DBS Firms Rebut NCTA on FCC Fees

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The leading direct-broadcast satellite providers are challenging cable-industry claims that DBS is paying less than its fair share in regulatory fees to the Federal Communications Commission.

The FCC in 2005 is requiring cable operators to pay $48 million to fund the agency’s operations, while the commission intends to collect just $1.9 million combined from EchoStar Communications Corp. and DirecTV Inc.

The National Cable & Telecommunications Association has told the FCC that changes in the regulatory landscape compel DBS operators to pay more.

In response, EchoStar and DirecTV said all the NCTA was trying to do was handicap a competitor, comparing the trade group’s call for higher DBS fees at the FCC to ongoing cable-operator efforts to get state lawmakers to impose taxes on DBS revenue.

“The [FCC] should not let itself become a party to yet another such attempt by cable to hamper its competitors and, ultimately, harm consumers,” the DBS companies said in a filing with the agency Friday.

In March 8 comments, the NCTA told the FCC that the imbalance in regulatory fees was a “gross disparity” and “fundamentally unfair,” especially when FCC oversight of DBS is increasing and DBS-subscriber penetration is soaring.

The FCC requires cable to contribute 72 cents per subscriber. If DBS had to pay the same per-subscriber fee, it would be paying about $18 million instead of $1.9 million.

EchoStar and DirecTV said the cable industry’s burden on FCC resources far exceeds the burden imposed by DBS. While DBS provides video programming under largely well-established rules, cable operators offer high-speed-data and voice-over-Internet-protocol service under a regulatory regime that is still evolving at the FCC.

“The cable industry cannot credibly claim to be in a position of parity with DBS in terms of the regulatory costs it imposes on the FCC,” the DBS firms added. “To the contrary, DBS operators impose significantly lower regulatory-cost burdens on the [FCC]. There is, therefore, no policy basis for imposing higher regulatory fees on DBS operators.”

The DBS firms noted that the United States has four licensed DBS operators but nearly 1,000 cable operators, and that many of the cable systems are subject to FCC rate regulations and other behavioral rules designed to protect consumers and promote competition.

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