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File how2ftp (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** Before the FCC 95-227 FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) Assessment and Collection ) MD Docket No. 95-3 of Regulatory Fees for ) Fiscal Year 1995 ) Price Cap Treatment of ) Regulatory Fees Imposed ) by Section 9 of the Act ) REPORT AND ORDER Adopted: June 14, 1995 ; Released: June 19, 1995 By the Commission: Table of Contents Topic Paragraph Numbers I. Introduction 1-6 II. Background 7-10 III. Discussion 11-137 A. FY 1995 Regulatory Fees 11-137 1. General Discussion 11-28 2. Private Radio Services 29-50 a. Exclusive Use Services 31-36 b. Shared Use Services 37-48 c. Amateur Radio Vanity Call Signs 49-50 3. Mass Media Services 51-71 a. Commercial AM and FM Radio Stations 52-54 b. Construction Permits - Commercial AM Radio 55 c. Construction Permits - Commercial FM Radio 56 d. Commercial Television Stations 57-59 e. Commercial Television Satellite Stations 60 f. Construction Permits - Commercial VHF Television Stations 61 g. Construction Permits - Commercial UHF Television Stations 62 h. Construction Permits - Commercial Television Satellite Stations 63 i. Low Power Television, FM Translator and Booster Stations, TV Translator and Booster Stations 64-67 j. Broadcast Auxiliary Stations 68-69 k. International HF Broadcast (Short Wave) 70-71 4. Cable Services 72-78 a. Cable Television Systems 72-75 b. Cable Antenna Relay Service 76-78 5. Common Carrier Services 79-137 a. Public Mobile/Cellular Radio Services 84-94 b. Domestic Public Fixed Radio Service 95-96 c. International Public Fixed Radio Service 97 d. Earth Stations 98-107 e. Space Stations (Geosynchronous) 108-114 f. International Bearer Circuits 115-117 g. Inter-exchange and Local Exchange, Competitive Access Providers, Resellers, and Other Service Providers 118-137 B. Procedures for Payment of Regulatory Fees 138-143 1. Annual Payments of Standard Fees 139 2. Installment Payments for Large Fees 140 3. Advance Payments of Small Fees 141 4. Timing of Standard Fee Calculations and Payments 142-143 C. Authority and Further Information 144-146 Appendix A - Regulatory Flexibility Analysis Appendix B - Schedule of Regulatory Fees Appendix C - How Full Time Equivalents (FTEs) and Fee Category Cost Allocations Were Calculated Appendix D - Development of Private Radio Services Regulatory Fees Appendix E - Development of Mass Media Services Regulatory Fees Appendix F - Development of Cable Services Regulatory Fees Appendix G - Development of Common Carrier Services Regulatory Fees Appendix H - Guidelines for Regulatory Fee Categories Appendix I - Description of FCC Activities Appendix J - Parties filing Comments I. Introduction 1. The Congress, pursuant to Section 9 of the Communications Act of 1934, as amended, has required that the Commission collect $116,400,000 in FY 1995 to recover certain of its regulatory costs. On January 12, 1995, the Commission released a Notice of Proposed Rule Making, In the Matter of Assessment and Collection of Regulatory Fees for Fiscal year 1995, MD Docket No. 95-3, FCC 95-14 (Notice). In the Notice, the Commission asked for comments on proposals to revise its Schedule of Regulatory Fees. The Commission now has under consideration a proposed Report and Order to revise its Schedule of Regulatory Fees. See 47 CFR 1.1152 through 1.1156. 2. In revising our regulatory fees, we adjusted our Regulatory Fee Schedule to recover $116,400,000 in regulatory costs, consistent with the amount that Congress has appropriated for our enforcement, policy and rule making, international, and user information activities for FY 1995. 47 U.S.C.  159(a). In addition, we have amended the Schedule to collect regulatory fees from regulatees of services not included in the FY 1994 Schedule and we have modified our method of assessing fees for certain services. 47 U.S.C.  159(b)(1)(A),(b)(3). The revised Regulatory Fee Schedule is set forth in Appendix B. 3. For several categories of service, the regulatory fees for FY 1995 are significantly higher than corresponding fees for FY 1994. See 47 U.S.C.  159(g); see also Implementation of Section 9 of the Communications Act (FY 1994 Order), 9 FCC Rcd 5333 (1994) Petitions for Reconsideration Pending. Our revised assessments result, for the most part, from increases in the amount that Congress has appropriated for Commission activities whose costs must be recovered through regulatory fees. As noted, the amount appropriated and to be recovered through regulatory fees is $116,400,000. That amount is 93 percent greater than the $60,400,000 that Congress required us to recover through regulatory fees in FY 1994. The impact of this increase is, however, lessened for some categories of services by anticipated revenues from categories of regulatees that we added to the Regulatory Fee Schedule and by increases in the number of payment units, e.g., subscribers. Similarly, for some services increases in the fees exceed 93% because of the reallocation of FTEs, decreases in the number of payment units, and modification of the methodology for computing fees to better reflect the benefits derived from the Commission's regulation. 4. In determining the individual fee amounts for FY 1995, Section 9 of the Act requires that we first determine the number of full-time equivalent employees (FTEs) associated with our regulatory activities, and then determine the amount to be recovered from each fee category by estimating the number of FTEs assigned to each category. "Mandatory adjustments" are then made to the Section 9 Regulatory Fee Schedule. An initial attempt to develop individual fees by allocating FTEs down to the individual fee level rather than at the grouped category level proved ineffective. Since we do not have a cost accounting system to gather appropriate data on how Commission employees allocate their time, estimated FTE data yielded anomalous results which would have required substantial "permitted amendments" to resolve obvious inequities. 5. Additionally, it became apparent in the fee development effort that the Commission's options were limited in terms of what it could do to make the fees more equitable and at the same time assure that the Commission collects the $116.4 million that Congress has required. This meant that we could not recommend adoption of proposals that would have resulted in the regulatees being unsure about the amount of their fee payment and the staff having no way to verify that proper payments were made. In addition, we had difficulty developing fees in several areas because the Commission does not always have accurate or complete information concerning the number of regulatees and/or measurement units essential to fee collection verification requirements. Thus, it became necessary in a number of instances to utilize industry estimates of payment volumes instead of relying on information available within the Commission. 6. Finally, much of our policy and rule making efforts are expended in the development of new and emerging technologies and services (e.g., PCS, DBS, and LEOs). We found that, as a practical matter, we had to allocate the costs associated with these activities to existing licensees in other services because there were no operational systems or customer base on which to assess a fee for these new services. To alleviate the regulatory burden on existing licensees, we urge the Congress to allow the Commission to recoup, from amounts received from competitive bidding under Section 309 of the Communications Act, at least such amount as would otherwise be allocable as regulatory fees for such services. II. Background 7. Section 9(a) of the Act requires us to assess and collect annual regulatory fees to recover the costs, as determined annually by Congress, of our enforcement, policy and rule making, international, and user information activities. 47 U.S.C. 159(a). Congress established our Regulatory Fee Schedule for FY 1994. 47 U.S.C.  9(g). In our FY 1994 Report and Order, we set forth the Regulatory Fee Schedule for FY 1994 and prescribed rules to govern payment of the fees, as required by Congress. 47 U.S.C.  159(f)(1); 47 CFR  1.1151 - 1.1166. 8. For fiscal years after FY 1994, Section 9 requires that we adjust the fees so that we can reasonably expect to collect the amount specified by Congress. 47 U.S.C.  159(b)(1)(B). Sections 9(b)(2) and (3) provide for annual "Mandatory Adjustments" and "Permitted Amendments" to the Schedule of Regulatory Fees. 9. In making Section 9(b)(2)'s mandatory adjustments, we first consider the amount that we are to collect as set forth in our Appropriations Act. 47 U.S.C.  159(b)(2),(b)(1)(B). Second, we identify the number of FTEs allocated to our enforcement, policy and rule making, user information, and international activities. 47 U.S.C.  159 (b)(1)(A). 159(b)(1)(A). Third, we determine the amount to be recovered from each fee category, e.g., Common Carrier, by estimating the number of FTEs assigned to each fee category. 47 U.S.C.  159(b)(2). Finally, we make proportionate adjustments to the individual fees set forth in Section 9(g)'s Regulatory Fee Schedule in order to determine the revised fee for the particular services within each service category for FY 1995. Id. In determining individual service fees, we take into consideration the estimated number of payment units, e.g., licensees, for each service. 47 U.S.C  (b)(2)(A). 10. Once we have determined each service's "mandatory fee," as described above, Section 9(b)(3), relating to "Permitted Amendments" to the Schedule, provides that, if necessary, we shall amend the Schedule of Regulatory Fees, as provided in Section 9(b)(1)(A) to, inter alia, reflect the benefits of our regulation to the payers of the fees for each service by considering factors that we determine are necessary in the public interest. 47 U.S.C.  159(b)(3),(b)(1)(A). In making these amendments, we "shall add, delete, or reclassify services in the Schedule to reflect additions, deletions or changes in the nature of its services... ." 47 U.S.C.  159(b)(3). Finally, while the fees are not judicially reviewable, we are required to notify Congress of any permitted amendments to the Regulatory Fee Schedule 90 days before those amendments become effective. 47 U.S.C.  159 (b)(2),(3),(4)(B). III. Discussion A. FY 1995 Regulatory Fees 1. General Discussion 11. In adjusting our regulatory fees pursuant to Section 9(b)(2)'s provisions for "Mandatory Adjustments", we first identified our directly assigned FY 1995 regulatory fee FTEs in the Wireless, International, Mass Media, Common Carrier and Cable Services Bureaus. We next allocated these regulatory fee FTEs to the appropriate Section 9 regulatory fee category (i.e. Private Radio, Mass Media, Cable Services, and Common Carrier). We then identified additional FTEs from bureaus and offices supporting the regulatory fee activities of the operating bureaus. Appendix C contains a more detailed description of our allocation of FTEs by activity. The resulting allocation of FTEs, rounded to the nearest tenth of a percent, is as follows: Regulatory Regulatory Fee Percentage of Regulatory Fee Category Fee FTEs Percentage Total FCC FTEs Private Radio 103 7.3% 4.5% Mass Media 253 18.0 11.1 Common Carrier 689 49.0 30.3 Cable Services 361 25.7 15.9 Total 1,406 100.0% 61.9% 12. Next, we allocated our $116,400,000 revenue requirement to the Private Radio, Mass Media, Common Carrier, and Cable Services activities, based on the regulatory fee percentages shown above. For example, to derive the amount to be recovered from cable services, we calculated that the 25.7 percent of total FTEs representing the 361 FTEs assigned to the cable services activity resulted in $29,914,800 to be recovered through the collection of cable services fees. The resulting allocation of costs, rounded to tenths of a million, by regulatory fee category, is as follows: Regulatory Fee Category Cost Allocation Private Radio $ 8.5 million Mass Media 21.0 million Common Carrier 57.0 million Cable Services 29.9 million 13. After determining these cost allocations, we updated the number of FY 1995 payment units for the individual services within each fee category. For example, we estimate that there are approximately 60,000,000 payment units for cable television systems, i.e., cable subscribers. The number of payment units is based upon information provided by Commission program experts and supplemented by information contained in actual licensee data bases maintained by the Commission, information provided by industry groups or contained in trade publications, actual data from FY 1994 regulatory fee collections, and from data provided in the comments in this proceeding. See Appendices D through G. 14. Next, in order to make the proportionate changes in the statutory schedule of fees required by Section 9(b)(2), we compared our FY 1995 revenue requirement in each regulatory fee category, e.g., Cable Services, with the total amount that would be collected from all of the services within each category under the FY 1994 fee schedule. For example, we estimated that approximately $22.7 million, or $7.2 million less than its $29.9 million FY 1995 revenue requirement, would be collected from cable system payers based upon our FY 1994 fees. Therefore, we pro-rated the $7.2 million shortfall to the individual services within the cable services fee category (i.e., CARS licensees and cable system subscribers). We then divided the revenue requirement in each service by the payment units to determine the revised amount of the individual fee. These revised fees constitute the "mandatory adjustments" required by Section 9(2). 15. Following our determination of "Mandatory Adjustments", we reviewed each service and its associated fee assessment to determine if the nature of a service or the public interest warranted a fee adjustment pursuant to Section 9(b)(3)'s requirements for "Permitted Amendments." Pursuant to our authority to make permitted amendments to the fees, we revised our method for calculating fees for local exchange carriers (LECs), interexchange carriers (IXCs), and other common carriers and certain international services. Additionally, we are establishing a reduced fee for satellite television stations to distinguish those stations from full service television stations and we are adding a fee requirement for licensees of FM and TV translator and booster stations. Also, we established a fee for one-way paging services separate from the fee for other common carrier mobile services, reduced the fee for space stations, and eliminated the fee for receive only earth stations. After making these permitted amendments, we revised the remaining fees within the affected service category to take into account the impact of the fee modification upon other services within the category. 16. Comsat General and Comsat Video argue that their proposed fee increases are disproportionately high when compared to the increases proposed in other categories of service and within their own category of service, and that the increase constitutes a violation of Section 9(b)(2)'s requirement that we make proportionate adjustments to the statutory fees when recalculating the fees to collect a greater or lesser amount than previously required by Congress. These parties assert that our proposed fee increases with respect to Common Carrier activities and, in particular, geosynchronous space stations are neither proportionate nor in the public interest, and, that they constitute illegal taxes because they do not reasonably reflect the true cost of regulatory service provided to these entities. See National Cable Television Ass'n. v. United States, 415 U.S. 336, 340 (1974) (NCTA I). COMSAT General and Comsat Video state that a fee is distinguishable from a tax in that a fee is "a payment for a special privilege or service rendered, and not a revenue measure." National Cable Television Ass'n. v. F.C.C., 554 F. 2d 1094, 1106 (D.C. 1976). According to these parties, the fee must be calculated to return the cost of the service or benefit at a rate that reasonably reflects the costs of the services performed and the value conferred on the payor. Electronic Industries Ass'n. v. F.C.C., 554 F.2d 1109, 1117 (D.C. 1976). 17. In addition, the parties argue that our proposed allocation of FTEs to the major categories of service fails to comply with the requirements of Section 9. These parties contend that our proposed allocation of FTEs to the various major service categories violates Section 9(b)(1)(a) because, in their view, the Notice contains insufficient supporting information to permit analysis of the basis for our FTE allocations. Comsat General argues that a detailed accounting of the overhead and employees' time, based on a task code charge system, is necessary to justify the reasonableness of our assignment of FTEs to the common carrier and other categories and to the individual services within these categories. 18. Also, several parties contend that the Notice fails to demonstrate that individual fees are "reasonably related to the benefits provided to the payor of the fee," in violation of Section 9(b)(1)A), and are contrary to the intent of Congress as reflected in the legislative history of Section 9. They also contend that the regulation of their particular service does not justify the fee proposed for the service. GE America Communications, Inc. (GE Americom) states that the amount of cost recovery that we allocated to geosynchronous satellites should be reduced because our regulatory activities with respect to in- orbit domestic satellites are de minimis since their licensees are not the subject of enforcement proceedings, our domestic satellite policies are well-established with little need for rule makings, and our deregulatory policies have further reduced the cost of space segment regulation. 19. We reject Comsat General and Comsat Video's arguments that our proposed fees constitute unauthorized taxes. In reviewing a similar fee program enacted by Congress, the Supreme Court held that NCTA I stood only for the proposition that Congress must indicate clearly its intention to delegate "discretionary authority to recover administrative costs not inuring directly to the benefit of regulated parties by imposing additional financial burdens, whether characterized as 'fees' or 'taxes' on those parties." Skinner v. Mid-American Pipe Line Co., 490 U.S. 212, 224; 109 S.Ct. 1762, 1733 (1989). Skinner thus bars any interpretation of NCTA I and its progeny in the courts of appeals that would limit Congress to allowing agencies to set regulatory fees only in amounts that reflect services received by the regulated entities. Skinner also stated that a congressional delegation of authority to raise funds was proper where Congress provides sufficient guidance to the collecting agency concerning the identity of the entities subject to the fee, the purposes for which the funds may be used, the manner in which the fees are to be established, and the aggregate amount of the fees to be collected. 490 U.S. 219-220, 109 S. Ct. 1731. 20. Subsequent to the Court's decision in Skinner, Congress adopted Section 9 directing us to recover the full amount of specified regulatory costs from regulatees. Consistent with the guidance in Skinner, Congress identified the categories of service providers subject to the fees, and declared that fees are to be assessed in a rule making proceeding, based upon the number of FTEs within our bureaus and offices performing enforcement, policy and rule making, international, and user information activities. Section 9 further requires us to take into account factors reasonably related to the benefits provided to the payor of the fee by these activities, and we are to recover the costs of these activities only if required in annual Appropriations Acts and only in the aggregate amount annually designated by Congress. As described below, our actions to revise the regulatory fees are consistent with the requirements of Section 9. Thus, our revisions to the Regulatory Fee Schedule in establishing regulatory fees for FY 1995 satisfy the Court's concerns and guidelines regarding unauthorized taxation of persons subject to a fee requirement. 21. The FTE allocations used to calculate the amounts to be recovered from each fee category were developed in full compliance with the requirements of Section 9 of the Act. In developing the FY 1995 regulatory fee schedule, we relied upon estimates of year-end FTEs from our Bureaus and Offices, because actual FTEs utilized are not known until the completion of the fiscal year. Thus, to produce the best possible estimates of FY 1995 year-end FTEs, we conducted a survey in December 1994, immediately prior to releasing the Notice in this proceeding to estimate FTEs for this rule making. The Commission performed a review of its staffing, taking into consideration expected new and replacement hiring and attrition through the end of the fiscal year, in order to determine the most accurate estimate of projected FY 1995 year-end FTEs by organization. Next, the Bureaus and Offices allocated their assigned year-end FTEs to each of their major functional activities (e.g., Authorization of Service, Enforcement, Public Information). The staff actually assigned to perform these allocations within the Bureaus and Offices were those individuals most familiar with the regulatory programs and associated staffing under their auspices. 22. In contending that their proposed fees are unduly high, commenters generally have failed to recognize that Section 9 requires that we add to our direct FTEs, i.e., those represented by staff directly assigned to our operating Bureaus, any support FTEs representing staff assigned to overhead functions such as our field and laboratory staff and certain staff assigned to the Office of Managing Director. 47 U.S.C.  159(b)(1)(A). These support FTEs comprise nearly 40% of all FTEs associated with regulatory fees. Therefore, personnel costs to be recovered through regulatory fees are approximately 40% higher than the costs associated with staff directly assigned to an operating Bureau and performing functions covered by the regulatory fee program. Further, personnel costs represent only 75% of our costs to be recovered through regulatory fees. Thus, the addition of non-personnel costs (equipment, rents, contractual services, supplies, etc.) to personnel costs results in an actual cost of regulation significantly exceeding direct staff costs. The addition of benefits and other obligations to the average Commission salary cost results in an additional cost of approximately $33,000 per employee. Although some of the parties view these costs of regulation to be excessive, they often reflect costs associated with our regulatory programs that they may not have fully considered. 23. Support FTEs, and ultimately costs, are allocated to each regulatory fee category (e.g., cable television) based upon the number of direct FTEs assigned to each fee category. We believe our allocations of FTEs reasonably assign personnel and related costs attributable to each fee category. As noted, actual FTE assignments can only be determined once a fiscal year is completed. However, we are satisfied that our estimates, based upon careful review of current and anticipated FTE assignments conducted well into the fiscal year and shortly before the adoption of the Notice in this proceeding, yield an accurate estimate of FY 1995 FTE assignments. 24. We also note the concerns of several commenters that certain individual fees seem unreasonable relative to the benefits provided. In general, these commenters fail to recognize the formulaic approach to setting the mandatory fee levels dictated by Congress. Section 9 provides that, in setting individual fee amounts, we prorate increases or decreases to the individual services within each fee category. 47 U.S.C.  159(b)(2). This statutory requirement retains the relationship between annually calculated fees and the fees initially established by the Congress. It does not provide the flexibility to adjust fees relative to benefits to the payor or in consideration of other factors. These factors, however, are considered in the next stage of the fee development process as permitted amendments, if warranted. 25. As discussed earlier, the Commission is not able to allocate detailed costs to individual fee line items (e.g., VHF Television Stations in the 51-100 markets). Rather, those costs are allocated to broad categories of services by Section 9. Even when the Commission implements a cost accounting system in FY 1996, it may not be cost effective to obtain detailed cost data relative to our regulation of individual services. Since we do not relate specific regulatory costs to particular services within a fee category, we are constrained by Section 9 and by our information collection systems to the formulaic approach to the mandatory adjustment of regulatory fees. However, any inequities resulting from this approach are likely to be small and confined to like services due to the pro-rata formula applied by fee category. As noted, in developing the individual fees, as discussed below, we have carefully examined any apparent inequities computed pursuant to the mandatory formula required by Section 9 and have adjusted certain fees pursuant to our authority to make "permitted" amendments to the fees. In making the permitted amendments, the Commission is not required to calibrate the amount of the regulatory fee collected precisely to the cost of the benefits each regulatee derives from the Commission's regulation. See United States v. Sperry Corp., 493 U.S. 52, 60 (1989)(upholding a one and a half percent user fee of amount recoverd by claimant before Iran-U.S. Claims Tribunal); Massachusetts v. United States 435 U.S. 444, 463 (1978)(upholding flat registration fee on civil aircraft). Moreover, the Commission can collect fees from regulatees for their use of frequencies and for the potential benefits of its regulatory activities, even if they do not utilize these activities. See United States v. Sperry Corp., 493 U.S. supra at 63. 26. Also, many commenters have mistakenly correlated gross increases in fee amounts from FY 1994 to FY 1995 to increases in regulation. Although there may, in fact, be changes in regulatory burden for certain services, the primary reason for increased fees overall is the 93% increase in recoverable fees mandated by Congress. Additionally, Section 9 prohibited any adjustment of individual fees established in the Regulatory Fee Schedule for FY 1994. 9 U.S.C.  159(b)(2). Thus, the FY 1994 fee was established by Congress and was not adjusted to reflect changes in the allocation of FTEs not considered by Congress. Our development of FY 1995 fees in accordance with Section 9's requirements represents the first allocation of FTEs to appropriate fee categories. This has resulted in a realignment of costs between major fee categories and a redistribution of relative fee revenue requirements among the four major fee categories. As the commenters have noted, certain fees decrease from FY 1994 levels while other fees increase. This primarily reflects the reallocation of FTEs for FY 1995 compared to the Congressionally mandated Regulatory Fee Schedule in effect in FY 1994. 27. We have retained, for fee determination purposes, the regulatory fee category classifications (i.e., Private Radio, Common Carrier, Cable Services and Mass Media) set forth in Section 159 in order to minimize any adverse impact on the fees resulting from changes in classification. Further, for ease in locating particular fees, we have formatted the FY 1995 Schedule of Fees to reflect our new organizational structure even though we have developed those fees based upon the fee activities contained in the FY 1994 Regulatory Fee Schedule. See Appendix B. With the exception of annual fees in the amount of $5.00 or less, individual fee amounts have been rounded to the nearest $5 in the case of fees under $1,000, or to the nearest $25 in the case of fees of $1,000 or more in accordance with Section 9(b)(2). Appendices C through G describe the method by which FTEs were assigned to the fee categories and the development of the individual fees within each major category. 28. We have revised the revenue requirements for individual fees in several of the fee categories. Revenue requirements change whenever volume estimates change due to the pro-rata formula associated with the mandatory provisions of Section 9. Likewise, any permitted amendments which reduce fees have the effect of reallocating to other services within a fee category the revenues which would have been collected if the permitted amendment had not been accepted. In effect, each volume change and/or permitted amendment impacts the revenue requirement in each service within the category. Zero-basing each revenue calculation makes any attempt to explain the calculated difference between revenue requirements shown in the Notice and in this Report and Order meaningless. We, therefore, have not attempted to do this and instead, have explained each permitted amendment we've made and also described the source of any changes to volume estimates. 2. Private Radio Services 29. In developing the FY 1995 regulatory fees for Private Radio Services (set forth in the Wireless Radio Services category in the FY 1995 Regulatory Fee Schedule), we made mandatory adjustments to the Regulatory Fee Schedule required by 47 U.S.C.  159, considering the number of FTEs and the estimated volume of payments. We have also taken into account the quality of the frequencies licensed. Accordingly, we have decided to continue to assess the two levels of regulatory fees applied to these services by Congress' fee schedule, i.e., exclusive use services and shared use services, in recognition that those licensees who generally receive a higher quality communications channel, due to exclusive or lightly shared frequencies, should pay a higher fee than licensees who operate on heavily shared frequencies. 47 U.S.C.  159(2). 30. We are implementing no changes to the rules for calculating fee payments and submitting regulatory fee payments for Private Radio Services. Due to the relatively small regulatory fees generally assessed for the services, we will continue to require applicants for new, reinstatement, and renewal licenses in these services to pay the entire regulatory fee for the full term of their requested license at the time they file their license applications. See Appendix D for a description of the development of the fees for the various services within the Private Radio category. a. Exclusive Use Services 31. Land Mobile Services. The fees for Land Mobile Services are set forth in the FY 1995 Regulatory Fee Schedule within the Wireless Radio Service category and include services authorized under Part 90 of the Commission's Rules to provide high quality voice or digital communications between vehicles or to fixed stations to further the business activities of the licensee. These services, using the 220-222 MHz band and frequencies at 470 MHz and above, may be offered on a private carrier basis in the Specialized Mobile Radio Service (SMRS). 32. The FY 1995 revenue requirement for Land Mobile Services is $396,390. Our estimated payment units for Land Mobile are 13,213 units. Dividing the revenue requirement by the number of payment units and its license term of five years results in an annual fee of $6 per license rather than the $7 annual fee proposed in the Notice. Thus, Land Mobile licensees are subject to a $6 annual regulatory fee per license, payable for an entire five or ten year license term at the time of application for a new, renewal, or reinstatement license. The total regulatory fee due is $30 for a license with a five year term or $60 for a license with a 10 year term. See Guidelines, Appendix H at 4. 33. Microwave Services. The fees for Microwave Services are set forth in the FY 1995 Regulatory Fee Schedule within the Wireless Radio Service category. Microwave Services include private microwave systems and private carrier systems authorized under Part 94 of the Commission's Rules to provide telecommunications services between fixed points on a high quality channel of communications. Microwave systems are often used to relay data and to control railroad, pipeline, and utility equipment. 34. The FY 1995 revenue requirement for Microwave Services is $193,200. Payment units for Microwave Services are estimated to be 6,440 licenses. Dividing the revenue requirement for Microwave Services by its payment units and license term of five years results in an annual fee of $6 per license. Thus, Microwave licensees are subject to a $6 annual regulatory fee per license, rather than the $7 annual fee proposed in the Notice, payable for an entire five year license term at the time of application for a new, reinstatement or renewal license. The total regulatory fee due is $30 for the five year license term. See Guidelines, Appendix H at 6. 35. Interactive Video Data Service (IVDS). The fees for IVDS are set forth in the FY 1995 Regulatory Fee Schedule within the Wireless Radio service category. IVDS is a two-way point-to- multi-point radio service allocated high quality channels of communications and authorized under Part 95 of the Commission's Rules. IVDS provides information, products and services, and also the capability to obtain responses from subscribers in a specific service area. IVDS is offered on a private carrier basis. 36. The FY 1995 revenue requirement for IVDS is $43,500. Payment units for IVDS are estimated to be 1,450 licenses. Dividing the revenue requirement of IVDS by its payment units and license term of five years results in an annual fee of $6 per license rather than the $7 fee we proposed in the Notice. Thus, IVDS licensees are subject to a $6 annual regulatory fee per license, payable for an entire five year license term at the time of application for a new, reinstatement or renewal license. The total regulatory fee due is $30 for the five year term of the license. See Guidelines, Appendix H at 7. b. Shared Use Services 37. Marine (Ship) Service. Fees for Marine (Ship) Service are set forth in the FY 1995 Regulatory Fee Schedule for the Wireless Radio Service category. Marine (Ship) Service is a shipboard radio service authorized under Part 80 of the Commission's Rules to provide telecommunications between watercraft or between watercraft and shore-based stations. Radio installations are required by domestic and international law for large passenger or cargo vessels. Radio equipment may be voluntarily installed on smaller vessels, such as recreational boats. 38. The FY 1995 revenue requirement for the Marine (Ship) Service fee category is $5,070,420. Payment units are estimated to be 169,014 stations. Dividing the revenue requirement of the Marine (Ship) Service by its payment units and license term of ten years results in an annual fee of $3 per station. Thus, as proposed in the Notice, Marine (Ship) Station licensees are subject to a $3 annual regulatory fee per station, payable for an entire ten year license term at the time of application for a new, reinstatement or renewal license. The total regulatory fee due is $30 for the ten year license term. See Guidelines, Appendix H at 8. 39. Marine (Coast) Service. Fees for Marine (Coast) Service are set forth in the FY 1995 Regulatory Fee Schedule for the Wireless Radio service category. Marine (Coast) Service stations are land-based stations in the maritime services, authorized under Part 80 of the Commission's Rules, to provide communications services to ships and other watercraft in coastal and inland waterways. 40. The FY 1995 revenue requirement for this service is $41,955 and the estimated payment units are 2,797 licenses. Dividing the revenue requirement of the Marine (Coast) Service by its payment units and license term of five years results in an annual fee of $3 per license. Thus, as proposed in the Notice, Marine (Coast) licensees are subject to a $3 annual regulatory fee per call sign, payable for the entire five year license term at the time of application for a new, reinstatement or renewal license. The total regulatory fee due is $15 per call sign for the five year license term. See Guidelines, Appendix H at  9. 41. Private Land Mobile (Other) Services. Fees for Private Land Mobile (Other) Services are set forth in the FY 1995 Regulatory Fee Schedule for the Wireless Radio Service category. Private Land Mobile Radio Services are authorized under Parts 90 and 95 of the Commission's Rules. Stations in this category provide one or two way communications between vehicles, persons or to fixed stations on a shared basis and include radiolocation services, private carrier paging services, industrial radio services and land transportation radio services. 42. The FY 1995 revenue requirement for Private Land Mobile (Other) Services is $1,396,275. Payment units are estimated to be 93,085 licenses. Dividing the revenue requirement of these services by their payment units and license term of five years results in an annual fee of $3 per license. Thus, as proposed in the Notice, licensees of these services are subject to a $3 annual regulatory fee per call sign, payable for an entire five year license term at the time of application for a new, reinstatement or renewal license. The total regulatory fee is $15 for the five year license term. See Guidelines, Appendix H at  10. 43. Aviation (Aircraft) Service. The fee for Aviation (Aircraft) Service is set forth in the FY 1995 Regulatory Fee Schedule for the Wireless Radio service category. Aviation (Aircraft) stations are authorized to provide communications between aircraft and from aircraft to ground stations. The service includes frequencies used to communicate with air traffic control facilities pursuant to Part 87 of the Commission's Rules. 44. The FY 1995 revenue requirement for the Aviation (Aircraft) Service is $1,130,430. The payment units are estimated to be 37,681 licenses. Dividing the revenue requirement of the Aviation (Aircraft) Service by its payment units and license term of ten years results in an annual fee of $3 per station, as proposed in the Notice. Thus, licensees of aircraft stations are subject to a $3 annual regulatory fee per station, payable for the entire ten year license term at the time of application for a new, reinstatement or renewal license. The total regulatory fee due is $30 per station for the ten year license term. See Guidelines, Appendix H at  11. 45. Aviation (Ground) Service. Fees for Aviation (Ground) Service are set forth in the FY 1995 Regulatory Fee Schedule for the Wireless Radio service category. Aviation (Ground) Service stations provide ground-based communications to aircraft for weather or landing information, or for logistical support pursuant to Part 87 of the Commission's Rules. 46. The FY 1995 revenue requirement for the Aviation (Ground) Service is $39,900. Payment units for the Aviation (Ground) Service are estimated to be 2,660 licenses. Dividing the Service's revenue requirement by its payment units and license term of five years results in an annual fee of $3 per license. Thus, as proposed in the Notice, licensees of Aviation Ground stations are subject to a $3 annual regulatory fee per call sign, payable for the entire five year license term at the time of application for a new, reinstatement or renewal license. The total regulatory fee due is $15 per call sign for the five year license term. See Guidelines, Appendix H at  12. 47. General Mobile Radio Service (GMRS). Fees for the GMRS are set forth in the FY 1995 Regulatory Fee Schedule within the Wireless Radio service category. GMRS licensees provide personal and limited business communications between vehicles or to fixed stations for short-range, two-way communications pursuant to Part 95 of the Commission's Rules. 48. The FY 1995 revenue requirement for GMRS is $41,775. Payment units for GMRS are estimated to be 2,785 licenses. Dividing GMRS' revenue requirement by its payment units and license term of five years results in an annual fee of $3 per license. Thus, as proposed in the Notice, GMRS licensees are subject to a $3 annual regulatory fee per license, payable for an entire five year license term at the time of application for a new, reinstatement or renewal license. The total regulatory fee due is $15 per license for the five year license term. See Guidelines, Appendix H at  13. c. Amateur Vanity Call Signs 49. Fees for Amateur Vanity Call signs are set forth in the FY 1995 Regulatory Fee Schedule within the Wireless Radio service category. The fee covers voluntary requests for specific call signs in the Amateur Radio Service. We have concluded our rule making proceeding related to the authorization of vanity call signs. See Report and Order in PR Docket No. 93-305, 10 FCC Rcd 1039 (1995). Therefore, amateur radio operators are required to submit a regulatory fee payment with their vanity call sign application in FY 1995. 50. The revenue requirement for vanity call signs is $840,000. We have revised our estimated payment units to 28,000 vanity call sign applications, as a result of further analysis by the Wireless Telecommunications Bureau. Dividing the service's revenue requirement by its estimated payment units and license term of ten years results in a fee of $3 per year per license as proposed in the Notice. Thus, holders of amateur vanity call signs are subject to a $3 annual regulatory fee per call sign, payable for an entire ten year license term at the time of application for a vanity call sign. The total regulatory fee is $30 per license for the ten year license term. See Guidelines, Appendix H at 14. 3. Mass Media 51. The regulatory fees for the Mass Media fee category apply to broadcast licensees and permittees in the television, AM and FM services and in several auxiliary services. We have incorporated changes in payment volume estimates for satellite television stations, auxiliary radio licenses, and translator stations. The payment volumes were adjusted after further review of the Commission's licensing data. See Appendix E for a description of the development of the fees for services within the Mass Media category; see also Guidelines, Appendix H at 15-26. a. Commercial AM and FM Radio 52. These categories include licensed commercial AM (Classes A, B, C, and D) and FM ( Classes A, B, B1, C, C1, C2, and C3) radio stations operating under Part 73 of the Commission's Rules. In developing our proposed FY 1995 fees for AM and FM stations, we determined that the public interest requires that we retain the operational class distinctions among AM and FM stations that Congress established in its Regulatory Fee Schedule. 47 U.S.C.  159. Also, as a permitted amendment, we proposed a further distinction to recognize that the population density of a station's geographic coverage is a public interest factor warranting recognition in the fee schedule. We proposed to distinguish stations located in Arbitron radio markets vis-a-vis those not located in these markets and to allocate the fee burden utilizing a fee ratio between the Arbitron and non-Arbitron markets similar to the ratio of the fee requirement established for larger television station markets and "remaining markets" set forth in the Regulatory Fee Schedule. We proposed no change to the rules for calculating and submitting regulatory fees by AM and FM radio station licensees. 53. Several commenters contend that Arbitron rankings are not useful for establishing the AM and FM fee structure. These parties state that markets are only ranked if a sufficient number of stations located within the market subscribe to the Arbitron service. Also, a station may be placed in a market if it competes with market stations even though the station may not be physically located in a major metropolitan area within the market. The National Association of Broadcasters (NAB) also argues that a station may be placed in an Arbitron market based on promotional programming during the rating period and recommends that a licensee be allowed to show that its placement in an Arbitron market is not representative of its service. Washington Broadcasting Company argues that stations 20 kilometers from the principal city in a market or serving less than 20 percent of the population of a market should not be considered as an Arbitron Market station. A number of licensees argue that fees should be based on a graduated scale by market size, differentiating between markets 1-10; 11-25; 25-50; 51-100; and remaining markets in a manner similar to that in the Regulatory Fee Schedule for television stations. Broadcast Market Associates and James Wagner recommend the fees be based on the population a station serves. Montana Broadcasters Association argues that fees should be based on gross revenues. In contrast, Radio 840, Inc. argues that all stations in the same class be assessed the same fee without distinction as to market size. 54. We agree with commenters that our proposal to base fees on whether a licensee is ranked in an Arbitron market is flawed. The Arbitron rankings data is incomplete for fee determination purposes, and reliance upon it does not provide a sufficiently accurate and equitable methodology for determining fees. We attempted, within the limitations of available data, to compute fees on a graduated scale by market size. The results produced unexpected inequities that not only raised the fees significantly for markets 1-10 and 11-25, but also raised the fees at the low end for remaining markets. Moreover, the Commission's data bases do not contain population and gross revenue data from which we could compute fees. Therefore, we have decided not implement the proposed fees methodology for AM and FM stations. Instead, for FY 1995 we will retain the fee methodology enacted by Congress for FY 1994. In this regard, we note that although the Regulatory Fee Schedule does not differentiate between markets, the AM and FM fees differentiate between classes of stations and are low enough to avoid placing an onerous burden on most licensees. Thus, the regulatory fees for AM and FM stations for FY 1995 are as follows and represent the mandatory adjustments to the Regulatory Fee Schedule consistent with Section 9 (b)(2): AM Radio Class A ....................................$1,120 Class B .......................................620 Class C .......................................250 Class D .......................................310 FM Radio Classes C, C1, C2, B .......................$1,120 Classes A, B1, C3 .............................745 We have made no change to the rules for calculating and submitting regulatory fees by AM and FM radio station licensees. See Guidelines, Appendix H at 16. b. Construction Permits - Commercial AM Radio 55. This category includes holders of permits to construct new AM stations under Part 73 of the Commission's Rules. The FY 1995 revenue requirement for the Commercial AM Construction Permit fee category is $9,875. Payment units for the service are estimated to be 79 AM Construction Permits. Dividing the revenue requirement for AM Construction Permits by the estimated payment units results in a regulatory fee of $125 per Construction Permit. Thus, for FY 1995, we are assessing holders of Construction Permits for Commercial AM Stations $125 for each permit held. Upon issuance of an operating license, this fee would no longer be assessed. Instead, for the next regulatory fee period, licensees are required to pay the applicable fee for the designated class of the station. We have made no change in the rules for calculating and submitting the regulatory fee by AM construction permittees. See Guidelines, Appendix H at 17. c. Construction Permits - Commercial FM Radio 56. This category includes holders of permits to construct new commercial FM stations covered under Part 73 of the Commission's Rules. The FY 1995 revenue requirement for Commercial FM Radio Construction Permits is $435,860. Our estimate of the payment units is 703 Construction Permits. Dividing the revenue requirement for FM Construction Permits by the estimated payment units results in a regulatory fee of $620 per permit. Thus, for FY 1995, we are assessing permittees $620 for each permit held. Upon issuance of an operating license, this fee would no longer be assessed. Instead, for the next regulatory fee period, licensees must pay a regulatory fee based upon the designated class of the station. We are making no changes in the rules for calculating and submitting regulatory fees by FM construction permittees. See Guidelines, Appendix H at 18. d. Commercial Television Stations 57. This category includes licensed Commercial VHF and UHF Television Stations covered under Part 73 of the Commission's Rules, except Television Satellite, Translator, and Low Power Stations, addressed separately below. We are assessing Commercial Television Stations annual fees based on a station's market rankings as published by Warren Publishing in the 1994 Edition of the Television and Cable Factbook (No. 62). The FY 1995 revenue requirements for the different categories of VHF and UHF Commercial Television Stations are shown in Appendix E. Payment units for Commercial Television Stations are also shown in Appendix E. Dividing the revenue requirements for each Commercial Television Station category by the payment units for each category results in the following fees for Television Stations in each ADI market grouping: VHF Markets 1-10...........$22,420 VHF Markets 11-25...........19,925 VHF Markets 26-50...........14,950 VHF Markets 51-100...........9,975 VHF Remaining Markets........6,225 UHF Markets 1-10...........$17,925 UHF Markets 11-25...........15,950 UHF Markets 26-50...........11,950 UHF Markets 51-100...........7,975 UHF Remaining Markets........4,975 See Guidelines, Appendix H at 19. 58. Several commenters argue that the Arbitron market structure is obsolete and should be replaced with the Nielsen Station Index. Further, commenters argue that the Arbitron market structure is disadvantageous to small non-ADI markets and the stations located on the fringe of larger markets. Various solutions proposed include basing fees on Grade B Contour coverage or percentage of audience share. 59. We decline to consider any change in the methodology established by the Congress and affirmed in the FY 1994 schedule. We were unable to obtain sufficient information to properly evaluate the merits of using the Nielsen Station Index for establishing fees. The Commission's data bases do not contain data necessary to establish fees from Grade B Contour coverage or percentage of audience share. Thus, we will retain the Arbitron market groupings for FY 1995. e. Commercial Television Satellite Stations 60. Pursuant to our authority to make permissive amendments to our regulatory fees, Television Satellite Stations (authorized pursuant to Note 5 of Section 73.3555 of the Commission's Rules) that retransmit programming of the primary station will be assessed a fee separate from the fee for fully operational television stations. This fee is based upon the $500 fee passed by the House of Representatives for Television Satellite Stations for FY 1994. While not legally binding, the $500 base fee was determined to be appropriate for licensees of Television Satellite Stations in our FY 1994 authorization bill passed in the House of Representatives. See H.R. 4522. In addition, pursuant to the instructions of Section 9, 47 U.S.C.  159(b)(3), a separate fee for Television Satellite Stations would take into account the public interest factors reflected in comments filed in the proceeding to adopt the FY 1994 Schedule of Regulatory Fees. In developing the FY 1995 fee for Television Satellite Stations, we use the $500 fee proposed by the House of Representatives for FY 1994 to calculate a FY 1995 fee for Television Satellite Stations. We divide a "simulated" FY 1994 revenue requirement by the estimated number of Television Satellite Station licenses. Our FY 1995 revenue requirement for Television Satellite Stations is $68,200. Following release of our Notice, we revised our estimate of payment units to 110 licensed Television Satellite Stations based on an updated analysis of these stations. Therefore, we are exercising our authority to make permitted amendments to the Regulatory Fee Schedule to establish a Television Satellite fee of $620 per station. We caution that only those stations designated as Television Satellite Stations in the 1994 Edition of the Television and Cable Factbook (No. 62) are eligible to submit the fee applicable to Television Satellite Stations. Full-service television licensees are subject to the regulatory fee payment required for their class of station and market. See Guidelines, Appendix H at 20. f. Construction Permits - Commercial VHF Television Stations 61. This category includes holders of permits to construct new Commercial VHF Television Stations covered under Part 73 of the Commission's Rules. The FY 1995 revenue requirement for this service category is $54,725. The number of permits is 11. Dividing the revenue requirement for VHF Television Construction Permits by its payment units results in a fee of $4,975. Therefore, for FY 1995, we are assessing permittees $4,975 for each VHF Television Construction Permit held. Upon issuance of an operating license, this fee would no longer be assessed. Instead, for the next regulatory fee period, licensees must pay a fee based upon the designated market of the station. We are making no changes to the rules for calculating and submitting regulatory fees by VHF Television Construction Permittees. See Guidelines, Appendix H at 21. g. Construction permits - Commercial UHF Television Stations 62. This category includes holders of permits to construct new UHF Television Stations covered under Part 73 of the Commission's Rules. The FY 1995 revenue requirement for this service category is $576,375. Payment units for UHF Television Construction Permits are estimated to be 145 permits. Dividing the revenue requirement for this service category by its estimated payment units results in a fee of $3,975 for each UHF Television Construction Permit held. Therefore, we are assessing a fee of $3,975 per UHF Television Construction Permit. Upon issuance of an operating license, this fee would no longer be assessed. Instead, for the next regulatory fee period, licensees must pay a fee based upon the designated market of the station. We are making no changes to the rules for calculating and submitting regulatory fees by UHF Television Construction Permittees. See Guidelines, Appendix H at 22. h. Construction Permits - Satellite Television Stations 63. We are exercising our authority to make permitted amendments to add a new service category to the Regulatory Fee Schedule in recognition that the holders of Construction Permits for UHF and VHF Television Satellite Stations should be charged a separate, lower fee than the fee charged holders of Construction Permits for fully operational Television Stations. See  56 above, where we exercised our authority to make permitted amendments to the Regulatory Fee Schedule relating to the fee for Television Satellite Stations. We developed the fee for Television Satellite Construction Permits by taking the average fee for VHF and UHF Television Stations and relating it to the average fee for Construction Permits for VHF and UHF Television Stations. Using this relationship and the revenue requirement for Television Satellite Stations results in a computed fee of $225 for Construction Permits for Television Satellite Stations. An individual regulatory fee payment is to be made for each Television Satellite Station Construction Permit held. Upon issuance of an operating license, this fee would no long be assessable. Instead, for the next fee period the licensee will be assessed the fee for an operating Television Satellite Station. See Guidelines, Appendix H at 23. i. Low Power Television, FM Translator and Booster Stations, TV Translator and Booster Stations 64. This category includes Low Power UHF/VHF Television stations operating under Part 74 of the Commissions Rules with a transmitter power output limited to 0.01kw for a UHF facility and, generally, 1kw for a VHF facility. Low Power Television (LPTV) stations may retransmit the programs and signals of a TV broadcast station, originate programming, and/or operate as a subscription service. This category also includes translators and boosters operating under Part 74 that rebroadcast the signals of full service stations on a frequency different from the parent station (Translators) or on the same frequency (Boosters). 65. We are exercising our authority to make permitted amendments to the Regulatory Fee Schedule to include FM Translator and Booster Stations because we believe these facilities were inadvertently omitted from the Regulatory Fee Schedule and we are unaware of any reason not to establish a fee for these services. The stations in this category are secondary to full service stations in terms of frequency priority. 66. We have also received requests for waivers of the regulatory fees from operators of community based Translators. These Translators are generally not affiliated with commercial broadcasters, they are nonprofit, nonprofitable, or only marginally profitable, serve small rural communities, and are supported financially by the residents of the communities served. We are aware of the difficulties these Translators have in paying even minimal regulatory fees, and we will address those concerns in the ruling on reconsideration of the FY 1994 Order. 67. The revenue requirement for this service category is $1,210,400. Our estimated payment units is 7,120 licenses, including licenses covering FM translators. Dividing the revenue requirement for this category by its estimated payment units results in a fee of $170 per license. Thus, for FY 1995, we assess licensees of Low Power Television Stations and licensees of both FM and TV Translators and Boosters an annual regulatory fee of $170 for each license held. We are making no changes to the rules for calculating and submitting regulatory fee payments by licensees in this service category. See Guidelines, Appendix H at 24. j. Broadcast Auxiliary Stations 68. This category includes licensees of Remote Pickup Stations, Aural Broadcast Auxiliary Stations, Television Broadcast Auxiliary Stations, and Low Power Auxiliary Stations, authorized under Part 74 of the Commission's Rules. Auxiliary stations are generally associated with a particular Television or Radio Broadcast Station or Cable Television System. 69. The FY 1995 revenue requirement for this category is $900,000. We have revised estimated payment units to 30,000 licenses based upon a review of our license records. Dividing the category's revenue requirement by its estimated payment units results in a fee of $30 per license. Thus, we are assessing licensees of Commercial Auxiliary Stations a $30 annual regulatory fee for FY 1995 on a per call sign basis. We are making no changes to the rules for calculating or submitting regulatory fee payments by licensees of facilities in this service category. See Guidelines, Appendix H at 25. k. International HF Broadcast (Short Wave) 70. This category covers International HF Broadcast Stations licensed under Part 73 of the Commission's Rules to operate on a frequency in the 5,950 Khz to 26,100 Khz range to provide service to the general public in foreign countries. The proposed fees for International HF Broadcast are set forth in the International Service category in the FY 1995 fee schedule. 71. For FY 1995, the revenue requirement for this category is $4,750. Payment units are estimated to be 19 short wave licenses. Dividing the category's revenue requirement by its estimated payment units results in a fee of $250 per license. See Appendix E. Thus, for FY 1995, we are assessing an annual regulatory fee of $250 per station license. We are making no changes to the rules for calculating and submitting fees by licensees of facilities in this service category. See Guidelines, Appendix H at 26. 4. Cable Services a. Cable Television Systems 72. This category includes operators of Cable Television Systems, as that term is defined in Section 76.5 of the Commission's Rules, providing or distributing programming or other services to subscribers under Part 76 of the Commission's Rules. 73. The National Cable Television Association (NCTA), the Small Cable Business Association (SCBA), and the Cable Telecommunications Association contend that our allocation of full-time equivalents (FTEs) to cable television is unsupported and is unduly high. SCBA urges us to exempt small systems from payment of regulatory fees. Finally, NCTA and SCBA contend that we have understated the number of payment units, i.e., cable television subscribers, subject to the fee. 74. We have addressed in paras. 11 through 26 our allocation of FTEs. Therefore, no further discussion of this issue is required here. Further, we find that the Regulatory Fee Schedule adequately considers the financial circumstances of small cable systems by basing the fee payment for cable systems on their number of subscribers so that payments by cable systems reflect their relative size and their relative benefits from our regulation. We have divided the cable system revenue requirement of $29,400,000 by our estimate of 60,000,000 payment units to derive the FY 1995 fee for cable systems of $.49 per subscriber. See Appendix F. Therefore, we are assessing a fee of $.49 per cable television subscriber. 75. Payments for cable systems are to be made on a per subscriber basis by community unit determined as of December 31, 1994 as reported on each cable systems's 1994 Annual Report of Cable Systems (FCC Form 325). We are making no change in the rules for calculating or submitting regulatory fees by cable system operators. See Appendix F for a description of the development of the fee for cable systems, See also, Guidelines, Appendix H at 27. b. Cable Antenna Relay Service 76. This category includes Cable Television Relay Service (CARS) Stations authorized under Part 78 of the Commission's Rules. These stations transmit television and related audio signals, signals of AM and FM broadcast stations and cablecasting from the point of reception to a terminal point from which the signals are distributed to the public by a cable television system. 77. SCBA contends that the CARS fee is out of proportion to the benefits received from our regulation of these facilities. Since SCBA has provided no support for its argument, we will give no consideration to an adjustment of the CARS fee. Further, we reject the argument of SCBA that we should exempt small cable systems from the CARS fee. SCBA has not demonstrated that the fee is unreasonable or that small cable systems receive any less benefit from our regulation than other cable systems. 78. Our FY 1995 revenue requirement for CARS is $603,780 and our estimated payment units are 2,082 licenses. Dividing the revised revenue requirement for CARS by our estimated payment units results in a fee of $290 per license. See Appendix F. Thus, for FY 1995, we are assessing a $290 regulatory fee per CARS license. We are making no change to the rules for calculating and submitting regulatory fees by CARS licensees. See Appendix F for a description of the development of the fee for CARS. See also, Guidelines, Appendix H at 29. 5. Common Carrier Services 79. We have received numerous comments from providers of Common Carrier Services objecting to the amount of the fees proposed for their particular categories of service. Several of these parties complain that the FTEs assigned to the Common Carrier category and the costs apportioned to their particular service category are unduly high, and that the Notice miscalculated the estimated payment units for their services. We have discussed our FTE allocations, cost allocations and unit estimates in paragraphs 8 through 23. We will, however, address issues related to cost allocation and payment units where the arguments presented have not been previously considered. See Appendix G for a description of the development of the fee for services within the Common Carrier category. 80. The Commission is exercising its authority pursuant to Section 9(b)(3) in order to revise the fees associated with regulation by the International Bureau. Numerous commenters have expressed concern that the proposed fees would not be representative of the costs associated with the regulatory activities of the International Bureau, nor would the proposed fees reflect the benefits provided to the payers of the proposed fees. 81. Section 9(b)(3) provides the Commission authority to adjust the Schedule of Regulatory Fees provided the following two conditions are met: (1) the Commission determines that the Schedule requires amendment to comply with the requirements of paragraph (1)(A), which states, "The fees assessed under subsection (a) shall be derived by determining the full-time equivalent number of employees performing the activities described in subsection (a) within the Private Radio Bureau, Mass Media Bureau, Common Carrier Bureau, and other offices of the Commission...," and (2) the basis for changing or reclassifying services in the Schedule reflects additions, deletions, or changes in the nature of its services as a consequence of Commission rulemaking proceedings or changes in law. 82. The Commission has determined that the reorganization establishing the International Bureau satisfies both of the requirements described above. Specifically, the reorganization was a Commission rulemaking proceeding, as defined in 47 CFR 1.412(b)(5), which resulted in the Commission being able to determine the full-time equivalent number of employees performing regulatory fee-based activities in the International Bureau. 83. Specifically, the Commission will adjust the Common Carrier Fee category so that the total collected from the individual services associated with International Bureau fees totals approximately $8.3 million, which is the estimated regulatory cost associated with the International Bureau. The revisions to the Common Carrier fee category have been made by reallocating the difference between what would have been collected under the International Bureau fees proposed in the Notice and $8.3 million to all remaining services in the Common Carrier fee category on a proportional basis. a. Public Mobile/Cellular Radio Services 84. Fees for the Public Mobile and Cellular Radio Services are set forth in the FY 1995 Regulatory Fee Schedule within the Wireless Radio service category. These services include common carriers and others (e.g., cellular radio licensees) offering a wide variety of land-based or air-to-ground mobile telephone, paging or data transmission services to the public, under Parts 22 and 24 of the Commission's Rules. Licensees include those using radio to provide telephone services at fixed locations, such as Basic Exchange Telecommunications Radio Services, Rural Radio and Offshore Radio. 85. In the Notice, we proposed to assess a fee for this service category based upon the total number of telephone numbers or call signs that a licensee provides to its customers. The Regulatory Fee Schedule assessed the fee based on the number of a licensee's subscribers. Reliance on a subscriber count, however, does not fully reflect the benefit of our regulation i.e., usage of channel capacity, because individual subscribers vary in the number of mobile units or telephone numbers utilized. In order to assure that all cellular/mobile units in operation are, in fact, assessable as customers, we are revising our fee structure to assess the fee based on mobile units or telephone numbers provided by a licensee as a more equitable payment formulation because it better reflects actual usage of our frequency assignments and related benefits of our regulation. Therefore, for FY 1995, we amend our Regulatory Fee Schedule so that each cellular licensee will pay an annual fee based on the number of telephone numbers provided, and each licensee in the Public Mobile Radio Service pays an annual regulatory fee for each mobile unit, including paging units, assigned to its customers, including resellers of its services. 86. A number of commenters argue that our proposal to base the fees on units (telephone numbers or mobile units) rather than subscribers is inconsistent with the Regulatory Fee Schedule developed by Congress. They assert that the change to units is not an adjustment permitted under Section 9(b)(2) or a change pursuant to law or regulation as required by Section 9(a)(3). 87. Congress, however, has authorized the Commission to modify the Regulatory Fee Schedule to ensure that the fees are reasonably related to the benefits of the Commission's regulatory activities. See 47 U.S.C.  159(b)(1)(A). Under Section 9, "the Commission is required to adjust the fees to reflect proportionate changes in its appropriations, and is permitted through a rule making, to make changes to the Regulatory Fee Schedule, including adding, deleting or reclassifying services when the Commission determines that such changes are necessary to ensure such fees are reasonably related to the benefits provided to the payor of the fee by the Commission's activities." Conference Report H. Rept. No. 213, 103d Cong., 1st Sess. 1188 (1993). Thus, Congress intended that we modify the fee structure in instances where we find that a revision to the Regulatory Fee Schedule better reflects the relative benefits licensees receive from our regulatory activities and achieves a more equitable distribution of the fee burden. We find that assessing fees on the basis of mobile units or telephone numbers, equitably reflects the actual benefit received from the Commission's regulation. 88. Alltel argues the Commission should modify the date for determining fees so that the burden of the fees would be shared by new service providers. It asserts that equity requires that the fee burden be shared by licensees authorized during the year. 89. We recognize that Alltel's suggestion would distribute the fee burden among additional service providers. However, such a system would be difficult to administer and lead to confusion because regulatees are directed to count payment units as of a date certain, and as new regulatees are authorized, would involve utilization of different dates for computing fees for different licensees. Moreover, we do not believe that a calculation date later in the fiscal year would significantly affect the amounts of the fee payments that we are adopting since many new service providers subject to the fee would be in an early start-up phase of their operations and existing providers would have accounted for substantially all their units of payment under the calculation date that we have proposed. In the FY 1994 Order, establishing December 31 as the calculation date for regulatees paying fees based upon subscriber lines or circuits, we noted that many regulatees file reports based upon information collected as of that date. 9 FCC Rcd at 5365-66  96. In other instances, regulatees calculate subscriber counts as of that date for internal purposes. Reliance on December 31 as a date certain for calculating fees facilitates both the computation of fee payments and our verification that the correct fee payments are submitted. 9 FCC Rcd at 5350,  48-49. Further, since our regulatory fee program is ongoing, new carriers will be subject to payment of fees in the next fiscal year. Thus, we have decided to adopt December 31, 1994, as the date for calculation of fee payments for all mobile regulatees. 90. Frontier and Alltel also argue that cellular and paging licensees are being treated differently from carriers using the interstate network. Frontier asserts that cellular resellers are exempt from the regulatory fee and that this places an unfair burden on facilities-based carriers who must pay for regulatory activities benefitting resellers of mobile services. Also, these parties contend that our treatment of mobile resellers is inconsistent with our proposal to include resellers of interstate services in the fee schedule. 91. We recognize that the fees for mobile service providers are assessed in a manner different from the fee for users of the interstate network and that we are including resellers of interstate services directly in the fee schedule, but not resellers of mobile services. We also recognize that there are substantial equity issues that must be addressed before assessing resellers a fee, in order to protect them from having their mobile units or telephone numbers double counted. For non-mobile common carriers we are adopting a proposal to assess fees on the basis of gross revenues, and we are protecting resellers from double payments by permitting them to deduct from their gross revenues the payments made to facilities based carriers. In the case of mobile resellers, we do not have the data necessary to structure a fee schedule on the basis of gross revenues or in a manner which would protect mobile resellers from double payments. However, by revising the Regulatory Fee Schedule to require a fee payment for every mobile unit or telephone number made available by a licensee to a third party, we will collect a fee for each unit made available to a licensee's customers, including resellers. Moreover, to the extent that the regulatory fees are included in the carriers' charges to the resellers, the resellers will be sharing in the regulatory burden. 92. A number of mobile regulatees also assert that their fees are increasing at a disproportionate rate because of the increase in the per unit rate and because of the change in counting from subscribers to mobile units or telephone numbers used. Our modification of the methodology for computing fees was required because reliance on a subscriber count does not fully reflect actual usage of the frequencies we have authorized mobile providers to operate. For FY 1994, regulatees often paid only a nominal $.06 fee for a single subscriber even though that subscriber may have subscribed to numerous mobile units or telephone numbers. Thus, as a result of the fee methodology, fee payments did not necessarily reflect the direct benefit of our regulation to individual licensees. For those regulatees whose fees reflected actual usage, the modification in counting units will not result in a significant increase in fees. However, the fact that other regulatees may be subjected to larger increases is only a reflection of the fact that their prior fees did not reflect the benefits they received and does not establish that they are being subjected to an unwarranted or disproportionate increase in fees. 93. Several parties, including PCIA, Mobile Media Communications, and Airtouch Paging, requested that the Commission establish a separate and lower fee category for regulatees offering one-way paging services. We have reviewed these requests and determined that a reduced fee for Part 22 one- way pagers is appropriate in view of the quality of the channels afforded paging entities versus cellular providers. Pagers are authorized only to transmit one-way data messages whereas cellular providers operate systems providing two-way voice communications. We are also aware that the paging industry is very competitive and generally has low profit margins compared to the cellular industry and to other public mobile services. We have therefore established a reduced annual fee of $ .02 per pager for FY 1995. This permitted amendment should provide an equitable cost allocation among cellular and other public mobile licensees and paging licensees based upon their relative market pricing structures while minimizing any adverse impact on the one-way paging industry. 94. Our revenue requirement for FY 1995 for Cellular and Other Public Mobile (non-one way paging) carriers is $3,510,000. The revenue requirement for Public Mobile One Way Pagers is $392,000. Based on the comments of parties, we have also revised the estimated payment units for these services to 19.6 million one way pagers and 23.4 million Cellular/Other Public Mobile units. Dividing the revenue requirement for Cellular/Other Public Mobile by its estimated units results in an annual regulatory fee of $.15 per payment unit. Thus, we will assess a fee of $.15 per mobile unit or telephone number in this service. For one way pagers the resulting fee is $.02 per pager. See Guidelines, Appendix H at 30-33. b. Domestic Public Fixed Radio Service 95. The Domestic Public Fixed Radio Service includes stations authorized under Part 21 of the Commission's Rules to use microwave frequencies for video and data distribution within the United States. This category includes licensees in the Point-to- Point Microwave Radio Service, Local Television Transmission Radio Service, Digital Electronic Message Service, Multipoint Distribution Service (MDS), and Multichannel Multipoint Distribution Service (MMDS). We received no comments related to the proposed fee. 96. The FY 1995 revenue requirement for this service is $1,960,000, and the payment units are estimated to be 14,000 licenses. Therefore, we will adopt for Domestic Public Fixed Radio Service licensees a $140 annual regulatory fee per call sign payable on a specified date to be announced by the Commission. Moreover, in response to Southwestern Bell Corporation's request, we will modify our fee payment procedures to permit licensees in the Public Fixed Radio Service to file a single Form 159 stating their number of call signs and the total fee amount with an attached listing of each call sign covered by the fee payment. Licensees with up to 100 call signs may submit a hard copy list with their Form 159. However, we require licensees with greater than 100 call signs to file a data diskette containing their listing of call signs along with a hardcopy Form 159. We are adopting no other change to the rules for calculation and submission of the fee payment by licensees in the Domestic Public Fixed Radio Services. See Guidelines, Appendix H at 34. c. International Public Fixed Radio Service 97. The International Public Fixed Radio Service (IPFRS) is set forth in the FY 1995 Regulatory Fee Schedule within the International fee category. It includes common carriers authorized under Part 23 of the Commission's Rules to provide radio communications between the United States and a foreign point via microwave or H troposcatter systems, other than satellites and satellite earth stations, but not including service between the United States and Mexico and the United States and Canada using frequencies above 72 MHz. The FY 1995 revenue requirement for this service is $4,000, and the payment units are estimated to be 20 licenses. Thus, we are adopting a regulatory fee for IPFRS licensees of $200 per call sign. We are proposing no change to the rules for calculating and submitting fees by licensees in the International Public Fixed Radio Services. See Guidelines, Appendix H at 35. d. Earth Stations 98. Earth stations are set forth in the FY 1995 Regulatory Fee Schedule within the International fee category. The earth station category encompasses all domestic and international earth station facilities authorized or registered under Part 25 of the Commission's rules. These facilities include transmit/receive, transmit-only, and receive-only earth stations; Very Small Aperture Terminals (VSATs) operating in the 12/14 GHz frequency bands; Mobile Satellite Earth stations; and equivalent C-band antennas operating in the 4/6 GHz frequency bands authorized pursuant to blanket authority. 99. In Section 9's Schedule of Regulatory Fees, these facilities were grouped into several categories. Within these categories, some fees were assessed on a per meter basis; other fees were assessed on a per 100 antennas basis. For example, in our FY 1994 Order, we adopted the Regulatory Fee Schedule's requirement that a higher fee be assessed for fixed satellite earth station antennas of 9 meters or more than for those less than 9 meters. This distinction resulted in the anomaly that antennas performing the same function were subjected to different fees, a fee several thousand percent higher for large earth stations than for small earth stations. To rectify this disparity, we proposed in the Notice to exercise our permitted authority to eliminate the dual fee levels for these earth stations. Therefore, we proposed that any earth station antenna in this service category be charged a fee based upon its size as measured in meters in order to eliminate the disparity in fees under the former schedule and to assure that smaller antennas would continue to be subject to a smaller fee requirement than larger antennas. 100. EDS Corporation argues that their small transmit/receive and transmit only earth stations should continue to be assessed fees similar to those charged for earth stations in VSAT networks (a per antenna fee), as Congress prescribed in its fee schedule, instead of fees similar to those for larger transmit/receive, transmit only earth stations (a per antenna-meter fee), as proposed in the Notice. EDS contends that since the enactment of Section 9, no change in the regulation of small transmit/receive and transmit only earth stations has taken place that would justify a revision in the manner in which its fees are assessed. In addition, COMSAT Video contends that C-band transmit/receive and transmit only earth stations should be assessed fees distinct from the fees assessed for Ku-band transmit/receive and transmit only earth stations. COMSAT Video questions our estimated payment unit estimates for transmit-receive and receive only earth stations. 101. We reject EDS's argument that we lack the authority to revise the Regulatory Fee Schedule. As noted, Congress specifically provided that we were to adjust the fees to ensure that they are reasonably related to the benefits received. 9 U.S.C. 159(b)(1)(A). We conclude that we cannot find sufficient difference in our regulation of earth stations (regardless of size or intended use) to warrant establishing separate fees for these facilities. 102. For FY 1995, we proposed to modify the Regulatory Fee Schedule for receive-only earth stations by assessing the fee on a per meter basis, in the amount of $120 per meter, regardless of whether a facility was more or less than 9 meters in diameter. 103. The Associated Press (AP) the National Cable Television Association (NCTA), the Cable Telecommunications Association (CATA), Joint Cable Commenters and the Wireless Cable Industry Association (WCIA) object to the substantial increase in fees proposed for receive only earth stations of less than 9 meters. NCTA and the Joint Commenters contend that the proposed fee would amount to as much as a 10,000 percent increase for receive only earth stations smaller than 9 meters in diameter. CATA and WCIA claim that the burden of the increase would fall upon small cable and wireless cable operators in rural areas, unable to share earth stations among systems. Further, CATA and WCIA argue that Congress distinguished between the fees for large and small receive only earth stations in order not to overburden cable and wireless entities. 104. NCTA argues that the assessment for small receive only earth stations is not substantiated by a description of how the assessment was developed. GE American states that our unit estimate for receive only earth stations is low. Further, AP, CATA and NCTA contend that our deregulation of receive only earth stations and, in particular, our policy to permit operators to decide individually whether to register their facilities for interference protection, demonstrates that only a minimal degree of our regulatory activities are involved with regulation of receive only earth stations. 105. In view of the comments received, we have reevaluated our proposed fee for receive only earth stations. We are aware that our regulatory requirements for these facilities have been substantially modified in recent years, notwithstanding the inclusion of receive only earth stations in Section 9(g)'s fee schedule. In particular, we recognize that domestic receive only earth stations are no longer subject to licensing. (International receive only earth stations are currently licensed). Rather, operators of receive only earth stations may register these facilities with us in order to obtain interference protection and other benefits. Further, our review of the resource burden of providing interference protection to receive only earth stations demonstrates to us that regulation of these facilities accounts for an insignificant portion of the costs attributable to these activities. Therefore, we have decided to exercise our authority to make "permitted amendments" and to delete receive only earth stations as a service subject to a regulatory fee requirement for FY 1995. See 47 U.S.C.  159(b)(3). Therefore, we will assess no fee for receive only earth stations. 106. In addition, we have reviewed the fee structure in effect in FY 1994 for earth stations and conclude that the current structure is not the most equitable for regulatory fee purposes. As noted, all satellite earth stations require a certain amount of regulatory activity. Commenters have focused on individual elements of our regulatory activities in arguing against the changes in fees for particular types of earth stations. For example, certain classes of earth stations require more international activity than others (i.e., coordination and consultation); other classes of earth stations require more rulemaking and enforcement activity than others (i.e., zoning related matters). Since we do not yet have a cost accounting system capable of assigning the cost of specific regulatory activities to specific classes of earth stations, we find that assessing the fee on a per authorization or registration basis, rather than a per meter or 100 antennas basis is the most equitable method of allocating the regulatory costs assigned to satellite earth stations. Moreover, we find no reasonable basis for charging a per meter fee when it appears that the regulatory costs associated with a five or nine meter antenna are similar and the benefits to the payer are no less at five meters than at nine meters. Consequently, we are eliminating the size distinctions and assessing fees on a per authorization or registration basis. 107. Accordingly, we have revised our estimate of the number of payment units to conform to the number of authorizations or registrations contained in this service category (includes VSATs, mobile equivalents, transmit/receive and transmit only earth stations). As of October 1, 1994, 3,378 authorizations and registrations had been issued. The FY 1995 revenue requirement attributable to all earth stations is $1,114,740. Dividing the revenue requirement by our estimate of 3,378 earth stations results in a fee of $330 per authorization or registration. See Appendix G. e. Space Stations (Geosynchronous) 108. Geosynchronous space stations are domestic and international satellites positioned in orbit to remain fixed relative to the earth. They are authorized under Part 25 of the Commission's Rules to provide communications between satellites and earth stations on a common carrier and/or private carrier basis. 109. In addition to issues addressed above relating to FTEs, the satellite parties raise several issues in opposing our proposed space segment fees. Columbia and Panamsat, supported by GE Americom, argue that Comsat is obligated to pay space segment fees for its Intelsat and Inmarsat satellites in addition to the fees it pays for its domestic satellites. Also, Columbia and Panamsat argue that we should base our space segment fee on the number of transponders operated by a licensee rather than its number of operational satellites because transponder usage and bandwidth capacity more rationally reflect the benefits that licensees receive from our regulation. Finally, these parties argue that the number of satellites in operation as of October 1, 1994, the date for calculating fees, is higher than the estimated number of satellites we used to calculate the per satellite fee. 110. We reject the parties' contention that Comsat General must pay fees on a per space station basis for the Intelsat and Inmarsat satellites that it manages. Section 9's legislative history discloses that Congress intended that Comsat General would be subject to a space segment fee only for its licensed operations. Specifically, Congress stated with respect to space station fees that: the Committee intends that fees in this category be assessed on operators of U.S. facilities, consistent with FCC jurisdiction. Therefore, these fees will only apply to space stations directly licensed by the Commission under Title III of the Communications Act. Fees will not be applied to space stations operated by international organizations subject to the International Organization Immunities Act, 22 U.S.C. Section 288 et seq. This language was incorporated by reference in the Conference Report accompanying the 1994 Budget Reconciliation Act, which included the regulatory fee program. Thus Congress did not intend for the Commission to assess a fee per space station for the space segment facilities of Intelsat and Inmarsat. Therefore, we will not require Comsat General to submit fee payments for their satellites. For FY 1996, however, we intend to explore other ways to recover the regulatory costs imposed on the Commission on behalf of Comsat's participation in the Intelsat and Inmarsat programs. 111. Further, we reject the parties' arguments that we should base the space segment fee on transponders aboard operational satellites rather than on the number of operational satellites. Our calculation of fees using space segments rather than transponders is reasonable and reflects Congress' decision to assess satellite fees based on operational satellites. Moreover, Panamsat has provided us with no demonstrable evidence that the costs of regulating the various satellite systems is more closely related to the number of transponders that a satellite carries than to the total number of operational satellites. Nor has Panamsat considered the administrative burden of its proposed fee structure on regulatees subject to the fee and upon our own resources. Because the cost of satellite regulatory activities is reasonably related to the number of operational satellites, we find no basis for modifying our reliance on space stations as payment units. 112. COMSAT General contends that the proposed fee is contrary to the public interest because it will discourage maintenance of older satellites even though they may remain viable providers of low-cost, full time and occasional use commercial services. COMSAT General further contends that the proposed fee will discourage competitive discounting or exploitation of innovative satellite technologies and is harmful to consumers of satellite services, particularly start-up and small businesses, because it results in higher prices for services. 113. We reject Comsat General's contention that our fees may have an adverse impact on innovation in the satellite and other industries by precluding the use of older satellites. Newer satellites offer the public access to faster, more efficient, and more advanced telecommunications services. Providing an incentive to maintain older, less efficient satellites may have a negative impact on the end users of satellite services. Newer satellites are available to perform any service that Comsat general may have intended for older generation satellites. Although Comsat General states that older satellites "may remain viable as providers of low-cost providers of full time and occasional use commercial services", they provide us no documentation that the cost per user to lease capacity on an older satellite is lower than the cost to lease capacity on a newer, high capacity satellite that can serve more customers. 114. Finally, several satellite parties contend that our estimate of payment units for the satellite fee is flawed because we did not calculate the number of satellites in operation on October 1, 1994, the date for the calculation of fees. We have reviewed our records and find that 39 satellites were operational on October 1, 1994. The revenue requirement for regulation of satellites is $2,925,000. Dividing this by 39 operational satellites yields a fee of $75,000. See Guidelines, Appendix H at 40. f. International Bearer Circuits 115. Regulatory fees for international bearer circuits are set forth in the International Service category in the FY 1995 Regulatory Fee Schedule. The fee proposed in the Notice is to be paid by the facilities-based common carrier activating the circuit in any transmission facility for the provision of service to an end user or resale carrier. Also as proposed in the Notice, we are modifying our requirements for payment of the fee for bearer circuits by private submarine cable operators to require that they pay fees for circuits sold on an indefeasible right of use (IRU) basis or leased to any customer other than an international common carrier authorized by the Commission to provide U.S. international common carrier services. Compare FY 1994 Order at 5367. As provided in the FY 1995 fee schedule, 64 Kbps circuits or their equivalent will be assessed a fee. Equivalent circuits include the 64 Kbps circuit equivalent of larger bit stream circuits. For example, the 64 Kbps circuit equivalent of a 2.048 Mbps circuit is thirty 64 Kbps circuits. Analog circuits such as 3 and 4 KHz circuits used for international service are also included as 64 Kbps circuits. However, circuits derived from 64 Kbps circuits by the use of digital circuit multiplication systems are not equivalent 64 Kbps circuits. Such circuits are not subject to fees. Only the 64 Kbps circuit from which they have been derived will be subject to payment of a fee. 116. In the Notice, we estimated the volume of active 64 Kbps circuits or equivalent to be 62,000. AT&T, supported by Sprint, contends that our estimate of the number of bearer circuits subject to the fee was low. We have re-examined our estimate of the number of bearer circuits subject to a fee as of October 1, 1994. Based on this re-examination, we have revised the number of bearer circuits to 125,000. The FY 1995 revenue requirement for this service is $500,000. Dividing the revenue requirement for this service by the number of active bearer circuits results in a fee of $4.00 per circuit. 117. For purposes of calculating equivalent units subject to the bearer circuit fee, we will assess fees as follows: Analog Television Channel No. of equivalent 64 Kbps Size in MHz Circuits 36.............................. 630 24.............................. 288 18.............................. 240 See Appendix G. for a description of the development of the fees for international bearer circuits; see also Guidelines, Appendix H at 41. g. Inter-Exchange and Local Exchange Carriers, Competitive Access Providers, Pay Telephone Providers, and other Non-Mobile Providers of Interstate Service 118. Inter-Exchange Carriers (long distance telephone companies) and Local Exchange Carriers (local telephone operating companies) provide commercial and private residential telephone service. 119. In the Notice, we proposed to require a regulatory fee payment from inter-exchange carriers (IXLs), local exchange carriers (LECs), and competitive access providers (CAPs), consistent with our FY 1994 fee schedule. Also, we proposed to add to the schedule all domestic and international carriers that provide operator services, WATS, 800, 900, telex, telegraph, video, other switched services, interstate access, special access, and alternative access services. We stated that the fee requirement would apply to carriers using their own facilities or reselling facilities and services of other carriers or telephone holding companies, including companies other than traditional telephone companies that provide interstate access service to long distance companies and other customers. 120. In addition, we proposed to modify our methodology for assessing fees upon these carriers generally, including CAPs and resellers, by basing the fee upon the number of customer units, i.e., the number of users of a service. As in FY 1994, inter- exchange and local exchange carriers would be required to calculate their total fee payments based upon their total number of presubscribed lines (PSLs). In the alternative, we proposed to assess fees on providers of interstate services based on their minutes of interstate service in calendar year 1994. For each methodology, we proposed the use of certain equivalency assumptions in recognition that several categories of service providers would be unable to calculate their fees based on either PSLs or minutes of use (MOUs). Moreover, we invited interested parties to file comments proposing "the most efficient and equitable method for assessment of fees." See Notice at paragraph 58. 121. Numerous parties submitted comments opposing our proposal to add resellers and other users of the interstate network to the fee schedule. The parties argue that Section 9 authorizes us to add services to the Regulatory Fee Schedule only if a regulation or change in the law so dictates. See 47 U.S.C.  159(b)(3). Thus, in the view of these parties, no such rule making or change in the law has occurred since the enactment of Section 9 to justify the addition of resellers to the fee schedule. Further, the interested parties contend that the Regulatory Fee Schedule precludes inclusion of resellers because it specifically limits the fees to providers of "presubscribed lines," and resellers do not provide presubscribed lines. See 47 U.S.C.  9(g). Finally, the commenters argue that the imposition of a fee on resellers is contrary to our procompetitive and deregulatory policies, particularly since resellers, in their view, are subject to minimal regulation and derive little benefit from our regulation. 122. We disagree with the argument that our regulation of resellers is so minimal that these carriers should not be subject to a fee requirement. As we observed in the Notice, we required facilities based carriers to remove any restrictions on the resale and sharing of private line facilities and services and our oversight of the interstate communications market has fostered the growth of the strong resale market that currently exists. Nothing that the parties have presented persuades us that their regulation is so minimal or their benefits so attenuated that these carriers should not be subject to a fee. Resellers are subject to tariffing requirements and are obligated to provide their services pursuant to just, reasonable and nondiscriminatory rates and practices in accordance with Sections 201 and 202 of the Act. Their rates and services are also subject to our review pursuant Section 208 of the Act. 123. In addition, we reject the argument that Section 9 requires a rule making other than the instant proceeding to add services to the Regulatory Fee Schedule. Nor do we believe that the fee schedule's provision that we assess fees for FY 1994 based upon PSLs amounts to a congressional directive that we limit our assessment of fees to interstate service providers capable of calculating their fees by a PSL count. 47 U.S.C.  159(g). Section 9's legislative history establishes that we "are permitted through a rule making, to make changes to the fee schedule, including adding, deleting, or reclassifying services when the Commission determines that such changes are necessary to ensure such fees are reasonably related to the benefits provided to the payor of the fee by the Commission's activities." Thus, our inclusion in the Regulatory Fee Schedule of resellers and other carriers using the interstate network is fully consistent with Section 9's provisions. 124. Many common carriers, including inter-exchange carriers, local exchange carriers, resellers, CAPs, and pay telephone operators filed comments addressing our proposal to revise our methodology for assessing fees based on customers units or, in the alternative, on MOUs. In addition, several commenters responded to our invitation to propose a method for assessing regulatory fees on common carriers by urging that we assess the fee based upon the gross revenues of the subject carriers. 125. In describing our proposed methodology, we stated that fees would be assessed based upon the number of customer units. We defined customer units for LECs and pre-selected IXCs as their total number of presubscribed lines, as defined by Section 69.116 of the rules. 47 C.F.R.  69.116. For any other switched services, such as MTS, WATS, 800, 900 and operator service not billed to the number from which the call is placed, the number of units would equal the number of billing accounts less those already associated with those presubscribed lines reported by the carrier. For non-switched service providers, including service provided by CAPs, special access, and private (alternative access) line providers, the number of customer units would be based on the total capacity provided to customers measured as voice equivalent lines. For this purpose, 4 Khz or 64 Kbps equivalents would equate to one voice equivalent line. We proposed to assess the fee for pay phone operators by their number of units based upon the number of pay telephones used for pay telephone compensation. 126. The Notice's alternative fee structure based fees on a carrier's number of MOUs of interstate service in calendar year 1994. For access service provided by local exchange carriers, interstate minutes would equal the number of originating and terminating access minutes. For interstate service subject to access charges, the number of minutes would equal the number of originating and terminating access minutes. For other interstate services billed based on timed usage, the number of minutes would equal the number of billed minutes. For interstate services not billed on the basis of timed usage, minutes would be estimated as the billed revenue in dollars times ten. 127. Several commenters support our proposed assessment of carrier fees based upon customer units. These parties contend that the customer unit methodology parallels the existing fee structure, under which LECs have planned and budgeted for their payments of the fees, and that a count of presubscribed access lines represents both an equitable measure of a carrier's relative market presence and a relatively stable measure. Also, they favor the proposal because its methodology forms the basis for calculation of Universal Service Fund requirements, familiar to the carriers, and because its calculations are simple and straightforward. 128. Other parties disagree that the customer unit approach is the methodology best suited to assessing regulatory fees. These parties claim that allocation mechanisms based on PSLs do not accurately reflect the various interexchange carriers' shares of switched services. According to AT&T, our FY 1994 PSL methodology failed to assess fees upon inter-exchange carrier's in a nondiscriminatory manner because AT&T's customers average significantly less usage and per line revenue than customers of other IXCs and, therefore, discourages its competitors from seeking out and serving low volume users. Further, several carriers state that our proposed equivalency ratios for carriers that cannot calculate their fees by PSLs do not accurately reflect the participation of these carriers in the market. 129. NYNEX and America's Carriers Telecommunications Association (ACTA) support assessing the fee for carriers based on MOUs, as described in the Notice's alternative methodology. NYNEX asserts that the MOU approach better reflects the relative size of each carrier's customer base and its regulatory benefits than do customer units and, thus, would ensure that every carrier pays an equitable share of regulatory costs. Further, NYNEX contends that MOU data is easy to administer and verify and avoids unnecessary reliance on assumptions, calculations and projections. ACTA favors adoption of the MOU approach if resellers are subjected to the fee because, in its view, assessement of the fee by MOUs has the advantages of lower administrative costs and resource burdens since calculation of the fee does not depend on a line count by the LECs or NECA. 130. Several carriers oppose reliance on MOUs due to the large fluctuations in minutes of use which may lead to anomalies that distort the measure of a company's market presence and risk imposing an unfair burden of fees or a windfall in reduced fees for reasons other than a carrier's actual market size. Opponents points out that many LEC services, such as Special Access facilities sold to inter-exchange carriers, are not measured on a minutes of use basis. In this connection, the parties contend that a methodology based on MOUs would be difficult to administer because it relies on complex assumptions in order to calculate the fees for services that are not billed on a time usage basis. Several parties contend that our proposal to rely upon network usage assumptions in assessing fees for competitive access providers will result in excessive and unjustified fees from these carriers. 131. In response to our invitation to propose efficient and equitable methodologies for assessing the carrier fee several commenters support adoption of a methodology based upon a carrier's gross interstate revenues. These parties contend that fees based on a multiplier of each carrier's total gross interstate revenues would result in a fair allocation of costs in as competitively neutral a manner as possible. Further, they argue a gross revenue assessment methodology permits dispensing with assumptions or projections, necessary to the implementation of the customer unit and MOU methodologies. Moreover, they state that gross interstate revenues are widely reported and are readily verifiable by reference to corporate tax filings. 132. Several parties support a revenue-based fee calculation because it would permit the assessment of fees on the basis of data that could be compiled by carriers in a manner similar to our methodology for funding the Telecommunications Relay Service (TRS). NECA states that the TRS model would ensure that the carriers subject to the fee would be equitably charged through use of an interstate revenue basis, easily administered and based on externally verifiable data. Further, according to NECA, the TRS mechanism would permit the allocation of fees to special access services without administrative difficulty because exchange carriers could base their fees on submitted TRS data. Resellers supporting assessment of the fee by gross revenues urge that we permit carriers to reduce their fee payments by the amount that they pay to other carriers for facilities and services in order to avoid double payment of the fee. 133. MCI and Sprint oppose assessing fees based on gross interstate revenues. MCI contends that the revenue method is flawed because it is the byproduct of a carrier's minutes of use and, therefore, may fluctuate greatly and be unrepresentative of a carrier's market presence. For its part, Sprint contends that the term "gross revenues" is open to several definitions and that revenue figures are more subject to revision than presubscribed line counts that could necessitate delay, or shortfalls, in the collection of fees. 134. After considering the arguments of the many commenters in this proceeding, we have decided to adopt a gross revenues methodology for assessing carrier fees. A revenue based allocation will effectively spread the cost recovery burden of the fee requirement in proportion to the benefits realized by those carriers subject to our jurisdiction. We find that assessing fees by interstate gross revenues is reasonably related to the benefits of the regulation that these carriers receive. Properly administered, a gross revenues methodology will ease administrative burdens of carriers in calculating fee payments, provide reliable and verifiable information upon which to calculate the fee and equitably distribute the fee requirement in a competitively neutral manner. Interstate revenues are widely reported and more easily verifiable than customer units or MOUs and, therefore, avoid the need for burdensome reporting requirements. A revenue based methodology avoids the calculation problems inherent in both the customer unit and minutes of use alternative and permits the assessment of fees without any need to rely upon assumptions and projections. 135. We will require non-mobile common carriers, including resellers, that provide interstate telecommunications services to calculate their fee payments based upon their proportionate share of gross interstate revenues using the methodology that we have adopted for carriers to calculate their contributions to the TRS fund. Interstate revenue data is already reported to NECA due to its role as administrator of the TRS fund. In order to avoid imposing a double payment burden on resellers, we will permit interexchange carriers to subtract from their reported gross interstate revenues any payments made to underlying carriers for telecommunications facilities or services. This would include payments for interstate access services. It should be emphasized that the assessment and collection of regulatory fees is a Commission activity, totally separate and apart from TRS funding. However, we intend that carriers subject to payment of regulatory fees calculate and file their fees consistent with the TRS methodology, as modified by Public Notice to be published in the Federal Register. The FY 1995 revenue requirement is $46,310,880, and the total TRS revenue is estimated to be $52,626,000,000, resulting in a fee of 0.00088 per TRS revenue dollar. See Guidelines, Appendix H at 42-44. 136. On October 7, 1994, the Common Carrier Bureau, on its own motion, issued a waiver permitting price cap regulated common carriers to treat the initial assessment of regulatory fees and any subsequent changes in the level of the fees paid, either as a result of Commission modification of the fee schedule, or due to increases or decreases in the number of presubscribed or access lines on which the fee must be paid, as an exogenous cost by making appropriate adjustments to their price cap indexes. Price Cap Treatment of Regulatory Fees Imposed by Section 9 of the Act, 9 FCC Rcd 6060 (Com. Car. Bur., 1994), Erratum, 9 FCC Rcd 6487 (Com. Car. Bur., 1994). MCI Telecommunications Inc. (MCI) filed a petition for reconsideration of that decision on November 7, 1994. In that petition, as well as in comments in this proceeding, MCI requests that the Commission reverse the Bureau regulatory fees order and require LECs to file for a waiver of the exogenous cost rules. In support of its petition, MCI alleges that the Common Carrier Bureau failed to follow Commission procedures requiring the LECs to file for waivers of the exogenous cost rules, shifted the burden of proof from the LECS, lacked a record on which to make a decision, and prejudged the petitions for reconsideration that were filed on the original regulatory fees order. Several LECs opposed the MCI petition. 137. MCI has not presented any evidence that would undermine the Bureau's conclusion that the Section 9 regulatory fees meet our criteria for exogenous cost treatment. As explained in the Bureau order, regulatory fees imposed pursuant to Section 9 of the Act are a legislatively-imposed charge on telecommunications common carriers, the imposition of which is beyond the control of the carrier. Moreover, MCI has not shown that the grant of the waiver sua sponte violates any Commission rules or procedures. In fact, Section 1.3 of the Commission's rules specifically authorizes grant of waivers sua sponte. Accordingly, MCI's petition seeking reconsideration of the Bureau's order is denied. In addition, we take this opportunity to clarify that carriers subject to price caps may file tariffs reflecting the effects of Commission-mandated changes in the regulatory fee schedule after the annual tariff filing is due. See LEC Price Cap Performance Review at para. 317. B. Procedures for Payment of Regulatory Fees 138. Generally, as proposed in the Notice, we are retaining the procedures established in our FY 94 Order for the payment of regulatory fees. Consistent with Section 9(f) of the Act, we are again providing for three categories of fee payments, based upon the category of service for which the fee payment is due and the amount of the fee to be paid. 47 U.S.C.  159(f). The fee categories are 1) "standard" fees, 2) "large" fees, and 3) "small" fees. 1. Annual Payments of Standard Fees 139. Standard fees are those regulatory fees that are payable in full on an annual basis. Payers of standard fees are not required to make advance payments for their full license term. All standard fees are payable in full on the date we establish for payment of fees in their regulatory fee category. The payment dates for each regulatory fee category will be announced by public notice in the Federal Register following the termination of this proceeding. 2. Installment Payments for Large Fees 140. Our Notice proposed that regulatees in any category of service with a payment due of $12,000 or greater would be eligible to pay their fees in two installments. However, as a practical matter since the time for collecting fees will be extremely limited, regulatees subject to a fee will be required to submit their fees on a single date. In most instances, the requirement to submit a single payment should work no hardship since regulatees will have had no less than ninety days notice of the amount of their fee requirement and the use of these funds throughout substantially the entire fiscal year. 3. Advance Payments of Small Fees 141. As proposed in the Notice, we will again treat regulatory fee payments by certain radio licensees as small fees subject to advance payments. Advance payments will be required from licensees of those services that we decided would be subject to advance payments in our FY 1994 Order. Payers of advance fees will submit the entire fee due for the full term of their licenses when filing their initial, reinstatement or renewal application. Those subject to the fee must pay the amount due for the current fiscal year multiplied by the number of years in the term of their requested license. The payor would not be subject to the payment of a new fee until filing an application for renewal or reinstatement of the license. Thus, payment for the full license term would be made based upon the regulatory fee applicable at the time the application is filed. Refunds will not be made in cases where the fee for a service is lower for FY 1995 than the fee paid under the FY 1994 fee schedule. The Commission will announce by public notice in the Federal Register the effective date for the payment of small fees pursuant to the FY 1995 fee schedule. 4. Timing of Standard Fee Calculations and Payment Dates. 142. As noted, the date for payment of standard fees will be published in the Federal Register. For licensees, permittees and holders of other authorizations in the Common Carrier, Mass Media, and Cable Services, whose fees are not based on a subscriber, unit or circuit count, fees should be submitted for any authorization held as of October 1, 1994. As in our FY 1994 Order, we are establishing October 1 as the date to be used for calculating standard fees since it is the first day of the fiscal year and, therefore, current licensees subject to the fees would have benefited from our regulatory activities from the beginning of the period covered by the payment. 143. In the case of regulatees whose fees are based upon a subscriber, unit or circuit count, the number of a regulatee's, subscribers, licenses or circuits on December 31, 1994, will be used to calculate the fee payment. We have selected the last date of the calendar year because many of these entities file reports with us as of that date. Others calculate their subscriber numbers as of that date for internal purposes. Therefore, calculation of the regulatory fee as of that date will facilitate both an entity's computation of its fee payment and our verification that the correct fee payment has been submitted. C. Ordering Clauses 144. Accordingly, it is ordered that the rule changes as specified below are adopted. 145. It is further ordered that the rule changes made herein will become effective 90 days after publication in the Federal Register. This action is taken pursuant to Sections 4(i), 4(j), 9, and 303(r) of the Communications Act of 1934 as amended, 47 U.S.C.  154(1) and 154(j) and 159 and 303(r). 146. It is further ordered that the petition for reconsideration filed by MCI Telecommunications Inc. is denied. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary Appendix A Regulatory Flexibility Analysis Need and Purpose for This Action This Report and Order adopts a Schedule of Regulatory Fees in order to collect $116,400,000, the amount that Congress has required the Commission to recover through regulatory fees for FY 1995. The Report and Order seeks to ease the burden of compliance with the fee requirement by increasing estimated payment units, where appropriate, and by revising methodologies for assessing fees to better assure that fee payments are reasonably related to the benefits that regulatees derive from the Commission's regulation. The Commission has also reduced the threshold payment amounts for eligibility for installment payments. Summary of Comments America's Carriers Telecommunications Association (ACTA) argues that proposals set forth in the Notice of Proposed Rulemaking would adversely impact on resale carriers, contending that the proposed fee would double the fee for interstate exchange carriers, including resellers and other carriers newly subject to the fee. Further, ACTA contends that resale carriers would be subject to a "double fee payment" because resellers would pay the fee directly and also be charged the fee by facilities-based carriers from whom they obtain facilities and services. Proposals Adopted In response to comments by numerous parties, the Commission rejected the methodologies for assessing fees for interstate carriers set forth in the Notice of Proposed Rulemaking. Instead, the Commission has adopted a methodology for assessing fees based upon a carrier's gross interstate communications revenues, similar to the method that the Commission adopted for calculating carrier contributions to the fund for the Telecommunications Relay Services (TRS). The Commission found that the TRS methodology provides an efficient and equitable mechanism for assessing fees. Carriers subject to the fee would not be unduly burdened because they already report the information needed to calculate the fee to the National Exchange Carriers Association (NECA), the administrator of the TRS fund. Moreover, the Commission has eliminated the "double fee payment" of concern to ACTA by permitting resale carriers to subtract from their reported gross revenues any payments made for facilities and services to facilities-based carriers.