Assessment and Collection of Regulatory Fees For Fiscal Year 1998

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[MD Docket No. 98-36; FCC 98-40]

Assessment and Collection of Regulatory Fees For Fiscal Year 1998

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Commission is proposing 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 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

[[Page 16189]]

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 April 22, 1998 and Reply Comments are due May

4, 1998.

FOR FURTHER INFORMATION CONTACT: Terry Johnson, Office of Managing

Director at (202) 418-0445.

SUPPLEMENTARY INFORMATION:

Adopted: March 13, 1998

Released: March 25, 1998.

Table of Contents

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Paragraph

Topic numbers

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I. Introduction........................................... 1-3

II. Background............................................ 4-7

III. Discussion........................................... 8-42

A. Summary of FY 1998 Fee Methodology................. 8-12

B. Development of FY 1998 Fees........................ 13-29

i. Adjustment of Payment Units.................... 13

ii. Calculation of Revenue Requirements........... 14

iii. Calculation of Regulatory Costs.............. 15-16

iv. Establishment of 25% Revenue Ceilings......... 17-18

v. Recalculation of Fees.......................... 19

vi. Proposed Changes to Fee Schedule.............. 20-28

a. Commercial AM/FM Radio..................... 21-25

b. Alternative Proposed Schedule for AM and FM

Radio Stations............................... 26

vii. Effect of Revenue Redistributions on Major

Constituencies................................... 27

C. Other Issues....................................... 28-33

i. Distinguishing between CMRS Fee Categories..... 28-31

ii. Clarification of Operational LEO System....... 32

iii. Renaming of LEO Fee Category................. 33

D. Procedures for Payment of Regulatory Fees.......... 34-40

i. Annual Payments of Standard Fees............... 35

ii. Installment Payments for Large Fees........... 36

iii. Advance Payments of Small Fees............... 37

iv. Minimum Fee Payment Liability................. 38

v. Standard Fee Calculations and Payments......... 39-40

E. Schedule of FY 1998 Regulatory Fees................ 41

IV. Procedural Matters.................................... 42-46

A. Comment Period and Procedures...................... 42

B. Ex Parte Rules..................................... 43

C. Initial Regulatory Flexibility Analysis............ 44

D. Authority and Further Information.................. 45-46

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Attachment A--Initial 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 1997 Regulatory Fees

Attachment F--Schedule of Regulatory Fees

Attachment G--Comparison Between FY 1997 and FY 1998 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

I. Introduction

1. By this Notice of Proposed Rulemaking, the Commission commences

a proceeding to revise its Schedule of Regulatory Fees in order to

collect the amount of regulatory fees that Congress, pursuant to

section 9(a) of the Communications Act, as amended, has required it to

collect for Fiscal Year (FY) 1998. See 47 U.S.C. 159 (a).

2. Congress has required that we collect $162,523,000 through

regulatory fees in order to recover the costs of our enforcement,

policy and rulemaking, international and user information activities

for FY 1998. See Public Law 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 proposing to revise our fees in order to collect the increased

amount that Congress has required that we collect. Additionally, we

propose to amend the Schedule in order to simplify and streamline the

Fee Schedule. See 47 U.S.C. 159(b)(3).

3. In proposing to revise our fees, we 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 are proposing changes

to the fees pursuant to public interest considerations. The current

Schedule of Regulatory Fees is set forth in sections 1.1152 through

1.1156 of the Commission's rules. See 47 CFR 1.1152 through 1.1156.

II. Background

4. 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. See 47 U.S.C. 159(a).

See Attachment I for a description of these activities. In our FY 1994

Fee 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

[[Page 16190]]

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

and FY 1997 Fee Reports and Orders, we amended certain rules governing

our regulatory fee program based upon our experience administering the

program in prior years. See 47 CFR Secs. 1.1151 et seq.

5. As noted above, for FY 1994 we adopted the Schedule of

Regulatory Fees established in section 9(g) of the Act. 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).

6. 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.'' See 47 U.S.C. 159(b)(3).

7. Section 9(i) requires that we develop accounting systems

necessary to adjust our fees pursuant to changes in the costs of

regulation of the various services subject to a fee and for other

purposes. See 47 U.S.C. 9(i). For FY 1997, we relied for the first time

on cost accounting data to identify our regulatory costs and to develop

our FY 1997 fees based upon these costs. Also, for FY 1997, we 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 and also allows us to make annual revisions to our fees

based to the fullest extent possible, and consistent with the public

interest, on the actual costs of regulating those services subject to a

fee. 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. Summary of FY 1998 Fee Methodology

8. As noted above, Congress has required that the Commission

recover $162,523,000 for FY 1998 through the collection of regulatory

fees, representing the costs applicable to our enforcement, policy and

rulemaking, international, and user information activities. See 47

U.S.C. 159(a).

9. In developing our proposed FY 1998 fee schedule, we first

determined that we would continue to use the same general methodology

as we used in developing fees for FY 1997. We next estimated payment

units 1 for FY 1998 in order to determine the aggregate

amount of revenue we would collect without any revision to our FY 1997

fees. Next, we compared this revenue amount to the $162,523,000 that

Congress has required us to collect in FY 1998 and pro-rated the

overage among all the existing fee categories.

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\1\ Payment units are the number of subscribers, mobile units,

pagers, cellular telephones, licenses, call signs, adjusted gross

revenue dollars, etc. which represent the base volumes against which

fee amounts are calculated.

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10. We then separately projected revenue requirements in each

service category using data generated by our cost accounting system and

established a revenue ceiling in each service no higher than 25 percent

above the revenue that payers within a fee category 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). This methodology,

described in our FY 1997 Report and Order at paragraph 35, reduces fees

for services whose regulatory costs have declined and increases fees

for services experiencing higher regulatory costs in order to continue

to eliminate disparities disclosed by our cost accounting system

between a service's current costs and fees ascribed to these services

in prior fiscal years. The 25 percent limitation minimizes the impact

of unexpected substantial increases to fees which could affect the

well-being of licensees.

11. Once we established our tentative FY 1998 fees, we evaluated

proposals made by Commission staff concerning other adjustments to the

Fee Schedule and to our collection procedures. These proposals are

discussed in paragraphs 20-30 and are factored into our proposed FY

1998 Schedule of Regulatory Fees, set forth in Attachment F.

12. Finally, we have incorporated, as Attachment H, proposed

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. 2 In the following paragraphs, we

describe in greater detail our proposed methodology for establishing

our FY 1998 regulatory fees.

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\2\ We also will incorporate a similar Attachment in the Report

and Order concluding this rulemaking. That Attachment will contain

updated information concerning any changes made to the proposed fees

adopted by the Report and Order.

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B. Development of FY 1998 Fees

i. Adjustment of Payment Units

13. 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. Attachment B provides a summary of how revised payment units

were determined for each fee category.3

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\3\ 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 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

14. 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 without any change to the FY 1997 Schedule of

Regulatory Fees. The amount of revenue we would collect without changes

in the fee schedule 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 then adjusted these revenue

requirements for each fee category on a

[[Page 16191]]

proportional basis, consistent with section 9(b)(2) of the Act, to

obtain an estimate of revenue requirements for each fee category at the

$162,523,000 level 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

15. In accordance with section 159(i) of the Act, the Commission

utilizes a cost accounting system designed, in part, to provide data

which helps to ensure that fees closely reflect our actual costs of

regulation for each service category. The Commission's cost accounting

system accumulates both personnel and non-personnel costs on a service-

by-service basis and is described in detail in our FY 1997 Report and

Order at paragraph 12.

16. In order to utilize actual costs for fee development purposes,

we first add indirect support costs to direct costs 4 and

then adjust the results to approximate the amount of revenue that

Congress requires us to collect in FY 1998 ($162,523,000).5

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 (Fiscal Year 1997) among all the fee

categories so that total costs approximated $162,523,000. For fee

categories where fees are further differentiated by market (e.g.,

Markets 1-10 under the general VHF and UHF Commercial Television fee

categories), we distributed the costs to each market group by

maintaining the same ratios between the market groups as between the

revenue requirements in the FY 1997 fee schedule. 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 for FY 1998.

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\4\ One feature of our 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.

\5\ Congress' estimate of costs to be recovered through

regulatory fees is generally determined ten to twelve months before

the end of the fiscal year to which the fees actually apply. As

such, year-end actual activity costs for FY 1997 will not equal

exactly the amount Congress has designated for collection for FY

1998.

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iv. Establishment of 25% Revenue Ceilings

17. Our next step was to establish a ceiling of 25 percent 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.

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

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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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18. 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

($34,456,724) 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. This results in a

certain amount of subsidization between fee payer classes.7

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 resulting from the application of

our revenue ceilings.8

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\7\ 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.

\8\ Application of the 25% ceiling was accomplished by choosing

a ``target'' fee revenue requirement for each individual fee

category. This ``target'' was either the actual calculated (cost-

based) revenue requirement (for those categories at or below the 25%

ceiling) or, in the case where the calculated revenue exceeded the

ceiling, an amount equal to the ceiling. The shortfall created by

reducing the revenue requirement of those whose revenue requirement

exceeded the revenue ceiling was proportionately spread among those

fee categories whose revenue requirements were below the ceiling.

This computation required more than one round of adjustment because

the allocation of this revenue, in a few instances, caused the new

revenue requirement amount to exceed the 25% ceiling. After three

iterations (rounds), all the revenue requirements were at or below

the revenue ceiling. See Attachment E.

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v. Recalculation of Fees

19. 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

20. We examined the results of our calculations made in paragraphs

15-19 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 proposing the following changes to our Fee Schedule:

a. Commercial AM & FM Radio. 21. For FY 1997 we established a

revised methodology for determining AM & FM radio regulatory fees. This

new methodology relies upon a radio station's calculated field strength

signal contour overlaid upon U.S. Census data to obtain an estimate of

population coverage for each station.9 The calculated

population coverages are then used along with a station's class to

[[Page 16192]]

develop a range of fees for both AM and FM radio stations.

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\9\ 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.

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22. Although the calculated contours used in FY 1997 are consistent

with Commission radio station signal protection policies and rules, we

received several complaints from licensees stating that the contours

exaggerated actual market areas and populations served. In several

instances licensees complained that small, rural stations whose

contours, at the fringe, intersected major metropolitan areas, were

attributed with populations far in excess of what they considered to be

their primary or even 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. To alleviate this

disparity and to ensure that radio stations are assigned population

coverage figures more in line with their actual market areas, we are

proposing for FY 1998 to utilize the same general methodology for

determining regulatory fees as we introduced in FY 1997, but to change

the applicable signal contours to 5 m/V/m for AM radio stations and 70

dBuV/m for FM radio stations. These reduced contours are generally

consistent with the city grade contours of radio stations and should

limit population coverage to only those populations actually within a

station's primary local market area. We seek comment on this proposal.

It should be noted that population coverage is only one factor used to

determine radio station regulatory fees. For example, the number of

stations claiming non-profit exemption from fees impacts the number of

stations which may be assessed regulatory fees. Additionally, the

overall amount that Congress requires the Commission to collect and the

actual costs attributable to radio station regulation also influence

the final determination of fee amounts. The following paragraphs

explain in detail the development of our proposed fee schedule for AM

and FM radio stations.

23. We calculated the revenue requirements for each category of

station (e.g., AM, FM or construction permit) under our existing

methodology for assessing radio station fees as shown in Attachment E.

In order to consider both population and class of station, we then

multiplied the population served by the same ratio between the

individual classes as compared to the original FY 1994 Schedule to

determine the weighted population. The weighted approach also

streamlines the schedule by allowing us to combine AM and FM stations

into a single ``radio'' category.

24. Our next step was to sort the data by compiling a list of every

AM and FM station in descending order by class-weighted population.

Next, we determined actual fees for each station. We designed a

schedule which would place stations in wide bands based upon the

classes of station and total populations served, with different fees

for each band. We established the ranges for the schedule by first

proposing a minimum and a maximum fee amount. In setting a minimum fee,

we are proposing that it should be no less than the AM Construction

Permit fee which we calculated in Attachment E to be $235. Therefore,

we set the lowest radio fee at $250. In order to prevent the fee from

becoming too great a burden for any licensee, we are proposing to limit

the maximum fee to $2,500. At the same time, we are proposing to retain

the number of actual fee classifications at ten as in our FY 1997

Report and Order. This allowed us to establish fee classifications in

$250 increments, with each increment containing the same number of

stations, resulting in a more equitable fee schedule while keeping the

size of the schedule relatively manageable.10 The resulting

schedule of regulatory fees for radio stations (both AM and FM) would

read:

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\10\ The number of stations is not exactly divisible by 10,

leaving group 10 with five less stations than the other groups.

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Number

Classification group of Fee

stations

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1.................................................. 878 $2,500

2.................................................. 878 2,250

3.................................................. 878 2,000

4.................................................. 878 1,750

5.................................................. 878 1,500

6.................................................. 878 1,250

7.................................................. 878 1,000

8.................................................. 878 750

9.................................................. 878 500

10................................................. 873 250

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25. This schedule, which we propose today, results in: (1) same

class stations in different size cities generally having different

fees, (2) different class stations in the same city generally having

different fees, and (3) same class stations in the same city generally

having the same fee. In addition, it is generally true that in using

this methodology: (1) larger stations and those located in larger

metropolitan areas tend to be assessed higher fees and (2) small

stations and those located in rural areas tend to be assessed lower

fees. This proposed fee schedule achieves the objectives of both

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 those located in rural

areas. 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. 47 U.S.C Sec. 1.1166.

b. Alternative Proposed Schedule for AM and FM Radio Stations.--26.

We also received a number of complaints that licensees could not easily

see how their station class was used in determining their regulatory

fee for FY 1997. Further, several licensees expressed the view that

there was not enough difference between the fees imposed on stations in

the largest population centers and those below. See, for example,

letter from Heckler Broadcasting, Inc. received October 2, 1997; and

Petition for Reduction of Regulatory Fee filed September 18, 1997, from

Family Communications, Inc. The alternative schedule shown below

addresses both of these concerns. However, it should be noted that

although the ratios between the classes in the alternative schedule

would no longer match the original schedule adopted by Congress, which

was implemented in our FY 1994 Report and Order, it addresses licensee

complaints that the differentiations between the size of service and

fee assessed in our existing schedule are inequitable. We invite public

comment on whether this alternative schedule for AM and FM Radio should

be implemented instead of the one proposed in paragraph 24.

AM Radio Station Regulatory Fees

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Population served Class A Class B Class C Class D

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1,000,000.................................................. 4,250 3,500 2,000 2,500

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FM Radio Station Regulatory Fees

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Classes A, Classes B,

Population served B1 & C3 C, C1 & C2

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1,000,000.................................... 3,500 4,250

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vii. Effect of Revenue Redistributions on Major Constituencies

27. The following chart illustrates the relative percentage of the

overall revenue requirements borne by the major constituencies since

inception of regulatory fees in FY 1994.

Percentage of Revenue Collected by Constituency

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Fiscal years--

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1994 1995 1996 1997 1998

(Actual) (Actual) (Actual) (Actual) (Proposed)

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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

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Total.................................... 100.0 100.0 100.0 100.0 100.0

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C. Other Issues

i. Distinguishing between CMRS Fee Categories

28. We have received several comments from CMRS fee payers

concerning the difficulty some of them have had in distinguishing

between CMRS Mobile Services fees and CMRS Messaging Services fees. In

our FY 1997 Report and Order (see paragraphs 58-62) we stated that

Congress in its statutory fee schedule distinguished between licensees

that we authorized to provide exclusive use services and those we

authorized to provide only shared use services. Section (g) assesses a

higher fee upon licensees of exclusive use spectrum than upon licensees

of less valuable shared use spectrum. Similarly, the statutory fee

schedule established fees for broadcast licensees that consider the

type of service and class of service authorized. Moreover, since we

established the fee program, our 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 propose that our

fee schedule for CMRS will not consider the particular use made of a

licensee's spectrum and will consider the nature of services offered

only to the extent that services offered on broadband spectrum and

services offered on narrowband spectrum will be subject to different

categories of fee payment. Thus, licenses authorizing operations on

broadband spectrum would be subject to the CMRS Mobile Services fee,

regardless of the services offered on that spectrum by the licensee.

Further, licenses authorizing the provision of services on narrowband

spectrum would be subject to the CMRS Messaging Services fee,

regardless of the services offered on that spectrum. See also

Attachment H, paragraphs 14 and 15. We also tentatively conclude that

the Wireless Communications Service should be classified as CMRS Mobile

Services. We request comments on these matters. We also believe a

further clarification of which entities should be paying which CMRS fee

would be beneficial to licensees and other fee payers. Separately, we

propose to incorporate a clarification as to what is meant by CMRS

``units'' and who is responsible for paying regulatory fees for various

kinds of CMRS units. See also Attachment H, paragraph 16.

29. The following categories of CMRS licensees would be covered by

the CMRS Mobile Services regulatory fee:

Rural Radio Service

Air-ground Radiotelephone Service

Cellular Radiotelephone Service

Offshore Radiotelephone Service

Broadband Personal Communications Services

Wireless Communications Service

Specialized Mobile Radio Service

Public Coast Service

30. The following categories of CMRS licensees would be covered by

the CMRS Messaging Services regulatory fee:

Paging and Radiotelephone Service

Narrowband Personal Communications Services

220-222 MHz Band

Interconnected Business Radio Services

31. Licensees in the Specialized Mobile Radio Service have

requested reconsideration of our determination that FY 1997 CMRS

regulatory fees should be based upon whether a licensee operates on

broadband or

[[Page 16194]]

narrowband spectrum. See FY 1997 Report and Order at para. 60. We

expect to address these concerns in our action on petitions for

reconsideration of the FY 1997 Report and Order. Interested parties may

comment in this proceeding on the appropriate fee structure for CMRS

licensees and, in particular, may present alternatives to the

methodology we established for FY 1997. Commenters should be aware that

we do not believe that a case-by-case determination of the appropriate

fee for a particular SMR licensee would serve the public interest due

to the heavy resource burden it would require.

ii. Clarification of Operational LEO System

32. In our FY 1997 Report and Order at paragraph 75, we reiterated

our requirement that licensees of low earth orbit satellite systems

(LEOS) pay the LEO regulatory fee upon their certification of operation

of a single satellite pursuant to Sec. 25.120(d). We stated that we

require payment of the LEO fee following commencement of operations of

a system's first satellite in order to assure that we recover our

regulatory costs related to LEO systems from licensees of these systems

as early as possible so that regulatees in other services are not

burdened with these costs any longer than necessary. However, because

Sec. 25.120(d) applies to both geostationary and non-geostationary

satellite systems, we believe that we need to clarify our existing

definition of an operational LEO satellite. Non-geostationary satellite

licensees, including licensees of LEO systems, are required to submit

reports pursuant to Secs. 25.142(c), 25.143(e), and 25.145(g) of the

Commission's rules. These reports, annual and filed upon completion of

milestones, report the status of a [the] system and indicate compliance

under Sec. 25.120(d). In our FY 1997 Report and Order at paragraph 75,

we reiterated our requirement that licensees of low earth orbit

satellite systems (LEOS) pay the LEO regulatory fee upon their

certification of operation of a single satellite pursuant to

Sec. 25.120(d). We stated that we require payment of the LEO fee

following commencement of operations of a system's first satellite in

order to assure that we recover our regulatory costs related to LEO

systems from licensees of these systems as early as possible so that

regulatees in other services are not burdened with these costs any

longer than necessary. However, because Sec. 25.120(d) applies to both

geostationary and non-geostationary satellite systems, we believe that

we need to clarify our existing definition of an operational LEO

satellite to prevent misunderstanding of our intent as stated in

paragraph 75 of our FY 1997 Report and Order. As such, we propose to

add the following to our guidance (see Attachment H) relative to

determining whether or not a LEO satellite is operational for fee

assessment purposes:

Licensees of Non-Geostationary Satellite Systems will be assessed

the LEO regulatory fee 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).

iii. Renaming of LEO Fee Category

33. ``Non-Geostationary'' satellite orbits were first introduced in

the early 90's with the filing of applications for non-voice, non-

geostationary satellite service operating below 1 GHz. These satellites

proposed to operate satellites in a ``low earth'' orbit, or a non-

geostationary orbit The term, ``low earth orbit'' was then synonomous

with ``non-geostationary''. As new technologies have evolved, we have

received applications proposing to operate in ``medium'' and ``high''

earth orbit technologies, also non-geostationary orbits[, have been

filed with the FCC]. Thus, we propose to change the name of the ``Low

Earth Orbit Satellite Systems'' fee category to the ``Non-Geostationary

Satellite Systems'' fee category in order to clarify that non-

geostationary satellites, whether operating in low, medium or high

orbits, are covered under this regulatory fee. This is consistent with

current industry use, as well as with Commission rules, which refer to

non-geostationary, not low earth, orbits and satellites. This name

change will have no adverse impact on any entity covered by regulatory

fees in FY 1998.

D. Procedures for Payment of Regulatory Fees

34. Generally, we propose to retain 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 proposing to establish 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) ``standard'' fees, (2) ``large'' fees, and (3) ``small'' fees.

i. Annual Payments of Standard Fees

35. As we have in the past, we are proposing to treat regulatory

fee payments by certain licensees as ``standard fees'' which 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. All

standard fees are 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 either in the Report and

Order terminating this proceeding or by public notice in the Federal

Register pursuant to authority delegated to the Managing Director.

ii. Installment Payments for Large Fees

36. While we are mindful that time constraints may preclude an

opportunity for installment payments, we propose 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. We

propose that regulatees eligible to make installment payments may

submit their required fees in two equal payments (on dates to be

announced) or, in the alternative, in a single payment on the date that

their final installment payment is due. Due to statutory constraints

concerning notification to Congress prior to actual collection of the

fees, however, it is unlikely that there will be sufficient time for

installment payments, and that regulatees eligible to make installment

payments will be required to pay these fees on the last date that fee

payments may be submitted. The dates for installment payments, or a

single payment, will be announced either in the Report and Order

terminating this proceeding or by public notice published in the

Federal Register pursuant to authority delegated to the Managing

Director.

iii. Advance Payments of Small Fees

37. 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). We propose

that advance payments will be required from licensees of those services

that we

[[Page 16195]]

decided would be subject to advance payments in our FY 1994 Report and

Order, and to those additional payers set forth herein.11 We

are also proposing that payers of advance fees will 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 for payment of small fees established in this

proceeding will be announced in our Report and Order terminating this

proceeding or by public notice published in the Federal Register

pursuant to authority delegated to the Managing Director.

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\11\ 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).

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iv. Minimum Fee Payment Liability

38. As we have in the past, we are proposing that regulatees whose

total regulatory fee liability, including all categories of fees for

which payment is due by an entity, amounts to less than $10 will be

exempted from fee payment in FY 1998.

v. Standard Fee Calculations and Payment Dates

39. As noted, the time for payment of standard fees and any

installment payments will be published in the Federal Register pursuant

to authority delegated to the Managing Director. For licensees,

permittees and holders of other authorizations in the Common Carrier,

Mass Media, and Cable Services whose fees are not based on a

subscriber, unit, or circuit count, we are proposing that fees be

submitted for any authorization held as of October 1, 1997. October 1

is the date to be used for establishing liability for payment of

standard fees.

40. In the case of 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.12

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\12\ 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 1997, rather than on a count as of December 31, 1997.

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E. Schedule of Regulatory Fees

41. The Commission's proposed Schedule of Regulatory Fees for FY

1998 is contained in Attachment F of this NPRM.

IV. Procedural Matters

A. Comment Period and Procedures

42. Pursuant to procedures set forth in Secs. 1.415 and 1.419 of

the Commission's rules, interested parties may file comments on or

before April 22, 1998, and reply comments on or before May 4, 1998. All

relevant comments will be considered by the Commission before final

action is taken in this proceeding. To file formally in this

proceeding, participants must file an original and four copies of all

comments, reply comments and supporting materials. If participants want

each Commissioner to receive a personal copy of their comments, an

original and nine copies must be filed. Comments and reply comments

should be sent to the Office of the Secretary, Federal Communications

Commission, Washington, D.C. 20554. Interested parties, who do not wish

to formally participate in this proceeding, may file informal comments

at the same address or may e-mail their comments to [email protected].

Comments and reply comments will be available for public inspection

during regular business hours in the FCC Reference Center (Room 239) of

the Federal Communications Commission, 1919 M Street, N.W., Washington,

D.C. 20054.

B. Ex Parte Rules

43. This is a non-restricted notice and comment rulemaking

proceeding. Ex parte presentations are permitted, except during the

Sunshine Agenda period, provided they are disclosed pursuant to the

Commission's rules. See 47 CFR 1.1202, 1.1203 and 1026(a).

C. Initial Regulatory Flexibility Analysis

44. As required by the Regulatory Flexibility Act, see 5 U.S.C.

Sec. 603, the Commission has prepared an Initial Regulatory Flexibility

Analysis (IRFA) of the possible impact on small entities of the

proposals suggested in this document. The IRFA is set forth as

Attachment A. Written public comments are requested with respect to the

IRFA. These comments must be filed in accordance with the same filing

deadlines for comments on the rest of the NPRM, but they must have a

separate and distinct heading, designating the comments as responses to

the IRFA. The Office of Public Affairs, Reference Operations Division,

shall send a copy of this NPRM, including the IRFA, to the Chief

Counsel for Advocacy of the Small Business Administration, in

accordance with the Regulatory Flexibility Act.

D. Authority and Further Information

45. 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. Secs. 154(i)-(j), 159, & 303(r). It is ordered that this NPRM is

adopted. It is further ordered that the Commission's Office of Public

Affairs, Reference Operations Division, shall send a copy of this NPRM,

including the Initial Regulatory Flexibility Analysis, to the Chief

Counsel for Advocacy of the Small Business Administration.

46. Further information about this proceeding may be obtained by

contacting the Fees Hotline at (202) 418-0192.

Federal Communications Commission.

Magalie Roman Salas,

Secretary.

Attachment A--Initial Regulatory Flexibility Analysis

1. As required by the Regulatory Flexibility Act

(RFA),13 the Commission has prepared this Initial Regulatory

Flexibility Analysis (IRFA) of the possible significant economic impact

on small entities by the policies and rules proposed in the present

Notice of Proposed Rulemaking, In the Matter of Assessment and

Collection of Regulatory Fees for Fiscal Year 1998. Written public

comments are requested on this IRFA. Comments must be identified as

responses to the IRFA and must be filed by the deadlines for comments

on the IRFA provided above in paragraph 42. The Commission will send a

copy of the NPRM, including this IRFA, to the Chief Counsel for

Advocacy of the Small Business Administration. See 5 U.S.C. 603(a). In

addition, the NPRM and IRFA (or summaries thereof)

[[Page 16196]]

will be published in the Federal Register. See id.

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\13\ See 5 U.S.C. Sec. 603. The RFA, see 5 U.S.C. Sec. 601 et.

seq., has been amended by the Contract With America Advancement Act

of 1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). 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, the Proposed Rules:

2. This rulemaking proceeding is initiated to obtain comments

concerning the Commission's proposed amendment of its Schedule of

Regulatory Fees. For Fiscal Year 1998, we intend to collect regulatory

fees in the amount of $162,523,000, the amount that Congress has

required the Commission to recover. The Commission seeks to collect the

necessary amount through its proposed revised fees, as contained in the

attached Schedule of Regulatory Fees, in the most efficient manner

possible and without undue burden to the public.

II. Legal Basis

3. This action, including publication of proposed rules, is

authorized under Sections (4)(i) and (j), 9, and 303(r) of the

Communications Act of 1934, as amended, 47 U.S.C. Secs. 154(i) and (j),

159, and 303(r).

III. Description and Estimate of the Number of Small Entities to

which the Proposed 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.14 The RFA

generally defines the term ``small entity'' as having the same meaning

as the terms ``small business,'' ``small organization,'' and ``small

governmental jurisdiction.'' 15 In addition, the term

``small business'' has the same meaning as the term ``small business

concern'' under the Small Business Act.16 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).17 A small organization is generally ``any not-for-

profit enterprise which is independently owned and operated and is not

dominant in its field.'' 18 Nationwide, as of 1992, there

were approximately 275,801 small organizations.19 ``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.'' 20 As of

1992, there were approximately 85,006 such jurisdictions in the United

States.21 This number includes 38,978 counties, cities, and

towns; of these, 37,566, or 96 percent, have populations of fewer than

50,000.22 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.

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\14\ 5 U.S.C. Sec. 603(b)(3).

\15\ Id. Sec. 601(6).

\16\ 5 U.S.C. Sec. 601(3) (incorporating by reference the

definition of ``small business concern'' in 15 U.S.C. Sec. 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. Sec. 601(3).

\17\ Small Business Act, 15 U.S.C. Sec. 632 (1996).

\18\ 5 U.S.C. Sec. 601(4).

\19\ 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).

\20\ 5 U.S.C. Sec. 601(5).

\21\ U.S. Dept. of Commerce, Bureau of the Census, ``1992 Census

of Governments.''

\22\ 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. 23 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 television services and 1,423 had less

than $11 million in revenue. 24

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\23\ 13 CFR. Sec. 121.201, SIC code 4841.

\24\ 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).

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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.25 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

1995.26 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.

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\25\ 47 CFR Sec. 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).

\26\ Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29,

1996 (based on figures for December 30, 1995).

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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.'' 27 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.28 Based on available data, we find that the

number of cable operators serving 660,000 subscribers or less totals

1,450. 29 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, 30 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 subcribers, and we have based our fee revenue estimates on

that figure.

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\27\ 47 U.S.C. Sec. 543(m)(2).

\28\ Id. Sec. 76.1403(b).

\29\ Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29,

1996 (based on figures for Dec. 30, 1995).

\30\ 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

Sec. 76.1403(d).

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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),31 multipoint

distribution systems (MDS),32 satellite

[[Page 16197]]

master antenna systems (SMATV), and subscription television services.

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\31\ Direct Broadcast Services (DBS) are discussed with the

international services, infra.

\32\ Multipoint Distribution Services (MDS) are discussed with

the mass media services, infra.

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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).33 According to data in the most recent report, there

are 3,459 interstate carriers.34 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.

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\33\ 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).

\34\ Id.

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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.35 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.

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\35\ 13 CFR Sec. 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).

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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.'' 36

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\36\ See 13 CFR Sec. 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.

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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.37 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.'' 38 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 ILECs that may

be affected by the proposed rules, if adopted.

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\37\ 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).

\38\ See generally 15 U.S.C. Sec. 632(a)(1).

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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. 39 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.40 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.

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\39\ 1992 Census, supra, at Firm Size 1-123.

\40\ 13 CFR Sec. 121.201, SIC code 4813.

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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.41 According to the most recent Telecommunications

Industry Revenue data, 1,371 carriers reported that they were engaged

in the provision of local exchange services.42 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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\41\ Id.

\42\ 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.43

According to the most recent Telecommunications Industry Revenue data,

143 carriers reported that they were engaged in the provision of

interexchange services.44 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

[[Page 16198]]

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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\43\ 13 CFR Sec. 121.201, SIC code 4813.

\44\ 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.45 According to the most recent Telecommunications

Industry Revenue data, 109 carriers reported that they were engaged in

the provision of competitive access services.46 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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\45\ 13 CFR Sec. 121.201, SIC code 4813.

\46\ 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.47 According to the most

recent Telecommunications Industry Revenue data, 27 carriers reported

that they were engaged in the provision of operator

services.48 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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\47\ 13 CFR Sec. 121.201, SIC code 4813.

\48\ 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.49 According to the most recent

Telecommunications Industry Revenue data, 441 carriers reported that

they were engaged in the provision of pay telephone

services.50 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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\49\ 13 CFR Sec. 121.201, SIC code 4813.

\50\ 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.51 According to the

most recent Telecommunications Industry Revenue data, 339 reported that

they were engaged in the resale of telephone service.51a 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 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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\51\ 13 CFR Sec. 121.201, SIC code 4813.

\51a\ Telecommunications Industry Revenue, Figure 2.

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20. 800 Service Subscribers.51b 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.51c 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.51d 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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\51b\ We include all toll-free number subscribers in this

category, including 888 numbers.

\51c\ FCC, CCB Industry Analysis Division, FCC Releases, Study

on Telephone Trends, Tbl. 20 (May 16, 1996).

\51d\ 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).51e This definition provides that a small

entity is expressed as one with $11.0 million or less in annual

receipts.51f 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.51g The Census report does not provide more precise

data.

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\51e\ An exception is the Direct Broadcast Satellite (DBS)

Service, infra.

\51f\ 13 CFR Sec. 120.121, SIC code 4899.

\51g\ 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

[[Page 16199]]

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.'' 51h This definition

provides that a small entity is one with $11.0 million or less in

annual receipts.51i 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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\51h\ 13 CFR Sec. 120.121, SIC code 4841.

\51i\ 13 CFR Sec. 121.201, 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.51j The SBA defines a television

broadcasting station that has $10.5 million or less in annual receipts

as a small business.51k Television broadcasting stations

consist of establishments primarily engaged in broadcasting visual

programs by television to the public, except cable and other pay

television services.51l Included in this industry are

commercial, religious, educational, and other television stations.\52\

Also included are establishments primarily engaged in television

broadcasting and which produce taped television program materials.\53\

Separate establishments primarily engaged in producing taped television

program materials are classified under another SIC number.\54\ There

were 1,509 television stations operating in the nation in 1992.\55\

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.\56\ For 1992,\57\ the number of

television stations that produced less than $10.0 million in revenue

was 1,155 establishments.\58\ Only commercial stations are subject to

regulatory fees.

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\51j\ 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 Notice 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 Notice, 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. Sec. 601(3).

\51k\ 13 CFR Sec. 121.201, SIC code 4833.

\51l\ 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).

\52\ 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.

\53\ 1992 Census, Series UC92-S-1, at Appendix A-9.

\54\ 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).

\55\ FCC News Release No. 31327 (Jan. 13, 1993); 1992 Census,

Series UC92-S-1, at Appendix A-9.

\56\ FCC News Release, ``Broadcast Station Totals as of December

31, 1997.''

\57\ 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.

\58\ 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.\59\ A radio broadcasting station is an establishment

primarily engaged in broadcasting aural programs by radio to the

public.\60\ Included in this industry are commercial, religious,

educational,

[[Page 16200]]

and other radio stations.\61\ Radio broadcasting stations which

primarily are engaged in radio broadcasting and which produce radio

program materials are similarly included.\62\ However, radio stations

which are separate establishments and are primarily engaged in

producing radio program material are classified under another SIC

number.\63\ The 1992 Census indicates that 96 percent (5,861 of 6,127)

radio station establishments produced less than $5 million in revenue

in 1992.\64\ Official Commission records indicate that 11,334

individual radio stations were operating in 1992.\65\ As of December

31, 1997, Commission records indicate that 12,27 radio stations were

operating, of which 7,465 were FM stations.\66\ Only commercial

stations are subject to regulatory fees.

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\59\ 13 CFR Sec. 121.201, SIC code 4832.

\60\ 1992 Census, Series UC92-S-1, at Appendix A-9.

\61\ Id.

\62\ Id.

\63\ Id.

\64\ 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.

\65\ FCC News Release, No. 31327 (Jan. 13, 1993).

\66\ FCC News Release, ``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.\67\ Additionally, the proposed rules will

affect some 12,156 full power radio stations, approximately 11,670 of

which are small businesses.\68\ 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).\69\ 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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\67\ We use the 77 percent figure of TV stations operating at

less than $10 million for 1992 and apply it to the 1997 total of

1558 TV stations to arrive at 1,200 stations categorized as small

businesses.

\68\ 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.

\69\ 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.\70\ Thus, radio or

television stations with fewer than five full-time employees are

exempted from certain EEO reporting and record keeping

requirements.\71\ We estimate that the total number of broadcast

stations with 4 or fewer employees is approximately 4,239.\72\

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\70\ The Commission's definition of a small broadcast station

for purposes of applying its EEO rules was adopted prior to the

requirement of approval by the SBA pursuant to section 3(a) of the

Small Business Act, 15 U.S.C. Sec. 632(a), as amended by section 222

of the Small Business Credit and Business Opportunity Enhancement

Act of 1992, Public Law 102-366, Sec. 222(b)(1), 106 Stat. 999

(1992), as further amended by the Small Business Administration

Reauthorization and Amendments Act of 1994, Public Law 103-403,

Sec. 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 FR

8925 (June 6, 1970).

\71\ See, e.g., 47 CFR Sec. 73.3612 (Requirement to file annual

employment reports on Form 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,

1985). 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

No. 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.

\72\ 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) 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.\73\

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\73\ 13 C.F.R. Sec. 121.201, SIC code 4832.

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37. There are currently 2,720 FM translators and boosters, 4,952 TV

translators.\74\ 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.\75\

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\74\ FCC News Release, Broadcast Station Totals as of December

31, 1996, No. 71831 (Jan. 21, 1997).

\75\ 15 U.S.C. Sec. 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.\76\ 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.\77\ This definition of a small entity in the context of MDS

auctions has been approved by the SBA.\78\ These stations were licensed

prior to implementation of Section 309(j) of the Communications Act of

1934, as amended, 47 U.S.C. Sec. 309(j). Licenses for new MDS

facilities are now awarded to auction winners in Basic Trading Areas

(BTAs) and BTA-like areas.\79\ 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

[[Page 16201]]

fees and the number which are small businesses is unknown.

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\76\ For purposes of this item, MDS includes both the single

channel Multipoint Distribution Service (MDS) and the Multichannel

Multipoint Distribution Service (MMDS).

\77\ See 47 C.F.R. Sec. 1.2110 (a)(1).

\78\ Amendment of Parts 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).

\79\ 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.\80\ 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.\81\ 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.\82\ 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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\80\ 13 C.F.R. Sec. 121.201, SIC code 4812.

\81\ 1992 Census, Series UC92-S-1, at Table 5, SIC code 4812.

\82\ Telecommunications Industry Revenue, Figure 2.

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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.\83\ 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.

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\83\ 13 C.F.R. Sec. 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.\84\ 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.\85\

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 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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\84\ 13 C.F.R. Sec. 121.201, SIC code 4812.

\85\ 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,\86\ 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.\87\

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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\86\ 13 C.F.R. Sec. 121.201, SIC code 4812.

\87\ 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.\88\ 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. \89\ These

regulations defining ``small entity'' in the context of broadband PCS

auctions have been approved by the SBA.\90\ 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.\91\ 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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\88\ 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, paras. 57-60 (released June 24, 1996), 61 FR 33859 (July

1, 1996); see also 47 C.F.R. Sec. 24.720(b).

\89\ 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, para. 60 (1996), 61 FR 33859 (July 1, 1996).

\90\ 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).

\91\ 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.

[[Page 16202]]

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.92 A significant subset of the Rural Radiotelephone

Service is the Basic Exchange Telephone Radio Systems

(BETRS).93 We will use the SBA's definition applicable to

radiotelephone companies, i.e., an entity employing no more than 1,500

persons.94 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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\92\ The service is defined in Section 22.99 of the Commission's

Rules, 47 C.F.R. Sec. 22.99.

\93\ BETRS is defined in Sections 22.757 and 22.759 of the

Commission's Rules, 47 C.F.R. Secs. 22.757, 22.759.

\94\ 13 C.F.R. Sec. 121.201, SIC code 4812.

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46. Air-Ground Radiotelephone Service. The Commission has not

adopted a definition of small entity specific to the Air-Ground

Radiotelephone Service.95 Accordingly, we will use the SBA's

definition applicable to radiotelephone companies, i.e., an entity

employing no more than 1,500 persons.96 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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\95\ The service is defined in Section 22.99 of the Commission's

Rules, 47 C.F.R. Secs. 22.99.

\96\ 13 C.F.R. Sec. 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.97 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.

---------------------------------------------------------------------------

\97\ See 47 C.F.R. Sec. 90.814(b)(1).

---------------------------------------------------------------------------

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.

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 98 indicates that

at the end of fiscal year 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.

---------------------------------------------------------------------------

\98\ Federal Communications Commission, 60th Annual Report,

Fiscal Year 1994, at 116.

---------------------------------------------------------------------------

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.99

---------------------------------------------------------------------------

\99\ 13 C.F.R. Sec. 121.201, SIC code 4812.

---------------------------------------------------------------------------

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,100 private-operational fixed,101 and

broadcast auxiliary radio services.102 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

[[Page 16203]]

companies--i.e., an entity with no more than 1,500

persons.103 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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\100\ 47 C.F.R. Sec. 101 et seq. (formerly, Part 21 of the

Commission's Rules).

\101\ Persons eligible under Parts 80 and 90 of the Commission's

rules can use Private Operational-Fixed Microwave services. See 47

C.F.R. 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.

\102\ Auxiliary Microwave Service is governed by Part 74 of

Title 47 of the Commission's Rules. See 47 C.F.R. Sec. 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.

\103\ 13 C.F.R. Sec. 121.201, SIC 4812.

---------------------------------------------------------------------------

56. Public Safety Radio Services. Public Safety radio services

include police, fire, local government, forestry conservation, highway

maintenance, and emergency medical services.104 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 four of

this IRFA, all governmental entities with populations of less than

50,000 fall within the definition of a small entity.105 All

licensees in this category are exempt from the payment of regulatory

fees.

---------------------------------------------------------------------------

\104\ With the exception of the special emergency service, these

services are governed by Subpart B of Part 90 of the Commission's

Rules, 47 C.F.R. Secs. 90.15-90.27. The police service includes

26,608 licensees 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 C.F.R. Secs. 90.15-90.27. The 19,478 licensees in the

special emergency service include medical services, rescue

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 C.F.R. Secs. 90.33-

90.55.

\105\ 5 U.S.C. Sec. 601(5).

---------------------------------------------------------------------------

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).106 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.

---------------------------------------------------------------------------

\106\ 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 C.F.R. Secs. 95.401-95.428; Secs. 95.1-

95.181; Secs. 95.201-95.225; 47 C.F.R. Secs. 95.191-95.194.

---------------------------------------------------------------------------

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.

107 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.

---------------------------------------------------------------------------

\107\ This service is governed by Subpart I of Part 22 of the

Commission's Rules. See 47 C.F.R. Secs. 22.1001--22.1037.

---------------------------------------------------------------------------

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 service. In the auction, there were

seven winning bidders that qualified as very small business entities,

and one that qualified as a small business entity. We conclude that the

number of geographic area WCS licensees affected includes these eight

entities.

IV. Description of Projected Reporting, Recordkeeping and Other

Compliance Requirements

60. With certain exceptions, the Commission's Schedule of

Regulatory Fees applies to all Commission licensees and regulatees.

Most licensees will be required to count the number of licenses or call

signs authorized, complete and submit an FCC Form 159 (``FCC Remittance

Advice''), and pay a regulatory fee based on the number of licenses or

call signs. 108 Interstate telephone service providers must

compute their annual regulatory fee based on their adjusted gross

interstate revenue using information they already supply to the

Commission in compliance with the Telecommunications Relay Service

(TRS) Fund, and they must complete and submit the FCC Form 159.

Compliance with the fee schedule will require some licensees to

tabulate the number of units (e.g., cellular telephones, pagers, cable

TV subscribers) they have in service, and complete and submit an FCC

Form 159. Licensees ordinarily will keep a list of the number of units

they have in service as part of their normal business practices. No

additional outside professional skills are required to complete the FCC

Form 159, and it can be completed by the employees responsible for an

entity's business records.

---------------------------------------------------------------------------

\108\ The following categories are exempt from the Commission's

Schedule of Regulatory Fees: Amateur radio licensees (except

applicants for vanity call signs)and operators in other non-licensed

services (e.g., Personal Radio, part 15, ship and aircraft).

Governments and non-profit (exempt under section 501(c) of the

Internal Revenue Code) entities are exempt from payment of

regulatory fees and need not submit payment. Non-commercial

educational broadcast licensees are exempt from regulatory fees as

are licensees of auxiliary broadcast services such as low power

auxiliary stations, television auxiliary service stations, remote

pickup stations and aural broadcast auxiliary stations where such

licenses are used in conjunction with commonly owned non-commercial

educational stations. Emergency Alert System licenses for auxiliary

service facilities are also exempt as are instructional television

fixed service licensees. Regulatory fees are automatically waived

for the licensee of any translator station that: (1) is not licensed

to, in whole or in part, and does not have common ownership with,

the licensee of a commercial broadcast station; (2) does not derive

income from advertising; and (3) is dependent on subscriptions or

contributions from members of the community served for support.

Receive only earth station permittees are exempt from payment of

regulatory fees. A regulatee will be relieved of its fee payment

requirement if its total fee due, including all categories of fees

for which payment is due by the entity, amounts to less than $10.

---------------------------------------------------------------------------

61. Each licensee must submit the FCC Form 159 to the Commission's

lockbox bank after computing the number of units subject to the fee. As

an option, licensees are permitted to file electronically or on

computer diskette to minimize the burden of submitting multiple copies

of the FCC Form 159. This latter, optional procedure may require

additional technical skills. Licensees who pay small fees in advance

supply fee information as part of their application and do not need to

use the FCC Form 159.

62. Licensees and regulatees are advised that failure to submit the

required regulatory fee in a timely manner will subject the licensee or

regulatee to a late payment fee of 25% in addition to the required fee.

109 Until payment is received, no new or pending

[[Page 16204]]

applications will be processed, and existing authorizations may be

subject to rescission. 110 Further, in accordance with the

Debt Collection Improvement Act of 1996, federal agencies may bar a

person or entity from obtaining a federal loan or loan insurance

guarantee if that person or entity fails to pay a delinquent debt owed

to any federal agency. 111 Thus, debts owed to the

Commission may result in a person or entity being denied a federal loan

or loan guarantee pending before another federal agency until such

obligations are paid. 112

---------------------------------------------------------------------------

\109\ 47 U.S.C. 1.1164(a).

\110\ 47 U.S.C. 1.1164(c).

\111\ Public Law 104-134, 110 Stat. 1321 (1996).

\112\ 31 U.S.C. 7701(c)(2)(B).

---------------------------------------------------------------------------

63. The Commission's rules currently provide for relief in

exceptional circumstances. Persons or entities that believe they have

been placed in the wrong regulatory fee category or are experiencing

extraordinary and compelling financial hardship, upon a showing that

such circumstances override the public interest in reimbursing the

Commission for its regulatory costs, may request a waiver, reduction or

deferment of payment of the regulatory fee. 113 However,

timely submission of the required regulatory fee must accompany

requests for waivers or reductions. This will avoid any late payment

penalty if the request is denied. The fee will be refunded if the

request is granted. In exceptional and compelling instances (where

payment of the regulatory fee along with the waiver or reduction

request could result in reduction of service to a community or other

financial hardship to the licensee), the Commission will accept a

petition to defer payment along with a waiver or reduction request.

---------------------------------------------------------------------------

\113\ 47 U.S.C. Sec. 1.1166.

---------------------------------------------------------------------------

V. Steps Taken to Minimize Significant Economic Impact on Small

Entities, and Significant Alternatives Considered

64. The Omnibus Consolidated Appropriation Act, Public Law 105-119,

requires the Commission to revise its Schedule of Regulatory Fees in

order to recover the amount of regulatory fees that Congress, pursuant

to Section 9(a) of the Communications Act, as amended, has required the

Commission to collect for Fiscal Year (FY) 1998. See 47 U.S.C.

Sec. 159(a). We seek comment on the proposed methodology for

implementing these statutory requirements and any other potential

impact of these proposals on small entities.

65. With the use of actual cost accounting data for computation of

regulatory fees, we found that some fees which were very small in

previous years would have increased dramatically. The methodology

proposed in this NPRM minimizes this impact by limiting the amount of

increase and shifting costs to other services which, for the most part,

are larger entities.

66. Several categories of licensees and regulatees are exempt from

payment of regulatory fees. See, e.g., footnote 108, supra, and

Attachment H of the NPRM, infra.

VI. Federal Rules that May Duplicate, Overlap, or Conflict with the

Proposed Rules

67. None.

Attachment B--Sources of Payment Unit Estimates for FY 1998

In order to calculate individual service fees for FY 1998, we

adjusted FY 1997 payment units for each service to more accurately

reflect expected FY 1998 payment liabilities. We obtained our updated

estimates through a variety of means. For example, we used Commission

licensee data bases, actual prior year payment records and industry and

trade association projections when available. We tried to obtain

verification for these estimates from multiple sources and, in all

cases, we compared FY 1998 estimates with actual FY 1997 payment units

to ensure that our revised estimates were reasonable. Where it made

sense, we adjusted and/or rounded our final estimates to take into

consideration the fact that certain variables that impact on the number

of payment units cannot yet be estimated exactly. These include an

unknown number of waivers and/or exemptions that may occur in FY 1998

and the fact that, in many services, the number of actual licensees or

station operators fluctuates from time to time due to economic,

technical or other reasons. Therefore, when we note, for example, that

our estimated FY 1998 payment units are based on FY 1997 actual payment

units, it does not necessarily mean that our FY 1998 projection is

exactly the same number as FY 1997. It means that we have either

rounded the FY 1998 number or adjusted it slightly to account for these

variables.

------------------------------------------------------------------------

Fee category Sources of payment unit estimates

------------------------------------------------------------------------

Land Mobile (All), Microwave, IVDS Based on Wireless Telecommunications

\114\, Marine (Ship & Coast), Bureau (WTB) projections of new

Aviation (Aircraft & Ground), applications and renewals taking

GMRS, Amateur Vanity Call Signs, into consideration existing

Domestic Public Fixed. Commission licensee data bases.

Aviation (Aircraft) and Marine

(Ship) estimates have been adjusted

to take into consideration the

licensing of portions of these

services on a voluntary basis.

CMRS Mobile Services.............. Based on actual FY 1997 payment

units adjusted to take into

consideration industry estimates of

growth between FY 1997 and FY 1998

and Wireless Telecommunications

Bureau projections of new

applications and average number of

mobile units associated with each

application.

CMRS Messaging Services........... Based on industry estimates of the

number of units in operation.

AM/FM Radio Stations.............. Based on actual FY 1997 payment

units.

UHF/VHF Television Stations....... Based on actual FY 1997 payment

units.

AM/FM/TV Construction Permits..... Based on actual FY 1997 payment

units.

LPTV, Translators and Boosters.... Based on actual FY 1997 payment

units.

Auxiliaries....................... Based on actual FY 1997 payment

units.

MDS/MMDS.......................... Based on actual FY 1997 payment

units.

Cable Antenna Relay Service (CARS) Based on actual FY 1997 payment

units.

Cable Television System Based on Cable Services Bureau and

Subscribers. industry estimates of

subscribership.

Interstate Telephone Service Based on actual FY 1997 interstate

Providers. revenues associated with

contributions to the

Telecommunications Relay System

(TRS) Fund, adjusted to take into

consideration FY 1998 revenue

growth in this industry as

estimated by the Common Carrier

Bureau.

Earth Stations.................... Based on actual FY 1997 payment

units.

Space Stations (GEOs & NGEOs)..... Based on International Bureau

licensee data bases.

International Bearer Circuits..... Based on International Bureau

estimate.

[[Page 16205]]

International HF Broadcast Based on actual FY 1997 payment

Stations, International Public units.

Fixed Radio Service.

------------------------------------------------------------------------

\114\ The Wireless Telecommunications Bureau's staff advises that they

do not anticipate receiving any applications for IVDS in FY 1998.

Therefore, since there is no volume, there will be no regulatory, fee

in the IVDS category for FY 1998.

Attachment C--Calculation of Revenue Requirements

--------------------------------------------------------------------------------------------------------------------------------------------------------

Computed FY 1998 Pro-rated

Fee category FY 1998 payment x FY 1997 Fee x Payment years = revenue revenue

units requirement requirement

--------------------------------------------------------------------------------------------------------------------------------------------------------

LM (220 MHz, >470 MHZ-Base, SMRS)............... 4,645 10 5 232,250 225,691

Private Microwave............................... 3,830 10 10 383,000 372,184

Domestic Public Fixed/Commercial Microwave...... 5,150 10 10 515,000 500,456

IVDS............................................ 0 0 5 0 0

Marine (Ship)................................... 16,500 5 10 825,000 801,702

GMRS/Other LM................................... 72,465 5 5 1,811,625 1,760,465

Aviation (Aircraft)............................. 3,500 5 10 175,000 170,058

Marine (Coast).................................. 1,370 5 5 34,250 33,283

Aviation (Ground)............................... 1,865 5 5 46,625 45,308

Amateur Vanity Call Signs....................... 10,000 5 10 500,000 485,880

AM/FM Radio..................................... 8,646 1,126 1 9,735,396 9,460,469

AM Construction Permits......................... 62 195 1 12,090 11,749

FM Construction Permits......................... 473 950 1 449,350 436,660

Satellite TV.................................... 105 950 1 99,750 96,933

Satellite TV Construction Permit................ 10 345 1 3,450 3,353

VHF Markets 1-10................................ 42 35,025 1 1,471,050 1,429,508

VHF Markets 11-25............................... 61 28,450 1 1,735,450 1,686,441

VHF Markets 26-50............................... 71 18,600 1 1,320,600 1,283,306

VHF Markets 51-100.............................. 118 9,850 1 1,162,300 1,129,477

VHF Remaining Markets........................... 207 2,725 1 564,075 548,146

VHF Construction Permits........................ 10 4,800 1 48,000 46,644

UHF Markets 1-10................................ 94 16,850 1 1,583,900 1,539,171

UHF Markets 11-25............................... 96 13,475 1 1,293,600 1,257,069

UHF Markets 26-50............................... 124 8,750 1 1,085,000 1,054,360

UHF Markets 51-100.............................. 172 4,725 1 812,700 789,749

UHF Remaining Markets........................... 182 1,350 1 245,700 238,761

UHF Construction Permits........................ 50 2,975 1 148,750 144,549

Auxiliaries..................................... 20,000 25 1 500,000 485,880

International HF Broadcast...................... 4 390 1 1,560 1,516

LPTV/Translators/Boosters....................... 2,290 220 1 503,800 489,573

CARS............................................ 1,800 65 1 117,000 113,696

Cable Systems................................... 66,000,000 0.54 1 35,640,000 34,633,530

Interstate Telephone Service Providers.......... 70,103,000,000 0.00116 1 81,319,480 79,023,026

CMRS Mobile Services (Cellular/Public Mobile)... 55,540,000 0.24 1 13,329,600 12,953,173

CMRS--Messaging................................. 39,592,000 0.03 1 1,187,760 1,154,218

MDS/MMDS........................................ 1,878 215 1 403,770 392,368

International Circuits.......................... 325,000 5 1 1,625,000 1,579,110

International Public Fixed...................... 3 310 1 930 904

Earth Stations.................................. 3,000 515 1 1,545,000 1,501,369

Space Stations (Geostationary Orbit)............ 46 97,975 1 4,506,850 4,379,577

Space Stations (Non-Geostationary Orbit)........ 2 135,675 1 271,350 263,687

---------------------------------------

****** Total Estimated Revenue Collected.... ................ ................ ................ 167,246,011 162,523,000

****** Total Revenue Requirement............ ................ ................ ................ 162,523,000 162,523,000

Difference.............................. ................ ................ ................ 4,723,011 0

** 0.971760098 factor applied

--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 16206]]

Attachment D.--Calculation of Regulatory Costs

----------------------------------------------------------------------------------------------------------------

Total costs

Actual FY 1997 Overhead and with overhead Total costs

Fee category regulatory other indirect and other pro-rated to Adjusted pro-

costs pro rated indirect pro $162 million** rated costs***

rated

----------------------------------------------------------------------------------------------------------------

LM (220 MHz, >470 MHZ-Base,

SMRS)........................ 1,952,428 98,195 2,050,623 2,113,136 2,113,136

Microwave..................... 4,860,809 244,469 5,105,277 5,260,912 5,260,912

IVDS.......................... 2,122,499 106,749 2,229,248 2,297,206 2,297,206

Marine (Ship)................. 2,754,238 138,521 2,892,759 2,980,945 2,980,945

GMRS/Other LM................. 5,943,682 298,930 6,242,612 6,432,918 6,432,918

Aviation (Aircraft)........... 980,895 49,333 1,030,228 1,061,635 1,061,635

Marine (Coast)................ 685,608 34,482 720,090 742,041 742,041

Aviation (Ground)............. 562,239 28,277 590,516 608,518 608,518

Amateur Vanity Call Signs..... 88,615 4,457 93,072 95,909 95,909

AM/FM Radio................... 14,125,529 710,427 14,835,955 15,288,230 14,396,926

AM Construction Permits... ............... .............. ............... .............. 103,960

FM Construction Permits... ............... .............. ............... .............. 787,344

Satellite TV.................. ............... .............. ............... .............. 70,397

Satellite TV Construction

Permit....................... ............... .............. ............... .............. 11,690

VHF Television................ 4,957,533 249,333 5,206,866 5,365,598 ..............

VHF Markets 1-10.......... ............... .............. ............... .............. 1,291,499

VHF Markets 11-25......... ............... .............. ............... .............. 1,129,458

VHF Markets 26-50......... ............... .............. ............... .............. 1,371,983

VHF Markets 51-100........ ............... .............. ............... .............. 1,000,147

VHF Remaining Markets..... ............... .............. ............... .............. 502,757

VHF Construction Permits.. ............... .............. ............... .............. 30,584

UHF Television................ 2,954,865 148,611 3,103,476 3,198,086 ..............

UHF Markets 1-10.......... ............... .............. ............... .............. 1,023,388

UHF Markets 11-25......... ............... .............. ............... .............. 756,347

UHF Markets 26-50......... ............... .............. ............... .............. 531,842

UHF Markets 51-100........ ............... .............. ............... .............. 484,190

UHF Remaining Markets..... ............... .............. ............... .............. 202,119

UHF Construction Permits.. ............... .............. ............... .............. 166,940

Auxiliaries................... 146,460 7,366 153,826 158,515 158,515

International HF Broadcast.... 217,931 10,961 228,891 235,869 235,869

LPTV/Translators/Boosters..... 736,547 37,044 773,590 797,173 797,173

CARS.......................... 61,797 3,108 64,905 66,883 66,883

Cable Systems................. 20,125,023 1,012,164 21,137,187 21,781,555 21,781,555

Interstate Telephone Service

Providers.................... 53,234,026 2,677,341 55,911,367 57,615,828 57,615,828

CMRS Mobile Services (Cellular/

Public Mobile)............... 11,273,798 567,002 11,840,801 12,201,768 12,201,768

CMRS--One Way Paging.......... 6,015,701 302,552 6,318,254 6,510,866 6,510,866

MDS/MMDS...................... 1,357,260 68,262 1,425,521 1,468,979 1,468,979

International Circuits........ 8,253,772 415,114 8,668,886 8,933,157 8,933,157

International Public Fixed.... 193,436 9,729 203,165 209,358 209,358

Earth Stations................ 339,999 17,100 357,099 367,985 367,985

Space Stations (Geostationary

Orbit)....................... 5,677,889 285,563 5,963,452 6,145,248 6,145,248

Space Stations (Non-

Geostationary Orbit)......... 540,215 27,169 567,385 584,681 584,681

Overhead & Other Indirect

Costs........................ 7,552,257 .............. ............... .............. ..............

---------------------------------------------------------------------------------

*****Total............ 157,715,049 7,552,257 157,715,049 162,523,000 162,532,656

*****Total Revenue

Requirement.......... 162,523,000 .............. 162,523,000 162,523,000 162,523,000

Difference............ (4,807,951) .............. (4,807,951) .............. 9,656

----------------------------------------------------------------------------------------------------------------

**1.046987 factor applied

***The pro rated costs shown in the previous column needed to be adjusted to sub-allocate TV and radio costs.

Note: Columns may not add due to rounding.

[[Page 16207]]

Attachment E.--Calculation of FY 1998 Regulatory Fees

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Costs vs.

Pro-rated Adjusted revenue Pro-revenue Round 1 Round 1 Round 1 Pro- Round 2 Round 2 Round 2 Pro- Computed Rounded new

Fee category revenue activity requirement requirement Target Adjustable rated Target Adjustable rated new FY 1998 FY 1998 Expected FY

requirement costs difference plus 25% revenue target target revenue target target regulatory regulatory 1998 revenue

(percent) ceiling revenue revenue revenue revenue fee fee

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

LM (220 MHz, >470MHZ-Base, SMRS)........................... 225,691 2,113,136 836.30 282,114 282,114 ........... 282,114 282,114 ........... 282,114 12 12 278,700

Microwave.................................................. 872,640 5,260,912 502.87 1,090,800 1,090,800 ........... 1,090,800 1,090,800 ........... 1,090,800 12 12 1,077,600

IVDS....................................................... 0 2,297,206 ........... 0 0 ........... 0 0 ........... 0 0 0 0

Marine (Ship).............................................. 801,702 2,980,945 271.83 1,002,128 1,002,128 ........... 1,002,128 1,002,128 ........... 1,002,128 6 6 990,000

GMRS/Other LM.............................................. 1,760,465 6,432,918 265.41 2,200,581 2,200,581 ........... 2,200,581 2,200,581 ........... 2,200,581 6 6 2,173,950

Aviation (Aircraft)........................................ 170,058 1,061,635 524.28 212,573 212,573 ........... 212,573 212,573 ........... 212,573 6 6 210,000

Marine (Coast)............................................. 33,283 742,041 2129.49 41,604 41,604 ........... 41,604 41,604 ........... 41,604 6 6 41,100

Aviation (Ground).......................................... 45,308 608,518 1243.07 56,635 56,635 ........... 56,635 56,635 ........... 56,635 6 6 55,950

Amateur Vanity Call Signs.................................. 485,880 95,909 -80.26 607,350 607,350 95,909 128,310 128,310 128,310 128,757 1.29 1.29 128,757

AM/FM Radio................................................ 9,460,469 14,396,926 52.18 11,825,586 11,825,586 ........... 11,825,586 11,825,586 ........... 11,825,586 1,368 1,375 11,888,250

AM Construction Permits.................................... 11,749 103,960 784.84 14,686 14,686 ........... 14,686 14,686 ........... 14,686 237 235 14,570

FM Construction Permits.................................... 436,660 787,344 80.31 545,825 545,825 ........... 545,825 545,825 ........... 545,825 1,154 1,150 543,950

Satellite TV............................................... 96,933 70,397 -27.38 121,166 121,166 70,397 94,179 94,179 94,179 94,508 900 900 94,500

Satellite TV Construction Permit........................... 3,353 11,690 248.64 4,191 4,191 ........... 4,191 4,191 ........... 4,191 419 420 4,200

VHF Markets 1-10........................................... 1,429,508 1,291,499 -9.65 1,786,885 1,291,499 1,291,499 1,727,804 1,727,804 1,727,804 1,733,829 41,282 41,275 1,733,550

VHF Markets 11-25.......................................... 1,686,441 1,129,458 -33.03 2,108,051 1,129,458 1,129,458 1,511,021 1,511,021 1,511,021 1,516,290 24,857 24,850 1,515,850

VHF Markets 26-50.......................................... 1,283,306 1,371,986 6.91 1,604,133 1,371,986 1,371,986 1,835,481 1,604,133 ........... 1,604,133 22,593 22,600 1,604,600

VHF Markets 51-100......................................... 1,129,477 1,000,147 -11.45 1,411,846 1,000,147 1,000,147 1,338,025 1,338,025 1,338.025 1,342,691 11,379 11,375 1,342,250

VHF Remaining Markets...................................... 548,146 502,757 -8.28 685,183 502,757 502,757 672,602 672,602 672,602 674,948 3,261 3,250 672,750

VHF Construction Permits................................... 46,644 30,584 -34.43 58,305 30,584 30,584 40,916 40,916 40,916 41,059 4,106 4,100 41,000

UHF Markets 1-10........................................... 1,539,171 1,023,388 -33.51 1,923,964 1,023,388 1,023,388 1,369,117 1,369,117 1,369,117 1,373,892 14,616 14,625 1,374,750

UHF Markets 11-25.......................................... 1,257,069 756,347 -39.83 1,571,336 756,347 756,347 1,011,862 1,011,862 1,011,862 1,015,391 10,577 10,575 1,015,200

UHF Markets 26-50.......................................... 1,054,360 531,842 -49.56 1,317,950 531,842 531,842 711,513 711,513 711,513 713,994 5,758 5,750 713,000

UHF Markets 51-100......................................... 789,749 484,190 -38.69 987,186 484,190 484,190 647,763 647,763 647,763 650,022 3,779 3,775 649,300

UHF Remaining Markets...................................... 238,761 202,119 -15.35 298,451 202,119 202,119 270,400 270,400 270,400 271,343 1,491 1,500 273,000

UHF Construction Permits................................... 144,549 166,940 15.49 180,686 166,940 166,940 223,337 180,686 ........... 180,686 3,614 3,625 181,250

Auxiliaries................................................ 485,880 158,515 -67.38 607,350 158,515 158,515 212,066 212,066 212,066 212,805 11 11 220,000

International HF Broadcast................................. 1,516 235,869 15458.64 1,895 1,895 ........... 1,895 1,895 ........... 1,895 474 475 1,900

LPTV/Translators/Boosters.................................. 489,573 797,173 62.83 611,966 611,966 ........... 611,966 611,966 ........... 611,966 267 265 606,850

CARS....................................................... 113,696 66,883 -41.17 142,120 66,883 66,883 89,478 89,478 89,478 89,790 50 50 90,000

Cable Systems.............................................. 34,633,530 21,781,555 -37.11 43,291,913 21,781,555 21,781,555 29,139,975 29,139,975 29,139,975 29,241,595 0.44 0.44 29,241,595

Interstate Telephone Service Providers..................... 79,023,026 57,615,828 -27.09 98,778,783 57,615,828 57,615,828 77,080,070 77,080,070 77,080,070 77,348,871 0.00110 0.00110 77,348,871

CMRS Mobile Services (Cellular/Public Mobile).............. 12,953,173 12,201,768 -5.80 16,191,466 12,201,768 12,201,768 16,323,867 16,191,466 ........... 16,191,466 0.29 0.29 16,191,466

CMRS Messaging Services.................................... 1,154,218 6,510,866 464.09 1,442,773 1,442,773 ........... 1,442,773 1,442,773 ........... 1,442,773 0.04 0.04 1,442,773

MDS/MMDS................................................... 392,368 1,468,979 274.39 490,460 490,460 ........... 490,460 490,460 ........... 490,460 261 260 488,280

International Circuits..................................... 1,579,110 8,933,157 465.71 1,973,888 1,973,888 ........... 1,973,888 1,973,888 ........... 1,973,888 6 6 1,950,000

International Public Fixed................................. 904 209,358 23059.07 1,130 1,130 ........... 1,130 1,130 ........... 1,130 377 375 1,125

Earth Stations............................................. 1,501,369 367,985 -75.49 1,876,711 367,985 367,985 492,301 492,301 492,301 494,017 165 165 495,000

Space Stations (Geostationary Orbit)....................... 4,379,577 6,145,248 40.32 5,474,471 5,474,471 ........... 5,474,471 5,474,471 ........... 5,474,471 119,010 119,000 5,474,000

Space Stations (Non-Geostationary Orbit)................... 263,687 584,681 121.73 329,609 329,609 ........... 329,609 329,609 ........... 329,609 164,804 164,800 329,600

****** Total Estimated Revenue Collected............... 162,522,999 162,532,659 ........... 203,153,749 128,453,011 100,850,097 162,523,000 162,116,000 116,537,401 162,523,000 ........... ........... 162,499,486

****** Total Revenue Requirement....................... 162,523,000 162,523,000 ........... 162,523,000 162,523,000 ........... 162,523,000 162,523,000 ........... 162,523,000 ........... ........... 162,523,000

Difference........................................... (1) 9,659 ........... 40,630,749 (34,069,989) ........... 0 (406,400) ........... 0 ........... ........... (23,514)

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

** 1.33782803 factor applied

*** 1.003487295 factor applied

[[Page 16208]]

Attachment F.--Proposed FY 1998 Schedule of Regulatory Fees

------------------------------------------------------------------------

Annual

Fee category regulatory

fee

------------------------------------------------------------------------

PMRS (per license) (Formerly Land Mobile--Exclusive Use at

220-222 MHz, above 470 MHz, Base Station and SMRS) (47 CFR

Part 90).................................................. 12

Microwave (per license) (47 CFR Part 101).................. 12

Interactive Video Data Service (per license) (47 CFR Part

95)....................................................... (\1\)

Marine (Ship) (per station) (47 CFR Part 80)............... 6

Marine (Coast) (per license) (47 CF

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