new toll free number regulatory fee by the due date or be subject to the late fee. For carrier RespOrgs, the new fee should appear in the payor's Fee Filer account, once the amount of the fee is announced.
It is important to note that although an invoice will appear in the CORES database, RespOrgs will not receive any form of notification that the invoice is ready or that the regulatory fee needs to be paid. Further, by statute, unpaid fees are subject to a mandatory late fee of 25% of the amount owed. The FCC does not waive this late fee. Therefore, it is important that RespOrgs take the steps necessary to be ready to pay this fee when due.
Please be advised that attorneys in Kelley Drye & Warren's Communications practice group are experienced in addressing FCC regulatory fee issues and are able to assist clients and RespOrgs with submitting payments.
For further information on any of these filings, please contact Steve Augustino at (202) 342-8612 or your usual Kelley Drye attorney.