Federal Communications Commission FCC 18-65 Before the Federal Communications Commission Washington, DC 20554 In the Matter of ) ) Assessment and Collection of Regulatory Fees for ) MD Docket No. 18-175 Fiscal Year 2018 ) ) REPORT AND ORDER AND NOTICE OF PROPOSED RULEMAKING Adopted: May 21, 2018 Released: May 22, 2018 Comment Date: June 21, 2018 Reply Comment Date: July 6, 2018 By the Commission: TABLE OF CONTENTS Heading Paragraph # I. INTRODUCTION...................................................................................................................................1 II. BACKGROUND.....................................................................................................................................2 III. REPORT AND ORDER..........................................................................................................................8 A. Submarine Cable Regulatory Fees....................................................................................................8 B. International Bearer Circuits and Section 214 Authorizations .......................................................11 C. Cable Television Services – Calculation of Number of Subscribers..............................................14 IV. NOTICE OF PROPOSED RULEMAKING .........................................................................................16 A. Discussion—FY 2018 Regulatory Fees..........................................................................................16 1. Direct Broadcast Satellite (DBS) Regulatory Fees ..................................................................17 2. Broadcast Television Licenses, Post-Incentive Auction ..........................................................21 3. Terrestrial and Satellite International Bearer Circuits..............................................................22 B. Methodology for FY 2019 Regulatory Fee Calculations................................................................27 1. Broadcast Television Stations ..................................................................................................27 2. Small Satellites .........................................................................................................................32 V. PROCEDURAL MATTERS.................................................................................................................34 A. Payment of Regulatory Fees ...........................................................................................................34 1. Checks Will Not Be Accepted for Payment of Annual Regulatory Fees.................................34 2. Credit Card Transaction Levels................................................................................................35 3. Payment Methods .....................................................................................................................36 4. De Minimis Regulatory Fees....................................................................................................37 5. Standard Fee Calculations and Payment Dates ........................................................................38 B. Commercial Mobile Radio Service (CMRS) and Mobile Services Assessments...........................39 C. Enforcement....................................................................................................................................42 D. Initial Regulatory Flexibility Analysis............................................................................................45 E. Initial Paperwork Reduction Act of 1995 Analysis ........................................................................46 F. Final Regulatory Flexibility Act Analysis ......................................................................................47 G. Filing Instructions ...........................................................................................................................48 Federal Communications Commission FCC 18-65 H. Ex Parte Information.......................................................................................................................50 VI. ORDERING CLAUSE..........................................................................................................................51 APPENDIX A – Calculation of FY 2018 Revenue Requirements and Pro-Rata Fees APPENDIX B – Proposed Regulatory Fees FY 2018 APPENDIX C – Sources of Payment Unit Estimates for FY 2018 APPENDIX D – Factors, Measurements, and Calculations that Determine Station Signal Contours and Associated Population Coverages APPENDIX E – Initial Regulatory Flexibility Analysis APPENDIX F – Final Regulatory Flexibility Analysis APPENDIX G – FY 2017 Schedule of Regulatory Fees APPENDIX H – Television Stations with Population Data I. INTRODUCTION 1. In this Report and Order and Notice of Proposed Rulemaking, we address several regulatory fee issues raised in the Further Notice of Proposed Rulemaking attached to the Commission’s FY 2017 Report and Order1 and we seek comment on regulatory fees for fiscal year 2018 (FY 2018). More specifically, in this Report and Order, we (1) adopt new tiers for calculating regulatory fees for submarine cable systems; (2) decline to adopt a new regulatory fee for international section 214 authorizations; and (3) retain the optional bulk rate calculation for determining the number of subscribers in multiple dwelling units used in the calculation of cable television regulatory fees. In this Notice of Proposed Rulemaking, we seek comment on the Commission’s proposed regulatory fees for FY 2018. Specifically, we propose to collect $322,035,000 in regulatory fees for FY 2018, as detailed in the proposed fee schedules in Appendix B. II. BACKGROUND 2. The Commission is required by Congress to assess regulatory fees each year in an amount that can reasonably be expected to equal the amount of its appropriation.2 Regulatory fees, mandated by Congress, are collected “to recover the costs of … enforcement activities, policy and rulemaking activities, user information services, and international activities.”3 Regulatory fees are to “be derived by determining the full-time equivalent number of employees performing” these activities, “adjusted to take into account factors that are reasonably related to the benefits provided to the payer of the fee by the Commission’s activities ….”4 Regulatory fees recover direct costs, such as salary and expenses; indirect costs, such as overhead functions; and support costs, such as rent, utilities, and equipment.5 Regulatory fees also cover the costs incurred in regulating entities that are statutorily exempt from paying regulatory fees,6 entities whose regulatory fees are waived,7 and entities providing services for which we do not assess regulatory fees. 3. Congress sets the amount of regulatory fees the Commission must collect each year in the 1 See generally Assessment and Collection of Regulatory Fees for Fiscal Year 2017, Report and Order and Further Notice of Proposed Rulemaking, 32 FCC Rcd 7057 (2017) (FY 2017 Report and Order and FNPRM). 2 47 U.S.C. § 159(b)(1)(B). 3 47 U.S.C. § 159(a). 4 47 U.S.C. § 159(b)(1)(A). 5 Assessment and Collection of Regulatory Fees for Fiscal Year 2004, Report and Order, 19 FCC Rcd 11662, 11666, para. 11 (2004) (FY 2004 Report and Order). 6 For example, governmental and nonprofit entities are exempt from regulatory fees under section 9(h). 47 U.S.C. § 159(h); 47 CFR § 1.1162. 7 47 CFR § 1.1166. 2 Federal Communications Commission FCC 18-65 Commission’s fiscal year appropriations. Section 9(a)(2) of the Communications Act of 1934, as amended (Communications Act or Act) requires the Commission to collect fees sufficient to offset the amount appropriated.8 To calculate regulatory fees, the Commission allocates the total collection target across all regulatory fee categories. The allocation of fees to fee categories is based on the Commission’s calculation of Full Time Employees (FTEs) in each regulatory fee category.9 FTEs are classified as “direct” if the employee is in one of the four “core” bureaus; otherwise, that employee is considered an “indirect” FTE.10 The total FTEs for each fee category includes the direct FTEs associated with that category, plus a proportional allocation of indirect FTEs.11 The Commission then allocates the total amount to be collected among the various regulatory fee categories within each of the core bureaus. Each regulatee within a fee category pays its proportionate share based on an objective measure (e.g., revenues or number of subscribers).12 These calculations are illustrated in Appendix A. The sources for the unit estimates that are used in these calculations are listed in Appendix C. 4. The Commission annually reviews the regulatory fee schedule, proposes changes to the schedule to reflect changes in the amount of its appropriation, and proposes increases or decreases to the schedule of regulatory fees.13 The Commission will make changes to the regulatory fee schedule “if the Commission determines that the schedule requires amendment to comply with the requirements”14 of section 9(b)(1)(A) of the Act.15 The Commission may also add, delete, or reclassify services in the fee schedule to reflect additions, deletions, or changes in the nature of its services “as a consequence of Commission rulemaking proceedings or changes in law.”16 5. As part of its annual review, the Commission regularly seeks to improve its regulatory fee analysis.17 For example, in the FY 2014 Report and Order, the Commission