[Federal Register Volume 77, Number 21 (Wednesday, February 1, 2012)]
[Proposed Rules]
[Pages 4948-4973]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-2058]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CG Docket Nos. 10-51 and 03-123; FCC 11-184]


Structure and Practices of the Video Relay Service Program; 
Telecommunications Relay Services and Speech-to-Speech Services for 
Individuals With Hearing and Speech Disabilities

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Commission continues the process of 
reexamining the fundamentals of the Commission's Video Relay Service 
(VRS) rules to ensure the VRS program fulfills the goals set for the 
Commission in section 225 of the Communications Act (the Act). 
Specifically, the Commission sets forth a series of options and 
proposals to improve the structure and efficiency of the program, to 
ensure that it is available to all eligible users and offers functional 
equivalence--particularly given advances in commercially available 
technology--and is as immune as possible from the waste, fraud, and 
abuse that threaten the long-term viability of the program as it 
currently operates.

DATES: Interested parties may file comments on or before March 2, 2012, 
and reply comments on or before March 19, 2012.

ADDRESSES: You may submit comments, identified by CG Docket Nos. 10-51 
and 03-123, by any of the following methods:
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the Commission's Electronic Comment 
Filing System (ECFS), through the Commission's Web site http://fjallfoss.fcc.gov/ecfs2/. Filers should follow the instructions 
provided on the Web site for submitting comments. For ECFS filers, in 
completing the transmittal screen, filers should include their full 
name, U.S. Postal service mailing address, and CG Docket Nos. 10-51 and 
03-123.
     Paper filers: Parties who choose to file by paper must 
file an original and four copies of each filing. Filings can be sent by 
hand or messenger delivery, by commercial overnight courier, or by 
first-class or overnight U.S. Postal Service mail (although the 
Commission continues to experience delays in receiving U.S. Postal 
Service mail). All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
     All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters at 
445 12th St. SW., Room TW-A325, Washington, DC 20554. All hand 
deliveries must be held together with rubber bands or fasteners. Any 
envelopes must be disposed of before entering the building.
     Commercial Mail sent by overnight mail (other than U.S. 
Postal Service Express Mail and Priority Mail) must be sent to 9300 
East Hampton Drive, Capitol Heights, MD 20743.
     U.S. Postal Service first-class, Express, and Priority 
mail should be addressed to 445 12th Street SW., Washington, DC 20554.

In addition, parties must serve one copy of each pleading with the 
Commission's duplicating contractor, Best Copy and Printing, Inc., 445 
12th Street SW., Room CY-B402, Washington, DC 20554, or via email to 
[email protected].
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Dana Wilson, Consumer and Governmental 
Affairs Bureau, (202) 418-2247; email: [email protected].

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Further Notice of Proposed Rulemaking, FCC 11-184, adopted December 15, 
2011, and released December 15, 2011, in CG Docket Nos. 10-51 and 03-
123, seeking comment on a series of options and proposals to improve 
the structure and efficiency of the program, to ensure that it is 
available to all eligible users and offers functional equivalence--
particularly given advances in commercially available technology--and 
is as immune as possible from the waste, fraud, and abuse that threaten 
the long-term viability of the program as it currently operates. The 
full text of document FCC 11-184 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 11-184 and copies of subsequently filed documents 
in this matter may also 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, www.bcpiweb.com, or by calling 
1-800-378-3160. FCC 11-184 can also be downloaded in Word or Portable 
Document Format (PDF) at: http://www.fcc.gov/cgb/dro/trs.html#orders.
    Pursuant to 47 CFR 1.415 and 1.419, interested parties may file 
comments and reply comments on or before the dates indicated in the 
DATES section of this document. Comments and reply comments must 
include a short and concise summary of the substantive discussion and 
questions raised in the document FCC 11-184. The Commission further 
directs all interested parties to include the name of the filing party 
and the date of the filing on each page of their comments and reply 
comments. Comments and reply comments must otherwise comply with 47 CFR 
1.48 and all other applicable sections of the Commission's rules.
     Pursuant to 47 CFR 1.1200 et seq., this matter shall be 
treated as a ``permit-but-disclose'' proceeding in accordance with the 
Commission's ex parte rules. Persons making ex parte presentations must 
file a copy of any written presentation or a memorandum summarizing any 
oral presentation within two business days after the presentation 
(unless a different deadline applicable to the Sunshine period 
applies). Persons making oral ex parte presentations are reminded that 
memoranda summarizing the presentation must: (1) List all persons 
attending or otherwise participating in the meeting at which the ex 
parte presentation was made; and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda or other 
filings in the proceeding, the presenter

[[Page 4949]]

may provide citations to such data or arguments in his or her prior 
comments, memoranda, or other filings (specifying the relevant page 
and/or paragraph numbers where such data or arguments can be found) in 
lieu of summarizing them in the memorandum. Documents shown or given to 
Commission staff during ex parte meetings are deemed to be written ex 
parte presentations and must be filed consistent with Sec.  1.1206(b) 
of the Commission's rules. In proceedings governed by Sec.  1.49(f) or 
for which the Commission has made available a method of electronic 
filing, written ex parte presentations and memoranda summarizing oral 
ex parte presentations, and all attachments thereto, must be filed 
through the electronic comment filing system available for that 
proceeding, and must be filed in their native format (e.g., .doc, .xml, 
.ppt, searchable .pdf). Participants in this proceeding should 
familiarize themselves with the Commission's ex parte rules.
    People with Disabilities: To request materials in accessible 
formats for people with disabilities (Braille, large print, electronic 
files, audio format), send an email to [email protected] or call the 
Consumer and Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (TTY).

Initial Paperwork Reduction Act of 1995

    Document FCC 11-184 seeks comment on potential new information 
collection requirements. If the Commission adopts any new information 
collection requirement, the Commission will publish another notice in 
the Federal Register inviting the public to comment on the 
requirements, as required by the Paperwork Reduction Act of 1995, 
Public Law 104-13 (44 U.S.C. 3501-3520). In addition, pursuant to the 
Small Business Paperwork Relief Act of 2002, the Commission seeks 
comment on how it might ``further reduce the information collection 
burden for small business concerns with fewer than 25 employees.''

Synopsis

I. Introduction

    1. Video relay service (VRS) allows persons with hearing or speech 
disabilities or who are deaf-blind to use American Sign Language (ASL) 
to communicate in near real time through a communications assistant 
(CA), via video over a broadband Internet connection. In document FCC 
11-184, the Commission continues the process of reexamining the 
fundamentals of the Commission's VRS rules to ensure the VRS program 
fulfills the goals set for the Commission in section 225 of the Act. 
Specifically, the Commission sets forth a series of options and 
proposals to improve the structure and efficiency of the program, to 
ensure that it is available to all eligible users and offers functional 
equivalence--particularly given advances in commercially available 
technology--and is as immune as possible from the waste, fraud, and 
abuse that threaten the long-term viability of the program as it 
currently operates. The Commission solicits comment on these options 
and proposals to ensure that this vital program is effective, 
efficient, and sustainable for the future.

II. Structural Issues With the Current VRS Program

    2. Our overarching goal in this proceeding is to improve the VRS 
program so that it better promotes the goals Congress established in 
section 225 of the Act. Specifically, the Commission seeks to ensure 
that VRS is available to all eligible users, is provided efficiently, 
offers functional equivalence, and is as immune as possible to the 
waste, fraud, and abuse that threaten its long-term viability. The 
Commission notes that this is largely consistent with the goals 
outlined in the recent Consumer Groups' TRS Policy Statement, and that 
the Commission seeks to reform VRS in accordance with these goals to 
the extent possible. In developing the records of the VRS-related 
proceedings discussed above, and in particular based on the submissions 
to the VRS program structure and practices proceeding (CG Docket No. 
10-51), the Commission has identified a number of structural issues 
with the current program that have not only detracted from its 
historical success in providing communications services to individuals 
who are deaf, hard of hearing, deaf-blind, or have a speech disability, 
but may also threaten its future success. These issues--which the 
Commission seeks to address with the proposals set forth and the 
questions raised in document FCC 11-184--include the following: (i) 
Broadband affordability may be restricting the availability of VRS, 
(ii) VRS access technology standards may be insufficiently developed, 
frustrating the program's technology goals, and potentially resulting 
in inappropriate lock in of VRS users, (iii) the current VRS 
compensation mechanism is unpredictable and potentially inefficient, 
(iv) the structure of the VRS industry is potentially suboptimal and 
inconsistent with the goals of the Act, and (v) the current VRS 
compensation mechanism has proven vulnerable to waste, fraud, and 
abuse. The Commission discusses and seeks comment on each in turn 
below.

A. Broadband Affordability May Be Restricting the Availability of VRS

    3. The National Broadband Plan identified broadband affordability 
as a major barrier to broadband adoption. Although the Commission 
unfortunately lacks systematic data, the Commission has anecdotal and 
other evidence to suggest that this broadband affordability barrier may 
be particularly acute for the deaf and hard of hearing community, such 
that some people who would benefit from VRS are unable to afford the 
required broadband Internet access service. For example, as one 
commenter observed, a disproportionate number of deaf American adults 
are unemployed, receive Social Security, live in poverty, or have 
household income below $20,000; broadband penetration among this 
community is therefore likely to be lower than the national average of 
approximately 65%. Thus, the Commission finds it reasonable to presume 
that some of those deaf Americans who have low incomes live in areas 
where broadband is available, yet they do not subscribe due to the 
expense. Further, though there is no definitive estimate of the number 
of Americans with hearing or speech disabilities who are fluent enough 
in ASL to use VRS, there are likely to be such individuals who would 
benefit from VRS but cannot afford the necessary broadband Internet 
access service.
    4. The Consumer Groups' TRS Policy Statement urges the Commission 
to give consideration to regulatory initiatives that can ``meet the 
broadband access needs of people with hearing and speech 
disabilities.'' Indeed, any gap between the number of individuals who 
subscribe to VRS and the number of individuals who would subscribe but 
for the expense of broadband Internet access may represent a potential 
failure of our statutory obligation to make TRS ``available * * * to 
the extent possible,'' as the Commission believes VRS is effectively 
unavailable to those who cannot afford broadband Internet access. Now 
that the base of VRS users has grown significantly, the Commission is 
concerned that the broadband-penetration ceiling may have become a 
constraint on the availability of the program. The Commission seeks 
information and data from commenters that would help us better analyze 
whether there is a gap between potential VRS demand and actual VRS

[[Page 4950]]

subscribership attributable to the expense of broadband Internet 
access.

B. VRS Access Technology Standards May Be Insufficiently Developed

    5. Under the present VRS model, multiple providers offer 
substantially similar services with no opportunity for price 
competition, as end users receive the service at no cost. Despite this, 
however, the program supports more than one provider to allow VRS users 
choice between providers who compete on factors such as quality of 
service, customer service, and technological development. This is 
consistent with the goal expressed by the Consumer Groups to ensure 
``intense competition among a number of qualified vendors in the 
telecommunications relay services market to give the TRS user 
population a range of choices in features and services * * * .''
    6. Although the Commission has adopted general rules to facilitate 
this non-price competition, such as requiring that VRS providers ensure 
interoperability with competing providers and that the technologies 
used to access VRS services be portable between providers, the record 
indicates that these rules, in practice, have met with limited success 
in two particular areas: Ensuring that VRS providers have a real 
opportunity to compete for other providers' VRS users, and facilitating 
VRS users' access to off-the-shelf VRS access technology. The 
Commission questions whether it makes sense to spend Fund resources 
supporting multiple providers to ensure that such choice is available 
in principle if most VRS users cannot in practice take advantage of 
such choice (e.g., because of a lack of interoperability and/or 
portability of VRS access technology), and explore below new approaches 
to making consumer choice and effective competition a reality.
1. VRS Users May Be ``Locked In''
    7. The Commission has adopted interoperability and portability 
rules to facilitate competition among providers. Every VRS provider is 
required to provide its users with the capability to register with that 
VRS provider as a ``default provider.'' Such registration is required: 
(1) To allow the VRS provider to take steps to associate the VRS user's 
telephone number with their IP address to allow for the routing and 
completion of calls; (2) to facilitate the provision of 911 service; 
and (3) to facilitate the implementation of appropriate network 
security measures. On the other hand, our interoperability and 
portability rules are intended to (i) allow VRS users to make and 
receive calls through any VRS provider, and to choose a different 
default provider, without changing the VRS access technology they use 
to place calls, and (ii) ensure that VRS users can make point-to-point 
calls to all other VRS users, irrespective of the default provider of 
the calling and called party.
    8. Under the Commission's Internet-based TRS Numbering Order, 
published at 73 FR 41286, July 18, 2008 and 73 FR 41307, July 18, 2008; 
and Second Internet-based TRS Numbering Order, published at 73 FR 
79683, December 30, 2008 (together, the Internet-based TRS Numbering 
Orders), providers must ensure that videophone equipment that they 
distribute retain certain, but not all, features when a user ports his 
number to a new default provider. Specifically, a default provider that 
furnishes videophone equipment to a consumer need not ensure that the 
videophone equipment's ``enhanced features'' (e.g., address book, speed 
dial list) can be used when the consumer ports the number to and uses 
the videophone equipment with the new provider. Further, those enhanced 
features are, in most cases, impossible to port to new equipment 
obtained from the new default provider. Indeed, notwithstanding some 
level of industry effort, there is no set of common technical standards 
that will ensure such enhanced feature functionality remains after a 
customer ports to a new provider. Consequently, the Commission is 
concerned that VRS users may be effectively ``locked in'' to their 
existing providers by their wish to continue to use these non-
standardized enhanced features. Indeed, many VRS users appear to be 
reluctant to switch to a new default provider because alternative 
default providers find it difficult to support many of the enhanced 
features of users' existing videophones, posing an unacceptably high 
switching cost. The Commission notes that the Consumer Groups' TRS 
Policy Statement emphasizes the importance of ``[t]otal 
interoperability * * * for equipment software and services from all 
vendors (for any forms of TRS) with no loss of core functionality.'' As 
consumers note, full interoperability, including the ability to make 
point to point calls, ``ensures greater protection for TRS users' 
safety, life, health, and property.''
    9. The Commission seeks comment on the effectiveness of our current 
interoperability and portability requirements, and the role that 
existing VRS access technology standards--or the lack thereof--may play 
in frustrating the effectiveness of those requirements. Consumers 
further seek ``a conducive climate for healthy market competition'' in 
all forms of TRS.'' The Commission is concerned that VRS users may not 
be able to enjoy the benefits of non-price competition between multiple 
providers if, in fact, switching costs are so high that there is little 
prospect that consumers will actually switch default providers. Is the 
rationale for structuring the VRS program to afford competitive 
alternatives to VRS users drawn into question in the absence of 
technical standards that will reduce or eliminate such switching costs, 
including non-monetary costs such as those associated with the loss of 
enhanced features? If it is not possible to reduce switching costs to a 
level that does not frustrate the effectiveness of our current 
interoperability and portability requirements, should the Commission 
simply bid contracts for one or a limited number of VRS providers to 
offer VRS service, as smaller providers may have little hope of gaining 
market share by winning customers from larger providers? The Commission 
notes that such contracts would likely result in efficiency gains for 
the Fund by inducing price competition for the contract and/or 
eliminating the need to perpetually support sub-scale providers at 
higher rates. The Commission seeks comment on the impact such an 
approach would have on users. Given that the vast majority of users 
currently choose to obtain service from one provider, would it be 
correct to conclude that the impact would be minimal, or would the loss 
of additional competition--even by providers with small market shares--
risk harmful consequences in terms of loss of innovation and consumer 
choice? If yes, the Commission asks commenters to provide specific 
details supporting this conclusion.
2. VRS Users May Not Have Appropriate Access to Off-the-Shelf 
Technology
    10. When VRS was first launched a decade ago, videotelephony was a 
specialized, niche market requiring customized hardware and software, 
as well as frequently unavailable broadband Internet access service. It 
has now become a mainstream, mass-market offering. Indeed, currently 
available commercial video technology can provide closer functional 
equivalence, may be less costly, and is likely to improve at a faster 
pace than the custom devices supplied exclusively by VRS providers, so 
that the installed base of VRS access technology may be (or may soon 
become) inferior to ``off-the-shelf'' offerings.
    11. As described in greater detail in Appendix B of document FCC 
11-184, in 2006 the industry migrated to a

[[Page 4951]]

standard for transmitting real-time voice and video over packet-based 
networks called H.323, but has failed to make progress on the 
standardization needed to transition to the Session Initiation Protocol 
(SIP) family of standards, which has subsequently become the default 
for mass market Internet-based voice and video devices. In addition, as 
discussed in paragraph 8 above, there are no standards in place to 
facilitate transferring videophone equipment's enhanced features (e.g., 
address book, speed dial list) when the consumer ports their number to 
and uses the videophone equipment with a new provider.
    12. The Commission notes that the Consumer Groups' TRS Policy 
Statement emphasizes the need for the Commission to support 
technological innovation that will contribute to the quality and 
efficiency of TRS. In particular, the Consumer Groups request that we 
engage in ``[a]n ongoing effort * * * to `raise the bar' in 
technological design and operations efficiency.'' The Commission seeks 
comment on whether the lack of progress on standards development in the 
VRS industry is serving as a barrier to the introduction of potentially 
superior, and less expensive, off-the-shelf technology into the VRS 
market. What other barriers limit introduction of off-the-shelf 
technology into the VRS market? Are there other mechanisms that can be 
used to encourage the introduction of off-the-shelf technology in the 
VRS market? How would advances for off-the-shelf technology be impacted 
if the Commission were to bid contracts for one or a limited number of 
VRS providers to offer VRS service?

C. The Current VRS Compensation Mechanism Is Unpredictable and 
Potentially Inefficient

    13. As discussed above, the per-minute rate for compensating VRS 
providers has fluctuated significantly over time, resulting in 
uncertainty and controversy. Indeed, providers have frequently 
complained about uncertainty in the rate setting process due to the 
frequency with which rates have been recalculated and disagreements 
regarding the nature of the costs for which compensation may be 
provided. They explain that such uncertainty has impeded their ability 
to make long-term plans. The current rate setting mechanism has also 
negatively affected the telecommunications carriers that are required 
to contribute to the TRS Fund. The Commission would like to create 
stability and long-term predictability in the compensation mechanism, 
to the benefit of the providers, contributing carriers, and all 
consumers.
    14. In addition to the problems related to the rate fluctuations 
described above, several features of the VRS program make it difficult 
to manage costs and reimbursements. First, although there are many VRS 
users and multiple VRS providers, the users neither receive nor send 
price signals because the service is provided at no charge to them. 
Thus, there is no opportunity for the market to set prices, enable 
price competition, determine industry structure, or influence demand. 
Second, the TRS Fund is effectively the sole purchaser of VRS services 
but, unlike a normal market participant, the Fund cannot ``choose'' the 
volume (i.e., number of VRS minutes) to purchase, and so has no control 
over total expenditures once rates are set. Third, costs incurred by 
VRS providers are not necessarily aligned with the reimbursements the 
Fund provides on a per-minute basis. That is, many of a VRS providers' 
costs do not vary directly with the number of minutes of service 
provided (e.g., equipment, call center infrastructure, CA supervision, 
marketing/outreach, general and administrative (G&A) expenses). 
Further, to the extent that that providers' other sources of revenue 
are de minimis and all VRS provider's costs are explicitly or 
implicitly supported by the Fund, there is frequent controversy over 
whether activities such as those related to customer acquisition and 
retention, equipment subsidies, and financing (e.g., interest payments) 
are legitimate or not. For these reasons--as well as those related to 
waste, fraud, and abuse described below--the Commission is concerned 
with the efficiency of the current per-minute compensation scheme. The 
Commission seeks comment on this assessment of the efficiency of our 
per-minute compensation mechanism, and whether there are other factors 
that we should consider in restructuring the VRS compensation mechanism 
to improve its predictability and efficiency.

D. The Current Structure of the VRS Industry Is Inefficient

    15. At present, there are twelve companies eligible for 
reimbursement from the Fund for VRS. In addition, until recent rule 
changes, approximately fifty additional ``white label'' companies 
marketed or offered VRS under their own names and received compensation 
from the Fund indirectly. At present, however, a single provider is 
handling the vast majority of VRS minutes. As a result, while this 
provider enjoys significant economies of scale, the remaining providers 
are able to cover their costs only because of the Commission's adoption 
of a tiered rate structure, which compensates providers with fewer 
minutes of use at a higher rate per minute. As a result, as Table 1 
shows, a disproportionate amount of the monthly compensation for VRS is 
paid at the subscale Tier I and Tier II rates. Indeed, if all minutes 
handled were compensated at the Tier III ``at scale'' rate, the Fund 
would immediately save over $2 million per month--a reduction in the 
size of the Fund of approximately 5%.

                                                                         Table 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Minutes     Compensation    Reimbursement   Reimbursement                 $/minute
             Tier                        Tier structure            compensated       rate         (millions)           %         Minutes %     (ratio)
--------------------------------------------------------------------------------------------------------------------------------------------------------
I............................  <= 50,000 minutes................       315,157           $6.24              $2            4.19         3.56         1.18
II...........................  50,001-500,000 minutes...........     1,491,340            6.23             9.3           19.77        16.84         1.17
III..........................  > 500,000 minutes................     7,047,330            5.07            35.7           76.04         79.6         0.96
                                                                 ---------------------------------------------------------------------------------------
                                Totals..........................     8,853,827             n/a              47             100          100          n/a
--------------------------------------------------------------------------------------------------------------------------------------------------------

    16. Recognizing that the industry structure going forward may be 
influenced by factors including the desire and ability of existing VRS 
users to switch providers, the number of new VRS users who enter the 
market, and the rate structure (e.g., the willingness of the Fund to 
support subscale players for a definite or indefinite period of time 
and the absolute level(s) of compensation), the Commission seeks 
comment on whether the current market

[[Page 4952]]

structure--namely, a single large provider with numerous subscale 
providers--represents an appropriate balance between consumer choice 
and efficiency.

E. The Current VRS Compensation Mechanism Has Proven Vulnerable to 
Waste, Fraud, and Abuse

    17. The compensation of VRS providers on a per-minute basis creates 
an inherent incentive for providers to seek ways to generate minutes of 
use solely for the purpose of generating ``compensable minutes,'' 
rather than to provide legitimate services to VRS users. Illegitimate 
minutes are difficult to detect on an ex post basis, particularly when 
comingled with legitimate minutes or submitted by eligible providers on 
behalf of non-eligible ``white label'' providers. The U.S. Department 
of Justice, working in cooperation with the FCC's Office of Inspector 
General (OIG), has actively pursued individuals alleged to have 
manufactured and billed the TRS Fund for illegitimate minutes of use, 
and the Commission has adopted rules to bolster the certification 
process and discourage fraud and abuse. Even the best auditing 
mechanisms are imperfect, however, and so it is preferable to change 
the structural incentives of providers to discourage such abuse in the 
first place and increase our ability to detect it if it does occur 
along with strong oversight and auditing.

III. Proposed Reforms To the VRS Program To Address Structural Issues

    18. The Commission sets forth below detailed proposals to address 
the structural issues identified in section II, above. The Commission 
seeks comment on these proposals, and emphasizes the importance of 
comments being detailed, specific, and supported by data wherever 
appropriate.

A. Ensuring That VRS is ``Available''

    19. To the extent that the record shows that there is unaddressed 
demand for VRS, the Commission proposes to (i) promote residential 
broadband adoption via a pilot program to provide discounted broadband 
Internet access to low-income deaf, hard of hearing, deaf-blind, and 
speech disabled Americans who use ASL as their primary form of 
communication, and (ii) provide an incentive payment to providers for 
adding new-to-category customers.
1. Promoting Residential Broadband Adoption by Low-Income Americans 
With Disabilities
    20. Commenters in this docket have advocated for the creation of a 
program to subsidize or otherwise make available broadband Internet 
access to Americans who are unable to access VRS because they cannot 
afford broadband Internet access. Such a program would be consistent 
with the recommendations of the National Broadband Plan, the 
Commission's broader efforts to meet the 21st century communications 
needs of low-income consumers, and the Act.
    21. The Commission therefore seeks comment on establishing a ``TRS 
Broadband Pilot Program'' (TRSBPP) to utilize the TRS Fund to provide 
discounted broadband Internet access to low-income deaf, hard of 
hearing, deaf-blind, and speech disabled Americans who use ASL as their 
primary form of communication. The Commission aims to ensure that any 
such program is both effective, by expanding the potential base of VRS 
users to include those who could not otherwise afford broadband, and 
efficient in its structure and operation. A detailed proposal to 
implement a TRSBPP is set forth in Appendix A of document FCC 11-184. 
The Commission seeks comment on our legal authority to implement such a 
program in section VI.
2. Providing Incentives to Providers for Adding New-To-Category 
Customers
    22. A VRS provider's legitimate marketing and outreach costs are 
currently compensable from the Fund as part of the per-minute rate. 
Providers argue that marketing and outreach is a critical component of 
the service they provide. However, the appropriateness of certain 
marketing and outreach costs claimed by providers has been the source 
of controversy, as have provider marketing practices. Moreover, under 
the existing per-minute compensation system, providers have had a 
greater incentive to target existing VRS users than to focus outreach 
either on ``new-to-category users,'' i.e., potential VRS users that are 
not yet registered with any provider as a VRS user or members of the 
general public.
    23. The Consumer Groups' TRS Policy Statement asks the Commission 
to address deficiencies in outreach and research and development. They 
express the concern that countless Americans on fixed incomes may not 
be aware of resources for accessing TRS, or the capabilities and 
features that TRS has to offer. They also note that ``[r]elay services 
are equal access programs that are just as useful and critically 
important for those with or without hearing and speech disabilities,'' 
and advocate for TRS promotional activities to acquaint the public and 
private sectors, including employers, educational institutions, and 
businesses, about TRS to ``build familiarity and acceptance of TRS 
nationwide.'' Accordingly, the Commission seeks comment on ways to 
ensure that providers are making potential users aware of VRS in a 
manner consistent with the goals of section 225 of the Act. In 
particular, the Commission seeks comment on ways to provide incentives 
for providers to (i) Be more efficient in their marketing and outreach 
efforts, (ii) ensure that VRS is available to more potential users by 
focusing their efforts on new-to-category users instead of existing VRS 
users, (iii) determine whether such efforts are effective in reaching 
potential users, and (iv) ensure that their outreach efforts build 
familiarity about VRS within the general public. The Commission also 
seeks comment on how governmental and non-governmental entities, such 
as the FCC, the United States Department of Health and Human Services, 
state and local governments, and nonprofit organizations, can help make 
potential users aware of VRS.
    24. One proposal would be to cease reimbursing providers for 
marketing and outreach based on their individual expenses for these 
activities, and instead implement a one-time, fixed incentive payment 
to VRS providers from the TRS Fund for each new-to-category VRS user 
they sign up, starting some time after the effective date of a final 
order in this proceeding. Such a system would align compensation with 
actual results and encourage VRS providers to focus their marketing and 
outreach efforts primarily on finding and signing-up new-to-category 
customers instead of merely trying to persuade existing VRS users to 
switch providers, which--while a valid commercial goal--is not a 
reasonable and legitimate expense for the Fund. By providing a fixed 
payment for each successful user sign-up, it would encourage providers 
to find the most efficient means of recruiting new users and focus Fund 
expenditures on fulfilling the goals set forth in section 225 of the 
Act. Further, to the extent that the marginal cost of adding a new 
customer is rising, for example, because providers are approaching the 
broadband-penetration ceiling, a fixed incentive payment could better 
compensate providers for the cost of adding a new-to-category customer. 
The Commission seeks comment on whether

[[Page 4953]]

such an incentive payment will better align Fund expenses and 
providers' incentives with the goals of efficiency and availability by 
replacing the un-measurable effects of ``marketing and outreach'' with 
a concrete, transparent, and success-based mechanism.
    25. If a new-to-category incentive payment were to be adopted, how 
could the Commission ensure that the payment is made only for signing 
up VRS users that were not previously registered for iTRS, or were not 
previously able to access VRS because, for example, they could not 
afford broadband Internet access? One proposal would be to define, for 
purposes of marketing and outreach compensation, the terms ``VRS user'' 
and ``new-to-category VRS user.'' For example, a ``VRS user'' could be 
defined as ``as an individual that has registered with a VRS provider 
as described in Sec.  64.611 of the Commission's rules.'' This 
definition is consistent with our definition of ``Registered Internet-
based TRS User,'' but distinguishes ``VRS users'' from the larger 
universe of Registered Internet-based TRS Users to reflect the changes 
the Commission proposes to make to the VRS program in document FCC 11-
184. ``New-to-category VRS user'' could be defined as ``a VRS user that 
has never previously registered with any provider of Internet-based 
TRS.'' The Commission seeks comment on whether these definitions would 
appropriately limit new-to-category incentive payments, or whether 
different and/or additional definitions would better achieve the stated 
purpose of the new-to-category incentive payment. Should these 
definitions explicitly state that VRS users and new-to-category VRS 
users must be ``deaf, hard of hearing, deaf-blind, or [have] a speech 
disability?'' Should the new-to-category incentive payment be limited 
to one-per-household or one-per residence? Should other factors be 
considered? For example, should there be a minimum age requirement for 
VRS users, so as to ensure that infants or small children are not 
registered prior to their being able to actually use the service? 
Should incentive payments be limited to one-per-household or one-per-
residence as is contemplated for the TRSBPP? The Commission seeks 
comment on whether a consumer's decision to obtain services supported 
by the TRSBPP, if adopted, should affect eligibility for the Lifeline 
or Link Up programs, or vice versa.
    26. If a new-to-category incentive payment were to be adopted, how 
should providers prove eligibility for payments from the TRS Fund? What 
type of information should providers obtain to ensure that an 
individual that claims to be or appears to be a new-to-category VRS 
user is actually a new-to-category VRS user. Given that hearing 
individuals should not be Registered Internet-based TRS users, should 
proof that new-to-category VRS users are ``deaf, hard of hearing, deaf-
blind, or [have] a speech disability'' be required? What method or 
methods should a provider use to verify or validate the information 
provided by a potential new-to-category VRS user? Should the Commission 
establish a standard certification form? Should providers establish a 
validation or verification process? Should the Commission establish 
guidelines or detailed rules governing what constitutes an acceptable 
verification or validation process? Should there be only one acceptable 
process, or should providers be entitled to use one of several methods 
to validate or verify information provided to support categorization as 
a new-to-category VRS user?
    27. If a new-to-category incentive payment is adopted, how should 
the Commission calculate the amount of such payment? One methodology 
would be to use as a basis the average or median cost per gross 
addition (CPGA) of certified VRS providers over the most recent one 
year period. The Commission therefore requests that all commenting 
parties submit their CPGA for their most recent fiscal year, including 
a description of how the CPGA was calculated and the cost, revenue, and 
subscriber data used to calculate the figure. Another methodology would 
be to set the incentive payment as the sum of the reasonable costs of 
adding a new customer, which would include marketing, equipment, setup, 
and other reasonable costs. To the extent commenters support such a 
methodology, the Commission requests that they submit a proposed list 
of costs and fully justified estimates for those costs. To the extent 
commenters wish to propose another method for setting the incentive 
payment, they should provide a detailed explanation and justification 
for their proposed dollar amount per new-to-category user. The 
Commission invites comment on all aspects of this new-to-category 
incentive payment proposal.
    28. If a new-to-category incentive payment is adopted, what impact 
would such adoption have on the Fund contribution factor? Would the 
reduction in reimbursements for individual provider marketing and 
outreach expenses offset claims for incentive payments? Is it necessary 
to ensure that there is not a sudden increase in the Fund contribution 
factor? One proposal would be to cap the number of incentive payments 
at a fixed number per year. For example, if incentive payments were 
limited to 50,000 per year, and there is a pool of 200,000 potential 
new-to-category VRS users who could register, it would spread the cost 
over at least four years. The Commission seeks comment on whether an 
annual cap on the number of payments is appropriate and, if so, at what 
level the cap should be set. The Commission also seeks comment on 
whether the duration of the incentive payment should be limited. Should 
the incentive payment continue to be available in perpetuity, or is it 
sufficient to make the payment available only during the transition 
period discussed in section IV.B.15?
    29. The Commission seeks comment on whether a new-to-category 
incentive payment program could help address the market structure issue 
addressed in section II.D above. Could those certified VRS providers 
that are currently subscale increase their growth prospects if the new-
to-category incentive payment is limited to providers that have less 
than the number of users the Commission estimate is necessary to 
achieve minimum efficient scale? As the Commission explains in greater 
detail below, we believe that having all providers of VRS operating at 
minimum efficient scale will improve the efficiency of the VRS program 
by ensuring that the Fund does not indefinitely subsidize providers 
that have less efficient cost structures. The Commission proposes that 
new users would not be prohibited from registering with providers that 
already have more than the number of users it takes to achieve scale--
but such providers would not be eligible for the incentive payment 
because they already have achieved minimum efficient scale and 
presumably have less need for an additional financial incentive to 
promote awareness of their brand (as well as greater financial 
resources for marketing and outreach). The Commission seeks comment on 
this proposal.
    30. The Commission seeks comment on whether there are additional 
specific steps the Commission should take to incent providers to 
refocus their efforts away from merely churning users between providers 
and toward finding and adding new-to-category VRS users who have not 
been able to benefit from VRS to date. The Commission also seeks 
comment on steps that it should take to reduce the increasing incidence 
of relay hang-ups by businesses and others who not acquainted with TRS, 
as well as

[[Page 4954]]

general measures needed to familiarize the general public about the 
existence and purpose of TRS. Finally, the Commission seeks comment on 
whether there are specific actions the Commission should take to 
supplement provider outreach efforts to expand the availability of VRS 
to more users and build acceptance of VRS in the greater community.
    31. If a new-to-category incentive payment is adopted, what impact 
would such adoption have on research and development relating to VRS 
and, more broadly, TRS? Would providers have sufficient incentive and 
means to invest in research and development on VRS access technology, 
improving their call platforms, and/or other aspects of the provision 
of VRS? Would the introduction of standards for iTRS access technology 
facilitate research and development by VRS providers? Would such 
standards incent equipment manufacturers that have not traditionally 
invested in VRS and other TRS technologies to do so going forward? What 
other steps could the Commission take to promote research and 
development in VRS and other forms of TRS?

B. Addressing VRS User Lock In and Access to Advanced Technology

1. Defining VRS Access Technologies
    32. The Commission in the First Numbering Order used the defined 
term ``CPE'' to describe ``TRS customer premises equipment,'' or the 
technology used to access Internet-based TRS. Because the use of this 
term has created some confusion among providers as new access 
technologies have been brought to market, and to distinguish the 
equipment, software and other technologies used to access VRS from 
``customer premises equipment'' as that term is defined in section 3 of 
the Act, the Commission proposes to amend Sec. Sec.  64.605 and 64.611 
of its rules by replacing the term ``CPE'' where it appears with the 
term ``iTRS access technology.'' The Commission proposes to define 
``iTRS access technology'' as ``any equipment, software, or other 
technology issued, leased, or provided by an Internet-based TRS 
provider that can be used to make or receive an Internet-based TRS 
call.'' Thus, any software, hardware, or other technology issued, 
leased, or otherwise provided to VRS or IP Relay users by Internet-
based TRS providers, including ``provider distributed equipment'' and 
``provider based software,'' whether used alone or in conjunction with 
``off-the-shelf software and hardware,'' would qualify as ``iTRS access 
technology.'' Given the differential treatment of VRS and IP Relay 
proposed in document FCC 11-184, the Commission further proposes to 
refer separately to iTRS access technology as ``VRS access technology'' 
and ``IP Relay access technology'' where appropriate. The Commission 
seeks comment on this proposal.
2. Establishing Standards for iTRS Access Technology
    33. Prior to the Commission's establishment of its Part 68 rules in 
1975, terminal equipment was manufactured almost exclusively by Western 
Electric, which was part of the Bell System of companies that included 
the monopoly local exchange and long distance providers in most parts 
of the country. This ensured that no harmful terminal equipment was 
connected to the public switched telephone network, but also created a 
monopoly in the development and manufacture of terminal equipment. The 
Part 68 rules are premised on a compromise whereby providers are 
required to allow terminal equipment manufactured by anyone to be 
connected to their networks, provided that the terminal equipment has 
been shown to meet the technical criteria for preventing network harm 
that are established in the Part 68 rules. The Commission's Part 68 
rules have facilitated a vibrant, competitive market for terminal 
equipment, reducing prices and resulting in a proliferation of new 
equipment and capabilities available to consumers.
    34. The Commission seeks comment on whether the effectiveness of 
our interoperability requirements and functional equivalence could be 
improved by the creation of VRS access technology standards that are 
conceptually similar to the Part 68 standards for traditional CPE. 
Development of such standards may help to resolve the issue of VRS user 
lock in described in section II.B.1 by giving VRS users assurance that 
they will be able to continue to use their existing VRS access 
technology even if they choose to register with a new VRS provider, and 
that they will not lose access to enhanced features that have proven to 
be of particular importance to end users. The Commission also expects 
that a properly developed set of standards, and a properly developed, 
consensus driven process for maintaining and updating those standards, 
is consistent with, and could serve as a step towards, the 
accessibility of interoperable video conferencing services under the 
CVAA, and ultimately could result in widespread use of off-the-shelf 
technology both for VRS and for point-to-point calls.
    35. Appendix B of document FCC 11-184 sets forth a detailed 
proposal for developing and maintaining VRS access technology standards 
based primarily on SIP. The Commission seeks comment on this proposal. 
The process described in that appendix is intended to develop an open, 
competitive VRS market, and is designed to facilitate interoperability, 
portability, affordability, supportability and compatibility goals that 
the Commission has long pursued and consumers have requested. 
Establishing VRS access technology standards may give providers a fair 
chance to compete and grow and could resolve the problem of users being 
locked in to their existing providers because of iTRS access technology 
constraints.
    36. To ensure all VRS access technologies that VRS providers issue, 
lease, or otherwise provide to VRS users are compliant with any 
standards that we establish in this proceeding, we propose to adopt, or 
to incorporate by reference into our rules, any such standards. Non-
compliance would then constitute an enforceable violation of Commission 
rules. The Commission seeks comment on this proposal. What effect would 
such a proposal have on existing VRS access technology currently in 
use? Should VRS providers that issued, leased, or otherwise provided 
VRS access technology to VRS users be required to ensure that such 
legacy VRS access technology is fully compliant with any standards 
adopted or, alternatively, removed from use within some discrete period 
of time (e.g., 12-18 months)? The Commission notes that the burden of 
making the existing base compliant may be reduced to the extent that 
legacy devices are reaching the end of their natural lives. If the 
Commission's interoperability and portability rules are not effectively 
enforced with respect to the existing base of VRS users and new-to-
category users, will this prevent smaller providers from growing, and 
hence prevent a more efficient industry structure from being attained? 
In practice, no provider has an incentive to make its customers more 
contestable, even if this benefits VRS users, and so the Commission 
seeks comment on how to ensure that any standards adopted are actually 
implemented. For example, should VRS minutes generated using equipment 
that does not meet any standards adopted be non-compensable?
    37. The Commission notes that the Commission has previously sought 
comment on whether to ``mandate specific Internet protocols that VRS 
providers must use to receive and place VRS calls.'' The Commission's 
intent in document FCC 11-184 is not to lock

[[Page 4955]]

providers into a particular set of protocols, which could have the 
effect of discouraging or impairing the development of improved 
technology. Rather, our goal is to establish functional requirements, 
guidelines, and operations procedures for VRS that will encourage the 
use of existing and new technologies, and allow the industry to expand 
and evolve in a way that the lack of standards to date has inhibited, 
in particular by facilitating the use of off-the-shelf equipment and 
preventing the use of equipment and lock in as a tool for limiting 
consumers' choice of providers.
    38. Given the focus of document FCC 11-184 on the VRS program, the 
Commission does not propose to establish standards for iTRS access 
technology used to access IP Relay or other forms of iTRS at this time. 
The Commission expects, however, that to the extent such standards are 
warranted, the establishment of standards for the VRS program may serve 
as a model for other Internet-based TRS programs.
3. Off-the-Shelf iTRS Access Technology
    39. Commenters responding to the VRS Technology Public Notice, 
published at 76 FR 11462, March 2, 2011, generally state that off-the-
shelf VRS access technology hardware (i.e., commercially available 
computing and communications equipment such as laptops, mobile phones, 
and tablet computers with broadband Internet access and a front facing 
camera such as the Apple iPad2) is becoming increasingly available and 
popular among both VRS providers and VRS users--a dramatic change since 
VRS was first introduced. Commenters also note the benefits of 
developing VRS applications that run on off-the-shelf hardware, 
including that it is based on common commercial protocols and that 
``competing VRS providers can all design for any open platforms.'' 
Conversely, commenters have argued that proprietary videophones 
developed by providers are a source of VRS user lock in. The Commission 
therefore seeks comment on whether the effort to develop and maintain 
VRS access technology standards discussed in the preceding section 
would be furthered by phasing in a requirement that all VRS access 
technology hardware used to make compensable VRS calls be ``off-the-
shelf.'' Would limiting providers to making modifications to or 
developing software for existing commercial platforms help or hinder 
the effort to ensure portability and interoperability? Is such a rule 
consistent with the Commission's obligation to ``encourage * * * the 
use of existing technology and * * * not discourage or impair the 
development of improved technology?'' How should ``off-the-shelf'' be 
defined for the purpose of such a rule? Should special purpose 
videophones be treated differently than other hardware, such as 
laptops, tablets, or smartphones? What other factors must be considered 
if VRS providers are allowed to provide users only off-the-shelf VRS 
access technology hardware?
4. Funding iTRS Access Technology
    40. The Commission has consistently held that costs attributable to 
the user's relay hardware and software, including installation, 
maintenance, and testing, are not compensable from the Fund. As the 
Commission has explained, ``compensable expenses must be the providers' 
expenses in making the service available and not the customer's costs 
of receiving the equipment. Compensable expenses, therefore, do not 
include expenses for customer premises equipment--whether for the 
equipment itself, equipment distribution, or installation of the 
equipment or necessary software.''
    41. The Commission also recognizes, however, that providers 
continue to provide VRS access technology to VRS users free of charge, 
and that in many cases these providers' primary or only source of 
revenue may be the TRS Fund. The TRS Fund is likely, therefore, 
implicitly or indirectly funding iTRS access technology costs. But 
because this funding is implicit or indirect, the Commission has no 
data on how many units of hardware or software are being distributed by 
providers, how many users are receiving iTRS access technology from 
providers, how much money is being spent on manufacturing, installation 
and maintenance, or other data that could help the Commission ensure 
that the TRS program is being run in as efficient a manner as possible, 
and in a manner that fully meets the needs of VRS users.
    42. The Commission does not seek to alter our prior decision that 
equipment costs are not ``costs caused by interstate telecommunications 
relay service.'' The Commission seeks comment, however, on whether the 
``availability'' mandate in section 225(d)(3) of the Act, discussed in 
greater detail in section VI below, provides the Commission authority 
to collect contributions to the TRS Fund to support iTRS access 
technology for VRS users and to disburse the relevant support. Would 
providing explicit compensation for iTRS access technology help further 
the goal of ensuring that TRS is ``available, to the extent possible 
and in the most efficient manner?'' Would the Commission be in a better 
position to collect data on costs associated with iTRS access 
technology if an explicit funding mechanism were in place? Should iTRS 
access technology funding be limited to low income consumers, as is 
contemplated in the discussion of the TRSBPP above, or would it be more 
appropriate to allow iTRS access technology costs to be covered by the 
TRS Fund for all VRS users? If the TRS Fund is used to support iTRS 
access technology, should the Commission require that ownership of 
supported technology be passed to VRS users to help reduce the 
possibility of user lock in? What other legal and policy issues are 
relevant to the discussion of whether VRS access technology costs 
should be explicitly (rather than implicitly) compensable from the TRS 
Fund?
    43. To the extent that the Commission finds it has the authority to 
provide compensation for iTRS access technology, the Commission does 
not, given the focus of document FCC 11-184 on the VRS program, propose 
to provide explicit compensation for iTRS access technology used to 
access IP Relay or other forms of iTRS at this time. The Commission 
expects, however, that to the extent a VRS access technology funding 
program proved successful, the VRS program may serve as a model for 
other Internet-based TRS programs.

C. Instituting a More Efficient Compensation Mechanism and Reducing 
Incentives for Waste, Fraud, and Abuse

    44. The Commission long has questioned whether a per-minute 
compensation methodology is appropriate for VRS, due in no small part 
to the significant difficulty of determining a ``reasonable'' per-
minute compensation rate for VRS, given issues concerning CA staffing, 
labor costs, and engineering costs particular to VRS. Although there 
has been significant effort directed to determining what categories of 
provider costs should be compensable from the Fund, the Commission has 
not recently examined the fundamental question of whether a tiered, 
per-minute compensation model is best suited to VRS.
    45. Based on information VRS providers have submitted to the 
Commission, the Commission believes that a tiered, per-minute 
compensation model may not be the most appropriate for VRS because it 
does not align compensation with costs (leading to structural 
inefficiency and lack of transparency), it provides a structural 
incentive to increase the number of VRS

[[Page 4956]]

minutes billed to the Fund (leading to fraud), and it sustains numerous 
subscale players (leading to waste). The Commission recognizes that any 
compensation mechanism will have its benefits and its drawbacks, but in 
seeking a better alternative to the current model, the Commission notes 
the following with respect to the current compensation mechanism:
    46. First, although the major cost item for each provider that 
varies with the number of VRS minutes is the direct CA cost, if the 
average number of VRS minutes per user is constant--as the Commission 
believes it is based on both discussions with providers and examination 
of historic usage data from the Fund administrator--then the CA cost is 
also effectively constant per user. That is, if the CA cost/minute is 
constant and the average minutes/user is also constant, then by 
definition the product of the two (i.e., CA cost/minute * minutes/user 
= CA cost/user) is also constant when averaged over a period of time 
and customer base of reasonable size.
    47. Second, the Commission notes that there are no other 
significant cost items that scale on a per minute basis. Indeed, all 
the other items (e.g., iTRS access technology, installation, customer 
care, G&A, call center infrastructure, etc.) are either fixed or scale 
directly or indirectly with the number of users served.
    48. Third, because a substantial fraction of the costs of providing 
VRS are not directly variable with either the number of users or 
equivalently the number of minutes handled, a providers' cost structure 
exhibits a scale curve, as illustrated in Figure 1. The minimum 
efficient scale (V*) is the point on the scale curve at which the 
volume of a firm's output is high enough to take substantial advantage 
of economies of scale so that the average costs are minimized. Put more 
simply, minimum efficient scale is the point at which the per-unit cost 
begins to ``flatten'' as the volume of output increases. The Commission 
implicitly acknowledged the existence of such a scale curve when 
adopting a tiered rate methodology by compensating providers with fewer 
overall minutes of use at a higher per-minute rate. The Commission 
notes, however, that the current scheme provides no limit on the 
duration of support for subscale providers, resulting in an industry 
structure in which the Fund compensates numerous providers at the 
lowest volume, highest cost Tier I rates ($6.24 per minute) and very 
few firms at the higher volume, lowest cost Tier III rates ($5.07 per 
minute).
    49. The Commission seeks comment on these observations regarding 
the current compensation mechanism, in particular on the shape of the 
scale curve and the point at which minimum efficient scale is reached. 
The Commission also seeks comment on whether a more reasonable and 
transparent mechanism for compensating providers would be: (a) Based on 
a per user payment instead of a per minute payment, so that the 
compensation rate is better aligned with the costs of providing 
service, and so is easier to determine and more efficient; and (b) 
based on a predictable transition from the current tiered rates to a 
single at-scale rate. The Commission discusses (a) in the remainder of 
this section and (b) in section III.D.
[GRAPHIC] [TIFF OMITTED] TP01FE12.000

    50. The Commission seeks comment on whether a per-user compensation 
mechanism would better align the compensation methodology with the 
providers' cost structure, and so be more efficient, easier to set, and 
more transparent. In addition, would such a mechanism eliminate 
providers' incentives to stimulate minutes of use, a common and 
difficult to detect form of VRS fraud? Would such a mechanism incent 
VRS providers to add new users rather than promote additional minutes 
of use, thus better aligning the incentives of VRS providers with the 
goal of ensuring that TRS is available ``to the extent possible and in 
the most efficient manner?'' What pitfalls regarding potential fraud 
would come with a per-user approach? Will shifting provider incentives 
from generating minutes of use to adding users result in the providers 
fraudulently adding or reporting users to generate additional 
compensation? Would it be easier to detect the existence of fraudulent 
users than fraudulent minutes of use (particularly ex post facto), thus 
rendering the program easier to monitor and audit? What safeguards 
could be

[[Page 4957]]

established to ensure that providers register only individuals that 
meet the requirements established in the statute and by our 
regulations? Would a per-user compensation mechanism render the program 
more transparent by allowing the Commission and the public to better 
understand the actual number of users of VRS and the cost per user--
neither of which are known today despite the size of the program? Would 
the rate setting process be simplified, more predictable, and more 
transparent? Would a per-user mechanism, taken in combination with the 
transition plan described in sections III.D and IV.B.15, provide more 
certainty to VRS providers and investors, and better governance for the 
Commission? To provide a solid basis for discussion, a detailed 
explanation of a per-user compensation mechanism is set forth in 
Appendix C of document FCC 11-184. The Commission seeks comment on the 
per-user compensation mechanism described in Appendix C of document FCC 
11-184. Would a per-user approach eliminate the need to provide funding 
for marketing to new-to-category customers?
    51. Active Users. While a per-user compensation system would 
eliminate incentives to manufacture minutes of use, it would create 
incentives to enroll more users--even those who do not actually utilize 
the service and therefore do not generate costs for the VRS provider. 
It may also create incentives to enroll the same users with multiple 
providers. The Commission seeks comment on how these incentives can be 
lessened or eliminated. Should providers be compensated only for 
``active users''--those registered VRS users that meet a minimum usage 
requirement? One proposal for defining active users is set forth in 
Appendix C of document FCC 11-184. The Commission recognizes that if it 
adopts a minimum usage requirement for VRS users, it will require VRS 
providers to continue tracking the monthly use of its service by users. 
The Commission seeks comment on what steps it can take to ensure that 
VRS providers do not use this information to encourage or entice users 
to meet the minimum usage requirement for being considered an active 
user.
    52. Enterprise Users. The record indicates that there are an 
increasing number of individuals who use VRS in the course of their 
employment, and that those users may have higher average monthly usage 
than those who do not use VRS in the course of their employment. The 
Commission recognizes, for example, that a single deaf or hard of 
hearing individual may use VRS both as an ``enterprise user'' (i.e., in 
the course of their employment) and for their own personal use, just as 
hearing individuals frequently have a phone provided by their employer 
for use at work, and separate phones for their personal use. The 
Commission therefore seeks comment on whether a VRS provider should 
receive additional compensation for ``enterprise users'' under a per-
user compensation system.
    53. An option for establishing a system to compensate VRS providers 
for enterprise users is set forth in Appendix C of document FCC 11-184. 
The Commission seeks comment on the benefits of establishing a separate 
enterprise user compensation rate in general, and on the option in 
Appendix C of document FCC 11-184 in particular. Would the proposal in 
Appendix C of document FCC 11-184 help reduce barriers to employment 
for VRS users--as is requested by the Consumer Groups--because VRS 
providers would have an economic incentive to work with businesses to 
ensure that the workplace has functionally equivalent communications 
with which those employees can perform their assigned duties? Would 
establishing a separate compensation rate for enterprise users help 
ensure that VRS providers are appropriately compensated for the 
reasonable costs of providing VRS? To what extent would this option 
impact the obligations of employers under Title I of the ADA to provide 
reasonable accommodation to qualified individuals with disabilities who 
are employees or applicants for employment, unless to do so would cause 
undue hardship?
    54. The Commission notes that under the existing compensation 
mechanism, VRS calls made by or to a VRS provider's employee, or the 
employee of a provider's subcontractor, are a provider business expense 
and are not eligible for compensation from the TRS Fund on a per-minute 
basis. The Commission proposes that the same logic applies under a per-
user compensation mechanism, and that the cost of calls made to and by 
employees of VRS providers and their affiliates, or subcontractors of 
VRS providers and their affiliates should be treated as a cost of 
providing service which is recovered through the compensation provided 
for service rendered to non-affiliated VRS users. The Commission 
therefore seeks comment on what safeguards should be put in place to 
ensure that VRS providers are not compensated at the enterprise rate 
for providing service to individuals who work for VRS providers or 
their affiliates and subcontractors of VRS providers and their 
affiliates. For example, should employees of VRS providers and their 
affiliates be required to use a separate 10-digit number at work to 
denote VRS calls made in the course of their employment? Should the 
definition of Enterprise VRS Employer include an exclusion of these 
entities? Should the Enterprise VRS Employers of each Enterprise User 
be listed in the iTRS database? Should rules associated with call 
detail records be modified so that Enterprise Users and Enterprise VRS 
Employers are readily identifiable? How should self-employed VRS users 
be treated for the purpose of an enterprise rate?

D. Transitioning the Industry Structure To Ensure Economies of Scale

    55. Each of the structural reforms discussed above is worth 
exploring on its own merit. A major additional benefit of these 
reforms, if adopted, would be to create an opportunity to transition 
away from the current inefficient industry structure by giving all 
providers an opportunity to achieve minimum efficient scale. 
Specifically, the proposed TRSBPP could make VRS available to a 
significant pool of new-to-category potential VRS users, and the 
implementation of iTRS access technology standards could reduce 
switching transaction costs and make the existing base of VRS users 
more contestable than is currently the case (i.e., more easily able to 
switch from their current provider to a new provider). At the end of a 
successful transition period, an industry structure could consist of 
multiple, at-scale providers serving a larger number of users than at 
present, with each provider being compensated at the same at scale per-
user rate set by the Commission (see Figure 2). The ultimate result 
could be a program in which providers' incentives are aligned with the 
statute's goals of efficiency, functional equivalence, choice, and 
maximizing access to VRS, the Fund could be paying an effective rate 
per user that may better reflect the actual costs of providing VRS than 
is currently the case, and which could eliminate the current tiered 
rates, which provide seemingly indefinite support for subscale 
providers and introduce extra complexity into the management of the 
program.

[[Page 4958]]

[GRAPHIC] [TIFF OMITTED] TP01FE12.001

    56. The Commission notes, however, that implementation of these 
reforms, if adopted, would need to be phased in over time, as some of 
the reforms would need to be conducted sequentially. For example, 
appropriate VRS access technology standards must be in place before 
providers can be expected to compete effectively for existing users. 
Further, providers that are currently subscale will not be able to 
achieve scale overnight, and some providers may have chosen to adopt 
capital structures requiring a level of profitability that may not be 
reflected in a reformed program, for example, because of increased 
competition or better alignment of rates with the actual costs of 
providing service. The Commission therefore seeks comment in section IV 
on how the reforms in this section, if adopted, could be implemented so 
as to minimize the risk of inappropriate disruptions that could result 
from the transition to an at-scale per-user rate.
    57. The Commission notes that the transitions discussed in this 
section will be accompanied by risk. An appropriately implemented 
structural reform program and transition process potentially would give 
each provider a real opportunity to achieve minimum efficient scale 
during the transition period and may result in an end state for the 
program that is better for VRS users and VRS providers, as well as 
being more sustainable and efficient for the Fund. If, however, some 
providers are not able to manage their businesses, gain scale, or 
support their existing capital structures during a transition period, 
they will likely have to change their current business plans. This 
would be a reasonable result, and fully consistent with our settled 
policy, affirmed by the courts, that our duty is ``to protect 
competition, not competitors.'' The Commission seeks to enhance 
competition in the provision of VRS services because it appears to be 
an effective way of furthering the goals of section 225 of the Act, but 
will not act to preserve any particular competitor. The Commission does 
not believe that any provider has an inherent entitlement to receive 
compensation from the Fund, and so do not regard as a goal the 
protection of VRS providers who are high cost and/or uncompetitive.

IV. Implementing Structural Reforms

    58. In this section, the Commission seeks comment on how to 
implement the structural reforms discussed in section IV above, to the 
extent they are adopted. The Commission also seeks comment on whether 
any additional amendments or new rules are necessary to implement any 
reforms that are adopted.

A. VRS User Database

    59. The Commission seeks comment on whether the Commission should 
establish a VRS User Database to facilitate four primary functions 
required to implement the reforms proposed in document FCC 11-184: (i) 
Ensuring that each VRS user has at least one default provider, (ii) 
allowing for the identification of new-to-category users, (iii) 
supporting the operation of the TRS Broadband Pilot Program discussed 
in section III.A.1 and Appendix A of document FCC 11-184, and (iv) 
ensuring efficient program administration. A proposal for establishing 
a VRS User Database is set forth in Appendix D of document FCC 11-184.

B. Rules Governing the VRS program

    60. Implementation of the reforms discussed in document FCC 11-184 
will require that the rules governing the operation of the VRS program 
be amended. The Commission seeks comment on the need to modify existing 
rules or add new rules consistent with the proposals set forth in 
document FCC 11-184.
1. Restructuring Section 64.604
    61. Section 64.604 of the Commission's rules has become somewhat 
unwieldy since it was adopted in 2000. Initially focused on TRS 
mandatory minimum standards, the section now includes subsections that 
govern, inter alia, the administration of the TRS Fund and procedures 
for making complaints against providers. The Commission seeks comment 
on whether, regardless of any substantive changes that are made in 
response to document FCC 11-184, Sec.  64.604 of its rules should be 
broken into separate sections, each of which addresses a particular 
regulatory issue. To this end, the Commission seeks comment on whether 
it should adopt service-specific rules (e.g., VRS, speech-to-speech, 
captioned telephone relay service), transmission-specific rules (i.e., 
PSTN-based TRS vs. iTRS), or some other structure.
2. Improving Functional Equivalence in the Workplace
    62. The Commission notes that in the employment context, the 
employer, rather than the employee, generally holds the contractual 
right to control certain aspects of the communications services and 
products used on the job. For example, employers generally procure 
telephone service and telephone numbers for their employees, and it is 
the employer that pays the phone bill (directly or indirectly), 
interacts with the providing carrier, and has the contractual right to 
port or reassign numbers through their carrier partner. This generally 
is not the case in the context of VRS.
    63. As discussed in section III.C and in Appendix C of document FCC 
11-184, the Commission seeks comment on whether to provide additional 
compensation to VRS providers for providing service to VRS users in the 
course of their employment if a per user compensation mechanism is 
adopted. The Commission further seeks comment on whether, if such a 
proposal is adopted, it can be implemented such that VRS service is 
provided in the workplace in a manner that is functionally equivalent 
to the way

[[Page 4959]]

telecommunications services are provided to hearing employees.
    64. Specifically, the Commission seeks comment on whether 
enterprises that have deaf employees could be treated as ``VRS Users'' 
for the purposes of our VRS program, except to the extent necessary to 
ensure that VRS providers appropriately receive and process calls, 
including emergency calls, from individual employees. Thus, for 
example, a business that contracts with a VRS provider to make VRS 
available to all of its deaf employees would be considered a ``user'' 
as that term is used in connection with the registration and number 
portability obligations set forth in Sec.  64.611 of the Commission's 
rules, but each individual employee would be considered a user for the 
purposes of the emergency access obligations set forth in Sec.  64.605 
of its rules. The Commission seeks comment on what changes to its 
rules, if any, would be necessary to implement such a proposal, 
particularly in the context of the more general proposals and requests 
for comment set forth in the remainder of this section IV.B.
3. Removing the Need for Free Dial Around
    65. Under our existing interoperability rules, Internet-based TRS 
users must be able to ``dial around'' to competing providers. 
Specifically, Sec.  64.611(a)(2) of the Commission's rules obligates 
default VRS providers, to ``route and deliver all of that user's 
inbound and outbound calls unless the user chooses to place a call 
with, or receives a call from, an alternate provider.'' If providers 
are compensated on a per-user basis, however, they will not be 
compensated for calls placed through them by another VRS provider's 
registered user. If VRS users were permitted to dial-around their 
default provider under a per-user compensation mechanism, providers 
would have a perverse incentive to encourage their VRS users to dial 
around so as to avoid incurring the costs of processing their VRS 
calls. Dial around may also encourage VRS providers that seek to 
provide less than full service to free ride on other providers.
    66. The Commission recognizes, however, that some consumers might 
value the ability to dial around to different providers for various 
reasons. For example, the availability of dial around could facilitate 
competition among providers to answer calls more quickly. In that case, 
some consumers might value the dial around feature because it allows 
them to direct their call to an alternate provider that they believe 
might be even more responsive than their default provider in particular 
instances.
    67. Given these competing considerations, the Commission seeks 
comment on whether to modify or eliminate the dial around requirement 
if the Commission adopts a per-user compensation mechanism. Would it be 
appropriate to mandate dial around functionality only for the purpose 
of accessing emergency services? Could providers continue to offer dial 
around capability on a commercial basis (e.g., on a charge per call 
basis)?
    68. The Commission notes that eliminating the dial around 
requirement for VRS will make the way VRS service is provided more 
consistent with the way that most communications services are provided 
today. For example, a subscriber to an interconnected VoIP service 
cannot make free calls via a second interconnected VoIP service to 
which she does not subscribe. However, the Commission recognizes that 
the availability of dial around currently serves as an incentive for 
VRS providers to meet or exceed ``speed of answer'' requirements 
because a customer who does not get their call answered quickly enough 
can redirect the call--and the per-minute compensation associated with 
the call--to another VRS provider. The Commission therefore seeks 
comment below on whether we need to revise this standard and whether 
there are other modifications that must be made to the Commission's 
mandatory minimum standards so that they better reflect the actual 
minimum standards that are reasonable for VRS users to expect.
    69. The Commission seeks comment on whether it should require VRS 
providers to accept 911 calls from users who are not their registered 
users should the proposal to require VRS users to sign a contract with 
a specific provider be adopted. The Commission has anecdotal evidence 
that some VRS providers require users to register with them before 
completing the user's 911 call. Such a requirement would be similar to 
the requirement that wireless providers complete 911 calls even if the 
caller's contract for service has lapsed.
4. One Free Provider Per VRS User
    70. Under the existing per-minute compensation mechanism, 
registering with multiple VRS providers is not necessarily problematic 
from an efficiency perspective, as the total reimbursements paid from 
the TRS Fund for each VRS user's minutes of use will be roughly the 
same, regardless of which providers process the calls. As described in 
Appendix C of document FCC 11-184, however, a per-user rate should 
cover an at scale provider's reasonable, annual costs to provide VRS 
service. Thus, under a per-user mechanism, allowing VRS users to 
register with multiple providers could result in significant increases 
in reimbursements paid from the Fund. Allowing individuals to register 
with multiple providers also makes it difficult to assess how many VRS 
users there are, and what the usage patterns of VRS users are, as well 
as facilitating fraud and/or abuse of the Fund by allowing providers to 
obtain compensation from the Fund without necessarily providing all 
aspects of service that might be expected from a committed, at scale 
VRS provider. The Commission seeks comment on limiting VRS users to 
registering with a single VRS provider for the purposes of making and 
receiving calls that are reimbursable from the Fund. Would this be an 
effective means of ensuring that VRS is provided in an efficient 
manner, while at the same time making VRS available to all potential 
users?
    71. If so, what mechanisms should a provider use to ensure that a 
user that it registers is not already registered with another provider? 
Would the existence of the VRS User Database (VRSURD) be sufficient to 
ensure that multiple registrations do not occur? Are there specific 
requirements that should be placed on users that choose to register to 
use this service? What type of information should providers obtain to 
ensure that an individual is not already registered with another 
provider? What method or methods should a provider use to verify or 
validate the information provided by a potential VRS user? Should the 
Commission establish a standard certification form? Should providers 
establish a validation or verification process? Should the Commission 
establish guidelines or detailed rules governing what constitutes an 
acceptable verification or validation process? Should there be only one 
acceptable process, or should providers be entitled to use one of 
several methods to validate or verify information provided to ensure 
that a VRS user is registered with only one VRS provider? What 
information will be required beyond that which providers generally 
collect today?
    72. The Commission seeks comment on the impact that a ``one free 
provider per VRS user'' rule would have on consumers. Some VRS users 
have recommended that ``consumers not be restricted to one service 
provider for both fixed and mobile services,'' arguing that ``consumers 
may have different service providers preferences depending on the type 
of service and that

[[Page 4960]]

consumers should be able to choose between different providers.'' Were 
the Commission to adopt a rule allowing dual registration (i.e., for 
fixed and mobile services) would we be able to achieve the efficiencies 
sought after in this proceeding? How would this approach be 
implemented? The Commission notes that data provided by some providers 
suggests that when a VRS user utilizes both fixed and mobile services, 
that user's mobile minutes tend to replace, rather than supplement, 
that user's fixed minutes. If this is the case, would VRS providers be 
incented to offer high quality service on multiple platforms (e.g., 
mobile and fixed) to attract more customers? In this manner could ``a 
one free provider per VRS user'' rule encourage competition and 
innovation between VRS providers, especially given the lack of price 
competition? Could providers offer users a single ten digit number that 
would allow inbound calls to be received on all platforms that a user 
possesses? Could providers offer additional paid services (i.e., 
services that are not needed to achieve functional equivalency) on a 
commercial basis, as some currently do for remote interpreting 
services? Would ``one free provider per VRS user'' be consistent with 
the mandate of section 225 of the Act?
    73. Consistent with section IV.B.1 and Appendix C of document FCC 
11-184, should an Enterprise VRS User's Enterprise VRS Employer be 
considered the ``user'' for the purposes of this restriction?
5. Contracts
    74. The Commission seeks comment on whether to allow VRS providers 
to require VRS users who are either (i) new-to-category VRS users 
(i.e., have not previously signed up for VRS) or (ii) switching from 
another VRS provider to enter into a service contract starting one year 
after the adoption of a per-user compensation mechanism. The Commission 
also seeks comment on whether VRS providers should be allowed to 
require Enterprise VRS Employers to enter into a service contract 
starting one year after the adoption of a per-user compensation 
mechanism. Some providers use service contracts in other communications 
markets, and the Commission seeks comment on the possible harms and 
benefits of allowing them in the context of a per-user compensation 
mechanism in the VRS industry. For example, are there costs 
attributable to VRS user registration, start-up, or connection such 
that service contracts could make the program more cost efficient and 
administrable by restricting VRS users and Enterprise VRS Employers' 
ability to change their default providers with great frequency? Would 
explicitly allowing contracts lessen the incentive for providers to 
frustrate interoperability and portability by allowing providers to 
recoup the costs of providing iTRS access technology, customer setup, 
enrollment, and other upfront costs? Would service contracts increase 
the stability of providers' revenues and reduce the amount of customer 
churn, lessening the incentives of providers to spend excessive funds 
on marketing and winback activities? Would limiting VRS providers to 
requiring contracts from new-to-category, switching VRS users, and 
Enterprise VRS Employers for some period of time help prevent VRS 
providers from contractually locking in their existing user bases, thus 
ensuring that the existing installed base of users is contestable 
(i.e., users can easily switch from one provider to another) during the 
transition period described in section IV.C? What harms may arise due 
to service contracts? For example, would a VRS providers have an 
incentive to provide subpar service to save costs and increase profits 
once it gains new subscribers because they could be locked in for a 
period of time? Would revising our speed of answer and other mandatory 
minimum standards be sufficient to offset this possible harm? Should 
the Commission require VRS providers to offer a trial period? If so, 
what period of time for a trial period would be appropriate?
    75. If the Commission was to adopt a per-user compensation 
mechanism and allow VRS providers to require service contracts, what 
would be an appropriate service term? Is a one-year term appropriate, 
or should terms be longer or shorter? What protections would need to be 
put in place for consumers? Should consumers be permitted to be 
released from a contract if the provider breaches its obligations to 
provide service in accordance with the Commission's TRS mandatory 
minimum standards? Conversely, if consumers are being provided free or 
discounted VRS access technology as part of their service contract, 
should providers be allowed to impose an early termination fee (ETF) if 
consumers wish to exit the contract before its expiration? Are there 
other costs that providers intend to recover over the course of a 
contract that might justify the use of an ETF? Would such fees be 
consistent with the requirements of section 225 of the Act, including 
that TRS users pay rates no greater than the rates paid for 
functionally equivalent voice services? If so, should a VRS provider be 
allowed to ``buy out'' a VRS user's or Enterprise VRS Employer's ETF 
with a competing provider in order to allow that user to switch without 
incurring a pecuniary transaction cost? Are there other terms that 
should be permitted or required that would address up-front costs? 
Likewise, are there other contract terms that should be required for or 
prohibited in such contracts?
6. Mandatory Minimum Standards (Performance Rules)
    76. In view of the purpose of TRS, Congress specifically mandated 
in section 225 of the Act that relay services offer access to the 
telephone system that is ``functionally equivalent'' to voice telephone 
services. The ``functional equivalence'' standard serves as a benchmark 
for determining the services and features TRS providers must offer to 
consumers, and is reflected in the TRS mandatory minimum standards 
contained in the Commission's rules. TRS mandatory minimum standards 
are defined in the Commission's Part 64.604 rules in terms of 
``operational standards,'' ``technical standards'' and ``functional 
standards.'' These standards ensure that TRS users have the ability to 
access the telephone system in a manner that approximates, as closely 
as possible, the experience of a voice telephone user.
a. Operational Standards
    77. The Commission seeks comment on whether the options set forth 
in document FCC 11-184 necessitate modifications to its TRS operational 
standards, or the establishment of separate operational standards for 
VRS. How would the adoption of a new-to-category incentive payment 
impact our rules governing data collection from TRS providers and 
information filed with the Administrator? Would the data for registered 
new VRS users be quantified by the certified VRS provider and submitted 
or quantified by the TRS Fund Administrator? If a per-user compensation 
system is adopted, how and by whom would the data for ``Active Users'' 
be quantified? Do provider incentives under a per-user compensation 
system change such that the Commission will need to take extra 
precautions to ensure that providers will not be motivated to 
discourage high volume users from contracting with them or from making 
VRS calls? How can the Commission ward off such incentives, to ensure 
the continued provision of high quality service to all users, 
regardless of the quantity of calls they make? Should specific training 
requirements or qualifications be

[[Page 4961]]

established for VRS CAs different from or beyond those general 
requirements set forth in Sec.  64.604(a)(1) of the Commission's rules 
to ensure that providers maintain a certain level of CA qualifications 
for all calls handled? If specific qualifications are imposed on VRS 
CAs, what affect would this have on the current pool of VRS CAs who may 
or may not meet those qualifications? What effect, if any, would 
different qualifications have on the ability of VRS providers to comply 
with the speed of answer requirement? Is there any need to modify the 
confidentiality and conversation content standards set forth in Sec.  
64.604(a)(2) of the Commission's rules to protect consumers from 
compromises in call quality? Should obligations with respect to the 
types of calls VRS providers must process be modified if a per-user 
compensation mechanism is adopted? Are there other operational 
standards that should be adopted or modified to ensure high quality VRS 
for all users?
b. Technical Standards
    78. As discussed in section III.B.2 and Appendix B of document FCC 
11-184, the Commission seeks comment on establishing detailed iTRS 
access technology standards. The Commission seeks comment on whether 
those proposals, or the other proposals set forth in document FCC 11-
184, necessitate modifications to our TRS technical standards, or the 
establishment of separate technical standards for VRS. For example, as 
discussed in section IV.B.3 above, should the speed of answer 
requirements set forth in Sec.  64.604(b)(2) of the Commission's rules 
be modified? If adopted, would standards consistent with those set 
forth in Appendix D of document FCC 11-184 render the need for rules on 
equal access to interexchange carriers and caller ID treatment 
unnecessary?
c. Functional Standards
    79. The Commission seeks comment on whether the proposals set forth 
in document FCC 11-184, if adopted, necessitate modifications to its 
TRS functional standards, or the establishment of separate functional 
standards for VRS. For example, should VRS providers maintain the same 
types of consumer complaint logs as other providers of TRS?
    80. The Commission's TRS functional standards rules contain a 
number of subsections that govern unrelated aspects of the TRS program. 
Consistent with section IV.B.1 above, the Commission seeks comment on 
restructuring our rules into separate logical sections and, in the 
following paragraphs, seeks comment on the substance of these rules.
7. Public Access to Information
    81. In the 2010 VRS Reform NOI, the Commission noted that it has 
been difficult to assess the effectiveness of funded outreach programs. 
Outreach to the hearing community continues to be necessary; we are 
aware, for example, that some businesses refuse to accept relay calls, 
perhaps due to a failure to understand the nature of TRS. The 
Commission does not, however, believe that its existing practice of 
relying on VRS providers to conduct effective outreach has been 
effective. The Commission seeks comment on whether the Commission 
should establish an independent outreach program to educate the general 
public about TRS, including VRS. Should such a program be conducted 
specifically by the FCC, a specialized contractor, consumer 
organizations, state and local governments, or some other entity or 
combination of entities? The Commission notes that it recently 
authorized the expenditure of $500,000 annually from the Fund to allow 
entities that have significant experience with and expertise in working 
with the deaf-blind community to conduct outreach to deaf-blind 
individuals to make them aware of the availability of specialized CPE 
to low-income individuals who are deaf-blind. Would this effort serve 
as a model for VRS?
8. Jurisdictional Separation of Costs
    82. The Commission does not propose to modify our rules that govern 
jurisdictional separation of costs or cost recovery, but nonetheless 
seek comment on whether modifications to these rules are necessary.
9. Telecommunications Relay Services Fund
a. Contributions and Contribution Computations
    83. If the Commission should choose to adopt any of the options set 
forth in document FCC 11-184, including implementing a TRSBPP or 
reimbursing expenses for iTRS access technology through the TRS Fund, 
what modifications, if any, should be made to its rules governing 
contributions and contribution computations?
b. Data Collection
    84. If the Commission should choose to adopt any of the options set 
forth in document FCC 11-184, what modifications, if any, should be 
made to its rules governing data collection from TRS providers and 
information filed with the Administrator? For example, is the general 
grant of authority to the Administrator to request information 
reasonably ``necessary to determine TRS Fund revenue requirements and 
payments'' sufficient? Should the Commission explicitly require 
providers to submit additional detailed information, such as 
information regarding their financial status (e.g., a cash flow to debt 
ratio)?
c. Payments to TRS Providers
    85. If the Commission should choose to adopt any of the options set 
forth in document FCC 11-184, including adoption of a per-user 
compensation mechanism, implementing a TRSBPP or reimbursing expenses 
for iTRS access technology through the TRS Fund, what modifications, if 
any, should be made to its rules governing payments to TRS providers, 
eligibility for payments from the TRS Fund, and notice of participation 
in the TRS Fund?
d. Administrator Reporting, Monitoring, and Filing Requirements; 
Performance Review; Treatment of TRS Customer Information
    86. Many of the possible changes set forth in this item contemplate 
a role for the Administrator. If the Commission should choose to adopt 
any of the options set forth in document FCC 11-184, what 
modifications, if any, should be made to its rules governing the 
obligations of the Administrator, Commission review of the 
Administrator's performance, and treatment of TRS customer information?
e. Enforcement
    87. If the Commission should choose to adopt any of the options set 
forth in document FCC 11-184, what modifications to its rules, if any, 
are necessary to ensure that they are enforceable?
10. Consumer Complaints
    88. If the Commission should choose to adopt any of the options set 
forth in document FCC 11-184, what modifications, if any, should be 
made to its informal and formal complaint procedures?
11. Registration Process
    89. The Commission seeks comment on whether the options set forth 
in document FCC 11-184 necessitate modifications to its iTRS 
registration rules. In particular, the Commission seeks comment on what 
modifications, if any, would be necessary to implement the proposals 
regarding VRS in the workplace discussed in section IV.B.2

[[Page 4962]]

above. What additional verification standards would be needed?
12. Emergency Calling Requirements
    90. The Commission seeks comment on whether the options set forth 
in document FCC 11-184 necessitate modifications to its emergency 
calling requirements. In particular, the Commission seeks comment on 
what changes, if any, are necessary to accommodate the elimination of 
dial around discussed in section IV.B.3, above, a one provider per-user 
system as discussed in section IV.B.4 above, or the treatment of VRS in 
the workplace discussed in section IV.B.2 above.
13. Preventing Discrimination
    91. Section 225 of the Act requires the Commission to ensure that 
relay services ``are available, to the extent possible and in the most 
efficient manner, to hearing-impaired and speech-impaired individuals 
in the United States.'' Section 225(d)(1) of the Act charges the 
Commission with the obligation of adopting regulations that, among 
other things, ``prohibit relay operators from failing to fulfill the 
obligations of common carriers by refusing calls or limiting the length 
of calls that use telecommunications relay services.'' Pursuant to 
these statutorily mandated responsibilities and other Commission 
requirements, the Commission has issued a number of orders finding that 
specific types and forms of discrimination and fraudulent practices are 
unlawful and prohibited by the Act and our rules. As discussed in 
Section III.E above, however, some VRS providers' still have engaged in 
unlawful practices.
    92. Under a per-user compensation mechanism, the Commission 
recognizes that VRS providers may continue to engage in unlawful 
practices. Under the per-minute compensation reimbursement method, 
these unlawful practices have generally occurred through discrimination 
(e.g., favoring high-volume users over low-volume users), often 
resulting in waste, fraud, and abuse of the TRS Fund (e.g., seeking 
payment for non-compensatory minutes through discriminatory practices 
and outright fraud). By way of example, anecdotal evidence suggests 
that the per-minute compensation scheme provides unintended incentives 
to VRS providers to give call priority to high-volume users by placing 
them first in line for connections and to favor such users by providing 
them with newer and better VRS access technology before low-volume 
users. Under a per-user compensation framework, providers likewise may 
have the incentive to discriminate against high-volume users in favor 
of low-volume users because providers would be compensated at the same 
level for all users, regardless of their call volume. Similarly, some 
providers may utilize a variety of practices geared toward ensuring 
that low-volume users make the minimum number of calls required to 
qualify as an ``active user'' for purposes of compensation from the 
Fund. Both call discrimination and practices aimed at acquiring and 
maintaining low-volume ``active users'' that would not otherwise 
utilize VRS could result in waste, fraud, and abuse of the TRS Fund and 
threaten the long-term sustainability of the VRS program.
    93. It has become increasingly apparent that our ``piece meal'' 
approach to detect and outlaw discriminatory and fraudulent practices 
has not always worked. As the Commission noted in Section III.E, in 
many cases, ``when directed not to engage in certain calling 
activities,'' for example, ``some providers have merely shifted to 
other arrangements that are not specifically prohibited and have 
engaged in attempts to make non-compliant calls in ways that have made 
them more difficult to detect.'' To the extent that VRS providers 
discriminate in the manner in which they handle calls (e.g., the type 
of call or caller), except as provided for in the Commission's rules, 
they create inefficiencies in the VRS call processing system. Likewise, 
when a VRS provider engages in fraudulent practices by encouraging or 
causing VRS calls to be made that would not otherwise be made, or VRS 
users to be enrolled that would not otherwise be enrolled, except for a 
provider's desire to drive up its compensation from the TRS Fund, the 
VRS system is made inefficient. These types of unlawful practices 
artificially tie up CAs and limit the ability of legitimate callers to 
use VRS contrary to section 225 of the Act.
    94. Further, unlawful VRS provider practices not only allow 
dishonest providers to obtain a competitive advantage over providers 
that operate in compliance with the Act and the Commission's rules, but 
undermine the key goals of Congress in enacting section 225 of the Act. 
VRS provider practices that result in waste, fraud, and abuse threaten 
the sustainability of the TRS Fund and are directly linked to the 
efficiency and effectiveness of the TRS Fund support mechanisms upon 
which VRS providers rely for compensation. As the Commission has 
previously found, fraudulent diversion of funds robs the TRS Fund for 
illicit gain and ``abuses a highly valued Federal program that, for the 
past twenty years, has been critical to ensuring that people with 
hearing and speech disabilities have the same opportunities to 
communicate over distances--with family, friends, colleagues, and 
others--as everyone else.'' Moreover, such practices unlawfully shift 
improper costs to consumers of other telecommunications services, 
including local and long distance voice subscribers, interconnected 
VoIP, and others.
    95. Accordingly, in furtherance of the Commission's express 
authority under section 225(b)(1) and section 225(d)(1)(E) of the Act 
and the goals underlying the provision and regulation of TRS, it 
proposes to adopt regulations prohibiting VRS providers from engaging 
in practices that result in waste, fraud, and abuse of the TRS Fund, 
including discriminatory practices (e.g., screening for or refusing to 
register individuals who are likely to be high volume users, 
discrimination based on length of calls or call volume, and favoring 
some users with free or low-cost iTRS access technology based on call 
volume), and seek comment on this proposal. The Commission concludes 
that such regulations should apply to all VRS providers as reasonably 
ancillary to the effective performance of its responsibilities under 
the Act, including its mandate to ensure that relay services ``are 
available, to the extent possible and in the most efficient manner, to 
hearing-impaired and speech-impaired individuals in the United 
States.'' The Commission seeks comment on this conclusion, and 
generally on the Commission's authority to adopt such regulations as 
proposed.
14. Preventing Slamming
    96. As discussed above and in the VRS Call Practices R&O and 
Certification FNPRM, the current VRS per-minute compensation structure 
has been vulnerable to unforeseen and difficult-to-detect waste, fraud, 
and abuse. The Commission recognizes that a per-user compensation 
structure could lead to other abuses by providers in order to increase 
the number of their active users and generate revenue. For example, 
under a per-user compensation scheme, VRS providers would have an 
incentive to engage in ``slamming'' and misleading marketing practices 
because reimbursement would be based on the number of registered users 
rather than on the total minutes of use.
    97. The Commission has previously sought comment on the need for 
VRS specific rules against slamming to protect relay consumers against

[[Page 4963]]

unauthorized default provider changes. The Commission incorporates by 
reference comments previously filed on this issue and seek to refresh 
the record on this issue. To protect VRS users from unwanted changes in 
their default provider, the Commission seeks further comment on whether 
it should adopt rules governing a user's change in VRS providers. The 
Commission seeks comment on the types of safeguards that should be put 
in place to protect users from unauthorized changes in their VRS 
default provider. The Commission also seeks comment on what type(s) of 
authorization providers must obtain prior to switching a subscriber's 
default provider and how verification of any such authorization should 
be obtained and maintained by the receiving provider. Additionally, the 
Commission seeks comment on whether and how providers may use 
information obtained when receiving notification of a user's service 
change to another provider, whether for marketing, win-back, or other 
purposes.
15. Audits.
    98. Section 64.604(c)(5)(iii)(C) of the Commission's rules states 
that the TRS Fund 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 fund payments.'' 
The Commission seeks comment on whether the TRS Fund Administrator or 
the Commission requires additional authority to conduct audits under 
the rules its propose in document FCC 11-184.

C. Implementing the Transition From per-Minute to per-User Compensation

    99. As discussed in section III.D, implementation of the reforms 
discussed in document FCC 11-184, if adopted, would need to be phased 
in according to a well-developed and transparent plan. In this section, 
the Commission seeks comment on how to conduct such a transition.
1. Phases
    100. A transition from a per-minute to a per-user compensation 
mechanism can be conceptualized as consisting of three phases. The 
first phase would be the ``implementation phase,'' during which all 
conditions necessary to prepare for the switch from per-minute to per-
user compensation would be met, including measures to make the existing 
base of customers more contestable and bring new VRS users into the 
program. The implementation phase would begin immediately after the 
adoption of a final order in this proceeding, and terminate with the 
initiation of per-user compensation at an initial per user rate. The 
second phase would be the ``growth phase'' during which smaller 
providers would have the opportunity to achieve scale by adding users 
and all providers would transition from their initial per-user rate set 
during the implementation phase to a unitary at-scale ``base rate'' 
discussed in Appendix C of document FCC 11-184 (if those rates are 
different). The third and final phase would be the ``scale phase,'' 
during which all providers are compensated at a per-user compensation 
mechanism selected by the Commission to reflect the cost of providing 
VRS service at scale. The Commission seeks comment on whether these 
three phases are the appropriate logical structure for a transition 
from per-minute to per-user compensation. The Commission also seeks 
comment, in the following sections, on how each of the phases of a 
transition should be conducted.
a. Implementation Phase
    101. As described above, the ``implementation phase'' would be the 
time period during which all conditions necessary to prepare for the 
switch from per-minute to per-user compensation would be met. The 
implementation phase would begin upon the adoption of a final order in 
this proceeding, and terminate with the initiation of per-user 
compensation. The Commission seeks comment in this section on how an 
implementation phase should be conducted.
(i) VRS Provider Compensation During Implementation Phase
    102. The Commission seeks comment on how VRS providers should be 
compensated during the implementation phase. As discussed in greater 
detail in the following paragraphs, the Commission and the 
Administrator will need to gather data from VRS providers before an 
initial per-user rate can be established. The Commission therefore 
seeks comment on what the per-minute rate should be during the 
implementation phase. The Commission stated in the 2011 VRS Rate Order 
that the interim rates currently in effect would ``be in effect on an 
interim basis until the Commission completes its examination of VRS 
rates and compensation as part of the 2010 VRS NOI proceeding'' because 
``extending the current interim rates and compensation structure 
temporarily provided the best means to ensure stability and certainty 
for VRS while the Commission continues to evaluate the issues and the 
substantial record developed in response to the 2010 VRS NOI 
proceeding.'' Should the Commission extend the current interim rates 
during the implementation period to provide continued certainty during 
the implementation phase?
(ii) Actions To Be Conducted During the Implementation Phase
    103. The Commission seeks comment on what actions need to be taken 
during the implementation phase and the timing of such actions. If the 
Commission adopts a per-user mechanism, it propose to require that each 
of the following occur during the implementation phase:
     The VRSURD be established and operational;
     The TRSBPP be established and operational;
     iTRS access technology standards be adopted and 
implemented;
     ``One provider per user'' be implemented (i.e., VRS users 
must select a single VRS provider); and
     The initial per-user rate (or rates) be calculated and 
published.
    The Commission describes in greater detail and seeks comment on 
these conditions in the following paragraphs.
    104. VRSURD. As discussed in section IV.A and Appendix D of 
document FCC 11-184, a VRSURD would be essential to (i) ensure that 
each VRS user has at least one default provider, (ii) allow for the 
identification of new-to-category users, (iii) support the operation of 
the TRS Broadband Pilot Program discussed in section III.A.1 and 
Appendix A of document FCC 11-184, and (iv) ensure efficient program 
administration. In order to establish a VRSURD, the neutral database 
administrator must be selected, construct the database, work with 
industry to populate the database, test the functionality of the 
database, and be prepared to support the functionality described in 
Appendix D of document FCC 11-184 before the Commission can effectively 
implement a ``one provider per user'' rule. The data that will be 
submitted to the VRSURD also will be critical to establishing a per-
user rate.
    105. The Commission notes that the Commission completed the 
comparable task of establishing the iTRS numbering directory in six 
months. The Commission seeks comment on whether this is a reasonable 
timeframe for the establishment of the VRSURD. Are there issues that 
would make the process of establishing a VRSURD take more--or less--
time than was needed to establish the iTRS numbering directory? If so, 
what are those issues, and what impact would they have on the timing?
    106. TRSBPP. As discussed in section III.A.1 and Appendix A of 
document

[[Page 4964]]

FCC 11-184, the Commission proposes, to the extent there is unaddressed 
demand for VRS, to promote residential broadband adoption via a pilot 
program to provide discounted broadband Internet access to low-income 
Americans who are deaf, hard of hearing, deaf-blind, or speech 
disabled. The Commission notes that implementation of a TRSBPP would 
require that a VRSURD be established and that the Administrator, VRS 
providers, and broadband providers all take steps to establish and 
implement appropriate procedures. The Commission seeks comment on how 
much time should be allowed for the TRSBPP to be implemented. The 
Commission also seeks comment on whether it would be necessary to have 
the TRSBPP operational before the end of the implementation period, or 
whether that program, to the extent adopted, could be implemented at a 
later time.
    107. iTRS access technology standards. Appropriate VRS access 
technology standards must be in place before VRS providers can be 
expected to compete effectively for VRS users. The Commission seeks 
comment on how much time the Commission should allocate for each of the 
actions described in Appendix D of document FCC 11-184, including the 
adoption of iTRS access technology standards, the time necessary for 
any standards transition phases for the installed base of VRS access 
technology and/or for new VRS users, the establishment of a conformance 
and interoperability testing regime, and the establishment of an 
ongoing standards governance process. To what extent must the steps 
described in Appendix D of document FCC 11-184be completed during an 
implementation phase? Could certain steps be completed during the 
growth phase?
    108. One provider per user. As discussed in section IV.B.4, users 
must select a single default provider under a per-user compensation 
system. At what point during the implementation phase would it be 
appropriate to implement such a requirement? How long should VRS users 
be given to make a provider selection? What should happen if VRS users 
fail to select a default provider during the time allotted? How long 
before the end of the implementation period should the selection period 
end to ensure that the Commission and the Administrator have accurate 
counts of each VRS providers' user base on which to rely when 
establishing per-user rates?
    109. Calculation of initial per-user rate(s). As discussed above, 
the Commission contemplates that the implementation phase would 
terminate with the initiation of per-user compensation. The Commission 
seeks comment on how the initial per-user compensation rate for each 
VRS provider should be calculated. Should all VRS providers be 
compensated at the same initial rate, or is it more appropriate to set 
a separate initial per-user rate for each provider? Should providers 
immediately be paid at the ``target base rates'' established as 
discussed in Appendix C of document FCC 11-184? Should each VRS 
provider be compensated at an initial per-user rate that keeps them 
revenue neutral (i.e., each provider would continue to receive the same 
amount of revenue immediately before and immediately after the switch 
to a per user rate)?
    110. To the extent initial revenue neutrality is a goal, would the 
first year of the implementation phase be the appropriate reference 
period for determining the appropriate revenue level, or would some 
other time period be more appropriate? How would the appropriate level 
be established? When should a VRS provider's number of users be 
determined? Would it be appropriate to use the VRS user count 
immediately after VRS users are required to select a single default 
provider, or should a ``settling in'' period be allowed to pass first 
to allow for customers to switch providers? How long should such a 
settling in period be? The Commission notes that to the extent that 
providers are kept revenue neutral between the end of the per minute 
mechanism and the start of the per user mechanism, they may have an 
incentive to depress their initial user count to inflate the 
corresponding initial per user rate. The Commission seeks comment on 
ways to prevent this.
    111. What other factors should be taken into account when 
establishing an initial per-user rate? For example, should there be a 
maximum per-user compensation rate established so as to ensure that VRS 
providers with very few users at the end of the implementation period 
are not paid an ``excessive'' per-user rate? Should a VRS provider's 
capital structure be taken into account when establishing their initial 
per-user rate? To what extent should the Commission be concerned that 
an initial per-user rate might increase the likelihood of a VRS 
provider being unable to sustain its current capital structure? How 
disruptive would such financial restructuring be to the service 
experienced by VRS users? How, if at all, would such a proceeding 
affect the TRS Fund in the long term?
    112. Other possible conditions. The Commission seeks comment on 
what, if any, additional conditions should be met during the 
implementation phase. For example, should the new-to-category incentive 
payment, if adopted, be available during the entirety of the 
implementation phase, or should that incentive payment be made 
available only after the TRSBPP has been implemented? This would help 
to ensure that a new-to-category incentive is not paid for registering 
individuals who already are aware of the VRS program but did not 
register solely due to the cost of a broadband Internet connection.
    113. Duration. Should the total duration of the implementation 
period be limited in time, or only by the achievement of the necessary 
conditions? If limiting the total duration of the implementation period 
is appropriate, what should the deadline be? Should there be interim 
deadlines established for meeting any of the conditions set pursuant to 
the discussion in the paragraphs above? What should those deadlines be? 
For the sake of clarity, commenters responding to these questions 
should reference the date that a final order is adopted in this 
proceeding (e.g., ``the deadline for such action should be one year 
from the adoption of a final order'').
    114. What should be the result if any deadlines established 
pursuant to the discussion in the preceding paragraph are not met? 
Would it be appropriate to implement one of the default alternatives 
discussed in section V?
b. Growth Phase
    115. The ``growth phase'' of a transition from per-minute to per-
user compensation would be that time during which small providers would 
have the opportunity to achieve scale by adding users and transition 
from their initial per-user rate to the unitary, at-scale ``target base 
rate'' discussed in Appendix C of document FCC 11-184 (if those rates 
are different). The growth phase would terminate once all VRS providers 
are being compensated at the target base rate.
    116. The growth phase would be defined primarily by three factors: 
the initial per-user rate for each VRS provider, the target base rate, 
and the transition from the initial per-user rate(s) to the target base 
rate. As we seek comment above on how to establish the initial per-user 
rate(s) and below on setting the target base rate, we focus our inquiry 
in this section on the transition path.
    117. As illustrated in Figure 3 below, two questions must be 
answered once initial per-user rates and the target base rate are 
established. First, how long

[[Page 4965]]

should the growth period be? That is, how much time should elapse 
between tinitial and tfinal? Second, what should 
the per-user rate be during the growth period? Or, put another way, 
what should be the shape of the rate curve between tinitial 
and tfinal? The Commission seeks comment on these questions.
[GRAPHIC] [TIFF OMITTED] TP01FE12.002

    118. Duration of growth period. The Commission seeks comment on the 
appropriate duration of the growth period. How should the Commission 
balance the need to give providers a fair chance to adapt their cost 
structures to the new reimbursement scheme (e.g., by attaining scale 
economies and/or adjusting their financing commitments) against the 
knowledge that every year of paying rates above the target base rate, 
R*, could be considered an unnecessary expenditure of Fund resources? 
What other factors should be taken into account when determining the 
appropriate duration of the growth period?
    119. Shape of the rate curve. The Commission seeks comment on the 
appropriate per-user rate over the course of the growth period. One 
approach, illustrated in Figure 4, would be to simply compensate each 
VRS provider at the initial per-user rate established during the 
transition period. As discussed above, such rates could be unique to 
each provider (e.g., RA and RB as shown in Figure 
4) or common to all providers (e.g., the target base rate, R*, or 
another unitary rate).
[GRAPHIC] [TIFF OMITTED] TP01FE12.003

    120. An alternative approach, illustrated in Figure 5, would be to 
reduce each provider's per-user compensation rate during the course of 
the growth period until the target base rate is reached. Figure 5 
illustrates a simple version of this approach, with each VRS provider's 
per-user compensation being reduced to the target base rate in two 
steps, the first at t1 and the second at tfinal.

[[Page 4966]]

[GRAPHIC] [TIFF OMITTED] TP01FE12.004

    121. Note that, regardless of the shape of the rate curve, 
providers will benefit from the certainty of a pre-determined 
trajectory during the duration of the growth period, which will allow 
them to make operational and financing plans with minimal regulatory 
risk. The Commission seeks comment on the rates that should be paid 
during the growth period. Should there be a single rate during the 
growth period, or should the rate be reduced in steps over time? If the 
rate should be reduced, what should the duration of each step be, and 
how should the amount of the reduction be calculated? Commenters should 
provide detailed explanations of and justifications for their 
recommendations, to include any financial data necessary to support the 
use of a particular rate curve. If the Commission transitions to a per 
user rate following document FCC 11-184, it expects to set 
tinitial, tfinal, R*, and the trajectory as soon 
as possible as part of the initial rate setting process to provide 
multi-year certainty for providers. Further discussion of the target 
base rate can be found in Appendix C of document FCC 11-184.
    122. New entrants. To the extent newly certified VRS providers are 
authorized to be compensated by the Fund and begin to provide service 
during the transition period (``new entrants''), how should those 
entrants be compensated? Should they be compensated at the target base 
rate, the weighted average rate being paid to existing providers at the 
time of entry, or some other rate?
c. Scale Phase
    123. The third and final phase of a transition from a per-minute to 
a per-user compensation mechanism would be the ``scale phase,'' during 
which all providers are compensated at the same per user rate selected 
by the Commission. Thus, the scale phase would be the ``steady state'' 
that exists after compensation has transitioned to a per-user mechanism 
and all providers are being compensated at the efficient target base 
rate. The Commission seeks comment on the appropriate way to determine 
the annual per-user compensation rate during the scale phase.
    124. If the Commission adopts a per-user mechanism, it proposes to 
adopt for the scale phase a price cap mechanism consistent with that 
adopted by the Commission for IP Relay in the 2007 Rate Order, 73 FR 
3197. January 18, 2008. Under that plan, the compensation rate is set 
for a period of three years, ``during which time the rates would be 
adjusted upward annually for inflation (according to a pre-defined 
inflation factor) and downward to account for efficiency gains 
(according to a factor also set at the outset of price caps).''
    125. Specifically, the Commission proposes to adopt the general 
model established for IP Relay in the 2007 Rate Order, with the 
exception of how the base rate is calculated. As described in the 2007 
Rate Order:

    As a general matter, the price cap plan applies three factors to 
a base rate--an Inflation Factor, an Efficiency (or ``X'') Factor, 
and Exogenous Costs. The basic formula takes a base rate and 
multiplies it by a factor that reflects an increase due to 
inflation, offset by a decrease due to efficiencies. 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. As a result the rate for a particular year will equal the 
rate for the previous year, reduced by 0.5 percent (i.e., 
RateYear Y = RateYear Y-1 (1-0.005)). Reducing 
the rate by this amount will encourage VRS providers to become more 
efficient in providing the service.
The Commission will also adjust the rate, as necessary, due to 
exogenous costs, i.e., those costs beyond the control of the IP 
Relay providers that are not reflected in the inflation adjustment. 
Therefore, to the extent the Commission adopts new service 
requirements, it will determine whether the costs of meeting the new 
requirements warrant an upward exogenous adjustment.

    126. A number of providers asserted at that time that a price cap 
approach would have at least three benefits: (1) It would create 
incentives for providers to lower costs; (2) the three year time frame 
gives providers ``predictability about revenue to allocate money to 
programs that will reduce costs in the future;'' and (3) it simplifies 
the rate setting process, saving time and money. One provider also 
emphasized that under price caps, providers would focus on increasing 
efficiencies to accommodate decreasing rates. The Commission notes that 
many of the same providers supported the establishment of a cost 
recovery methodology for VRS at that time, and believe that the 
benefits attributed to the adoption of a price cap methodology in that 
context will adhere equally in the VRS context.
    127. The Commission seeks comment on this proposal. Should the 
specifics of this methodology be modified for VRS? For example, should 
the Commission adopt a different Inflation Factor or Efficiency Factor? 
Should the standards for an exogenous cost adjustment be modified? Is a 
three year time frame appropriate for VRS? What other factors might be 
appropriate for inclusion in such a methodology?
2. Contracts
    128. In section IV.B.5 above, the Commission seeks comment on 
whether to allow VRS providers to require VRS users who are either (i) 
new-to-category VRS users (i.e., have not previously

[[Page 4967]]

signed up for VRS) or (ii) switching from another VRS provider to enter 
into a service contract after the adoption of a per-user compensation 
mechanism. If the Commission was to adopt such a proposal, during what 
phase of the transition described above would it be appropriate to 
allow providers to require VRS users to enter into contracts?

V. Alternatives To Structural Reform

    129. The Commission seeks comment on the rate methodology the 
Commission should adopt should (i) the Commission choose not to adopt 
the per-user rate methodology proposed in document FCC 11-184 or (ii) 
should the transition to a per-user methodology be terminated before it 
is completed. The Commission notes that each of the reform proposals 
described in this NPRM--increasing VRS availability (via broadband 
subsidies, new to category incentives, and enterprise VRS), ensuring 
the interoperability and portability of VRS access technologies via 
standards, compensating VRS providers at a single at-scale rate, and 
moving to a per-user compensation scheme--is worth pursuing in itself 
to improve the program, although as they are mutually reinforcing it 
explores implementing them all, sequenced appropriately.
    130. The Commission notes that the Commission in the 2010 TRS Rate 
Methodology Order, 75 FR 49491, August 13, 2010, adopted interim VRS 
rates representing the average of the tiered rates established in 2007, 
which were based on providers' projected costs, and the Administrator's 
2010 proposed rates, which, in turn, were based on providers' actual, 
historical costs. These interim rates reflect a balance between the 
goal of ensuring that VRS providers recover from the Fund only the 
reasonable costs caused by their provision of VRS and the goal of 
ensuring quality and sufficient service during the pendency of this 
proceeding. In anticipation of the proposals set forth in document FCC 
11-184, CGB waived the May 1, 2011 Fund Administrator filing 
requirement for VRS payment formulas and revenue requirements for the 
2011-12 TRS Fund year, and subsequently concluded that it would be more 
efficient and less disruptive to extend the existing interim rates 
while concluding the evaluation of the issues and the substantial 
record developed in response to this proceeding.
    131. The Commission proposes that if a per-minute rate methodology 
is retained, the Commission adopt, consistent with the recommendations 
of the Administrator for the 2010-2011 fund year, a per-minute rate 
based on weighted average actual per-minute provider costs for the most 
recently completed fund year. The Commission in the 2010 TRS Rate 
Methodology Order found that the Administrator's ``proposed rates based 
on actual costs [were] reasonable and supported by record evidence,'' 
and that it was suitable that ``the Commission exercise its discretion 
to use them as a basis for setting an interim rate for the 2010-2011 
Fund year.'' Although the Commission has, during this interim period, 
allowed providers to recover their costs at rates well above those 
based on actual cost data so as to avoid ``a significant and sudden cut 
to providers' compensation,'' in the event that broader structural 
reform is not possible at this time, the Commission finds it reasonable 
to move to a rate based entirely on providers' actual costs. The 
Commission seeks comment on this proposal.
    132. The Commission further proposes to eliminate the current tier 
structure and utilize a single rate based on the weighted average of 
providers' actual costs. The rationale for adopting the tiers in the 
2007 TRS Rate Methodology Order was that providers with a relatively 
small number of minutes generally have higher costs. The Commission 
expects data from providers will show that this remains the case today. 
Consistent with its analysis above, however, the tiered rate structure 
supports an unnecessarily inefficient market structure, and apparently 
provides insufficient incentive for VRS providers to achieve minimal 
efficient scale. Further, its findings in the 2010 TRS Rate Methodology 
Order continue to hold true: ``[t]o the extent that one provider 
commands a substantial share of the VRS market, the Commission finds 
that [the Administrator'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 [the Administrator's] methodology, and use of 
actual cost information submitted by the providers and certified under 
penalty of perjury to be true and correct, [was] reasonable.'' The 
Commission seeks comment on this proposal to eliminate the current tier 
structure and utilize a single rate based on the weighted average of 
providers' actual costs.
    133. The Commission seeks comment on what steps the Commission and 
the Administrator should take to implement these proposals, should the 
Commission choose to adopt them. For example, by when should the 
Administrator require VRS providers to file the requisite cost data? To 
what extent should the Administrator, or providers, obtain independent 
audits of the data to be submitted? Should the Commission accept late 
filed data, or simply calculate the rate based on data submitted by the 
deadline established by the Commission or the Administrator? What other 
steps must the Commission or the Administrator take to ensure that a 
per-minute rate based on providers' actual costs can be established in 
an expeditious fashion? Finally, the Commission seeks comment on 
whether there are other viable alternatives to adopting a per user or 
per minute rate methodology. The Commission proposes that ignoring the 
last ten years of experience with the TRS program, both good and bad, 
and the technological progress that has occurred over the same period, 
and simply continuing with the program as currently structured (perhaps 
with relatively minor tinkering around the margins) is simply not a 
viable option for the Commission in its duty to manage responsibly the 
contributions of millions of Americans to a program that disburses over 
half a billion dollars a year. The Commission therefore discourages 
commenters from assuming a Panglossian stance with respect to a status 
quo that is increasingly failing to meet the needs and expectations of 
its stakeholders including, especially, actual and potential VRS users.

VI. Legal Authority

    134. The Commission seeks comment on our legal authority to adopt 
each of the options and proposals discussed in document FCC 11-184. As 
noted above, section 225 of the Act requires the Commission ``to make 
available to all individuals in the United States a rapid, efficient 
nationwide communication service, and to increase the utility of the 
telephone system of the Nation,'' and directs that ``the Commission 
shall ensure that interstate and intrastate telecommunications relay 
services are available, to the extent possible and in the most 
efficient manner, to hearing-impaired and speech-impaired individuals 
in the United States.'' Section 225 of the Act further requires that 
the Commission, among other things, ``establish functional 
requirements, guidelines, and operations procedures for 
telecommunications relay services,'' ``establish minimum standards that 
shall be met in carrying out [the

[[Page 4968]]

provision of TRS],'' and ``require that users of telecommunications 
relay services pay rates no greater than the rates paid for 
functionally equivalent voice communication services.'' Does section 
225 of the Act, standing alone, provide sufficient authority for the 
options and proposals contemplated in document FCC 11-184? Do the 
Commission's grants of authority in the Act, including those in 
sections 1, 2, 4(i), 255, and 303(r), and section 706 of the 
Telecommunications Act of 1996, provide additional authority? Does 
section 254 of the Act, which sets forth the goal that ``consumers in 
all regions of the nation, including low-income consumers, * * * should 
have access to telecommunications and information services,'' provide 
additional legal authority for proposals in this item targeted towards 
low-income consumers?
    135. The Commission seeks additional comment on our authority to 
establish the TRSBPP. Specifically, the Commission seeks comment on our 
authority to collect contributions to the TRS Fund to support broadband 
Internet access for low income VRS users and to disburse the relevant 
support. Section 225 of the Act provides that the Commission ``shall 
ensure that interstate and intrastate telecommunications relay services 
are available, to the extent possible and in the most efficient manner, 
to hearing-impaired and speech-impaired individuals in the United 
States.'' The Commission seeks comment on whether VRS is not 
``available'' to a potential user who is unable to afford broadband 
Internet access. Does section 225(b)(1) of the Act, standing alone, 
provide authority for the Commission to assess contributions and 
disburse support for broadband Internet access?
    136. Section 225 of the Act does not explicitly describe how the 
Commission must ensure that TRS is available. The subsection that most 
nearly describes how TRS providers should be compensated is section 
225(d)(3) of the Act, which addresses recovery of costs in the context 
of jurisdictional separations. Section 225(d)(3)(A) of the Act requires 
the Commission to ``prescribe regulations governing the jurisdictional 
separation of costs for the services provided pursuant to this 
section,'' which the Commission construe to mean that it should specify 
how providers distinguish between interstate and intrastate costs. 
Subsection (B) further provides that the Commission's regulations 
``shall generally provide that costs caused by interstate 
telecommunications relay services shall be recovered from all 
subscribers for every interstate service.'' The statute does not 
address how those costs are to be recovered from subscribers, nor how 
payments are to be disbursed to providers. In the absence of such 
guidance, the Commission chose to establish a shared funding 
mechanism--the TRS Fund--over other possible funding mechanisms.
    137. Does section 225(d)(3)(B) of the Act limit the Commission's 
ability to disburse support only for ``costs caused by interstate 
telecommunications relay services,'' or does the Commission have 
authority to disburse additional funds to the extent necessary to 
ensure that the mandate of section 225(b)(1) of the Act--to make TRS 
``available''--is met? Would section 225(d)(3)(B) of the Act authorize 
the Commission to require contributions to the TRS Fund to support 
broadband Internet access if the Commission finds that broadband 
Internet access is necessary to meet its section 225(b)(1) of the Act 
mandate? Are there other considerations?
    138. Does section 706(b) of the Telecommunications Act of 1996 
provide additional support for the TRSBPP? The Commission found in the 
Seventh Broadband Progress Report that broadband is not ``being 
deployed to all Americans in a reasonable and timely fashion.'' Section 
706(b) of the Telecommunications Act of 1996 directs the Commission, in 
light of that determination, to ``take immediate action to accelerate 
the deployment'' of broadband. Does this directive provide the 
Commission with additional authorization to utilize the TRS Fund to 
promote broadband availability in conjunction with the goal of 
promoting the availability of TRS?
    139. The Commission notes another, more recent legislative 
development on this issue. Congress in the CVAA authorized the 
Commission to provide up to $10 million support annually from the Fund 
for programs for ``the distribution of specialized customer premises 
equipment designed to make telecommunications service, Internet access 
service, and advanced communications, including interexchange services 
and advanced telecommunications and information services, accessible by 
low-income individuals who are deaf-blind.'' Does this explicit 
authorization to utilize the TRS Fund to pay for equipment used to make 
non-TRS services available to Americans with disabilities limit the 
Commission's authority to utilize the TRS Fund to effectuate the 
availability mandate in section 225(b)(1) or other mandates in the Act?
    140. The CVAA also directs the Chairman to create an Emergency 
Access Advisory Committee ``[f]or the purpose of achieving equal access 
to emergency services by individuals with disabilities.'' The Committee 
is charged, among other things, with making recommendations about 
``what actions are necessary as a part of the migration to a national 
Internet protocol-enabled network * * * that will ensure access to 
emergency services by individuals with disabilities,'' and ``for the 
possible phase out of the use of current-generation TTY technology to 
the extent that this technology is replaced with more effective and 
efficiency technologies and methods to enable access to emergency 
services by individuals with disabilities.'' The Commission has 
authority to implement the recommendations of the Committee, and to 
promulgate ``any other regulations * * * as are necessary to achieve 
reliable, interoperable communication that ensures access by 
individuals with disabilities to an Internet protocol-enabled emergency 
network, where achievable and technically feasible.'' Ensuring that 
individuals with hearing and speech disabilities who use ASL have 
access to VRS would, by definition, ensure that those people would have 
access to an ``Internet protocol-enabled emergency network,'' as (i) 
VRS providers must afford their users access to 911 service and (ii) 
VRS requires that the user obtain a high speed internet connection to 
access the service. Ensuring access to VRS also would facilitate the 
phase out of TTY technology to the extent that the cost of broadband 
Internet access is preventing current TTY users from transitioning to 
VRS or other forms of Internet-based TRS. The Commission seeks comment 
on whether these provisions provide the Commission with authority, to 
the extent recommendations of the Committee are consistent, to create 
the TRSBPP. The Commission seeks comment also on any other sources of 
authority that would enable the Commission to require contributions to 
the TRS Fund and disburse funds from the TRS Fund for the purpose of 
supporting broadband Internet access for low-income individuals who are 
deaf, hard of hearing, have a speech disability, or are deaf-blind and 
use ASL as their primary form of communication.
    141. The Commission also seeks comment on its authority to collect 
contributions to the TRS Fund to provide reimbursements for relay 
hardware and software used by the consumer, including installation, 
maintenance costs, and testing. Does the ``availability'' mandate in 
section

[[Page 4969]]

225(b)(1) of the Act discussed in the preceding paragraphs provide 
authority for such reimbursements? Does Section 706(b) of the 
Telecommunications Act of 1996 or the CVAA provide additional 
authority?

VII. Other Issues

    142. The Commission seeks comment on other issues related to the 
issues addressed in document FCC 11-184.

A. Data Security and Privacy

    143. The Commission notes that the privacy-based limitations on the 
government's access to customer information in Title II of Electronic 
Communications Privacy Act (ECPA), section 222 of the Act, and its 
implementing rules and the privacy provisions of the Cable Act, may be 
implicated by the collection of the data discussed in document FCC 11-
184. The Commission seeks comment on whether any of these pre-existing 
regulatory or statutory requirements create any concerns with respect 
to its ability to adopt the proposals discussed in document FCC 11-184, 
including the storage by a database administrator of customer data 
discussed in Appendix D of document FCC 11-184. The Commission seeks 
comment on how best to address these concerns. Would it be appropriate 
or necessary to require VRS users to consent to certain disclosures as 
a condition of receiving service in order to ensure that the VRS 
program is operated efficiently and the Commission and the Fund 
Administrator can fulfill their auditing and management functions 
effectively? What would be the appropriate extent of such a consent 
requirement, and what other regulatory privacy protections, if any, 
would be necessary if such a requirement were adopted?

B. Request for Data

    144. The Commission requests that providers and other interested 
parties provide such data as is necessary to support their comments in 
response to document FCC 11-184. The Commission notes that it may find 
factual information supported by affidavit or certification to be more 
persuasive than information that is not so supported. In that regard, 
the Commission further notes that any submissions containing knowing or 
willful misrepresentations, whether or not supported by affidavit or 
certification, are punishable by fine or imprisonment.

C. Support of Certification Applications and Annual Reports by 
Certification Under Penalty of Perjury

    145. In the 2011 VRS Certification Order, the Commission adopted 
interim rules requiring that providers certify, under penalty of 
perjury, that their certification applications and annual compliance 
filings required under Sec.  64.606(g) of the Commission's rules are 
truthful, accurate, and complete. The Commission found good cause to 
adopt these interim rules to ensure that providers seeking 
certification and providers holding certifications may be held 
accountable for their submissions as they seek to secure or retain 
certification under the rules adopted in the 2011 VRS Certification 
Order. The Commission concluded that interim rules requiring 
certification by a Chief Executive Officer, Chief Financial Officer, or 
other senior executive of an iTRS provider, under penalty of perjury, 
to the truthfulness, accuracy, and completeness of certification 
applications and annual compliance filings were a necessary and 
critical component of its efforts to curtail fraud and abuse. In 
particular, the Commission found that these interim rules would help to 
ensure that it has true and complete information, thereby ensuring that 
only qualified providers are eligible for compensation from the Fund.
    146. Specifically, the Commission adopted the following interim 
rules:

The chief executive officer (CEO), chief financial officer (CFO), or 
other senior executive of an applicant for Internet-based TRS 
certification under this section with first hand knowledge of the 
accuracy and completeness of the information provided, when 
submitting an application for certification under paragraph (a)(2) 
of this section, must certify as follows: I swear under penalty of 
perjury that I am -------- (name and title), -------- an officer of 
the above-named applicant, and that I have examined the foregoing 
submissions, and that all information required under the 
Commission's rules and orders has been provided and all statements 
of fact, as well as all documentation contained in this submission, 
are true, accurate, and complete.
The chief executive officer (CEO), chief financial officer (CFO), or 
other senior executive of an Internet-based TRS provider under this 
section with first hand knowledge of the accuracy and completeness 
of the information provided, when submitting an annual report under 
paragraph (g) of this section, must, with each such submission, 
certify as follows: I swear under penalty of perjury that I am ----
---- (name and title), -------- an officer of the above-named 
reporting entity, and that I have examined the foregoing 
submissions, and that all information required under the 
Commission's rules and orders has been provided and all statements 
of fact, as well as all documentation contained in this submission, 
are true, accurate, and complete.

    147. The Commission tentatively concludes that it should adopt 
these rules permanently, and seeks comment on this tentative 
conclusion. The Commission also seeks comment on whether there are any 
additional elements that should be covered by these proposed 
certifications, and, in general, whether there are any additional 
safeguards that it should adopt as rules to ensure the veracity and 
completeness of provider submissions, and to help ensure that providers 
comply with the Commission's TRS rules and policies.

VIII. Initial Regulatory Flexibility Analysis

    148. As required by the Regulatory Flexibility Act (RFA), the 
Commission has prepared this present Initial Regulatory Flexibility 
Analysis (IRFA) of the possible significant economic impact on small 
entities by the policies and rules proposed in document FCC 11-184. 
Written public comments are requested on this IRFA. Comments must be 
identified as responses to the IRFA and must be filed by the deadlines 
for comments to document FCC 11-184. The Commission will send a copy of 
document FCC 11-184, including this IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration (SBA).

A. Need for, and Objectives of, the Proposed Rules

    149. In document FCC 11-184, the Commission seeks comment on a 
series of proposals to improve the structure and efficiency of the VRS 
program, to ensure that it is available to all eligible users and 
offers functional equivalence--particularly given advances in 
commercially available technology--and is as immune as possible from 
the waste, fraud, and abuse that threaten the long-term viability of 
the program as it currently operates.
    150. Among these proposals, the Commission proposes to establish a 
``TRS Broadband Pilot Program'' (TRSBPP) to utilize the TRS Fund to 
provide discounted broadband Internet access to low-income deaf, hard 
of hearing, deaf-blind, and speech disabled Americans who use ASL as 
their primary form of communication, and providing incentives to 
providers for adding new-to-category customers. The Commission proposes 
such a subsidy to meet the objective of increasing utilization of VRS 
by eligible

[[Page 4970]]

individuals who cannot currently afford broadband.
    151. The Commission seeks comment on whether the TRSBPP should 
support fixed services, mobile services, or both. Fixed connections--
whether wireline or wireless--that are advertised as capable of 
delivering 256 kbps, generally deliver such speeds to their customers, 
and can be shared by all members of a residential unit. The Commission 
proposes that broadband providers will provide discounts to eligible 
households or residences and receive reimbursement from the TRS Fund 
for the provision of such discounts. The Commission proposes to 
establish the discount amount for the TRSBPP at a level that will make 
broadband Internet access service capable of supporting VRS at no cost, 
or very low cost, to consumers. The Commission seeks comment on how to 
set the amount of the discount that should be provided to qualifying 
households or residences. Given the Commission's experience in 
administering the Lifeline and Link Up programs, it proposes to adopt 
the Lifeline and Link Up certification and verification rules that are 
ultimately adopted in the Lifeline and Link Up Modernization NPRM 
proceeding, modified as necessary to reflect the differences between 
possible future changes in the Lifeline program and the proposed 
TRSBPP.
    152. In addition, the Commission proposes to concretely define iTRS 
access technology, which will help ensure that the rules governing VRS 
can be applied equally to any medium used to access VRS. The goal of 
establishing standards for iTRS access technology is to meet the 
Commission's policy objectives of facilitating an open, competitive 
market for VRS by supporting interoperability, portability, 
affordability, supportability and compatibility of VRS equipment. 
Specifically, the Commission proposes: (1) Defining ``iTRS access 
technology'' as ``any equipment, software, or other technology issued, 
leased, or provided by an Internet-based TRS provider that can be used 
to make or receive an Internet-based TRS call''; (2) establishing 
standards for iTRS access technology; and (3) supporting the use of 
off-the-shelf iTRS access technology. The Commission intends to apply 
its definitions and standards in a manner that will allow for the use 
of VRS through off-the shelf technology because this will give VRS 
users enhanced choice and accessibility to utilize VRS. Accordingly, 
the Commission seeks comment on the proposal.
    153. In addition, the Commission seeks comment on the extent to 
which the statute supports the use of the Fund to support iTRS access 
technology research and development costs. Research and development 
would help to achieve the goals of establishing standards and 
furthering technological advancements that both meet the needs of VRS 
users, and provide compatibility with mainstream, off-the-shelf 
equipment. If research and development are supported by the Fund, then 
the Commission's goals of providing greater access to VRS will be 
better achieved.
    154. Next, the Commission explores the option of instituting a more 
efficient compensation mechanism that reduces incentives for waste, 
fraud, and abuse by shifting from a per-minute to a per-user 
compensation mechanism with a specific plan for transitioning the 
industry structure to ensure economies of scale. Per-minute 
compensation has provided an incentive for the manufacturing of 
illegitimate minutes by some providers in order to increase 
reimbursements. Shifting to a per-user compensation mechanism will 
remove the incentive to increase VRS traffic through illegitimate 
means. The Commission states, ``[t] he ultimate result could be a 
program in which providers' incentives are aligned with the statute's 
goals of efficiency, functional equivalence, choice, and maximizing 
access to VRS, the Fund could be paying an effective rate per user that 
may better reflect the actual costs of providing VRS than is currently 
the case, and which could eliminate the current tiered rates, which 
provide seemingly indefinite support for subscale providers and 
introduce extra complexity into the management of the program.''
    155. The Commission specifically proposes a greater per-user 
reimbursement rate to VRS providers for their registered enterprise 
users vs. residential users. This proposal is intended to serve two 
objectives: (1) To account for the potentially greater volume of calls 
an enterprise user may make, and (2) to provide an incentive to 
providers to market and support their services to deaf individuals in 
the workplace. Accordingly, the Commission seeks comment on this 
separate proposal.
    156. The transition phase for restructuring VRS as described above 
is intended to account for current subscale providers who may need time 
to attempt to achieve scale. By subscale, the Commission refers to 
providers whose cost of delivering VRS may be higher than costs other 
providers may incur because of their small market share. The Commission 
notes that any transition will be accompanied by risk. However, if 
adopted, an appropriately implemented structural reform program and 
transition process will give each provider a real opportunity to 
achieve minimum efficient scale during the transition period and result 
in an end state for the program that is better for VRS users, as well 
as being more sustainable for the Fund. To that end, the Commission 
seeks comment on whether to allow VRS providers to require VRS users 
who are either (i) new-to-category VRS users (i.e., have not previously 
signed up for VRS) or (ii) switching from another VRS provider, to 
enter into a service contract after the adoption of a per-user 
compensation mechanism in order to support the growth of smaller 
providers under the new structure.
    157. The rules addressed in this section raise questions about 
related new reporting requirements that will be addressed in section 0. 
Even though the Commission record is not yet ample enough for it to 
propose specific rules, the Commission raises questions about record-
keeping, reporting and info-gathering, e.g., info-gathering pursuant to 
the PRA, and seek comments on these issues, because comments received 
on those areas may guide us toward a more efficient administration of 
its proposed use of a per-user mechanism; its proposed expanded use of 
R&D and its proposed changes in the definition of iTRS. Comments on 
proposed changes in the Commission's record-keeping, reporting and 
information gathering actions are directly related to these major 
proposed structural changes in VRS rules because proposed changes in 
these recordkeeping and informational areas will in all likelihood 
facilitate an improved monitoring of all costs imposed on impacted 
small entities by all of its proposed general structural reforms. For 
example, the Commission may, to facilitate improved monitoring of the 
costs of its overall structural reforms, decide to require service 
providers of all kinds, including broadband-based services providers, 
to provide certain specific types of reports on their activities and 
may require them to hire accountants to prepare independent audits of 
their activities and operations in this context. The specific questions 
the Commission raise with regard to record-keeping, reporting, and 
info-gathering, and the comments it seeks on these issues, are 
discussed in greater detail in Section 0, the Section 0 of this IRFA 
where an expanded treatment of such issues is required.

B. Legal Basis

    158. The legal basis for any action that may be taken pursuant to 
document

[[Page 4971]]

FCC 11-184 is contained in sections 1, 2, 4(i), 225, 255, 303(r), and 
706 of the Communications Act of 1934, as Amended, 47 U.S.C. 151, 152, 
154(i), 225, 254, 255, 303(r), and 1302(b).

C. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules May Apply

    159. Small Businesses. Nationwide, there are a total of 
approximately 29.6 million small businesses, according to the SBA. 
Entities that provide VRS could generally be referred to as, ``Wired 
Telecommunications Carriers'' or ``All Other Telecommunications.''
    160. Wired Telecommunications Carriers. The Census Bureau defines 
this category as follows: ``This industry comprises establishments 
primarily engaged in operating and/or providing access to transmission 
facilities and infrastructure that they own and/or lease for the 
transmission of voice, data, text, sound, and video using wired 
telecommunications networks. Transmission facilities may be based on a 
single technology or a combination of technologies. Establishments in 
this industry use the wired telecommunications network facilities that 
they operate to provide a variety of services, such as wired telephony 
services, including VoIP services; wired (cable) audio and video 
programming distribution; and wired broadband Internet services. By 
exception, establishments providing satellite television distribution 
services using facilities and infrastructure that they operate are 
included in this industry.''
    161. In this category, the SBA deems a wired telecommunications 
carrier to be small if it has 1,500 or fewer employees. Census data for 
2007 shows 3,188 firms in this category of these 3,188 firms, only 44 
had 1,000 or more employees. While the Commission could not find 
precise Census data on the number of firms with in the group with 1,500 
or fewer employees, it is clear that at least 3,144 firms with fewer 
than 1,000 employees would be in that group. On this basis, the 
Commission estimates that a substantial majority of the providers of 
interconnected VoIP, non-interconnected VoIP, or both in this category, 
are small.
    162. All Other Telecommunications. Under the 2007 U.S. Census 
definition of firms included in the category ``All Other 
Telecommunications (NAICS Code 517919)'' comprises ``establishments 
primarily engaged in providing specialized telecommunications services, 
such as satellite tracking, communications telemetry, and radar station 
operation. This industry also includes establishments primarily engaged 
in providing satellite terminal stations and associated facilities 
connected with one or more terrestrial systems and capable of 
transmitting telecommunications to, and receiving telecommunications 
from, satellite systems. Establishments providing Internet services or 
voice over Internet protocol (VoIP) services via client-supplied 
telecommunications connections are also included in this industry.''
    163. In this category, the SBA deems a provider of ``all other 
telecommunications'' services to be small if it has $25 million or less 
in average annual receipts. For this category of service providers, 
Census data for 2007 shows that there were 2,383 such firms that 
operated that year. Of those 2,383 firms, 2,346 (approximately 98%) had 
$25 million or less in average annual receipts and, thus, would be 
deemed small under the applicable SBA size standard. On this basis, 
Commission estimates that approximately 98% or more of the providers of 
interconnected VoIP, non-interconnected VoIP, or both in this category 
are small.
    164. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the Census Bureau has placed wireless firms within this new, 
broad, economic census category. Prior to that time, such firms were 
within the now-superseded categories of ``Paging'' and ``Cellular and 
Other Wireless Telecommunications.'' Under the present and prior 
categories, the SBA has deemed a wireless business to be small if it 
has 1,500 or fewer employees. For the category of Wireless 
Telecommunications Carriers (except Satellite), Census data for 2007 
shows that there were 1,383 firms that operated that year. Of those 
1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 
100 employees. Thus under this category and the associated small 
business size standard, the majority of firms can be considered small. 
Similarly, according to Commission data, 413 carriers reported that 
they were engaged in the provision of wireless telephony, including 
cellular service, Personal Communications Service (``PCS''), and 
Specialized Mobile Radio (``SMR'') Telephony services. Of these, an 
estimated 261 have 1,500 or fewer employees and 152 have more than 
1,500 employees. Consequently, the Commission estimates that 
approximately half or more of these firms can be considered small. 
Thus, using available data, we estimate that the majority of wireless 
firms can be considered small.
    165. The Commission notes that under the standards listed above 
some current VRS providers and potential future VRS providers would be 
considered small businesses. There are currently ten eligible VRS 
providers, five of which may be considered small businesses. In 
addition, there are several pending applications from entities seeking 
to become certified to provide VRS that may be considered small 
businesses. Although the Commission does not estimate a significant 
adverse economic impact on such entities, it nevertheless seeks comment 
on the potential impact of the rules and policies proposed in document 
FCC 11-184 due to the fact that some affected entities would likely be 
considered small businesses.

D. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements

    166. Certain rule changes proposed in this proceeding would, if 
adopted, modify rules governing data collection obtained from TRS 
providers and might also modify the filing of information with the 
Administrator. For example, the Commission may decide that it is 
sufficient to grant to the Administrator a general authority to request 
information, or it may decide to require providers to submit additional 
detailed information, such as information regarding their financial 
status, e.g., a cash-flow-to-debt ratio. Proposed rule changes may also 
modify records of calls so that Enterprise Users and Enterprise VRS 
Employers can be readily identified based on their call history. Such 
changes my also authorize the Administrator to require VRS providers to 
file the requisite cost data, and may require the Administrator and/or 
providers to obtain independent audits of the data to be submitted. 
Additional rule changes may result in a Commission decision to accept 
late-filed data, or in the alternative to calculate the VRS rate based 
on data submitted by the deadline established by the Commission or the 
Administrator.
    167. Section 64.604(c)(5)(iii)(C) of the Commission's rules 
requires TRS providers to ``provide the administrator with true and 
adequate data necessary to determine TRS Fund Sec.  
64.604(c)(5)(iii)(C) of its rules requires TRS providers to ``provide 
the administrator with true and adequate data necessary to determine 
TRS Fund revenue requirements and payments.'' The Commission has 
proposed to place the primary responsibility for managing the TRSBPP 
enrollment, certification, and eligibility verification processes on 
VRS providers. This may result in a Commission decision to require VRS 
providers to collect and maintain user

[[Page 4972]]

enrollment, initial certification, and verification of eligibility for 
TRSBPP support documentation for submission upon request to the TRS 
Fund Administrator or the Commission. The Commission may also determine 
that the TRS Fund Administrator should be empowered to collect 
additional data under the proposals in document FCC 11-184. For 
example, the Commission may decide that broadband providers that 
receive disbursements from the TRS Fund should be required to report 
certain information.
    168. The Commission is also considering record keeping requirements 
regarding individuals seeking TRSBBP support. One possibility would be 
to adopt the existing Federal Lifeline program eligibility criteria. As 
discussed in the Lifeline and Link Up Reform and Modernization NPRM, 
Lifeline discounts are available to eligible consumers in households 
that qualify as ``low-income,'' but there is no uniform national 
definition of households for all programs.
    169. The Commission will provide an analysis of the costs 
associated with any new record keeping or reporting requirements it 
adopts based in part on the record in this proceeding. The costs of 
compliance with new rules adopted in this proceeding will be fully 
reimbursed by the TRS Fund as the costs of compliance with the current 
VRS are reimbursable from the TRS Fund.
    170. Current VRS providers and newly certified VRS providers that 
may fall into the small business categories listed in section C above 
will be subject to the costs imposed by any rules adopted as a result 
of this proceeding. If the Commission adopts any new information 
collection requirements, the Commission will publish another notice in 
the Federal Register inviting the public to comment on the requirement, 
as mandated by the Paperwork Reduction Act of 1995. In addition, 
pursuant to the Small Business Paperwork Relief Act of 2002, the 
Commission seeks specific comment from the public on how it might 
``further reduce the information collection burden for small business 
concerns with fewer than 25 employees.''

E. Steps Taken To Minimize Significant Economic Impact on Small 
Entities and Significant Alternatives Considered

    171. The RFA requires an agency to describe any significant 
alternatives that it has considered in developing its approach, which 
may include the following four alternatives (among others): ``(1) the 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance and reporting requirements under the rule for such small 
entities; (3) the use of performance rather than design standards; and 
(4) an exemption from coverage of the rule, or any part thereof, for 
such small entities.''
    172. In general, alternatives to proposed rules are discussed only 
when those rules pose a significant adverse economic impact on small 
entities. In this context, however, the proposed rules generally confer 
benefits as explained below. Therefore, the Commission limits its 
discussion of an alternative to paragraph number twenty-four below.
    173. The purpose of the proposed TRSBPP is to provide discounted 
broadband Internet access to low-income deaf, hard of hearing, deaf-
blind, and speech disabled Americans who use ASL as their primary form 
of communication. Such a program would be consistent with the 
recommendations of the National Broadband Plan, the Commission's 
broader effort to meet the 21st century communications needs of low-
income consumers, and the Act. In addition, the TRSBPP will help to 
ensure that Fund resources are not spent on merely transferring 
existing users back and forth between providers, and instead are used 
to expand the availability of VRS to more users. This in turn would 
confer a benefit on small entities operating as VRS providers in that 
it would increase the current user base, thereby offering greater 
business opportunities for VRS providers.
    174. As noted above, the Commission seeks comment on new iTRS 
definitions and standards that will facilitate the use of VRS through 
mainstream equipment and provide better functionality for VRS users. 
The Commission believes that setting such uniform definitions and 
standards for VRS technology will stabilize the VRS market and allow 
for the greatest number of potential users to avail themselves of VRS. 
The more users who are registered, the more financial gain for VRS 
providers. In addition, with established definitions and standards, a 
level playing field for all providers will be possible. Finally uniform 
application of VRS rules to all forms of VRS equipment will provide 
predictability for VRS providers. Therefore, the Commission believes 
that such measures to provide definitions and standards will benefit 
all industry participants including small businesses.
    175. Moreover, if the Commission adopts rules based on the record 
received in response to its proposal to support research and 
development through the Fund, the Commission believes that all 
entities, small and large, will benefit from such funding. The 
Commission seeks comment on this position.
    176. The Commission considers an alternative to structural reform 
by proposing the possibility of adopting per-minute rates based on a 
criterion not discussed above, i.e., weighted average actual per-minute 
provider costs for the most recently completed fund year, and by 
eliminating the current tier structure. Although the Commission 
believes this alternative would neither achieve the policy goals set 
forth above, nor minimize the adverse economic impact on small 
entities, the Commission nevertheless seeks comment on this alternative 
proposal.
    177. Applications to become a certified VRS provider are 
voluntarily submitted. If a small entity, as defined by the SBA, 
applies for certification by showing that it can comply with all of the 
Commission's rules, including the proposed new rules in document FCC 
11-184, its expenses will be reimbursed from the Fund once it becomes a 
certified provider, regardless of whether the Commission adopts the 
proposed structural reforms to the VRS program. The Interstate TRS Fund 
is sized each year based on the foreseeable costs associated with 
providing service in compliance with the Commission rules. A 
contribution factor based on this proposed Fund size is then used to 
determine the amount each entity responsible for paying into the Fund 
must contribute. The Commission believes that its proposals will not 
impose an adverse financial burden on entities, including small 
businesses, because entities that are able to provide VRS in compliance 
with these proposed structural reforms will continue to be promptly 
reimbursed from the Interstate TRS Fund for all costs associated with 
compliance with the Commission's proposed reforms. Although all 
participating VRS providers will be compensated from the Fund for the 
costs of providing service, the Commission seeks comment on whether 
there may still be some adverse financial impact on a substantial 
number of small entities resulting from restructuring VRS.
    178. Each of the proposed rules, with the exception of the 
alternative discussed above in paragraph twenty-four, confers a benefit 
rather than imposes a significant adverse economic impact on regulated 
small businesses.

[[Page 4973]]

Therefore, the need for consideration of alternatives is very limited. 
However, the Commission asks for comment on the reimbursement of all 
costs incurred via compliance with new structural reforms in case there 
are costs of such compliance that may not have been considered fully or 
may not be compensable from the Fund under the proposed structural 
reforms.

F. Federal Rules That May Duplicate, Overlap, or Conflict With Proposed 
Rules

    179. None.

IX. Ordering Clauses

    Pursuant to sections 1, 2, 4(i), 4(j), 225, 251, 254 and 303(r) of 
the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 
154(j), 225, 251, 254, 303(r), document FCC 11-184 is adopted.
    The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of document FCC 11-184, 
including the Initial Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of the Small Business Administration.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2012-2058 Filed 1-31-12; 8:45 am]
BILLING CODE 6712-01-P