CommLaw Monitor News and analysis from Kelley Drye’s communications practice group Sat, 20 Apr 2024 13:05:21 -0400 60 hourly 1 FCC Previews Summer Blockbuster Meeting, With USF Reform, Smallsat Licensing, and Anti-Spoofing Measures on Tap for August Mon, 22 Jul 2019 15:46:20 -0400 Even with the dog days of summer upon us, the FCC shows no signs of slowing down on its policymaking priorities in a jam-packed agenda for its next open meeting on August 1, 2019. Headlining the agenda is a proposal to establish a Rural Digital Opportunity Fund (“RDOF”) offering $20.4 billion over a decade to support high-speed broadband deployment to unserved areas. The RDOF would eventually replace the FCC’s Connect America Fund (“CAF”) as the agency’s primary universal service program for high-cost areas. The areas receiving RDOF support would be determined by a new agency-led information collection, requiring more granular service data from broadband providers. As with the CAF, the RDOF proceeding is sure to engender debate in the broadband industry about the appropriate performance benchmarks, auction bidding rules, and data collection mechanisms. In addition to the RDOF, the FCC also plans to adopt items at the August meeting to reform how it allocates Rural Health Care Program funding; streamline licensing procedures for small satellite systems (otherwise known as “smallsats”); establish procedures for the auction of new toll free numbers; implement 911 direct dial and location information requirements on multi-line telephone systems (“MLTS”) often found in offices, hotels, and college campuses; expand the agency’s anti-spoofing rules; and limit the franchise fees placed on cable operators.

The August agenda items impact all corners of the telecommunications industry. You will find more details on some of the most significant August meeting items after the break:

RDOF Funding and Procedures: The draft Notice of Proposed Rulemaking (“NPRM”) seeks comment on the budget, auction procedures, application processes, and deployment obligations for the RDOF. The FCC plans to target $20.4 billion in support to areas that lack access to 25/3 Mbps broadband service, which represents the agency’s current benchmark for fixed advanced communications services and an increase over the 10/1 Mbps minimum performance tier under the CAF. The FCC would award RDOF support through an auction in two phases, with the first phase targeting wholly-unserved census blocks and the second phase focusing on partially-unserved census blocks. Like the CAF auction, the FCC anticipates weighing RDOF auction bids based on performance, with higher-speed, lower-latency services preferred. RDOF bidders would be subject to similar application procedures, deployment milestones, and reporting obligations as CAF auction participants.

RDOF Data Collection: The draft Report and Order and Further NPRM would require all fixed broadband providers to submit coverage polygons depicting the areas where they provide service as well as information on the speed and technology used in providing such service. Service provider coverage claims would be subject to challenge by government entities and the public, with the FCC seeking comment in the further NPRM on how it should gather and apply this “crowdsourced” information. For now, the RDOF data collection would be in addition to the deployment data already collected by the FCC from service providers through the Form 477. The new data collection would only apply to fixed broadband providers at first, but the FCC would seek comment on the parameters for incorporating mobile broadband coverage data into the RDOF in the future. In addition, the FCC would seek input on whether to require even more precise deployment data based on user location and who should bear the burden of such data collection.

Rural Health Care Program (“RHCP”) Reform: The draft Report and Order would adopt reforms to the FCC’s RHCP, which provides financial support to rural health care providers to obtain broadband and other communications offerings at discounted rates to facilitate telehealth services. The FCC plans to revamp the RHCP’s Telecom Program that subsidizes the difference between urban and rural service rates by, among other things, requiring the RHCP Administrator to create a database of rates that health care providers would use to determine the amount of support they can receive. The FCC would prioritize RHCP funding in the event support requests exceed the cap (which was $581 million in 2018) based on the rurality of the area and whether the area faces a shortage of medical personnel. The FCC would caution that it intends to enforce limits on RHCP spending consistent with its current review of overall universal service budgets. In addition, the FCC anticipates tightening up its RHCP competitive bidding and consultant rules following a number of high-profile enforcement actions.

Streamlining Smallsat Licensing: The draft Report and Order would revise the FCC’s current one-size-fits-all satellite licensing regime and create a tailor-made path for licensing smallsats. Smallsat applicants would be subject to lower application fees, easier application processes, and quicker agency reviews, including an exemption from the agency’s processing round procedure that often delays approvals as competing satellite systems file challenges. To qualify for streamlined processing, smallsat applications must meet certain requirements, including: (1) a maximum mass of 180 kg for any single satellite; (2) no more than 10 satellites under a single authorization; (3) total on-orbit satellite lifetime of five years or less; (4) propulsion capabilities or deployment below 400 km altitude; (5) ability to share frequencies with current operations without precluding future entrants; and (6) relatively low risk from orbital debris.

Toll-Free Number Auction: The draft Public Notice would establish procedures for the auction of over 17,000 toll-free numbers in the “833” code, with applications due by October 18, 2019 and bidding set to begin on December 17, 2019. The auction would be the first time the FCC has used competitive bidding to distribute numbering resources. The auction would be run by Somos, which currently is the designated administrator of the toll free database. Parties may apply to participate in the auction individually or through a Responsible Organization, which can bid on behalf of multiple parties as long as the parties do not want the same numbers. Parties would be subject to application, anti-collusion, and default provisions similar to those used in the FCC’s recent spectrum auctions. Winning bidders would be allowed to sell the toll-free numbers obtained through the auction on the secondary market and would report such secondary market transactions to Somos.

MLTS 911 Requirements: The draft Report and Order would implement recent legislation by prohibiting the manufacture, import, sale, or lease of an MLTS unless it is pre-configured so that a user may initiate an emergency call by dialing 911 without first having to dial “9” or take other action to access an outside line. Similarly, anyone installing, managing, or operating an MLTS would not be allowed to do so unless the MLTS is pre-configured to allow 911 direct dialing. If possible, MLTS managers also must configure the MLTS to provide a notification when a 911 call is made to a central location (e.g., front desk, security office) in order to facilitate emergency response efforts. The FCC plans to adopt an assumption that an MLTS manager is responsible for any failure to comply with the 911 direct dialing or notification rules. The new rules would apply to any MLTS manufactured, imported, sold, leased, or installed after February 16, 2020. In addition, the FCC would impose “dispatchable location” requirements on MLTS and other 911-capable services, which would require the transmission of a caller’s street address and additional information such as room number, floor number, or other data to help identify the caller’s location.

Anti-Spoofing Expansion: The draft Report and Order would expand the reach of FCC enforcement against the manipulation of caller ID information for malicious purposes (otherwise known as “spoofing”) under new authority granted by legislation adopted last year. Specifically, the FCC would extend its authority to punish spoofing violations for communications originating from foreign points to recipients within the United States. The FCC also would expand the scope of communications covered by its anti-spoofing rules to include some of the most widely-used forms of text messaging as well as alternative voice services, such as one-way VoIP services. The draft item follows in the wake of numerous enforcement actions imposing large fines for malicious spoofing in 2018.

Cable Franchise Fee Restrictions: The draft Report and Order would address concerns raised by a federal appeals court regarding the fees imposed by local franchising authorities (“LFAs”) on cable operators. The Communications Act places a five percent cap on such fees, but cable operators allege that LFAs frequently seek additional benefits as part of the franchise process. The draft item would treat most in-kind contributions required by LFAs from cable operators as fees subject to the five percent cap. Moreover, the FCC would prohibit LFAs from using their franchising authority to regulate most non-cable services, including broadband services offered over cable systems. LFAs also would be prohibited from requiring cable operators to secure additional franchises or other authorizations to provide non-cable services through their cable systems.

1-833-AUCTION: FCC Proposes Procedures for First-Ever Auction of Numbering Resources Wed, 15 May 2019 15:26:26 -0400 At its May 2019 Open Meeting, the FCC approved a Public Notice (“Notice”) that sets the stage for the auction of certain toll free numbers with the dialing code 833—the first time an auction mechanism will be used to distribute any numbering resources. The FCC intends to auction over 17,000 numbers set aside during the opening of the 833-prefix because more than one entity expressed an interest in the number. In 2018, the FCC approved the use of competitive bidding to allocate these numbers. With this Public Notice, the FCC sets proposed ground rules for the auction. Comments on the auction pre-bidding procedures proposed in the Notice are due by June 3, 2019 and reply comments by June 10, 2019.

Prior to 2018, the FCC has always allocated new toll free numbers to Responsible Organizations (“RespOrgs”) on a first come, first served basis. However, with new rules adopted in the 2018 Toll Free Assignment Modernization Order (“2018 Order”), the FCC chose to use multiple approaches to toll free number assignment, including the use of competitive bidding. The planned auction for the reserved numbers in the 833-prefix will serve as the first test of the new alternative approaches. With the auction, unlike prior assignment approaches, both subscribers and RespOrgs will be able to participate directly in the process for acquiring (bidding) for numbers.

Some important features of the upcoming auction are highlighted below:

  • Eligible government entities or nonprofit health and safety organization are being given an opportunity to reserve one of the 833-numbers, without participating in an auction. Any interested entity must file a petition by May 16 and, if granted, the number will be assigned to the petitioner and will not be made available for bidding.
  • Somos, which is currently the designated administrator of the toll free database, will serve as the auctioneer for the 833 auction, managing certain parts of the process and the online auction systems.
  • Prior to the auction, parties interested in bidding are required to submit applications to Somos with requested information including desired toll free numbers, relevant certifications, and an upfront payment which will determine the quantity of 833 numbers that can be bid on during the auction. Only minor changes to these applications will be allowed.
  • The FCC proposes allowing an entity to participate in bidding through only one party, either applying directly on its own behalf or having a RespOrg submit all its bids. The Notice seeks input on how such a limitation would be implemented, relevant certification requirements and limitations on communications and sharing of information.
Notably, the FCC proposes a single-round, single-bid format for the auction. Each of the reserved numbers would be made available to the highest bidder for that number. However, the FCC proposes a “Vickery” style auction, in which the highest bidder will pay the amount of the second-highest bid for the number. (For example, if bids of $100 and $1,000 are made, the winner would be the entity that bid $1,000 but the payment due would be $100). Numbers receiving only one bid would be awarded to that winner, for zero dollars.

Finally, in another first, numbers won through the auction may be sold on a secondary market post-auction.

The specific date of the auction will be determined after the procedures have been finalized.

FCC Plans to Bar Chinese Telecom Provider from U.S. Market and Open Up More Shared Use Spectrum at May Open Meeting Tue, 23 Apr 2019 18:48:11 -0400 Highlighting recent network security and corporate espionage issues involving foreign-owned carriers, the FCC plans to take the unprecedented step of denying a Chinese telecommunications provider’s application to offer service in the United States based on law enforcement concerns at its next open meeting on May 9, 2019. The agency would conclude that China Mobile USA, a Delaware corporation ultimately owned by the Chinese government, is vulnerable to foreign exploitation that could undermine the security and reliability of U.S. networks. The proposed denial is in line with the 2018 recommendation of the federal agencies commonly known as “Team Telecom,” which represented the first time the group called for the rejection of a carrier’s application due to security risks. The FCC also anticipates freeing up additional spectrum for commercial wireless operations by allowing shared use of the 1675-1680 MHz band currently allocated for federal weather monitoring operations. Rounding out the major actions on the May agenda, the FCC expects to seek comment on the procedures governing its long-awaited auction of “833” toll free numbers, adopt rules aimed at improving the Video Relay Service (“VRS”) used by individuals with hearing or speech disabilities, and propose the regulatory fees for fiscal year 2019.

You will find more details on the significant May meeting items after the break:

China Mobile Authorization Denial: The draft Order would reject China Mobile USA’s application for authority to provide telecommunications services between the United States and foreign points. The FCC would find that, while foreign government control of a carrier is not (by itself) grounds for denial, the Chinese government’s ultimate control of China Mobile USA could result in covert monitoring and disruption of U.S. communications networks. The FCC also would note prior challenges with prosecuting Chinese-owned companies for violations, even when such entities are incorporated under U.S. law. Unlike prior grants of authority involving foreign-owned carriers, the FCC would conclude that the pervasiveness of Chinese government control over China Mobile USA undermines any potential mitigation measures the company could implement to address its national security concerns.

Shared Use of the 1675-1680 MHz Band: The draft Notice of Proposed Rulemaking (“NPRM”) would request input on permitting fixed/mobile wireless services (except aeronautical mobile services) to share the 1675-1680 MHz band on a co-primary basis with incumbent federal weather monitoring operations. The item appears to be a response to language in President Trump’s proposed 2020 budget that would effectively require the Commission to act on a petition filed by Ligado Networks by requiring the FCC to auction this spectrum for wireless broadband use subject to sharing arrangements with Federal weather satellites. Satellite and weather data stakeholders have previously opposed Ligado’s use of the 1675-1680 MHz band because of concerns that its use would result in harmful interference to meteorological satellites that provide real-time weather and related environmental information. Non-federal operators would be required to comply with power limits and other restrictions designed to protect federal users in the band from harmful interference. The FCC would propose licensing the spectrum in unpaired five-megahertz blocks on a partial economic area basis through competitive bidding. The spectrum auction likely would take place in 2020.

Toll Free Number Auction: The draft Public Notice would set the stage for the auction of over 17,000 numbers in the recently-opened 833 toll free code. While the FCC traditionally assigned toll free numbers on a first-come, first served basis, it adopted rules last year to allow for auctions to improve efficiency and fairness in the toll free number assignment process. The Public Notice would request comment on the application, bidding, assignment, and payment procedures for the auction. Under the FCC’s plan, government entities and non-profit health/safety organizations could petition the agency to set aside specific 833 toll free numbers for their use. The auction would consist of a single round overseen by Somos, Inc., the Toll Free Numbering Administrator. Winning bidders would be able to sell the rights to their toll free numbers through secondary market transactions following the auction. The FCC has not indicated when it expects the auction to occur.

VRS Reform: The draft Order and Further NPRM would facilitate direct video calling between VRS users and customer support call centers by allowing such centers to list their videophones in the VRS numbering directory. To address potential program fraud, the item would require per-call validation of VRS user registrations and force VRS providers to register enterprise and publicly-available videophones. In addition, the FCC would prohibit VRS providers from offering non-VRS-related inducements to encourage customers to sign up for their services. The draft item also would request input on whether the FCC should make permanent a pilot program allowing VRS calls to be handled by at-home interpreters. The item would further ask whether the FCC should allow VRS providers to offer service to new users pending identity verification and require users to “log-in” before using enterprise and publicly-available videophones.

2019 Regulatory Fee Assessment: The draft NPRM would seek comment on the FCC’s proposed collection of $339,000,000 in regulatory fees for fiscal year 2019. The fees would be due in September 2019 and generally would follow the methodology used in past collections. Nearly all service categories would see at least a slight increase to their regulatory fees in order to cover the $16 million projected increase to the agency’s budget and operators should review the NPRM’s proposed fee schedule for the expected impact to their services.

FCC Plans Major Wireless Deployment and 911 Actions at September Meeting Sun, 09 Sep 2018 12:44:56 -0400 Continuing its focus on broadband infrastructure deployment for 5G technologies, the FCC announced that it plans to eliminate regulatory impediments that delay and increase the cost of wireless deployments at its next meeting, scheduled for September 26, 2018. The item would alter the balance of power between wireless broadband providers and state/local governments concerning control over rights of way and deployment fees. The FCC also anticipates initiating a rulemaking aimed at improving 911 dialing and location accuracy for multi-line telephone systems (“MLTS”), potentially imposing new compliance obligations on office building, hotel, and other large facility managers. Rounding out the major actions, the FCC released draft items that would: (1) permit toll free numbers to be auctioned and sold on the secondary market and (2) consolidate rules and expand the spectrum available for so-called Earth Stations in Motion (“ESIMs”) that provide high-speed broadband service to vehicles, aircraft, and vessels. The proposed items will generate input from all corners of the communications industry as well as real estate interests. You will find more details on the significant September FCC items after the jump:

Wireless Infrastructure Deployment: The FCC issued a draft Declaratory Ruling and Order finding that state/local fees for accessing rights of way and other charges associated with deployments may prohibit the provision of wireless service in violation of the Communications Act. The FCC therefore plans to allow such fees and charges only to the extent they are nondiscriminatory and represent a “reasonable” approximation of the state/local governments’ costs related to the deployment. The draft item would further clarify that state/local consideration of aesthetic concerns with deployments are not necessarily unlawful, so long as any aesthetic requirements are: (1) reasonable; (2) no more burdensome than those applied to other deployments; and (3) published in advance. In addition, the FCC will establish two new shot clocks for small wireless facility deployments (60 days for collocation on preexisting structures and 90 days for new constructions) and codify existing shot clocks for larger wireless facility deployments.

911 Dialing and Location Accuracy: A draft Notice of Proposed Rulemaking seeks comment on requiring MLTS to enable users to dial 911 directly, without having to dial a prefix to reach an outside line (e.g., requiring callers to first dial 9). The FCC proposes requiring MLTS to provide a notification that a 911 call has been made to a front desk, security office, or other centralized location. The proposed rulemaking asks whether MLTS, VoIP, and other telecommunications service providers should be responsible for ensuring that “dispatchable location” information is transmitted with 911 calls, such as the calling party’s street address as well as room number, floor number, or similar data necessary to help first responders reach the called party quickly.

Auctioning Toll Free Numbers: The FCC plans to adopt a draft Report and Order that would enable it to auction off toll free numbers. Generally, the FCC has allocated toll free numbers on a first-come, first-served basis at no cost. The FCC claims this process leads to stockpiling and other inefficient uses of toll free numbers, while rewarding parties that “game” the system through computer-assisted number reservation tools. The FCC proposes that its first auction will cover 17,000 numbers recently made available in the 833 toll free code. Importantly, the FCC intends to eliminate the prohibition on secondary market sales of toll free numbers to allow successful auction participants to sell numbers to others, potentially creating a “gold rush” for prime toll free numbers.

ESIM Expansion: Under a draft Report and Order and Further Notice of Proposed Rulemaking, the FCC would consolidate the rules that apply to earth stations on aircraft, vessels, and vehicles, eliminating duplicative regulations and streamlining the application process. It would also expand the frequencies available for ESIMs to include conventional Ka-band spectrum. Operation of ESIMs is currently confined to the conventional C-band spectrum and parts of the Ku-band spectrum. The FCC argues that any potential interference issues involving incumbent satellite operators in the Ka-band can be resolved through prior coordination and industry best practices. The FCC seeks comment on whether ESIMs should be allowed to operate in additional spectrum bands, on both a protected and unprotected basis, to provide even more flexibility.

FCC Proposes to Auction Desirable 833-prefix Numbers, Allow the Sale of Toll Free Numbers Wed, 04 Oct 2017 15:33:03 -0400 The Federal Communications Commission (“FCC” or the “Commission”) adopted a Notice of Proposed Rulemaking (“NPRM”) at its September Open Meeting that proposes significant changes to not only the methodology for assigning toll-free numbers but also the management of the toll free number assignment process. The principal proposal in the NPRM is to use an auction process to assign certain highly valued (e.g., vanity and repeater) toll free numbers “to better promote the equitable and efficient use of numbers.” The Commission also proposes to eliminate its prohibition on the brokering of toll free numbers, which would open the marketplace for sales of valuable toll free numbers. Comments will be due 30 days after publication of the NPRM in the Federal Register and reply comments will be due 60 days after publication.

In the NPRM, the FCC proposes the use of a toll free number assignment approach that allows for the assignment of numbers in different manners including “by auction, on a first-come, first-served basis, an alternative assignment methodology, or by a combination of the forgoing as circumstances require.” Beginning with the introduction of 888 area code toll free numbers in 1998, the FCC has employed a first-come, first-served approach to assignment of toll free numbers. However, the FCC has regularly struggled with the best way to ensure fair distribution when dealing with the following types of numbers, which tend to be highly valued: a) vanity – numbers that spell a name or word; and b) repeater – numbers that are easy to remember (e.g., 1-800-222-2222). As a result, the FCC now proposes the use of an auction process to fairly and efficiently assign these types of numbers.

Proposed Auction Method. The FCC specifically proposes the use of an auction to distribute the approximately 17,000 numbers that were subject to mutually exclusive requests resulting from the 2017 Order opening 833 as another toll free area code. Mutually exclusive numbers are defined as those numbers that received at least two requests for assignment in the 833 process. The NPRM contemplates using a single round, sealed-bid Vickrey auction under which Responsible Organizations (“RespOrgs”) would bid for the numbers most valuable to them. In a sealed bid auction, a bidder submits bids for individual numbers privately to the auctioneer. A Vickrey auction means the highest bidder for a number wins and pays the second-highest bid for the number. A reserve price would not be set since the purpose is to increase the efficiency of the assignment process not necessarily raise money and other toll free numbers will continue to be assigned at no cost. Auction participants would be required to simultaneously submit separate bids for each number they want, with the winning bid being determined independently for each separate number. The FCC does not intend to allow package bids, bidding on a combination of numbers at one time, in this process. If the auction approach is adopted, the FCC intends to evaluate the ultimate process and outcome to assess how to address future toll free number assignments.

Alternative Auction Methods - The FCC also seeks comment on any other auction methods including:

  • Pay-your-bid auction, instead of a Vickrey auction, wherein the highest bidder wins and pays the value of his or her own bid. The NPRM notes that while this approach is simpler it could be less efficient because people are less incentivized to bid their true value for the good.
  • Open auction, which allow the bidder the opportunity for price discovery and better understanding how other bidders value the good. In an open auction, the bidder generally is aware of what other participants are bidding and how much they are willing to spend but the FCC notes it may be more costly to implement.
Eligibility to Participate in Auction. The Commission seeks to allow only RespOrgs to bid in a toll free number auction therefore any entity interested in subscribing to a mutually exclusive number would need to approach a RespOrg to bid on their behalf. Alternatively, the FCC seeks input on whether subscribers should be allowed to participate directly and whether there would be any legal challenges to such an approach. Additionally, the NPRM considers whether the current definition of mutually exclusive numbers is the most appropriate or if it should consider whether the number is being sought by more than two RespOrgs rather more than two subscribers. Currently, the toll free numbering administrator (“TFNA”), Somos, can notify only RespOrgs about auctions and the FCC proposes to include subscriber information in the TFNA database to allow for subscribers to be notified, allowing for larger participation if auction methods are adopted.

Use of Auction Funds. The Commission proposes to use any net proceeds from any toll free number auction to assist with the costs of toll free number administration by the TFNA including the costs of implementing numbering auctions in the event the FCC assigns the TFNA that responsibility.

Brokering and the Sale of Toll Free Numbers. The NPRM also proposes a significant change to the assignment of toll-free numbers. It has long been recognized that no one “owns” toll free numbers: like spectrum, they are a public resource that are allocated for temporary use. Toll free numbers have heretofore been assigned on a first-come, first-served basis. The FCC rules contain strict prohibitions on the brokering (sale) of numbers and related prohibitions on warehousing and hoarding of numbers. The FCC has taken enforcement action against companies found to be brokering numbers. This NPRM explores doing away with these prohibitions as follows:

  • Secondary markets - The FCC proposes to revise its rules to promote a secondary market for toll free numbers whereby subscribers would be allowed reassign their toll free numbers to other subscribers for a fee (or other compensation) as negotiated by the parties. The NPRM discusses ways to allow a subscriber to reassign the right to use the number despite the lack of ownership.
  • Brokering Rule – Under current rules, RespOrgs and subscribers are prohibited from selling a toll free number for a fee. The FCC proposes to eliminate the brokering rule since it directly prohibits secondary markets.
  • Warehousing and Hoarding Rules – The FCC prohibits warehousing which is the practice where a RespOrg reserves a toll free number even though no end user subscriber has requested the number for use. Hoarding, the acquisition of more toll free numbers from a RespOrg than the toll free subscriber intends to use, is also banned by the FCC. The NPRM now seeks comment on whether these rules effectively achieve their purpose of preventing number exhaust and ensuring effective use of numbering resources. If the Commission removes these rules, what additional restrictions or mechanisms would be needed to prevent RespOrgs or subscribers from holding numbers they no longer need?
Public Interest Numbers and Other Proposals. The Commission is also considering setting aside for no cost certain toll free numbers that may be desired by organizations with public interest goals. Additionally, the NPRM raises the possibility of making changes to the overall toll free number management by Somos. Specifically, the Commission seeks input on the use of a mechanism other than a tariff for toll free administration and alternative regulatory treatment for the TFNA database services provided by Somos. The FCC also proposes to adopt new requirements to make Somos’ operations and budget more transparent to ensure it is only recovering its operating costs as is allowed by the rules.

This NPRM is the first foray into toll free number assignment and administration in over a decade. Users of toll free numbers – especially those who use or desire vanity numbers – should follow this proceeding very carefully.

Regulatory Fees Order for FY 2014 Released; September 23 Payment Deadline Set Mon, 01 Sep 2014 19:22:31 -0400 As a result of the Federal Communications Commission 's Regulatory Fees Order released last Friday, submarine cable licensees will see a welcome decline in fees for fiscal year 2014 due to a reallocation among International Bureau regulatees, and Responsible Organizations (“RespOrgs”) will begin paying regulatory fees on toll free numbers in fiscal year 2015. However, among other decisions, the FCC declined to adopt its proposal to pool the revenues to be collected from payers of the Interstate Telecommunications Service Provider (“ITSP”) fee and Commercial Mobile Radio Service (“CMRS”) providers.

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.
Industry-specific guidance on who must pay, and how much, will be posted on the Commission website at ITSP and CMRS regulatory fee data are available on the FCC site. Finally, payers should note that only electronic payment of regulatory fees will be accepted this year, and payers are responsible for making sure payments are timely and complete before the September 23, 2014, deadline.