Cable, DBS Clash Over Regulatory Fees

Cable associations and satellite providers disagreed whether the FCC has the authority to create a regulatory fee category that would apply to all multichannel video programming distributors. The split became clear in reply comments posted in docket 14-92 Tuesday. “It is long past time to end the competitive disparity that the current regulatory fee structure perpetuates,” the American Cable Association and NCTA said in joint reply comments. The associations devote too little attention to the FCC’s authority to enact such a system, DirecTV and Dish Network said in their own joint reply comments. “Such hand waving cannot suffice” when the law prohibits the cable proposal, the DBS companies said. CenturyLink and HyperCube Telecom also filed reply comments in the proceeding, focusing on how new regulatory fee rules would apply to toll-free services.

The FCC is allowed to change the regulatory fee schedule only in response to changes in the nature of the commission’s services, DirecTV and Dish said. Though cable interests have pointed to the Media Bureau’s taking up of some regulation of direct broadcast satellite as such a change, the satellite companies disagree. The Media Bureau has always regulated DBS, the companies said. “While Media Bureau oversight of DBS may have changed in some details, the 'nature' of such regulation has remained constant,” DirecTV and Dish said. “The statute is not written narrowly to allow fee changes only in immediate reaction to a sweeping regulatory change brought about by a new statute or rulemaking,” ACA and NCTA said. The rule is written to give the FCC flexibility to decide if changes over time merit a change in fees, the cable associations said. The commission embarking on a rulemaking for 2014 regulatory fees shows that it believes such a time has come, ACA and NCTA said.

The satellite providers’ argument that changes to regulatory fees for DBS need to have an exact corollary to the amount of work that Media Bureau employees expend on DBS issues is incorrect, ACA and NCTA said. “The Commission has never held that each entity should pay fees exactly equal to its interaction with the Media Bureau or any other bureau -- nor is it required by the statute to do so,” the trade associations said. That disregards a statutory requirement that the FCC recover the costs of regulation, DirecTV and Dish countered. The Media Bureau spends more time regulating cable than satellite, they said. “Even under cable’s (highly misleading) calculations, the Media Bureau 'regulates' DIRECTV roughly as much as it does Suddenlink. But DIRECTV would pay nearly seventeen times as much as Suddenlink in Media Bureau-related regulatory fees under cable’s proposal,” the satellite filing said.

The cable proposal would increase DBS regulatory fees by 1,100 percent, creating “rate shock” and violating the Administrative Procedure Act’s (APA) reasoned decision-making requirement, DirecTV and Dish said. Since the FCC imposed a cap on previous fee increases, the APA bars it from abandoning the cap without an explanation, the satellite companies said. The FCC could use “phase-in options” to provide “reasonable accommodation” and comply with the APA, the cable associations said. “The DBS Operators continue to rely on legalistic arguments to create a narrative in which DBS fees, unchanged in form since 1996, must remain frozen in time, while the Commission is unable to make any changes,” ACA and NCTA said. “It is fair to suggest that cable has spent so many years pushing its proposal in order to cause just such rate shock for DBS operators and their subscribers,” DirecTV and Dish said.

The FCC’s enforcement for nonpayment of regulatory fees for toll-free numbers shouldn’t punish the customers of the companies involved, HyperCube said. Revoking numbers or decertifying the responsible organizations is “likely to impose hardships on business customers of toll-free services and consumers who rely on toll-free numbers for important information,” HyperCube said. Carriers, which already pay regulatory fees, shouldn't be included in the regulatory fee rules for toll-free numbers, CenturyLink said. “The Commission should clarify that its new regulatory fees rule for toll free services is not intended to duplicate regulatory fees for entities that already pay them,” CenturyLink said.