Assessment and Collection of Regulatory Fees for Fiscal Year 1998
Federal RegisterJul 1, 1998
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 1
[MD Docket No. 98-36; FCC 98-115]
Assessment and Collection of Regulatory Fees for Fiscal Year 1998
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: The Commission has revised its Schedule of Regulatory Fees in
order to recover the amount of regulatory fees that Congress has
required it to collect for fiscal year 1998. Section 9 of the
Communications Act of 1934, as amended, provides for the annual
assessment and collection of regulatory fees. For fiscal year 1998
sections 9(b)(2) and (3) provide for annual ``Mandatory Adjustments''
and ``Permitted Amendments'' to the Schedule of Regulatory Fees. These
revisions will further the National Performance Review goals of
reinventing Government by requiring beneficiaries of Commission
services to pay for such services.
EFFECTIVE DATE: August 31, 1998.
FOR FURTHER INFORMATION: Terry Johnson, (202) 418-0445, Office of
Managing Director.
SUPPLEMENTARY INFORMATION:
Adopted: June 9, 1998; Released: June 16, 1998
By the Commission:
Table of Contents
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Paragraph
Topic No.
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I. Introduction............................................ 1
II. Background............................................. 5
III. Discussion
A. Cost-Based Fee Methodology.......................... 9
B. Relationship of Cost Service to Revenue Requirement. 15
C. The 25% Ceiling on Fees............................. 21
D. Application of Cost-Based Methodology to Determine
Fee Amounts
i. Adjustment of Payment Units..................... 25
ii. Calculation of Revenue Requirements............ 26
iii. Calculation of Regulatory Costs............... 27
iv. Application of 25% Revenue Ceiling............. 28
v. Recalculation of Fees........................... 29
vi. Proposed Changes to Fee Schedule............... 30
a. Commercial AM & FM Radio.................... 31
b. CMRS........................................ 41
[[Page 35848]]
c. Space Stations and Bearer Circuits
i. Geostationary Satellites................ 50
ii. Non-geostationary Satellites........... 54
iii. Bearer Circuits....................... 57
d. Interstate Telephone Service Providers...... 64
E. Schedule of Regulatory Fees......................... 68
F. Effect of Revenue Redistributions on Major
Constituencies........................................ 69
G. Procedures for Payment of Regulatory Fees
i. Installment Payments for Large Fees............. 70
ii. Annual Payments of Standard Fees............... 72
iii. Advance Payment of Small Fees................. 73
iv. Standard Fee Calculations and Payment Dates.... 74
v. Minimum Fee Payment Liability................... 76
IV. Ordering Clause........................................ 77
V. Authority and Further Information....................... 78
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Attachment A--Final Regulatory Flexibility Analysis
Attachment B--Sources of Payment Unit Estimates
Attachment C--Calculation of Revenue Requirements
Attachment D--Calculation of Regulatory Costs
Attachment E--Calculation of FY 1998 Regulatory Fees
Attachment F--Schedule of Regulatory Fees
Attachment G--Comparison between FY 1997 and FY 1998 Proposed &
Final Regulatory Fees
Attachment H--Detailed Guidance on Who Must Pay Regulatory Fees
Attachment I--Description of FCC Activities
Attachment J--Factors, measurements and calculations that go into
determining station signal contours and associated population
coverages
Attachment K--Parties Filing Comments and Reply Comments
Attachment L--FY 1998 AM/FM Regulatory Fees
I. Introduction
1. By this Report and Order, the Commission concludes its
rulemaking proceeding to revise its Schedule of Regulatory Fees in
order to recover the amount of regulatory fees that Congress has
required it to collect for Fiscal Year (FY) 1998. See 47 U.S.C. 159(a).
2. Congress has required us to collect $162,523,000 in regulatory
fees in order to recover the costs of our enforcement, policy and
rulemaking, international and user information activities for FY 1998.
See Pub. L. 105-119 and 47 U.S.C. 159(a)(2). This amount is $10,000,000
or nearly 7% more than the amount that Congress designated for recovery
through regulatory fees for FY 1997. See Assessment and Collection of
Regulatory Fees for Fiscal Year 1997, FCC 97-215, released June 26,
1997, 62 FR 37408, July 11, 1997. Thus, we are revising our fees in
order to collect the increased amount as specified by Congress.
Additionally, we are amending the Schedule in order to simplify and
streamline the Fee Schedule, including clarification of feeable
categories in the Commercial Mobile Radio Services (CMRS), renaming the
LEO category as Space Stations Non-geostationary, and clarifying when
those stations must begin paying regulatory fees. We have also revised
our methodologies for assessing AM and FM radio fees. See 47 U.S.C.
159(b)(3).
3. In revising the fees, we have adjusted the payment units and
revenue requirement for each service subject to a fee, consistent with
sections 159(b)(2) and (3). In addition, we have made changes to the
fees pursuant to public interest considerations such as the 25% cap on
increases in the fees which is explained in more detail below. We are
amending Secs. 1.1152 through 1.1156 to reflect the fee revisions. See
47 CFR 1.1152 through 1.1156. See also Rule Changes and Attachment F
for our revised fee schedule for FY 1998.
4. Finally, we have included, as Attachment H, Guidance containing
detailed descriptions of each fee category, information on the
individual or entity responsible for paying a particular fee and other
critical information designed to assist potential fee payers in
determining the extent of their fee liability, if any, for FY 1998. In
the following paragraphs, we describe in greater detail our methodology
for establishing our FY 1998 regulatory fees.
II. Background
5. Section 9(a) of the Communications Act of 1934, as amended,
authorizes the Commission to assess and collect annual regulatory fees
to recover the costs, as specified each year by Congress, that it
incurs in carrying out enforcement, policy and rulemaking,
international, and user information activities. See 47 U.S.C. 159(a).
See Attachment I for a description of these activities. In our FY 1994
Report and Order, 59 FR 30984, June 16, 1994, we adopted the Schedule
of Regulatory Fees that Congress established and we prescribed rules to
govern payment of the fees, as required by Congress. See 47 U.S.C.
159(b), (f)(1). Subsequently, in our FY 1995, FY 1996, and FY 1997
Reports and Orders, 60 FR 34004, June 29, 1995, 61 FR 36629, July 12,
1996, and 62 FR 37408, July 11, 1997, we modified the Schedule to
increase by approximately 93 percent, 9 percent, and 21 percent,
respectively, the revenue generated by these fees in accordance with
the amounts Congress required us to collect for each of those fiscal
years. Also, in our FY 1995, FY 1996, and FY 1997 fee decisions, we
amended certain rules governing our regulatory fee program based upon
our experience administering the program in prior years. See 47 CFR
1.1151 et seq.
6. For fiscal years after FY 1994, however, sections 9(b)(2) and
(3), respectively, provide for ``Mandatory Adjustments'' and
``Permitted Amendments'' to the Schedule of Regulatory Fees.
See 47 U.S.C. 159(b)(2), (b)(3). Section 9(b)(2), entitled
``Mandatory Adjustments,'' requires that we revise the Schedule of
Regulatory Fees whenever Congress changes the amount that we are to
recover through regulatory fees. See 47 U.S.C. 159(b)(2).
7. Section 9(b)(3), entitled ``Permitted Amendments,'' requires us
to determine annually whether additional adjustments to the fees are
warranted, taking into account factors that are reasonably related to
the payer of the fee and factors that are in the public interest. In
making these amendments, we are required to ``add, delete, or
[[Page 35849]]
reclassify services in the Schedule to reflect additions, deletions or
changes in the nature of its services.'' See 47 U.S.C. 159(b)(3).
8. Section 9(i) requires us to develop an accounting system to
adjust our fees to reflect changes in the costs of regulating various
services and for other purposes. See 47 U.S.C. 9(i). We developed and
implemented the cost accounting system in conjunction with FY 1997
fees. For FY 1998, we continue to rely on cost accounting data to
identify our regulatory costs and to develop fees based upon these
costs. Also, for FY 1998, we have limited the increase in the amount of
the fee for any service in order to phase in our reliance on cost-based
fees for those services whose revenue requirement would be more than 25
percent above the revenue requirement which would have resulted from
the ``mandatory adjustments'' to the FY 1997 fees without incorporation
of costs. This methodology enables us to develop regulatory fees which
more closely reflect our costs of regulation. Finally, section
9(b)(4)(B) requires that we notify Congress of any permitted amendments
90 days before those amendments go into effect. See 47 U.S.C.
159(b)(4)(B).
III. Discussion
A. Cost-Based Fee Methodology
9. Congress has required us to recover $162,523,000 in FY 1998
regulatory fees, representing the costs applicable to our enforcement,
policy and rulemaking, international, and user information
activities.\1\ See 47 U.S.C. 159(a).
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\1\ The impact of regulatory fees on the FCC's appropriation is
substantial. For example, without regulatory fees to offset the
Commission's costs, the FCC would require a Congressional
appropriation of $186.5 million for FY 1998. When offsetting
regulatory fees are taken into consideration, only $24 million must
be appropriated from tax receipts to fund the Commission. Thus,
taxpayers are spared the expense of funding almost 87% of the
Commission's annual budget. Funds collected as application or filing
fees pursuant to section 8 of the Act are deposited into the General
Fund of the U.S. Treasury as reimbursement to the United States but,
unlike section 9 regulatory fees, do not offset funds appropriated
to the Commission. 47 U.S.C. 158(a).
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10. In our FY 1998 NPRM we developed our proposed FY 1998 fee
schedule using the same general methodology as we used in developing
fees for FY 1997. We estimated payment units \2\ for FY 1998 in order
to determine the aggregate amount of revenue we would collect without
any revision to our FY 1997 fees. Because the total was greater than
$162,523,000, we pro-rated the overage among all the existing fee
categories reducing the revenue amounts to total $162,523,000.
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\2\ Payment units are the number of subscribers, mobile units,
pagers, cellular telephones, licenses, call signs, adjusted gross
revenue dollars, etc. which represent the base units for which fees
are calculated.
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11. The NPRM provided notice that we would rely on the cost
accounting system implemented in FY 1997 to assist us in determining
our costs of regulation of those services subject to a fee for FY 1998.
In response, several interested parties, including the Personal
Communications Industry Association (PCIA), BellSouth Cellular Corp.,
BellSouth Wireless Data, L.P. (BellSouth), and PanAmSat Corporation
(PanAmSat), contend that we failed to explain the accounting system
sufficiently to permit interested parties to determine how the system
distributes costs among our various services. PrimeCo argues that we
merely disclosed the results of the cost accounting system and,
therefore, interested parties cannot evaluate our cost accounting
system or suggest improvements. In addition, PCIA, among others, argues
that without more data concerning our assignment of costs, they cannot
determine whether the costs attributed to their services are reasonable
estimates of our actual costs.
12. The NPRM provided sufficient information describing the
accounting system to afford interested parties the opportunity to
comment. Our NPRM made it clear that our cost accounting system relied
upon information derived from our personnel/payroll system and our
fiscal accounting system as the basis for recording direct and indirect
costs, separately and combined, for every major category of service
subject to a fee. The cost accounting system was designed to identify
the actual costs of regulation by category of service and this
information, combined with other data, yield fees more closely
reflecting the cost of our regulation. The accounting system collects
cost of service information on an employee-by-employee basis.
13. The NPRM provided sufficient detail concerning our manner of
distributing costs of personnel directly assigned to regulatory
activities, and other costs included in our determination of regulatory
costs. The system separately identifies direct costs, including salary
and expenses for staff directly assigned to our operating Bureaus, and
other costs, such as rent, utilities and contracts, directly
attributable to such personnel. Also, included as indirect costs are
those costs attributable to personnel assigned to overhead functions,
including such functions as field and laboratory staff, on a
proportional basis; i.e., spread among all categories of service
subject to a fee according to their share of direct costs. Finally, in
Attachment D of the NPRM, we provided a precise calculation of the
regulatory costs, including separate discussions of the cost accounting
system's accumulation of the direct, indirect and total actual costs
for each major category of service. Thus, our NPRM, consistent with
section 9(i) of the Act, sufficiently described our cost accounting
system, including how it distributes actual costs among the various
categories of service, affording parties an understanding of the system
sufficient for them to submit comments on how the system allocated
costs among those services subject to a regulatory fee. 47 U.S.C.
159(i)
14. Our cost accounting system was developed under contract by
American Management Systems, Inc. (AMS) in FY 1995. The system has been
integrated with the Commission's bi-weekly payroll and fiscal
accounting systems and, as such, its procedures conform to generally
accepted cost accounting principles and standards as mandated by the
General Accounting Office
(GAO) and by the U.S. Treasury Department. Because the methodology
we employed in developing FY 1998 fees is the same as the one that was
used to develop the FY 1997 fees, we adopt by incorporation paragraphs
16-20 of the FY 1997 Report and Order which provides detailed
information covering how our cost accounting system operates.
B. Relationship of Cost Service to Revenue Requirement
15. PCIA and other commenters contend that the fees are unlawful
because allegedly there is no basis for or relationship between the
fees the Commission is proposing to collect from a particular class of
licenses or regulatees and the amount of regulatory work or oversight
associated with those regulatees. We reject the arguments that our
proposed fees are inconsistent with the statute or otherwise unlawful
because they are not completely cost-based or do not reflect the
benefits received by entities subject to a fee payment. Section 9(a)
requires that we recover our costs ``in the total amounts required in
Appropriations Acts.'' 47 U.S.C. 159(a).
Section 9(a) does not require that we base our fees solely on
benefits to regulatees or that the fees recover from an entity only its
particular cost of regulation. In our FY 1995 Report and Order, we
stated that we are not limited to setting regulatory fees only in the
amount that reflects services received by regulated entities. 10 FCC
Rcd at 13521,
[[Page 35850]]
citing Skinner v. Mid-America Pipe Line Co., 490 U.S. 212, 224 (1989).
Rather, once Congress, as in section 9, has made a proper delegation of
authority to raise funds, ``so long as the fees in question are within
the scope of Congress' lawful delegation of authority in section 9,
they are constitutional.'' Id. Thus, as we noted in our FY 1995 Report
and Order, we ``can collect fees from regulatees for their use of
frequencies and for the potential benefits of regulatory activities,
even if they do not utilize these activities.'' See 60 FR 34000, (June
29, 1995), citing United States v. Sperry Corp., 493 U.S. 52, 63. Thus,
there is no requirement that the fees we establish be designed to
recover only the costs of those benefits directly received by an
entity. Rather, we may adjust the fees by taking into consideration
``factors that the Commission determines are in the public interest.''
47 U.S.C. 159(b)(1) (A).
16. We must collect in regulatory fees the amount specified by
Congress. Direct costs, such as salary and expenses for (a) staff
directly assigned to our operating Bureaus and performing regulatory
activities and (b) staff assigned outside the operating Bureaus to the
extent that their time is spent performing regulatory activities
pertinent to an operating Bureau, are only part of the costs to be
recovered from each licensee. Indirect costs, which include costs of
support personnel assigned to overhead functions such as field and
laboratory staff and certain staff assigned to the Office of Managing
Director, and support costs, including rent, utilities, equipment, and
contractual costs attributable to regulatory oversight, must also be
recovered.\3\
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\3\ One commenter questioned how the Commission's use of
contractors affected its computation of Full Time Equivalency (FTE)
employee numbers. While the Commission used FTE numbers in
developing its FY 1995 and FY 1996 fee schedules it discontinued
using FTE numbers after it adopted a cost accounting system in FY
1997. PCIA also questions the allocation of such overhead costs as
office moves. As with all overhead, we allocate it to the functional
area where the cost was incurred, if this is feasible.
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17. Regulatory fees also recover costs attributable to regulatees
that Congress, has exempted from the fees, such as Citizen's Band Radio
and most recreational ship and aircraft radio station operators,
amateur radio licensees, governmental entities, licensees in the public
safety radio services, and non-profit groups, as well as costs
attributable to licensees which have been granted waivers of the fees.
47 U.S.C. 159(b)(d). The costs of regulating these entities is borne by
those regulatees subject to a fee requirement, with no direct
measurable benefit accruing to such fee payers. We recover our costs of
regulation for exempt entities, and licensees who have received waivers
of the fees by allocating our regulatory costs attributable to them on
a proportional basis across all fee categories so as not to unduly
impact any particular category of fee payers.
18. PCIA points out that our NPRM did not provide actual FY 1997
fee collection data, including the number of actual payment units and
the actual amount of fees collected in certain fee categories. These
commenters contend that such information is essential to the evaluation
of the Commission's FY 1998 fee proposal and to insure that costs are
properly allocated among all regulatees or licensees in a given
service. We recognize that we did not provide a detailed listing of
actual FY 1997 collections data in the NPRM. However, Attachment B, of
the NPRM, contained a service-by-service explanation of the basis of
our estimated FY 1998 payment units.
Several of these are based on actual FY 1997 payments. Others are
based on estimates obtained from Commission program experts or from
regulated industries. In any case, as we noted in the NPRM, we
consider, as one factor in estimating payment units, the actual number
of payment units recorded in our fees collection system for FY 1997.
These payment unit estimates used ``as of'' dates corresponding to the
beginning of the current fiscal year, or, for some fee categories, at
the end of the previous calendar year. We believe that this reliance
upon actual ``historical'' or retrospective FY 1997 data provides us a
much greater confidence level than would an estimate of payment units
made prospectively.\4\ Finally, from the inception of the regulatory
fee collection program, actual historical payment units and collection
amounts for the various categories of services have been routinely
available for inspection to interested persons upon request. In sum, we
cannot find that there is a basis for concluding that these commenters
could not fairly evaluate our proposed fees for FY 1998 given the
information pertaining to payment units contained in the NPRM and
detailed collections data readily available from the Commission.
Additionally, we note that no interested party proposed alternative
payment units for any category of service for FY 1998.
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\4\ In this regard the Commission has been checking the payments
received from broadcast licensees against the name of the licensees
in the Commission's database. The Commission has written to each
licensee requesting payment or evidence of payment or exempt status,
in order to perfect its database and ensure that the numbers of
licensees upon which fees are based is accurate.
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19. Finally, PCIA and other interested parties are concerned about
the amount of the proposed increase in their revenue requirements and
in their fee amounts for FY 1998 compared with those established for FY
1997. They question how estimates of actual costs for FY 1997 and FY
1998 could differ so significantly from one year to the next in certain
fee categories. These differences can be attributed to the increase in
the amount to be collected as specified by Congress, changes in the
numbers of units subject to the fees, and changes in services. For
example, in reassigning services from the CMRS Mobile category to the
CMRS Messaging category, we adjusted the estimated payment units of
both fee categories. Moreover, as we have noted, because each service
must offset a portion of our overhead costs, and subsidize costs not
related to its regulation, the resulting fee will invariably exceed the
payer's direct regulatory costs, not withstanding the efforts by
Congress and the Commission to reduce the regulatory burden on our
licensees.
20. As noted in our FY 1997 Report and Order, an important
consideration in utilizing a revenue ceiling is the impact on other fee
payers. Because the Commission is required to collect a full
$162,523,000 in FY 1998 regulatory fees, the additional revenue that
would have been collected from licensees subject to a revenue ceiling
had there been no ceiling, needs to be collected instead from licensees
not subject to the ceiling. Revenues from current fee payers already
offset costs attributable to regulatees exempt from payment of a fee or
otherwise not subject to a fee pursuant to section 9(h) of the Act or
the Commission's rules. For example, CB and ship radio station users,
amateur radio licensees, governmental entities, licensees in the public
safety radio services, and all non-profit groups are not required to
pay a fee. The costs of regulating these entities is borne by those
regulatees subject to a fee requirement. We believe, however, that the
public interest is best served by this methodology. To do otherwise
would subject payers in some fee categories to unexpected major fee
increases which could severely impact the economic well being of
certain licensees. Attachment E displays the step-by-step process we
used to calculate adjusted revenue requirements for each fee category
for FY 1998, including the reallocation of revenue requirements
[[Page 35851]]
resulting from the application of our revenue ceilings.\5\
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\5\ For example, PCIA has requested that we establish a cost-
increase benchmark at which point an explanation of the increase for
any affected category must be included. A line-by-line explanation
of all accounting data is not feasible, nor, do we believe,
necessary in this item. Specific cost accounting data is available
to interested parties upon request.
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C. The 25% Ceiling on Fees
21. After separately projecting the revenue requirements for each
service category using data generated by our cost accounting system, we
established a revenue ceiling no higher than 25 percent above the
revenue that regulatees would have paid if FY 1998 fees had remained at
FY 1997 levels (adjusted only for changes in volume and the increase
required by Congress).
22. SBC Communications (SBC) argues that the 25 percent ceiling is
increasing the difference between the fees and the costs of regulation
for some regulatees. Comcast Cellular Communications, Inc. (Comcast)
and Small Business in Telecommunications (SBT) argue that the 25%
ceiling unfairly results in the subsidization of some fee payer classes
by other services.
23. Capping each fee category's revenue requirement at no more than
a 25 percent increase enables us to continue the process of reducing
fees for services with lower costs and increasing fees for services
with higher costs in order to close the gap between actual costs and
fees designed to recover these costs.\6\ Congress in its original fee
schedule, established fee amounts for each fee category that were to be
used until the FCC could implement an agency-wide cost accounting
system to track costs by fee category. The Congressional fee schedule
inherently subsidized certain services at the expense of others.
Furthermore, the Congressional mandate to collect significantly larger
amounts in regulatory fees each year had made it more difficult to
eliminate the imbalances first established in the statutory fee
schedule. The full extent of these imbalances became clear when the
Commission moved to a cost-based system in FY 1997. Thus, for FY 1997
we adopted a ceiling on fees in order to establish a mechanism that
would smooth the transition to cost based fees.
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\6\ We are not suggesting that fee increases are limited to a 25
percent increase over the FY 1997 fees. The 25 percent increase is
over and above the revenue which would be required after adjusting
for projected FY 1998 payment units and the proportional share of
the 6.56 percent increase in the amount that Congress is requiring
us to collect. Thus, FY 1998 fees may increase more than 25 percent
over FY 1997 fees depending upon the number of payment units. We are
also not suggesting that this methodology will always result in a
continuous closing of an existing gap between costs and fees
designed to recover these costs. Since actual costs for a fee
category may increase or decrease in consecutive years, the gap
could either close or widen depending upon whether or not actual
costs go down or up and by how much.
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24. As noted in our FY 1997 Report and Order, an important
consideration in utilizing a revenue ceiling is the impact on other fee
payers. We are required to collect a full $162,523,000 in FY 1998
regulatory fees. The additional revenue that would have been collected
from licensees subject to a revenue ceiling had there been no ceiling,
needs to be collected instead from services where increases are less
than 25%. Utilization of the 25% ceiling permits us to close the gap
between regulatory fees and actual costs while minimizing the potential
adverse impact of substantial fee increases. In sum, we believe that
the public interest is best served again by adopting the 25% ceiling.
C. Application of Cost-Based Methodology to Determine Fee Amounts
i. Adjustment of Payment Units
25. As the first step in calculating individual service regulatory
fees for FY 1998, we adjusted the estimated payment units for each
service because payment units for many services have changed
substantially since we adopted our FY 1997 fees. We obtained our
estimated payment units through a variety of means, including our
licensee data bases, actual prior year payment records, and industry
and trade group projections. Whenever possible, we verified these
estimates from multiple sources to ensure the accuracy of these
estimates.\7\ Attachment B provides a summary of how payment units were
determined for each fee category.
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\7\ Certain payment unit estimates have been revised since
release of the NPRM due to additional or updated information
obtained by the Commission. This may result in changed fee amounts
from those proposed in the NPRM. It is important to also note that
Congress' required revenue increase in regulatory fee payments of
approximately seven percent in FY 1998 will not fall equally on all
fee payers because payment units have changed in several services.
When the number of payment units in a service increase from one year
to another, fees do not have to rise as much as they would if
payment units had decreased or remained stable. Declining payment
units have the opposite effect on fees.
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ii. Calculation of Revenue Requirements
26. We next multiplied the revised payment units for each service
by our FY 1997 fee amounts in each fee category to determine how much
revenue we would collect in FY 1998 without any change to the existing
Schedule of Regulatory Fees. The amount of revenue we would collect is
approximately $171.5 million. This amount is approximately $9 million
more than the amount the Commission is required to collect in FY 1998.
We therefore adjusted the revenue requirements for each fee category on
a proportional basis, consistent with section 9(b)(2) of the Act, to
obtain an estimate of revenue requirements for each fee category
necessary to collect the $162,523,000 amount required by Congress for
FY 1998. Attachment C provides detailed calculations showing how we
determined the revised revenue amount for each service.
iii. Calculation of Regulatory Costs
27. In order to utilize actual costs as derived from our accounting
system we combined support costs and direct costs \8\ and then adjusted
the results to approximate the amount of revenue that Congress requires
us to collect in FY 1998 ($162,523,000).\9\ In effect, we
proportionally adjusted the actual cost data pertaining to regulatory
fee activities recorded for the period October 1, 1996, through
September 30, 1997, (FY 1997) among all the fee categories so that
total costs approximated $162,523,000. For fee categories where fees
are further differentiated by sub-categories, we distributed the
revenue requirements to each sub-category. The results of these
calculations are shown in detail in Attachment D and represent our best
estimate of actual total attributable costs relative to each fee
category and sub-category for FY 1998. However, the fee schedule for AM
and FM radio stations was differentiated by class of station and
population served in such a manner as to further differentiate small
stations from larger stations.
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\8\ One feature of the cost accounting system is that it
separately identifies direct and indirect costs. Direct costs
include salary and expenses for (a) staff directly assigned to our
operating Bureaus and performing regulatory activities and (b) staff
assigned outside the operating Bureaus to the extent that their time
is spent performing regulatory activities pertinent to an operating
Bureau. These costs include rent, utilities and contractual costs
attributable to such personnel. Indirect costs include support
personnel assigned to overhead functions such as field and
laboratory staff and certain staff assigned to the Office of
Managing Director. The combining of direct and indirect costs is
accomplished on a proportional basis among all fee categories as
shown on Attachment D.
\9\ Congress' estimate of costs to be recovered through
regulatory fees is generally determined at least twelve months
before the end of the fiscal year to which the fees actually apply.
As such, year-end actual activity costs will not equal exactly the
amount Congress designates for collection in a particular fiscal
year.
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[[Page 35852]]
iv. Application of 25 Percent Revenue Ceiling
28. We applied the 25% ceiling on the increase in the revenue
requirement of each fee category (over and above the Congressionally
mandated increase in the overall revenue requirement and the difference
in unit counts) using the same methodology we described in detail in
our FY 1997 Report and Order.
v. Recalculation of Fees
29. Once we determined the amount of fee revenue that it is
necessary to collect from each class of licensee, we divided the
revenue requirement by the number of payment units (and by the license
term, if applicable, for ``small'' fees) to obtain actual fee amounts
for each fee category. These calculated fee amounts were then rounded
in accordance with section 9(b)(3) of the Act. See Attachment E.
vi. Proposed Changes to Fee Schedule
30. We examined the results of our calculations made in paragraphs
25-27 to determine if further adjustments of the fees and/or changes to
payment procedures were warranted based upon the public interest and
other criteria established in 47 U.S.C. 159(b)(3). As a result of this
review, we are adopting the following changes to our Fee Schedule:
a. Commercial AM & FM Radio
31. In FY 1997 we revised the methodology for assessing radio
regulatory fees, by determining each station's daytime protected field
strength signal contour which was then overlaid upon U.S. Census data
to estimate the population coverage for each station.\10\ Under the FY
1997 methodology, stations with larger populations within their
protected service area were assessed higher fees than stations with
smaller populations within their protected service area. The FY 1997
radio regulatory fees were also based on the ratio between the
differences in fees assessed for different classes of stations in the
Statutory Fee Schedule. 47 U.S.C. 159(g). We will modify these
procedures to assess regulatory fees by calculating the populations
within each station's narrower city strength service contour. We
anticipate that this methodology will reduce the populations to be
considered for fee purposes to the populations which most licensees
consider to be within their ``core'' service area. We also will
increase the differences between fee payments for different classes of
stations with different populations, so that stations serving larger
populations would pay a greater share of the regulatory fee burden.
---------------------------------------------------------------------------
\10\ In FY 1997 we determined that the signal contour for AM
radio stations would be based upon a calculated signal strength of
0.5 mV/m from the transmitter location. For Class B FM stations the
contour was based upon a signal strength of 54 dBuV/m from the
transmitter location and for Class B1 FM stations the contour was
based upon a signal strength of 57 dBuV/m. For all other FM Classes,
a 60 dBuV/m contour was used. Attachment J describes in detail the
factors, measurements and calculations that go into determining
station signal contours and associated population coverages.
---------------------------------------------------------------------------
32. We received complaints from licensees stating that the
protected field strength contours used to calculate the fees,
overstated actual market areas and populations served. In several
instances licensees contended that rural stations whose contours
intersected major metropolitan areas, were assigned populations far in
excess of the populations within their primary or even their secondary
market areas. See, for example, letters from KTXC, dated September 10,
1997; Music Express Broadcasting Corporation of Northeast Ohio, dated
August 28, 1997; and Martin Broadcasting Company, dated August 26,
1997.
33. We also received complaints from licensees that they could not
determine how the size of their regulatory fees were affected by their
class of station, and that there was not a sufficient differentiation
in fees between stations serving large populations and other stations.
Several licensees argue that stations serving smaller populations have
paid a disproportionate share of the regulatory fees. See letter from
Heckler Broadcasting, Inc., received October 2, 1997; and Petition for
Reduction of Regulatory Fee filed September 18, 1997 by Family
Communications, Inc.
34. Comments filed by 19 State Broadcaster Associations, and by the
NAB support reliance on city grade contours, a fee schedule which
separated stations by class and population, and a fee schedule that
increased the differentiation between the fees paid by stations serving
larger markets and by stations serving smaller markets. The NAB also
maintained that specifically dividing stations by class and population
will provide a greater understanding to individual licensees concerning
how their fees were calculated. Finally, the NAB argued that it is
inequitable to base fees on the number of licensees who have paid their
fees in the past and, therefore, shifting the fee payment obligation
from the number of licensees that did not pay their fees. The NAB urges
the Commission to adopt a broadcast fee schedule based on the total
number of operating stations, excluding only those stations that have
documented non-profit status.
35. In part, as a response to these concerns and comments, the NPRM
proposed to modify the fee schedule for FY 1998 by utilizing the same
general methodology for determining regulatory fees as we did in FY
1997, but by increasing the strength of the applicable signal contours
to 5 mV/m for AM radio stations and 70 dBuV/m for FM radio stations,
their city strength service contours. The city strength signal contours
should reduce the populations used to assess fees to the populations
within each station's primary local market area.
36. The FY 1998 NPRM proposed alternative fee schedules. In the
first schedule, we determined the population in each station's city
strength service contours, and then multiplied each population served
by the same ratios between the fees for individual classes and types of
stations (AM or FM), as established in the original Statutory Fee
Schedule to determine the weighted population for each station in the
FY 1998 Fee Schedule. See 47 U.S.C. 159(g). We then proposed to combine
all of the AM and FM stations into a single schedule. We developed a
range of fees for the schedule by selecting a minimum fee not lower
than the AM Construction Permit fee which we determined to be $235, and
a maximum fee which would not place an undue burden on any licensee.
Therefore, we proposed to set the lowest radio fee at $250, and to
increase the fees in $250 increments to $2,500 for stations serving the
largest populations. We further proposed to retain the same number of
actual fee classifications (ten) as in our FY 1997 Report and
Order.\11\
---------------------------------------------------------------------------
\11\ The number of stations is not exactly divisible by 10,
leaving group 10 with five less stations than the other groups.
---------------------------------------------------------------------------
37. We agree with the NAB and the State Broadcaster Associations
that separately listing AM and FM stations by class of station, and by
increasing the burden to be paid by the stations serving larger
populations, is more equitable. Although that schedule would depart
from the original ratios in the statutory fee schedule, we are
authorized to modify the schedule and implement the following schedule
which is responsive to the concerns expressed by our licensees. 47
U.S.C. 159(b).
[[Page 35853]]
Radio Station Regulatory Fees
----------------------------------------------------------------------------------------------------------------
FM classes
Population served AM class A AM class B AM class C AM class D FM classes B, C, C1 &
A, B1 & C3 C2
----------------------------------------------------------------------------------------------------------------
1,000,000........................ 4,000 3,250 1,500 2,000 3,250 4,000
----------------------------------------------------------------------------------------------------------------
38. As can be seen from the above chart, the same class stations in
different size cities generally have different fees, with stations
serving larger populations paying higher fees. In addition, different
class stations in the same city generally have different fees, with
stations which provide a higher class of service paying higher fees.
The same class stations in the same city will have the same fee. Thus,
the adopted fee schedule achieves the objectives of assessing fees
based on class of station and populations served, thereby providing a
fair and equitable means of distinguishing between stations located in
metropolitan areas and in rural areas.
39. Moreover, if a licensee believes that it has been improperly
placed in a particular fee classification group or that it will suffer
undue financial hardship from the fee assessment, our rules provide for
waiver, reduction or deferral of a fee as described in Sec. 1.1166 of
our rules. See 47 CFR 1.1166.
40. We also agree with the NAB that the fee schedule should reflect
the total number of non-exempt operating stations. We have identified
those licensees who have not paid their regulatory fees and have
requested that they pay the fee or submit evidence establishing that
they have paid their fee or are entitled to an exemption from the
regulatory fee. In addition, in Assessment and Collection of Regulatory
Fees for Fiscal Year 1997, FCC 97-384, adopted October 17, 1997, we
required licensees to submit evidence of their non-profit status. For
FY 1998, we have made adjustments to the number of licensees subject to
fee payment based on responses received pertaining to non-profit
status. Further, for FY 1999, we will consider the number of licensees
who have paid their fees, as adjusted to account for licensees that
have established their exempt status, and to account for responses to
our letters requesting fee payments. Moreover, it is our intention to
follow up on the FY 1998 fee payments to again identify and collect
fees from those licensees that have not paid their fees and to further
adjust and perfect our station counts.
41. The Commission will again inform radio station licensees of
their exact fee obligation. A Public Notice listing each station's call
letters, location, population, and the required fee will be mailed to
each licensee. The same information will also be available at our
internet web site (http://www.fcc.gov). Interested parties may also
obtain their applicable fee amount for FY 1998 by calling the FCC's
National Call Center at 1-888-225-5322. We have also provided detailed
payment information for each radio station as Attachment L to this
Report and Order.
b. CMRS
42. In the NPRM, we proposed for FY 1998 fees of $.29 per unit for
the CMRS Mobile Service and $.04 per unit for the CMRS Messaging
Service. In addition, we sought comment on how best to assign the
various CMRS services between the two fee categories. For FY 1997,
licensees authorized for operation on broadband spectrum were subject
to payment of the CMRS Mobile Service fee and licensees authorized for
operation on narrowband spectrum were subject to payment of the CMRS
Messaging fee without regard to the nature of the services actually
offered. We invited interested parties to comment on our proposal to
continue the FY 1998 fee structure, and we specifically invited
comments on whether licensees in the 900 MHZ Specialized Mobile Radio
(SMR) Service were properly included in the CMRS Mobile fee category.
Further, we tentatively proposed to include the Wireless Communications
Service in the CMRS Wireless fee category.
43. Several interested parties filed comments, in particular,
concerning the demarcation between the CMRS Mobile and CMRS Messaging
fee categories. SBC Communications Inc. (SBC) urges us to adopt only a
single CMRS fee covering all CMRS services contending that both
Congress and the Commission intended in establishing SMRS to create
regulatory symmetry among the CMRS services and, thereby, avoid any
competitive advantage to narrowband PCS and SMR Services over Cellular
and broadband PCS.\12\ In contrast, Paging Network, Inc. (Pagenet)
supports retention of the existing fee category structure, but
recommends adoption of a subcategory for non-voice networks and
services within the CMRS Mobile Service fee category which would be
subject to the same fee payment as licensees within the CMRS Messaging
fee category.
---------------------------------------------------------------------------
\12\ Id.
---------------------------------------------------------------------------
44. Bell South, a provider of mobile wireless data, supported by
American Mobile Telecommunications Association (AMTA), suggests that
900 MHZ SMR licensees should be classified in the CMRS Messaging Fee
category not the CMRS Mobile Services Category. BellSouth WD argues
that regulatory fees should be governed by how the service bands are
predominantly used. BellSouth WD states that the Commission has
allocated 5 MHz of spectrum in each geographic region for 900 MHz SMR
systems and that, in practice, this spectrum is licensed in 20 blocks,
each consisting of 10 two-way 12.5 KHz paths, or 0.25 MHz per ten-
channel block.\13\ Further, Bell South contends that 900 MHz SMRs do
not have the capacity to compete with true broadband systems, lacking
the amount of spectrum of those services included in the CMRS Mobile
Fee category. Thus, Bell South WD suggests that we either include any
license authorization providing 25 KHz or less spectrum in the CMRS
Messaging Service category or that we establish a third CMRS fee
payment category for systems that operate in the 900 MHz SMR band and
other services that are allocated no more than 5 MHz of spectrum. Small
Business in Telecommunications (SBT), representing several SMR
licensees, argues that, because we classified narrowband PCS, which
operates on 50 KHz paired channels, in the CMRS
[[Page 35854]]
Messaging Service category,\14\ we should clarify that all CMRS
stations which are authorized with channel bandwidth not exceeding 50
KHz are within the CMRS Messaging Service category.
---------------------------------------------------------------------------
\13\ See BellSouth WD Comments at 2.
\14\ See FY 1997 Fees Order at paragraph 61.
---------------------------------------------------------------------------
45. Moreover, SBT contends that we should clarify that SMR systems
and Public Coast stations are within the CMRS Messaging Fees category
since these stations are authorized with substantially less channel
capacity than narrowband PCS stations. SBT also believes that SMR
licensees, which are small businesses should receive discounts on their
fees similar to the discounts given to small businesses in spectrum
auctions. AMTA also supports relief for small businesses. SBC also
contends that we incorrectly included the Rural Radio Service and the
Basic Exchange Telecommunications Radio Service (BETRS) in the CMRS fee
category.
46. We decline to adopt suggestions to base our fees on the
predominant use of assigned spectrum and on a licensee by licensee
basis. We are aware of no existing records or other information that
would permit development of a sub-category of CMRS Mobile Services for
those CMRS licensees who use broadband spectrum to deliver CMRS
Messaging Services. Thus, adoption of those proposals could impose upon
the licensees themselves and our staff an undue expenditure of
administrative resources in the course of preparing the fee payments
and processing them.
47. Furthermore, we reject SBC's contention that all CMRS licensees
should pay the same regulatory fee. The statutory fee schedule makes
plain that Congress in enacting the regulatory fee program contemplated
that our fee levels would recognize the benefit of the spectrum
authorized to licensees in the various services. 47 U.S.C. 159(g).
Furthermore, interested parties should note that in the past our CMRS
fee schedules have adhered to Congress' principle that our fee
categories are to be based on the authorization provided to a licensee
rather than the use a particular licensee makes of its authorized
spectrum. Thus, we have considered the nature of the services offered
only to the extent that service offered on broadband spectrum and
services offered on narrowband spectrum are subject to different
categories of fee payment.
48. While, at this time, we lack an adequate record to modify
classifications within the CMRS fee category, we intend to adopt
shortly a Notice of Inquiry to seek comment on revisiting several of
our regulatory fee categories, including CMRS. We encourage CMRS
licensees to participate in that proceeding by submitting comments and
supporting data.
49. Finally, we did not receive any comments opposing our tentative
conclusion that the Wireless Communications Service (WCS) should be
classified as a CMRS Mobile Service and, therefore, we will classify
WCS as service within the CMRS Mobile Service fee category. Also, we
agree with SBC that Sec. 20.7(a) of the rules excludes licensees in the
Rural Radio Service from CMRS. Therefore, licensees in this Service
shall pay annual regulatory fees under the category, GMRS/Other Land
Mobile. For FY 1998, the GMRS/Other Land Mobile fee is $6 per license,
payable in advance for the entire license term and at the time of
application for a new, modification or reinstatement license. The total
regulatory fee due is $30 for a five-year license term.
c. Space Stations and Bearer Circuits
i. Geostationary Satellites
50. For FY 1997 and prior years, we have adopted the statutory fee
schedule's ``per satellite'' method for assessment of fees upon
licensees of space stations. 47 U.S.C. 159(g). In the NPRM, we proposed
retaining this approach. See FY 1998 NPRM, Attachment F. Columbia asks
that we modify our methodology to take into account the difference
between transponder and bandwidth capacity that exists among different
satellites. Columbia states that its satellites are limited to just
twelve C-band transponders, which, it contends, is only about one-third
the capacity of the typical geostationary satellite. Further, it argues
that satellite operators benefit from our regulation in close
proportion to its capacity because a satellite's commercial capacity
dictates the benefit it receives from our regulation, i.e., its ability
to generate income. Thus, Columbia suggests that we base the space
station fees on the transponder capacity of each satellite measured in
36 MHZ equivalent circuits.
51. Both GE Americom and Lorel contend that the Commission engages
in little oversight once a satellite is licensed and that application
processing costs should not be included in the regulatory fee schedule.
The costs attributed to the regulation of geostationary satellites are
based on the Commission's cost accounting system which separates
application processing costs from regulatory costs.
52. Finally, GE Americom and others contend that any costs related
to the development of new services rather than existing services should
be treated as overhead and recovered proportionately from all fee
payers. They also state that high regulatory fees adversely affect the
U.S. satellite industry's capability to compete with foreign licensed
companies. We continue to believe that it would be inappropriate to
transfer costs directly attributable to one industry group to other
unrelated industries or groups. Benefits need not be received or used
by a particular licensee to satisfy the ``reasonably related''
criteria. It is enough that the benefits are available to all. The FCC,
by statute, may only regulate costs of domestic licensed companies and
we do not believe that our regulatory fees substantially affect
American companies ability to compete with foreign entities.
53. After a careful review of the arguments, we have concluded that
due to the tight collection schedule we face at this point, as a
practical matter, we have no viable alternative other than adoption of
the fee as proposed in the NPRM. Our action today is not intended to
prejudge any pending waiver applications regarding these fees.
Moreover, since the calculation of annual regulatory fees for
geostationary satellites has been a matter of dispute for several
years, we will soon issue a Notice of Inquiry which will entertain
suggestions for alternative approaches based on different criteria and
information. We will also ask the satellite industry to specify the
data upon which we can base each alternative approach and the most
feasible method for obtaining this information.
ii. Non-Geostationary Satellites
54. In the NPRM, we proposed to revise the fee payment requirement
for non-geostationary satellite systems by requiring a fee payment
``upon the commencement of operation of a system's first satellite as
reported annually pursuant to Secs. 25.142(c), 25.143(e) 25.145(g) or
upon certification of operation of a single satellite pursuant to
Sec. 25.120(d).''\15\ See NPRM at paragarph 32. In its comments,
ORBCOMM contends that we should recover our non-geostationary space
station regulatory costs from all non-geostationary satellite licensees
rather than only those that have launched their initial satellites
because all licensees benefit from our policy, enforcement and
information activities and services.
---------------------------------------------------------------------------
\15\ Section 25,120(d) has been renumbered to Sec. 25.121(d).
---------------------------------------------------------------------------
55. In the past, we have not assessed fees upon licensees of LEO
systems that
[[Page 35855]]
do not operate at least one in-orbit space station. Nevertheless, we
believe that ORBCOMM's proposal to impose a fee on all licensees of LEO
systems warrants consideration due to developments in satellite
technology permitting the deployment of LEO systems containing large
numbers of satellites. However, before further considering the
proposal, we believe an opportunity for comments by the interested
parties would be useful. Therefore, we adopt the fee as proposed in the
NPRM. Nevertheless, we will include ORBCOMM's proposal in the Notice of
Inquiry we will initiate to review various methodologies for assessing
fees in various fee categories. This will provide an opportunity to
fully explore this proposal with input from all affected parties.
56. Finally, we will adopt the NPRM's proposal to reclassify the
LEO regulatory fee category as the ``Space Stations (Non-
geostationary)'' fee category because advances in satellite technology
have made possible medium and high orbit satellite systems operating in
non-geostationary orbits. See NPRM at paragraph 33.
iii. Bearer Circuits
57. For FY 1997, for the first time, we applied the international
bearer circuit fee to satellite non-common carriers providing
international bearer circuits to end users. See FY 1997 Report and
Order at paragraphs 66-72. Previously, we had assessed the bearer
circuit fee only upon undersea cable operators and domestic and
international common carriers. In the NPRM, we proposed to again assess
the bearer circuit fee on both private and common carrier satellite
providers of international bearer circuits to end users. See FY 1998
NPRM, Attachment F.
58. Columbia, Loral, and PanAmSat contend that assessment of the
bearer circuit fee on private satellite providers of international
bearer circuits is unlawful. These parties state that section 9(g) of
the Communications Act specifically limits the assessment of the bearer
circuit fee to ``carriers''. 47 U.S.C. 159(g). Because section 3(10) of
the Act defines ``carriers'' as ``common carriers'', they contend that
we are limited to imposing the fee only on common carriers providing
international bearer circuits. 47 U.S.C. 153(10). In addition,
according to Columbia, the intent of Congress in including the bearer
circuit fee in its statutory fee schedule was to assure the recovery
from common carriers of the cost of their Title II regulation. Because
non-common carriers are not subject to Title II regulation, Columbia
argues that imposition of the bearer circuit fee on non-common carriers
would result in recovery of the costs of Title II regulation from
entities not subject to our Title II jurisdiction.
59. As a separate matter, PanAmSat states that our justification
underlying imposition of the FY 1997 bearer fee upon non-common carrier
satellite providers was flawed because we mistakenly believed that non-
common carrier satellite operators would offer interconnected PSTN
services in competition with common carriers following our elimination
of the de jure prohibition on non-common carriers for the provision of
these services. See FY 1997 Report and Order at paragraph 71. Instead,
PanAmSat contends that the record in the pending Comsat Dominance
proceeding demonstrates that the amount of PSTN traffic actually
carried by non-common carrier satellites is so small as to be
inconsequential from a competitive point of view. See 60-SAT-ISP-97.
Thus, PanAmSat, supported by Columbia and Loral, argues that there has
been no change in our regulation of non-common carriers to justify,
pursuant to section 9(b)(3), subjecting non-common carrier satellites
providers to a new fee. 47 U.S.C. 159(b)(3).
60. Finally, PanAmSat contends that to assess non-common carrier
satellite operators the international bearer circuit fee will create a
competitive disparity. PanAmSat states that under our DISCO II
policies, foreign-licensed satellites now may be used to provide
satellite service in the United States. Foreign satellite operators are
not, however, required to pay regulatory fees. See 12 FCC Rcd 24094
(1997). As a result, the satellite systems against which U.S.-licensed
non-common carriers actually compete will have a competitive advantage
solely as a result of having used a foreign licensing administration.
In sum, PanAmSat asks that we not impose the bearer circuit fee on non-
common carrier satellite operators in order to avoid skewing
competition in the telecommunications markets by unfairly
discriminating against U.S.-licensed service providers.
61. We disagree with Columbia, Loral and PanAmSat that our
assessment of the bearer circuit regulatory fee on them is unlawful.
First, we disagree with their assertion that the intent of Congress in
enacting section 9 of the Communications Act, under which the
Commission is required to collect annual regulatory fees, including the
bearer circuit fee at issue here, was to recover the costs of
regulating common carriers under Title II of the Act. Section 9(a)
clearly states that the purpose of the regulatory fees is to recover
the costs of the Commission's enforcement activities, policy and
rulemaking activities, user information services and international
activities. Section 9(a) does not mention carriers or non-carriers or
impose different criteria for each. Rather, the section requires the
Commission to collect fees designed to recover its costs for these four
general activities and to collect those fees from all entities that
either require the Commission to engage in those activities or who
benefit from them. As we noted in our FY 1997 Report and Order the
Commission's costs for Title II regulation are recovered from the
application fees under section 8 of the Communications Act.
62. We further disagree with the argument of PanAmSat that our
argument for recovering bearer circuit fees from non-carrier providers
of such circuits is flawed. We see nothing in section 9 that would
specifically exempt non-carriers from paying fees under section 9.
While we agree that the Schedule of Regulatory Fees included in section
9(g) states that we should impose bearer circuit fees upon
``carriers,'' \16\ and that section 3(10) of the Act defines
``carriers'' to mean ``common carriers,'' \17\ that is not the end of
the issue. Section 9(b)(3) empowers the Commission to amend the
Schedule of Regulatory Fees if the Commission deems such amendment
necessary in the public interest.\18\ In our 1997 Report and Order we
amended the schedule of regulatory fees to impose them upon non-carrier
operators of international satellite systems under the terms of section
9(g)(3). The basis for this amendment was that the non-carrier system
operators had sought and obtained a significant expansion of the scope
of services they are permitted to offer.\19\
---------------------------------------------------------------------------
\16\ 47 U.S.C. 159(g).
\17\ 47 U.S.C. 153(10).
\18\ 47 U.S.C. 159(g)(3).
\19\ See FCC 97-295 at paragraph 71, June 26, 1997.
---------------------------------------------------------------------------
Our DISCO II Order also allowed them to provide unlimited domestic
service,\20\ thereby increasing their permitted service areas. Because
of these changes in their operation the non-carrier operators of
international satellite systems impose more burdens upon the
Commission's regulatory staff and derive a greater benefit from such
staff's activities, particularly its international representation
functions.
[[Page 35856]]
We concluded, therefore, that it would be appropriate to begin to
collect regulatory fees from such operators.
---------------------------------------------------------------------------
\20\ See 63 FR 6496 (February 9, 1997). Amendment of the
Commission's Regulatory Policies to Allow Non-U.S. Licensed Space
Stations to Provide Domestic and International Satellite Service in
the United States, Report and Order in IB Docket No. 96-111, 12 FCC
Rcd 24094 (1997), 62 FR 64167 (December 4, 1997).
---------------------------------------------------------------------------
63. The commenting parties do not directly challenge the
conclusions of our FY 1997 Report and Order. At most, PanAmSat argues
that we may have overestimated the number of circuits such entities
interconnect to the public switched telephone network (PSTN) and that
the number is actually ``competitively inconsequential.'' Our decision,
however, was not solely based upon the connection of circuits to the
PSTN. The non-carrier international satellite operators have become
substantial providers of international private-line circuits. Such
circuits are international bearer circuits, whether or not they are
interconnected to the PSTN. They offer substantial competition to
carrier offerings of international bearer circuits. Commission staff
has also spent considerable time representing non-carrier satellite
operators in international forums. Therefore, we continue to believe
that our regulation of these entities has sufficiently changed so that
it is now appropriate for them to contribute to the recovery of
Commission costs through payment of the bearer circuit fee. Finally, we
find no merit in PanAmSat's argument that our imposition of bearer
circuit fees on U.S.-licensed satellite systems discriminates in favor
of foreign-owned systems. Congress requires the Commission to recover
regulatory fees from firms who are subject to the Commission's
regulatory jurisdiction. Foreign-licensed satellite systems do not fall
within Commission jurisdiction. Therefore, they neither directly impose
burdens on the Commission's staff nor receive benefits from Commission
representation in international fora.
d. Interstate Telephone Service Providers
64. In the NPRM, we proposed to adopt the methodology for assessing
fees upon Interstate Telephone Service Providers that we had employed
in past years. Under this methodology, carriers calculate their fees
based upon their proportionate share of interstate revenues using the
methodology we developed for contribution to the TRS Fund. See
Telecommunications Relay Services, 8 FCC Rcd 5300 (1993). However, in
order to avoid imposing upon resellers a double fee payment, we permit
carriers to remove from their gross interstate revenue payments made to
underlying carriers for telecommunications facilities and services,
including payments for interstate access services.
65. SBC contends that our methodology imposes an undue burden upon
the LECs because we permit interexchange carriers (IXCs) to deduct
payments made to underlying common carriers from their gross revenues
while local exchange carriers (LECs) do not have such payments to
deduct. SBC suggests that use of end user revenues--the same
contribution base used for Universal Service--to develop the annual
fees would alleviate that burden and be more competitively neutral.
66. We find merit to SBC's proposal and, indeed, we have previously
recognized administrative advantages to using end user revenues as
opposed to net revenues when assessing carrier contributions.\21\
However, SBC is mistaken in describing end user revenues as more
competitively neutral than the mechanism we have proposed. Assuming
that all fees are recovered from customers, including carrier customers
that purchase their service for resale, retail customers would still
pay the same rates. Further, to the extent that SBC provides services
in competition with other carriers, those carriers would pay the same
percentage amounts as SBC when providing the same services to the same
customers. Since modifying the fee basis would not result in any
material difference in the rates that consumers pay, we cannot conclude
that the LEC's pay an undue share under our proposed methodology.
---------------------------------------------------------------------------
\21\ Federal-State Joint Board on Universal Service, Report and
Order, FCC 97-157, CC Docket No. 96-45, 12 FCC Rcd 8776, 9206-9209
(rel. May 8, 1997) (Universal Service Order).
---------------------------------------------------------------------------
67. Interested parties should note that we are adopting our net
revenue methodology as the fee basis for the Interstate Telephone
Service Providers fee category again this year, in part, because we do
not yet have adequate data to estimate total common carrier interstate
end user revenue for FY 1997. While we could make such an estimate
using data available for the first half of FY 1997 based on USF filings
submitted on September 1, 1997, we believe that for FY 1998 we can make
a better calculation of net revenues using historic data from
regulatory fees as well as published gross revenue data based on TRS
Fund filings. Thus, we expect to revisit SBC's proposal in the course
of developing our regulatory fees for FY 1999.
E. Schedule of Regulatory Fees
68. The Commission's Schedule of Regulatory Fees for FY 1998 is
contained in Attachment F of this Report and Order.
F. Effect of Revenue Redistributions on Major Constituencies
69. The chart below illustrates the relative percentages of the
revenue requirements borne by major constituencies since inception of
regulatory fees in FY 1994.
Revenue Requirement Percentages by Constituencies
----------------------------------------------------------------------------------------------------------------
FY 1994 FY 1995 FY 1996 FY 1997 FY 1998
(actual) (actual) (actual) (actual) (proposal)
----------------------------------------------------------------------------------------------------------------
Cable TV Operators(Inc. CARS Licenses)......... 41.4 24.0 33.4 21.8 18.1
Broadcast Licensees............................ 23.8 13.8 14.6 14.1 15.3
Satellite Operators (Inc. Earth Stations)...... 3.3 3.6 4.0 5.0 5.0
Common Carriers................................ 25.0 44.5 40.9 49.8 47.8
Wireless Licensees............................. 6.5 14.1 7.1 9.3 13.8
----------------------------------------------------------------
Total...................................... 100.0 100.0 100.0 100.0 100.0
----------------------------------------------------------------------------------------------------------------
G. Procedures for Payment of Regulatory Fees
i. Installment Payments for Large Fees
70. Generally, we are retaining the procedures that we have
established for the payment of regulatory fees. Section
9(f) requires that we permit ``payment by installments in the case of
fees in large amounts, and in the case of small amounts, shall require
the payment of the fee in advance for a number of years not to exceed
the term of the license held by the payer.'' See 47 U.S.C.
159(f)(1). Consistent with section 9(f), we are again establishing
three categories of fee payments, based upon the category of service
for which the fee payment is due and the amount of the fee to be paid.
The fee categories are (1)
[[Page 35857]]
``standard'' fees, (2) ``large'' fees, and (3) ``small'' fees.
71. We proposed in the NPRM that regulatees in any category of
service with a liability of $12,000 or more be eligible to make
installment payments and that eligibility for installment payments be
based upon the amount of either a single regulatory fee payment or
combination of fee payments by the same licensee or regulatee. However,
statutory constraints requiring notification to Congress prior to
actual collection of the fees prevents us from allowing installment
payments in FY 1998. The payment dates for each regulatory fee category
will be announced by Public Notice and published in the Federal
Register following termination of this proceeding. However, regulatees
otherwise eligible to make installment payments may pay their fees on
the last date that fee payments may be submitted, as established in our
Public Notice.
ii. Annual Payments of Standard Fees
72. Standard fees are those regulatory fees that are payable in
full on an annual basis. Payers of standard fees are not required to
make advance payments for their full license term and are not eligible
for installment payments. As in the past, all standard fees will be
payable in full on the date we establish for payment of fees in their
regulatory fee category. The payment dates for each regulatory fee
category will be announced by Public Notice and published in the
Federal Register following termination of this proceeding.
iii. Advance Payment of Small Fees
73. As we have in the past, we are proposing to treat regulatory
fee payments by certain licensees as ``small'' fees subject to advance
payment consistent with the requirements of section 9(f)(2). Advance
payments will be required from licensees of those services that we
identified would be subject to advance payments in our FY 1994 Report
and Order, and to those additional payers set forth herein. \22\ Payers
of small fees must submit the entire fee due for the full term of their
licenses when filing their initial, renewal, or reinstatement
application. Regulatees subject to a payment of small fees shall pay
the amount due for the current fiscal year multiplied by the number of
years in the term of their requested license. In the event that the
required fee is adjusted following their payment of the fee, the payer
would not be subject to the payment of a new fee until filing an
application for renewal or reinstatement of the license. Thus, payment
for the full license term would be made based upon the regulatory fee
applicable at the time the application is filed. The effective date of
the FY 1998 small fees will be announced by Public Notice and published
in the Federal Register following termination of this proceeding.
---------------------------------------------------------------------------
\22\ Applicants for new, renewal and reinstatement licenses in
the following services will be required to pay their regulatory fees
in advance: Land Mobile Services, Microwave services, Marine (Ship)
Service, Marine (Coast) Service, Private Land Mobile (Other)
Services, Aviation (Aircraft) Service, Aviation (Ground) Service,
General Mobile Radio Service (GMRS). In addition, applicants for
Amateur Radio Vanity Call Signs will be required to submit an
advance payment.
---------------------------------------------------------------------------
iv. Standard Fee Calculations and Payment Dates
74. As noted, the time for payment of standard fees will be
published in the Federal Register. For licensees, permittees and
holders of other authorizations in the Common Carrier, Mass Media and
Cable Services, fees should be submitted for any authorization held as
of October 1, 1997. As in the past, this is the date to be used for
establishing liability for payment of these fees since it is the first
day of the federal government's fiscal year.
75. In the case of other regulatees whose fees are based upon a
subscriber, unit or circuit count, the number of a regulatees'
subscribers, units or circuits on December 31, 1997, will be used to
calculate the fee payment.\23\ As in the past, we have selected the
last date of the calendar year because many of these entities file
reports with us as of that date. Others calculate their subscriber
numbers as of that date for internal purposes. Therefore, calculation
of the regulatory fee as of that date will facilitate both an entity's
computation of its fee payment and our verification that the correct
fee payment has been submitted.
---------------------------------------------------------------------------
\23\ Cable system operators are to compute their subscribers as
follows: Number of single family dwellings + number of individual
households in multiple dwelling unit (apartments, condominiums,
mobile home parks, etc.) paying at the basic subscriber rate + bulk
rate customers + courtesy and free service. Note: Bulk-Rate
Customers= Total annual bulk-rate charge divided by basic annual
subscription rate for individual households. Cable system operators
may base their count on ``a typical day in the last full week'' of
December 1996, rather than on a count as of December 31, 1996.
---------------------------------------------------------------------------
v. Minimum Fee Payment Liability
76. Regulatees whose total fee liability amounts to less than $10,
including all categories of fees for which payment is due by an entity,
are exempted from fee payment in FY 1998.
IV. Ordering Clause
77. Accordingly, it is ordered that the rule changes specified
herein are adopted. It is further ordered that the rule changes made
herein will become effective 60 days from date of publication in the
Federal Register, except that changes to the Schedule of Regulatory
Fees, made pursuant to section 9(b)(3) of the Communications Act, and
incorporating regulatory fees for FY 1998, will become effective
September 13, 1998, which is 90 days from the date of notification to
Congress. Finally, it is ordered that this proceeding is Terminated.
V. Authority and Further Information
78. This action is taken pursuant to sections 4(i), 4(j), 9 and
303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i)
and (j) and 9 and 303(r).
79. Further information about this proceeding may be obtained by
contacting the Fees Hotline at (202) 418-0192.
List of Subjects in 47 CFR Part 1
Administrative practice and procedure, Communications common
carriers, Radio, Telecommunications, Television.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
Rule Changes
For the reasons discussed in the preamble part 1 of Title 47 of the
Code of Federal Regulations is amended as follows:
PART 1--PRACTICE AND PROCEDURE
1. The authority citation for part 1 continues to read as follows:
Authority: 15 U.S.C. 79 et seq.; 47 U.S.C. 151, 154(i), 154 (j),
155 225, and 303(r).
2. Section 1.1152 is revised to read as follows:
Sec. 1.1152 Schedule of annual regulatory fees and filing locations
for wireless radio services.
[[Page 35858]]
------------------------------------------------------------------------
Exclusive use services (per Fee amount
license) \1\ Address
------------------------------------------------------------------------
1. Land Mobile (Above 470 MHz,
Base Station & SMRS)(47 CFR,
Part 90):
(a) 800 MHz, New, Renewal, $12.00 FCC, 800 MHz, PO Box
Reinstatement (FCC 600). 358235, Pittsburgh, PA
15251-5235.
(b) 900 MHz, New, Renewal, 12.00 FCC, 900 MHz, PO Box
Reinstatement (FCC 600). 358240, Pittsburgh, PA
15251-5240.
(c) 470-512,800,900, 220 MHz, 12.00 FCC, 470-512, PO Box
220 MHz Nationwide Renewal 358245, Pittsburgh, PA
(FCC 574R, FCC 405A). 15251-5245.
(d) Correspondence, Blanket 12.00 FCC, Corres., PO Box
Renewal, (470- 358305, Pittsburgh, PA
512,800,900,220 MHz) 15251-5305.
(Remittance Advice,
Correspondence).
(e) 220 MHz, New, Renewal, 12.00 FCC, 220 MHz, PO Box
Reinstatement (FCC 600). 358360, Pittsburgh, PA
15251-5360.
(f) 470-512 MHz, New, 12.00 FCC, 470-512,
Renewal, PO Box 358810, Pittsburgh, PA 15251-
Reinstatement (FCC 600). 5810.
(g) 220 MHz Nationwide, New, 12.00 FCC, Nationwide, PO Box
Renewal, Reinstatement (FCC 358820, Pittsburgh, PA
600). 15251-5820.
2. Microwave (47 CFR Pt. 101):
(a) Microwave, New, Renewal, 12.00 FCC, Microwave, PO Box
Reinstatement (FCC 415). 358250, Pittsburgh, PA
15251-5250.
(b) Microwave, Renewal (FCC 12.00 FCC, Microwave, PO Box
402R). 358255, Pittsburgh, PA
15251-5255.
(c) Correspondence, Blanket 12.00 FCC, Corres., PO Box
Renewal (Microwave) 358305, Pittsburgh, PA
(Remittance Advice, 15251-5305.
Correspondence).
3. Shared Use Services:
(a) Land Transportation (LT), 6.00 FCC, Land Trans., PO Box
New, Renewal, Reinstatement 358215, Pittsburgh, PA
(FCC 600). 15251-5215.
(b) Business (Bus.), New, 6.00 FCC, Business, PO Box
Renewal, Reinstatement (FCC 358220, Pittsburgh, PA
600). 15251-5220.
(c) Other Industrial (OI), 6.00 FCC, Other Indus., PO
New, Renewal, Reinstatement Box 358225 Pittsburgh,
(FCC 600). PA 15251-5225.
(d) General Mobile Radio, 6.00 FCC, GMRS, PO Box
Service (GMRS) New, Renewal, 358230, Pittsburgh, PA
Reinstatement (FCC 574). 15251-5230.
(e) Business, Other 6.00 FCC, Bus., OI, LT, GMRS,
Industrial, Land PO Box 358245
Transportation, GMRS, Pittsburgh, PA 15251-
Renewal (FCC 574R, FCC 405A). 5245.
(f) Ground, New, Renewal, 6.00 FCC, Ground, PO Box
Reinstatement (FCC 406). 358260, Pittsburgh, PA
15251-5260.
(g) Coast, New, Renewal, 6.00 FCC, Coast, PO Box
Reinstatement (FCC 503). 358265, Pittsburgh, PA
15251-5265.
(h) Ground, Renewal (FCC 6.00 FCC, Ground, PO Box
452R). 358270, Pittsburgh, PA
15251-5270.
(i) Coast, FCC, Coast Renewal 6.00 PO Box 358270,
(FCC 452R). Pittsburgh, PA 15251-
5270.
(j) Ship, New, Renewal, 6.00 FCC, Ship, PO Box
Reinstatement (FCC 506). 358275, Pittsburgh, PA
15251-5275.
(k) Aircraft, New, Renewal, 6.00 FCC, Aircraft, PO Box
Reinstatement (FCC 404). 358280, Pittsburgh, PA
15251-5280.
(l) Ship, Renewal (FCC 405B). 6.00 FCC, Ship, PO Box
358290, Pittsburgh, PA
15251-5290.
(m) Aircraft, Renewal (FCC 6.00 FCC, Aircraft, PO Box
405B). 358290, Pittsburgh, PA
15251-5290.
(n) Correspondence, Blanket 6.00 FCC, Corres., PO Box
Renewal (Bus.,OI,LT,GMRS) 358305, Pittsburgh, PA
(Remittance Advice, 15251-5305.
Correspondence).
(o) Correspondence, Blanket 6.00 FCC, Corres., PO Box
Renewal (Ground) (Remittance 358305, Pittsburgh, PA
Advice, Correspondence). 15251-5305.
(p) Correspondence, Blanket 6.00 FCC, Corres., PO Box
Renewal (Coast) (Remittance 358305, Pittsburgh, PA
Advice, Correspondence). 15251-5305.
(q) Correspondence, Blanket 6.00 FCC, Corres., PO Box
Renewal (Aircraft) 358305, Pittsburgh, PA
(Remittance Advice, 15251-5305.
Correspondence).
(r) Correspondence, Blanket 6.00 FCC, Corres., PO Box
Renewal (Ship) (Remittance 358305, Pittsburgh, PA
Advice, Correspondence). 15251-5305.
4. Amateur Vanity Call Signs..... 1.30 FCC, Amateur Vanity, PO
Box 358924, Pittsburgh,
PA 15251-5924.
5. CMRS Mobile Services (per .29 FCC, Cellular, PO Box
unit). 358835, Pittsburgh, PA
15251-5835.
6. CMRS Messaging Services (per .04 FCC, Messaging, PO Box
unit). 358835, Pittsburgh, PA
15251-5835.
------------------------------------------------------------------------
\1\ Note that ``small fees'' are collected in advance for the entire
license term. Therefore, the annual fee amount shown in this table
must be multiplied by the 5- or 10-year license term, as appropriate,
to arrive at the total amount of regulatory fees owned. It should be
further noted that application fees may also apply as detailed in
1.1102 of this chapter.
3. Section 1.1153 is revised to read as follows:
Sec. 1.1153 Schedule of annual regulatory fees and filing locations
for mass media services.
------------------------------------------------------------------------
Fee amount Address
------------------------------------------------------------------------
I. Radio [AM and FM] (47 CFR,
Part 73):
1. AM Class A
(a) 1,000,000 population 4,000
2. AM Class B
(a) 1,000,000 population 3,250
3. AM Class C
(a) 1,000,000 population 1,500
4. AM Class D
(a) 1,000,000 population 2,000
5. AM Construction Permit.... 235
6. FM Classes A, B1 and C3
(a) 1,000,000 population 3,250
7. FM Classes B, C, C1 and C2
(a),000,000 population. 4,000 ........................
8. FM Construction Permits... 1,150 ........................
II. TV (47 CFR, Part 73) VHF
Commercial:
1. Markets 1 thru 10......... 37,575 FCC, TV Branch, PO Box
358835, Pittsburgh, PA
15251-5835.
2. Markets 11 thru 25........ 31,275 ........................
3. Markets 26 thru 50........ 21,400 ........................
4. Markets 51 thru 100....... 11,975 ........................
5. Remaining Markets......... 3,100 ........................
6. Construction Permits...... 2,525 ........................
III. TV (47 CFR, Part 73) UHF
Commercial:
1. Markets 1 thru 10......... 14,175 FCC, UHF
Commercial, PO Box
358835, Pittsburgh, PA
15251-5835.
2. Markets 11 thru 25........ 10,725 ........................
3. Markets 26 thru 50........ 6,650 ........................
4. Markets 51 thru 100....... 3,975 ........................
5. Remaining Markets......... 1,075 ........................
6. Construction Permits...... 2,650 ........................
IV. Satellite UHF/VHF Commercial:
1. All Markets............... 1,175 FCC Satellite TV PO Box
358835, Pittsburgh, PA
15251-5835.
2. Construction Permits...... 420 ........................
V. Low Power TV, TV/FM 265 FCC, Low Power PO Box
Translator, & TV/FM Booster (47 358835, Pittsburgh, PA
CFR, Part 74). 15251-5835.
VI. Broadcast Auxiliary.......... 11 FCC, Auxiliary, PO Box
358835, Pittsburgh, PA
15251-5835.
VII. Multipoint Distribution..... 260 FCC, Multipoint, PO Box
358835, Pittsburgh, PA
15251-5835.
------------------------------------------------------------------------
Sec. 1.1154 Schedule of annual regulatory charges and filing locations
for common carrier services.
------------------------------------------------------------------------
Fee amount Address
------------------------------------------------------------------------
I. Radio Facilities:
1. Microwave (Domestic Public $12 FCC, Common Carrier,
Fixed). P.O. Box 358680,
Pittsburgh, PA 15251-
5680.
II. Carriers:
1. Interstate Telephone .0011 FCC, Carriers, P.O. Box
Service Providers (per 358835, Pittsburgh, PA
dollar contributed to TRS 15251-5680.
Fund).
------------------------------------------------------------------------
5. Section 1.1155 is revised to read as follows:
Sec. 1.1155 Schedule of regulatory fees and filing locations for cable
television services.
------------------------------------------------------------------------
Fee amount Address
------------------------------------------------------------------------
1. Cable Antenna Relay Service... $50 FCC, Cable, P.O. Box
358835, Pittsburgh, PA
15251-5835.
[[Page 35860]]
2. Cable TV System (per .44
subscriber).
------------------------------------------------------------------------
6. Section 1.1156 is revised to read as follows:
Sec. 1.1156 Schedule of regulatory fees and filing locations for
international services.
------------------------------------------------------------------------
Fee amount Address
------------------------------------------------------------------------
I. Radio Facilities:
1. International (HF) $475 FCC, International, P.O.
Broadcast. Box 358835, Pittsburgh,
PA 15251-5835.
2. International Public Fixed 375 FCC, International, P.O.
Box 358835, Pittsburgh,
PA 15251-5835.
II. Space Stations (Geostationary 119,000 FCC, Space Stations,
Orbit). P.O. Box 358835,
Pittsburgh, PA 15251-
5835.
III. Space Stations (Non- 164,800 FCC, Space Stations,
Geostationary Orbit). P.O. Box 358835,
Pittsburgh, PA 15251-
5835.
IV. Earth Stations, Transmit/ 165 FCC, Earth Station, P.O.
Receive & Transmit Only (per Box 358835, Pittsburgh,
authorization or registration). PA 15251-5835.
V. Carriers:
1. International Bearer 6.00 FCC, International, P.O.
Circuits (per active 64KB Box 358835, Pittsburgh,
circuit or equivalent). PA 15251-5835.
------------------------------------------------------------------------
Attachment A--Final Regulatory Flexibility Analysis
1. As required by the Regulatory Flexibility Act (RFA),\24\-\25\ an
Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the
Notice of Proposed Rulemaking In the Matter of Assessment and
Collection of Regulatory Fees for Fiscal Year 1998, 63 FR 16188 (April
2, 1998). The Commission sought written public comments on the
proposals in its FY 1998 regulatory fees NPRM, including on the IRFA.
This present Final Regulatory Flexibility Analysis (FRFA) conforms to
the RFA, as amended.\26\
---------------------------------------------------------------------------
\24\-\25\ U.S.C. 603.
\26\ See 5 U.S.C. 604. The RFA, see 5 U.S.C. 601 et seq., has
been amended by the Contract with America Advancement Act (CWAAA),
Pub. L. 104-121, 110 Stat. 847 (1996). Title II of the CWAAA is
``The Small Business Regulatory Enforcement Fairness Act of 1996''
(SBREFA).
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I. Need for and Objectives of this Report and Order
2. This rulemaking proceeding was initiated in order to collect
regulatory fees in the amount of $162,523,000, the amount that Congress
has required the Commission to recover through regulatory fees in FY
1998. The Commission seeks to collect the necessary amount through its
revised regulatory fees, as contained in the attached Schedule of
Regulatory Fees, in the most efficient manner possible and without
undue burden on the public.
II. Summary of Significant Issues Raised by Public Comments in
Response to the IRFA
3. None.
III. Description and Estimate of the Number of Small Entities to
Which the Rules will Apply
4. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted.\27\ The RFA generally
defines the term ``small entity'' as having the same meaning as the
terms ``small business,'' ``small organization,'' and ``small
governmental jurisdiction.'' \28\ In addition, the term ``small
business'' has the same meaning as the term ``small business concern''
under the Small Business Act.\29\ A small business concern is one
which: (1) Is independently owned and operated; (2) is not dominant in
its field of operation; and (3) satisfies any additional criteria
established by the Small Business Administration (SBA).\30\ A small
organization is generally ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.''
\31\ Nationwide, as of 1992, there were approximately 275,801 small
organizations.\32\ ``Small governmental jurisdiction'' generally means
``governments of cities, counties, towns, townships, villages, school
districts, or special districts, with a population of less than
50,000.'' \33\ As of 1992, there were approximately 85,006 such
jurisdictions in the United States.\34\ This number includes 38,978
counties, cities, and towns; of these, 37,566, or 96 percent, have
populations of fewer than 50,000.\35\ The Census Bureau estimates that
this ratio is approximately accurate for all governmental entities.
Thus, of the 85,006 governmental entities, we estimate that 81,600 (91
percent) are small entities. Below, we further describe and estimate
the number of small entity licensees and regulatees that may be
affected by the proposed rules, if adopted.
---------------------------------------------------------------------------
\27\ 5 U.S.C. 603(b)(3).
\28\ Id. section 601(6).
\29\ 5 U.S.C. 601(3) (incorporating by reference the definition
of ``small business concern'' in 15 U.S.C. 632). Pursuant to the
RFA, the statutory definition of a small business applies ``unless
an agency, after consultation with the Office of Advocacy of the
Small Business Administration and after opportunity for public
comment, establishes one or more definitions of such term which are
appropriate to the activities of the agency and publishes such
definition(s) in the Federal Register. 5 U.S.C. 601(3).
\30\ Small Business Act, 15 U.S.C. 632 (1996).
\31\ 5 U.S.C. 601(4).
\32\ 1992 Economic Census, U.S. Bureau of the Census, Table 6
(special tabulation of data under contract to Office of Advocacy of
the U.S. Small Business Administration).
\33\ 5 U.S.C. 601(5).
\34\ U.S. Dept. of Commerce, Bureau of the Census, ``1992 Census
of Governments.''
\35\ Id.
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Cable Services or Systems
5. The SBA has developed a definition of small entities for cable
and other pay television services, which includes all such companies
generating $11 million or less in revenue annually.\36\ This definition
includes cable systems operators, closed circuit television services,
direct broadcast satellite services, multipoint distribution systems,
satellite master antenna systems and subscription television services.
According to the Census Bureau data from 1992, there were 1,788 total
cable and other pay
[[Page 35861]]
television services and 1,423 had less than $11 million in revenue.\37\
---------------------------------------------------------------------------
\36\ 13 CFR 121.201, SIC code 4841.
\37\ 1992 Economic Census Industry and Enterprise Receipts Size
Report, Table 2D, SIC code 4841 (U.S. Bureau of the Census data
under contract to the Office of Advocacy of the U.S. Small Business
Administration).
---------------------------------------------------------------------------
6. The Commission has developed its own definition of a small cable
system operator for the purposes of rate regulation. Under the
Commission's rules, a ``small cable company'' is one serving fewer than
400,000 subscribers nationwide.\38\ Based on our most recent
information, we estimate that there were 1,439 cable operators that
qualified as small cable system operators at the end of 1995.\39\ Since
then, some of those companies may have grown to serve over 400,000
subscribers, and others may have been involved in transactions that
caused them to be combined with other cable operators. Consequently, we
estimate that there are fewer than 1,439 small entity cable system
operators.
---------------------------------------------------------------------------
\38\ 47 CFR 76.901(e). The Commission developed this definition
based on its determination that a small cable system operator is one
with annual revenues of $100 million or less. Implementation of
Sections of the 1992 Cable Act: Rate Regulation, Sixth Report and
Order and Eleventh Order on Reconsideration, 10 FCC Rcd 7393 (1995),
60 FR 10534 (February 27, 1995).
\39\ Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29,
1996 (based on figures for December 30, 1995).
---------------------------------------------------------------------------
7. The Communications Act also contains a definition of a small
cable system operator, which is ``a cable operator that, directly or
through an affiliate, serves in the aggregate fewer than 1 percent of
all subscribers in the United States and is not affiliated with any
entity or entities whose gross annual revenues in the aggregate exceed
$250,000,000.'' \40\ The Commission has determined that there are
66,000,000 subscribers in the United States. Therefore, we found that
an operator serving fewer than 660,000 subscribers shall be deemed a
small operator, if its annual revenues, when combined with the total
annual revenues of all of its affiliates, do not exceed $250 million in
the aggregate.\41\ Based on available data, we find that the number of
cable operators serving 660,000 subscribers or less totals 1,450.\42\
We do not request nor do we collect information concerning whether
cable system operators are affiliated with entities whose gross annual
revenues exceed $250,000,000,\43\ and thus are unable at this time to
estimate with greater precision the number of cable system operators
that would qualify as small cable operators under the definition in the
Communications Act. It should be further noted that recent industry
estimates project that there will be a total 66,000,000 subscribers,
and we have based our fee revenue estimates on that figure.
---------------------------------------------------------------------------
\40\ 47 U.S.C. 543(m)(2).
\41\ Id. 76.1403(b).
\42\ Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29,
1996 (based on figures for Dec. 30, 1995).
\43\ We do receive such information on a case-by-case basis only
if a cable operator appeals a local franchise authority's finding
that the operator does not qualify as a small cable operator
pursuant to section 76.1403(b) of the Commission's rules See 47 CFR
76.1043(d).
---------------------------------------------------------------------------
8. Other Pay Services. Other pay television services are also
classified under Standard Industrial Classification (SIC) 4841, which
includes cable systems operators, closed circuit television services,
direct broadcast satellite services (DBS),\44\ multipoint distribution
systems (MDS),\45\ satellite master antenna systems (SMATV), and
subscription television services.
---------------------------------------------------------------------------
\44\ Direct Broadcast Services (DBS) are discussed with the
international services, infra.
\45\ Multipoint Distribution Services (MDS) are discussed with
the mass media services, infra.
---------------------------------------------------------------------------
Common Carrier Services and Related Entities
9. The most reliable source of information regarding the total
numbers of certain common carrier and related providers nationwide, as
well as the numbers of commercial wireless entities, appears to be data
the Commission publishes annually in its Telecommunications Industry
Revenue report, regarding the Telecommunications Relay Service
(TRS).\46\ According to data in the most recent report, there are 3,459
interstate carriers.\47\ These carriers include, inter alia, local
exchange carriers, wireline carriers and service providers,
interexchange carriers, competitive access providers, operator service
providers, pay telephone operators, providers of telephone toll
service, providers of telephone exchange service, and resellers.
---------------------------------------------------------------------------
\46\ FCC, Telecommunications Industry Revenue: TRS Fund
Worksheet Data, Figure 2 (Number of Carriers Paying Into the TRS
Fund by Type of Carrier) (Nov. 1997) (Telecommunications Industry
Revenue).
\47\ Id.
---------------------------------------------------------------------------
10. The SBA has defined establishments engaged in providing
``Radiotelephone Communications'' and ``Telephone Communications,
Except Radiotelephone'' to be small businesses when they have no more
than 1,500 employees.\48\ Below, we discuss the total estimated number
of telephone companies falling within the two categories and the number
of small businesses in each, and we then attempt to refine further
those estimates to correspond with the categories of telephone
companies that are commonly used under our rules.
---------------------------------------------------------------------------
\48\ 13 CFR 121.201, Standard Industrial Classification (SIC)
codes 4812 and 4813. See also Executive Office of the President,
Office of Management and Budget, Standard Industrial Classification
Manual 1987).
---------------------------------------------------------------------------
11. Although some affected incumbent local exchange carriers
(ILECs) may have 1,500 or fewer employees, we do not believe that such
entities should be considered small entities within the meaning of the
RFA because they are either dominant in their field of operations or
are not independently owned and operated, and therefore by definition
not ``small entities'' or ``small business concerns'' under the RFA.
Accordingly, our use of the terms ``small entities'' and ``small
businesses'' does not encompass small ILECs. Out of an abundance of
caution, however, for regulatory flexibility analysis purposes, we will
separately consider small ILECs within this analysis and use the term
``small ILECs'' to refer to any ILECs that arguably might be defined by
the SBA as ``small business concerns.'' \49\
---------------------------------------------------------------------------
\49\ See 13 CFR 121.201, SIC code 4813. Since the time of the
Commission's 1996 decision, Implementation of the Local Competition
Provisions in the Telecommunications Act of 1996, First Report and
Order, 11 FCC Rcd 15499, 16144-45 (1996), 61 FR 45476 (August 29,
1996), the Commission has consistently addressed in its regulatory
flexibility analyses the impact of its rules on such ILECs.
---------------------------------------------------------------------------
12. Total Number of Telephone Companies Affected. The U.S. Bureau
of the Census (``Census Bureau'') reports that, at the end of 1992,
there were 3,497 firms engaged in providing telephone services, as
defined therein, for at least one year.\50\ This number contains a
variety of different categories of carriers, including local exchange
carriers, interexchange carriers, competitive access providers,
cellular carriers, mobile service carriers, operator service providers,
pay telephone operators, personal communications services providers,
covered specialized mobile radio providers, and resellers. It seems
certain that some of those 3,497 telephone service firms may not
qualify as small entities or small ILECs because they are not
``independently owned and operated.'' \51\ For example, a PCS provider
that is affiliated with an interexchange carrier having more than 1,500
employees would not meet the definition of a small business. It is
reasonable to conclude that fewer than 3,497 telephone service firms
are small entity telephone service firms or small
[[Page 35862]]
ILECs that may be affected by the proposed rules, if adopted.
---------------------------------------------------------------------------
\50\ U.S. Department of Commerce, Bureau of the Census, 1992
Census of Transportation, Communications, and Utilities:
Establishment and Firm Size, at Firm Size 1-123 (1995) (1992
Census).
\51\ See generally 15 U.S.C. 632(a)(1).
---------------------------------------------------------------------------
13. Wireline Carriers and Service Providers. The SBA has developed
a definition of small entities for telephone communications companies
except radiotelephone (wireless) companies. The Census Bureau reports
that there were 2,321 such telephone companies in operation for at
least one year at the end of 1992.\52\ According to the SBA's
definition, a small business telephone company other than a
radiotelephone company is one employing no more than 1,500 persons.\53\
All but 26 of the 2,321 non-radiotelephone companies listed by the
Census Bureau were reported to have fewer than 1,000 employees. Thus,
even if all 26 of those companies had more than 1,500 employees, there
would still be 2,295 non-radiotelephone companies that might qualify as
small entities or small ILECs. We do not have data specifying the
number of these carriers that are not independently owned and operated,
and thus are unable at this time to estimate with greater precision the
number of wireline carriers and service providers that would qualify as
small business concerns under the SBA's definition. Consequently, we
estimate that fewer than 2,295 small telephone communications companies
other than radiotelephone companies are small entities or small ILECs
that may be affected by the proposed rules, if adopted.
---------------------------------------------------------------------------
\52\ 1992 Census, supra, at Firm Size 1-123.
\53\ 13 CFR 121.201, SIC code 4813.
---------------------------------------------------------------------------
14. Local Exchange Carriers. Neither the Commission nor the SBA has
developed a definition for small providers of local exchange services
(LECs). The closest applicable definition under the SBA rules is for
telephone communications companies other than radiotelephone (wireless)
companies.\54\ According to the most recent Telecommunications Industry
Revenue data, 1,371 carriers reported that they were engaged in the
provision of local exchange services.\55\ We do not have data
specifying the number of these carriers that are either dominant in
their field of operations, are not independently owned and operated, or
have more than 1,500 employees, and thus are unable at this time to
estimate with greater precision the number of LECs that would qualify
as small business concerns under the SBA's definition. Consequently, we
estimate that fewer than 1,371 providers of local exchange service are
small entities or small ILECs that may be affected by the proposed
rules, if adopted.
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\54\ Id.
\55\ Telecommunications Industry Revenue, Figure 2.
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15. Interexchange Carriers. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to
providers of interexchange services (IXCs). The closest applicable
definition under the SBA rules is for telephone communications
companies other than radiotelephone (wireless) companies.\56\ According
to the most recent Telecommunications Industry Revenue data, 143
carriers reported that they were engaged in the provision of
interexchange services.\57\ We do not have data specifying the number
of these carriers that are not independently owned and operated or have
more than 1,500 employees, and thus are unable at this time to estimate
with greater precision the number of IXCs that would qualify as small
business concerns under the SBA's definition. Consequently, we estimate
that there are fewer than 143 small entity IXCs that may be affected by
the proposed rules, if adopted.
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\56\ 13 CFR 121.201, SIC code 4813.
\57\ Telecommunications Industry Revenue, Figure 2.
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16. Competitive Access Providers. Neither the Commission nor the
SBA has developed a definition of small entities specifically
applicable to competitive access services providers (CAPs). The closest
applicable definition under the SBA rules is for telephone
communications companies other than except radiotelephone (wireless)
companies.\58\ According to the most recent Telecommunications Industry
Revenue data, 109 carriers reported that they were engaged in the
provision of competitive access services.\59\ We do not have data
specifying the number of these carriers that are not independently
owned and operated, or have more than 1,500 employees, and thus are
unable at this time to estimate with greater precision the number of
CAPs that would qualify as small business concerns under the SBA's
definition. Consequently, we estimate that there are fewer than 109
small entity CAPs that may be affected by the proposed rules, if
adopted.
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\58\ 13 CFR 121.201, SIC code 4813.
\59\ Telecommunications Industry Revenue, Figure 2.
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17. Operator Service Providers. Neither the Commission nor the SBA
has developed a definition of small entities specifically applicable to
providers of operator services. The closest applicable definition under
the SBA rules is for telephone communications companies other than
radiotelephone (wireless) companies.\60\ According to the most recent
Telecommunications Industry Revenue data, 27 carriers reported that
they were engaged in the provision of operator services.\61\ We do not
have data specifying the number of these carriers that are not
independently owned and operated or have more than 1,500 employees, and
thus are unable at this time to estimate with greater precision the
number of operator service providers that would qualify as small
business concerns under the SBA's definition. Consequently, we estimate
that there are fewer than 27 small entity operator service providers
that may be affected by the proposed rules, if adopted.
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\60\ 13 CFR 121.201, SIC code 4813.
\61\ Telecommunications Industry Revenue, Figure 2.
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18. Pay Telephone Operators. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to pay
telephone operators. The closest applicable definition under SBA rules
is for telephone communications companies other than radiotelephone
(wireless) companies.\62\ According to the most recent
Telecommunications Industry Revenue data, 441 carriers reported that
they were engaged in the provision of pay telephone services.\63\ We do
not have data specifying the number of these carriers that are not
independently owned and operated or have more than 1,500 employees, and
thus are unable at this time to estimate with greater precision the
number of pay telephone operators that would qualify as small business
concerns under the SBA's definition. Consequently, we estimate that
there are fewer than 441 small entity pay telephone operators that may
be affected by the proposed rules, if adopted.
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\62\ 13 CFR 121.201, SIC code 4813.
\63\ Telecommunications Industry Revenue, Figure 2.
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19. Resellers (including debit card providers). Neither the
Commission nor the SBA has developed a definition of small entities
specifically applicable to resellers. The closest applicable SBA
definition for a reseller is a telephone communications company other
than radiotelephone (wireless) companies.\64\ According to the most
recent Telecommunications Industry Revenue data, 339 reported that they
were engaged in the resale of telephone service.\65\ We do not have
data specifying the number of these carriers that are not independently
owned and
[[Page 35863]]
operated or have more than 1,500 employees, and thus are unable at this
time to estimate with greater precision the number of resellers that
would qualify as small business concerns under the SBA's definition.
Consequently, we estimate that there are fewer than 339 small entity
resellers that may be affected by the proposed rules, if adopted.
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\64\ 13 CFR 121.201, SIC code 4813.
\65\ Telecommunications Industry Revenue, Figure 2.
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20. 800 Service Subscribers.\66\ Neither the Commission nor the SBA
has developed a definition of small entities specifically applicable to
800 service (``toll free'') subscribers. The most reliable source of
information regarding the number of 800 service subscribers appears to
be data the Commission collects on the 800 numbers in use.\67\
According to our most recent data, at the end of 1995, the number of
800 numbers in use was 6,987,063. Similarly, the most reliable source
of information regarding the number of 888 service subscribers appears
to be data the Commission collects on the 888 numbers in use.\68\
According to our most recent data, at the end of August 1996, the
number of 888 numbers that had been assigned was 2,014,059. We do not
have data specifying the number of these subscribers that are not
independently owned and operated or have more than 1,500 employees, and
thus are unable at this time to estimate with greater precision the
number of toll free subscribers that would qualify as small business
concerns under the SBA's definition. Consequently, we estimate that
there are fewer than 6,987,063 small entity 800 subscribers and fewer
than 2,014,059 small entity 888 subscribers that may be affected by the
proposed rules, if adopted.
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\66\ We include all toll-free number subscribers in this
category, including 888 numbers.
\67\ FCC, CCB Industry Analysis Division, FCC Releases, Study on
Telephone Trends, Tbl. 20 (May 16, 1996).
\68\ FCC, CCB Industry Analysis Division, Long Distance Carrier
Code Assignments, p. 80, Tbl. 10B (Oct. 18, 1996).
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International Services
21. The Commission has not developed a definition of small entities
applicable to licensees in the international services. Therefore, the
applicable definition of small entity is generally the definition under
the SBA rules applicable to Communications Services, Not Elsewhere
Classified (NEC).\69\ This definition provides that a small entity is
expressed as one with $11.0 million or less in annual receipts.\70\
According to the Census Bureau, there were a total of 848
communications services providers, NEC, in operation in 1992, and a
total of 775 had annual receipts of less than $9,999 million.\71\ The
Census report does not provide more precise data.
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\69\ An exception is the Direct Broadcast Satellite (DBS)
Service, infra.
\70\ 13 CFR 120.121, SIC code 4899.
\71\ 1992 Economic Census Industry and Enterprise Receipts Size
Report, Table 2D, SIC code 4899 (U.S. Bureau of the Census data
under contract to the Office of Advocacy of the U.S. Small Business
Administration).
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22. International Broadcast Stations. Commission records show that
there are 20 international broadcast station licensees. We do not
request nor collect annual revenue information, and thus are unable to
estimate the number of international broadcast licensees that would
constitute a small business under the SBA definition. However, the
Commission estimates that only six international broadcast stations are
subject to regulatory fee payments.
23. International Public Fixed Radio (Public and Control Stations).
There are 3 licensees in this service subject to payment of regulatory
fees. We do not request nor collect annual revenue information, and
thus are unable to estimate the number of international broadcast
licensees that would constitute a small business under the SBA
definition.
24. Fixed Satellite Transmit/Receive Earth Stations. There are
approximately 3000 earth station authorizations, a portion of which are
Fixed Satellite Transmit/Receive Earth Stations. We do not request nor
collect annual revenue information, and thus are unable to estimate the
number of the earth stations that would constitute a small business
under the SBA definition.
25. Fixed Satellite Small Transmit/Receive Earth Stations. There
are 3000 earth station authorizations, a portion of which are Fixed
Satellite Small Transmit/Receive Earth Stations. We do not request nor
collect annual revenue information, and thus are unable to estimate the
number of fixed satellite transmit/receive earth stations may
constitute a small business under the SBA definition.
26. Fixed Satellite Very Small Aperture Terminal (VSAT) Systems.
These stations operate on a primary basis, and frequency coordination
with terrestrial microwave systems is not required. Thus, a single
``blanket'' application may be filed for a specified number of small
antennas and one or more hub stations. The Commission has processed 377
applications. We do not request nor collect annual revenue information,
and thus are unable to estimate of the number of VSAT systems that
would constitute a small business under the SBA definition.
27. Mobile Satellite Earth Stations. There are two licensees. We do
not request nor collect annual revenue information, and thus are unable
to estimate of the number of mobile satellite earth stations that would
constitute a small business under the SBA definition.
28. Radio Determination Satellite Earth Stations. There are four
licensees. We do not request nor collect annual revenue information,
and thus are unable to estimate of the number of radio determination
satellite earth stations that would constitute a small business under
the SBA definition.
29. Space Stations (Geostationary). Commission records reveal that
there are 46 space station licensees. We do not request nor collect
annual revenue information, and thus are unable to estimate of the
number of geostationary space stations that would constitute a small
business under the SBA definition.
30. Space Stations (Non-Geostationary). There are six Non-
Geostationary Space Station licensees, of which only two systems are
operational. We do not request nor collect annual revenue information,
and thus are unable to estimate of the number of non-geostationary
space stations that would constitute a small business under the SBA
definition.
31. Direct Broadcast Satellites. Because DBS provides subscription
services, DBS falls within the SBA-recognized definition of ``Cable and
Other Pay Television Services.'' \72\ This definition provides that a
small entity is one with $11.0 million or less in annual receipts.\73\
As of December 1996, there were eight DBS licensees. However, the
Commission does not collect annual revenue data for DBS and, therefore,
is unable to ascertain the number of small DBS licensees that could be
impacted by these proposed rules. Although DBS service requires a great
investment of capital for operation, there are several new entrants in
this field that may not yet have generated $11 million in annual
receipts, and therefore may be categorized as small businesses, if
independently owned and operated.
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\72\ 13 CFR 120.121, SIC code 4841.
\73\ 13 CFR 120.201, SIC code 4841.
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Mass Media Services
32. Commercial Radio and Television Services. The proposed rules
and policies will apply to television broadcasting licensees and radio
broadcasting licensees.\74\ The SBA
[[Page 35864]]
defines a television broadcasting station that has $10.5 million or
less in annual receipts as a small business.\75\ Television
broadcasting stations consist of establishments primarily engaged in
broadcasting visual programs by television to the public, except cable
and other pay television services.\76\ Included in this industry are
commercial, religious, educational, and other television stations.\77\
Also included are establishments primarily engaged in television
broadcasting and which produce taped television program materials.\78\
Separate establishments primarily engaged in producing taped television
program materials are classified under another SIC number.\79\ There
were 1,509 television stations operating in the nation in 1992.\80\
That number has remained fairly constant as indicated by the
approximately 1,564 operating television broadcasting stations in the
nation as of December 31, 1997.\81\ For 1992,\82\ the number of
television stations that produced less than $10.0 million in revenue
was 1,155 establishments.\83\ Only commercial stations are subject to
regulatory fees.
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\74\ While we tentatively believe that the SBA's definition of
``small business'' greatly overstates the number of radio and
television broadcast stations that are small businesses and is not
suitable for purposes of determining the impact of the proposals on
small television and radio stations, for purposes of this Report and
Order we utilize the SBA's definition in determining the number of
small businesses to which the proposed rules would apply. We reserve
the right to adopt, in the future, a more suitable definition of
``small business'' as applied to radio and television broadcast
stations or other entities subject to the proposed rules in this
Report and Order, and to consider further the issue of the number of
small entities that are radio and television broadcasters or other
small media entities. See Report and Order in MM Docket No. 93-48
(Children's Television Programming), 11 FCC Rcd 10660, 10737-38
(1996), 61 FR 43981 (August 27, 1996), citing 5 U.S.C. 601(3).
\75\ 13 CFR 120.201, SIC code 4833.
\76\ Economics and Statistics Administration, Bureau of Census,
U.S. Department of Commerce, 1992 Census of Transportation,
Communications and Utilities, Establishment and Firm Size, Series
UC92-S-1, Appendix A-9 (1995) 1992 Census, Series UC92-S-1).
\77\ Id.; see Executive Office of the President, Office of
Management and Budget, Standard Industrial Classification Manual
(1987), at 283, which describes ``Television Broadcasting Stations''
(SIC code 4833) as:
Establishments primarily engaged in broadcasting visual programs
by television to the public, except cable and other pay television
services. Included in this industry are commercial, religious,
educational and other television stations. Also included here are
establishments primarily engaged in television broadcasting and
which produce taped television program materials.
\78\ 1992 Census, Series UC92-S-1, at Appendix A-9.
\79\ Id., SIC code 7812 (Motion Picture and Video Tape
Production); SIC code 7922 (Theatrical Producers and Miscellaneous
Theatrical Services) (producers of live radio and television
programs).
\80\ FCC News Release No. 31327 (Jan. 13, 1993); 1992 Census,
Series UC92-S-1, at Appendix A-9.
\81\ FCC News Release, ``Broadcast Station Totals as of December
31, 1997.''
\82\ A census to determine the estimated number of
Communications establishments is performed every five years, in
years ending with a ``2'' or ``7''. See 1992 Census, Series UC92-S-
1, at III.
\83\ The amount of $10 million was used to estimate the number
of small business establishments because the relevant Census
categories stopped at $9,999,999 and began at $10,000,000. No
category for $10.5 million existed. Thus, the number is as accurate
as it is possible to calculate with the available information.
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33. Additionally, the Small Business Administration defines a radio
broadcasting station that has $5 million or less in annual receipts as
a small business.\84\ A radio broadcasting station is an establishment
primarily engaged in broadcasting aural programs by radio to the
public.\85\ Included in this industry are commercial, religious,
educational, and other radio stations.\86\ Radio broadcasting stations
which primarily are engaged in radio broadcasting and which produce
radio program materials are similarly included.\87\ However, radio
stations which are separate establishments and are primarily engaged in
producing radio program material are classified under another SIC
number.\88\ The 1992 Census indicates that 96 percent (5,861 of 6,127)
radio station establishments produced less than $5 million in revenue
in 1992.\89\ Official Commission records indicate that 11,334
individual radio stations were operating in 1992.\90\ As of December
31, 1997, Commission records indicate that 12,27 radio stations were
operating, of which 7,465 were FM stations.\91\ Only commercial
stations are subject to regulatory fees.
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\84\ 13 CFR 120.201, SIC code 4832.
\85\ 1992 Census, Series UC92-S-1, at Appendix A-9.
\86\ Id.
\87\ Id.
\88\ Id.
\89\ The Census Bureau counts radio stations located at the same
facility as one establishment. Therefore, each co-located AM/FM
combination counts as one establishment.
\90\ FCC News Release, No. 31327 (Jan. 13, 1993).
\91\ FCC News Releases, ``Broadcast Station Totals as of
December 31, 1997.''
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34. Thus, the proposed rules, if adopted, will affect approximately
1,558 full power television stations, approximately 1,200 of which are
considered small businesses.\92\ Additionally, the proposed rules will
affect some 12,156 full power radio stations, approximately 11,670 of
which are small businesses.\93\ These estimates may overstate the
number of small entities because the revenue figures on which they are
based do not include or aggregate revenues from non-television or non-
radio affiliated companies. There are also 1,952 low power television
stations (LPTV).\94\ Given the nature of this service, we will presume
that all LPTV licensees qualify as small entities under the SBA
definition.
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\92\ We use the 77 percent figure of TV stations operating at
less than $10 million for 1992 and apply if to be 1997 total of 1558
TV stations to arrive at 1,200 stations categorized as small
businesses.
\93\ We use the 96% figure of radio station establishments with
less than $5 million revenue from the Census data and apply it to
the 12,088 individual station count to arrive at 11,605 individual
stations as small businesses.
\94\ FCC News Release, No. 7033 (Mar. 6, 1997).
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Alternative Classification of Small Stations
35. An alternative way to classify small radio and television
stations is by number of employees. The Commission currently applies a
standard based on the number of employees in administering its Equal
Employment Opportunity Rule (EEO) for broadcasting.\95\ Thus, radio or
television stations with fewer than five full-time employees are
exempted from certain EEO reporting and record keeping
requirements.\96\ We estimate that the total number of broadcast
stations with 4 or fewer employees is approximately 4,239.\97\
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\95\ The Commission's definition of a small broadcast station
for purposes of applying its EEO rules was adopted prior to the
requirements of approval by the SBA pursuant to section 3(a) of the
Small Business Act, 15 U.S.C. 632(a), as amended by section 222 of
the Small Business Credit and Business Opportunity Enhancement Act
of 1992, Pub. L. 102-366, 222(b)(1), 106 Stat. 999 (1992), as
further amended by the Small Business Administration Reauthorization
and Amendments Act of 1994, Pub. L. 103-403, 301, 108 Stat. 4187
(1994). However, this definition was adopted after public notice and
the opportunity for comment. See Report and Order in Docket No.
18244, 23 FCC 2d 430 (1970), 35 8925 (June 6, 1970).
\96\ See, e.g., 47 CFR 73.3612 (Requirements to file annual
employment reports on Forms 395 applies to licensees with five or
more full-time employees); First Report and Order in Docket No.
21474 (Amendment of Broadcast Equal Employment Opportunity Rules and
FCC Form 395), 70 FCC 2d 1466 (1979), 50 FR 50329 (December 10,
1085). The Commission is currently considering how to decrease the
administrative burdens imposed by the EEO rule on small stations
while maintaining the effectiveness of our broadcast EEO
enforcement. Order and Notice of Proposed Rule Making in MM Docket
N0. 96-16 (Streamlining Broadcast EEO Rule and Policies, Vacating
the EEO Forfeiture Policy Statement and Amending Section 1.80 of the
Commission's Rules to Include EEO Forfeiture Guidelines), 11 FCC Rcd
5154 (1996), 61 FR 9964 (March 12, 1996). One option under
consideration is whether to define a small station for purposes of
affording such relief as one with ten or fewer full-time employees.
\97\ Compilation of 1994 Broadcast Station Annual Employment
Reports (FCC Form B), Equal Opportunity Employment Branch, Mass
Media Bureau, FCC.
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Auxiliary, Special Broadcast and Other Program Distribution
Services
36. This service involves a variety of transmitters, generally used
to relay broadcast programming to the public (through translator and
booster stations)
[[Page 35865]]
or within the program distribution chain (from a remote news gathering
unit back to the station). The Commission has not developed a
definition of small entities applicable to broadcast auxiliary
licensees. Therefore, the applicable definitions of small entities are
those, noted previously, under the SBA rules applicable to radio
broadcasting stations and television broadcasting stations.\98\
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\98\13 CFR 121.201, SIC code 4832.
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37. There are currently 2,720 FM translators and boosters, 4,952 TV
translators.\99\ The FCC does not collect financial information on any
broadcast facility and the Department of Commerce does not collect
financial information on these auxiliary broadcast facilities. We
believe, however, that most, if not all, of these auxiliary facilities
could be classified as small businesses by themselves. We also
recognize that most translators and boosters are owned by a parent
station which, in some cases, would be covered by the revenue
definition of small business entity discussed above. These stations
would likely have annual revenues that exceed the SBA maximum to be
designated as a small business (either $5 million for a radio station
or $10.5 million for a TV station). Furthermore, they do not meet the
Small Business Act's definition of a ``small business concern'' because
they are not independently owned and operated.\100\
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\99\ FCC News Release, Broadcast Station Totals as of December
31, 1996, No. 71831 (Jan. 21, 1997).
\100\ 15 U.S.C. 632.
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38. Multipoint Distribution Service (MDS). This service involves a
variety of transmitters, which are used to relay programming to the
home or office, similar to that provided by cable television
systems.\101\ In connection with the 1996 MDS auction the Commission
defined small businesses as entities that had annual average gross
revenues for the three preceding years not in excess of $40
million.\102\ This definition of a small entity in the context of MDS
auctions has been approved by the SBA.\103\ These stations were
licensed prior to implementation of section 309(j) of the
Communications Act of 1934, as amended, 47 U.S.C. 309(j). Licenses for
new MDS facilities are now awarded to auction winners in Basic Trading
Areas (BTAs) and BTA-like areas.\104\ The MDS auctions resulted in 67
successful bidders obtaining licensing opportunities for 493 BTAs. Of
the 67 auction winners, 61 meet the definition of a small business.
There are 1,573 previously authorized and proposed MDS stations
currently licensed. Thus, we conclude that there are 1,634 MDS
providers that are small businesses as deemed by the SBA and the
Commission's auction rules. It is estimated, however, that only 1,878
MDS licensees are subject to regulatory fees and the number which are
small businesses is unknown.
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\101\ For purposes of this item, MDC includes both the single
channel Multipoint Distribution Service (MDS) and the Multichannel
Multipoint Distribution Service (MMDS).
\102\ See 47 CFR 1,2110 (a)(1).
\103\ Amendment of Part 21 and 74 of the Commission's Rules with
Regard to Filing Procedures in the Multipoint Distribution Service
and in the Instructional Television Fixed Service and Implementation
of Section 309(j) of the Communications Act-Competitive Bidding, 10
FCC Rcd 9589 (1995), 60 FR 36524 (July 17, 1995).
\104\ Id. A Basic Trading Area (BTA) is the geographic area by
which the Multipoint Distribution Service is licensed. See Rand
McNally 1992 Commercial Atlas and Marketing Guide, 123rd Edition,
pp. 36-39.
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Wireless and Commercial Mobile Services
39. Cellular Licensees. Neither the Commission nor the SBA has
developed a definition of small entities applicable to cellular
licensees. Therefore, the applicable definition of small entity is the
definition under the SBA rules applicable to radiotelephone (wireless)
companies. This provides that a small entity is a radiotelephone
company employing no more than 1,500 persons.\105\ According to the
Bureau of the Census, only twelve radiotelephone firms out of a total
of 1,178 such firms which operated during 1992 had 1,000 or more
employees.\106\ Therefore, even if all twelve of these firms were
cellular telephone companies, nearly all cellular carriers were small
businesses under the SBA's definition. In addition, we note that there
are 1,758 cellular licenses; however, a cellular licensee may own
several licenses. In addition, according to the most recent
Telecommunications Industry Revenue data, 804 carriers reported that
they were engaged in the provision of either cellular service or
Personal Communications Service (PCS) services, which are placed
together in the data.\107\ We do not have data specifying the number of
these carriers that are not independently owned and operated or have
more than 1,500 employees, and thus are unable at this time to estimate
with greater precision the number of cellular service carriers that
would qualify as small business concerns under the SBA's definition.
Consequently, we estimate that there are fewer than 804 small cellular
service carriers that may be affected by the proposed rules, if
adopted.
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\105\13 CFR 121.291, SIC code 4812.
\106\1992 Census, Series UC92-S-1, at Table 5, SIC code 4812.
\107\Telecommunications Industry Revenue, Figure 2.
---------------------------------------------------------------------------
40. 220 MHz Radio Services. Because the Commission has not yet
defined a small business with respect to 220 MHz services, we will
utilize the SBA definition applicable to radiotelephone companies,
i.e., an entity employing no more than 1,500 persons.\108\ With respect
to 220 MHz services, the Commission has proposed a two-tiered
definition of small business for purposes of auctions: (1) For Economic
Area (EA) licensees, a firm with average annual gross revenues of not
more than $6 million for the preceding three years and (2) for regional
and nationwide licensees, a firm with average annual gross revenues of
not more than $15 million for the preceding three years. Given that
nearly all radiotelephone companies under the SBA definition employ no
more than 1,500 employees (as noted supra), we will consider the
approximately 1,500 incumbent licensees in this service as small
businesses under the SBA definition.
---------------------------------------------------------------------------
\108\ 13 CFR 121.201, SIC code 4812.
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41. Private and Common Carrier Paging. The Commission has proposed
a two-tier definition of small businesses in the context of auctioning
licenses in the Common Carrier Paging and exclusive Private Carrier
Paging services. Under the proposal, a small business will be defined
as either (1) an entity that, together with its affiliates and
controlling principals, has average gross revenues for the three
preceding years of not more than $3 million, or (2) an entity that,
together with affiliates and controlling principals, has average gross
revenues for the three preceding calendar years of not more than $15
million. Because the SBA has not yet approved this definition for
paging services, we will utilize the SBA's definition applicable to
radiotelephone companies, i.e., an entity employing no more than 1,500
persons.\109\ At present, there are approximately 24,000 Private Paging
licenses and 74,000 Common Carrier Paging licenses. According to the
most recent Telecommunications Industry Revenue data, 172 carriers
reported that they were engaged in the provision of either paging or
``other mobile'' services, which are placed together in the data.\110\
We do not have data specifying the number of these carriers that are
not independently owned and operated or have more than 1,500 employees,
and thus are unable at this time to estimate with greater precision the
number of paging carriers
[[Page 35866]]
that would qualify as small business concerns under the SBA's
definition. Consequently, we estimate that there are fewer than 172
small paging carriers that may be affected by the proposed rules, if
adopted. We estimate that the majority of private and common carrier
paging providers would qualify as small entities under the SBA
definition.
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\109\ 13 CFR 121.201, SIC code 4812.
\110\ Telecommunications Industry Revenue, Figure 2.
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42. Mobile Service Carriers. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to
mobile service carriers, such as paging companies. As noted above in
the section concerning paging service carriers, the closest applicable
definition under the SBA rules is that for radiotelephone (wireless)
companies,\111\ and the most recent Telecommunications Industry Revenue
data shows that 172 carriers reported that they were engaged in the
provision of either paging or ``other mobile'' services.\112\
Consequently, we estimate that there are fewer than 172 small mobile
service carriers that may be affected by the proposed rules, if
adopted.
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\111\ 13 CFR 121.201, SIC code 4812.
\112\ Telecommunications Industry Revenue, Figure 2.
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43. Broadband Personal Communications Service (PCS). The broadband
PCS spectrum is divided into six frequency blocks designated A through
F, and the Commission has held auctions for each block. The Commission
defined ``small entity'' for Blocks C and F as an entity that has
average gross revenues of less than $40 million in the three previous
calendar years.\113\ For Block F, an additional classification for
``very small business'' was added and is defined as an entity that,
together with their affiliates, has average gross revenues of not more
than $15 million for the preceding three calendar years.\114\ These
regulations defining ``small entity'' in the context of broadband PCS
auctions have been approved by the SBA.\115\ No small businesses within
the SBA-approved definition bid successfully for licenses in Blocks A
and B. There were 90 winning bidders that qualified as small entities
in the Block C auctions. A total of 93 small and very small business
bidders won approximately 40% of the 1,479 licenses for Blocks D, E,
and F.\116\ Based on this information, we conclude that the number of
small broadband PCS licensees will include the 90 winning C Block
bidders and the 93 qualifying bidders in the D, E, and F blocks, for a
total of 183 small entity PCS providers as defined by the SBA and the
Commission's auction rules.
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\113\ See Amendment of Parts 20 and 24 of the Commission's
Rules--Broadband PCS Competitive Bidding and the Commercial Mobile
Radio Service Spectrum Cap, Report and Order, FCC 96-278, WT Docket
No. 96-59, paragraphs 57-60 (released June 24, 1996), 61 FR 33859
(July 1, 1996); see also 47 CFR 24.720(b).
\114\ See Amendment of parts 20 and 24 of the Commission's
Rules--Broadband PCS Competitive Bidding and the Commercial Mobile
Radio Service Spectrum Cap, Report and Order, FCC 96-278, WT Docket
No. 96-59, paragraph 60 (1996), 61 FR 33859 (July 1, 1996).
\115\ See, e.g., Implementation of section 309(j) of the
Communications Act--Competitive Bidding, PP Docket No. 93-253, Fifth
Report and Order, 9 FCC Rcd 5532, 5581-84 (1994).
\116\ FCC News, Broadband PCS, D, E and F Block Auction Closes,
No. 71744 (released January 14, 1997).
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44. Narrowband PCS. The Commission has auctioned nationwide and
regional licenses for narrowband PCS. There are 11 nationwide and 30
regional licensees for narrowband PCS. The Commission does not have
sufficient information to determine whether any of these licensees are
small businesses within the SBA-approved definition for radiotelephone
companies. At present, there have been no auctions held for the major
trading area (MTA) and basic trading area (BTA) narrowband PCS
licenses. The Commission anticipates a total of 561 MTA licenses and
2,958 BTA licenses will be awarded by auction. Such auctions have not
yet been scheduled, however. Given that nearly all radiotelephone
companies have no more than 1,500 employees and that no reliable
estimate of the number of prospective MTA and BTA narrowband licensees
can be made, we assume, for purposes of this IRFA, that all of the
licenses will be awarded to small entities, as that term is defined by
the SBA.
45. Rural Radiotelephone Service. The Commission has not adopted a
definition of small entity specific to the Rural Radiotelephone
Service.\117\ A significant subset of the Rural Radiotelephone Service
is the Basic Exchange Telephone Radio Systems (BETRS).\118\ We will use
the SBA's definition applicable to radiotelephone companies, i.e., an
entity employing no more than 1,500 persons.\119\ There are
approximately 1,000 licensees in the Rural Radiotelephone Service, and
we estimate that almost all of them qualify as small entities under the
SBA's definition.
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\117\ The service is defined in 47 CFR 22.99.
\118\ BETRS is defined in 47 CFR 22.757, 22.759.
\119\ 13 CFR 121.201, SIC code 4812.
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46. Air-Ground Radiotelephone Service.\120\ The Commission has not
adopted a definition of small entity specific to the Air-Ground
Radiotelephone Service. Accordingly, we will use the SBA's definition
applicable to radiotelephone companies, i.e., an entity employing no
more than 1,500 persons.\121\ There are approximately 100 licensees in
the Air-Ground Radiotelephone Service, and we estimate that almost all
of them qualify as small under the SBA definition.
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\120\ The service is defined in 47 CFR 22.99.
\121\ 13 CFR 121.201, SIC code 4812.
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47. Specialized Mobile Radio (SMR). The Commission awards bidding
credits in auctions for geographic area 800 MHz and 900 MHz SMR
licenses to firms that had revenues of no more than $15 million in each
of the three previous calendar years.\122\ In the context of 900 MHz
SMR, this regulation defining ``small entity'' has been approved by the
SBA; approval concerning 800 MHz SMR is being sought.
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\122\ See 47 CFR 90.814(b)(1).
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48. The proposed fees in the NPRM apply to SMR providers in the 800
MHz and 900 MHz bands that either hold geographic area licenses or have
obtained extended implementation authorizations. We do not know how
many firms provide 800 MHz or 900 MHz geographic area SMR service
pursuant to extended implementation authorizations, nor how many of
these providers have annual revenues of no more than $15 million. One
firm has over $15 million in revenues. We assume, for purposes of this
IRFA, that all of the remaining existing extended implementation
authorizations are held by small entities, as that term is defined by
the SBA.
49. The Commission has held auctions for geographic area licenses
in the 900 MHz SMR band, and recently completed an auction for
geographic area 800 MHz SMR licenses. There were 60 winning bidders who
qualified as small entities in the 900 MHz auction. In the recently
concluded 800 MHz SMR auction there were 524 licenses awarded to
winning bidders, of which 38 were won by small or very small entities.
50. Private Land Mobile Radio (PLMR). PLMR systems serve an
essential role in a range of industrial, business, land transportation,
and public safety activities. These radios are used by companies of all
sizes operating in all U.S. business categories. The Commission has not
developed a definition of small entity specifically applicable to PLMR
licensees due to the vast array of PLMR users. For the purpose of
determining whether a licensee is a small business as defined by the
SBA, each licensee would need to be evaluated within its own business
area.
[[Page 35867]]
51. The Commission is unable at this time to estimate the number of
small businesses which could be impacted by the rules. However, the
Commission's 1994 Annual Report on PLMRs \123\ indicates that at the
end of FY 1994 there were 1,087,267 licensees operating 12,481,989
transmitters in the PLMR bands below 512 MHz. Because any entity
engaged in a commercial activity is eligible to hold a PLMR license,
the proposed rules in this context could potentially impact every small
business in the United States.
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\123\ Federal Communications Commission, 60th Annual Report,
Fiscal Year 1994, at 116.
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52. Amateur Radio Service. We estimate that 10,000 applicants will
apply for vanity call signs in FY 1998. All are presumed to be
individuals. All other amateur licensees are exempt from payment of
regulatory fees.
53. Aviation and Marine Radio Service. Small businesses in the
aviation and marine radio services use a marine very high frequency
(VHF) radio, any type of emergency position indicating radio beacon
(EPIRB) and/or radar, a VHF aircraft radio, and/or any type of
emergency locator transmitter (ELT). The Commission has not developed a
definition of small entities specifically applicable to these small
businesses. Therefore, the applicable definition of small entity is the
definition under the SBA rules for radiotelephone communications.\124\
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\124\ 13 CFR 121.201, SIC code 4812.
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54. Most applicants for recreational licenses are individuals.
Approximately 581,000 ship station licensees and 131,000 aircraft
station licensees operate domestically and are not subject to the radio
carriage requirements of any statute or treaty. Therefore, for purposes
of our evaluations and conclusions in this IRFA, we estimate that there
may be at least 712,000 potential licensees which are individuals or
are small entities, as that term is defined by the SBA. We estimate,
however, that only 16,500 will be subject to FY 1998 regulatory fees.
55. Fixed Microwave Services. Microwave services include common
carrier,\125\ private-operational fixed,\126\ and broadcast auxiliary
radio services.\127\ At present, there are approximately 22,015 common
carrier fixed licensees and 61,670 private operational-fixed licensees
and broadcast auxiliary radio licensees in the microwave services. The
Commission has not yet defined a small business with respect to
microwave services. For purposes of this IRFA, we will utilize the
SBA's definition applicable to radiotelephone companies--i.e., an
entity with no more than 1,500 persons.\128\ We estimate, for this
purpose, that all of the Fixed Microwave licensees (excluding broadcast
auxiliary licensees) would qualify as small entities under the SBA
definition for radiotelephone companies.
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\125\ 47 CFR 101 et seq. (formerly, Part 21 of the Commission's
rules).
\126\ Persons eligible under parts 80 and 90 of the Commission's
rules can use Private Operational-Fixed Microwave services. See 47
CFR parts 80 and 90. Stations in this service are called
operational-fixed to distinguish them from common carrier and public
fixed stations. Only the licensee may use the operational-fixed
station, and only for communications related to the licensee's
commercial, industrial, or safety operations.
\127\ Auxiliary Microwave Service is governed by part 74 of
Title 47 of the Commission's rules. See 47 CFR 74 et seq. Available
to licensees of broadcast stations and to broadcast and cable
network entities, broadcast auxiliary microwave stations are used
for relaying broadcast television signals from the studio to the
transmitter, or between two points such as a main studio and an
auxiliary studio. The service also includes mobile TV pickups, which
relay signals from a remote location back to the studio.
\128\ 13 CFR 121.201, SIC 4812.
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56. Public Safety Radio Services. Public Safety radio services
include police, fire, local government, forestry conservation, highway
maintenance, and emergency medical services.\129\ There are a total of
approximately 127,540 licensees within these services. Governmental
entities as well as private businesses comprise the licensees for these
services. As indicated supra in paragraph 4 of this IRFA, all
governmental entities with populations of less than 50,000 fall within
the definition of a small entity.\130\ All licensees in this category
are exempt from the payment of regulatory fees.
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\129\ With the exception of the special emergency service, these
services are governed by subpart B of part 90 of the Commission's
rules, 47 CFR 90.15-90.27. The police service includes 26,608
licenses that serve state, county, and municipal enforcement through
telephony (voice), telegraphy (code) and teletype and facsimile
(printed material). The fire radio service includes 22,677 licensees
comprised of private volunteer or professional fire companies as
well as units under governmental control. The local government
service that is presently comprised of 40,512 licensees that are
state, county, or municipal entities that use the radio for official
purposes not covered by other public safety services. There are
7,325 licensees within the forestry service which is comprised of
licensees from state departments of conservation and private forest
organizations who set up communications networks among fire lookout
towers and ground crews. The 9,480 state and local governments are
licensed to highway maintenance service provide emergency and
routine communications to aid other public safety services to keep
main roads safe for vehicular traffic. The 1,460 licensees in the
Emergency Medical Radio Service (EMRS) use the 39 channels allocated
to this service for emergency medical service communications related
to the delivery of emergency medical treatment. 47 CFR 90.15-90.27.
The 19,478 licensees in the special emergency service include
medical services, rescue organizations, veterinarians, handicapped
persons, disaster relief organizations, veterinarians, handicapped
persons, disaster relief organizations, school buses, beach patrols,
establishments in isolated areas, communications standby facilities,
and emergency repair of public communications facilities. 47 CFR
90.33-90.55.
\130\ 5 U.S.C. 601(5).
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57. Personal Radio Services. Personal radio services provide short-
range, low power radio for personal communications, radio signalling,
and business communications not provided for in other services. The
services include the citizen's band (CB) radio service, general mobile
radio service (GMRS), radio control radio service, and family radio
service (FRS).\131\ Inasmuch as the CB, GMRS, and FRS licensees are
individuals, no small business definition applies for these services.
We are unable at this time to estimate the number of other licensees
that would qualify as small under the SBA's definition; however, only
GMRS licensees are subject to regulatory fees.
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\131\ Licensees in the Citizens Band (CB) Radio Service, General
Mobile Radio Service (GMRS), Radio Control (R/C) Radio Service and
Family Radio Service (FRS) are governed by subpart D, subpart A,
subpart C, and subpart B, respectively, of part 95 of the
Commission's rules. 47 CFR 95.401-95.428; 95.1-95.181; 95.201-
95.225; 47 CFR 95.191-95.194.
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58. Offshore Radiotelephone Service. This service operates on
several UHF TV broadcast channels that are not used for TV broadcasting
in the coastal area of the states bordering the Gulf of Mexico.\132\ At
present, there are approximately 55 licensees in this service. We are
unable at this time to estimate the number of licensees that would
qualify as small under the SBA's definition for radiotelephone
communications.
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\132\ This service is governed by subpart I of part 22 of the
Commission's rules. See 47 CFR 22.1001-22.1037.
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59. Wireless Communications Services. This service can be used for
fixed, mobile, radiolocation and digital audio broadcasting satellite
uses. The Commission defined ``small business'' for the wireless
communications services (WCS) auction as an entity with average gross
revenues of $40 million for each of the three preceding years, and a
``very small business'' as an entity with average gross revenues of $15
million for each of the three preceding years.
The Commission auctioned geographic area licenses in the WCS
se
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