COMMUNICATIONS PROVIDERS SEEK CHANGES IN FEE STRUCTURE

“Regulatory fees imposed on LMDS are too high in relationship to the FCC’s administrative burden in overseeing the LMDS service,” said XO, urging the agency to “reevaluate” the LMDS regulatory fee. In the 2003 fee order, the FCC created a separate fee category for LMDS after determining it shouldn’t be categorized as a microwave service, which is subject to a lower fee, the company said: “Thus LMDS remains subject to the same fee as that imposed on MDS operations -- $265 per call sign -- and different from all other licensed microwave services.”

Tyco said the FCC’s fee structure for private submarine cables “is broken” and should better reflect the business. The problem stems from the FCC’s practice of charging the same capacity-based fees to both private submarine cable operators and facilities-based common carriers, the company said. Private operators have activated systems with greatly increased capacity in recent years while prices have declined, Tyco said. The capacity-based fees result in private companies paying disproportionately high fees, Tyco said: “Without modification, [the regulatory fees] will comprise an increasing percentage of capacity costs in a price-sensitive business with very thin margins… A capacity-based fee… favors older, lower-capacity systems to the detriment of newer, higher-capacity systems.” Since private carriers are subject to less regulation, their fees should be lower rather than higher than others, the company said: “By placing all international bearer circuit operators together… the Commission essentially forces private submarine cable operators to subsidize the regulatory activities of facilities-based common carriers.” Tyco recommended that the FCC create a separate subcategory for private submarine cable operators and use a flat, per-cable- landing-license fee for private operators.

CTIA questioned the FCC’s plan to base mobile service providers’ fees on information provided in the “Numbering Resource Utilization Forecast” (NRUF) reports filed by carriers. CTIA said the Commission should clarify that it intends to assess fees based on only on “assigned” numbers and should give carriers the option of subtracting non- working numbers from the “assigned” category in carriers’ NRUF reports. CTIA said it continues to object to the FCC’s methodology for allocating fees in general. However, it said the comments filed Sept. 21 were targeted to the FCC’s plan to use NRUF reports to determine each carrier’s obligation. “In contrast to the Commission’s stated desire… to count [for fee assessment purposes] the number of a carrier’s subscribers, units or circuits on December 31, 2003, NRUF reports are used by the Commission to monitor how efficiently telephone numbers are being used by carriers,” CTIA said.

Cingular Wireless said commercial wireless assessments should be based “on carriers’ own reports of units in service, which is the most accurate source for such data.” Cingular said wireless carriers are assessed based on subscriber units “which the FCC has spoken of vaguely as synonymous with telephone numbers.” The company said it “can envision no manner in which NRUF data could be used to arrive at an accurate regulatory fee assessment calculation.”

NCTA said the FCC proposes not only the 1.5% increase for cable systems, but an additional 4.8% increase in the annual per subscriber fee, totaling about 6%. Cable operators would be required to pay 70 cents per subscriber, up from 66 cents per subscriber, and CARS station fees would increase to $135 from $90 per station. The Commission also proposed to modify how cable operators calculate and report their fee payments. Rather than report subscriber counts for every community, they would base the payments on aggregate subscriber information from 3rd party sources.

Specifically, the Commission would rely on statistics from NCTA’s website and the Broadcasting & Cable Yearbook 2003-2004. However, NCTA warned the reference bases its numbers on Kagan research and would like cable operators to be able to self-certify subscriber figures if there’s any discrepancy. NCTA also points out that very small cable operators that NCTA’s website doesn’t track might be hard- pressed to rely on the Broadcasting & Cable publication because it costs $795. NCTA supported the Commission’s general concept of using aggregate figures, however, because doing it community-by-community had become a burdensome administrative process.

To accommodate small cable companies, the American Cable Assn. (ACA) proposed that those serving 1,000 or fewer subscribers be exempt from regulatory fee payments, and that those who are exempt also be exempt from filing the annual form. ACA said many small rural cable operators don’t use the FCC’s electronic form of payment, but the U.S. mail, so payment shouldn’t be deemed late and subject to a 25% late penalty if postmarked by the FCC’s deadline.