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FCC's Annual Fee Hike Irks Satellite TV Providers

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The Federal Communications Commission (FCC) has set its annual regulatory fees at $384 million for 2016, an increase of 11–13% on an average from the year-ago figure. The fee hike will cover the regulatory body’s one-time costs of $44 million for reorganizing and reducing office space. Moreover, the FCC has raised fees for satellite TV providers like AT&T Inc. (T - Free Report) , DIRECTV and Dish Network Corp. (DISH - Free Report) that will now pay 27 cents per subscriber – more than double the fees of 12 cents charged last year. However, the  charges are lower than the rate of $1 per subscriber paid by cable TV and IPTV providers like Comcast Corporation (CMCSA - Free Report) and Charter Communications Inc. (CHTR - Free Report) .

Industry Response

The American Cable Association (ACA) praises the fee increase for satellite TV operators as it is deemed to bridge the yawning gap between cable operators and satellite TV operators. However, Dish expressed discontentment, citing that consumers will ultimately bear the brunt of the raised fees.

The Bottom Line

The pay-TV industry, comprising cable TV and satellite TV players, has been witnessing subscriber loss owing to the growing popularity of over the top (OTT) video streaming service providers like Netflix Inc. (NFLX - Free Report) and Hulu.com. Thus, many of these pay-TV companies are trying to expand their IPTV presence to check churn. However, unlike IPTV, these OTT services are not regulated by the FCC and hence this asymmetric regulation may hurt the pay-TV industry at large. This has led industry lobbyists call for regulation of such OTT services. However, no progress on this aspect has been made till now.

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