In case you didn’t see it, the FCC
submitted to Congress its proposed budget for FY2004 this month
with a total of $280,798,000, which in itself is remarkable because
it represents only a small increase over last year’s budget.
What is noteworthy, and outrageous at the same time, is that once
again, telecom carriers and companies are expected to foot over
50% of the bill related to fees to be paid to the FCC !!!!

For a small carrier, like myself, federal
regulatory fees and taxes can be a significant cost of doing business.
It doesn’t seem fair is that the FCC regulates broadcasters
and the telecommunications industry differently with regard to regulatory
fees. While telecom carriers must equally “contribute”
to the FCC funds based on revenue, broadcasters (Radio, TV and Cable)
do so under a system that frequently charges ridiculously low annual
fees for an industry with huge cash cows. There’s no reason
why telecom companies should pay more per dollar of revenue than
broadcasters. As it is now, broadcasters can seemingly run a much
more lucrative operation than telecom providers simply because the
fees charged are less per capita of revenue. This is really a problem
for the telecom as a regulated industry. While we struggle to survive
in a dog-eat-dog world just to pay substantial regulatory fees to
the FCC, these radio, TV and cable broadcasters can sit back and
only have to put measly grain of sand in the FCC’s sandbox
compared to ourselves.

With all the current buzz in the industry
about the inevitable passage of regulation over VoIP telephony and
“potential revenue losses” due to increases in federal
and state fees, not to mention Chairman Powell’s “enlightened
view” that a new and fresh attitude is needed in regard to
regulating VoIP, maybe the time is also right to propose a reform
of the whole “contribution” process for companies regulated
by the FCC. Right now if I’m assessed USF I have no choice
but to pay it. The same is true for FET. If I slam a consumer, I
get a heavy fine per consumer from the FCC without a doubt. However,
this past Super Bowl half-time show had a clear violation and the
network’s fine was minimal. How many viewers saw that one?
The system is just not fair to small carriers.

To make it fair to telecom companies, broadcaster
fees ought to be based on actual revenue rather than simple filing,
just like telecom. This would definitely change the way the FCC
balances its budget and treats telecom companies. If not, let’s
be completely fair and telecom companies be assessed the same way
as broadcasters are for their fees. I say fairness ought to be the
rule, and equal treatment in regulation should mean industry-to-industry
and not just vertical within a specific niche service. So where
do I begin? How can this be done legally without me having to hire
an army of lobbyists or have deep enough pockets to “contribute”
to legislators instead of regulators? Where does the little guy
begin?- Regulation without Representation

Dear Reg. without Rep.,

I have not seen the FCC budget yet, but
from what you say in this email, everyone in prepaid should take
a look. Trusting that your numbers are correct on these breakouts
between the telecom and broadcast industries, I am not surprised
that telecom is currently bearing a higher regulatory revenue fee
ratio than other regulated communications industries. Telecom, as
an open and competitive regulated industry, is much younger than
radio and TV broadcasters. We are in many respects, the “newer”
kids on the block as far as the US Congress and the FCC are concerned.
Likewise, telecom services directly touch consumers in ways that
broadcasters in radio and TV simply don’t. Telecom providers
deal in servicing human conversations and interaction and not simply
sending out a message or program like radio and TV. The distinctive
services between telecom and broadcasters, in some ways, are like
a comparison of “apples” and “oranges” for
regulatory purposes. However, your “fairness” question
is relevant in light of the technological convergence of voice/data/video
under broadband services whereby Cable TV programming, Internet
services and possibly VoIP, may be able to be directly sold end
users of Cable TV. It calls in question who is regulated by the
FCC and how, and in part, these are Constitutional issues and concerns.

Without doubt, radio and TV interests maintain
a strong lobby in Washington DC in both the Congress and the FCC.
They have for decades. This may be part of the reason why they are
regulated in the fashion that they are. However, before disguising
yourself as a Mohawk Indian, storming the 8th Floor offices of the
FCC, and having your own personal FCC “Tea Party” in
rebellion of your fees, perhaps you should consider some practical
actions that can be taken within the industry so that your concerns
can be equally heard. This comes in the form of Grassroots Industry
Lobbying, and Administrative Appeals.

Let’s begin with Grassroots Industry
Lobbying. Not all lobbying efforts that are productive require an
army of lobbyists or heavy contributions to politicians. What is
required is a clear and identifiable campaign or industry platform
as to what is being opposed. This requires organization and structure.
Sometimes this is found through Industry Associations, such as the
International Prepaid Communications Association (IPCA), or the
CompTel/Ascent Alliance. However, an Industry Association is not
a requirement in order to lobby an issue. What is necessary is a
clear and intelligible platform to which others equally affected
can subscribe. This can even initially take shape around a website
or even an Internet chat forum. Get talking and debating your issue
within the industry as a first step. The key is to have your concerns
eventually reduced to a format that can be quickly re-communicated
to Congressional figures with the clear message that others in the
industry share this perspective. In combination with a platform,
a database system of mobilizing those in favor of your cause is
critical. Political officials who see their constituents mobilized
around an issue tend to pay attention. A good example of how this
can work is the Tax Revolt effort in California back in the early
1970s. In that tax reform movement, taxpayer interests where organized
to place caps on the state’s power to tax by signing petitions,
writing letters and even mailing select representatives “tea
bags” from constituents along with information that they are
registered voters and were passionate about the issue. The end result
was that it worked. So my advice is not to concern yourself so much
with an army of lobbyists or individual political contributions
as with a well-founded platform and an action plan on how to organize
others who share your concern.

Another means of contesting the way that
your fees may be assessed, and the fairness of it all, is by administrative
appeal. For this type of activity, you will definitely need an administrative
law attorney because the parameters of an appeal are very narrow.
This usually means that only a select number of administrative appeals
actually make it to the courts or result in reversing fees or policies.
Simply challenging the differences in policies between telecom companies
and broadcasters may not be enough. FCC policy must be derived from
federal statutes giving them regulatory authority and your appeal
must squarely fit into that delegated power. Likewise, administrative
agencies are given some latitude of reasonableness in establishing
regulatory policy or fee. So where Congress has specifically assigned
the FCC the responsibility of interpreting and administering the
1934 and 1996 Telecom Acts, the FCC’s interpretation of the
statute, regulation, or regulatory fee will be upheld so long as
it is reasonable. Whether or not there may exist a better way than
that which the FCC uses is not enough to base an appeal. The appeal
must challenge that the FCC policy is unreasonable, arbitrary, or
capricious in its application to regulated companies. The operative
concept here is that the FCC’s policy choice or interpretation
is merely a reasonable one, not an absolutely fair one.

Now let’s talk about your challenge.
Federal Statute 47 USC Sec. 254 requires that contributions to USF
are to be equitable or nondiscriminatory among carriers, and that
the FCC must uphold this mandate. The scope of Section 254 does
not extend to broadcasters because of the Act’s definition
of “carriers.” The gist of your challenge between broadcasters
and telecom companies is that there seems to be a discriminatory
implicit subsidy in favor of broadcasters by virtue of fees being
assessed on annual set fees, as opposed to usage fees on revenues
as with telecom. While an interesting perspective from a budgetary
basis, for the purposes of an administrative appeal, it is somewhat
of a stretch at this point in time. The reason being that the activities
of broadcasters and telecom companies fall into different sections
of the Telecom Act. The “apples” and “oranges”
analogy I gave you pretty much sums it all up. This is not to say
that things may change in the future. The challenge may become ripe
should cable companies expand more directly into telecom services
(voice) to the public through their cable access infrastructure
to end-users. However, at this time, this is really not the case.
So, you may be best to wait until that happens before launching
this administrative appeal of USF.

This is not to say you should not consult
an administrative law attorney to see if you have other claims.
On the contrary, should you feel that a particular FCC policy or
regulatory fee is impacting you or your business in an arbitrary
and capricious fashion, it is worth an opinion by an administrative
law attorney on all possible appeals. There may be another constitutional
or procedural basis not addressed here. Also, it won’t hurt
to get educated on the legal aspects and constraints of the policy
or fee you feel is unfair. Who knows — this may be the foundation
that you use to lobby against it in the future. For that reason,
I encourage you to educate yourself and others more on the ways
the FCC assesses fees. Also, seriously consider the Grassroots elements
of lobbying. You may find that you are not alone and that others
in the industry share your concern, and commitment to lobby it in
Congress.

•• Ed Maldonado is a principal
of Maldonado & Glenn, a telecom legal firm. He can be reached
at info@4counsel.net. Send
all of your Legal Line questions to legalline@prepaidpress.com.