[Federal Register Volume 73, Number 12 (Thursday, January 17, 2008)]
[Rules and Regulations]
[Pages 3197-3202]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-759]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CG Docket No. 03-123; FCC 07-186]


Telecommunications Relay Services and Speech-to-Speech Services 
for Individuals With Hearing and Speech Disabilities

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission adopts new cost recovery 
methodologies regarding compensation for the provision of 
Telecommunications Relay Services (TRS) from the Interstate TRS Fund 
(the Fund). Those cost recovery methodologies will result in fairer, 
more predictable rates that better reflect the actual costs and market 
realities of providing TRS. The Commission also: adopts new per-minute 
compensation rates for the various forms of TRS; clarifies the nature 
of certain cost categories and extent to which they are compensable 
from the Fund; reaffirms the role that the TRS Advisory Council is to 
play in the oversight of TRS; and announces its intent of additional 
and more comprehensive auditing of TRS providers to ensure Fund 
integrity.

DATES: 47 CFR 64.604 (c)(5)(iii)(C) contains information collection 
requirements that have not been approved by the Office of Management 
and Budget (OMB). The Commission will publish a separate document in 
the Federal Register announcing the effective date for the amendment 
and information collection requirements. Interested parties (including 
the general public, OMB, and other Federal agencies) that wish to 
submit written comments on the PRA information collection requirements 
must do so on or before March 17, 2008.

ADDRESSES: Interested parties may submit PRA comments identified by OMB 
Control Number 3060-0463, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web Site: http://www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments.
     E-mail: Parties who choose to file by email should submit 
their comments to [email protected]. Please include CG Docket Number 03-123 
and OMB Control Number 3060-0463 in the subject line of the message.
     Mail: Parties who choose to file by paper should submit 
their comments to Cathy Williams, Federal Communications Commission, 
Room 1-C823, 445 12th Street, SW., Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Thomas Chandler, Consumer and 
Governmental Affairs Bureau, Disability Rights Office at (202) 418-1475 
(voice), (202) 418-0597 (TTY), or e-mail at [email protected]. 
For additional information concerning the PRA information collection 
requirements contained in this document, contact Cathy Williams at 
(202) 418-2918, or via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Telecommunications Relay Services and Speech-to-Speech Services for 
Individuals with Hearing and Speech Disabilities, Report and Order and 
Declaratory Ruling (2007 TRS Cost Recovery Order), document FCC 07-186, 
adopted October 26, 2007, and released November 19, 2007, in CG Docket 
No. 03-123. Document FCC 07-186 addresses issues arising from the 
Commission's Further Notice of Proposed Rulemaking, Telecommunications 
Relay Services and Speech-to-Speech Services for Individuals with 
Hearing and Speech Disabilities (2006 TRS Cost Recovery FNPRM), CG 
Docket No. 03-123, FCC 06-106, published at 71 FR 54009, September 13, 
2006. The full text of document FCC 07-186 and copies of any 
subsequently filed documents in this matter will be available for 
public inspection and copying during regular business hours at the FCC 
Reference Information Center, Portals II, 445 12th Street, SW., Room 
CY-A257, Washington, DC 20554. Document FCC 07-186 and copies of 
subsequently filed documents in this matter also may be purchased from 
the Commission's duplicating contractor at Portals II, 445 12th Street, 
SW., Room CY-B402, Washington, DC 20554. Customers may contact the 
Commission's duplicating contractor at its Web site http://www.bcpiweb.com or by calling 1-800-378-3160. To request materials in 
accessible formats for people with disabilities (Braille, large print, 
electronic files, audio format), send an e-mail to [email protected] or 
call the Consumer and Governmental Affairs Bureau at (202) 418-0530 
(voice), (202) 418-0432 (TTY). Document FCC 07-186 can also be 
downloaded in Word or Portable Document Format (PDF) at: http://www.fcc.gov/cgb/dro/trs.html.

Paperwork Reduction Act of 1995 Analysis

    Document FCC 07-186 contains modified information collection 
requirements subject to the PRA of 1995. It will be submitted to OMB 
for review under section 3507 of the PRA. OMB, the general public, and 
other Federal agencies are invited to comment on the modified 
information collection requirements contained in this proceeding. 
Public and agency comments are due March 17, 2008. In addition, the 
Commission notes pursuant to the Small Business Paperwork Relief Act of 
2002, Public Law 107-198, see 44 U.S.C. 3506 (c)(4), that the 
Commission previously sought specific comment on how it may ``further 
reduce the information collection burden for small business concerns 
with fewer than 25 employees.''

Synopsis

    1. In the 2006 TRS Cost Recovery FNPRM, the Commission sought 
comment on four issues concerning the compensation of relay providers 
from the Fund. First, the Commission sought comment on the adoption of 
an alternative cost recovery methodology for traditional TRS, STS 
services, and IP Relay services based on the Multi-state Average Rate 
Structure (MARS) plan, under which the compensation rate would be based 
on a weighted average of competitively bid intrastate rates. The 
Commission sought comment on

[[Page 3198]]

whether adoption of the MARS plan would result in a more efficient 
provision of service and a fairer, more reasonable compensation rate, 
as well as on how the MARS plan would be implemented and whether the 
rates for those TRS forms should continue to be set for a one-year 
period or for longer.
    2. Second, the Commission sought comment on the adoption of an 
alternative cost recovery methodology for VRS. The Commission 
emphasized the need for a cost recovery methodology that would result 
in more predictable rates that more closely approximate the reasonable 
actual costs of providing VRS services. Accordingly, the Commission 
sought comment on whether changes should be made to the existing cost 
recovery methodology, or whether a new methodology should be adopted. 
The Commission proposed various new methodologies, including 
compensating each provider based on the provider's actual, reasonable 
costs, seeking competitive bids, or using a ``true-up'' based on each 
provider's reasonable actual costs. The Commission also sought comment 
on whether the VRS compensation rate should be set for a two-year 
period, rather than a one-year period.
    3. Third, the Commission sought comment on the extent to which 
certain types of costs--including marketing and outreach expenses, 
overhead costs, legal and lobbying expenses, start-up expenses, and 
executive compensation--are compensable from the Fund. Finally, the 
Commission sought comment on the steps it might take to ensure the 
integrity of the Fund and that compensation is paid consistent with the 
statute. Specifically, the Commission sought comment on the oversight 
of the Fund administrator, presently the National Exchange Carrier 
Association (NECA), the oversight of the providers, and ways to deter 
waste, fraud, and abuse.
    4. The 2007 TRS Cost Recovery Order resolves the issues on which 
the Commission sought comment in the 2006 TRS Cost Recovery FNPRM. 
First, the Commission adopts the MARS plan as the cost recovery 
methodology for interstate traditional TRS, interstate STS, interstate 
CTS, and interstate and intrastate IP CTS. Presently, the compensation 
rates are based on a weighted average of the providers' projected 
minutes of use of the service, and their projected costs of providing 
these minutes, for a future two-year period. Because the current 
methodology is based on projections only, it does not result in rates 
that satisfactorily correlate to the providers' actual costs. Adopting 
the MARS plan, in contrast, will produce a rate that better 
approximates actual costs, and therefore will promote the efficient 
recovery of all costs. It also will eliminate the costs, burdens, and 
uncertainties associated with evaluating, correcting, and re-evaluating 
provider data.
    5. The Commission will calculate one MARS rate applicable to both 
interstate traditional TRS and interstate STS based on state rates for 
intrastate TRS and STS, and adopt a separate MARS rate for interstate 
CTS and IP CTS based on state rates for intrastate CTS. Regardless, for 
both rates, the rate calculation mechanism will be the same. Generally, 
each January, the Fund administrator will request that the following 
information be filed on a per-state basis for the previous calendar 
year: (1) The per-minute compensation rate(s) for intrastate 
traditional TRS, intrastate STS, and intrastate CTS; (2) whether the 
rate applies to session or conversation minutes; (3) the number of 
session and conversation minutes for intrastate traditional TRS, 
intrastate STS, and intrastate CTS, (4) other amounts paid to the 
provider(s) for the relevant calendar year, if the per-minute 
compensation rate does not reflect the total costs paid by the state to 
the provider(s) for the relay service(s); and (5) other factors bearing 
on the rate averages, such as mid-year rate changes.
    6. The Fund administrator will multiply each state's respective 
intrastate traditional TRS and intrastate STS, and intrastate CTS, 
rates by the number of either intrastate session minutes or 
conversation minutes, whichever the state rates are based upon, and 
then total each state's total dollar amount for each rate. The Fund 
administrator will then divide the total dollar amount(s) for all the 
states (including costs not reflected in the rate) by the applicable 
total of all states' intrastate conversation minutes (even if some 
states do not base their rate on conversation minutes) for each service 
(e.g., intrastate traditional TRS and intrastate STS in one 
calculation, intrastate CTS in the other).
    7. The Fund administrator will file the MARS plan rate(s), as 
calculated, with the Commission by May 1st of each year, and the 
proposed MARS rate for each service and an explanation of how it was 
calculated will be placed on public notice. The Commission will then 
release by June 30 of each year an order adopting the compensation rate 
for the following July 1st to June 30th Fund year. The Commission will 
monitor the implementation of the MARS plan and, if necessary, take 
further steps to ensure that the MARS rate compensates providers for 
their reasonable costs of providing service.
    8. Beginning March 1, 2008, and for the remainder of the 2007-08 
Fund year, the MARS plan per-minute rate of $1.592 shall apply for 
interstate traditional TRS and interstate STS. This rate is a result of 
the calendar 2006 intrastate TRS and STS data filed by 49 states and 
Puerto Rico, which show that a total of $100,738,030 was spent to pay 
for 63,275,205 conversation minutes, which translates to $1.592 per 
minute.
    9. The Commission believes that this rate is reasonable because it 
is based on competitively bid state rates. For interstate STS, however, 
the Commission will add an additional $1.131 per minute, resulting in a 
total of $2.723, because of concerns that outreach efforts toward the 
STS community have not been effective. Each STS provider must allocate 
this additional $1.131 per minute toward outreach efforts directed at 
the STS community. For interstate CTS and interstate and intrastate IP 
CTS, the Commission adopts a 2007-2008 compensation rate of $1.629 per 
minute. This rate is based on calendar 2006 intrastate captioned 
telephone service data from the 39 states that provided this service in 
2006, which shows that $15,867,338, was spent to pay for 9,739,138 
conversation minutes, which translates to $1.629 per minute.
    10. Second, for IP Relay, the Commission declines to adopt a cost 
recovery methodology based on the MARS plan because there are no state 
rates for this service. Instead, the Commission adopts a cost recovery 
methodology based on price caps. As a general matter, the price cap 
plan adjusts a base rate upward for inflation and other, additional 
costs not reflected in the inflation adjustment, then downward for 
improved efficiencies. In so doing, the price cap plan applies three 
factors--an Inflation Factor, an Efficiency (or ``X'') Factor, and 
Exogenous Costs--to a base rate. The Inflation Factor will be the Gross 
Domestic Product--Price Index (GDP-PI)). The Efficiency Factor will be 
set as a figure equal to the Inflation Factor, less 0.5 percent (or 
0.005) to account for productivity gains.
    11. The Exogenous Costs will be those costs beyond the control of 
the IP Relay providers that are not reflected in the inflation 
adjustment, such as additional costs that they incur to satisfy new, 
Commission-adopted service requirements. As a result of the basic price 
cap plan formula, which multiplies the base rate by a factor that 
reflects an increase due to inflation, and then offsets it by a 
decrease due to

[[Page 3199]]

efficiencies, the rate for a particular year generally will equal the 
rate for the previous year, reduced by 0.5 percent (i.e., 
RateYear Y = RateYear Y-1 (1-0.005)). 
Adopting this methodology for IP Relay will encourage IP Relay 
providers to become more efficient in providing the service.
    12. The Commission adopts the price cap plan for three years, with 
the first rate period being the 2007-2008 Fund year. The rates will 
then continue, with annual adjustments for productivity gains, through 
the 2009-2010 Fund Year. The Commission will then assess what the base 
rate should be for the following three year period.
    13. Beginning March 1, 2008, the per-minute rate of $1.293 shall 
apply for inter- and intrastate IP Relay. NECA presented IP Relay rates 
ranging between $1.16 and $1.28, the latter reflecting both 2006 actual 
costs adjusted for inflation and a rate based on providers' projected 
minutes of use and costs, unadjusted. The Commission believes that the 
current rate reasonably compensates providers based on the cost data 
and the rates proposed by NECA, and that adopting the base rate for a 
three year period will add additional stability and predictability to 
the IP Relay rates. This rate shall continue through the 2009-2010 Fund 
year, subject to annual adjustment under the price cap plan.
    14. Third, for VRS, the Commission adopts a tiered-rate cost 
recovery methodology which compensates VRS providers at different per-
minute rates for monthly call minutes that fall within predetermined 
total call volume ranges. The VRS rates will be based on the providers' 
projected costs and minutes of use, and other data the VRS providers 
submit to the Fund administrator, subject to appropriate review and, 
where necessary, disallowances. Specifically, this tiered-rate approach 
is intended to reflect likely cost differentials between small 
providers (including new entrants); mid-level providers who are 
established but who do not hold a dominant market share; and large, 
dominant providers who are in the best position to achieve cost 
synergies.
    15. This tiered-rate approach will allow providers that handle a 
relatively small amount of minutes and therefore have relatively higher 
per-minute costs to receive compensation on a monthly basis more likely 
to accurately correlate to their actual costs. Conversely, providers 
that handle a larger number of minutes, and therefore have lower per-
minute costs, will also receive compensation on a monthly basis more 
likely to accurately correlate to their actual costs. Furthermore, 
under the tiered approach, all providers would be compensated on a 
``cascading'' basis, such that providers would be compensated at the 
same rate for the minutes falling within a specific tier. In other 
words, all providers will be compensated at the highest rate for those 
minutes falling within the first tier; at the middle rate for those 
minutes falling within the middle tier, and at the lower rate for all 
additional minutes.
    16. The Commission will set the tiers and their corresponding per-
minute rates for a three-year period, and will reduce the rates 
annually by 0.5 percent while allowing providers to seek exogenous cost 
adjustments for new costs imposed that are beyond the providers' 
control. The 0.5 percent annual downward adjustment will reduce Fund 
expenditures and encourage VRS providers to gain efficiencies in 
providing VRS services. The Commission believes that these tiers are 
appropriate to promote competition, and ensure that the newer providers 
are compensated for their actual costs and that the larger, more 
established providers are not overcompensated.
    17. Beginning March 1, 2008, the three following call volume tiers 
and their corresponding per-minute rates shall apply for VRS: For the 
first 50,000 monthly minutes, $6.77; for monthly minutes between 50,001 
and 500,000, $6.50; and for monthly minutes exceeding 500,000, $6.30. 
Those tiers, the number and size of which will be reevaluated every 
three years, are based on the data regarding total monthly VRS minutes 
that the various providers have submitted to NECA. That data indicates, 
first, that the newer providers generally provide less than 50,000 
minutes per month. For those providers offering a relatively small 
number of minutes, it is appropriate to base the rate on the providers' 
projected costs and minutes of use. As NECA's filing data reflects, the 
rate based on the providers' projected demand and cost data, without 
any disallowances, is $6.77.
    18. The Commission believes that this rate fairly reflects the 
actual reasonable costs of the newer or smaller providers offering VRS 
in compliance with all non-waived mandatory minimum standards. Second, 
the NECA filing data indicates that more established providers provide 
monthly minutes ranging in the low hundreds of thousands. For those 
established but non-dominant providers, the Commission believes it is 
appropriate to base the rate on the $6.77 rate noted above, less 
marketing and certain undisputed cost disallowances. The resulting rate 
is $6.50. Finally, the NECA filing data shows that the dominant 
provider provides minutes ranging in the millions. Such call volumes 
lead to economies of scale that result in lower per-minute costs. 
Accordingly, the Commission adopts a rate of $6.30 for this third and 
final tier. This rate will encourage providers with large numbers of 
minutes to become more efficient.
    19. Fourth, in addition to adopting new cost recovery methodologies 
and compensation rates, the Commission clarifies the extent to which 
certain cost categories are compensable from the Fund. Specifically, 
the Commission concludes that indirect overhead costs are not 
reasonable costs of providing TRS; accordingly, to be compensable, 
overhead costs must be directly related to, and directly support, the 
provision of relay service. The Commission also concludes that, to 
encourage competition in the VRS market, entry costs or start-up 
expenses of new entities seeking to provide VRS are compensable, but 
must be amortized in accordance with generally accepted accounting 
principles so that they are recovered over time and will not skew the 
rate in a particular year. Also, executive compensation is compensable 
to the extent that it is reasonable and is for services that ``directly 
support the provision of TRS.'' In determining what constitutes 
reasonable compensation, the Commission will consider bonuses, stock 
options, and other forms of compensation.
    20. With respect to other, miscellaneous costs, financial 
transaction costs or fees unrelated to the provision of relay service, 
such as those relating to the sale or change in ownership or structure 
of a relay service entity, are not compensable expenses. Also, costs 
attributable to consumer premises equipment such as relay hardware and 
software used by the consumer, including installation, maintenance 
costs, and testing, are not compensable. The Commission will scrutinize 
the providers' submitted costs to ensure that such consumer premises 
equipment costs are not directly or indirectly included.
    21. Finally, with respect to management and oversight of the Fund, 
the Commission reaffirms the role that the TRS Advisory Council may 
play in the oversight of TRS--including in the development of new cost 
recovery guidelines and compensation rate proposals, and further 
addressing of the compensability of certain cost categories--and 
expresses that the Council also can address other matters as assigned 
by the Commission. In

[[Page 3200]]

addition, the Commission announces its intention of additional and more 
comprehensive auditing of TRS providers to ensure Fund integrity, by, 
for example, reviewing the underlying documentation supporting 
submitted cost and demand data, as well as minutes submitted for 
compensation.
    22. The Commission also concludes that there should be more 
transparency to the rate setting process. The Commission realizes, 
however, that the interest in transparency must be balanced against the 
providers' interest in the confidentiality of their cost and demand 
data, an interest reflected in the Commission's rules. The Commission 
believes the MARS plan will make more transparent the determination of 
the traditional TRS, STS, CTS, and IP CTS rates. Not only does the 
Commission anticipate listing the State rates used in calculating the 
MARS rates and setting forth the final calculation that divides total 
costs by total minutes to determine the rate, but there are no cost 
adjustments to provider specific data in the determination of these 
rates, which furthers the goal of transparency.
    23. In the Declaratory Ruling portion of the 2007 TRS Cost Recovery 
Order, the Commission reiterates its prior rulings that a TRS provider 
may not offer any direct or indirect, financial or other tangible, 
incentive to a TRS user or third party to encourage TRS users to make 
TRS calls that they would not otherwise make, including calls designed 
to elicit customer feedback on quality of service. Nor may a relay 
provider condition a user's ongoing use or possession of relay 
equipment, or the receipt of different or upgraded equipment, on the 
user making relay calls through its service or the service of any other 
provider. In other words, providers cannot give consumers equipment as 
part of outreach efforts or for other purposes, and then require that 
the equipment be relinquished if the consumer fails to maintain a 
certain call volume. Not only do such practices likely require the 
impermissible use of the providers' call database, and the 
impermissible monitoring of consumers' calls, they also constitute 
impermissible financial incentives.
    24. In addition, relay providers may not use a consumer or call 
database to contact relay users for lobbying or any other purpose. The 
Commission has made clear that TRS customer profile information cannot 
be used for any purpose other than handling relay calls. Therefore, for 
example, a provider may not contact its customers, by an automated 
message, postcards, or otherwise, to inform them about pending TRS 
compensation issues and urge them to contact the Commission about the 
compensation rates. Similarly, a provider may not use call data to 
monitor the TRS use by its customers (or the customers of other 
providers) and to determine whether they are making a sufficient number 
of calls to warrant further benefits from the provider.

Final Regulatory Flexibility Certification

    25. The Regulatory Flexibility Act of 1980, as amended (RFA), 
requires that a regulatory flexibility analysis be prepared for 
rulemaking proceedings, unless the agency certifies that ``the rule 
will not, if promulgated, have a significant economic impact on a 
substantial number of small entities.'' 5 U.S.C. 605(b). The RFA 
generally defines ``small entity'' as having the same meaning as the 
terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' 5 U.S.C. 601(6). In addition, the term 
``small business'' has the same meaning as the term ``small business 
concern'' under the Small Business Act. 5 U.S.C. 601(3). A small 
business concern is one which: (1) Is independently owned and operated; 
(2) is not dominant in its field of operation; and (3) satisfies any 
additional criteria established by the Small Business Administration 
(SBA). Small Business Act, 15 U.S.C. 632.
    26. The 2007 TRS Cost Recovery Order addresses issues related to 
cost recovery methodologies for various forms of TRS. The 2007 TRS Cost 
Recovery Order adopts a single cost recovery methodology based on the 
``MARS'' plan for interstate traditional TRS, interstate STS, 
interstate CTS, and interstate and intrastate IP CTS. Beginning with 
the 2007-2008 Fund year, a single MARS rate will be calculated and will 
apply to interstate traditional TRS and interstate STS, interstate CTS, 
and IP CTS. Because states generally negotiate and pay separate rates 
for captioned telephone service, a separate MARS rate will be 
calculated and will apply to interstate captioned telephone service.
    27. The Commission concludes that the MARS methodology, as 
proposed, cannot be applied to IP Relay because there are no state 
rates for these services. The Commission, therefore, continues to use a 
cost recovery methodology for IP Relay based on the providers' 
projected demand and cost data that reasonably compensates the 
providers for the provision of IP Relay service. The Commission also 
concludes that adopting the proposed price cap plan for IP Relay will 
encourage IP Relay providers to become more efficient in providing the 
service. The Commission believes that the price cap plan for IP Relay 
will not have a significant economic impact on a substantial number of 
small businesses.
    28. The Commission concludes that adoption of the MARS plan for 
Interstate Traditional TRS, Interstate STS, Interstate CTS, and IP CTS 
for setting the rate eliminates the need to file the much more 
voluminous cost and demand data that providers presently must submit 
under the current cost recovery methodology to the Fund administrator. 
The Commission, therefore, concludes that the effect of the adoption of 
the MARS plan would be to lessen the reporting burden on small 
businesses. Accordingly, the Commission does not believe that these 
actions will have a significant economic impact on a substantial number 
of small businesses.
    29. The Commission further believes that the decision to set a 
standard for how ``reasonable'' costs should be compensable under the 
present cost recovery methodology for all forms of TRS, as well as a 
standard for what ``reasonable'' costs should include, will provide 
guidance for the providers, and therefore, benefits small businesses in 
two ways. This includes setting a standard for whether, and to what 
extent, marketing and outreach expenses, overhead costs, and executive 
compensation are compensable from the Fund. First, it provides 
predictability, and secondly, it eliminates uncertainties with whether 
the costs submitted would be compensable or not. Eliminating 
uncertainties will lessen the reporting burden on small businesses. The 
Commission therefore concludes that the requirements of the 2007 TRS 
Cost Recovery Order will not have a significant economic impact on a 
substantial number of small entities.
    30. The Commission expressed concern, based on comparisons of VRS 
providers' cost and demand projections with their actual historical 
data, that some VRS providers have received compensation significantly 
in excess of their actual costs. The Commission has also observed that 
providers' demand forecasts for VRS generally have been lower than 
actual demand, resulting in overcompensation to providers for completed 
minutes under the current per-minute cost recovery scheme.
    31. The Commission, therefore, adopts three compensation rate tiers 
for VRS. These tiers are intended to reflect likely cost differentials 
between small providers; mid-level providers who are established but 
who do not hold a dominant market share; and large, dominant providers 
who are in the best

[[Page 3201]]

position to achieve cost synergies. As a general matter, the three-
tiered approach is based on market data reflecting the number of 
monthly minutes submitted to NECA by the various providers. The data 
reflects that the newer providers generally provide less than 100,000 
minutes per month; that other, more established providers (with the 
exception of the dominant provider) generally provide monthly minutes 
ranging in the low hundreds of thousands; and that the dominant 
provider provides minutes ranging in the millions. The Commission, 
therefore, believes that using three tiers is appropriate to ensure 
both that, in furtherance of promoting competition, the newer providers 
will cover their costs, and the larger and more established providers 
are not overcompensated due to economies of scale.
    32. By adopting a tiered approach, providers that handle a 
relatively small number of minutes and therefore have relatively higher 
per-minute costs will receive compensation on a monthly basis that will 
likely more accurately correlate to their actual costs. Conversely, 
providers that handle a larger number of minutes, and that therefore 
have lower per-minute costs, will also receive compensation on a 
monthly basis that likely more accurately correlates to their actual 
costs. Furthermore, the Commission concludes that under such a tiered 
approach, all providers will be compensated on a ``cascading'' basis, 
such that providers will be compensated at the same rate for the 
minutes falling within a specific tier. In other words, all providers 
will be compensated at the highest rate for those minutes falling 
within the first tier; at the middle rate for those minutes falling 
within the middle tier, and at the lower rate for all additional 
minutes. The Commission believes that using tiered rates, rather than a 
single, weighted average rate, will more fairly compensate all 
providers for their reasonable actual costs of providing service. Since 
fair compensation will benefit all providers equally, imposing no 
separate and adverse impact on smaller entities, the Commission further 
concludes that its tiered rates will not have a significant economic 
impact on a substantial number of small entities.
    33. Because the Commission recognizes that potential STS users are 
not being made aware of the availability of STS, the Commission adds an 
additional amount to the STS compensation rate for outreach efforts. 
The Commission also requires that STS providers file a report annually 
with NECA and the Commission on their specific outreach efforts 
directly attributable to the additional support for STS outreach. Since 
STS providers will be compensated an additional amount for outreach, 
the Commission concludes that requiring STS providers to file an annual 
report will not have a significant economic impact on a substantial 
number of small entities.
    34. Finally, in order to be compensated for the costs of providing 
TRS, the providers are required to meet the applicable TRS mandatory 
minimum standards as required in 47 CFR 64.604. See generally 47 CFR 
64.604(c)(5)(iii)(E). Reasonable costs of compliance with the 2007 TRS 
Cost Recovery Order are compensable from the Fund. Thus, because the 
providers will recoup the costs of compliance within a reasonable 
period, the Commission asserts that the providers will not be 
detrimentally burdened. Therefore, the Commission certifies that the 
requirements of the 2007 TRS Cost Recovery Order will not have a 
significant economic impact on a substantial number of small entities.
    35. The Commission also notes that, with specific regard to the 
issue of whether a substantial number of small entities will be 
affected, of the 13 providers affected by the ruling adopted herein, 
there are only three small entities that will be affected by the 
Commission's action. The SBA has developed a small business size 
standard for Wired Telecommunications Carriers, which consists of all 
such firms having 1,500 or fewer employees. 13 CFR 121.201, NAICS code 
517110. Currently, thirteen providers are providing various forms of 
TRS and being compensated from the Interstate TRS Fund: Ameritech; AT&T 
Corp.; CapTel, Inc.; Communication Access Center for the Deaf and Hard 
of Hearing, Inc.; GoAmerica; Hamilton Relay, Inc.; Hands On; Healinc; 
Nordia Inc.; Snap Telecommunications, Inc.; Sorenson; Sprint and 
Verizon. The Commission notes that 3 of 13 providers noted above are 
small entities under the SBA's small business size standard. Because 
three of the affected providers will be promptly compensated within a 
reasonable period for complying with the 2007 TRS Cost Recovery Order, 
the Commission concludes that the number of small entities affected by 
the Commission's decision in the 2007 TRS Cost Recovery Order is not 
substantial.
    36. Therefore, for all of the reasons stated above, the Commission 
certifies that the requirements of the 2007 TRS Cost Recovery Order 
will not have a significant economic impact on these small entities.
    37. The Commission will send a copy of the 2007 TRS Cost Recovery 
Order, including a copy of this Final Regulatory Flexibility 
Certification, in a report to Congress pursuant to the Congressional 
Review Act, see 5 U.S.C. 801(a)(1)(A). In addition, the 2007 TRS Cost 
Recovery Order and this final certification will be sent to the Chief 
Counsel for Advocacy of the SBA.

Congressional Review Act

    The Commission will send a copy of the 2007 TRS Cost Recovery Order 
in a report to be sent to Congress and the Government Accountability 
Office pursuant to the Congressional Review Act, see 5 U.S.C. 
801(a)(1)(A).

Ordering Clauses

    Pursuant to Sections 1, 2, and 225 of the Communications Act of 
1934, as amended, 47 U.S.C. 151, 152, and 225, the 2007 TRS Cost 
Recovery Order IS ADOPTED.
    An annual compensation rate shall apply to interstate traditional 
TRS and interstate STS based on the MARS plan and the intrastate 
traditional TRS and STS rate(s) paid by the states, as provided in the 
2007 TRS Cost Recovery Order.
    An annual compensation rate shall apply to interstate CTS and 
interstate and intrastate IP CTS based on the MARS plan and the 
intrastate CTS rate paid by the states, as provided in the 2007 TRS 
Cost Recovery Order.
    A compensation rate shall apply to interstate and intrastate IP 
Relay based on price caps, and the rate shall be set for three-year 
periods, subject to adjustment, beginning with the 2007-2008 Fund year, 
as provided in the 2007 TRS Cost Recovery Order.
    Tiered compensation rates shall apply to interstate and intrastate 
VRS based on minutes of use, and the rates shall be set for three-year 
periods, subject to adjustment, beginning with the 2007-2008 Fund year, 
as provided in the 2007 TRS Cost Recovery Order.
    Effective March 1, 2008, the following per-minute compensation 
rates shall apply, as provided herein: for interstate traditional TRS: 
$1.592; for interstate STS: $2.723; for interstate CTS and interstate 
and intrastate IP CTS: $1.629; for interstate and intrastate IP Relay: 
$1.293; and for interstate and intrastate VRS: (1) For the first 50,000 
monthly minutes: $6.77; (2) for monthly minutes between 50,001 and 
500,000: $6.50; and (3) for monthly minutes above 500,000: $6.30.
    The amendment to section 64.604 of the Commission's rules is 
adopted.
    The 2007 TRS Cost Recovery Order shall be effective February 19, 
2008,

[[Page 3202]]

except Sec.  64.604 (c)(5)(iii)(C) of the Commission's rules, which 
contains information collection requirements that are not effective 
until approved by OMB. The Commission will publish a separate document 
in the Federal Register announcing the effective date of the rule.
    The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of the 2007 TRS Cost 
Recovery Order, including the Final Regulatory Flexibility 
Certification, to the Chief Counsel for Advocacy of the Small Business 
Administration.

List of Subjects in 47 CFR Part 64

    Individuals with disabilities, Reporting and recordkeeping 
requirements, Telecommunications.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Rule Changes

0
For the reasons discussed in the preamble, the Federal Communications 
Commission amends 47 CFR part 64 as follows:

PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS

0
1. The authority citation for part 64 continues to read as follows:

    Authority: 47 U.S.C. 154, 254 (k); secs. 403 (b)(2)(B), (c), 
Public Law 104-104, 110 Stat. 56.
    Interpret or apply 47 U.S.C. 201, 218, 222, 225, 226, 228, and 
254(k) unless otherwise noted.


0
2. Section 64.604 is amended by revising paragraph (c)(5)(iii)(C) to 
read as follows:


Sec.  64.604  Mandatory minimum standards.

* * * * *
    (c) * * *
    (5) * * *
    (iii) * * *
    (C) Data collection from TRS providers. TRS providers shall provide 
the administrator with true and adequate data, and other historical, 
projected and state rate related information reasonably requested by 
the administrator, necessary to determine TRS Fund revenue requirements 
and payments. TRS providers shall provide the administrator with the 
following: total TRS minutes of use, total interstate TRS minutes of 
use, total TRS operating expenses and total TRS investment in general 
accordance with part 32 of this chapter, and other historical or 
projected information reasonably requested by the administrator for 
purposes of computing payments and revenue requirements. The 
administrator and the Commission shall have the authority to examine, 
verify and audit data received from TRS providers as necessary to 
assure the accuracy and integrity of TRS Fund payments.
* * * * *
[FR Doc. E8-759 Filed 1-16-08; 8:45 am]
BILLING CODE 6712-01-P