FCC Keeps Status Quo on Reg Fees

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The Federal Communications Commission Monday saved the satellite-TV industry millions of dollars 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-year 2006 and recovering the deficit from DirecTV and EchoStar Communications, 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.

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.

For the current fiscal year, cable operators are required to pay 79 cents per subscriber, a 9.7% increase from the pervious year that far outstrips inflation. The FCC expects cable to contribute $49.7 million based on 63 million subscribers.

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.

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 weigh to cable and satellite subscribers). Paying 57 cents per subscriber would have raised satellite’s annual assessment from $2 million to about $15 million. The FCC’s refusal to adopt the NCTA-ACA plan saved EchoStar and DirecTV about $13 million combined.

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 statement.

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