FCC Unable to Track Fees Owed, GAO Study Finds

The Federal Communications Commission’s accounting system for handling millions of dollars in licensing and regulatory fees has such serious shortcomings that it cannot accurately track whether broadcasters and cable operators are paying what they owe, a Senate subcommittee said.

A report prepared by the General Accounting Office for the Senate’s Permanent Subcommittee on Investigations found that the FCC’s cable bureau was unable to determine whether fees were properly collected on 71% of its applications, and that the mass media bureau had inadequate documentation for 59% of its applications.

The subcommittee said at least hundreds of thousands of dollars in regulatory fees go uncollected by the FCC each year because the agency doesn’t have a mechanism to identify which telecommunications companies must pay.

The FCC did its own study of fees in 1998 and told the Treasury Department that more than 800 radio stations owed the agency about $600,000. The FCC also told the Treasury it was owed about $15 million in penalties at the end of fiscal 1998.

To dramatize the alleged fiscal lapse at the agency, a subcommittee investigator filed an application with the FCC on behalf of a fictitious phone company and got FCC approval without paying the required $600 application fee.

“It is troubling and sadly ironic that the Federal Communications Commission--an agency charged with regulating technologically sophisticated industries--did not implement an accounting system capable of determining if it is collecting the money it is owed,” said Sen. Susan Collins (R-Maine), chairwoman of the investigations subcommittee.

Regulatory fees imposed on broadcasters, satellite operators, phone carriers and other telecommunications companies were instituted by Congress in 1993 to offset the FCC’s administrative costs. The various fees provided about 70% of the FCC’s $222-million 1998 budget, the GAO said.

The problem is largely caused by the FCC’s failure to link its fee-collection database to its licensing database, the GAO said. It is compounded by the task of keeping track of the rapidly fluctuating assets of huge media companies.

FCC officials declined to comment publicly about the GAO report. But privately some said the burgeoning world of telecommunications doesn’t easily lend itself to fee collection.

FCC fees based on the number of subscribers served or stations owned, for instance, are nearly impossible to accurately calculate in today’s merger-crazed climate.

On Wednesday, top FCC officials acknowledged that they don’t even know if AT&T;’s cable holdings exceed current FCC ownership limits because so many cable system transactions are pending at AT&T;, which recently acquired cable giant Tele-Communications Inc.

The GAO report noted that the FCC has begun taking steps to address the problem.