[Federal Register Volume 75, Number 156 (Friday, August 13, 2010)]
[Notices]
[Pages 49491-49493]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-20047]


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FEDERAL COMMUNICATIONS COMMISSION

[CG Docket No. 03-123; FCC 10-115]


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

AGENCY: Federal Communications Commission.

ACTION: Notice; approval of new rates.

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SUMMARY: In this document, the Commission adopts per-minute 
compensation rates for the July 1, 2010 through June 30, 2011 
Interstate Telecommunications Relay Services (TRS) Fund (Fund) year. 
This action is necessary because the rates for the previous Fund year 
expired on June 30, 2010. The intended effect of this action is to 
establish reimbursement rates for TRS providers and an appropriate 
funding requirement for the 2010-2011 Fund year.

DATES: The new rates became effective July 1, 2010.

FOR FURTHER INFORMATION CONTACT: Diane Mason, Consumer and Governmental 
Affairs Bureau, Disability Rights Office at (202) 418-7126 (voice), 
(202) 418-7828 (TTY), or e-mail 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, Order, document FCC 
10-115, adopted June 18, 2010, and released June 28, 2010 in CG Docket 
number 03-123 (Order). On April 30, 2010, the Fund administrator, the 
National Exchange Carrier Association, Inc. (NECA), filed its annual 
Interstate Telecommunications Relay Services Fund Payment Formula and 
Fund Size Estimate for the period of July 1, 2010 through June 30, 
2011. That same day, the Commission's Consumer and Governmental Affairs 
Bureau (Bureau) released a public notice requesting comment on NECA's 
filing. See National Exchange Carrier Association Submits the Payment 
Formula and Fund Size Estimate for the Interstate Telecommunications 
Relay Services Fund for the July 2010 Through June 2011 Fund Year, CG 
Docket No. 03-123, public notice, document DA 10-761, published at 75 
FR 26701, May 12, 2010 (2010 TRS Rate PN). Over 22,000 comments, reply 
comments, and ex partes were filed in response to the 2010 TRS Rate PN.
    The full text of document FCC 10-115 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 10-115 and copies of subsequently 
filed documents in this matter may also be purchased from the 
Commission's duplicating contractor, BCPI, Inc., Portals II, 445 12th 
Street, SW., Room CY-B402, Washington, DC 20554. Customers may contact 
BCPI, Inc. via 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) or (202) 418-0432 (TTY). 
Document FCC 10-115 can also be downloaded in Word or Portable Document 
Format (PDF) at: http://www.fcc.gov/cgb/dro/trs.html#orders.

Synopsis

The Compensation Rates for VRS for the 2010-2011 Fund Year

    1. The Commission adopts interim, one-year rates of $6.2390 for 
Tier I, $6.2335 for Tier II, and $5.0668 for Tier III for VRS by 
averaging NECA's proposed per-minute rates calculated as a measure of 
actual, historical provider costs, and the current rates, which were 
based on providers' projected costs. Projected costs for VRS for a 
given Fund year have consistently proven to be higher than actual costs 
for that Fund year, and there is currently no ``true-up'' mechanism for 
reconciling, after the Fund year, the rates at which providers are 
reimbursed from the Fund and their actual costs for the Fund year. By 
NECA's calculation, the rates based on actual, historical costs would 
be $5.7754 for Tier I, $6.0318 for Tier II, and $3.8963 for Tier III 
for the 2010-2011 Fund year, all of which include allowances of 1.6% 
for cash working capital, 3.2% for growth in expenses, and $0.0083 per 
minute for ongoing E911 and ten-digit numbering costs. However, in 
light of concerns expressed by providers and users, and to ensure 
sufficient, quality service for users while the Commission considers 
broad reform, the Commission declines to reduce the VRS rates to that 
level at this time.
    2. Interim VRS Rates for the 2010-2011 Fund Year. The Commission 
finds that adopting a multi-year rate structure would be premature at 
this time. The Commission believes that establishing multi-year VRS 
rates at this time may hamper the Commission's efforts to implement in 
a timely manner reforms that the Commission may determine are needed as 
a result of the 2010 VRS NOI proceeding. See Structure and Practices of 
the Video Relay Service Program, CG Docket No. 10-51, Notice of 
Inquiry, FCC 10-111, published at 75 FR 41863, July 19, 2010 (2010 VRS 
NOI).
    3. Rates Based on Actual vs. Projected Costs for VRS. The 
Commission finds that NECA's use of providers' actual, historical costs 
in proposing VRS rates provides a valuable point of reference for 
setting VRS rates. Specifically, a comparative analysis by NECA of 
providers' projected and actual cost and demand over the past several 
years reveals that there is a substantial disparity between providers' 
reported projected costs and demand, and what turns out to be their 
actual costs and demand. In particular, based on the data received from 
providers, NECA indicates that VRS providers' weighted average actual 
per-minute costs as submitted to NECA were $4.4603 in 2006, $3.9604 in 
2007, $4.1180 in 2008, and $4.1596 in 2009. By contrast, the 
compensation rates were in the following ranges for each of those 
years: $6.644 in 2006, $6.444 to $6.77 in 2007, $6.30 to $6.7632 in 
2008, and $6.2373 to $6.7362 in 2009. In addition, in the past, the 
Commission has not provided a process for reconciling providers' actual 
costs to their compensation from the Fund, and the Commission declines 
to do so here.
    4. With the benefit of four years' data showing that providers' 
projections consistently overstate their costs, the Commission 
concludes that it can no longer justify basing VRS compensation rates 
only on projected costs. Furthermore, NECA, which has been the Fund 
administrator since the inception of the Fund, used weighted averages 
in proposing tiered rates based on actual costs. To the extent that one 
provider commands a substantial share of the VRS market, the Commission 
finds that

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NECA's use of weighted averages is appropriate, and properly balances, 
on one side, the greater relative costs incurred by smaller providers 
with, on the other, not penalizing providers operating at lower costs 
for their greater efficiency. The Commission therefore concludes that 
NECA's methodology, and use of actual cost information submitted by the 
providers and certified under penalty of perjury to be true and 
correct, were reasonable.
    5. The Commission has an obligation to protect the integrity of the 
Fund and to deter and detect waste. It has therefore sought to find a 
reasonable balance between the past rates based on projections that 
consistently overstate true costs and overcompensate VRS providers, and 
the NECA-proposed rates based on actual costs that would represent a 
significant and sudden cut to providers' compensation. The Commission 
concludes that adjusting NECA's proposed rates based on actual costs 
for a one-year, interim period strikes the correct balance. The 
Commission also notes that the rates adopted in the Order fall within 
the range of rates proposed by providers for each of the tiers. As 
such, the Commision expects that the interim rates adopted will permit 
service providers to continue offering service in accordance with the 
Commission's rules to consumers, while the Commission considers the 
2010 VRS NOI. In the interim, the Commission is obliged to adopt a set 
of rates that compensates VRS providers for reasonable costs caused by 
their provision of VRS ``in the most efficient manner'' possible, and 
is otherwise consistent with the Communications Act of 1934, as amended 
(Act) and the Commission's rules.
    6. Sorenson argues that ``any decision to create a new 
methodology--based on historical costs or any other approach that 
deviates from the incentive-based (or projected-`cost') approach 
adopted in 2007--would amount to a rule change that could be adopted 
only pursuant to a new rulemaking proceeding.'' Even if Sorenson is 
correct that, by adopting these interim VRS rates, the Commission is 
somehow changing a ``rule,'' the Commission has provided ample notice 
and opportunity for public comment regarding this action. For example, 
the Commission has twice expressly sought comment recently in this 
proceeding on the use of actual cost data as a basis for determining 
rates. Moreover, the Commission is taking the additional precaution of 
establishing VRS rates on an interim basis to address a significant 
disparity between actual costs and provider compensation while the 
Commission undertakes to examine VRS compensation more broadly in a 
formal rulemaking proceeding. The Commission notes that in the past, it 
has been afforded substantial deference when imposing regulations on an 
interim basis, particularly where it is acting in the public interest. 
The Commission therefore finds Sorenson's arguments in this regard to 
be without merit.
    7. Further, provider criticisms of NECA's proposal relying on 
actual cost data to set VRS rates--based on the argument that costs 
allowed by NECA do not include all of the true costs of providing VRS--
should, in theory, apply equally to reliance on projected cost data in 
VRS rate setting because the categories of compensable costs are the 
same whether actual or projected. Therefore, they are not persuasive as 
a challenge to reliance on actual cost data.
    8. Tiered Rate Structure. The Commission concludes that for the 
2010-2011 Fund year, the interim rate shall continue to be tiered based 
on the demand thresholds established in Telecommunications Relay 
Services and Speech-to-Speech Services for Individuals with Hearing and 
Speech Disabilities, Report and Order and Declaratory Ruling, CG Docket 
No. 03-123, document FCC 07-186, published at 73 FR 3254, Jan. 17, 
2008. (2007 TRS Rate Methodology Order): Tier I shall include monthly 
minutes submitted in the range of 0--50,000, Tier II shall include 
monthly minutes from 50,001 to 500,000, and Tier III shall include 
monthly minutes submitted above 500,000. The rationale for adopting the 
tiers in the 2007 TRS Rate Methodology Order remains applicable; that 
is, providers with a relatively small number of minutes generally have 
higher costs. Further, the Commission lacks sufficient record evidence 
to depart from the existing tier structure in favor of any particular 
alternative. The Commission therefore declines to change the tier 
structure at this time.
    9. Consistency of this Action with the ADA. The Commission 
concludes that the adoption of the VRS rates herein is consistent with 
its obligations under Title IV of the Americans with Disabilities Act, 
codified as section 225 of the Communications Act. In complying with 
these statutory requirements, the Commission often must balance the 
interests of contributors to the Fund, who are ratepayers, with the 
interests of users of TRS. Because the rates adopted in the Order 
exceed the VRS providers' average actual costs as reported by them, the 
Commission concludes that they are consistent with the requirements in 
section 225 of the Act, and furthermore reflect a full awareness of the 
Commission's obligations under section 225 and a commitment to further 
the goals of functional equivalency through strengthening and 
sustaining VRS.

The Compensation Rate for TRS and STS for the 2010-2011 Fund Year

    10. The Commission adopts NECA's proposed per-minute base rate of 
$2.0256 for traditional TRS and STS for the 2010-2011 Fund year. The 
base rate for TRS and STS is formulated by NECA following the MARS 
analysis adopted in the 2007 TRS Rate Methodology Order.
    11. Although the base rate for STS is the same as for TRS, in the 
2007 TRS Rate Methodology Order, the Commission recognized that many 
potential STS users were not being made aware of this important 
service. Therefore, for the 2007-2008 Fund year, the Commission added 
an additional amount of $1.131 per minute to the STS compensation rate 
calculated under the MARS plan to be used for outreach purposes. The 
Bureau decided to retain the outreach payment for the 2008-2009 and 
2009-2010 Fund years. The Commission will continue the additional 
funding for STS as adopted in the 2007 TRS Rate Methodology Order for 
the 2010-2011 Fund year in light of NECA's and commenters' belief that 
continued additional support for outreach is needed. However, the 
Commission will monitor the impact of this funding for the next cycle 
and consider alternative approaches to STS outreach in the future.

The Compensation Rates for Captioned Telephone Service (CTS) and 
Internet-Protocol (IP) CTS for the 2010-2011 Fund Year

    12. The Commission adopts NECA's proposed per-minute compensation 
rate of $1.6951 for CTS and IP CTS for the 2010-2011 Fund year. These 
rates are also calculated using the MARS formula adopted in the 2007 
TRS Rate Methodology Order.

The Compensation Rate for IP Relay for the 2010-2011 Fund Year

    13. The Commission adopts NECA's proposed per-minute compensation 
rate of $1.2985 for IP Relay for the 2010-2011 Fund year. This rate 
includes $0.0503 per minute for ongoing ten-digit numbering and E911 
costs and $0.0204 per minute as a rate of return on capital investment 
as explained in NECA's filing. Beginning July 1, 2010, all numbering 
and E911 costs associated with IP Relay, as well as VRS, will be 
compensated on a per-minute basis. The

[[Page 49493]]

Commission adopted a price cap formula in the 2007 TRS Rate Methodology 
Order for three years which expires June 30, 2010. The Commission finds 
it appropriate to continue to use the price-cap methodology used in 
setting the previous rates for IP Relay, and to adopt NECA's proposed 
rate for the 2010-2011 Fund year based on IP Relay providers' projected 
costs and demand.
    14. Unlike VRS, for IP Relay, the Commission explicitly stated that 
at the end of the first three-year cycle, it would adopt IP Relay rates 
for another three-year cycle. Therefore, NECA's proposed rate for the 
2010-2011 Fund year for IP Relay will serve as a base rate for a new 
three-year cycle for IP Relay that will expire June 30, 2013. As has 
been done in the previous cycle based on the 2007 TRS Rate Methodology 
Order, this rate will be adjusted annually by an inflation factor and 
an efficiency factor, and will include any appropriate exogenous costs 
submitted by providers. The inflation factor is the Gross Domestic 
Product minus the Price Index (GDP-PI), and the efficiency factor is 
the inflation factor minus 0.5 percent to account for productivity 
gains.

The Carrier Contribution Factor and Funding Requirement

    15. Because the Commission adopts NECA's proposed compensation 
rates for the various forms of TRS, with the adjustment of VRS rates to 
prevent a steep and disruptive decrease in per-minute compensation, and 
because the Commission agrees that NECA's projected minutes of use for 
each service are supported by the record and thus reasonable, the 
remaining issue to resolve is the treatment of NECA's March 30, 2010 
Supplemental Filing recommending a decrease in 2009-2010 funding 
requirements from $891 million to $701.8 million, and a reduction in 
the carrier contribution factor from 0.01137 to 0.00886. NECA made this 
recommendation based on the finding that actual VRS minutes for a 
seven-month period of July 2009 through January 2010 consistently 
averaged 18% below projections. The Commission declines to reduce the 
2009-2010 Fund size as recommended, and instead concludes that the most 
administratively reasonable approach is to apply NECA's recommended 
Fund adjustment to the funding requirement for 2010-2011. Based on 
this, the Commission adopts a total funding requirement of 
$433,990,484.98 and carrier contribution factor of 0.00585 which will 
result in a total Fund size of $705,048,502.19.

Paperwork Reduction Act

    16. This document does not contain new or modified information 
collection requirements subject to the Paperwork Reduction Act of 1995, 
Public Law 104-13. In addition, therefore, it does not contain any new 
or modified information collection burden for small business concerns 
with fewer than 25 employees, pursuant to the Small Business Paperwork 
Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

Congressional Review Act

    17. The Commission will send a copy of this 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 the authority contained in section 225 of the 
Communications Act of 1934, as amended, 47 U.S.C. 225, and Sec.  
64.604(c)(5)(iii) of the Commission's rules, 47 CFR 64.604(c)(5)(iii), 
document 10-115 is adopted.
    NECA shall compensate providers of interstate traditional TRS for 
the July 1, 2010 through June 30, 2011 Fund year, at the rate of 
$2.0256 per completed interstate conversation minute.
    NECA shall compensate providers of interstate Speech-to-Speech 
service for the July 1, 2010 through June 30, 2011 Fund year, at the 
rate of $3.1566 per completed interstate conversation minute.
    NECA shall compensate providers of interstate captioned telephone 
service and intrastate and interstate IP captioned telephone service 
for the July 1, 2010 through June 30, 2011 Fund year, at the rate of 
$1.6951 per completed conversation minute.
    NECA shall compensate providers of intrastate and interstate IP 
Relay service for the July 1, 2010 through June 30, 2011 Fund year, at 
the rate of $1.2985 per completed conversation minute.
    NECA shall compensate providers of intrastate and interstate Video 
Relay Service at the rates of $6.2390 for the first 50,000 monthly 
minutes (Tier I), $6.2335 for monthly minutes between 50,001 and 
500,000 (Tier II), and $5.0668 for minutes above 500,000 (Tier III) per 
completed conversation minute for the July 1, 2010 through June 30, 
2011 Fund year.
    The Interstate TRS carrier contribution factor shall be 0.00585, 
and the funding requirement shall be $433,990,484.98, and the, for the 
July 1, 2010 through June 30, 2011 Fund year.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2010-20047 Filed 8-12-10; 8:45 am]
BILLING CODE 6712-01-P