NAB, Tech Groups Expect Regulatory Fee Battle

NAB and tech groups are preparing for a battle over the FCC’s upcoming collection of regulatory fees, said attorneys and advocates in interviews. Since regulatory fees must be collected by the fall, attorneys expect the agency to soon issue public notices on the 2022 fee collection. The NPRM on the 2021 fee collection was released in May 2021. NAB has had annual disagreements with the agency’s fee assessments for the past several years (see 2008210053), but broadcast attorneys and tech advocates said they expect the group to press the issue this year. NAB Chief Legal Officer Rick Kaplan at the 2022 NAB Show in April said the item is now “at the top of the list.”

It would be legally and administratively difficult to broaden the base of regulatory fee payors, said attorneys and industry watchers, but the current increased scrutiny on tech companies and the agency’s 2021 NPRM (see 2110230001) seeking comment on the trade association’s proposals indicates some concessions to broadcasters could be possible. The issue also dovetails with similar discussions about the USF (see 2202180046). The FCC put out a rulemaking in response to NAB’s arguments, noted Pillsbury broadcast attorney Scott Flick: “They hadn’t done that before.”

There's “no conceivable way” the FCC would give ”so little attention to developing an accurate and equitable fee regime if its own money (or that of its employees) was at stake,” said NAB in ex parte meetings last week with Commissioner Brendan Carr and an aide to Commissioner Nathan Simington. Carr has been consistently critical of tech companies and said last year there's an “imbalance” in the agency’s handling of regulatory fees (see 2108260050). The FCC’s budget request for 2023 increased from the prior year, and includes additional full-time equivalents in numerous bureaus (see 2203280069). According to the FCC’s budget request, the bulk of Media Bureau FTEs will be dedicated to “promoting a 100 percent broadband policy,” which was also the case in 2022.

Broadcasters argued their regulatory fees shouldn’t increase to fund efforts on the spread of broadband, which they say doesn’t provide any direct benefit to broadcasters. NAB argued the agency is violating statutory requirements that the fees charged to a regulatee be connected to the work the agency performs to benefit that entity. “The FCC isn’t in compliance with the statute,” said Flick. Tech companies benefit from the FCC’s activities without paying into the regulatory fee pool, NAB said. In May, NAB asked the agency to release an FNPRM on collecting fees from “big tech” (see 2106170073).

NAB’s arguments are “totally specious,” said Margaret McCarthy, Internet Technology Industry Council senior director-government affairs. Tech companies “do pay regulatory fees, to the extent that they engage in regulated activity,” she said. There’s a “troubling narrative” arguing for expanding regulation of tech companies -- such as in the USF, or on social media moderation -- that NAB is playing into, she said. Proposals to impose regulatory fees on unlicensed spectrum users would “dampen innovation and undercut nearly every aspect of our economy,” emailed CTA Vice President-Regulatory Affairs David Grossman. Broadcasters argued the FCC has the authority to apply regulatory fees to unlicensed users and tech companies because of language in Ray Baum’s Act focused on beneficiaries of the FCC’s work rather than only licensees, but applying fees to entities that aren’t usually under FCC jurisdiction is likely to get a great deal of opposition, said Jeffrey Westling, American Action Forum director-technology and innovation policy. Nearly every nonbroadcast commenter on the 2021 NPRM opposed NAB's proposal (see 2110230001)

Expanding the regulatory fee base would be difficult, said Free State Foundation Senior Fellow Andrew Long. “How do you assess them, how do you come up with a number?” Long said, though he also said NAB’s arguments are “certainly compelling.” Determining who to charge what would be “administratively very complex,” said McCarthy. The agency has shown that it's good at solving that sort of problem with its work on the broadcast incentive auction, said Long. Chairwoman Jessica Rosenworcel specifically cited the question of implementing such fees in her comments on the 2021 reg fee order: “Just as importantly, we ask how if changes are made, they can be done in an administrable way?”