Each year with the end of summer comes an announcement from the FCC as to how it is divvying up its operating costs to then charge its regulatees in the form of regulatory fees. This annual ritual, required by Congress, makes the FCC virtually unique among federal agencies in funding its operations by passing the hat among those it regulates (and then charging them a fee to process each application to boot).
Bringing to a close the process initiated with the adoption of the Secure and Trusted Communications Act of 2019, the FCC’s Public Safety and Homeland Security Bureau released its list of communications equipment and services that it has deemed to pose an unacceptable risk to U.S. national security. U.S.-based service providers are prohibited from receiving federal subsidies for purchasing the listed communications equipment or services (Covered List), and service providers will be given an opportunity to receive federal funds to subsidize the removal and replacement of the communications equipment and services included on the Covered List.
The Continuing Appropriations Act, 2021 and Other Extensions Act, a $2.3 trillion COVID-19 relief and omnibus government funding package, contains several noteworthy communications-related measures, including $7 billion in funding for broadband initiatives and expanded television and radio station eligibility for the Paycheck Protection Program administered by the Small Business Administration (SBA).
$7 Billion in Broadband Funding
The legislation’s broadband provisions target funding to both new and existing programs, responding to immediate broadband access and affordability challenges intensified by the pandemic, while also addressing longer-term broadband deployment and network security issues. Specifically, the legislation will provide additional funding for telehealth, create an emergency broadband subsidy program for eligible low-income households, fund increased broadband deployment on Tribal lands and in unserved areas, and support the removal and replacement of communications network equipment and services that pose risks to national security. An overview of these provisions is included below.
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On Monday, August 17, 2020, the Department of Justice, the Federal Aviation Administration, the Department of Homeland Security, and the Federal Communications Commission released a joint advisory on the acquisition and use of counter-drone equipment by non-federal public and private entities. In the Advisory, the agencies highlight federal criminal laws and other federal statutes and regulations that may be implicated by the use of such technology, specifically for drone detection and mitigation.
The Advisory comes at a time when the United States is seeing a significant uptick in the use of drones or unmanned aircraft systems (UAS). Last week, the FAA noted that more than 1.6 million commercial and recreational drones are registered with the agency, and that it has certified more than 188,000 remote aircraft pilots. This widespread adoption of drones has heightened security concerns over the risk that they could present to the public, particularly at widely attended outdoor events such as sporting events or concerts. In addition to the use of drones in warfare, high-profile domestic incidents, including this week’s close call between a drone and Air Force One over the Washington area, present a case for the need for effective and widely available counter-UAS measures. As tech companies race to develop solutions, federal agencies are cautioning the public to be mindful of the possible legal restrictions of selling and operating counter-UAS technology.
On April 2, 2020, the FCC established the COVID-19 Telehealth Program (Program), which will guide the disbursement of $200 million to health care providers for connected care services to their patients. We published our summary of the Program on April 3, 2020, and followed up with a discussion of the FCC’s application procedures on April 9, 2020, and a review of the first wave of proposals granted on April 16, 2020.
With the fourth tranche of proposals approved on April 29, 2020, the FCC has now granted 30 funding proposals in 16 states. The FCC has pledged to review and grant eligible proposals on a rolling basis until either the FCC runs out of funds or the national pandemic ends.
As discussed in our prior alerts, the CARES Act of 2020 provided $200 million for the FCC to distribute to eligible parties with proposals to provide connected care services in response to the COVID-19 pandemic. The funds could be used for (i) telecommunications services and broadband connectivity services, (ii) data and information services, and (iii) internet-connected devices and equipment.
While the FCC has not released for public review most of the approved proposals, based on the public notices that have been released, it is clear that the FCC is willing to provide funding for proposals to implement connected care services and devices. Most of the approved proposals requested funding for a combination of:
- Remote patient monitoring;
- Portable equipment for screening at remote centers and nursing homes;
- Video services including patient visits; and
- Connected devices (tablets) for staff and high-risk patients.
On May 1, 2020, the FCC announced that, as of May 3, 2020, all applicants must submit their applications through the online portal.
Recently, there has been a push by groups to expand the pool of eligible entities. The American Hospital Association requested that the FCC reconsider its decision to only provide funding for nonprofit applicants. Other organizations like HCA Healthcare and the American Dental Association supported the expansion of eligible entities, arguing that the COVID-19 pandemic has affected all health care providers (including dentists) and that the CARES Act did not require the nonprofit limitation. The U.S. Chamber of Commerce also supported the expansion of funding opportunities, noting that 20 percent of the nation’s hospitals are prevented from filing proposals for COVID-19 funds.
It is unclear whether the FCC will adjust its eligibility standards to include for-profit hospitals and medical practices, especially in light of the availability of funds that have yet to be allocated. We will continue to monitor the program’s progress and report any changes in the FCC’s rules.
On March 31, 2020, the FCC adopted a Report and Order to implement the COVID-19 Telehealth Program. The Program was established in the CARES Act, and the FCC was appropriated $200 million to provide to eligible medical facilities to provide telehealth services to their patients.
A more detailed discussion of the FCC’s Report and Order creating the Program, and a discussion of the procedures to apply for funding, can be found here and here. The Program’s intended purpose is to provide emergency funding for expenses arising from the COVID-19 pandemic that fall outside of the normal procurement process. Under the new program, non-profit hospitals, teaching hospitals, rural health clinics and skilled nursing facilities can apply for funds from the FCC to be used for voice and internet service, remote patient monitoring platforms, and Internet-connected devices and equipment.
The window for submitting applications opened on Monday, April 13th, and the FCC announced today that the first wave of applications had been granted. Below is a summary of each approved funding proposal:
- Grady Memorial Hospital in Atlanta, Georgia, was awarded $727,747 to implement telehealth video visits, virtual check-ins, remote patient monitoring, and e-visits to patient’s hospital rooms, which it said would enable it to continue to provide high quality patient care, keep patients safe in their homes, and reduce the use of personal protective equipment during the COVID-19 pandemic.
- Hudson River HealthCare, Inc., in Peekskill, New York, was awarded $753,367 for telehealth services to expand its COVID-19 testing and treatment programs serving a large volume of low-income, uninsured, and/or underinsured patients throughout southeastern New York State, encompassing the Hudson Valley, New York City, and Long Island.
- Mount Sinai Health System, in New York City, was awarded $312,500 to provide telehealth devices and services to geriatric and palliative patients who are at high risk for COVID-19 throughout New York City’s five boroughs.
- Neighborhood Health Care, Inc., in Cleveland, Ohio, was awarded $244,282 to provide telemedicine, connected devices, and remote patient monitoring to patients and families impacted by COVID-19 in Cleveland’s West Side neighborhoods, targeting low-income patients with chronic conditions.
- Ochsner Clinic Foundation, in New Orleans, Louisiana, was awarded $1,000,000 for telehealth services and devices to serve high-risk patients and vulnerable populations in Louisiana and Mississippi, to treat COVID-19 patients, and to slow the spread of the virus to others.
- UPMC Children’s Hospital of Pittsburgh was awarded $192,500 to provide telehealth services to children who have received organ transplants and are thus immune-compromised and at high risk for COVID-19.
The FCC will continue to process applications until the earlier of (i) granting proposals for the full $200 million budgeted; or (ii) the end of the national emergency.
Even though the FCC stated that it would likely not grant proposals for more than $1 million, considering the rapid processing and approval of the first seven applications, interested parties will want to move quickly to submit their applications.
The FCC has released its finalized schedule of annual Regulatory Fees for Fiscal Year 2019, and thanks to the collective efforts of all 50 State Broadcasters Associations and the National Association of Broadcasters, there is some good news for radio stations and satellite television stations.
But before we get to that, some information for you from the FCC’s Public Notice released today on filing requirements. Fees will be due by 11:59 p.m. EDT on September 24, 2019. You must file via the FCC’s Fee Filer system, which is available for use now. You may pay online via credit card or debit card, or submit payment via Automated Clearing House (ACH) or wire transfer. Remember that $24,999.99 is the daily maximum that can be charged to a credit card in the Fee Filer system. As a result, many stations may have to pay their fees using the other methods.
Television broadcast stations will see an unfamiliar number in the “Quantity” box when they go to pay. This relates to the FCC’s phase-in of a population-based methodology for calculating television station fee amounts. It cannot be changed and should not be a cause for concern. Regulatees whose total fee amount is $1,000 or less are once again exempt and do not need to pay.
In most years, the outcome of the annual Regulatory Fee battle ends with the FCC’s various regulatees rolling their collective eyes and murmuring “just tell me how much I have to fork over.” This year’s Regulatory Fee proceeding had some surprises, however. When the proposed fee amounts were first announced, they contained a dramatic increase in year-over-year fee amounts for most categories of radio stations. Yet, the reason for this sudden increase was neither addressed by the FCC nor readily apparent from the FCC’s brain-numbing summary of its calculation process.
In response, all 50 State Broadcasters Associations and the NAB filed comments pressing the FCC to revisit its fee methodology and to explain or correct what appeared to be flawed data used to calculate broadcast Regulatory Fee amounts. In particular, they pressed the FCC to explain why the estimated number of radio stations slated to cover radio’s share of the FCC’s budget had inexplicably plummeted between 2018 and 2019, resulting in each individual station having to shoulder a significantly higher fee burden.
In its regulatory fee Order, the Commission acknowledged that its estimate of the number of radio stations that would be paying Regulatory Fees in 2019 had been “conservative”, and failed to include 553 of the nation’s commercial radio stations. Once these stations were added to the total number of radio stations previously anticipated to pay Regulatory Fees, the impact was to reduce individual station fees from those originally proposed by 9% to 13%, depending on the class of radio station.
This adjustment prevented what would have otherwise been a roughly $3 million dollar overpayment by radio stations nationwide, significantly exceeding the FCC’s cost of regulating radio stations in FY 2019. The fact that the FCC listened to the concerns of broadcasters, investigated the discrepancy between 2019 station data and that of prior years, and made appropriate changes to fix the problem, is heartening, particularly given that stations’ only options are paying the fees demanded, seeking a waiver, or turning in their license.
Terrestrial satellite TV stations also received a requested correction to their fee calculations. As noted above, the FCC is transitioning from a DMA-based fee calculation methodology to a population-based methodology for TV stations. To phase in this new methodology, the Commission proposed to average each station’s historical and population-based Regulatory Fee amounts and use that average for FY 2019 before moving to a fully population-based fee in FY 2020.
In calculating the average of the “old” and “new” fees, however, the FCC neglected to use the reduced fee amount historically paid by TV satellite stations, which is much lower than that paid by non-satellite TV stations in the same DMA. As a result, a TV satellite station might have seen its 2019 fees jump by tens of thousand of dollars over FY 2018, only to see them drop again in FY 2020. The FCC acknowledged that its intent in adopting the phase-in was not to unduly burden TV satellite stations in FY 2019, and it therefore recalculated those fees using the lower historical fee amounts traditionally applied to such stations.
While these reductions are a rare win against ever-increasing regulatory fees, there remain big picture issues that Congress and the FCC need to address in the longer term. Significant among these is the FCC’s reliance on collecting the fees that support its operations from the licensees it regulates (a burden not a benefit), while charging no fees to those that rely on the FCC’s rulemakings to launch new technologies on unlicensed spectrum or obtain rights against other private parties via the FCC’s rulemaking processes (a benefit not a burden). Such a narrow approach to funding the FCC makes little sense, particularly where it unduly burdens broadcasters, who, unlike most other regulatees, have no ability to just pass those fees on to consumers as a line item on a bill.
We live in a time of disruption. Disruption affects all areas of the economy, but surely the most affected has to be the communications sector. If any government agency can claim to be the regulator of this disruption, it must surely be the FCC. Yet despite the FCC’s position at the forefront of these changes, its Regulatory Fee process is mired in a system in which broadcasters are left holding the bag for more than 35% of the FCC’s operating budget (once again, burden not benefit). Even as the FCC spends more of its time and resources on rulemakings, economic analysis, and technical studies surrounding new technologies and new entrants into the communications sector whose main goal is to nibble away at broadcasters’ spectrum, audience, and revenue, it still collects regulatory fees only from the licensees and regulatees of its four “core” bureaus – the International Bureau, Wireless Telecommunications Bureau, Wireline Competition Bureau, and Media Bureau. It’s an old formula, and it no longer works.
Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:
- FCC Revokes License for Unpaid Regulatory Fees; Warns Other Stations of Similar Fate
- Texas Station Warned Over Multiple Tower and Transmission Violations
- FCC Nabs Massachusetts Pirate While Commission Continues to Push for Anti-Piracy Legislation
Embedded in the Music Modernization Act signed into law in 2018 was a provision that extended most federal copyright protections to pre-1972 sound recordings. Prior to the enactment of the MMA, sound recordings made prior to February 15, 1972, may have been protected under state law, but federal copyright law protections did not apply.
Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s special issue takes a look at the government’s renewed efforts to scuttle Pirate Radio operations.
Since the government first began regulating the airwaves, it has struggled to eliminate unlicensed radio operators. In its latest effort, the FCC is taking a hardline approach to this illegal behavior and is partnering with local and federal law enforcement, as well as Congress, to accomplish the task. While Chairman Pai has made clear that pirate radio prosecutions are once again a priority at the FCC, it is Commissioner O’Rielly who has been the most vocal on this front, calling for more aggressive action against unauthorized operators. The continued prevalence of pirate radio operations has been chalked up to several factors, including insufficient enforcement mechanisms and resources, the procedural difficulties in tracking down unregulated parties, and lackadaisical enforcement until recently. Regulators and broadcast industry leaders have also expressed frustration with the whack-a-mole nature of pirate radio enforcement—shutting down one operation only to have another pop up nearby.
Congress has also begun to take an interest in the issue, with the House Subcommittee on Communications and Technology holding a hearing last week discussing the subject. One of the witnesses was David Donovan, president of the New York State Broadcasters Association. In his testimony, he listed numerous risks that unlicensed operations present to the public, including failure to adhere to Emergency Alert System rules and RF emissions limits (which can be critically important where a pirate’s antenna is mounted on a residential structure). Pirate operators also create interference to other communications systems, including those used for public safety operations, while causing financial harm to legitimate broadcast stations by diverting advertising revenue and listeners from authorized stations.
Despite these harms, pirate operations continue to spread. This past month, the FCC issued a Notice of Unlicensed Operation (“NOUO”) to a New Jersey individual after the FCC received complaints from the Federal Aviation Administration (“FAA”) that an FM station’s broadcasts were causing harmful interference to aeronautical communications operating on air-to-ground frequencies. FCC agents tracked the errant transmissions to the individual’s residence and confirmed that he was transmitting without authorization.
Days later, the FCC issued an NOUO to another New Jersey resident who was transmitting unlicensed broadcasts from a neighborhood near Newark Airport. Once again, FCC agents were able to determine the source of the signal and found that the property owner was not licensed to broadcast on the frequency in question.