Assessment and Collection of Regulatory Fees for Fiscal Year 2016

AGENCY:

Federal Communications Commission.

ACTION:

Final rule.

SUMMARY:

In this document the Commission revises its Schedule of Regulatory Fees to recover an amount of $384,012,497 that Congress has required the Commission to collect for fiscal year 2016. Section 9 of the Communications Act of 1934, as amended, provides for the annual assessment and collection of regulatory fees for annual “Mandatory Adjustments” and “Permitted Amendments” to the Schedule of Regulatory Fees.

DATES:

Effective September 26, 2016. To avoid penalties and interest, regulatory fees should be paid by the due date of September 27, 2016.

FOR FURTHER INFORMATION CONTACT:

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

SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's Report and Order (R&O), FCC 16-121, MD Docket No. 16-166, adopted on September 1, 2016 and released on September 2, 2016.

I. Administrative Matters

A. Final Regulatory Flexibility Analysis

1. As required by the Regulatory Flexibility Act of 1980 (RFA), the Commission has prepared a Final Regulatory Flexibility Analysis (FRFA) relating to this Report and Order. The FRFA is located towards the end of this document.

B. Final Paperwork Reduction Act of 1995 Analysis

2. 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).

C. Congressional Review Act

3. The Commission will send a copy of this Report and Order to Congress and the Government Accountability Office pursuant to the Congressional Review Act, 5 U.S.C. 801(a)(1)(A).

II. Introduction

4. This Report and Order adopts a schedule of regulatory fees to assess and collect $384,012,497.00 in regulatory fees for Fiscal Year (FY) 2016, pursuant to Section 9 of the Communications Act of 1934, as amended (Communications Act or Act) and the Commission's FY 2016 Appropriation. The schedule of regulatory fees for FY 2016 adopted here is attached in Table 4. These regulatory fees are due on September 27, 2016. The FY 2016 regulatory fees are based on the proposals in the FY 2016 NPRM, considered in light of the comments received and Commission analysis. The FY 2016 regulatory fee schedule includes the following changes from last year: (1) An increase in regulatory fees across all fee categories to offset the Commission's facilities reduction costs; (2) an updated regulatory fee for Direct Broadcast Satellite (DBS) providers, a subcategory in the cable television and Internet Protocol Television (IPTV) category; and (3) adjustments to the regulatory fees on radio and television broadcasters, based on type and class of service and on the population served.

III. Background

5. Congress adopted a regulatory fee schedule in 1993 and authorized the Commission to assess and collect annual regulatory fees pursuant to the schedule, as amended by the Commission. As a result, 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. The Commission makes changes to the regulatory fee schedule “if the Commission determines that the schedule requires amendment to comply with the requirements” of section 9(b)(1)(A) of the Act. 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.” Thus, for each fiscal year, the Commission proposes a fee schedule in the annual Notice of Proposed Rulemaking that reflects changes in the amount appropriated for the performance of the Commission's regulatory activities, changes in the industries represented by the regulatory fee payors, changes in FTE levels, and any other issues of relevance to the proposed fee schedule. After reviewing the comments, the Commission issues a Report and Order adopting the fee schedule for the fiscal year and sets out the procedures for payment of fees.

6. The Commission calculates the fees by first determining the number of FTEs performing the regulatory activities specified in section 9(a), “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. . . .” FTEs are categorized as “direct” if they are performing regulatory activities in one of the “core” bureaus, i.e., the Wireless Telecommunications Bureau, Media Bureau, Wireline Competition Bureau, and part of the International Bureau. All other FTEs are considered “indirect.” The total FTEs for each fee category is calculated by counting the number of direct FTEs in the core bureau that regulates that category, plus a proportional allocation of indirect FTEs. Next, the Commission allocates the total amount to be collected among the various regulatory fee categories. This allocation is based on the number of FTEs assigned to work in each regulatory fee category. Each regulatee within a fee category pays its proportionate share based on an objective measure, e.g., revenues, number of subscribers, or licenses.

7. As part of its annual review, the Commission regularly seeks to improve its regulatory fee analysis. For example, in FY 2013, the Commission updated FTE allocations to more accurately reflect the number of FTEs working on regulation and oversight of the regulatees in the various fee categories, and now updates the FTE allocations annually; combined the UHF and VHF television stations into one regulatory fee category; and included IPTV in the cable television fee category. In FY 2014, we adopted a new fee category for toll free numbers, in the ITSP fee category; increased the de minimis threshold; and eliminated several categories from the regulatory fee schedule. In FY 2015, we added a subcategory for DBS providers in the cable television and IPTV regulatory fee category.

8. In our FY 2016 NPRM, we proposed to collect $384,012,497.00 in regulatory fees and included a detailed, proposed fee schedule. We received 17 comments and 10 reply comments.

IV. Discussion

9. In this FY 2016 Report and Order, we adopt a regulatory fee schedule for FY 2016, pursuant to section 9 of the Communications Act and our FY 2016 appropriation statute in order to collect $384,012,497.00 in regulatory fees. Of this amount, we project approximately $21.3 million (5.6 percent of the total FTE allocation) in fees from the International Bureau regulatees; $83.1 million (21.6 percent of the total FTE allocation) in fees from the Wireless Telecommunications Bureau regulatees; $146.5 million (38.0 percent of the total FTE allocation) from Wireline Competition Bureau regulatees; and $134.0 million (34.8 percent of the total FTE allocation) from the Media Bureau regulatees. These regulatory fees are due on September 27, 2016. The schedule of regulatory fees for FY 2016 adopted here is attached as Table 4.

1. Facilities Reduction

10. The regulatory fee rates for FY 2016 include $339,844,000 for operational expenses and an additional one time amount of $44,168,497 to offset facilities reduction costs, i.e., to reduce the FCC's office space footprint and/or move the FCC office location. Due to the facilities reduction costs, regulatees' aggregate fees by category increased on average by approximately 11-13 percent for 2016. Some commenters disagree with this approach. We are, however, required by Congress to collect this amount for FY 2016.

2. Toll Free Numbers

11. In the FY 2014 Report and Order, we adopted a regulatory fee category for each toll free number managed by a RespOrg. In the FY 2015 Report and Order, we adopted a regulatory fee of 12 cents per toll free number. We proposed a regulatory fee of 13 cents per toll free number in the FY 2016 NPRM. AT&T objects to the increase from 12 cents to 13 cents per year, and contends that we have not demonstrated increased regulatory oversight of RespOrgs to justify this increase. We identified in the FY 2016 NPRM that regulatory fees increased for all regulatee categories due to the one time increase for facilities reduction costs, which includes a one cent fee increase for toll free numbers. Pursuant to our obligations under section 9 of the Act and related Commission orders, we therefore adopt the fee proposed in the FY 2016 NPRM.

3. International Bureau Issues

a. International Bearer Circuits

12. Facilities-based common carriers must pay regulatory fees for terrestrial and satellite International Bearer Circuits (IBCs) active (used or leased) as of December 31 of the prior year in any terrestrial or satellite transmission facility for the provision of service to an end user or resale carrier. In addition, non-common carrier satellite operators must pay a fee for each circuit they and their affiliates hold and each circuit sold or leased to any customer, other than an international common carrier authorized by the Commission to provide U.S. international common carrier services. In the FY 2016 NPRM, and previously in FY 2015 Report and Order, we sought comment on how to ensure that all providers calculate and report IBCs in the same manner and how we could improve our requirements and regulatory treatment of terrestrial and satellite IBC.

13. We also sought comment on whether to eliminate the distinction between common carrier terrestrial circuits and non-common carrier terrestrial circuits for regulatory fee purposes. In doing so, we observed the telecommunications industry and Commission's rules have evolved. We also sought comment on the least burdensome methodology for calculating fees, whether international revenue rather than the number of circuits would be a useful data source, and asked how to ensure accurate reporting of both common carrier and non-common carrier terrestrial circuits.

14. Only Level 3 commented, proposing that we revise our regulatory fee methodology for terrestrial international bearer circuits and adopt a flat-fee methodology similar to the method we use to assess fees for submarine cable systems. This proposal would include common carrier and non-common carrier circuits. Level 3 contends that this would be simpler to administer and would reduce underreporting. We agree with Level 3 that there is need to evaluate the changes in the international services marketplace and update our fee methodology to reflect the changes and make it simpler and more efficient to administer. We find, however, that the record in this proceeding is insufficient to make any comprehensive changes to the fee methodology at this time. To adequately evaluate the changes to the marketplace, a separate rulemaking proceeding to comprehensively review the methodology used for assessing fees for terrestrial and satellite international bearer circuits is needed, including the allocation of the international bearer circuit fee category between terrestrial and satellite circuits and submarine cable systems. Accordingly, we make no changes to fee rules governing the IBCs based on the record in this proceeding.

b. Earth Stations

15. In the FY 2014 NPRM, we recognized that the International Bureau's oversight and regulation of the satellite industry involves FTEs working on legal, technical, and policy issues pertaining to both space station and earth station operations and is therefore interdependent to some degree. For that reason, in the FY 2014 regulatory fee proceeding, we increased the regulatory fees paid by earth station licensees by approximately 7.5 percent based on analysis and review of the record. In the FY 2015 NPRM, we sought comment on whether to raise the earth station regulatory fees again. However, we declined to adopt an increase in fees in FY 2015 due to an ongoing proceeding concerning part 25 (Satellite Communications) of the Commission's rules which could affect the distribution of FTE work. In the FY 2016 NPRM, we sought comment on this issue—specifically on EchoStar's proposal to assess different levels of regulatory fees on different types of earth station licenses.

16. EchoStar now observes that since it submitted its proposal, we have adopted reforms that streamlined the reporting process for satellite earth stations, which has addressed an unequal reporting burden and reduced administrative burdens. For this reason, EchoStar contends that all satellite earth stations should have the same regulatory fee, and no longer supports its earlier proposal.

17. No parties commented in favor of the proposal. At this time, we see no basis to assess different levels of regulatory fees on different types of earth station licensees. Accordingly, we adopt the earth station fee proposed in the FY 2016 NPRM.

c. Submarine Cable

18. We did not specifically seek comment on issues pertaining to the submarine cable industry. The proposed rates in the FY 2016 NPRM contained a fee increase due to the one-time increase for facilities reduction expenses and a change in submarine cable units. A group of submarine cable operators contends that the proposed rate is too high and not justified. Specifically, the Submarine Cable Coalition questions the methodology for the proposed fees and argues that the proposed fees are disproportionate to the benefits received by submarine cable operators and the minimal regulatory oversight by the Commission, after the licensing process. Further the Submarine Cable Coalition states that the Commission should not overcharge low-cost regulatees to subsidize for high-cost regulatees and recommends that the Commission reduce the regulatory fees commensurate with the amount of regulatory activity undertaken. As we have previously stated, the regulatory fees paid by the submarine cable operators cover not just the services provided those entities, but also the services provided to the common carriers that use the submarine cables to provide service. The regulatory fees are also not intended to recover only the costs of Title II regulation, but also the costs of our enforcement, policy and rulemaking, user information and international activities that benefit all entities involved in international telecommunications. We also note that since release of the FY 2016 NPRM, the units used to calculate fees has been updated with more recent data. Accordingly, the fees listed in Table 3 are less than the amount proposed in the FY 2016 NPRM. Nevertheless, we remind all regulatees, including submarine cable operators, the FY 2016 regulatory fees include the facilities reduction costs.

4. FTE Reallocations

19. ITTA has proposed in past regulatory fee proceedings that wireless providers should be combined into the ITSP fee category so that all voice providers pay regulatory fees on the same basis. ITTA continues to endorse this approach and contends that the wireline and wireless voice services are subject to many of the same regulatory policies, programs, and obligations and therefore combining these voice services into the ITSP category is an appropriate measure to comply with section 9 of the Act. ITTA explains that due to changes in the communications industry and the convergence of technologies, the Wireline Competition Bureau FTEs' work is no longer focused on ITSPs. According to ITTA, the work performed by Wireline Competition Bureau FTEs on universal service issues impacts various types of communications providers, not just ITSPs.

20. Certain commenters agree with ITTA's proposals. For example, NTCA contends that updating the ITSP category to include wireless revenues would be a “rational step.” CenturyLink explains that this would be analogous to including VoIP providers in the ITSP category and DBS in the cable television/IPTV category. Frontier states that the work of various Wireline Competition Bureau divisions is “inseparable from wireless carriers” and the divisions work “for the benefit of . . . all telecommunications service providers.” These commenters also support allocating Wireless Telecommunications Bureau FTEs to the Wireline Competition Bureau for regulatory fee purposes. In addition, Frontier supports requiring broadband Internet service providers to pay ITSP regulatory fees.

21. ITTA and CenturyLink argue that if wireless and wireline voice services are not combined in the ITSP category or Wireline Competition Bureau FTEs are not allocated to the Wireless Telecommunications Bureau for regulatory fee purposes, we should reassign some Wireline Competition Bureau FTEs as indirect FTEs. ITTA contends that the high-cost and Lifeline universal service programs benefit regulatees in addition to ITSPs and that we should therefore “adjust its fee structure to account for this industry crossover.” Commenters contend that all Wireline Competition Bureau FTEs that work on “cross-jurisdictional issues” such as numbering and universal service should be reassigned as indirect.

22. CTIA disagrees with the ITTA proposal and contends that there is no basis to reassign Wireline Competition Bureau FTEs to the Wireless Telecommunications Bureau because Wireless Telecommunications Bureau FTEs already participate in wireline proceedings to the extent they raise wireless issues. Also, substantial differences exist between wireless and wireline services concerning regulatory oversight which militate against combining, based on revenues, the CMRS and ITSP fee categories. Wireless providers are not subject to the regulations and requirements imposed on ITSPs, and logically combining CMRS into the ITSP category (based on revenues) merely because both offer voice services ignores the fundamental differences in the work done by FTEs in these two bureaus. CTIA further contends that there is insufficient information to support a clear case for the reclassification of FTEs that work on universal service or numbering issues from direct to indirect.

23. CTIA stresses that the number of FTEs working on any given issue could change significantly year-to-year depending on the individual proceedings the Commission undertakes in any given year, e.g., there has been significant work within the past year on adopting and implementing various components of the Connect America Fund (CAF), reforming the Lifeline Program, and implementing procedures to allow VoIP providers to obtain numbers directly from the numbering administrator. CTIA therefore recommends additional detailed analysis to demonstrate whether and how the number of FTEs working on particular issues may fluctuate and thus the impact of the potential reclassification of those FTEs as indirect.

24. The Commission has emphasized that reallocation of some of the International Bureau's FTEs as indirect was a “singular case” because the work of those International Bureau FTEs “primarily benefits licensees regulated by other bureaus.” We have further stated, “apart from the unique nature of the International Bureau FTEs, the work of all the FTEs in a core bureau contributes to the cost of regulating and overseeing the licensees of that bureau.” We concluded that “[g]iven the significant implications of reassignment of FTEs in our fee calculation, we make changes to FTE classifications only after performing considerable analysis and finding the clearest case for reassignment.”

25. After reviewing the record, we decline to adopt the ITTA proposal. In particular, we conclude that ITTA's proposal does not address this issue in a manner that is reasonable and in compliance with section 9 of the Act. ITTA does not contend that industries other than those in the ITSP regulatory fee category, i.e., CMRS, are subject to the oversight and regulation of the Wireline Competition Bureau or that CMRS creates significant costs for the Wireline Competition Bureau due to such oversight and regulation. We recognize that the CMRS industry participates in the universal service Lifeline program, and that the Wireline Competition Bureau FTEs are responsible for the oversight and regulation of the universal service mechanisms. We are not convinced at this time that this relationship is sufficient to support a reassignment of the FTEs from the Wireline Competition Bureau to the Wireless Telecommunications Bureau, particularly when the FTEs closely involved in wireless Lifeline issues are indirect FTEs, in the Enforcement Bureau and elsewhere, addressing compliance with the Commission's rules.

26. Further, the number of FTEs working on any given issue changes significantly depending on the individual proceedings the Commission undertakes in any given year. We now update FTE allocations on an annual basis to more accurately reflect the number of FTEs working on regulation and oversight of the regulatees in the various fee categories. To attempt to reallocate Wireline Competition Bureau FTEs each year based on particular work assignments is a subjective process that would likely result in unpredictable fluctuations in regulatory fees from year to year. In addition, to the extent wireline proceedings raise wireless issues, Wireless Telecommunications Bureau FTEs already are involved in work related to the wireless issues in such proceedings.

27. ITTA's proposals also do not take into account that many indirect FTEs throughout the Commission outside of the Wireline Competition Bureau work on universal service and other wireline issues. For example, indirect FTEs in the Enforcement Bureau, Office of Managing Director, as well as other bureaus and offices work on various universal service issues. Therefore, it is incorrect to contend that primarily FTEs in the Wireline Competition Bureau are devoted to all of the universal service issues. Further, ITTA's proposal to reassign some or all of the Wireline Competition Bureau FTEs working on universal service as indirect FTEs ignores licensees not involved in high-cost and Lifeline universal service issues, such as radio and television broadcasters, that would be responsible for contributing to the cost of those Wireline Competition Bureau FTEs. Although we recognize Wireline Competition Bureau proceedings can affect other industries, such as CMRS, we are not convinced that this demonstrates the “clearest case” for reassignment of FTEs. For these reasons, we decline to adopt the ITTA proposal at this time.

5. DBS Rate Issues

28. In 2015, we adopted the initial regulatory fee for DBS as a subcategory in the cable television and IPTV category of 12 cents per year per subscriber, or one cent per month. At that time, we stated that we would update the rate as necessary to ensure an appropriate level of regulatory parity and considering the resources dedicated to this subcategory. Such examination is consistent with a report issued by the Government Accountability Office (GAO) in 2012, which observed it is important for the Commission to “regularly update analyses to ensure that fees are set based on relevant information.” When we adopted this regulatory fee subcategory for DBS, we observed that numerous regulatory developments had increased the Media Bureau FTE activity involving regulation and oversight of multichannel video programming distributors (MVPDs), including DBS providers. For example, DBS providers (and cable television operators) are permitted to file program access complaints and retransmission consent complaints. In addition, DBS providers are subject to MVPD requirements such as those pertaining to program carriage and the requirement to negotiate retransmission consent in good faith. We also observed that the Commission had recently adopted requirements that apply to all MVPDs and thus equally apply to DBS providers as part of its implementation of the Commercial Advertisement Loudness Mitigation Act (CALM Act), the Twenty-First Century Communications and Video Accessibility Act of 2010 (CVAA), as well as the Satellite Television Extension and Localism Act (STELA) Reauthorization Act of 2014 (STELAR).

29. In the FY 2016 NPRM, we observed that DBS, along with other MVPDs, continues to receive increased oversight and regulation as a result of the work of Media Bureau FTEs. For example, we recently adopted a Report and Order requiring cable television operators, DBS providers, and certain other licensees to post their public file documents to the FCC-hosted online database. In addition, we recently released a Notice of Proposed Rulemaking pertaining to set-top boxes of cable television and DBS operators. These recent proceedings involving DBS further demonstrate that DBS providers impose regulatory costs and receive benefit from the activities of the Media Bureau FTEs that affect all MVPDs. In the FY 2016 NPRM, we sought comment on a higher regulatory fee rate of 27 cents per subscriber per year for FY 2016—a 24 cent per subscriber baseline with a proportional adjustment of three cents per subscriber associated with facilities reduction costs. This fee would be slightly higher than two cents per month per subscriber and would remain significantly below the cable television/IPTV rate of $1.00 per year.

30. Commenters representing the cable television industry agree that the Media Bureau FTEs increasingly devote time to issues involving the entire MVPD industry, and that DBS, cable television, and IPTV all receive oversight and regulation as a result of the work of the Media Bureau FTEs on MVPD issues. These commenters argue that regulatory fee parity for all MVPDs paying into the cable television/IPTV fee category is therefore justified because there is a “relatively small difference from a regulatory perspective” between DBS and cable television/IPTV. ACA observes that AT&T, the nation's largest MVPD, operates its U-verse IPTV service and its DirecTV DBS service, yet will be assessed lower regulatory fees for its approximately 20 million DirecTV subscribers than it will pay for its approximately six million IPTV subscribers, although these services use comparable Media Bureau FTE resources.

31. ACA agrees that the previously adopted phase-in period was the correct approach; however, DBS providers have already had the benefit of an adequate phase-in and should now be brought quickly up to parity with cable television and IPTV. Thus, ACA and NCTA argue, the Commission should either assess all payors in the cable television/IPTV fee category the same level of fees, or, at a minimum, assess DBS fee payors a higher fee and commit to raising that by 2017 to the fees assessed on cable television operators and IPTV providers.

32. The two DBS providers, ATT and DISH, however, disagree with our proposal and argue that there is no justification for increasing the fee to 27 cents per subscriber per year for FY 2016. ATT contends that we have failed to demonstrate any specific reason for this fee increase for DBS providers. DISH argues that the increase of an additional 15 cents per subscriber per year will subject DBS providers to “rate shock” and that we have abandoned our “phased approach.” We disagree that this rate increase, still substantially below the cable television/IPTV rate, will cause “rate shock.” As NTCA observes, it is unpersuasive that rate shock will occur under “a 27 cents annual fee for services that cost on average about $100 per month.”

33. The proposed fee of 27 cents per subscriber per year continues to follow our decision to assess fees for DBS in the cable television/IPTV category. In particular, the increase we adopt today is not based on an incremental increase in Media Bureau FTEs working on MVPD issues, but is supported by data and analysis and wholly consistent with the approach used in FY 2015. We reiterate that the DBS and cable television/IPTV oversight and regulatory work of Media Bureau FTEs is similar. As such, we remain committed as a goal to regulatory fee parity for all MVPDs paying into the cable television/IPTV fee category. We find it appropriate to adopt the rate proposed in the FY 2016 NPRM. For reasons similar to those discussed in the FY 2015 NPRM, and based on our analysis of the resources dedicated to this subcategory, including the resources dedicated to the pending portfolio of MVPD proceedings, we revise the DBS fee rate. Specifically, in this FY 2016 regulatory fee proceeding, we adopt a DBS fee rate of 27 cents per subscriber per year for FY 2016, as set forth in the fee schedule. This fee includes a 24 cent per subscriber baseline with a proportional adjustment of three cents per subscriber associated with facilities reduction costs.

6. Broadcasters' Fees

a. AM and FM Broadcasters Serving the Smallest Two Market Levels (=25,000 and 25,001-75,000)

34. In the FY 2016 NPRM, we proposed to include a higher population row in the table for AM and FM broadcasters, i.e., to divide broadcasters that serve 3,000,001-6,000,000 from those that have a higher population coverage. Similarly, we proposed to standardize the incremental increase in fees as the population served increases, and to more consistently assess fees based on the type and class of service. We also proposed to adjust the television broadcasters table so that Top 10 market stations should pay about twice what stations in markets 26-50 pay.

35. Several commenters contend that our proposal is too burdensome for small independent radio and television stations. One commenter contends that the addition of “greater than 6 million” is a welcome step for radio broadcasters, but that it does not go far enough because AM stations bill far less advertising revenue than FM stations. Another commenter, representing a group of recording artists, observes that “the [radio] stations that support us the most are the smaller independents not affiliated with the major networks. These smaller stations struggle on a day-to-day basis.” Several commenters suggest that we use a combination of revenue and a set fee instead of a market-based fee, to assess regulatory fees for radio and television broadcasters.

36. We do not require broadcasters to report their revenues. Thus, the revenue-based proposal is not practicable at this time. We agree, however, that the proposed rates should be revised downward for the smaller AM and FM radio broadcast stations. Extending some relief to these small radio broadcasters may facilitate their continued ability to stay in business and serve their small and rural communities. Therefore, after reviewing the record, including the comments filed by the industry describing the economic hardship faced by many small rural independent radio stations, we are adopting a revised version of the proposed table in the FY 2016 NPRM and reducing the regulatory fees in the two lowest population tiers for AM and FM broadcasters from the amounts proposed.

b. Puerto Rico Broadcasters Association Proposal

37. The PRBA and Arso comment on the issues set forth in the PRBA December 10, 2014 letter (PRBA Letter), seeking regulatory fee relief for the radio broadcasters in the Commonwealth of Puerto Rico due to economic hardship, unique geography, and declining population. In the PRBA Letter, PRBA requested that the Commission use more recent figures to determine the radio station population count for radio stations in Puerto Rico. PRBA stated that due to the economic hardship in the territory, the population has decreased in the past nine years by almost six percent because of migration to the mainland United States and a declining birthrate. Finally, PRBA contended that the radio listening market is limited because it is restricted to listeners within the boundaries of the island.

38. PRBA and Arso contend that the economic situation has worsened since the PRBA Letter was filed, and that it is crucial that the Commission provide relief from regulatory fee obligations for Puerto Rican broadcasters. PRBA contends that requiring each radio and television station to submit a waiver request would negate any benefit of the Commission's efforts. Arso observes that it would be burdensome for companies to pay the regulatory fee when requesting a fee reduction. Instead, PRBA contends, the Commission should either move the Puerto Rican stations to a lower population stratum or create a separate fee category for the Puerto Rican market. PRBA urges the Commission to adopt the second proposal—a separate fee category for the entire Puerto Rican market—at a rate 30 percent lower than the normal rate for each station.

39. We decline to adopt the PRBA proposal at this time. Fee relief is ordinarily processed through a waiver request or payment deferral. While we recognize that the economic situation in Puerto Rico is difficult in general, without the specific information needed to justify a waiver request or payment deferral we would not know the particular circumstances of the regulatee or licensee to support a request for relief. Information concerning how to request fee relief can be found on our Web site, e.g., https://www.fcc.gov/document/fy-2015-waiver-regulatory-fees-fact-sheet. As discussed above, we are adopting a revised version of the proposed table and thus reducing the regulatory fees in the two lowest population tiers from the amount proposed for radio broadcasters, which should provide some amount of fee relief to eleven of the PRBA stations.

c. Broadcast Television Incentive Auction—Reminder To Pay FY 2016 and FY 2017 Regulatory Fees

40. The Commission's Broadcast Television Incentive Auction (Incentive Auction) is underway, and all broadcast television licensees are reminded that they continue to be responsible for payment of FY 2016 regulatory fees if they held a license or construction permit as of October 1, 2015, as well as for payment of FY 2017 regulatory fees if they continue to hold their license or construction permit as of October 1, 2016. Licensees must pay the required regulatory fees to avoid any delay of payments resulting from the Incentive Auction. Finally, regulatees are reminded that non-payment of regulatory fees, if required, will place them in red light status and prevent them from conducting business with the Commission.

V. Procedural Matters

A. Payment of Regulatory Fees

1. Payments by Check Will Not Be Accepted for Payment of Annual Regulatory Fees

41. 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. The initiative to reduce paper and curtail check payments for regulatory fees is expected to produce cost savings, reduce errors, and improve efficiencies across government. In FY 2015, we 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. The paperless procedure requires that all payments be made by online Automated Clearing House (ACH) payment, online credit card, or wire transfer. 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 in order to associate the wire payment with the correct regulatory fee information.

2. Revised Credit Card Transaction Levels

42. Since June 1, 2015, in accordance with U.S. Treasury Announcement No. A-2014-04 (July 2014), the amount that can be charged on a credit card for transactions with federal agencies has been limited to $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 2016 regulatory fee collection in Fact Sheets, available at https://www.fcc.gov/regfees.

3. Payment Methods

43. During the fee season for collecting FY 2016 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 at http://transition.fcc.gov/fees/regfees.html. The receiving bank for all wire payments is the U.S. Treasury, New York, New York. When making a wire transfer, regulatees must fax a copy of their Fee Filer generated Form 159-E 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://ransition.fcc.gov/fees/wiretran.html .

4. De Minimis Regulatory Fees

44. Regulatees whose total FY 2016 annual regulatory fee liability, including all categories of fees for which payment is due, is $500 or less are exempt from payment of FY 2015 regulatory fees. The de minimis threshold applies only to filers of annual regulatory fees (not regulatory fees paid through multi-year filings), and is not a permanent exemption. Regulatees will need to reevaluate their total fee liability each fiscal year to determine whether they meet the de minimis exemption.

5. Standard Fee Calculations and Payment Dates

45. 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, 2015 for AM/FM radio stations, VHF/UHF full service television stations, and satellite television stations. Regulatory fees must be paid for all broadcast facility licenses granted on or before October 1, 2015. For providers of DBS service, regulatory fees should be paid based on a subscriber count on or about December 31, 2015. In instances where a permit or license is transferred or assigned after October 1, 2015, responsibility for payment rests with the holder of the permit or license as of the fee due date.
• Wireline (Common Carrier) Services: Regulatory fees must be paid for authorizations that were granted on or before October 1, 2015. In instances where a permit or license is transferred or assigned after October 1, 2015, 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 RespOrgs that manage Toll Free Numbers (TFN), regulatory fees should be paid on all working, assigned, and reserved toll free numbers, including those toll free numbers that are in transit status, or any other status as defined in section 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, 2015.

• 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, 2015. The number of subscribers, units, or telephone numbers on December 31, 2015 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, 2015, 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 (see Table 3) to publicize our estimates of the number of “small multi-year wireless” licenses that will be renewed or newly obtained in FY 2016.
• Multichannel Video Programming Distributor Services (cable television operators and CARS licensees): Regulatory fees must be paid for the number of basic cable television subscribers as of December 31, 2015. Regulatory fees also must be paid for CARS licenses that were granted on or before October 1, 2015. In instances where a permit or license is transferred or assigned after October 1, 2015, 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, 2015. In instances where a permit or license is transferred or assigned after October 1, 2015, 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, 2015. In instances where a license is transferred or assigned after October 1, 2015, responsibility for payment rests with the holder of the license as of the fee due date. For regulatory fee purposes, the allocation in FY 2016 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 International Bearer Circuits are to be paid by facilities-based common carriers that have active (used or leased) international bearer circuits as of December 31, 2015 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, the facilities-based common carriers must include circuits used by themselves or their affiliates. In addition, non-common carrier satellite operators must pay a fee for each circuit they and their affiliates hold and each circuit sold or leased to any customer, other than an international common carrier authorized by the Commission to provide U.S. international common carrier services. For these purposes, “active circuits” include backup and redundant circuits as of December 31, 2015. 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, 2015, responsibility for payment rests with the holder of the permit or license as of the fee due date. For regulatory fee purposes, the allocation in FY 2016 will remain at 87.6 percent for submarine cable and 12.4 percent for satellite/terrestrial facilities.

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

46. 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).

47. 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.

48. 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, 2015), 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.

C. Enforcement

49. To be considered timely, regulatory fee payments must be made electronically by the payment due date for regulatory fees. Section 9(c) of the Act requires us to impose a late payment penalty of 25 percent of the unpaid amount to be assessed on the first day following the deadline for filing these fees. Failure to pay regulatory fees and/or any late penalty will subject regulatees to sanctions, including those set forth in section 1.1910 of the Commission's rules, which generally requires the Commission to withhold action on “applications, including on a petition for reconsideration or any application for review of a fee determination, or requests for authorization by any entity found to be delinquent in its debt to the Commission” and in the DCIA. We also assess administrative processing charges on delinquent debts to recover additional costs incurred in processing and handling the debt pursuant to the DCIA and section 1.1940(d) of the Commission's rules. These administrative processing charges will be assessed on any delinquent regulatory fee, in addition to the 25 percent late charge penalty. In the case of partial payments (underpayments) of regulatory fees, the payor will be given credit for the amount paid, but if it is later determined that the fee paid is incorrect or not timely paid, then the 25 percent late charge penalty (and other charges and/or sanctions, as appropriate) will be assessed on the portion that is not paid in a timely manner.

50. Pursuant to the “red light rule,” we will withhold action on any applications or other requests for benefits filed by anyone who is delinquent in any non-tax debts owed to the Commission (including regulatory fees) and will ultimately dismiss those applications or other requests if payment of the delinquent debt or other satisfactory arrangement for payment is not made. Failure to pay regulatory fees can also result in the initiation of a proceeding to revoke any and all authorizations held by the entity responsible for paying the delinquent fee(s). Pursuant to a pilot program, we have initiated procedures to transfer debt to the Centralized Receivables Service at the U.S. Treasury, as described below.

D. Transfers of Unpaid Debt to Centralized Receivables Service (CRS), U.S. Treasury

51. Under section 9 of the Act, Commission rules, and federal debt collection laws, a licensee's regulatory fee is due on the first day of the fiscal year and payable at a date established in the Commission's annual regulatory fee Report and Order. In October 2015, the Commission, under revised procedures, began transferring unpaid regulatory fee receivables directly to the CRS at the U.S. Treasury rather than trying to collect the debt itself and then transferring the remaining unpaid debts to Treasury. Under revised procedures, the Commission can transfer delinquent debt to Treasury for further collection action within 120 days after the date of delinquency. However, regulatees will not likely see any substantial change in the current procedures of how past due debts are to be paid, except that the debts will be handled by CRS (U.S. Treasury) rather than by the Commission.

E. Effective Date

52. Providing a 30 day period after Federal Register publication before this Report and Order becomes effective as required by 5 U.S.C. 553(d) will not allow sufficient time to collect the FY 2016 fees before FY 2016 ends on September 30, 2016. For this reason, pursuant to 5 U.S.C. 553(d)(3), we find there is good cause to waive the requirements of section 553(d), and this Report and Order will become effective upon publication in the Federal Register. Because payments of the regulatory fees will not actually be due until late September, persons affected by this Report and Order will still have a reasonable period in which to make their payments and thereby comply with the rules established herein.

VI. Additional Tables

Table 5—Sources of Payment Unit Estimates for FY 2016

In order to calculate individual service fees for FY 2016, we adjusted FY 2015 payment units for each service to more accurately reflect expected FY 2016 payment liabilities. We obtained our updated estimates through a variety of means. For example, we used Commission licensee data bases, actual prior year payment records and industry and trade association projections when available. The databases we consulted include our Universal Licensing System (ULS), International Bureau Filing System (IBFS), Consolidated Database System (CDBS) and Cable Operations and Licensing System (COALS), as well as reports generated within the Commission such as the Wireless Telecommunications Bureau's Numbering Resource Utilization Forecast.

We sought verification for these estimates from multiple sources and, in all cases, we compared FY 2016 estimates with actual FY 2015 payment units to ensure that our revised estimates were reasonable. Where appropriate, we adjusted and/or rounded our final estimates to take into consideration the fact that certain variables that impact on the number of payment units cannot yet be estimated with sufficient accuracy. These include an unknown number of waivers and/or exemptions that may occur in FY 2016 and the fact that, in many services, the number of actual licensees or station operators fluctuates from time to time due to economic, technical, or other reasons. When we note, for example, that our estimated FY 2016 payment units are based on FY 2015 actual payment units, it does not necessarily mean that our FY 2016 projection is exactly the same number as in FY 2015. We have either rounded the FY 2016 number or adjusted it slightly to account for these variables.

Table 6—Factors, Measurements, and Calculations That Determines Station Signal Contours and Associated Population Coverages

AM Stations

For stations with nondirectional daytime antennas, the theoretical radiation was used at all azimuths. For stations with directional daytime antennas, specific information on each day tower, including field ratio, phase, spacing, and orientation was retrieved, as well as the theoretical pattern root-mean-square of the radiation in all directions in the horizontal plane (RMS) figure (milliVolt per meter (mV/m) @ 1 km) for the antenna system. The standard, or augmented standard if pertinent, horizontal plane radiation pattern was calculated using techniques and methods specified in sections 73.150 and 73.152 of the Commission's rules. Radiation values were calculated for each of 360 radials around the transmitter site. Next, estimated soil conductivity data was retrieved from a database representing the information in FCC Figure R3. Using the calculated horizontal radiation values, and the retrieved soil conductivity data, the distance to the principal community (5 mV/m) contour was predicted for each of the 360 radials. The resulting distance to principal community contours were used to form a geographical polygon. Population counting was accomplished by determining which 2010 block centroids were contained in the polygon. (A block centroid is the center point of a small area containing population as computed by the U.S. Census Bureau.) The sum of the population figures for all enclosed blocks represents the total population for the predicted principal community coverage area.

FM Stations

The greater of the horizontal or vertical effective radiated power (ERP) (kW) and respective height above average terrain (HAAT) (m) combination was used. Where the antenna height above mean sea level (HAMSL) was available, it was used in lieu of the average HAAT figure to calculate specific HAAT figures for each of 360 radials under study. Any available directional pattern information was applied as well, to produce a radial-specific ERP figure. The HAAT and ERP figures were used in conjunction with the Field Strength (50-50) propagation curves specified in 47 CFR 73.313 of the Commission's rules to predict the distance to the principal community (70 dBu (decibel above 1 microVolt per meter) or 3.17 mV/m) contour for each of the 360 radials. The resulting distance to principal community contours were used to form a geographical polygon. Population counting was accomplished by determining which 2010 block centroids were contained in the polygon. The sum of the population figures for all enclosed blocks represents the total population for the predicted principal community coverage area.

VII. Final Regulatory Flexibility Analysis

1. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was included in the Notice of Proposed Rulemaking. The Commission sought written public comment on these proposals including comment on the IRFA. This Final Regulatory Flexibility Analysis (FRFA) conforms to the IRFA.

A. Need for, and Objectives of, the Report and Order

2. In this Report and Order, we conclude the Assessment and Collection of Regulatory Fees for Fiscal Year (FY) 2016 proceeding to collect $384,012,497.00 in regulatory fees for FY 2016, pursuant to section 9 of the Communications Act of 1934, as amended (Communications Act or Act). These regulatory fees will be due on September 27, 2016. Under section 9 of the Communications Act, regulatory fees are mandated by Congress and collected to recover the regulatory costs associated with the Commission's enforcement, policy and rulemaking, user information, and international activities in an amount that can be reasonably expected to equal the amount of the Commission's annual appropriation.

3. This FY 2016 Report and Order adopts a regulatory fee schedule that includes the following noteworthy changes from prior years: (1) An increase in regulatory fees across all fee categories to offset the Commission's facilities reduction costs; (2) an updated regulatory fee for Direct Broadcast Satellite (DBS) providers, a subcategory in the cable television and Internet Protocol Television (IPTV) category; and (3) adjustments to the regulatory fees on radio and television broadcasters, based on type and class of service and on the population served.

B. Summary of the Significant Issues Raised by the Public Comments in Response to the IRFA

4. None.

C. Description and Estimate of the Number of Small Entities to Which the Rules Will Apply

5. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the proposed rules and policies, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA. Nationwide, there are a total of approximately 27.9 million small businesses, according to the SBA.

6. Wired Telecommunications Carriers. The U.S. Census Bureau defines this industry as “establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired communications networks. Transmission facilities may be based on a single technology or a combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services, wired (cable) audio and video programming distribution, and wired broadband internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry.” The SBA has developed a small business size standard for Wired Telecommunications Carriers, which consists of all such companies having 1,500 or fewer employees. Census data for 2012 shows that there were 3,117 firms that operated that year. Of this total, 3,083 operated with fewer than 1,000 employees. Thus, under this size standard, the majority of firms in this industry can be considered small.

7. Local Exchange Carriers (LECs). Neither the Commission nor the SBA has developed a size standard for small businesses specifically applicable to local exchange services. The closest applicable NAICS Code category is Wired Telecommunications Carriers as defined in paragraph 6 of this FRFA. Under the applicable SBA size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, census data for 2012 shows that there were 3,117 firms that operated that year. Of this total, 3,083 operated with fewer than 1,000 employees. The Commission therefore estimates that most providers of local exchange carrier service are small entities that may be affected by the rules adopted.

8. Incumbent LECs. Neither the Commission nor the SBA has developed a small business size standard specifically for incumbent local exchange services. The closest applicable NAICS Code category is Wired Telecommunications Carriers as defined in paragraph 6 of this FRFA. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 3,117 firms operated in that year. Of this total, 3,083 operated with fewer than 1,000 employees. Consequently, the Commission estimates that most providers of incumbent local exchange service are small businesses that may be affected by the rules and policies adopted. Three hundred and seven (307) Incumbent Local Exchange Carriers reported that they were incumbent local exchange service providers. Of this total, an estimated 1,006 have 1,500 or fewer employees.

9. Competitive Local Exchange Carriers (Competitive LECs), Competitive Access Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers. Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The appropriate NAICS Code category is Wired Telecommunications Carriers, as defined in paragraph 6 of this FRFA. Under that size standard, such a business is small if it has 1,500 or fewer employees. U.S. Census data for 2012 indicate that 3,117 firms operated during that year. Of that number, 3,083 operated with fewer than 1,000 employees. Based on this data, the Commission concludes that the majority of Competitive LECS, CAPs, Shared-Tenant Service Providers, and Other Local Service Providers, are small entities. According to Commission data, 1,442 carriers reported that they were engaged in the provision of either competitive local exchange services or competitive access provider services. Of these 1,442 carriers, an estimated 1,256 have 1,500 or fewer employees. In addition, 17 carriers have reported that they are Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 or fewer employees. Also, 72 carriers have reported that they are Other Local Service Providers. Of this total, 70 have 1,500 or fewer employees. Consequently, based on internally researched FCC data, the Commission estimates that most providers of competitive local exchange service, competitive access providers, Shared-Tenant Service Providers, and Other Local Service Providers are small entities.

10. Interexchange Carriers (IXCs). Neither the Commission nor the SBA has developed a definition for Interexchange Carriers. The closest NAICS Code category is Wired Telecommunications Carriers as defined in paragraph 6 of this FRFA. The applicable size standard under SBA rules is that such a business is small if it has 1,500 or fewer employees. U.S. Census data for 2012 indicates that 3,117 firms operated during that year. Of that number, 3,083 operated with fewer than 1,000 employees. According to internally developed Commission data, 359 companies reported that their primary telecommunications service activity was the provision of interexchange services. Of this total, an estimated 317 have 1,500 or fewer employees. Consequently, the Commission estimates that the majority of interexchange service providers are small entities that may be affected by the rules adopted.

11. Prepaid Calling Card Providers. Neither the Commission nor the SBA has developed a small business definition specifically for prepaid calling card providers. The most appropriate NAICS code-based category for defining prepaid calling card providers is Telecommunications Resellers. This industry comprises establishments engaged in purchasing access and network capacity from owners and operators of telecommunications networks and reselling wired and wireless telecommunications services (except satellite) to businesses and households. Establishments in this industry resell telecommunications; they do not operate transmission facilities and infrastructure. Mobile virtual networks operators (MVNOs) are included in this industry. Under the applicable SBA size standard, such a business is small if it has 1,500 or fewer employees. U.S. Census data for 2012 show that 1,341 firms provided resale services during that year. Of that number, 1,341 operated with fewer than 1,000 employees. Thus, under this category and the associated small business size standard, the majority of these prepaid calling card providers can be considered small entities. According to Commission data, 193 carriers have reported that they are engaged in the provision of prepaid calling cards. All 193 carriers have 1,500 or fewer employees. Consequently, the Commission estimates that the majority of prepaid calling card providers are small entities that may be affected by the rules adopted.

12. Local Resellers. Neither the Commission nor the SBA has developed a small business size standard specifically for Local Resellers. The SBA has developed a small business size standard for the category of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2012 show that 1,341 firms provided resale services during that year. Of that number, 1,341 operated with fewer than 1,000 employees. Under this category and the associated small business size standard, the majority of these local resellers can be considered small entities. According to Commission data, 213 carriers have reported that they are engaged in the provision of local resale services. Of this total, an estimated 211 have 1,500 or fewer employees. Consequently, the Commission estimates that the majority of local resellers are small entities that may be affected by the rules adopted.

13. Toll Resellers. The Commission has not developed a definition for Toll Resellers. The closest NAICS Code Category is Telecommunications Resellers, and the SBA has developed a small business size standard for the category of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2012 show that 1,341 firms provided resale services during that year. Of that number, 1,341 operated with fewer than 1,000 employees. Thus, under this category and the associated small business size standard, the majority of these resellers can be considered small entities. According to Commission data, 881 carriers have reported that they are engaged in the provision of toll resale services. Of this total, an estimated 857 have 1,500 or fewer employees. Consequently, the Commission estimates that the majority of toll resellers are small entities.

14. Other Toll Carriers. Neither the Commission nor the SBA has developed a definition for small businesses specifically applicable to Other Toll Carriers. This category includes toll carriers that do not fall within the categories of interexchange carriers, operator service providers, prepaid calling card providers, satellite service carriers, or toll resellers. The closest applicable NAICS Code category is for Wired Telecommunications Carriers as defined in paragraph 6 of this FRFA. Under the applicable SBA size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2012 shows that there were 3,117 firms that operated that year. Of this total, 3,083 operated with fewer than 1,000 employees. Thus, under this category and the associated small business size standard, the majority of Other Toll Carriers can be considered small. According to internally developed Commission data, 284 companies reported that their primary telecommunications service activity was the provision of other toll carriage. Of these, an estimated 279 have 1,500 or fewer employees. Consequently, the Commission estimates that most Other Toll Carriers are small entities.

15. W ireless Telecommunications Carriers (except Satellite). This industry comprises establishments engaged in operating and maintaining switching and transmission facilities to provide communications via the airwaves. Establishments in this industry have spectrum licenses and provide services using that spectrum, such as cellular services, paging services, wireless Internet access, and wireless video services. The appropriate size standard under SBA rules is that such a business is small if it has 1,500 or fewer employees. For this industry, Census data for 2012 show that there were 967 firms that operated for the entire year. Of this total, 955 firms had fewer than 1,000 employees. Thus under this category and the associated size standard, the Commission estimates that the majority of wireless telecommunications carriers (except satellite) are small entities. Similarly, according to internally developed Commission data, 413 carriers reported that they were engaged in the provision of wireless telephony, including cellular service, Personal Communications Service (PCS), and Specialized Mobile Radio (SMR) services. Of this total, an estimated 261 have 1,500 or fewer employees. Thus, using available data, we estimate that the majority of wireless firms can be considered small.

16. Television Broadcasting. This Economic Census category “comprises establishments primarily engaged in broadcasting images together with sound. These establishments operate television broadcasting studios and facilities for the programming and transmission of programs to the public.” These establishments also produce or transmit visual programming to affiliated broadcast television stations, which in turn broadcast the programs to the public on a predetermined schedule. Programming may originate in their own studio, from an affiliated network, or from external sources. The SBA has created the following small business size standard for Television Broadcasting firms: Those having $38.5 million or less in annual receipts. The 2012 Economic Census reports that 751 television broadcasting firms operated during that year. Of that number, 656 had annual receipts of less than $25 million per year. Based on that Census data we conclude that a majority of firms that operate television stations are small. The Commission has estimated the number of licensed commercial television stations to be 1,387. In addition, according to Commission staff review of the BIA Advisory Services, LLC's Media Access Pro Television Database, on March 28, 2012, about 950 of an estimated 1,300 commercial television stations (or approximately 73 percent) had revenues of $14 million or less. We therefore estimate that the majority of commercial television broadcasters are small entities.

17. In assessing whether a business concern qualifies as small under the above definition, business (control) affiliations must be included. Our estimate, therefore, likely overstates the number of small entities that might be affected by our action, because the revenue figure on which it is based does not include or aggregate revenues from affiliated companies. In addition, an element of the definition of “small business” is that the entity not be dominant in its field of operation. We are unable at this time to define or quantify the criteria that would establish whether a specific television station is dominant in its field of operation. Accordingly, the estimate of small businesses to which rules may apply does not exclude any television station from the definition of a small business on this basis and is therefore possibly over-inclusive to that extent.

18. In addition, the Commission has estimated the number of licensed noncommercial educational (NCE) television stations to be 396. These stations are non-profit, and therefore considered to be small entities. There are also 2,528 low power television stations, including Class A stations (LPTV). Given the nature of these services, we will presume that all LPTV licensees qualify as small entities under the above SBA small business size standard.

19. Radio Stations. This Economic Census category “comprises establishments primarily engaged in broadcasting aural programs by radio to the public. Programming may originate in their own studio, from an affiliated network, or from external sources.” The SBA has established a small business size standard for this category, which is: Such firms having $38.5 million or less in annual receipts. Census data for 2012 show that 2,849 radio station firms operated during that year. Of that number, 2,806 operated with annual receipts of less than $25 million per year. According to Commission staff review of BIA Advisory Services, LLC's Media Access Pro Radio Database, on March 28, 2012, about 10,759 (97 percent) of 11,102 commercial radio stations had revenues of $38.5 million or less. Therefore, the majority of such entities are small entities.

20. In assessing whether a business concern qualifies as small under the above size standard, business affiliations must be included. In addition, to be determined to be a “small business,” the entity may not be dominant in its field of operation. We note that it is difficult at times to assess these criteria in the context of media entities, and our estimate of small businesses may therefore be over-inclusive.

21. Cable Television and Other Subscription Programming. This industry comprises establishments primarily engaged in operating studios and facilities for the broadcasting of programs on a subscription or fee basis. The broadcast programming is typically narrowcast in nature (e.g., limited format, such as news, sports, education, or youth-oriented). These establishments produce programming in their own facilities or acquire programming from external sources. The programming material is usually delivered to a third party, such as cable systems or direct-to-home satellite systems, for transmission to viewers. The SBA has established a size standard for this industry of $38.5 million or less. Census data for 2012 shows that there were 367 firms that operated that year. Of this total, 319 operated with annual receipts of less than $25 million. Thus under this size standard, the majority of firms offering cable and other program distribution services can be considered small and may be affected by rules adopted.

22. Cable Companies and Systems. The Commission has developed its own small business size standards for the purpose of cable rate regulation. Under the Commission's rules, a “small cable company” is one serving 400,000 or fewer subscribers nationwide. Industry data indicate that there are currently 4,600 active cable systems in the United States. Of this total, all but ten cable operators nationwide are small under the 400,000-subscriber size standard. In addition, under the Commission's rate regulation rules, a “small system” is a cable system serving 15,000 or fewer subscribers. Current Commission records show 4,600 cable systems nationwide. Of this total, 3,900 cable systems have fewer than 15,000 subscribers, and 700 systems have 15,000 or more subscribers, based on the same records. Thus, under this standard as well, we estimate that most cable systems are small entities.

23. Cable System Operators (Telecom Act Standard). The Communications Act also contains a size standard for small cable system operators, which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.” There are approximately 52,403,705 cable video subscribers in the United States today. Accordingly, an operator serving fewer than 524,037 subscribers shall be deemed a small operator if its annual revenues, when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the aggregate. Based on available data, we find that all but nine incumbent cable operators are small entities under this size standard. We note that the Commission neither requests nor collects information on whether cable system operators are affiliated with entities whose gross annual revenues exceed $250 million. Although it seems certain that some of these cable system operators are affiliated with entities whose gross annual revenues exceed $250 million, we are unable at this time to estimate with greater precision the number of cable system operators that would qualify as small cable operators under the definition in the Communications Act.

24. Direct Broadcast Satellite (DBS) Service. 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. DBS is now included in SBA's economic census category “Wired Telecommunications Carriers.” The Wired Telecommunications Carriers industry comprises establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired telecommunications networks. Transmission facilities may be based on a single technology or combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services, wired (cable) audio and video programming distribution; and wired broadband internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry. The SBA determines that a wireline business is small if it has fewer than 1,500 employees. Census data for 2012 indicate that 3,117 wireline companies were operational during that year. Of that number, 3,083 operated with fewer than 1,000 employees. Based on that data, we conclude that the majority of wireline firms are small under the applicable standard. However, currently only two entities provide DBS service, which requires a great deal of capital for operation: ATT and DISH Network. ATT and DISH Network each report annual revenues that are in excess of the threshold for a small business. Accordingly, we must conclude that internally developed FCC data are persuasive that in general DBS service is provided only by large firms.

25. All Other Telecommunications. “All Other Telecommunications” is defined as follows: This U.S. industry is comprised of establishments that are primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems. Establishments providing Internet services or voice over Internet protocol (VoIP) services via client-supplied telecommunications connections are also included in this industry. The SBA has developed a small business size standard for “All Other Telecommunications,” which consists of all such firms with gross annual receipts of $32.5 million or less. For this category, census data for 2012 show that there were 1,442 firms that operated for the entire year. Of these firms, a total of 1,400 had gross annual receipts of less than $25 million. Thus, a majority of “All Other Telecommunications” firms potentially affected by the rules adopted can be considered small.

26. RespOrgs. RespOrgs, i.e., Responsible Organizations, are entities chosen by toll free subscribers to manage and administer the appropriate records in the toll free Service Management System for the toll free subscriber. Although RespOrgs are often wireline carriers, they can also include non-carrier entities. Therefore, in the definition herein of RespOrgs, two categories are presented, i.e., Carrier RespOrgs and Non-Carrier RespOrgs.

27. Carrier RespOrgs. Neither the Commission, the U.S. Census, nor the SBA have developed a definition for Carrier RespOrgs. Accordingly, the Commission believes that the closest NAICS Code-based definitional categories for Carrier RespOrgs are Wired Telecommunications Carriers, and Wireless Telecommunications Carriers (except satellite).

28. The U.S. Census Bureau defines Wired Telecommunications Carriers as establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired communications networks. Transmission facilities may be based on a single technology or a combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services, wired (cable) audio and video programming distribution, and wired broadband internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry. The SBA has developed a small business size standard for Wired Telecommunications Carriers, which consists of all such companies having 1,500 or fewer employees. Census data for 2012 show that there were 3,117 Wired Telecommunications Carrier firms that operated for that entire year. Of that number, 3,083 operated with less than 1,000 employees. Based on that data, we conclude that the majority of Carrier RespOrgs that operated with wireline-based technology are small.

29. The U.S. Census Bureau defines Wireless Telecommunications Carriers (except satellite) as establishments engaged in operating and maintaining switching and transmission facilities to provide communications via the airwaves, such as cellular services, paging services, wireless internet access, and wireless video services. The appropriate size standard under SBA rules is that such a business is small if it has 1,500 or fewer employees. Census data for 2012 show that 967 Wireless Telecommunications Carriers operated in that year. Of that number, 955 operated with less than 1,000 employees. Based on that data, we conclude that the majority of Carrier RespOrgs that operated with wireless-based technology are small.

30. Non-Carrier RespOrgs. Neither the Commission, the Census, nor the SBA have developed a definition of Non-Carrier RespOrgs. Accordingly, the Commission believes that the closest NAICS Code-based definitional categories for Non-Carrier RespOrgs are “Other Services Related To Advertising” and “Other Management Consulting Services.”

31. The U.S. Census defines Other Services Related to Advertising as comprising establishments primarily engaged in providing advertising services (except advertising agency services, public relations agency services, media buying agency services, media representative services, display advertising services, direct mail advertising services, advertising material distribution services, and marketing consulting services? The SBA has established a size standard for this industry as annual receipts of $15 million dollars or less. Census data for 2012 show that 5,804 firms operated in this industry for the entire year. Of that number, 5,249 operated with annual receipts of less than $10 million. Based on that data we conclude that the majority of Non-Carrier RespOrgs who provide TFN-related advertising services are small.

32. The U.S. Census defines Other Management Consulting Services as establishments primarily engaged in providing management consulting services (except administrative and general management consulting; human resources consulting; marketing consulting; or process, physical distribution, and logistics consulting). Establishments providing telecommunications or utilities management consulting services are included in this industry. The SBA has established a size standard for this industry of $15 million dollars or less. Census data for 2012 show that 3,683 firms operated in this industry for that entire year. Of that number, 3,632 operated with less than $10 million in annual receipts. Based on this data, we conclude that a majority of non-carrier RespOrgs who provide TFN-related management consulting services are small.

33. In addition to the data contained in the four (see above) U.S. Census NAICS Code categories that provide definitions of what services and functions the Carrier and Non-Carrier RespOrgs provide, Somos, the trade association that monitors RespOrg activities, compiled data showing that as of July 1, 2016 there were 23 RespOrgs operational in Canada and 436 RespOrgs operational in the United States, for a total of 459 RespOrgs currently registered with Somos.

D. Description of Projected Reporting, Recordkeeping and Other Compliance Requirements

34. This Report and Order does not adopt any new reporting, recordkeeping, or other compliance requirements.

E. Steps Taken To Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered

35. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its approach, which may include the following four alternatives, among others: (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.

36. This Report and Order does not adopt any new reporting requirements. Therefore no adverse economic impact on small entities will be sustained based on reporting requirements.

37. In keeping with the requirements of the Regulatory Flexibility Act, we have considered certain alternative means of mitigating the effects of fee increases to a particular industry segment. For example, beginning last year, in FY 2015, the Commission increased the de minimis threshold from under $10 to $500 (the total of all annual regulatory fees), which will impact many small entities that pay regulatory fees for ITSP, paging, cellular, cable, and Low Power Television/FM Translators. Historically, many of these small entities have been late in making their fee payments to the Commission by the due date. This increase in the de minimis threshold to $500 will relieve regulatees both financially and administratively. This Report and Order also adopts regulatory fees for the smaller market AM and FM stations at a lower amount than had been proposed. Finally, regulatees may also seek waivers or other relief on the basis of financial hardship. See 47 CFR 1.1166.

F. Federal Rules That May Duplicate, Overlap, or Conflict

38. None.

VIII. Ordering Clauses

39. Accordingly, IT IS ORDERED that, pursuant to Sections 4(i) and (j), 9, and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 159, and 303(r), this Report and Order IS HEREBY ADOPTED.

40. IT IS FURTHER ORDERED that this Report and Order SHALL BE EFFECTIVE September 26, 2016.

41. IT IS FURTHER ORDERED that the Commission's Consumer Governmental Affairs Bureau, Reference Information Center, SHALL SEND a copy of this Report and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the U.S. Small Business Administration.

List of Subjects in 47 CFR Part 1

• Administrative practice and procedure
• Radio
• Reporting and recordkeeping requirements

Rule Changes

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR, part 1 as follows:

PART 1—PRACTICE AND PROCEDURE

1. The authority citation for part 1 continues to read as follows:

Authority: 47 U.S.C. 151, 154(i), 155, 157, 225, 303(r), 309, 1403, 1404, 1451, and 1452.

2. Section 1.1152 is revised to read as follows:

3. Section 1.1153 is revised to read as follows:

4. Section 1.1154 is revised to read as follows:

5. Section 1.1155 is revised to read as follows:

6. Section 1.1156 is revised to read as follows: