[Federal Register Volume 61, Number 227 (Friday, November 22, 1996)]
[Proposed Rules]
[Pages 59397-59399]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29875]



47 CFR Part 1

[MD Docket No. 96-186; FCC 96-422]

Assessment of Annual Regulatory Fees for AM and FM Broadcast 
Radio Licensees

AGENCY: Federal Communications Commission.

ACTION: Notice of inquiry.


SUMMARY: In its decision establishing regulatory fees for fiscal year 
1996, the Commission stated that it would initiate a Notice of Inquiry, 
in order to develop a more equitable methodology for assessing 
regulatory fees upon AM and FM licensees, and in particular, that it 
would consider a specific methodology proposed by the Montana 
Broadcaster Association. Currently, the Commission assesses regulatory 
fees on AM and FM broadcasters based upon a station's license 
classification. Montana's proposal bases the fee on both a station's 
class of license and market designation. This Notice of Inquiry 
requests comments on Montana's proposal and invites interested parties 
to suggest alternative methodologies for assessing these fees.

DATES: Interested parties may file comments on or before December 23, 
1996 and reply comments on or before January 6, 1997.

ADDRESSES: Federal Communications Commission, 1919 M Street, N.W., 
Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Jerome D. Remson, Office of General 
Counsel at (202) 418-1755, or Terry D. Johnson, Office of Managing 
Director at (202) 418-0445.


    Adopted: October 25, 1996.
    Released: November 6, 1996.

I. Introduction

    1. By this Notice of Inquiry, the Commission is initiating a 
proceeding to determine if, in FY 1997, it is feasible to utilize a 
methodology based on market size for assessing annual regulatory fees 
upon licensees of AM and FM broadcast radio stations. We invite 
interested parties to comment upon a methodology proposed by the 
Montana Broadcasters Association (Montana), and to propose any other 
methodology for assessing AM and FM fees they believe would serve the 
public interest.

II. Background

    2. In establishing our regulatory fee program, we recognized that 
Congress had required the Commission to adopt the Schedule of 
Regulatory Fees for FY 1994, contained in section 9(g) of the 
Communications Act, as amended. 47 U.S.C. 159(g). The Schedule assessed 
AM and FM radio fees based upon class of station. Thus, each licensee 
paid a fee identical to other licensees with the same class of station, 
without regard to the size of its service area. See Implementation of 
Section 9 of the Communications Act, 59 FR 30984 (June 16, 1994), 9 FCC 
Rcd 5333, 5339 (1994). Therefore, we declined to consider any revision 
to the fee schedule for FY 1994, but we invited interested parties to 
propose alternative methodologies for various services subject to the 
regulatory fees, including AM and FM radio, for consideration in our 
proceeding to adopt the FY 1995 Schedule of Regulatory Fees. 60 FR 3807 
(January 19, 1995), 9 FCC Rcd at 5360. Subsequently, in our NOI 
proposing fees for FY 1995, we recognized that ``population density of 
a (AM or FM) station's geographic location was also a public interest 
factor warranting recognition in the fee schedule.'' Therefore, we 
proposed for consideration by interested parties a methodology 
incorporating market size in the calculation of AM and FM fees, by 
assessing higher fees for radio stations located in Arbitron Rating Co. 
(Arbitron) designated markets. We proposed a two-tiered fee schedule 
with stations in Arbitron rated markets paying higher fees than the 
same classes of stations located in smaller, non-Arbitron rated 
markets. See Notice of Proposed Rulemaking in the Matter of Assessment 
and Collection of Regulatory Fees for Fiscal Year 1995, MD Docket No. 
95-3, FCC 95-14, released January 12, 1995 at para. 29. See 60 FR 3807 
(January 19, 1995). Nevertheless, in our Report and Order establishing 
the FY 1995 fees, we declined to adopt this proposed method because, 
after consideration of the comments, we found that it did not provide a 
``sufficiently accurate and equitable method for determining fees.'' 
See Assessment and Collection of Regulatory Fees for Fiscal Year 1995 
60 FR 34004 (June 29, 1995), 10 FCC Rcd 13512, 13531-32 (1996).
    3. In our Notice of Proposed Rulemaking to establish regulatory 
fees for FY 1996, we stated with regard to the fees for AM and FM radio 
stations, that we ``were particularly interested in a proposal which 
would associate population density and service area contours with 
license data'' and we again requested interested parties to propose 
viable alternative methodologies for assessment of AM and FM fees. 
Assessment and Collection of Regulatory Fees for Fiscal Year 1996, FCC 
96-153, Paras. 20-21 (April 9, 1996). See 61 FR 16432 (April 15, 1996). 
In response, Montana filed comments proposing an AM and FM fee 
structure based on class of station and on market size. We received no 
comments addressing Montana's proposal. However, following our own 
review of the proposal, we decided not to take any action until we had 
an opportunity to more extensively evaluate the impact of

[[Page 59398]]

Montana's proposal on AM and FM licensees through a Notice of Inquiry. 
Assessment and Collection of Regulatory Fees for Fiscal Year 1996, FCC 
96-295, Paras. 23-29, July 5, 1996, 61 FR 36629 (July 12, 1996).

III. The Montana Proposal

    4. Montana's proposed methodology utilizes broad groupings of radio 
markets determined by Arbitron market size, with the fee for each 
market grouping predicated on the ratios that Congress initially 
established in section 9(g) of the Act (47 U.S.C. 159(g)) for assessing 
fees for licensees of television stations serving different sized 
markets. Montana proposes four specific radio market classifications: 
Markets 1 through 25; Markets 26-50; Markets 51-100; and Remaining 
Markets. Montana's proposal assigns stations to each market grouping 
based upon Arbitron market designations and relies on an analysis of 
broadcast markets prepared by Dataworld MediaXpert Service which groups 
radio stations by class of station within a particular market size. It 
then calculates the fees for stations in different markets utilizing 
the ratios between the fees for television markets in section 9(g). 
Montana argues that its proposal is more equitable than the groupings 
based on class of station relied on by the Commission, because under 
its proposal stations in smaller markets would pay lower fees than 
stations serving more populous markets.
    5. In order to collect the total aggregate fees to be recovered 
from AM and FM radio stations as proposed in the FY 1995 NPRM, 
Montana's proposed methodology would have allocated fees among radio 
stations as follows:

                                                                                        FM  Class I   FM  Class 
              Markets               AM  Class A  AM  Class B  AM  Class C  AM  Class D      \1\         II \2\  
1-25..............................       $2,890       $1,710         $645         $815       $2,890       $1,940
26-50.............................        2,040        1,140          455          575        2,040        1,370
51-100............................        1,360          760          305          385        1,360          910
Remaining.........................          850          475          190          240          850         570 
\1\ Class I includes FM Classes C, C1, C2 and B.                                                                
\2\ Class II includes FM Classes A, B1 and C3.                                                                  

    6. However, subsequent to the filing of Montana's proposal, 
Congress increased the aggregate amount of fees to be recovered by the 
Commission and amended the Commission's regulatory fee schedule for 
television stations to increase the fees paid by licensees in larger 
markets and to reduce the fees paid by licensees located in Markets 51-
100 and the Remaining Markets. Public Law No. 104-134. See Assessment 
Collection of Regulatory Fees for Fiscal Year 1996, supra at para. 14. 
This substantially changed the ratios between the fees for television 
stations in different sized markets used by Montana to compute its 
proposed radio fees. Substituting the actual ratios between the 
regulatory fees for television stations in different sized markets for 
the old ratios utilized in Montana's proposal, would have produced the 
following radio fees for FY 1996: \3\

    \3\ By contrast, according to the FY 1996 Schedule of Regulatory 
Fees, AM class A stations are assessed a fee of $1,250; Class B 
stations $690; Class C stations $280; and Class D stations $345. 
Similarly, FM Class C, C1, C2 and B stations (Montana's FM Class I) 
are assessed a fee of $1,250; and FM Class A, B1 and C3 stations 
(Montana's FM Class II) a fee of $830.

                                                                                        FM  Class I   FM  Class 
              Markets               AM  Class A  AM  Class B  AM  Class C  AM  Class D      \4\         II \5\  
1-25..............................      $11,500       $6,325       $2,575       $3,150       $4,875       $3,250
26-50.............................        6,675        3,675        1,500        1,850        2,850        1,900
51-100............................        3,550        1,975          800          980        1,525        1,000
Remaining.........................        1,000          555          225          275          430         285 
\4\ Class I includes FM Classes C, C1, C2 and B.                                                                
\5\ Class II includes FM Classes A, B1 and C3.                                                                  

    7. The above fees illustrate the impact of the Montana proposal 
when the changes mandated by Congress to the Regulatory Fee Schedule 
are considered. We are particularly concerned about the size of the 
increases in larger markets which, in addition to having more potential 
listeners, have greater concentrations of stations, thereby increasing 
the competition for listeners in those markets. Moreover, the accuracy 
of both sets of calculations are predicated on assumptions that the 
total aggregate amount of fees to be collected remains unchanged, that 
the revenue requirement allocated to all broadcast licensees remains 
unchanged, and that there are no changes in the numbers and classes of 
licensees subject to broadcast fees. The calculations presented herein 
are illustrative only, because the fees are predicated on assumptions 
that may not re-occur in FY 1997. A change in any or all three of these 
factors, would result in individual fees different than those 
illustrated in paragraph 6.

IV. Conclusion

    8. As discussed above, we intend to explore in this proceeding 
whether, in FY 1997, the regulatory fee schedule for AM and FM radio 
stations should be modified to take into consideration market size. Any 
such alternative fee schedule that we might propose would be subject to 
public comment in our proceeding to establish fees for FY 1997. To 
assist our efforts, we invite public comment on the Montana proposal or 
on proposed alternative methods for assessing regulatory fees for the 
AM and FM radio services.

V. Procedural Matters

    9. Accordingly, the Commission adopts this Notice of Inquiry 
pursuant to authority contained in Sections 4 (i) and (j), 9, 303(r), 
and 403 of the Communications Act of 1934 as amended. 47 U.S.C. 154 (i) 
and (j), 9, 303(r), and 403.
    10. Pursuant to the applicable procedures set forth in Secs. 1.415 
and 1.4129 of the Commission's rules, 47 CFR 1.425 and 1.419, 
interested parties may file comments on or before December 23, 1996 and 
reply comments

[[Page 59399]]

on or before January 6, 1997. All relevant and timely comments will be 
considered by the Commission before final action is taken in this 
proceeding. To file formally in this proceeding, participants must 
submit an original and four copies of all comments, reply comments and 
supporting comments. 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, DC 20554. 
Comments and reply comments will be available for public inspection 
during regular business hours in the FCC Reference Center (Room 239, 
1919 M Street, NW., Washington, DC 20554), of the Federal 
Communications Commission.
    11. This Notice of Inquiry is exempt from restrictions on ex parte 
presentations. See 47 CFR 1.1204(a)(4).
    12. Further information on this proceeding may be obtained by 
contacting Jerome D. Remson (202-418-1755), Office of the General 
Counsel, or Terry Johnson (202-418-0445, Office of the Managing 

List of Subjects in 47 CFR Part 1

    Administrative practice and procedure.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-29875 Filed 11-21-96; 8:45 am]