Radio sees (smaller) raise in regulatory fees for FY22

On Friday, the FCC released a Report and Order in its annual rulemaking proceeding to determine the regulatory fees that its regulatees will pay for FY2022.  The fee schedule adopted in this Report and Order establishes the final amounts that broadcasters will be required to pay later in the month of September.  Broadcasters secured a reduction in the fee increases that the FCC originally proposed, from approximately 13% to 7-8%, and the issuance of a Notice of Inquiry by which the FCC will take comments on proposals to change to its regulatory fee setting process going forward.

The FCC’s original proposal released in June of this year was to increase broadcasters’ fees for FY2022 by approximately 13 percent over the fees paid in FY2021.  The FCC attributed the large percent increase in year over year fees to the fact that broadcasters had received an 8.8% reduction in the fees proposed for FY2021, with the result that they did not experience any increase in fees in FY2021 over the fees paid in FY2020.

As you may recall, the fee increase that had been proposed for broadcasters last year was due to the fact that the FCC initially assessed broadcasters for a proportionate share of the special $33 million Congressional earmark for broadband data mapping under the DATA Act, despite the fact that broadcasters do not provide broadband services.  Broadcasters successfully lobbied the FCC to remove the broadband data mapping assessment for broadcasters, which resulted in the 8.8% fee reduction experienced last year.

This year, broadcasters argued that they should not be assessed costs related to the FCC’s continued regulation of broadband, since they still do not provide those services.  However, the FCC concluded that broadband regulation, in the absence of an earmark from Congress for broadband data mapping, should be treated as general overhead of the agency, the same as building security guards or rent, for which all regulatees must pay a proportionate share.

However, the FCC did recognize that the solution devised last year to protect broadcasters from the DATA Act assessment enabled it to correct another unfairness in its regulatory fee setting process, a process that has for years overcharged broadcasters for agency work related to the Universal Service Fund.  In 2017, the FCC reclassified 38 employees that work on Universal Service Fund matters in a way that the FCC acknowledged at the time was unfair to broadcasters, but for which it unable to come up with a fix at the time.  Applying 2021’s DATA Act “fix” to its traditional treatment of Universal Service Fund employees resulted in a reduction in the FY2022 fees proposed for broadcasters – one that should serve to help right-size broadcasters’ fees in future years as well.

Finally, the FCC reiterated its belief that its hands are tied by the statute that requires it to collect regulatory fees, so that it is unable to take into account factors such as the importance of the public service broadcasters provide, the fact that broadcasters provide a free over-the-air service and cannot pass regulatory fee costs on to subscribers as their many competitors do, or broadcasters’ ability/inability to pay the regulatory fees assessed.  Nevertheless, the FCC initiated a Notice of Inquiry into its fee methodology, which will allow broadcasters to continue to voice their concerns about the regulatory fee process to the FCC.  The regulatory fee process this year caught the attention of many on Capitol Hill, whose support will be needed for any fundamental changes to the statutory regulatory fee regime.

A chart showing the fees as originally proposed by the FCC in June and ultimately adopted by the FCC today is provided below: