Lack of Fee Fairness Undermines Competitive Market
PITTSBURGH, December 30, 2014 – The American Cable Association said the Federal Communications Commission needs to collect more fairly its regulatory fees that support the agency’s Media Bureau personnel charged with overseeing the country’s multichannel video program distributors (MVPDs) by collecting fees from those that benefit from the Bureau in a comparable manner.
Under the current FCC fee program, DirecTV and DISH pay nothing while cable and IPTV providers contribute tens of millions of dollars to support the activities of the Media Bureau, the agency group tasked with developing rules governing services provided by satellite TV operators and other MVPDs and aiding in the review of MVPD mergers, such as AT&T’s proposed $48.5 billion merger with DirecTV.
As in previous years, DISH and DirecTV continue to refuse to share the burden with cable and IPTV providers of covering Media Bureau costs to achieve greater parity in the collection of regulatory fees. The imposition of Media Bureau fees on the satellite providers would be revenue-neutral to the FCC, as fees paid by Dish and DirecTV would be offset by decreases in the fees paid by cable and IPTV providers.
“The FCC should ignore DISH and DirecTV’s meritless claims and use its ample legal authority to adopt a revised regulatory fee structure that would assess DBS fees at the same level as cable and IPTV in a revenue neutral manner,” ACA President and CEO Matthew M. Polka said. “It is long past time to end the competitive disparity that the current regulatory fee structure perpetuates. Satellite TV operators should pay more and cable and IPTV should pay less.”
ACA’s stated its view in comments filed with the FCC on Dec. 26 in a joint filing with the National Cable & Telecommunications Association as part of the agency’s annual rulemaking related to the congressionally mandated collection of regulatory fees for the current fiscal year.
Current law requires the FCC to fund its $340.5 million budget almost entirely from fees assessed on regulated entities. In fiscal 2014, cable and IPTV providers will pay $65.4 million, or approximately 20%, of the FCC’s budget based on a $1.00 per-video-subscriber annual assessment to support the work of the Media Bureau. Although DirecTV and DISH pay about $2 million in fees total, their contributions go to support satellite licensing activities of the FCC’s International Bureau; not a penny goes as compensation for the Media Bureau’s extensive oversight of rules benefiting the second- and third-largest pay-TV providers in the nation.
ACA’s comments made a number of points rebutting DISH and DirecTV’s rationales for maintenance of the status quo. As MVPDs, the DBS providers are subject to many of the same Media Bureau regulatory requirements and receive substantially the same regulatory benefits as cable and IPTV providers, the only other MVPDs currently assessed Media Bureau regulatory fees. It is not unreasonable that DBS should pay such regulatory fees at the same rate.
A review of FCC records – taking into account participation in numerous rulemakings, merger reviews, and enforcement proceedings pertinent to the DBS Providers – validates the assertion that the DBS operators place far more than a de minimis burden on the Media Bureau. As ACA and NCTA detailed in November comments, over the past twelve months alone, DBS operators made 113 filings in Media Bureau dockets, 30 of which were DirecTV filings in support of its proposed merger with AT&T, and 83 of which were DirecTV and DISH flings in other regulatory dockets, such as the Comcast-TWC merger review, retransmission consent reform, media ownership review, television closed captioning quality rules, and implementation of the Twenty-First Century Communications and Video Accessibility Act (CVAA).
Similarly, a review of ex parte filings since 2010 – which typically involve face-to-face meetings with FCC personnel or phone conversations – showed DirecTV representatives having 43 different meetings with 46 different members of the Media Bureau. ACA also explained that the FCC’s inequitable fee system has competitive consequences, particularly for small cable operators serving no more than a few thousand video subscribers in competition with Dish and DirecTV — multibillion dollar corporations together serving about 30 million subscribers.
In a highly critical report, the U.S. Government Accountability Office (GAO) said one of the key unfair attributes of the FCC’s system is the fact that cable operators (and now IPTV providers) pay 100% of the regulatory fees supporting Media Bureau MVPD regulation that benefits the DBS providers, thus cross-subsidizing the MVPD businesses of their primary and direct competitors.
ACA and NCTA concluded that just as the FCC last year simply added IPTV providers to the cable fee category and re-named it, it should do the same for DirecTV and DISH this year – assuming the agency is unwilling at this time to create an entirely new MVPD fee category. The two groups added that this would be preferable to creation of a stand-alone DBS Fee category — an option the FCC has under consideration – because it would be unnecessarily complicated and clash with FCC precedent of including broadly similar services in the same fee category without distinction.
About the American Cable Association: Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 850 smaller and medium-sized, independent cable companies who provide broadband services for nearly 7 million cable subscribers primarily located in rural and smaller suburban markets across America. Through active participation in the regulatory and legislative process in Washington, D.C., ACA’s members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business. For more information, visit https://acaconnects.org/