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ACA: Dish, DirecTV Need To Pay Equitable Share Of FCC Regulatory Fees

Full Fee Parity Should Be Achieved Within 4 Years, Trade Group Says

PITTSBURGH, June 23, 2015 - The American Cable Association called on the Federal Communications Commission to require greater parity in the payment of regulatory fees paid by Dish and DirecTV with cable and other terrestrial multichannel video programming distributors (MVPDs) this year and to achieve full parity within four years and remove the inequity of cable and IPTV providers subsidizing the regulatory fees of their competitors.

"The FCC is off to a good start by declaring that Dish and DirecTV should pay regulatory fees to support the work of the agency's Media Bureau for the first time and proposing setting the initial per subscriber fee at one cent per month in 2015.   But given the FCC proposes that cable operators pay nearly 8 cents per month, per customer, it must do more, including requiring these two multibillion dollar companies with national reach to shoulder more of the fee burden next year that is now disproportionately borne by smaller, locally based cable operators," ACA President and CEO Matthew M. Polka said.

ACA set forth its views in FCC comments jointly filed Monday with the National Cable & Telecommunications Association (NCTA) in response to the agency's proposal that Dish and DirecTV pay only $0.12 per subscriber in annual regulatory fees for fiscal year 2015 to support Media Bureau regulation of MVPDs.  Although the FCC has also proposed lowering cable's regulatory fee to reflect the revenue offset derived from satellite TV fees, the offset results in a cable and IPTV fee of $0.95 annually - or nearly eight times higher than the proposed level for satellite TV.

The FCC proposes to collect a total of $339.8 million in regulatory fees in fiscal year 2015, with $118.1 million assessed on Media Bureau regulatees.  Dish and DirecTV are expected to pay only about $4 million of the Media Bureau's allocation.

To correct the unwarranted and unsupported fee disparity favorable to Dish and DirecTV, the ACA-NCTA filing said the FCC should established $0.24 as the satellite TV rate in fiscal 2015 and raise it by $0.24 each year over the next three years, with fee parity with cable achieved in fiscal year 2018 and maintained going forward.

The ACA-NCTA filing said such a schedule would be fair in that it would allow Dish and DirecTV to plan ahead for these cost increases.  In addition, the cable trade groups said there is no evidence in the record showing that DBS operators' burden on the Media Bureau is substantially less than that of cable and IPTV operators to justify the wide disparity in regulatory fees.

In their comments, ACA and NCTA dismissed the idea that avoidance of "rate shock" for satellite TV subscribers should govern the fee level DBS operators pay initially or over time:  An FCC regulatory fee initially set at $0.24 a year - or $0.02 a month - would cause a rate increase of just one-tenth of one percent for a DirecTV subscriber taking the lowest-cost $19.99 per month introductory rate, assuming DirecTV chose to pass through the entire $0.24 fee amount.  To the extent concerns about "rate shock" require a phase-in to achieve full parity, the ACA-NCTA filing asked the FCC to make the phase-in period explicit and limited in duration.

The joint comments also observed that when IPTV providers were added to the same regulatory fee category as cable in 2013, no consideration was given to phasing in the fee to avoid rate shock.

About the American Cable Association: Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 850 smaller and medium-sized, independent cable companies who provide broadband services for nearly 7 million cable subscribers primarily located in rural and smaller suburban markets across America.  Through active participation in the regulatory and legislative process in Washington, D.C., ACA's members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business.  For more information, visit http://www.americancable.org/

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