Verizon: Hike Satellite TV Regulatory Fees

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Washington—Satellite TV providers DirecTV and Dish Network need to pay millions of dollars more each year to help finance the Federal Communications Commission's $313 million budget, according to Verizon Communications.

For the current fiscal year, DirecTV is paying about 7 cents and Dish Network about 5 cents per subscriber in FCC regulatory fees. Cable operators, in a disparity that has existed for many years, are paying 80 cents per subscriber.

"Under the [FCC's] current regulatory fee methodology, parity does not exist among providers of video services," Verizon said in a Sept. 25 FCC filing.

Congress requires the FCC to fund nearly 100% of its operations by assessing annual fees on cable TV providers, satellite TV providers, phone companies, broadcasters and other entities under its jurisdiction.

In 2008, cable operators, with 64.8 million subscribers, need to pay $51.8 million. DirecTV and Dish Network, with about 30 million subscribers, are to pay about $2.3 million combined.

Verizon also pointed out that the FCC hasn't been collecting regulatory fees from Internet Protocol TV providers, such as AT&T, because the agency hasn't classified IPTV providers as cable operators.

AT&T intends to address IPTV regulatory fee issues in a mid-October filing at the FCC, an AT&T spokesman said Tuesday.

The National Cable & Telecommunications Association has complained about the level of regulatory fees paid by satellite TV providers from many years, only to be routinely ignored by the FCC.

But Verizon is coming to the issue not as an incumbent cable operator but as a new video entrant concerned that the FCC is giving a cost advantage to Dish Network and DirecTV for no appropriate reason.

DirecTV and Dish Network have more subscribers than every cable operator except Comcast and Time Warner. The two satellite giants combined have 20 times the number of Verizon subscribers.

"Yet Verizon, which had around 943,000 subscribers at the end of 2007, will pay higher regulatory fees for its video service than Dish Network (with about 13.8 million subscribers)," Verizon said.

The FCC requires cable operators to pay on a per-subscriber basis. DirecTV and Dish Network are charged $119,000 per satellite.

"This results in DBS providers paying far lower fees than cable providers," Verizon said, adding that all video providers should pay the same per-subscriber fee.

According to Verizon, DirecTV will pay $1.6 million and Dish Network $715,000 in 2008 regulatory fees.

In a joint filing, Dish Network and DirecTV urged the FCC to maintain the status quo, claiming that a uniform per-subscriber fee would create "false parity."

The satellite TV companies said fees need to be calculated based on the burdens regulated entities place on FCC resources.

"Using any reasonable standard, the FCC expends greater resources on the regulation of the still dominant cable companies than the two DBS providers," DirectTV and Dish Network said.

As it has in years past, NCTA disagreed, saying: "Whatever basis the [FCC] previously had for treating DBS providers differently than cable operators, such disparate treatment cannot be justified in today's highly competitive video marketplace."

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