Assessment and Collection of Regulatory Fees for Fiscal Year 2019

AGENCY:

Federal Communications Commission.

ACTION:

Proposed rule.

SUMMARY:

In this document, the Federal Communications Commission (Commission) proposes to revise its Schedule of Regulatory Fees to recover an amount of $339,000,000 that Congress has required the Commission to collect for fiscal year 2019.

DATES:

Submit comments on or before June 7, 2019; and reply comments on or before June 24, 2019.

ADDRESSES:

You may submit comments, identified by MD Docket No. 19-105, by any of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
• Federal Communications Commission's website: http://www.fcc.gov/cgb/ecfs. Follow the instructions for submitting comments.
• People with Disabilities: Contact the FCC to request reasonable accommodations (accessible format documents, sign language interpreters, CART, etc.) by email: FCC504@fcc.gov or phone: 202-418-0530 or TTY: 202-418-0432.

For detailed instructions for submitting comments and additional information on the rulemaking process, see the SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT:

Roland Helvajian, Office of Managing Director at (202) 418-0444.

SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's Notice of Proposed Rulemaking (NPRM), MD Docket No. 19-105, FCC 19-37, adopted on May 7, 2019 and released on May 8, 2019. The full text of this document is available for inspection and copying during normal business hours in the FCC Reference Center, 445 12th Street SW, Room CY-A257, Portals II, Washington, DC 20554. This document is available in alternative formats (computer diskette, large print, audio record, and Braille). Persons with disabilities who need documents in these formats may contact the FCC by email: FCC504@fcc.gov or phone: 202-418-0530 or TTY: 202-418-0432.

I. Procedural Matters

A. Ex Parte Information

1. This proceeding shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules. Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter's written comments, memoranda, or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with § 1.1206(b) of the Commission's rules. In proceedings governed by § 1.49(f) of the Commission's rules or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission's ex parte rules.

B. Filing Instructions

2. Pursuant to §§ 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

• Electronic Filers: Comments may be filed electronically using the internet by accessing the ECFS: http://apps.fcc.gov/ecfs/.
• Paper Filers: Parties who choose to file by paper must file an original and one copy of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number.

Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

• All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St. SW, Room TW-A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building.
• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to FCC, 9050 Junction Drive, Annapolis Junction, MD 20701.
• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW, Washington, DC 20554.

3. People with Disabilities: To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

C. Initial Regulatory Flexibility Analysis

4. An initial regulatory flexibility analysis (IRFA) is contained in this summary. Comments to the IRFA must be identified as responses to the IRFA and filed by the deadlines for comments on the Notice of Proposed Rulemaking. The Commission will send a copy of the Notice of Proposed Rulemaking, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration.

D. Initial Paperwork Reduction Act of 1995 Analysis

5. This document does not contain new or modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does not contain any new or modified information collection burden for small business concerns with fewer than 25 employees, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

II. Introduction

6. In this Notice of Proposed Rulemaking (NPRM), we seek comment on the Commission's proposed regulatory fees for fiscal year (FY) 2019. Specifically, we propose to collect $339,000,000 in regulatory fees for FY 2019, pursuant to sections 9 and 9A of the Communications Act of 1934, as amended (Act or Communications Act), and the Commission's FY 2019 Appropriation. The proposed regulatory fee schedule for FY 2019 is set forth in Tables 2 and 3. For comparison purposes, the FY 2018 regulatory fee rates are listed in Table 7. In this NPRM, we also seek comment on modifications to the Commission's regulatory fee authority under the RAY BAUM'S Act of 2018.

III. Background

7. In 2018, as part of the RAY BAUM'S Act, Congress revised the Commission's regulatory fee authority by modifying section 9 and adding section 9A to the Communications Act. In making such changes, Congress deleted outdated language from the statute, removed the now obsolete statutory schedule of regulatory fees originally adopted in 1993, redirected the Commission on how to update regulatory fees, and revised and reformatted other provisions of the statute. Congress directed the Commission to complete a regulatory fee rulemaking under the modified statute by October 2019.

8. Congress established the Commission's regulatory fee authority in 1993 when Congress adopted a statutory schedule of regulatory fees and charged the Commission with updating and amending the schedule pursuant to statutory guidance on an annual basis. The Commission discharged its statutory obligation by (1) adopting regulatory fee rules and descriptions of each fee category listed in the statute and (2) annually making adjustments to the fee schedule through a notice and comment rulemaking proceeding. Such annual reviews of the fee schedule proposed revisions to the schedule to reflect changes in the amount of the Commission's appropriation and other changes based upon the criteria included in section 9 of the Communications Act.

9. Since 1993, the Commission has made numerous changes to the schedule. In making such changes, the Commission used the statutory criterion that the fee reflect the benefits provided to the payor of the fee and factors reasonably related to that criterion. For example, in the FY 2013 Report and Order, the Commission updated the full-time equivalents (FTE) allocations to more accurately reflect the number of FTEs working on regulation and oversight of regulatees in the fee categories. The Commission has since updated the FTE allocations annually. Other recent examples include the FY 2015 NPRM, where the Commission adopted a regulatory fee category for Direct Broadcast Satellite (DBS), as a subcategory of the cable television and IPTV fee category. In explaining the change, the Commission described both the change in the service and the Commission's regulation thereof in the decades since adoption of the original fee schedule and how DBS providers benefited from the work of Media Bureau FTEs on multichannel video programming distributors (MVPDs). And in the FY 2016 Report and Order, the Commission adjusted regulatory fees for radio and television broadcasters, based on the type and class of service and on the population served. The Commission has also made other improvements to its regulatory fee analysis as part of its annual review. For example, in the FY 2017 Report and Order, the Commission included non-common carrier terrestrial international bearer circuits in the regulatory fee methodology and increased the de minimis threshold to $1,000 for annual regulatory fee payors.

IV. Discussion

10. In this NPRM, we (1) explain and seek comment on the RAY BAUM'S Act modifications to the Commission's regulatory fee authority; (2) propose and seek comment on a schedule, as set forth in Tables 2 and 3, of FY 2019 regulatory fees, which are due in September 2019; and (3) propose and seek comment on granular aspects of the regulatory fee calculation for DBS providers, full-power broadcast television, and international bearer circuits. Finally, we reaffirm and restate certain rules that are fundamental to the enforcement and collection aspects of the Commission's regulatory fee regime.

A. RAY BAUM'S Act Modifications to the Commission's Regulatory Fee Authority

11. Although aspects of section 9 of the Communications Act have been modified by the RAY BAUM'S Act, the Commission's core responsibilities under the statute remain unchanged. The Commission remains charged with ensuring that regulatory fees will result in collections of amounts that can reasonably be expected to equal amounts appropriated by Congress for each fiscal year.

12. In the RAY BAUM'S Act modifications, Congress deleted the obsolete schedule of regulatory fees codified in the former section 9(g) of the Act and directed the Commission to establish a new schedule of regulatory fees and to provide annual updates thereafter. In plain terms, Congress directed the Commission to establish a new schedule of regulatory fees by amending “the schedule of regulatory fees established under this section if the Commission determines that the schedule requires amendment so that such fees reflect the full-time equivalent number of employees within the bureaus and offices of the Commission, adjusted to take into account factors that are reasonably related to the benefits provided to the payor of the fee by the Commission's activities.” Each year thereafter, the Commission is required to adjust the schedule of regulatory fees established under this section to “(A) reflect unexpected increases or decreases in the number of units subject to the payment of such fees; and (B) result in the collection of the amount required” by the Commission's annual appropriation. In such annual regulatory fee adjustments, the Commission may make further amendments to the schedule if the Commission determines that the statutory criteria are satisfied.

13. The scheme as articulated under the RAY BAUM'S Act is closely aligned to how the Commission implemented its authority under the prior version of section 9 of the Communications Act. Under both old and new versions of the statute, the Commission is charged with assessing and collecting regulatory fees that will result in collections of amounts that can reasonably be expected to equal amounts appropriated by Congress for each fiscal year. Again, under both old and new versions of the statute, regulatory fees are initially apportioned across fee categories based on the number of FTEs and adjusted “to take into account factors that are reasonably related to the benefits provided to the payor of the fee by the Commission's activities.” Not surprisingly, the Commission's consideration of changes, additions, or deletions to its fee schedule since 1993 have been focused on the FTE burdens related to the regulatory fee category at issue. As exercised, the Commission's fee determinations have been carefully considered. Thus, in this NPRM we are proposing to hew closely to our prior annual process for adjusting and amending fee categories and the fee schedule. We seek comment on this proposal.

14. Certain language was, however, deleted from section 9 in the RAY BAUM'S Act. First, the prior statute identified three bureaus that have since been renamed. Second, the prior statute included a list of examples of factors relevant to the Commission's inquiry into benefits provided the payor of the fee; those examples were “service area coverage, shared use versus exclusive use, and other factors that the Commission determines are necessary in the public interest.” Third, while both versions of the statute require the Commission to take into consideration in its annual review unexpected increases or decreases in the “number of units” subject to the payment of regulatory fees, the prior statute specifically mentioned licensees. Finally, under the prior version of section 9, in amending the schedule of regulatory fees, the Commission could take into consideration “additions, deletions, or changes in the nature of its services as a consequence of Commission rulemaking proceedings or changes in law.” The old version of the statute described the annual changes as either mandatory amendments or permitted amendments; under the RAY BAUM'S Act, the changes are described as adjustments or amendments. We seek comment on how these deletions and changes impact the Commission's responsibilities in assessing and collecting regulatory fees. Commenters should discuss any effect on the Commission's proposed regulatory fee methodology due to deletion of language or the reformulation of the requirements under section 9.

15. We remind commenters of certain unvarying aspects of the Commission's assessment and collection of regulatory fees that they should take into consideration when making comments on our proposals. Regulatory fees, mandated by Congress, are collected to recover the Commission's costs “to the extent, and in the total amounts, provided for in Appropriation Acts.” Thus, the Commission has no discretion regarding the total amount to be collected in any given fiscal year. Regulatory fees are to reflect “the full-time equivalent number of employees within the bureaus and offices of the Commission, adjusted to take into account factors that are reasonably related to the benefits provided to the payor of the fee by the Commission's activities.” Thus the calculation and allocation of FTEs across regulatory fee categories is, by statute, at the heart of the Commission's methodology in calculating regulatory fees. Regulatory fees recover the Commission's direct costs—that is, costs attributable to a specific regulatory activity (e.g., the salaries and benefits of Commission employees that work on the oversight and regulation of local exchange carriers). Regulatory fees also recover indirect costs, i.e., common costs that are not attributable to a specific regulatory activity. These costs are for general overhead, administration, and support, such as rent, utilities, salaries, and benefits of information technology and other employees whose work supports the core bureaus, and general-purpose equipment. Regulatory fees also cover the costs incurred in regulating entities that are statutorily exempt from paying regulatory fees and entities whose regulatory fees are waived. We also remind commenters that FTE time devoted to developing and implementing the Commission's spectrum auctions is not included in the calculation of regulatory fees and is not offset by the collection of regulatory fees. Instead, such FTE time is offset by the auction proceeds that the Commission is permitted to retain pursuant to section 309(j)(8)(B) of the Communications Act and the Commission's annual appropriation.

B. Allocating FTEs Across Categories for FY 2019

16. Applying the section 9 requirements to calculate regulatory fees, we propose to allocate the total collection target across all regulatory fee categories. We propose that for FY 2019 the allocation of fees to fee categories will be based on the Commission's calculation of FTEs in each regulatory fee category. Our proposed methodology is generally consistent with that employed in FY 2018. As a general matter, we reasonably expect that the work of the FTEs in the four “core” bureaus (i.e., Wireline Competition Bureau, Wireless Telecommunications Bureau, International Bureau, and Media Bureau) will remain focused on the industry segment regulated by each of those bureaus. The work of the FTEs in the indirect bureaus and offices benefits the Commission and the telecommunications industry and is not specifically focused on the regulatees and licensees of a core bureau. The total FTEs for each fee category includes the direct FTEs associated with that category, plus a proportional allocation of indirect FTEs.

17. Historically, the Commission 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 then pays its proportionate share based on an objective measure of size (e.g., revenues or number of subscribers). We propose that non-auctions FTEs will be classified as “direct” if the employee is in one of the four core bureaus; otherwise, the FTEs will be classified as “indirect.” We propose that each regulatee within a fee category pays its proportionate share based on an objective measure (e.g., revenues or number of subscribers). Our proposed calculations are illustrated in Table 1. The sources for the unit estimates that are used in these calculations are listed in Table 4.

18. We propose to allocate the total amount to be collected among the regulatory fee categories within each of the core bureaus and base the FY 2019 FTE allocations on a percentage that proportionally reflects the changes in FTEs in the core bureaus over the course of FY 2019. We project approximately $25.39 million (7.49% of the total FTE allocation) in fees from International Bureau regulatees; $85.15 million (25.12% of the total FTE allocation) in fees from Wireless Telecommunications Bureau regulatees; $106.64 million (31.46% of the total FTE allocation) from Wireline Competition Bureau regulatees; and $121.82 million (35.93% of the total FTE allocation) from Media Bureau regulatees. We seek comment on our calculation for the FY 2019 FTEs.

19. The above allocations across the core bureaus are further allocated across the regulatory fee categories within each core bureau to reflect FTE use. The specific fee proposals and the specific mechanism for calculating them can be viewed in Tables 1, 2, 3, 4, and 5. Presented as a percentage of each bureau's allocation, our FY 2019 regulatory fee proposals can be viewed as follows: The International Bureau regulatory fees allocated across International Bureau services: Bearer Circuits (3.76%), Submarine Cable (24.85%), GSO Space Stations (61.61%), NGSO Space Stations (4.27%), and Earth Stations (5.51%); the Wireless Telecommunications Bureau regulatory fees allocated across Wireless services: CMRS (Cell and Messaging) (87.67%), BRS/LMDS (1.14%), and Multi-Year Wireless regulatory fees (11.19%); the Wireline Competition Bureau regulatory fees allocated across Wireline services: ITSP as 100% with the Toll Free Number regulatory fee subcategory as 12 cents per toll free number (which can be viewed as 3.71% of the total Wireline Competitive Bureau allocation this year); and the Media Bureau regulatory fees allocated across media services: Broadcast Radio Station fees (24.52%), Television (20.48%), and Cable TV Systems (including IPTV) and DBS (55%).

20. The Commission first provided full descriptions of the regulatory fee categories in the 1994 Report and Order. These categories have changed over time through rulemaking and Table 6 contains an enumeration of the regulatory fee categories the Commission used to assess regulatory fees for FY 2018. We propose to use the same categories for FY 2019 and seek comment on each fee category in Table 6.

C. Direct Broadcast Satellite (DBS) Regulatory Fees

21. DBS service is a nationally distributed subscription service that delivers video and audio programming via satellite to a small parabolic dish antenna at the subscriber's location. The two DBS providers, AT&T and DISH Network, are MVPDs. The Media Bureau oversees the regulation of MVPDs, i.e., regulated companies that make available for purchase, by subscribers or customers, multiple channels of video programming. The Media Bureau relies on a common pool of FTEs to carry out its oversight of MVPDs and other video distribution providers. These responsibilities include market modifications, local-into-local, must-carry and retransmission consent disputes, program carriage and program access complaints, over-the-air reception device declaratory rulings and waivers, media rule modernization, media ownership, and proposed transactions.

22. For Media Bureau activities in FY 2019, the Commission must collect $67.02 million in regulatory fees from cable TV systems, IPTV providers, and DBS operators. Based on our prior regulatory fee decisions, the Commission proposes to assess cable TV systems and IPTV providers at the same rate for regulatory fee purposes—with the total fee due being based on subscribership. The Commission has previously taken a different approach when it adopted Media Bureau-based regulatory fees on DBS operators. Specifically, in FY 2015, the Commission decided to phase in the new Media Bureau-based regulatory fee for DBS, starting at 12 cents per subscriber per year, as a subcategory in the cable television and IPTV category. At the same time, the Commission committed to updating the regulatory fee rate in future years “as necessary for ensuring an appropriate level of regulatory parity and considering the resources dedicated to this new regulatory fee subcategory.” Accordingly, the Commission increased the regulatory fee for DBS operators to 24 cents and then 36 cents per subscriber per year, with the regulatory fees paid by DBS operators reducing those paid by other MVPDs. For FY 2018, the Commission continued the transition by increasing the DBS regulatory fee rate to 48 cents per subscriber per year. The Commission explained that the DBS regulatory fee is based on the significant number of Media Bureau FTEs that work on MVPD issues that include DBS, “not a particular number of FTEs focused solely on DBS” or “specific recent proceedings.”

23. The Commission previously concluded that the continued participation of DBS operators in Commission proceedings, and the use of a pool of Media Bureau FTEs to oversee MVPD issues, justifies increasing the DBS regulatory fee rate. We seek comment on whether Media Bureau resources working on MVPD proceedings, including DBS, support continuing to phase in the DBS regulatory fee rate to bring it closer to the cable television/IPTV rate, which, for FY 2019, is proposed to be 86 cents per subscriber, per year. We recognize that DBS is not identical to cable television and IPTV; however, services that are not technologically identical nevertheless can warrant placement in the same regulatory fee category, e.g., the ITSP category includes a range of carriers that are not regulated identically. Cable television, IPTV, and DBS all receive oversight and regulation by Media Bureau FTEs working on MVPD issues.

24. We propose to continue the phase in and set a DBS regulatory fee rate of 60 cents per subscriber per year, a 12-cent increase from the rate we used in FY 2018. In doing so, we invite comment concerning whether this continued “phase in” is still permissible under the RAY BAUM'S Act and whether this continued “phase in” is still good policy. In the alternative, we seek comment on including DBS fully in the cable television/IPTV rate, which would then be approximately 77 cents per subscriber per year, or adopting a different rate for DBS.

D. Broadcast Television Stations

25. Historically, regulatory fees for full-power television stations were based on the Nielsen Designated Market Area (DMA) groupings 1-10, 11-25, 26-50, 51-100, and remaining markets (DMAs 101-210). In the FY 2018 NPRM, we sought comment on whether using the actual population covered by the station's contours instead of using DMAs would more accurately reflect the actual market served by a full-power broadcast television station for purposes of assessing regulatory fees. We proposed this change in methodology, which was consistent with the methodology used for AM and FM broadcasters and would better “take into account factors that are reasonably related to the benefits provided to the payor of the fee by the Commission's activities.” We sought comment on whether, for FY 2019 and going forward, regulatory fees should be assessed for full-power broadcast television stations based on the actual population covered by the station's contour, instead of DMAs. We also sought comment on whether to phase in the implementation of this methodology.

26. In the FY 2018 Report and Order, we adopted the proposed methodology and stated that in order to facilitate the transition to this new fee structure, for FY 2019, we planned to adopt a fee based on an average of the historical DMA methodology and the population covered by a full-power broadcast station's contour for FY 2019. The RAY BAUM'S Act instructs the Commission, when considering its annual review, to “take into account factors that are reasonably related to the benefits provided to the payor of the fee by the Commission's activities.” Because the standard considered when adopting the proposed methodology for establishing full-power television station regulatory fees and the related transition in the FY 2018 Report and Order parallels the RAY BAUM'S Act standard, we tentatively conclude that the new methodology adopted last year is consistent with the RAY BAUM'S Act. Accordingly, consistent with our FY 2018 analysis, we propose FY 2019 fees for full-power broadcast television stations based on an average of the DMA methodology and the population covered by a full-power broadcast television station's contour. We also propose adopting a factor of .72 of one cent ($.007224) for FY 2019 full-power broadcast television station fees. As in the FY 2018 Report and Order, the population data for broadcasters' service areas is extracted from the TVStudy database, based on a station's projected noise-limited service contour. Table 3 lists this population data for each licensee. Table 3 also lists the DMA-based fee, the population-based fee (population multiplied by $.007224), and the resulting proposed regulatory fee for FY 2019 (i.e., the average of the DMA-based fee and population-based fee) for each full-power broadcast television station, including each satellite station. We seek comment on these proposed fees.

E. Terrestrial and Satellite International Bearer Circuits (IBCs)

27. The Commission previously sought comment on adopting a tiered methodology for assessing terrestrial and satellite international bearer circuit regulatory fees. For FY 2018, the Commission assessed terrestrial and satellite common carrier and non-common carrier IBC regulatory fees on a per-circuit basis, using Gbps as the measurement rather than 64 kbps and stated in the FY 2018 NPRM that it expected to have sufficient circuit information from payors in September 2018 to consider a tiered rate structure for FY 2019.

28. Now that we have FY 2018 circuit information for common carrier and non-common carrier terrestrial circuits, we believe that we should not move to a tiered structure for assessing IBC regulatory fees. Due to the wide range of numbers of circuits among carriers, particularly between the satellite and the terrestrial carriers—a tiered system, such as the two-tiered system previously proposed by CenturyLink, would result in large increases in fees for the smaller carriers that do not appear to be “reasonably related to the benefits provided to the payor of the fee[ ] by the Commission's activities,” as required by section 9(d) of the Act. More specifically, FY 2019 IBC fees that would be assessed on the 13 carriers currently in this fee category using the existing per-Gbps methodology would range from approximately $121 all the way to $355,000 per carrier, and condensing such a large range of fees to two tiers would require a substantial fee increase for the smaller carriers. To avoid such increases, we believe that we would need to adopt a complex tiering system of at least seven tiers, and several of these tiers would apply to only one carrier. We believe that such a complex tiered system would not be an improvement over the current methodology. Accordingly, we propose to continue to base non-common carrier and common carrier satellite and terrestrial IBC fees on the per Gbps rate in Table 2, which would be $121 for FY 2019. We seek comment on this proposal.

29. To the extent that commenters nevertheless believe that we should adopt a tiered structure for assessing IBC regulatory fees, we seek comment on what that structure should look like. For example, notwithstanding the concerns discussed above, should we adopt the following seven-tiered system, and if so, why?

• Systems with capacities less than 5 Gbps would pay a flat $150 fee.
• Systems with capacities equal to 5 Gbps or greater, but less than 50 Gbps, would pay a flat $750 fee.
• Systems with capacities equal to 50 Gbps or greater, but less than 250 Gbps, would pay a flat $11,200 fee.
• Systems with capacities equal to 250 Gbps or greater, but less than 750 Gbps, would pay a flat $45,000 fee.
• Systems with capacities equal to 750 Gbps or greater, but less than 1,200 Gbps, would pay a flat $135,000 fee.
• Systems with capacities equal to 1,200 Gbps or greater, but less than 2,500 Gbps, would pay a flat $270,000 fee.
• Systems with capacities equal to or greater than 2,500 Gbps would pay a flat $345,000 fee.

30. For any tiered structure proposed, commenters should explain why their proposal would be an improvement over the current methodology and how the resulting fees would be “reasonably related to the benefits provided to the payor of the fee[ ] by the Commission's activities.”

F. De Minimis Regulatory Fees

31. Section 9(e)(2) of the RAY BAUM'S Act provides the Commission with discretion to exempt a party from paying regulatory fees when the Commission determines that the cost of collection exceeds the amount collected. Specifically, section 9(e)(2) provides that the Commission may exempt a party from paying regulatory fees if “in the judgment of the Commission, the cost of collecting a regulatory fee established under this section from a party would exceed the amount collected from such party. . . .” Below, we seek comment on how to implement section 9(e)(2).

32. Since 1996, the Commission has provided a de minimis threshold for regulatory fee payments by exempting a regulatee from paying regulatory fees if the sum total of all of its annual regulatory fee liabilities was less than the threshold for a given fiscal year. In adopting the first de minimis threshold for regulatory fees of $10.00, the Commission found that the cost of processing small payments resulted in a net loss to the U.S. Department of the Treasury. The Commission subsequently revised the de minimis threshold in 2014 to $500.00 based in part on the costs of assessing and collecting regulatory fees from non-payers. The Commission estimated that the cost of collection of an unpaid regulatory fee was at least $350.00. The Commission explained that the increase in the de minimis threshold to $500.00 would provide financial relief to small entities and reduce the administrative burden on the Commission that would result from attempting to collect unpaid fees. The Commission noted that smaller entities are at greater risk of missing regulatory fee deadlines and that many such entities are subject to little Commission oversight and regulation. The Commission increased the de minimis threshold to $1,000.00 in 2017, observing that the cost of researching and creating a bill to send to a non-payor, and completing follow-up discussion and correspondence, had increased since the FY 2014 regulatory fee proceeding. The Commission further found that the $350.00 estimate of collection costs in the FY 2014 Report and Order did not include the Commission's overhead costs.

33. We view new section 9(e)(2) as codifying our authority to adopt a de minimis exemption. Section 9(e)(2) provides the Commission with discretion to exempt a “party” and to provide relief based on the cost of collection, both of which were factors considered in the existing de minimis exemption. The adoption of a monetary threshold applied against the total amount due in a given fiscal year continues to be, in our estimation, an efficient mechanism for reducing the Commission's costs in assessing and collecting regulatory fees.

34. We have analyzed an average cost of collection of a delinquent bill today and estimate that the cost to the Commission would exceed $1,000.00. For delinquent bills, the Commission's administrative process includes various functions such as gathering data from the bureaus and external sources (e.g., the Universal Service Administrative Company (USAC)); validating data and preparing the data for billing; validating outstanding bills; preparing delinquency bills for transfer to collection agent for processing; discussing bills with regulatees when they call with questions; addressing bill disputes (e.g., Centralized Receivable Service (CRS), U.S. Department of the Treasury, and FCC Help Desks); and processing payments received from CRS and U.S. Department of the Treasury. We thus seek comment on a section 9(e)(2) annual regulatory fee de minimis exemption of $1,000.00.

35. We also propose to exclude multi-year regulatory fees from the proposed section 9(e)(2) exemption. Historically, the de minimis threshold has applied only to annual regulatory fee filers and did not include regulatory fees paid through multi-year filings. The Commission excluded multi-year wireless fees from the de minimis exemption because the process of paying multi-year regulatory fees is a separate process from annual regulatory fee filings, and including multi-year fees in the threshold would significantly increase the Commission's administrative costs. Section 9(e)(2) provides the Commission with discretion as to whether and how to provide this exemption; specifically, it states that the Commission “may exempt” a party from paying regulatory fees. We propose to exclude multi-year licenses from the new section 9(e)(2) exemption due to the administrative costs associated with implementing such an exemption for these fees. We seek comment on this proposal.

G. Additional Regulatory Fee Reform

36. We also seek comment on additional regulatory fee reform and ways to further improve our regulatory fee process to make it less burdensome for all entities. In particular, we seek comment on whether our fee setting methodologies could be improved or updated to ensure that our regulatory fees are more equitable or otherwise streamlined to make the fee schedule simpler. As part of this analysis, we seek comment on the costs and benefits of reforming our fee-setting process.

H. Restatement of Certain Rules Fundamental to Waiver, Enforcement and Collection of Regulatory Fees

37. The RAY BAUM'S Act moved and reformatted certain provisions of prior section 9 relating to waiver, enforcement and collection of regulatory fees. Because these provisions are essential to the Commission's exercise of its statutory authority here, we take this opportunity to explain essential aspects of the statute and also note that our application of these provisions remains unchanged.

1. Waiver, Reduction and Deferral of Regulatory Fees

38. Section 9A of the Communications Act, as amended by the RAY BAUM'S Act, permits the Commission to waive, reduce, or defer payment of a regulatory fee and associated interest charges and penalties for good cause if the waiver, reduction, or deferral (collectively, waiver or waive) would serve the public interest. The Commission interprets this provision narrowly to permit only those waivers “unambiguously articulating `extraordinary circumstances' outweighing the public interest in recouping the cost of the Commission's regulatory services for a particular regulatee.” Within this standard, the Commission recognizes that in exceptional circumstances, financial hardship may justify waiving and/or deferring a party's regulatory fees. Financial inability, however, must be conclusively proven and the burden of proof for doing so lies solely with the regulatee seeking relief. Mere allegations of financial loss will not support a waiver request. Rather, as the Commission has stated, “it is incumbent upon each regulatee to fully document its financial position and show that it lacks sufficient funds to pay the regulatory fees and to maintain its service to the public.” The Commission has suggested that documents that may be relevant to prove financial inability include balance sheets and profit and loss statements (audited if available), twelve month cash flow projections (with an explanation of how calculated), a list of officers and highest paid employees other than officers, and each individual's compensation, or similar information. We emphasize, however, that the foregoing list of documents is not exhaustive and it is up to each regulatee to determine the documentation required to prove financial hardship in its own case.

39. The Commission has previously stated that with respect to waiver, reduction, and deferral requests based on financial hardship, the Commission will base its decision on the information submitted with the request as well as “any additional information available in the Commission's records.” We are not bound, nor is it an efficient use of the Commission's time, to search our records for information or documents that might be relevant to a request for waiver, reduction or deferral of a regulatory fee. Therefore, we propose to eliminate consideration of information and documents available in our records and instead, require that any party seeking regulatory fee relief, regardless of the basis for its request, must include with its request all documents and information the requestor believes to be relevant to prove its case, regardless of whether or not such documentation or information exists in Commission records.

40. The Commission frequently receives requests to waive regulatory fees owed by regulatees in bankruptcy or receivership, who cite the fact of the bankruptcy or receivership as proof of the regulatee's financial hardship, justifying waiver. Here we wish to emphasize the standard to which the Commission hews in determining whether to grant relief in such cases. While the Commission recognizes that the fact of a bankruptcy or receivership filing may be sufficient evidence of financial hardship, we consider such cases individually, taking into account a number of other factors that are relevant to the question of whether the regulatee lacks sufficient funds to pay the regulatory fees and to maintain its service to the public. Although the factors we consider are case-specific, they might include for example, whether the regulatee intends to reorganize or liquidate in bankruptcy, the reason for the bankruptcy or receivership filing, the regulatee's ability or plan to obtain post-petition financing, the number, type and amount of other claims asserted against the regulatee in the bankruptcy or receivership case, and the priority accorded under bankruptcy or receivership law to the Commission's regulatory fee claim.

41. We also remind regulatees that requests to waive their regulatory fees must be properly filed by the date on which such fees are due.

2. Enforcement

42. Late payment penalty and interest. Regulatory fee payments must be paid by their due date. Section 9A(c)(1) of the Act requires the Commission to impose a late payment penalty of 25 percent of unpaid regulatory fee debt, to be assessed on the first day following the deadline for payment of the fees. Section 9A(c)(2) of the Act requires the Commission to assess interest at the rate set forth in 31 U.S.C. 3717 on all unpaid regulatory fees, including the 25 percent penalty, until the debt is paid in full. The RAY BAUM'S Act, however, prohibits the Commission from assessing the administrative costs of collecting delinquent regulatory fee debt. Thus, while section 9A(c) of the Act leaves intact those parts of § 1.1940 of the Commission's rules pertaining to penalty and interest charges, the Commission will no longer assess administrative costs on delinquent regulatory fee debts.

43. Collection and offset. The Commission will pursue collection of all past due regulatory fees, including penalties and accrued interest, using collection remedies available to it under the Debt Collection Improvement Act of 1996, its implementing regulations and federal common law. These remedies include offsetting regulatory fee debt against monies owed to the debtor by the Commission, and referral of the debt to the United States Treasury for further collection efforts, including centralized offset against monies other federal agencies may owe the debtor.

44. Red light. Failure to timely pay regulatory fees, penalties or accrued interest will also subject regulatees to the Commission's “red light” rule, which generally requires the Commission to withhold action on and subsequently dismiss applications and other requests for benefits by any entity owing debt, including regulatory fee debt, to the Commission.

45. Revocation. In addition to financial penalties, section 9(c)(3) of the Act, and § 1.1164(f) of the Commission's rules grant the Commission the authority to revoke authorizations for failure to pay regulatory fees in a timely fashion. Should a fee delinquency not be rectified in a timely manner the Commission may require the licensee to file with documented evidence within sixty (60) calendar days that full payment of all outstanding regulatory fees has been made, plus any associated penalties as calculated by the Secretary of Treasury in accordance with § 1.1164(a) of the Commission's rules, or show cause why the payment is inapplicable or should be waived or deferred. Failure to provide such evidence of payment or to show cause within the time specified may result in revocation of the station license.

V. Procedural Matters

46. Included below are procedural items as well as our current payment and collection methods. We include these payments and collection procedures here as a useful way of reminding regulatory fee payers and the public about these aspects of the annual regulatory fee collection process.

A. Payment of Regulatory Fees

47. Credit Card Transaction Levels. Since June 1, 2015, in accordance with U.S. Treasury Announcement No. A-2014-04 (July 2014), the highest amount that can be charged on a credit card for transactions with federal agencies is $24,999.99. Transactions greater than $24,999.99 will be rejected. This limit applies to single payments or bundled payments of more than one bill. Multiple transactions to a single agency in one day may be aggregated and treated as a single transaction subject to the $24,999.99 limit. Customers who wish to pay an amount greater than $24,999.99 should consider available electronic alternatives such as Visa or MasterCard debit cards, ACH debits from a bank account, and wire transfers. Each of these payment options is available after filing regulatory fee information in Fee Filer. Further details will be provided regarding payment methods and procedures at the time of FY 2019 regulatory fee collection in Fact Sheets, https://www.fcc.gov/regfees.

48. Payment Methods. Pursuant to an Office of Management and Budget (OMB) directive, the Commission is moving towards a paperless environment, extending to disbursement and collection of select federal government payments and receipts. In 2015, the Commission stopped accepting checks (including cashier's checks and money orders) and the accompanying hardcopy forms (e.g., Forms 159, 159-B, 159-E, 159-W) for the payment of regulatory fees. During the fee season for collecting regulatory fees, regulatees can pay their fees by credit card through Pay.gov, ACH, debit card, or by wire transfer. Additional payment instructions are posted on the Commission's website at http://transition.fcc.gov/fees/regfees.html. The receiving bank for all wire payments is the U.S. Treasury, New York, NY (TREAS NYC). Any other form of payment (e.g., checks, cashier's checks, or money orders) will be rejected. For payments by wire, a Form 159-E should still be transmitted via fax so that the Commission can associate the wire payment with the correct regulatory fee information. The fax should be sent to the Federal Communications Commission at (202) 418-2843 at least one hour before initiating the wire transfer (but on the same business day) so as not to delay crediting their account. Regulatees should discuss arrangements (including bank closing schedules) with their bankers several days before they plan to make the wire transfer to allow sufficient time for the transfer to be initiated and completed before the deadline. Complete instructions for making wire payments are posted at http://transition.fcc.gov/fees/wiretran.html.

49. Standard Fee Calculations and Payment Dates.—The Commission will accept fee payments made in advance of the window for the payment of regulatory fees. The responsibility for payment of fees by service category is as follows:

• Media Services: Regulatory fees must be paid for initial construction permits that were granted on or before October 1, 2018 for AM/FM radio stations, VHF/UHF broadcast television stations, and satellite television stations. Regulatory fees must be paid for all broadcast facility licenses granted on or before October 1, 2018.
• Wireline (Common Carrier) Services: Regulatory fees must be paid for authorizations that were granted on or before October 1, 2018. In instances where a permit or license is transferred or assigned after October 1, 2018, responsibility for payment rests with the holder of the permit or license as of the fee due date. Audio bridging service providers are included in this category. For Responsible Organizations (RespOrgs) that manage Toll Free Numbers (TFN), regulatory fees should be paid on all working, assigned, and reserved toll free numbers as well as toll free numbers in any other status as defined in § 52.103 of the Commission's rules. The unit count should be based on toll free numbers managed by RespOrgs on or about December 31, 2018.

• Wireless Services: CMRS cellular, mobile, and messaging services (fees based on number of subscribers or telephone number count): Regulatory fees must be paid for authorizations that were granted on or before October 1, 2018. The number of subscribers, units, or telephone numbers on December 31, 2018 will be used as the basis from which to calculate the fee payment. In instances where a permit or license is transferred or assigned after October 1, 2018, responsibility for payment rests with the holder of the permit or license as of the fee due date.
• Wireless Services, Multi-year fees: The first eight regulatory fee categories in our Schedule of Regulatory Fees pay “small multi-year wireless regulatory fees.” Entities pay these regulatory fees in advance for the entire amount period covered by the five-year or ten-year terms of their initial licenses, and pay regulatory fees again only when the license is renewed or a new license is obtained. We include these fee categories in our rulemaking to publicize our estimates of the number of “small multi-year wireless” licenses that will be renewed or newly obtained in FY 2019.
• Multichannel Video Programming Distributor Services (cable television operators, CARS licensees, DBS, and IPTV): Regulatory fees must be paid for the number of basic cable television subscribers as of December 31, 2018. Regulatory fees also must be paid for CARS licenses that were granted on or before October 1, 2018. In instances where a permit or license is transferred or assigned after October 1, 2018, responsibility for payment rests with the holder of the permit or license as of the fee due date. For providers of DBS service and IPTV-based MVPDs, regulatory fees should be paid based on a subscriber count on or about December 31, 2018. In instances where a permit or license is transferred or assigned after October 1, 2018, responsibility for payment rests with the holder of the permit or license as of the fee due date.

• International Services: Regulatory fees must be paid for (1) earth stations and (2) geostationary orbit space stations and non-geostationary orbit satellite systems that were licensed and operational on or before October 1, 2018. In instances where a permit or license is transferred or assigned after October 1, 2018, responsibility for payment rests with the holder of the permit or license as of the fee due date.
• International Services (Submarine Cable Systems): Regulatory fees for submarine cable systems are to be paid on a per cable landing license basis based on circuit capacity as of December 31, 2018. In instances where a license is transferred or assigned after October 1, 2018, responsibility for payment rests with the holder of the license as of the fee due date. For regulatory fee purposes, the allocation in FY 2019 will remain at 87.6 percent for submarine cable and 12.4 percent for satellite/terrestrial facilities.
• International Services (Terrestrial and Satellite Services): Regulatory fees for terrestrial and satellite IBCs are to be paid based on active (used or leased) international bearer circuits as of December 31, 2018 in any terrestrial or satellite transmission facility for the provision of service to an end user or resale carrier. When calculating the number of such active circuits, entities must include circuits used by themselves or their affiliates. For these purposes, “active circuits” include backup and redundant circuits as of December 31, 2018. Whether circuits are used specifically for voice or data is not relevant for purposes of determining that they are active circuits. In instances where a permit or license is transferred or assigned after October 1, 2018, responsibility for payment rests with the holder of the permit or license as of the fee due date. For regulatory fee purposes, the IBC allocation in FY 2019 will remain at 87.6 percent for submarine cable and 12.4 percent for satellite/terrestrial facilities.

B. Commercial Mobile Radio Service (CMRS) and Mobile Services Assessments

50. The Commission will compile data from the Numbering Resource Utilization Forecast (NRUF) report that is based on “assigned” telephone number (subscriber) counts that have been adjusted for porting to net Type 0 ports (“in” and “out”). This information of telephone numbers (subscriber count) will be posted on the Commission's electronic filing and payment system (Fee Filer) along with the carrier's Operating Company Numbers (OCNs).

51. A carrier wishing to revise its telephone number (subscriber) count can do so by accessing Fee Filer and follow the prompts to revise their telephone number counts. Any revisions to the telephone number counts should be accompanied by an explanation or supporting documentation. The Commission will then review the revised count and supporting documentation and either approve or disapprove the submission in Fee Filer. If the submission is disapproved, the Commission will contact the provider to afford the provider an opportunity to discuss its revised subscriber count and/or provide additional supporting documentation. If we receive no response from the provider, or we do not reverse our initial disapproval of the provider's revised count submission, the fee payment must be based on the number of subscribers listed initially in Fee Filer. Once the timeframe for revision has passed, the telephone number counts are final and are the basis upon which CMRS regulatory fees are to be paid. Providers can view their final telephone counts online in Fee Filer. A final CMRS assessment letter will not be mailed out.

52. Because some carriers do not file the NRUF report, they may not see their telephone number counts in Fee Filer. In these instances, the carriers should compute their fee payment using the standard methodology that is currently in place for CMRS Wireless services (i.e., compute their telephone number counts as of December 31, 2018), and submit their fee payment accordingly. Whether a carrier reviews its telephone number counts in Fee Filer or not, the Commission reserves the right to audit the number of telephone numbers for which regulatory fees are paid. In the event that the Commission determines that the number of telephone numbers that are paid is inaccurate, the Commission will bill the carrier for the difference between what was paid and what should have been paid.

VI. Tables

Regulatory fees for the first seven fee categories below shaded are collected by the Commission in advance to cover the term of the license and are submitted at the time the application is filed.

Regulatory fees for the first eight fee categories below are collected by the Commission in advance to cover the term of the license and are submitted at the time the application is filed.