Assessment and Collection of Regulatory Fees For Fiscal Year 1999

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[MD Docket No. 98-200; FCC 98-298]

Assessment and Collection of Regulatory Fees For Fiscal Year 1999

AGENCY: Federal Communications Commission.

ACTION: Notice of inquiry.

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SUMMARY: The Commission is seeking proposals to assist it in revising

its Schedule of Regulatory Fees in order to recover the amount of

regulatory fees that Congress has required it to collect for fiscal

year 1999. Section 9 of the Communications Act of 1934, as amended,

provides for the annual assessment and collection of regulatory fees.

For fiscal year 1999 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.

DATES: Comments are due January 7, 1999 and Reply Comments are due

January 19, 1999.

FOR FURTHER INFORMATION CONTACT: Terry Johnson, Office of Managing

Director at (202) 418-0445, or the Fees Hotline at (202) 418-0192.

SUPPLEMENTARY INFORMATION:

Adopted: November 10, 1998.

Released: December 4, 1998.

Table of Contents

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Paragraph

Topic No.

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I. Introduction............................................ 1

II. Background............................................. 2

III. Discussion............................................ 4

a. Commercial Mobile Radio Services (``CMRS'')........... 5

b. Space Stations

i. Geostationary Orbit Space Stations (``GSOs'')....... 10

ii. Non-geostationary Orbit Space Stations (``NGSOs''). 11

c. Interstate Telephone Service Providers................ 12

d. Treatment of New Services in all Feeable Categories... 16

IV. Procedural Matters

a. Comment Period and Procedures......................... 19

b. Ex Parte Rules........................................ 24

c. Authority and Further Information..................... 25

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I. Introduction

1. By this Notice of Inquiry (``NOI''), the Commission begins a

rulemaking proceeding seeking comments and suggestions for revising its

Schedule of Regulatory Fees in order to recover the amount of

regulatory fees that Congress requires it to collect for Fiscal Year

(``FY'') 1999.1

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\1\ 47 U.S.C. 159(a).

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II. Background

2. 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 determined annually by Congress, that it

incurs in carrying out enforcement, policy and rulemaking,

international, and user information activities.2 In our FY

1994 Report and Order,3 we adopted the Schedule of

Regulatory Fees that Congress established and we prescribed rules to

govern payment of the fees, as required by Congress.4

Subsequently, in our FY 1995, FY 1996, FY 1997 and FY 1998 fee

Orders,5 we modified the Schedule to increase by

approximately 93 percent, 9 percent, 21 percent, and 7 percent,

respectively, the revenue generated by these fees in accordance with

the amounts Congress required us to collect for FY 1995, FY 1996, FY

1997 and FY 1998. Also, in our FY 1995, FY 1996, FY 1997 and FY 1998

fee Orders, we amended certain rules governing our regulatory fee

program based upon our experience administering the program in prior

years.6

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\2\ Id.

\3\ 59 FR 30984 (Jun. 16, 1994).

\4\ 47 U.S.C. 159(b), (f)(1).

\5\ 60 FR 34004 (Jun. 29, 1995), 61 FR 36629 (Jul. 12, 1996), 62

FR 37408 (Jul. 11, 1997), and 63 FR 35847 (Jul. 1, 1998),

respectively.

\6\ 47 CFR 1.1151 et seq.

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3. Section 9(b)(3), entitled ``Permitted Amendments,'' requires

that we 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 to ``add, delete, or reclassify

services in the Schedule to reflect additions, deletions or changes in

the nature of its services.'' 7

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\7\ 47 U.S.C. 159(b)(3).

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III. Discussion

4. Pursuant to its FY 1998 Notice of Proposed Rulemaking

(``NPRM''),8 the Commission received comments from

interested parties concerning its proposed ``permitted amendments'' to

the fee schedule. However, the Commission rejected some and was unable

to resolve several other of the commenters' proposals in time for

inclusion in its FY 1998 Report and Order,9 due to the

statutory 90-day advance notice required by Congress.10

Further, in its FY 1998 Report and Order, the Commission stated its

intention to issue this NOI requesting that interested parties comment

on possible solutions to these unresolved issues.11 Briefly,

the issues for which we seek comment include: (1) Clarification of the

Commercial Mobile Radio Services (``CMRS'') fee categories and

demarcation of which types of services or usage to include in each

category; (2) determination of the appropriate basis for assessing

regulatory fees on geostationary orbit space stations (``GSOs''); (3)

determination of the appropriate method of assessing our regulatory

costs associated with non-

[[Page 70091]]

geostationary orbit space station systems (``NGSOs'') to licensees

which have launched satellites or to all NGSO licensees; (4) whether we

should base revenues for interstate telephone service providers on the

Universal Services Fund's end user methodology rather than the

Telecommunication Relay Services Fund adjusted gross revenue

methodology; and (5) whether we should create a ``new services''

category in our cost accounting system in which costs associated with

development of new services, regardless of the service, would be

proportionately assessed to all feeable categories rather than assessed

to existing licensees in the same service category.

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\8\ 63 FR 16188, (Apr. 2, 1998).

\9\ 63 FR 35847, (Jul. 1, 1998).

\10\ 47 U.S.C. 159(b)(4)(B).

\11\ See FY 1998 Report and Order at paragraaphs 48, 53, 55, and

67.

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a. Commercial Mobile Radio Services (``CMRS'')

5. For FY 1998, CMRS licensees authorized for operation on

broadband spectrum 12 are subject to payment of the CMRS

Mobile Services fee 13 and licensees authorized for

operation on narrowband spectrum 14 are subject to payment

of the CMRS Messaging Services fee.15 Our fee schedule

considers the nature of the services offered only to the extent that

services offered on broadband spectrum and services offered on

narrowband spectrum are subject to different categories of fee payment.

In our FY 1998 NPRM, we invited interested parties to comment on our

proposal to continue this fee structure for CMRS services.

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\12\ Includes specialized mobile radio services (part 90),

personal communications services (part 24), wireless communications

services (part 27), public coast stations (part 80), and public

mobile radio stations (cellular radio, 800 MHz air-ground

radiotelephone, and offshore radio services (part 22)). See FY 1998

Report and Order at Attachment H, paragraph 14.

\13\ For FY 1998, this fee is $0.29 per feeable unit. See FY

1998 Report and Order at Attachment F.

\14\ Includes licensees formerly licensed as part of the

private radio services (private paging, qualifying interconnected

business radio services, and 220-222 MHz land mobile systems (part

90)), and licensees formerly licensed as part of the common carrier

radio services (public mobile one-way paging (part 22)) and

licensees of personal communications services (one-way and two-way

paging (part 24)). See FY 1998 Report and Order at Attachment H,

paragraph 15.

\15\ For FY 1998, this fee is $0.04 per feeable unit. See FY

1998 Report and Order at Attachment F.

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6. Several parties filed comments, in particular, concerning the

demarcation between the CMRS Mobile Services and CMRS Messaging

Services fee categories. SBC Communications Inc. (``SBC'') urged us to

adopt only a single CMRS fee covering all CMRS services, contending

that both Congress and the Commission intended to create regulatory

symmetry among the CMRS services, and, thereby avoid any competitive

advantage to narrowband personal communication service (``PCS'') and

specialized mobile radio (``SMR'') service over cellular and broadband

PCS.16 In contrast, Paging Network, Inc. (``Pagenet'')

supported retention of the existing fee category structure, but

recommended adoption of a subcategory for non-voice networks and

services within the CMRS Mobile Services fee category which would be

subject to the same fee payment as licensees within the CMRS Messaging

Services fee category.17 Pagenet argued that there are

significant differences in network efficiency and the level of

Commission regulation required between voice and non-voice operations

such that non-voice services are being charged a disproportionate share

of the CMRS Mobile Services costs.

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\16\ See Comments of SBC Communications, Inc. at p. 7.

\17\ See Comments of Paging Network, Inc. at p. 2.

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7. BellSouth Wireless Data (``BellSouth WD'') suggested that 900

MHz SMR licensees should be classified in the CMRS Messaging Services

fee category, and not in the CMRS Mobile Services fee category in which

900 MHz SMR licensees are currently classified.18 BellSouth

WD argued that regulatory fees should be governed by how the service

bands are predominantly used on a licensee by licensee basis. BellSouth

WD stated 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 10-channel block. Further, BellSouth WD

contended that 900 MHz SMR systems do not have the capacity to compete

with true broadband systems, lacking the amount of spectrum of those

services included in the CMRS Mobile Services fee category. Thus,

BellSouth WD suggested that either we include any authorization

providing 25 kHz or less spectrum in the CMRS Messaging Services fee

category, or we establish a third CMRS fee payment category for systems

that operate in the 900 MHz SMR band and other CMRS services that are

allocated no more than 5 MHz of spectrum. American Mobile

Telecommunications Association (``AMTA'') supported BellSouth WD's

proposal.19

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\18\ See Comments of BellSouth Wireless Data, L.P. at p. 2.

\19\ See Reply Comments of American Mobile Telecommunications

Association, Inc. at pp. 2-4.

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8. Small Business in Telecommunications (``SBT'') argued that,

because we classify narrowband PCS, which operates on 50 kHz paired

channels, in the CMRS Messaging Services fee category,20 we

should clarify that all CMRS stations which are authorized with channel

bandwidth not exceeding 50 kHz are within the CMRS Messaging Services

fee category. Moreover, SBT contended we should clarify that SMR

systems and public coast stations are within the CMRS Messaging

Services fee category since these stations are authorized with

substantially less channel capacity than narrowband PCS

stations.21

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\20\ See FY 1998 Report and Order at Attachment H, paragraph 15.

\21\ See Comments of Small Business in Telecommunications at pp.

5-6.

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9. We must be able to determine, or estimate with some degree of

precision, the number of feeable units that are within each fee payment

category and be able to determine the pro rata share of our regulatory

costs that must be assessed per feeable unit. We are not aware of any

existing records or other sources of information that would permit

development of any of the proposals offered by the commenters as

summarized above. Therefore, we seek comments on these and solicit any

other proposals to revise the methodology the Commission uses to

determine its CMRS fee categories. Further, we ask that all comments on

the above and any new proposals include data (or available sources for

data) that would enable the Commission to definitively assign each type

of service to the appropriate proposed fee category and provide an

estimate of the number of feeable units contained in each category for

FY 1999.

b. Space Stations

i. Geostationary Orbit Space Stations (``GSOs'')

10. In the past, we have adopted the statutory fee schedule's ``per

satellite'' method for assessment of fees upon licensees of

geostationary (GSOs) space stations, 47 U.S.C. 159(g). The calculation

of annual regulatory fees for GSOs has however been a matter of dispute

for several years during which proposals for alternate methods of

calculation have been presented. Therefore, we are seeking alternative

methods of calculating fees based on different criteria and/or

information from affected parties. We ask commentors to suggest

alternative methods for assessing regulatory fees for GSO space

stations. Along with suggestions, we ask commentors to specify the data

upon which we can base any alternative approach and the most feasible

method for obtaining the data necessary to calculate fees.

[[Page 70092]]

ii. Non-geostationary Orbit Space Stations (``NGSOs'')

11. In our FY 1998 Report and Order, we continued to require that

NGSO licensees pay for NGSO systems by requiring a fee payment ``upon

the commencement of operation of a system's first satellite as reported

annually pursuant to sections 25.142(c), 25.143(e), 25.145(g) or upon

certification of operation of a single satellite pursuant to section

25.121(d).'' In our FY 1998 proceeding, Orbital Communications

Corporation (``ORBCOMM'') contended that, because all NGSO licensees

benefit from our policy, enforcement and information activities and

services, the Commission should recover its NGSO space station

regulatory costs from all NGSO licensees, rather than from only those

that have launched their initial satellite.22 As we stated

in our FY 1998 Report and Order, we are including ORBCOMM's proposal in

this NOI and seek comment here on ORBCOMM's proposal, as well as

alternative proposals.

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\22\ See Comments of Orbital Communications Corporation at p. 3.

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c. Interstate Telephone Service Providers

12. For FY 1998 we adopted the methodology for assessing fees upon

interstate telephone service providers that we had employed in past

years. Under this methodology, interstate telephone service providers

calculate their regulatory fees based upon their proportionate share of

interstate revenues using the methodology we developed for contribution

to the TRS Fund.23 However, in order to avoid imposing a

double fee payment upon certain interstate telephone service providers

(e.g, resellers), we permit those interstate telephone service

providers to remove, from their gross interstate revenue, payments made

to underlying carriers for telecommunications facilities and services,

including payments for interstate access services.

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\23\ See Telecommunications Relay Services, 8 FCC Rcd 5300

(1993).

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13. In our FY 1998 proceeding, SBC contended that our methodology

imposes an undue burden upon the local exchange carriers (``LECs'')

because we permit interexchange carriers (``IXCs'') to deduct payments

made to underlying common carriers from their gross interstate revenues

while LECs do not have such payments to deduct. SBC suggested that use

of end user revenues--the same contribution base used for the Universal

Service Fund--to calculate the annual fees would alleviate that burden

and be more competitively neutral.24

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\24\ See Report and Order In the Matter of Universal Service, 62

FR 32861 (Jun. 17, 1997).

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14. In our FY 1998 proceeding, we declined to adopt SBC's proposal.

We disagreed with SBC's description that end user revenues are more

competitively neutral than our current methodology. Specifically,

assuming that all fees are recovered from customers, including

customers of interstate telephone service providers that purchase their

service for resale, retail customers would still pay the same rates. To

the extent that services are provided in competition with other

interstate telephone service providers, those interstate telephone

service providers would pay the same percentage amounts when providing

the same services to the same customers. Additionally, in the FY 1998

proceeding, we said we do not have adequate data to estimate total

common carrier interstate end user revenue.25

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\25\ See FY 1998 Report and Order at paragraph 67.

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15. As we indicated in our FY 1998 Report and Order, we are

revisiting SBC's proposal here. Thus, we ask the common carrier

industry to comment on the feasibility of relying on end user revenues

as provided to the Universal Services Fund, as opposed to net revenues

based upon the TRS Fund. Further, we ask that commenters specify the

data upon which we can base this or any other alternative approach and

the most feasible method for obtaining this information.

d. Treatment of New Services in All Feeable Categories

16. In our FY 1998 proceeding, a number of payors of GSO fees

argued that licensees in existing GSO satellite services unfairly bear

the cost of our policy and rulemaking activities related to the

development of rules and procedures for ``new'' GSO satellite services.

They suggested that we create a separate regulatory category in our

regulatory cost accounting system for ``new services'' where the

Commission has not yet authorized a licensee. Regulatory costs

associated with the development of policy and rules for such new

services throughout the Commission would be charged to this cost

category and distributed across all fee payors when calculating

regulatory fee rates for any given fiscal year. Regulatory costs

associated with these new services would be charged to the appropriate

service, as they are now, upon the grant of the first authorization or

license for that service.

17. In our FY 1998 Report and Order, we concluded that due to a

tight collection schedule, as a practical matter, we had no viable

alternative other than adoption of the fees as proposed in the NPRM,

without any of the amendments proposed by commenters. However, as

indicated in our FY 1998 Report and Order, we seek comment on this and

other alternative approaches to our current regulatory fee cost

recovery methodology for new and developmental services. Specifically,

we seek comment on whether a regulatory category for ``new services,''

which would impact payors in all services, should be added to our cost

accounting system.

18. In addition, in our FY 1998 proceeding, some parties suggested

that the Commission identify more clearly costs related to those

activities intended to be covered by regulatory fees. We seek comment

on whether and how we should further distinguish our costs, in

particular those costs related to regulatory activities and ongoing

regulation of licensees. Further, we seek suggestions as to how we can

ensure that the amounts collected are distributed properly among our

fee categories.

IV. Procedural Matters

a. Comment Period and Procedures

19. Pursuant to sections 1.415 and 1.419 of the Commission's rules,

47 CFR 1.415, 1.419, interested parties may file comments on or before

January 7, 1999, and reply comments on or before July 19, 1999.

Comments may be filed using the Commission's Electronic Comment Filing

System (ECFS) or by filing paper copies. See Electronic Filing of

Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

20. Comments filed through the ECFS can be sent as an electronic

file via the Internet to http://www.fcc.gov/e-file/ecfs.html>.

Generally, only one copy of an electronic submission must be filed. If

multiple docket or rulemaking numbers appear in the caption of this

proceeding, however, commenters must transmit one electronic copy of

the comments to each docket or rulemaking number referenced in the

caption. In completing the transmittal screen, commenters should

include their full name, Postal Service mailing address, and the

applicable docket or rulemaking number. Parties may also submit an

electronic comment by Internet e-mail. To get filing instructions for

e-mail comments, commenters should send an e-mail to [email protected], and

should include the following words in the body of the message, ``get

form 26

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\26\ 47 CFR 1.204(b)(1).

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c. Authority and Further Information

25. Authority for this proceeding is contained in sections 4(i) and

(j), 9, and 303(r) of the Communications Act of 1934, as amended, 47

U.S.C. 154(i)--(j), 159, and 303(r). It is ordered that this NOI is

adopted.

26. Further information about this proceeding may be obtained by

contacting the Fees Hotline at (202) 418-0192, or you may e-mail your

questions to mcontee@fcc.gov.

Federal Communications Commission.

Magalie Roman Salas,

Secretary.

[FR Doc. 98-33564 Filed 12-17-98; 8:45 am]

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