The NPRM was published yesterday in the Federal Register, which set the comment date as December 3, 2015, and reply comment date as December 18, 2015. Submarine cable licensees - and entities that utilize submarine cable systems - should review the NPRM and consider whether to participate in the comment cycle to ensure their views are heard.

Should you have any questions about this proceeding and what the proposed rules may mean for your business, feel free to contact a member of Kelley Drye’s Communications practice group.

While the text of the NPRM has not yet been released, the FCC did provide a preview of what submarine cable licensees may face at Thursday’s open meeting. The FCC proposal would require reporting of "major" outages such as those resulting in degradation or lost connectivity of fifty percent (50%) or more of the submarine cable system’s capacity, of at least thirty (30) minutes' duration, even if traffic is rerouted during the outage. Licensees would have to submit an initial report shortly after the outage commences, with additional reports due at set timeframes. The FCC hopes consistent reports on cable system outages would reveal trends and facilitate amelioration of systemic issues. The FCC seeks public comment on the proposals and on steps that it can take to improve the submarine cable deployment process.

The item was generally well-received by the Commission, but Commissioner O’Rielly expressed partial concerns about the imposition of additional regulatory obligations, hoping to see more data demonstrating the need for this new regulation. He expressed some reservations about the possibility of a reporting requirement opening the door to further regulation of submarine cables, the potential for an individual cable system consortium member being held liable for reporting even if that licensee’s traffic was unaffected, and compliance costs.

Unlike terrestrial or satellite network outages, where the cause of an outage can often be identified with reasonable effort and in a timely manner, we anticipate submarine cable licensees will incur greater costs to identify the cause of an outage and face hurdles in complying with the brief reporting times being proposed. The NPRM should be released in the near future -- setting the comment and reply dates -- and we will provide a more detailed review once the text is available.

Filers, thus, are now required to submit the Annual International Reports in accordance with the processes and specifications of rule 43.62 and the 43.62 filing manual. The reporting changes include creation of an online filing portal. However, it is not certain that the online filing system will be ready in time for the March 31, 2015 annual circuit capacity report filing. Indeed, the Public Notice suggests that the filing date has been suspended for now. The FCC will issue another Public Notice announcing the implementation of the online filing system and the due date for the annual circuit capacity report.

International providers of telecommunications, including interconnected VoIP providers, should review the new filing manual and take time to become familiar with the new reporting obligations in advance of the announcement of the Circuit Capacity report filing deadline for 2015. We have every reason to believe that the annual Traffic and Revenue Report deadline will remain the same, July 31. But the January 2013 Order modified the requirements for this second report as well. So, again, we recommend that providers ascertain whether, under the revised 43.62 and the new filing manual, they must file. If so, then the new requirements concerning Traffic and Revenue Report should be reviewed as well.

Because the Regulatory Fee Order for FY 2014 came out later than in years past, the FCC indicated the decision would become effective upon publication in the Federal Register, rather than thirty days thereafter. The FY 2014 regulatory fees are due September 23 (by 11:59 PM, Eastern Daylight Time), and Fee Filer, the Commission’s automated filing and payment system for FY 2014 regulatory fees, is now open. In the Commission’s June 13, 2014, notice of proposed rulemaking regarding FY 2014 (“NPRM”) regulatory fees, it had sought comment on approximately a dozen issues, including whether to reapportion the fee allocations between International Bureau regulatees, i.e., submarine cable landing (“SCL”) licensees and satellite and earth stations licensees/operators. In the Regulatory Fees Order, the FCC recognized that SCL licensees are subject to minimal regulation, enforcement, and oversight after the initial licensing of a submarine cable system, points underscored by comments from the submarine cable industry. In a decision which should make SCL licensees glad, the Commission amended the allocation percentage between Submarine Cable and Bearer Circuit issues and Satellite and Earth Station issues from 41 to 59 percent of International regulatory fees, respectively, to 35.72 and 64.28 percent, respectively. (Within the Satellite and Earth Station category, the Commission determined to raise fees for affected earth station regulatees by 7.5% compared to last year, collecting the remainder of the relative increase in the category from satellite regulatees.) This change contributed to a considerable drop in the fees submarine cable systems will be assessed this year. For example, the largest systems, with capacity of 20 Gbps or greater, will pay $163,900 this year compared to $217,675 in 2013 (for FY 2013), a drop of nearly 25%. Notably, the Commission explained that it would revisit the matter of allocations among these International Bureau licensees in future regulatory fee proceedings to ascertain whether additional adjustment is warranted.

In the NPRM, the Commission had also proposed to combine wireline and wireless voice services into one category. But, after examining the record, the Regulatory Fees Order concluded that combining the ITSP and CMRS categories would be complex and require a totally new methodology, something that could not be accomplished for FY 2014 in the time provided. Consequently, ITSP fee changes FY 2014 are relatively flat, declining approximately one percent from FY 2013 to $0.00343 per assessable interstate and international end user telecommunications revenues dollar. Nonetheless, the Commission indicated that the issue may be revisited in future years to determine if this particular combination of fee categories has merit and could be implemented.

The Regulatory Fees Order also added toll free numbers as a new regulatory fee category to help recover Wireline Competition Bureau FTEs. The new fees will be assessed on RespOrgs, beginning with FY 2015, for each toll free number accessible in the United States that RespOrgs manage. The Commission noted that it must first submit this change to Congress, under the applicable provision of the Communications Act of 1934, as amended, at least 90 days before it takes effect. As a result, the change will not create a liability for RespOrgs until next year. In a Second Further NPRM accompanying the Regulatory Fees Order, the Commission sought comment on what procedures it should use to enforce the RespOrgs’ obligations to pay fees beginning next fiscal year, including potentially reclamation of numbers or decertification. The Regulatory Fees Order reflects a number of other decisions as well, including:

• A commitment to update the FTE (full-time equivalent number of employees performing regulatory activities) counts within the agency annually to reflect the changing work of Commission FTEs.
• A commitment to revise allocations of FTEs among the agency’s constituent bureaus and offices every two years. (The Commission, which made a series of reallocations for FY 2013, declined to adopt any further FTE reallocations in the Regulatory Fees Order for FY 2014, but found that additional evaluation and information is required. In the NPRM, the FCC had sought comment on reallocating certain Enforcement Bureau, the Consumer & Governmental Affairs Bureau, and the Office of Engineering and Technology FTEs directly to certain other bureaus.)
• A determination not to adopt a per unit cap on increases at 7.5 % (or higher) for any fee category resulting from FTE reallocations or reform measures.
• Effective October 1, 2014, for FY 2015, an increase to the de minimis threshold for regulatory fee obligations to $500, the minimum amount a regulated entity must owe from the sum total of all of its liabilities for different fee categories for the fiscal year before it must contribute.
• Elimination of 218-219 MHz licensees, broadcast auxiliaries, and satellite television construction permits from the regulatory fee schedule and a commitment to reevaluate in the future whether other categories considered in the rulemaking, but not eliminated at this time for lack of sufficient support, should be subject to elimination.
• Removal of the exemption for broadcast licensees in the AM expanded band for FY 2014.
• Declining to include regulatory fees paid by Direct Broadcast Satellite (“DBS”) providers in the cable television and IPTV category on a per subscriber basis, but seeking further comment in the Second Further NPRM whether to adopt a new DBS fee category.
• A decision to no longer mail out initial assessment letters to CMRS providers beginning with FY 2014 but to post telephone numbers (subscriber counts) on the Fee Filer. The Regulatory Fees Order outlines the process by which CMRS carriers can seek to revise its subscriber counts.