Insights

Potential New FCC Fee on Toll-Free Service Providers

Dec 30, 2014

The Federal Communications Commission (FCC) is in the process of implementing a new annual fee that will be assessed on the number of Toll-Free Numbers (TFNs) a Toll-Free Service Provider has reserved.

The FCC is a self-funded agency.  Therefore, even though Congress sets an appropriations level for the agency every year, fees paid by regulated entities fund the agency. There are two sets of fees: one is annual, and one is for specific FCC applications.  The annual fees are intended to cover the FCC’s rulemaking and enforcement functions, as well as overhead.

The FCC determined that Toll-Free Service Providers and the Toll-Free Industry in general require the utilization of FCC resources for rulemaking and enforcement, but do not currently pay FCC fees, except as part of interstate revenues for entities subject to those fees. For example, the FCC expends resources every time there is a new Toll-Free code opening or when there are enforcement actions.  Because of this use of FCC resources, the FCC proposed that a new fee be instituted on Toll-Free Service Providers based on the number of reserved TFNs.

The FCC’s proposal has not yet been finalized.  However, it is likely that the fee will be about a penny per month per TFN, or twelve cents a year per TFN. At the same time, the FCC also declared that any company’s annual fee of less than $500 will be considered de minimis, and such companies will be exempt from paying that annual FCC fee.  Therefore, if the FCC decides to implement its penny per month per TFN formula, Toll-Free Service Providers with less than 4,166 reserved TFNs will be exempt from the annual fee.

There are many significant logistical questions that the FCC still has to answer before it can fully implement this fee.

• Will the FCC require Toll-Free Service Providers to register with the FCC and how will that process work?
• When will the FCC count TFNs for the annual fee assessment?
• What type of enforcement will the FCC use in the case of non-payment?
• Will Toll-Free Service Providers that already pay fees on their Toll-Free revenue as Interstate Telecommunications Service Providers be assessed fees on both the number of TFNs and the amount of interstate revenue generated?

We will be monitoring the situation and working with the FCC to ensure that the fee implementation is done in an efficient and sensible manner. If and when the FCC finalizes its plans, we will be communicating with the Toll-Free Service Provider community to ensure that each provider is aware of their new FCC fee responsibilities. Stay tuned for more updates.

Joel Bernstein

Vice President, Regulatory and Public Policy