FCC regulatory fees for FY 2019 must be paid by September 24, 2019, under an order issued by the agency earlier this week. Federal law requires the FCC to assess regulatory fees each year to cover its operating costs (thus, the agency is largely self-funding). The FCC plans to collect a total of $339 million in fees for FY 2019, representing about a 5 percent increase from FY 2018. Beyond providing the specific fees due, the order offers important guidance for entities seeking fee waivers or dealing with bankruptcy or license transfers. While most services saw only slight fee increases, the significant fee jump for certain industry sectors led Commissioner O’Rielly to push for new restraints on agency spending. As the FCC collects its regulatory fees across all regulated services, any decline in fees for one service necessarily means increased fees for others. In light of this “zero sum” game, all service providers should carefully examine the impact of the order on their business and the potential for future reforms.

In the order, the FCC reiterated its longstanding policy that regulatory fee waivers will only be granted under “exceptional circumstances” demonstrating clear financial hardship. The FCC emphasized that waiver requests must be filed before the fee payment deadline in order to be granted. The FCC further cautioned that it will not automatically grant a waiver just because an entity declared bankruptcy or entered receivership. Instead, the FCC will consider each waiver request individually based on the specific financial hardship evidence provided by the requesting entity.

The FCC also reminded service providers that the entity holding the license on the date when annual regulatory fees are due is responsible for payment, even if it subsequently transfers the license to another entity. Consequently, service providers that transferred licenses after October 1, 2018, may remain responsible for the regulatory fees associated with the licensed services.

As with most years, many regulated services saw only slight increases to their annual regulatory fees. For example, the fee for interstate telecommunications service providers rose approximately eight percent, from 0.00291 to 0.00317 per revenue dollar. However, other industries saw significantly larger fee increases, such as satellite, drawing criticism from Commissioner O’Rielly. In particular, the Commissioner recommended that the FCC reduce its internal expenditures by streamlining agency procedures and expanding online filing mechanisms in line with his December 2018 blog post. The Commissioner asserted that such belt-tightening measures were critical to stemming future regulatory fee increases.

NPRM for Future Regulatory Fees

While the order established the annual regulatory fees for FY 2019, the FCC sought comment on proposed reforms that could impact how it assesses fees for FY 2020 and beyond. First, the FCC asked whether it could (and should) assess fees on non-U.S. licensed space stations serving the United States – although this proposal could lead to similar fees being placed on domestic operators by foreign regulators in retaliation. Second, the FCC inquired whether it should adjust the apportionment of fees applied to international services to lower the current assessment on submarine cable operators, which remains higher than other international services. Third, the FCC sought input on lowering the fees assessed on certain broadcasters to reflect reductions in coverage calculations and promote competition and diversity within the radio broadcast industry.

Comments on these proposals will be due 30 days after Federal Register publication (which has not occurred yet), with reply comments due 60 days after Federal Register publication.

Click here to read our advisory with additional details.

FCC Regulatory Fees for FY 2019 Due September 24th, O’Rielly Urges Agency Belt-Tightening