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Federal Communications Commission
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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).

Report No. MM 97- 17 MASS MEDIA ACTION December 18, 1997

(MM Docket 97-247)

The FCC today requested comment on various fee alternatives for broadcasters' use of excess digital capacity to offer certain services that would be "ancillary or supplementary" to their over-the-air digital broadcast (DTV) signals. The Telecommunications Act of 1996 specifies that no fees are to be assessed for services supported by commercial advertising revenues.

The Notice of Proposed Rule Making adopted today implements a Congressional requirement that the FCC establish a program to assess and collect fees from broadcast licensees for ancillary or supplementary uses of their DTV spectrum. These services could include subscription television services, computer software distribution, data transmissions, audio signals, and other uses for which the DTV licensee receives subscription fees or compensation other than from commercial advertising from third parties. As required by Congress, these fees would "recover for the public a portion of the value of the public spectrum," "avoid unjust enrichment" of broadcast licensees using the DTV spectrum for fee-based services, and recover for the public an amount that, to the extent feasible, equals but does not exceed the amount that would have been recovered had such service been licensed pursuant to an auction.

The Notice of Proposed Rule Making seeks comment on various methods of assessing a fee. In the Notice, the Commission sets forth possible fee assessment programs including: a fee assessed as a percentage of gross revenues, a fee based upon net revenues or on incremental profits received from the provision of services, and a fee based upon a hybrid of a flat rate and a percentage of revenues.

The Commission said a fee based on a percentage of revenues received from pay services would meet the requirements of the 1996 Act, would be straightforward to assess and calculate, and would not dissuade broadcasters from offering ancillary and supplementary services.

The Commission asked for comment on what would be an appropriate percentage rate for the fee if the fee is be to assessed as a percentage of revenues. It noted that the 1996 Act provides for periodic adjustment of the fee, and asked for comment on when, in what circumstances, and in what amounts the fee should be adjusted in the future. It asked whether it should set a lower percentage rate for the fee at the outset to allow broadcasters a greater percentage of revenues during the build-out of DTV facilities and also to provide the Commission an opportunity to adjust the percentage rate after gaining more information concerning the nature of the ancillary or supplementary services being offered for a fee by DTV licensees.

The Commission also asked for comments on whether public television stations should be exempt or receive special relief from any obligation to pay fees when they offer pay ancillary or supplementary services on their DTV spectrum.

The Commission said that to implement the DTV fee collection program, it proposes to employ similar procedures to those it currently uses for the administration of its processing fees, regulatory fees, and auction revenue programs. It said it would also propose to generally follow the same reporting and filing requirements as currently exist for other programs. The Commission asked for comments on whether DTV licensees' revenues from these services should be independently verified, and what reporting and filing requirements should be required of broadcasters in connection with the collection of the required fees.

Action by the Commission December 18, 1997, by Notice of Proposed Rulemaking (FCC No. 97-414). Chairman Kennard, Commissioners Ness, Powell, Furchgott- Roth and Tristani, with Commission Ness issuing a separate statement.

- FCC -

MMB Contacts: Susanna Zwerling, (202) 418-2140, Jerry Duvall (202) 418-2616
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News Media Contact: David Fiske (202) 418-0513