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ACA: FCC Needs To Inject Fairness, Progressivity Into Regulatory Fee Assessments

The American Cable Association called on the Federal Communications Commission to reform its regulatory fee system by requiring direct broadcast satellite providers (DBS) to pay their fair share and by progressively scaling the fee burden based on an entity's ability to pay, much like the graduated federal income tax.

"The FCC must reform its fee categories so all multichannel video programming distributors (MVPDs), including DBS operators, pay their fair share of the costs associated with the Media Bureau's activities in regulating MVPD services," ACA President and CEO Matthew M. Polka said.  "Fairness also means adoption of an ability-to-pay principle because larger entities have a greater ability to bear these regulatory costs than smaller ones."

ACA's views were set forth in comments filed October 23 in connection with a Notice of Proposed Rulemaking (NPRM) issued by the FCC in the wake of a Government Accountability Office report that urged the agency to address various weaknesses in its regulatory fee collection program.  The FCC -- which requested about $347 million for fiscal year 2013 -- is almost entirely funded by fees assessed on regulated entities, including small cable operators.  All cable operators, regardless of size, pay a flat regulatory fee of 95 cents per subscriber to the FCC annually.

Agreeing with the FCC's own position in the NPRM, ACA said in its filing that fairness should guide reform.  ACA noted that DBS providers today pay no regulatory fees to cover Media Bureau activities governing MVPD services, even though the law requires that the benefits provided by the Bureau's activities be taken into account in the FCC's fee assessments.

ACA noted that since passage of the Satellite Home Viewer Improvement Act of 1999 -- which allowed DBS providers to offer local TV signals for the first time -- DBS providers have been deeply involved in Media Bureau regulatory activities, from program access rules and retransmission consent good faith obligations to implementation of the CALM Act and the Twenty-First Century Video Accessibility Act.

"Although cable operators pay millions of dollars to fund the FCC, the two DBS operators are the second and third largest MVPDs in the country, with more that 33 million customers combined, and pay no fees to cover the cost of Media Bureau oversight," Polka said.  "The FCC's fee reforms should recognize and correct this fundamental problem, which is likely having market-distorting effects."

A fair regulatory fee system also means that the burden imposed should be proportional to an ability to pay. ACA urged the FCC to expressly acknowledge this fact in its order and take steps to ensure that fee assessments are structured to take into account the lesser ability of small entities to pay regulatory fees. ACA proposed a regulatory fee structure where cable fees would be set on a graduated scale.

"The fact that small businesses are less able to contend with regulation and pay regulatory fees is well documented," Polka said.  "As the FCC's NPRM points out, regulatees' ability to pay varies with their size and revenues, and imposing the same fee on a Fortune 500 company and a local family business would have very different effects on those entities."

In its comments, ACA called on the FCC to retain the per-subscriber fee assessment methodology in lieu of a revenue-based approach, which ACA said is complicated and burdensome with no clear offsetting benefits.

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