FCC Opts to Keep Cable Fees Status Quo
By Ted Hearn -- Multichannel News, 7/23/2006 8:00:00 PM
The Federal Communications Commission on July 17 saved the satellite-TV industry about $13 million by rejecting a cable-industry plan that called for hiking federal regulatory fees on its chief video competitors.
The cable plan, sponsored by the industry’s two leading trade organizations, called for trimming the $50 million cable operators owe the U.S. Treasury in fiscal 2006 and recovering the deficit from DirecTV and EchoStar Communications Corp., both of which opposed the idea in a joint campaign.
In an order establishing the fee regime for the current year, the FCC said the National Cable & Telecommunications Association and the American Cable Association failed to meet the legal test established by Congress to justify changing the manner in which the agency collects regulatory fees.
| Paying In |
|---|
| Who Funds the FCC’s $300 Million Budget |
| Source: FCC |
| Telephone: $140.1 million |
| Cable: $49.7 million |
| Wireless phone: $42 million |
| Geostationary satellite: $9.6 million |
“We’re disappointed with the decision. The [FCC] staff seemed to understand that DBS companies make use of FCC resources [at levels] roughly comparable to cable companies, yet it declined to follow the evidence and adjust fees,” said NCTA spokesman Brian Dietz.
The FCC is required by law to fund nearly 100% of its budget by collecting fees from regulated entities. The 2,000-employee agency’s budget is about $300 million. Cable operators, phone companies, wireless phone companies, certain satellite licensees generate about 80% of the FCC’s revenue.
For the current fiscal year, cable operators are required to pay 79 cents per subscriber, a 9.7% increase from the previous year. The FCC expects cable to contribute $49.7 million, based on 63 million subscribers.
In the last four years, the FCC has raised cable’s nominal per-subscriber regulatory fee by 49%, from 53 cents in 2002 to 79 cents in 2006, despite cable’s claim that the industry has placed fewer demands on agency resources as a result of competition supplanting the need for regulation.
EchoStar and DirecTV — which have about 27 million customers combined — do not pay on a per-subscriber basis. Instead, they pay about $111,000 per satellite, bringing their FCC tab to about $2 million annually.
The NCTA-ACA plan called on satellite, like cable operators, to pay on a per-subscriber basis.
DirecTV and EchoStar attacked the plan as an unvarnished attempt by cable to impose costs on the competition.
“We’re pleased that the FCC has rejected, once again, the cable industry’s effort to increase the regulatory costs for its DBS competitors,” said Susan Eid, DirecTV’s vice president of government relations.
To raise $51.2 million combined from both cable and satellite, the FCC would need to collect about 57 cents per subscriber — assuming the FCC gave equal weight to each cable and satellite subscriber.
Paying 57 cents per subscriber would have raised satellite’s annual assessment from $2 million to about $15 million.
Without reference to any specific dispute, FCC Democrats Michael Copps and Jonathan Adelstein, alone in commenting on the agency’s decision, called for change.
“In a rapidly evolving communications marketplace, we need to look for ways to ensure that our regulatory fee methodologies continue to reflect the industries we regulate,” Copps said in a one-paragraph comment.
