[Federal Register Volume 81, Number 54 (Monday, March 21, 2016)]
[Rules and Regulations]
[Pages 14984-14986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-06305]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CG Docket Nos. 10-51 and 03-123; FCC 16-25]


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: Final rule.

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SUMMARY: In this document, the Commission modifies its four-year 
compensation rate plan for Video Relay Service (VRS), adopted in 2013, 
by temporarily ``freezing'' the rate of compensation paid from the 
Interstate Telecommunications Relay Services Fund (TRS Fund) to VRS 
providers handling 500,000 or fewer monthly minutes and directs the TRS 
Fund administrator to pay compensation to such providers at a rate of 
$5.29 per VRS minute for a 16-month period.

DATES: Effective April 20, 2016.

FOR FURTHER INFORMATION CONTACT: Robert Aldrich, Consumer and 
Governmental Affairs Bureau, at 202-418-0996 or email 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Structure and Practices of the Video Relay Service Program and 
Telecommunications Relay Services and Speech-to-Speech Services for 
Individuals with Hearing and Speech Disabilities, Report and Order, 
document FCC 16-25, adopted on March 1, 2016, and released on March 3, 
2016, in CG Docket Nos. 10-51 and 03-123. The full text of document FCC 
16-25 will be available for public inspection and copying via ECFS, and 
during regular business hours at the FCC Reference Information Center, 
Portals II, 445 12th Street SW., Room CY-A257, Washington, DC 20554. 
Document FCC 16-25 can also be downloaded in Word or Portable Document 
Format (PDF) at: https://www.fcc.gov/general/disability-rights-office-headlines. 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).

Final Paperwork Reduction Act of 1995 Analysis

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

Congressional Review Act

    The Commission will not send a copy of FCC 16-25 pursuant to the 
Congressional Review Act, see 5 U.S.C. 801(a)(1)(A), because the 
Commission adopted no rules therein, as defined in 5 U.S.C. 804(3). 
Rather, the Commission modified the rates applicable to compensation 
paid to VRS providers from the TRS Fund.

Synopsis

    1. In 2013, the Commission adopted a Report and Order amending its 
telecommunications relay service (TRS) rules to improve the structure, 
efficiency, and quality of the VRS program, reduce the risk of waste, 
fraud, and abuse, and ensure that the program makes full use of 
advances in commercially-available technology. Structure and Practices 
of the Video Relay Services Program, Telecommunications Relay Services 
and Speech-to-Speech Services for Individuals with Hearing and Speech 
Disabilities, CG Docket Nos. 10-51, 03-123, Report and Order and 
Further Notice of Proposed Rulemaking, published at 78 FR 40407, July 
5, 2013 (VRS Reform Order), and 78 FR 40582, July 5, 2013 (VRS Reform 
FNPRM), aff'd in part and vacated in part sub nom. Sorenson 
Communications, Inc. v. FCC, 765 F.3d 37 (D.C. Cir. 2014) (Sorenson). 
The VRS Reform Order established the rates at which VRS providers are 
compensated from the Interstate Telecommunications Relay Service Fund 
(TRS Fund) for a four-year period beginning July 1, 2013, and adopted 
structural reforms designed to establish a more level playing field for 
all VRS providers.
    2. Pursuant to the TRS rules, VRS providers submit the number of 
minutes of service they provide to the TRS Fund administrator on a 
monthly basis and are compensated for these minutes based on rates set 
annually by the Commission. The Commission currently uses a three-tier 
compensation rate structure that allows smaller providers to receive 
more compensation per minute, on average, than larger providers. A 
tiered compensation rate structure allows providers to earn a higher 
compensation rate on the initial minutes of service provided each 
month. Pursuant to the three-tiered VRS rate structure as modified in 
the VRS Reform Order, the Tier I rate (the highest rate) applies to a 
provider's first 500,000 monthly VRS minutes, the Tier II rate applies 
to a provider's second 500,000 monthly minutes, and the Tier III rate 
(the lowest rate) applies to monthly minutes in excess of 1,000,000. As 
a result, smaller providers receive more compensation per minute, on 
average, than larger providers.
    3. In the VRS Reform Order, the Commission recognized a need to 
better align VRS compensation rates with the allowable costs of this 
service, pending a further determination as to VRS compensation 
methodology. To that end, and as an alternative to immediately reducing 
rates to a level based on average costs, the Commission adopted a four-
year schedule that gradually adjusts the VRS compensation rates 
downward every six months, beginning July 1, 2013, and ending June 30, 
2017. (In document FCC 16-25, the term ``average,'' when used to 
describe multiple providers' costs, means an average of provider costs 
weighted in proportion to each provider's total minutes.) Subsequently, 
in a Further Notice of Proposed Rulemaking released November 3, 2015, 
the Commission proposed to temporarily freeze the compensation rates of 
providers handling 500,000 or fewer monthly minutes. Structure and 
Practices of the Video Relay Services Program, Telecommunications Relay 
Services and Speech-to-Speech Services for Individuals with Hearing and 
Speech Disabilities, CG Docket Nos. 10-51, 03-123, Further Notice of 
Proposed Rulemaking, published at 80 FR 72029, November 18, 2015, (VRS 
Rate Freeze FNPRM).
    4. The Commission adopts its proposal to temporarily ``freeze'' the 
compensation rates of providers handling 500,000 or fewer monthly 
minutes (the smallest VRS providers) and directs the TRS Fund 
administrator to pay compensation, subject to a possible true-up, at a 
compensation rate of $5.29 per VRS minute for the period from July 1, 
2015, to October 31, 2016.

[[Page 14985]]

This rate is applicable to a VRS provider in any month for which the 
provider submits 500,000 or fewer compensable VRS minutes for 
compensation from the TRS Fund.
    5. The record of this proceeding confirms that for each of the 
smallest VRS providers, the per-minute costs incurred or projected by 
the provider in calendar years 2015 and 2016, respectively, are higher 
than the ``blended'' compensation rate applicable to that provider in 
that year under the four-year schedule adopted in the VRS Reform Order. 
(A provider's ``blended'' compensation rate for a calendar year is the 
average of the Tier I rates applicable in the first and second halves 
of the calendar year, weighted by the provider's projected minutes for 
each half.) The individual cost information filed by the smallest VRS 
providers, which the Commission finds to be credible, while updating 
the cost data previously filed with Rolka Loube, confirms Rolka Loube's 
initial assessment that the deficits incurred by the smallest VRS 
providers may be jeopardizing their continuation of service. Further, 
the smallest VRS providers credibly argue that available financing 
arrangements will not permit them to maintain operations indefinitely 
in accordance with the Commission's minimum TRS standards while 
continuing to operate at a loss. Therefore, the Commission finds that, 
absent rate relief, it is likely that the smallest providers either (1) 
will be unable to maintain their operations in 2016 or (2) will be 
unable to continue to grow their operations significantly in the 
direction of reaching optimum levels of efficiency. As a result, the 
Commission's objective to offer such providers ``a reasonable 
opportunity to . . . reach the optimum scale to compete effectively'' 
may be undermined. See VRS Reform Order, 78 FR 40602, July 5, 2013.
    6. As the Commission has previously recognized, the presence of 
diverse providers can spur improvements in the availability, 
efficiency, and functional equivalence of VRS. Further, public interest 
considerations favor the grant of interim relief. The record confirms 
that certain service features offered by small VRS providers may be 
uniquely helpful in advancing the goal of functionally equivalent 
service for certain subsets of VRS consumers. Specialized features 
offered by the smallest VRS providers include Spanish language VRS and 
emergency alert functions for schools for the deaf.
    7. Based on these various considerations, the Commission concludes 
that it should temporarily halt the scheduled reduction in the VRS 
compensation rates applicable to the smallest VRS providers, consistent 
with its objective in the VRS Reform Order to permit smaller providers 
a reasonable opportunity to grow and to attain efficiencies comparable 
to those of larger VRS providers. Accordingly, the Commission adopts 
its proposal in the VRS Rate Freeze FNPRM to apply a rate of $5.29 per 
minute to compensation claimed by the smallest VRS providers for a 
limited period. This rate, which was in effect prior to July 1, 2015, 
is lower than the smallest VRS providers' average projected allowable 
costs for 2015 but higher than their average projected allowable costs 
for 2016. It is also lower than any individual provider's allowable 
costs for 2015. The Commission concludes that application of a $5.29 
per minute compensation rate to the smallest VRS providers will 
generally provide a reasonable level of support for the operations of 
the smallest VRS providers and will not risk providing significant 
overcompensation for such providers. In addition, application of this 
rate to the smallest VRS providers, in lieu of the previously scheduled 
rates, will not impose a heavy cost burden on the TRS Fund.
    8. Regarding the period for which this rate freeze should apply, 
the Commission adopts the proposal in the VRS Rate Freeze FNPRM for an 
adjusted compensation rate of $5.29 per minute to be effective for 16 
months, beginning retroactively on July 1, 2015, the beginning of the 
current Fund Year, and ending on October 31, 2016. This 16-month rate 
freeze allows the smallest VRS providers the opportunity to achieve 
market share growth and improvements in efficiency while benefitting 
from further implementation of structural reforms--such as the 
establishment of the ACE platform, which will address interoperability 
and other matters and is scheduled for launch this year.
    9. While rates should not be frozen indefinitely, the Commission 
agrees with a number of commenting parties that, in order to avoid 
subjecting the smallest VRS providers to a sudden drop in compensation 
upon the expiration of the 16-month period, the compensation rate for 
the smallest providers should be adjusted downward in the same 
increments previously directed in the VRS Reform Order. In other words, 
for the smallest VRS providers the ``glide path'' originally 
established in the VRS Reform Order will resume after a 16-month 
freeze. The resulting per-minute rates for the smallest VRS providers 
for the period from January 1, 2015, to the end of the four-year period 
are: (1) January 2015-October 2016, $5.29; (2) November 2016-April 
2017, $5.06; (3) May-June 2017, $4.82.
    10. In response to the VRS Rate Freeze FNPRM, a number of 
commenters urge the Commission to expand the proposed scope of the rate 
freeze beyond the smallest VRS providers. For example, some parties 
argue that VRS providers that are larger than the smallest providers, 
but significantly smaller than the largest provider, also have a need 
for rate relief based on a comparison of their costs with applicable 
compensation rates. The information provided to the Commission does not 
indicate that any VRS providers other than the smallest providers will 
have allowable costs exceeding the average compensation rate applicable 
to such providers in 2015 and 2016. The Commission recognizes that 
among the three largest VRS providers, there are substantial 
differences in per-minute costs. However, as noted in the VRS Rate 
Freeze FNPRM, the Commission previously restructured the rate tiers--
and ``froze'' the Tier II rate at $4.82 for the first three years of 
the transition period--in order to allow the smaller of these providers 
`` `a full opportunity to improve efficiencies and achieve scale.' '' 
Again, these providers have not shown that they will incur allowable 
costs in excess of their revenues in 2015 and 2016. The Commission 
notes that several parties attempt to renew claims made in prior 
proceedings alleging that the categories of allowable costs are too 
narrow to permit recovery of all reasonable VRS costs. Those claims 
were considered and rejected in the VRS Reform Order. See VRS Reform 
Order, 78 FR 40599, July 5, 2013. Further, while a number of parties 
contend that implementation of structural reforms has imposed 
additional costs, no party has submitted specific estimates or 
documentation regarding such implementation costs.
    11. In summary, while some parties contend that the compensation 
rates for currently profitable providers should be frozen, allegedly to 
prevent reductions in the quality of VRS, the Commission does not 
perceive any immediate risk that any of the larger VRS providers have 
been or will be unable to continue to provide service that meets the 
Commission's minimum TRS standards in 2015 and 2016. The Commission 
notes, however, that there is an open rulemaking on a number of broader 
VRS ratemaking proposals and issues. See VRS Reform FNPRM, 78 FR 40582, 
July 5, 2013. Some of the comments filed in response to the VRS Rate 
Freeze FNPRM address those matters, as well as raising

[[Page 14986]]

new issues regarding quality of service and the viability of future 
competition in the VRS market. To the extent relevant, the Commission 
may address these comments when it completes action on the broader VRS 
rulemaking proposals.
    12. In summary, the Commission directs the TRS Fund administrator, 
Rolka Loube, to compensate the smallest VRS providers at a rate of 
$5.29 per minute, applicable from July 1, 2015, through October 31, 
2016. More specifically, from the effective date of this Report and 
Order through October 31, 2016, the Commission directs the 
administrator to pay compensation to the smallest VRS providers at a 
rate of $5.29 per minute. Second, the Commission directs the 
administrator to pay each of the smallest VRS providers a one-time lump 
sum reflecting the difference between the compensation they would have 
received if they had been paid at a rate of $5.29 per minute and the 
compensation they actually received at the lower applicable rates, for 
all compensable calls completed during the period between July 1, 2015, 
and the effective date of document FCC 16-25. In addition, to avoid 
subjecting the smallest VRS providers to a sudden drop in compensation 
upon the expiration of the 16-month period, the Commission directs the 
administrator to pay compensation to the smallest VRS providers at a 
rate of $5.06 per minute from November 1, 2016, through April 30, 2017, 
and at a rate of $4.82 per minute from May 1, 2017, through June 30, 
2017.

Final Regulatory Flexibility Act Certification

    13. As required by the Regulatory Flexibility Act (RFA), the 
Commission has prepared the Final Regulatory Flexibility Certification 
(FRFC) as to the policies and rules adopted in document FCC 16-25. The 
Commission will send a copy of document FCC 16-25, including the FRFC, 
to the Chief Counsel for Advocacy of the Small Business Administration 
(SBA). (See 5 U.S.C. 603(a).)
    14. After consideration of the comments received in response to the 
VRS Rate Freeze FNPRM, the Commission modifies in part the four-year 
compensation rate plan for video relay service (VRS) adopted in the 
2013 VRS Reform Order. Although the Commission believes that the four-
year schedule of VRS compensation rate reductions continues to be 
justified in order to gradually move compensation rates close to a 
level close to average allowable provider costs, the Commission 
modifies the schedule as applied to the smallest VRS providers, i.e., 
those providing 500,000 or fewer compensable minutes of use of VRS per 
month. Spreading rate reductions over a four-year period was largely 
intended to provide a reasonable opportunity for the smallest providers 
to reach minimum efficient scale while benefitting from the VRS Reform 
Order initiatives, which were intended to address many of the issues 
that have made it difficult for small providers to operate efficiently.
    15. The smallest providers have achieved significant reductions in 
their per-minute costs but have yet to approach the size or efficiency 
levels of their larger rivals. Further, some small providers offer 
service features that may be helpful in advancing the goal of 
functionally equivalent service for certain subsets of VRS consumers, 
such as Spanish language speakers and deaf-owned businesses. Therefore, 
the Commission adopts the temporary, limited compensation rate 
``freeze'' proposed in the VRS Rate Freeze FNPRM. Specifically, from 
the effective date of document FCC 16-25 through October 31, 2016, the 
Commission directs the TRS Fund administrator to pay compensation to 
the three smallest VRS providers at a rate of $5.29 per minute. In 
addition, the Commission directs the administrator to pay each of the 
smallest VRS providers a one-time lump sum reflecting the difference 
between the compensation they would have received if they had been paid 
at a rate of $5.29 per minute and the compensation they actually 
received at the lower applicable rates, for all compensable calls 
completed during the period between July 1, 2015, and the effective 
date of document FCC 16-25. In addition, to avoid subjecting the 
smallest VRS providers to a sudden drop in compensation upon the 
expiration of the 16-month period, the Commission directs the 
administrator to pay compensation to the smallest VRS providers at a 
rate of $5.06 per minute from November 1, 2016, through April 30, 2017, 
and at a rate of $4.82 per minute from May 1, 2017, through June 30, 
2017.
    16. In document FCC 16-25, the Commission adopts its proposal to 
temporarily ``freeze'' the compensation rates applicable to the 
smallest VRS providers and determines, as it concluded in the Initial 
Regulatory Flexibility Analysis, that this measure will not impose any 
additional compliance requirements on small businesses and would 
temporarily ease the impact of existing VRS regulations on small 
entities by temporarily increasing the VRS compensation rate for small 
entities above the rate currently in effect. Therefore, the Commission 
certifies that the rule amendments in document FCC 16-25 will not have 
a significant economic impact on a substantial number of small 
entities.

Ordering Clause

    Pursuant to the authority contained in sections 4(i), 201(b), and 
225 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 
201(b), 225, document FCC 16-25 is adopted.

    Federal Communications Commission.
Gloria J. Miles,
Federal Register Liaison Officer, Office of the Secretary.
[FR Doc. 2016-06305 Filed 3-18-16; 8:45 am]
 BILLING CODE 6712-01-P