FCC 375

For the second consecutive year, the Federal Communications Commission is proposing to increase the amount charged to radio stations, although the hike won’t be nearly as steep as a year ago. The Commission is slated to begin the rulemaking process at its May 13 meeting that would, if left in place, boost the annual fee paid by radio by 4% to 5%. That’s roughly half the increase adopted last year.

Stations continue to be assessed a fee based on their class and the number of potential listeners their signal reaches. In the case of the FMs with the biggest reach, the FCC proposes a $21,375 annual fee for 2020 – a 4.3% increase compared to a year ago. The smallest AMs would see their regulatory fee go up by 5.3% to $1,000. Various other fees for things would also go up. The charge for an AM construction permit would increase 4% to $620 while the fee for an FM construction permit would jump 7.5% to $1,075.

As in the past the FCC doesn’t offer any insight into what went into its decision-making process about which services it regulates would pay more or less. It does say, however, that regulatory fees cover three types of expenses – direct costs such as salary and expenses, indirect costs, such as overhead, and support costs, such as rent, utilities and equipment. Ultimately, the agency must collect $339 million in regulatory fees to cover the 2020 appropriation it has received from Congress.

“Unlike most federal agencies, the FCC actually covers its own operational costs by assessing fees on companies we regulate,” Chair Ajit Pai said in a blog post last week. “Notably, we are proposing a new fee for foreign-licensed space stations that have access to the U.S. market. The Commission spends resources regulating these space stations, so it’s only fair that the foreign space stations, just like U.S. space stations, help pay for the Commission’s operations.”

The FCC in 2017 doubled the threshold for the so-called “de minimis rule” to $1,000—that’s the amount under which a company need not pay a regulatory fee if they fall below the figure. The theory is that the cost of processing small payments results in a net loss to the U.S. Treasury. That $1,000 trigger would remain in place again in 2020 after Congress put that figure into federal law last year.

Even as fees fluctuate from year to year, one constant for radio stations remains: when the bill comes due. Just as it has been in the past, the FCC says every broadcaster must pay its annual fees on or before Sept. 30.

Some broadcasters have backed a proposal to waive annual fees for stations as the industry struggles to cope with the impact of the COVID-19 economic slowdown. But Pai told Inside Radio there are limits to what it can do on its own. “We still are legally required to collect fees to pay our bills,” he said.

While the FCC proposes using the same metrics for determining how much each radio station pays in regulatory fees, it also intends to complete a transition for how television station charges are calculated. Historically, regulatory fees for full-power television stations were based on the Nielsen Designated Market Area (DMA) groupings, but the FCC has been moving TV to something more like what radio has. It is transitioning to using the actual population covered by the station’s contours instead of DMAs to calculate TV fees, saying it would more accurately reflect the market served by a full-power broadcast television station. It started the process in 2019 with a “blended fee” and in 2020 it proposes now fully transitioning to the new methodology.

In another move that only impacts television stations, the FCC has agreed with a proposal floated by the Puerto Rico Broadcasters Association to take into account recent population losses when it determines a fee. Following Hurricanes Irma and Maria, the Census Bureau estimates Puerto Rico’s population has decreased from 3.73 million in 2010 to 3.19 million in 2018, which is a 14% decline. The FCC has also agreed that its signal coverage estimates for TV stations in Puerto Rico have failed to take into account the island’s rugged mountainous terrain and the use of multiple satellite stations to cover the market. The FCC has proposed to cap the total reach of those stations at 3.1 million viewers, the latest population estimate for the island.