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ACA: FCC Needs To Establish Regulatory Fee Parity Between Cable/IPTV and Big Satellite TV

Disparity Means Smaller Cable Providers Subsidize AT&T and Dish

PITTSBURGH, June 23, 2017 -   The American Cable Association yesterday called on the Federal Communications Commission to use this year's budget cycle to establish regulatory fee parity between cable/IPTV providers and direct broadcast satellite (DBS) giants AT&T/DirecTV and Dish Network. Although ACA appreciates the steps the FCC has taken in the recent past, ACA remains concerned that without fee parity this year, cable/IPTV providers will continue to subsidize their much larger competitors without legal justification.

"There is no reason to further delay bringing DBS into full parity with cable/IPTV providers for fiscal 2017. Cable, IPTV and DBS providers impose similar burdens on the FCC's Media Bureau staff. It is inequitable to continue to assess fees in a manner that does not equitably distribute the regulatory fee burden among all MVPD payors that impose regulatory oversight burdens on Media Bureau employees," ACA President and CEO Matthew M. Polka said.

ACA also urged the FCC to continue to exempt the smallest entities from the regulatory fee regime. The de minimis exemption applies today only to entities with an aggregate fee payment burden of less than $500. ACA said it supports more than doubling the de minimis threshold to provide relief for very small cable operators where it's needed and warranted.

The FCC funds its $356.7 million budget by collecting fees from regulated entities, including cable operators, DBS/satellite TV providers, TV stations, voice telephony providers and satellite operators. For fiscal 2017, the FCC wants cable/IPTV providers to pay 150% more than DirecTV and Dish per subscriber -- or 96 cents for cable/IPTV compared to 38 cents for DBS.

In comments filed June 22 with the FCC, ACA explained that the legal standard for fee parity has been met in that cable/IPTV and DBS impose approximately the same burden on full-time staff members in the FCC's Media Bureau. Whether the issue is TV stations' voluntary transition to ATSC 3.0, implementation of the post-auction reimbursement fund, the Nexstar/Media General transaction, or various non-rulemaking proceedings, advocacy before the FCC's Media Bureau staff by cable/IPTV and DBS providers is roughly equivalent.

ACA's analysis showed that establishing fee parity would fail to produce a consumer-facing rate shock. Regulatory fee parity would mean cable/IPTV and DBS entities would each pay 76 cents per subscriber annually. At 76 cents per subscriber, the increase for the DBS providers would amount to only 3.2 cents per subscriber, per month - an amount so small as to cause no harm to the providers or consumers, and would likely be unnoticed by most consumers.

Meanwhile, cable/IPTV providers and their subscribers, who have been seeking relief for more than a decade, would finally see the elimination both of the unfair regulatory fee burden and  a government-imposed instrument that compels smaller cable operators to cross-subsidize their larger and strongest pay-TV rivals. 

Raising the de minimis level, according to ACA, would both reduce the FCC's administrative costs related to collecting regulatory fees, and offer fair relief for those operators that are often disproportionately burdened by regulations and regulatory fees, particularly when those entities also use the fewest administrative resources among those in a fee category.

ACA said a de minimis level set at an amount greater than $1,000 is justified. Exceeding the $1,000 threshold is realistic for very small entities - those with 1,000 subscribers or fewer - who are subject to multiple regulatory fee categories, such as those holding Cable Antenna Relay Service (CARS) licenses whose fee is $940 per license.  

Because the FCC's de minimis exemption applies only if the sum total of regulatory fee liability falls below the fee cap, setting the exemption at $1,000 alone may not provide sufficient relief for the very small cable and IPTV providers serving 1,000 or fewer subscribers who are the most deserving of relief.  ACA estimates these very small operators' cable/IPTV regulatory fees amount to less than 0.04% of what the FCC  proposes to collect in fiscal 2017. 

About the American Cable Association: Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 750 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 http://www.americancable.org/.

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