[Federal Register Volume 88, Number 22 (Thursday, February 2, 2023)]
[Proposed Rules]
[Pages 7049-7057]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-01679]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CG Docket Nos. 03-123, 13-24, 22-408; FCC 22-97; FR ID 123862]


Proposal for New TRS Fund Support for Internet Protocol Captioned 
Telephone Service

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Federal Communications Commission (FCC or Commission) 
proposes to adopt a new three-year plan for Telecommunications Relay 
Services (TRS) Fund support of internet Protocol Captioned Telephone 
Service (IP CTS). Based on recent data that allows more reliable 
assessment of the costs of fully automatic IP CTS, the Commission 
proposes to apply different formulas for compensating TRS providers for 
the provision of Communications Assistant (CA)-assisted and automatic 
speech recognition (ASR)-only IP CTS. The Commission proposes to 
continue using an average-cost methodology, subject to

[[Page 7050]]

revised criteria for determining reasonable costs and to annual 
adjustments based on relevant cost factors.

DATES: Comments are due March 6, 2023. Reply comments are due April 3, 
2023.

ADDRESSES: You may submit comments, identified by CG Docket Nos. 03-
123, 13-24, and 22-408, by either of the following methods:
     Federal Communications Commission's Website: https://www.fcc.gov/ecfs/filings. Follow the instructions for submitting 
comments.
     Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing. If more than one docket 
or rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number. Filings can be sent by hand or messenger delivery, 
by commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail. All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see document FCC 22-97 at 
https://docs.fcc.gov/public/attachments/FCC-22-97A1.pdf.

FOR FURTHER INFORMATION CONTACT: Michael Scott, Disability Rights 
Office, Consumer and Governmental Affairs Bureau, at (202) 418-1264, or 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking, document FCC 22-97, adopted on December 21, 
2022, released on December 22, 2022, in CG Docket Nos. 03-123, 13-24, 
and 22-408. The full text of document FCC 22-97 is available for public 
inspection and copying via the Commission's Electronic Comment Filing 
System (ECFS). 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.
    Ex Parte Rules. This proceeding shall be treated as a ``permit-but-
disclose'' proceeding in accordance with the Commission's ex parte 
rules. 47 CFR 1.1200 et seq. 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 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.

Synopsis

Background

    1. Section 225 of the Communications Act of 1934, as amended (the 
Act), 47 U.S.C. 225, requires the Commission to ensure that TRS are 
available to persons who are deaf, hard of hearing, or deafblind or 
have speech disabilities, ``to the extent possible and in the most 
efficient manner.'' TRS are defined as ``telephone transmission 
services'' enabling such persons to communicate by wire or radio ``in a 
manner that is functionally equivalent to the ability of a hearing 
individual who does not have a speech disability to communicate using 
voice communication services.''
    2. IP CTS, a form of TRS, permits an individual who can speak but 
who has difficulty hearing over the telephone to use a telephone and an 
[IP]-enabled device via the internet to simultaneously listen to the 
other party and read captions of what the other party is saying. IP CTS 
is supported entirely by the TRS Fund, which is composed of mandatory 
contributions collected from telecommunications carriers and voice over 
internet Protocol (VoIP) service providers based on a percentage of 
each company's annual revenue. IP CTS providers receive monthly 
payments from the TRS Fund to compensate them for the reasonable cost 
of providing the service, in accordance with a per-minute compensation 
formula approved by the Commission.
    3. Before 2018, compensation for IP CTS providers was determined by 
proxy, by averaging the payments made by state TRS programs to 
providers of an analogous service, Captioned Telephone Service (CTS). 
In 2018, the Commission determined that this approach had resulted in 
providers receiving compensation greatly in excess of the average cost 
actually incurred to provide IP CTS. Instead, the Commission proposed 
that compensation be determined as a weighted average of the actual 
allowable costs reported by the providers. In 2020, the Commission 
adopted this average-cost methodology. From 2018 to 2021, the 
Commission progressively reduced the level of TRS Fund compensation to 
close the gap between compensation and average provider cost. As a 
result of these decisions, the compensation formula for IP CTS was 
reduced from $1.9467 per minute in Fund Year 2017-18 to $1.30 per 
minute in Fund Year 2021-22.
    4. In 2018, the Commission authorized, for the first time, the 
provision of IP CTS on a fully automatic basis, using only automatic 
speech recognition (ASR) technology to generate captions, without the 
participation of a communications assistant. The Commission also sought 
comment on whether and how to establish a separate compensation formula 
for the provision of fully automatic IP CTS. In 2020, while noting that 
the ASR-only mode allowed substantial reductions in the cost of 
providing IP CTS, the Commission deferred the issue of establishing a 
specific compensation formula for ASR-only captioning. With only two 
companies (both new entrants) then authorized to provide fully 
automatic IP CTS, the Commission reasoned that sufficient information 
was not yet available on the specific cost of that service mode. The 
Commission also suggested that, even after sufficient cost data became 
available, application of a single compensation formula might still be 
warranted. Noting that the two service modes are essentially different 
technological means for delivering a

[[Page 7051]]

single service, the Commission pointed out that a single compensation 
formula may be warranted to encourage IP CTS providers to use the most 
cost-effective technology for providing this service.

Proposed Rules

    5. Compensation for ASR-only IP CTS. The Commission revisits the 
question of whether to establish different formulas for CA-assisted and 
ASR-only IP CTS, along with other related issues. Since 2020, the 
availability of cost data has improved. All currently certified IP CTS 
providers have been authorized to provide captioning in the ASR-only 
mode, either as an alternative to CA-assisted captioning or as the 
provider's sole captioning method, and additional applicants are 
currently seeking authorization to provide TRS Fund-supported IP CTS 
exclusively in the ASR-only mode. Total minutes of ASR-only IP CTS has 
substantially increased in the past two years. Historical cost and 
demand data for calendar year 2021, in which ASR-only usage increased 
to some 23% of monthly IP CTS minutes that year, was reported by 
providers in March 2022, along with projected cost and demand for 2022 
and 2023. These reports appear to confirm that there are significant 
differences in the costs attributable to each service mode. The TRS 
Fund administrator reports that the weighted average of provider costs 
attributed to ASR-only IP CTS (expenses plus 10% operating margin) in 
2021 was $0.6977, $0.30 less per minute than the average for CA-
assisted IP CTS ($0.9979). The Commission seeks comment on the extent 
to which these estimates, based on provider-reported data, accurately 
reflect cost differences between ASR-only and CA-assisted IP CTS.
    6. Further, notwithstanding the Commission's prior reservations, we 
believe there are special considerations warranting the application of 
different compensation formulas to the two service modes, at least as a 
temporary measure. On the one hand, there is evidence, including tests 
conducted by a federally funded research and development center, that 
ASR-only captioning offers better speed of answer (i.e., it takes less 
time for captioning to commence after a call has begun), lower caption 
delay (the time lag between words being spoken on a phone call and the 
appearance of captions on the user's screen), and a level of accuracy 
that is generally comparable to (and in many instances, greater than) 
that of CA-assisted captioning. On the other hand, the record also 
indicates that for some portion of IP CTS calls, CA-assisted captioning 
can result in better service or is preferred by consumers. Further, 
some research indicates that ASR technology may show algorithmic bias 
in the accuracy with which it transcribes voices; a 2020 study of 
speech recognition systems from five major tech companies found that 
the systems misidentified words spoken by black individuals at a 
substantially higher rate than words spoken by white people. Given the 
apparently substantial cost differences, the continued application of a 
single compensation formula to both service modes could encourage IP 
CTS providers to use the lower-cost, more profitable ASR-only mode even 
for those calls where a user could benefit from having a CA involved. 
The Commission seeks comment on the foregoing analysis. Is it 
consistent with recent test results of the speed and accuracy of ASR-
only and CA-assisted IP CTS?
    7. In noting that the availability of CA assistance may improve the 
quality of service on some calls, the Commission does not mean to 
suggest that, if a provider chooses to provide IP CTS exclusively in 
one mode or the other, that provider would necessarily fail to provide 
functionally equivalent service. The Commission has granted 
certification to a number of applicants proposing to offer only fully 
automatic IP CTS, based in part on a showing that their average 
performance on testing of both caption delay and accuracy exceeded that 
of an average CA-assisted IP CTS provider.
    8. In addition, the Commission notes that it has proposed to adopt 
measures and metrics that would allow more precise assessment of IP CTS 
service quality, including compliance with minimum TRS standards. The 
Commission recognizes the importance of this question, and work 
continues on development of more precise measures and metrics for 
assessing how well each provider and captioning approach performs in 
meeting the objectives of section 225 of the Act. Among the potential 
benefits of such metrics is the ability to make more fine-grained 
policy determinations regarding TRS Fund compensation. Pending the 
development of such metrics, the Commission seeks to apply cost-based 
compensation formulas for CA-assisted and ASR-only IP CTS that allow 
providers (or consumers, when able to choose) to select an appropriate 
captioning method for each call based primarily on considerations of 
quality, not cost. The Commission seeks comment on this analysis.
    9. As a further consideration, if the cost differences between ASR-
only and CA-assisted IP CTS are as substantial as they appear, then--as 
long as a substantial portion of IP CTS minutes are provided with CA 
assistance--continued application of a single, average-cost-based 
compensation formula to both modes of service could confer above-
average profits on those IP CTS providers that produce captions 
predominantly or exclusively in the ASR-only mode. While such above-
average profits earned during a limited period of time may serve to 
incentivize and reward innovation, prolonged payment of excessive 
compensation may result in waste of TRS Fund resources--and could 
significantly increase the risk of fraud in the IP CTS program, if the 
availability of unusually high profits increases the attractiveness of 
the IP CTS program to unscrupulous actors. The Commission seeks comment 
on this analysis.
    10. To address the concerns discussed above, the Commission 
proposes that during the next compensation period, different levels of 
per-minute compensation should be applicable to each service mode, with 
the compensation formula for each mode aligned with the reasonable cost 
attributable to that mode. By setting a level of per-minute 
compensation for the ASR-only service mode that tracks its actual cost, 
the Commission believes it can maintain an appropriate incentive for 
providers to use the ASR-only mode where warranted, while also 
continuing to support CA-assisted IP CTS where appropriate, e.g., where 
CA-assisted IP CTS may be needed to achieve functional equivalence. 
Given its lower reported cost, the fact that all IP CTS providers have 
now begun using ASR-only IP CTS, and the likelihood of continuing 
improvements in ASR technology, the Commission believes IP CTS 
providers will continue to be motivated to offer this service mode when 
preferred by users or otherwise warranted.
    11. The Commission seeks comment on this proposal and the above 
assumptions. If the Commission applies different compensation formulas 
to the ASR-only and CA-assisted service modes, should the Commission 
also, within the CA-assisted category, establish a separate formula for 
CA-assisted IP CTS using the Communications Access Realtime Translation 
(CART) method to account for cost differences? Alternatively, should 
the Commission continue to determine a single level of compensation for 
IP CTS, based on the weighted average of providers' reasonable costs 
for the service as a whole? What are the costs and benefits of 
establishing separate compensation

[[Page 7052]]

levels for IP CTS calls, compared to maintaining the current approach? 
Are there other factors the Commission should consider in setting 
compensation formulas for ASR-only and CA-assisted service?
    12. If the Commission establishes separate formulas for CA-assisted 
and ASR-only service, then it must be clear--to both providers and the 
TRS Fund administrator--which formula applies to any particular call or 
portion of a call. The Commission therefore proposes to codify in its 
rules the requirement, currently imposed as a condition of granting 
certification for the provision of ASR-only in addition to CA-assisted 
captioning, that IP CTS providers identify in their monthly call detail 
reports those calls and minutes that are captioned as ASR-only and 
those captioned as CA-assisted. If the service mode changes in the 
middle of a call, the Commission proposes that portions of the call 
(i.e., number of minutes, specified to one decimal place) that are ASR-
only and CA-assisted, respectively, shall be correctly identified as 
such.
    13. The Commission also proposes to amend its rules to make clear 
which compensation formula is applicable to calls for which a CA or 
other provider personnel is not involved in the initial generation of 
the captions, but is monitoring caption quality while a call is in 
progress and may also be correcting captions during a call. The 
Commission seeks comment on the extent to which such monitoring is 
currently practiced and how it is handled operationally. For example, 
where CAs are engaged in monitoring ASR-generated captions, do they 
also undertake to correct any mistakes themselves, or do they simply 
assess the caption quality to determine whether the call needs to be 
transferred to the CA-assisted service mode? Are there circumstances in 
which one CA may simultaneously monitor more than one ASR-captioned 
call? Are there other relevant scenarios the Commission should 
consider, involving both a CA and the use of ASR on a single call?
    14. The Commission proposes that, if a CA is only assigned to 
monitor or correct one call at a time, the CA-assisted compensation 
formula shall apply to any call (or any call minutes, if a CA is not 
present for the entire call) to which that CA is assigned. On the other 
hand, if a CA (or other employee) is monitoring more than one call, or 
is splitting time between monitoring a call and attending to other 
tasks, then--because the employee's involvement appears to be more in 
the nature of general supervision of ASR-only operations--the 
Commission proposes that the ASR-only formula shall apply to each call 
being monitored. The Commission seeks comment on these proposals. Are 
there any other kinds of situations in which the proper classification 
of calls and minutes as ASR-only or CA-assisted needs clarification?
    15. The Commission also seeks comment on how to determine with 
greater precision the reasonable cost of providing IP CTS on a fully 
automatic or CA-assisted basis. Are any additional categories or 
subcategories needed in the administrator's cost reporting template to 
appropriately capture the costs of each service mode? Are any such 
changes necessary to capture costs that may be incurred in providing 
users the ability to choose a preferred service mode, or to switch 
between ASR-only and CA-assisted services during a call? Are there 
other steps the Commission could take, consistent with cost-causation 
principles, to ensure that the compensation formulas provide 
appropriate incentives for providers to offer such choices to consumers 
or otherwise to advance the statutory goal of functional equivalence?
    16. Although the Commission required IP CTS providers offering both 
modes of service to specify the costs attributable to each mode, there 
is a lack of consistency in how various providers have responded to 
this directive. For certain cost categories, such as facilities, 
indirect costs, and marketing, some providers directly assigned the 
costs attributed to each service mode, while other providers allocated 
the same costs based on the share of minutes provided. In accordance 
with well-established principles of regulatory accounting, the 
Commission tentatively concludes that when it is possible to directly 
assign costs to either ASR-only or CA-assisted IP CTS, providers must 
do so, and when that is not possible, they must reasonably allocate 
such costs based on direct analysis of the origin of the costs 
themselves. The Commission has applied this principle in a variety of 
contexts where costs of regulated companies must be apportioned among 
multiple services. When direct analysis is not possible, common cost 
categories should be allocated based upon an indirect, cost-causative 
linkage to another cost category (or group of cost categories) for 
which a direct assignment or allocation is available. The Commission 
seeks comment on this tentative conclusion.
    17. Allowable Costs. In the 2020 IP CTS Compensation Order, the 
Commission decided that IP CTS costs could be reasonably determined 
using, for the most part, the same allowable-cost criteria applicable 
to other forms of internet-based TRS. As the only exception, the 
Commission determined that the TRS Fund should support reasonable 
outreach costs of IP CTS providers. Except as specifically identified 
in this document, the Commission does not seek to revisit these 
determinations. Nonetheless, in order to ensure that the Commission 
sets rates for the foregoing periods at levels that promote the 
statutory goal of functional equivalence at a time when both technology 
and consumer use of communications services are rapidly evolving, the 
Commission seeks comment on whether adjustments to certain cost 
criteria are warranted for IP CTS.
    18. Research and development to enhance functional equivalency. The 
Commission proposes to revise its allowable cost criteria to allow TRS 
Fund support for the reasonable cost of research and development to 
enhance the functional equivalency of IP CTS, including improvements in 
service quality that may exceed the Commission's TRS mandatory minimum 
standards. Currently, the TRS Fund supports research and development 
conducted by an IP CTS provider to ensure that its service meets the 
applicable TRS mandatory minimum standards, but does not compensate 
providers for developing IP CTS enhancements that exceed this 
criterion. In establishing this limitation, the Commission reasoned 
that the functionality that TRS providers must provide is defined by 
the applicable mandatory minimum standards, and that the TRS Fund was 
not intended to be a source of funding for the development of TRS 
services, features, and enhancements that, although perhaps desirable, 
are not necessary for the provision of functionally equivalent TRS 
service.
    19. The Commission now proposes to revisit this criterion with 
respect to IP CTS costs. In this document, the Commission seeks comment 
on the allowability of research and development costs specifically with 
respect to IP CTS. In the pending VRS compensation proceeding, 
commenters have raised an analogous concern with respect to VRS. The 
Commission deferred consideration of the analogous issue with respect 
to IP Relay, pending its resolution for other forms of TRS.
    20. While it is true that, to be eligible for TRS Fund support, a 
TRS provider is only required to meet the minimum standards, the rules 
do not prohibit providers from exceeding those standards. Further, 
section 225 of the Act states that the Commission's TRS

[[Page 7053]]

regulations must not ``discourage or impair the development of improved 
technology.'' In addition, the Commission's policy is to encourage IP 
CTS providers to compete for subscribers on the basis of service 
quality, including by introducing innovative captioning processes and 
features.
    21. Adjusting the Commission's criteria to allow TRS Fund support 
for research and development into IP CTS improvements that meet or 
exceed the Commission's minimum standards will increase the likelihood 
that, in fact, the service actually provided does meet or exceed those 
standards and harmonize the Commission's IP CTS cost criteria with the 
Congressional intent to encourage the development of improved 
technology for TRS. The Commission seeks comment on this proposal and 
the cost and benefits of allowing providers to recover the reasonable 
cost of such research and development.
    22. The Commission also invites comment on how it should ensure 
that the benefit of the conducted research and development actually 
enhances functional equivalency. The Commission believes that, by using 
an average cost methodology and setting compensation formulas for 
multi-year periods, the Commission provides substantial incentives for 
providers to use research and development funds wisely and avoid 
incurring unnecessary costs. However, the Commission seeks comment on 
whether additional safeguards are needed. Should providers be required 
to report on conducted research and development? If so, how often? What 
information should be included in such reports to allow the Commission 
or TRS Fund administrator to audit research and development costs? 
Further, in determining the reasonable costs for research and 
development, should the Commission account for the benefits that may 
inure to providers, for example, licensing or earning profits from 
research and development outside the TRS program?
    23. Numbering. Pursuant to a prior Commission ruling, the costs 
associated with acquiring a telephone number and assigning it to a 
customer are not currently supported by the TRS Fund. The Commission 
reasoned that such costs are not attributable to the use of a relay 
service to facilitate a call, noting that analogous costs incurred by 
voice service providers are typically passed through to their 
customers. In the 2022 IP Relay Compensation Order, however, the 
Commission revisited this issue with respect to IP Relay, concluding 
that, because the Commission's rules require the assignment of North 
American Numbering Plan (NANP) numbers to IP Relay users, it seems 
illogical to treat such costs as if they are not attributable to the 
use of relay to facilitate a call. The Commission also reasoned that 
the circumstances relevant to recovery of number acquisition costs by 
voice service providers and IP CTS providers are not equivalent. While 
voice service providers have a billing relationship with their 
consumers, IP CTS providers typically do not, and there seems to be 
little point in creating such a relationship for the sole purpose of 
passing through what likely would be a de minimis monthly charge for 
any particular IP CTS user.
    24. To harmonize IP CTS compensation methodology with the IP Relay 
ruling, the Commission proposes to also treat as allowable the 
reasonable costs of acquiring NANP telephone numbers for IP CTS users, 
in those circumstances where such acquisition is necessary to provide 
the service. To date, such number acquisition has not been routinely 
required. IP CTS is most commonly provided as an adjunct to the 
consumer's existing telephone service. In such cases, the consumer 
already has a telephone number, and it is not necessary for the IP CTS 
provider to assign one. However, for some types of IP CTS, the user 
initiates an IP CTS call by connecting to the IP CTS provider via the 
internet, such as web-based or wireless-based IP CTS, and the provider 
assigns a new NANP telephone number to the IP CTS user, which is 
different from the user's existing telephone number and is used only 
for processing and transmitting IP CTS calls. The Commission seeks 
comment on this proposal and the costs and benefits of allowing 
recovery of number acquisition costs.
    25. User access software. Pursuant to longstanding Commission 
rulings, twice upheld by the D.C. Circuit, the TRS Fund does not 
support the provision of the equipment used by a consumer to access 
TRS. The Commission has previously interpreted this restriction to 
extend to the ``installation of the equipment or any necessary 
software.'' However, the Commission has not specifically addressed 
whether the TRS Fund should support the expenses of providing software 
that is not designed for installation on provider-distributed 
equipment, but rather is usable on off-the-shelf user devices supplied 
by third parties. At the time the prohibition on equipment cost 
recovery was adopted, TRS user software was typically proprietary 
software run on provider-distributed equipment.
    26. Historically, IP CTS has been most commonly accessed via 
provider-distributed devices. However, a number of providers offer IP 
CTS via software applications that consumers may access via any web 
browser or may download to off-the-shelf devices owned by the consumer, 
such as a computer, tablet, or mobile device.
    27. The Commission proposes to allow TRS Fund support for the 
reasonable cost of developing, maintaining, and providing software and 
web-based applications that enable users to access IP CTS from off-the-
shelf user devices. Where a type of software can be used with a variety 
of devices purchased from other sources and is necessary for a customer 
to access and use the service, the Commission believes that such access 
software, even though it may be installed on or downloaded to a user 
device, is appropriately classified as associated with the relay 
service, rather than with equipment. Further, the Commission believes 
that its statutory directive to make TRS widely available in the most 
efficient manner will be advanced if the TRS Fund supports the 
provision of software that enables access to IP CTS from a wide range 
of devices. Today, a wide variety of devices are capable of receiving 
and displaying captions of telephone conversations.
    28. In addition, compatibility with off-the-shelf equipment 
facilitates consumers' ability to choose from a range of service 
providers based on the quality of their captioning service. The 
Commission does not propose to include the costs of providing any 
devices to users, just the costs of developing and providing software 
that is necessary to provide IP CTS on off-the-shelf devices. The 
Commission seeks comment on this proposal, its costs and benefits, and 
the above assumptions. Are there more specific characteristics or 
limitations that should be identified for determining whether access 
software costs should be allowable? Commenters are encouraged to 
provide specific examples of the types of software that might be 
allowed and the amount of such costs that would be covered under this 
proposal.
    29. As one party has suggested, should the Commission also allow 
TRS Fund support for the cost of IP CTS access software that is 
developed and provided for proprietary devices that are designed to be 
used with a particular provider's service (or with a service that has 
been licensed to use a particular IP CTS technology)? What would be the 
costs and benefits of such a change? How would allowing such cost 
recovery promote the objectives of section 225 of

[[Page 7054]]

the Act? Would such a change require the Commission to revisit its past 
determination that its rules should promote the ability of users to 
access TRS from a variety of commercially available devices? Would 
allowing such recovery tend to ``lock in'' consumers, increasing their 
dependence on a single supplier of IP CTS technology? If the Commission 
were to allow such cost recovery, how should it distinguish between 
costs of the software needed to access IP CTS from proprietary devices, 
which would be supported by the TRS Fund, and software that is integral 
to operation of the device, which would continue to be unsupported?
    30. The Commission seeks comment on how to ensure the appropriate 
allocation of software costs between software that a consumer can 
download to the consumer's off-the-shelf equipment or that is used in 
association with web-based IP CTS as opposed to software that is used 
with a provider's or contractor's proprietary equipment. To the extent 
that such software costs are not directly attributable to one category 
or the other, the Commission seeks comment on how to allocate such 
costs between these categories.
    31. Operating Margin. The Commission proposes that IP CTS 
compensation for the next cycle should aim to ensure that the total 
compensation paid to all providers allows an average recovery of an 
operating margin above allowable expenses that is within the zone of 
reasonableness (7.75%-12.35%) established in the Commission's 2017 VRS 
Compensation Order, published at 82 FR 39973, August 22, 2017, and 
applied to IP CTS in the 2020 IP CTS Compensation Order, published at 
85 FR 64971, October 14, 2020. The Commission seeks comment on this 
proposal. Have there been changes in relevant factors that support 
adjusting the range? Is the current allowable operating margin 
sufficient to attract capital, new entry, and promote functionally 
equivalent IP CTS? The Commission notes that a new investor recently 
purchased a controlling interest in a certified IP CTS provider, 
CaptionCall. What has been providers' experience since 2020?
    32. If the Commission continues to use a cost-based methodology for 
IP CTS, should it also continue to set the operating margin at 10%, the 
approximate midpoint of the zone of reasonableness? If the Commission 
sets different compensation formulas for CA-assisted and ASR-only IP 
CTS, is there any reason to apply a different operating margin for the 
ASR-only formula?
    33. Calculation of Cost-Based Compensation Formulas. The Commission 
seeks comment on the appropriate levels of per-minute compensation for 
CA-assisted and ASR-only IP CTS, respectively. Based on the cost and 
demand data reported by providers in March 2022, the TRS Fund 
administrator, Rolka Loube, has determined that the average cost 
(including a 10% operating margin) of CA-assisted IP CTS was $0.9979 
per minute in 2021, and is projected to be $1.1818 per minute in 2022. 
The estimated average cost of ASR-only IP CTS was $0.6977 per minute in 
2021 and is projected to be $0.7286 for 2022. Updated cost data, which 
will include historical cost and demand for 2021 and 2022 and projected 
cost and demand for 2023 and 2024, is due to be filed by providers in 
February 2023. In setting compensation, the Commission intends to take 
account of such updated cost and demand data, which may result in 
modification of the above estimates. For example, a recent report by 
Rolka Loube indicates that demand for IP CTS, which increased 
significantly in 2020 and 2021, appears to be returning to a level 
closer to that of 2019. This may reflect a declining impact of the 
COVID-19 pandemic. The record will remain open for interested parties 
to comment on such additional data.
    34. The Commission recognizes that the use of ASR-only IP CTS has 
grown while the use of CA-assisted IP CTS has declined. As noted above, 
by the end of 2021, the ASR-only mode accounted for approximately 23% 
of monthly IP CTS minutes, and current projections are that the 
percentage will rise to 40% by late 2023. Given the absence of CAs, it 
appears that ASR-only service involves a much smaller proportion of 
variable costs. If ASR-only minutes continue to increase as a share of 
total IP CTS usage, it appears likely that the per-minute costs of ASR-
only will decline, as ASR-only IP CTS seems to involve few costs that 
grow in direct proportion to usage. The Commission seeks comment on 
these assumptions. Is the projected growth of ASR-only IP CTS a 
reasonable expectation, given the efficiency advantages and other 
benefits of this technology? Is the trend of growth likely to change 
substantially, and if so, how should that affect the Commission's 
compensation determinations?
    35. Compensation Period. The Commission proposes a three-year 
compensation period. Thus, if the revised compensation formula is 
effective July 1, 2023, the compensation period will end June 30, 2026. 
The Commission believes this period is long enough to give providers 
certainty regarding the applicable compensation levels, provide 
incentives for providers to become more efficient, and mitigate any 
risk of creating the ``rolling average'' problem previously identified 
by the Commission regarding TRS. On the other hand, the period is short 
enough to allow timely reassessment of the compensation formulas in 
response to substantial cost changes and other significant 
developments.
    36. The Commission seeks comment on this proposal. What are the 
costs and benefits of adopting a compensation period of a longer or 
shorter duration? In light of the high growth rate of ASR-only usage 
and the apparently high volume sensitivity of ASR-only per-minute 
costs, as well as the ongoing changes in ASR technology, should the 
Commission set a different compensation period for an ASR-only 
compensation formula (or for a single IP CTS compensation formula, if 
the Commission continues using one)?
    37. Inflation and Productivity Adjustments. The Commission seeks 
comment to refresh the record on whether a price indexing formula, 
analogous to price-cap factors, should be applied during a multi-year 
compensation period, and on the appropriate indices to use to reflect 
inflation and productivity. If inflation and productivity trends for IP 
CTS can be predicted with reasonable accuracy, then it appears that the 
adoption of such factors would give providers greater assurance of cost 
recovery during a multi-year compensation period, and allow the 
benefits of any productivity-related cost declines to be shared with 
TRS Fund contributors.
    38. In the 2020 IP CTS Compensation Order, the Commission deferred 
consideration of such factors ``until we are better able to assess the 
impact of ASR technology on IP CTS costs.'' Have providers adjusted 
their projected costs to account for anticipated inflation? If the 
Commission continues to use a weighted average of historical and 
projected costs in setting a compensation formula, are such adjustments 
accounted for in the compensation formula? If adopted, how should a 
price-indexing approach be structured if the Commission were to adopt 
compensation levels for CA-assisted and ASR-only IP CTS, e.g., to 
account for any disparities in expected productivity gains between the 
services?
    39. As a reference point for determining an annual inflation 
adjustment, the Commission proposes to use the Bureau of Labor 
Statistics' Employment Cost Index for ``professional, scientific, and 
technical services.'' The Commission believes

[[Page 7055]]

that, because CA-assisted IP CTS is a labor-intensive service, this 
seasonally adjusted index, which includes translation and interpreting 
services, will more accurately reflect changes in relevant costs than 
will a more general index of price changes. The Commission seeks 
comment on this proposal. Is the use of the index appropriate for ASR-
only IP CTS, given that ASR-only IP CTS is not primarily labor based? 
Would another index be more appropriate for ASR-only IP CTS?
    40. How should the Commission ensure productivity is properly 
accounted for in the adjustment? Does the proposed price index 
appropriately account for inflation and productivity relevant to IP CTS 
or would a different price index be more reasonable? Should the 
Commission adopt a separate X-factor to account for productivity or 
other factors that may reduce costs relative to inflation? If so, how 
should the Commission set such an X-factor? For example, could total 
factor productivity for the professional and technical services 
industry as measured by the Bureau of Labor Statistics be used to set 
the X-factor for CA-assisted IP CTS? Given that ASR-only IP CTS is not 
primarily labor based, would another index be more appropriate for ASR-
only IP CTS?
    41. Alternative Approaches. The Commission also seeks comment on 
whether there are other approaches to IP CTS compensation that can 
successfully align the compensation formula for this service with 
actual provider costs and enable the Commission to provide IP CTS in 
the most efficient manner. To the extent that commenters wish to 
suggest alternative approaches that could simplify or otherwise improve 
the IP CTS compensation process, the Commission invites the submission 
of specific proposals, along with an explanation of how each proposal 
would better align IP CTS compensation with actual provider costs and 
otherwise advance the objectives of section 225 of the Act.
    42. Technical Amendment Clarifying IP Relay Compensation Rate. The 
Commission proposes a technical amendment to Sec.  64.640(d) of the 
Commission's rules to clarify the inflation adjustment factor for IP 
Relay compensation. In the 2022 IP Relay Compensation Order, published 
at 87 FR 42656, July 18, 2022, the Commission adopted an annual 
inflation adjustment factor based on the Employment Cost Index compiled 
by the Bureau of Labor Statistics, U.S. Department of Labor, for total 
compensation for private industry workers in professional, scientific, 
and technical services. The Commission directed the TRS Fund 
administrator to specify in its annual TRS Fund report ``the index 
values for each quarter of the previous calendar year and the last 
quarter of the year before that.'' The Commission also directed the TRS 
Fund administrator to propose the IP Relay compensation level for the 
next TRS Fund year by adjusting the compensation level from the 
previous year by a percentage equal to the percentage change in the 
index between the fourth quarter of the calendar year ending before the 
filing of its annual report and the fourth quarter of the preceding 
calendar year.
    43. In short, Sec.  64.640(d) of the Commission's rules codifies 
the index and time periods to be used to calculate the percentage 
change in the index to determine the rate of inflation. The Commission 
proposes to revise the text of the rule to clarify the inflation 
adjustment factor to eliminate any ambiguity as to how the inflation 
adjustment factor is calculated. The relevant provision of the rules 
currently reads:

    (d) The inflation adjustment factor for a Fund Year 
(IFFY), to be determined annually on or before June 30, 
is 1/100 times the difference between the values of the Employment 
Cost Index compiled by the Bureau of Labor Statistics, U.S. 
Department of Labor, for total compensation for private industry 
workers in professional, scientific, and technical services, for the 
following periods:
    (1) The fourth quarter of the Calendar Year ending 6 months 
before the beginning of the Fund Year; and
    (2) The fourth quarter of the preceding Calendar Year.

    As amended, this provision would read:

    (d) The inflation adjustment factor for a Fund Year 
(IFFY), to be determined annually on or before June 30, 
is equal to the difference between the Initial Value and the Final 
Value, as defined herein, divided by the Initial Value. The Initial 
Value and Final Value, respectively, are the values of the 
Employment Cost Index compiled by the Bureau of Labor Statistics, 
U.S. Department of Labor, for total compensation for private 
industry workers in professional, scientific, and technical 
services, for the following periods:
    (1) Final Value. The fourth quarter of the Calendar Year ending 
6 months before the beginning of the Fund Year; and
    (2) Initial Value. The fourth quarter of the preceding Calendar 
Year.

    44. Digital Equity and Inclusion. Finally, the Commission, as part 
of its continuing effort to advance digital equity for all, including 
people of color, persons with disabilities, persons who live in rural 
or Tribal areas, and others who are or have been historically 
underserved, marginalized, or adversely affected by persistent poverty 
or inequality, invites comment on any equity-related considerations and 
benefits (if any) that may be associated with the proposals and issues 
discussed in this Notice. The term ``equity'' is used here consistent 
with Executive Order 13985 as the consistent and systematic fair, just, 
and impartial treatment of all individuals, including individuals who 
belong to underserved communities that have been denied such treatment, 
such as Black, Latino, and Indigenous and Native American persons, 
Asian Americans and Pacific Islanders and other persons of color; 
members of religious minorities; lesbian, gay, bisexual, transgender, 
and queer (LGBTQ+) persons; persons with disabilities; persons who live 
in rural areas; and persons otherwise adversely affected by persistent 
poverty or inequality. Specifically, the Commission seeks comment on 
how the Commission's proposals may promote or inhibit advances in 
diversity, equity, inclusion, and accessibility, as well as the scope 
of the Commission's relevant legal authority.

Initial Regulatory Flexibility Analysis

    45. As required by the Regulatory Flexibility Act of 1980, as 
amended, the Commission has prepared the Initial Regulatory Flexibility 
Analysis (IRFA) of the possible significant economic impact on a 
substantial number of small entities by the policies and rules proposed 
in the NPRM. Written public comments are requested on the IRFA. 
Comments must be identified as responses to the IRFA and must be filed 
by the deadline for comments provided in this document.

Need for, and Objectives of, the Proposed Rules

    46. The Commission seeks comment on the adoption of a compensation 
methodology and compensation levels for TRS Fund support of providers 
of IP CTS. With the introduction and growing demand of ASR-only IP CTS, 
the Commission seeks to build a record on the cost and service quality 
differences between ASR-only IP CTS and CA-assisted IP CTS. In doing 
so, the Commission proposes to move away from its current practice of 
determining a compensation level for both ASR-only IP CTS and CA-
assisted IP CTS on the average weighted cost of providing CA-assisted 
IP CTS. To develop an alternative, the Commission seeks comment on the 
allocation of costs between ASR-only and CA-assisted IP CTS, allowable 
costs, operating margins,

[[Page 7056]]

cost reporting, available demand data, and the service quality of ASR-
only and CA-assisted IP CTS.
    47. The Commission seeks comment on the appropriate duration of the 
compensation period and the use of a price indexing formula to adjust 
compensation for inflation and productivity. The Commission also seeks 
comment on alternatives to using a cost-based compensation methodology 
and alternatives to averaging costs to determine whether such 
alternatives could better achieve the Commission's objectives.
    48. The Commission also seeks comment on a technical amendment to 
the Commission's rules on IP Relay compensation to clarify the 
inflation adjustment factor that is applied annually during the 
compensation period.
    49. The Commission takes these steps to ensure the provision of IP 
CTS in a functionally equivalent manner to persons who are deaf, hard 
of hearing, deafblind or have speech disabilities. In doing so, the 
Commission balances several different factors including regulating the 
recovery of costs caused by the service, encouraging the use of 
existing technology and not discouraging or impairing the development 
of improved technology, and ensuring IP CTS is ``available, to the 
extent possible and in the most efficient manner.''

Legal Basis

    50. The authority for this proposed rulemaking is contained in 
sections 1, 2, and 225 of the Act, as amended, 47 U.S.C. 151, 152, 225.

Small Entities Impacted

    51. The proposals in this document will affect the obligations of 
IP CTS providers. These services can be included within the broad 
economic category of All Other Telecommunications.

Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    52. The proposed compensation methodology will not create new 
reporting, recordkeeping, or other compliance requirements.

Steps Taken To Minimize Significant Impact on Small Entities, and 
Significant Alternatives Considered

    53. Throughout this document, the Commission is taking steps to 
minimize the impact on small entities by seeking comment on reforms to 
the IP CTS compensation methodology that would ensure that providers of 
IP CTS are fairly compensated for the provision of IP CTS (both ASR-
only IP CTS and CA-assisted IP CTS) including considering significant 
alternatives by identifying and seeking comment on multiple 
methodologies for compensation; and considering various options to 
determine the best compensation methodology for ensuring functionally 
equivalent service and balance several different factors in carrying 
out the objective of section 225 of the Act over the long term in 
accordance with the Commission's statutory obligations. The Commission 
seeks comment on the effect these proposals will have on all entities 
that have the potential to provide IP CTS, including small entities.
    54. The Commission seeks comment from all interested parties. Small 
entities are encouraged to bring to the Commission's attention any 
specific concerns they may have with the proposals outlined in this 
document. The Commission expects to consider the economic impact on 
small entities, as identified in comments filed in response to this 
document, in reaching its final conclusions and acting in this 
proceeding.

Federal Rules Which Duplicate, Overlap, or Conflict With, the 
Commission's Proposals

    55. None.

Initial Paperwork Reduction Act of 1995 Analysis

    The Commission seeks comment on proposed rule amendments that may 
result in modified information collection requirements. If the 
Commission adopts any modified information collection requirements, 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, 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. Public Law 107-198, 44 U.S.C. 3506(c)(4).

List of Subjects in 47 CFR Part 64

    Individuals with disabilities, Telecommunications, 
Telecommunications relay services. Federal Communications Commission.

Katura Jackson,
Federal Register Liaison Officer.

Proposed Regulations

    For the reasons discussed in the preamble, the Federal 
Communications Commission proposes to amend Title 47 of the Code of 
Federal Regulations as follows:

PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS

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

    Authority: 47 U.S.C. 151, 152, 154, 201, 202, 217, 218, 220, 
222, 225, 226, 227, 227b, 228, 251(a), 251(e), 254(k), 255, 262, 
276, 403(b)(2)(B), (c), 616, 617, 620, 1401-1473, unless otherwise 
noted; Pub. L. 115-141, Div. P, sec. 503, 132 Stat. 348, 1091.

0
2. The authority citation for subpart F continues to read as follows:

    Authority: 47 U.S.C. 151-154; 225, 255, 303(r), 616, and 620.

0
3. Amend Sec.  64.640 by revising paragraph (d) to read as follows:


Sec.  64.640  Compensation for IP Relay.

* * * * *
    (d) The inflation adjustment factor for a Fund Year 
(IFFY), to be determined annually on or before June 30, is 
equal to the difference between the Initial Value and the Final Value, 
as defined herein, divided by the Initial Value. The Initial Value and 
Final Value, respectively, are the values of the Employment Cost Index 
compiled by the Bureau of Labor Statistics, U.S. Department of Labor, 
for total compensation for private industry workers in professional, 
scientific, and technical services, for the following periods:
    (1) Final Value. The fourth quarter of the Calendar Year ending 6 
months before the beginning of the Fund Year; and
    (2) Initial Value. The fourth quarter of the preceding Calendar 
Year.
* * * * *
0
4. Add Sec.  64.641 to subpart F to read as follows:


Sec.  64.641  Compensation for Internet Protocol Captioned Telephone 
Service using only automatic speech recognition technology (ASR-Only IP 
CTS).

    (a) For the period from ___, through ___, TRS Fund compensation for 
the provision of ASR-Only internet Protocol Captioned Telephone Service 
shall be as described in this section.
    (b) For Fund Year ___, comprising the period from ___, ___, the

[[Page 7057]]

Compensation Level for ASR-Only internet Protocol Captioned Telephone 
Service shall be $X.XXXX per minute.
    (c) For each succeeding Fund Year through ___, the per-minute 
Compensation Level (LFY) shall be determined in accordance 
with the following equation:

LFY = LFY-1 * (1+IFFY-PFFY)

where IFFY is the Inflation Adjustment Factor for that 
Fund Year, determined in accordance with paragraph (d) of this 
section and PFFY is the Productivity Adjustment Factor 
for that Fund Year, determined in accordance with paragraph (e).

    (d) The inflation adjustment factor for a Fund Year 
(IFFY), to be determined annually on or before June 30, is 
equal to the difference between the Initial Value and the Final Value, 
as defined herein, divided by the Initial Value. The Initial Value and 
Final Value, respectively, are the values of the Employment Cost Index 
compiled by the Bureau of Labor Statistics, U.S. Department of Labor, 
for total compensation for private industry workers in professional, 
scientific, and technical services, for the following periods:
    (1) Final Value. The fourth quarter of the Calendar Year ending 6 
months before the beginning of the Fund Year; and
    (2) Initial Value. The fourth quarter of the preceding Calendar 
Year.
    (e) The productivity adjustment factor for a Fund Year 
(PFFY), to be determined annually on or before June 30, is 
[to be added].
    (f) In addition to LFY, an ASR-only internet Protocol 
Captioned Telephone Service provider shall be paid a per-minute 
exogenous cost adjustment if claims for exogenous cost recovery are 
submitted by the provider and approved by the Commission on or before 
June 30. Such exogenous cost adjustment shall equal the amount of such 
approved claims divided by the provider's projected minutes for the 
Fund Year.
    (g) An exogenous cost adjustment shall be paid if an internet 
Protocol Captioned Telephone Service provider incurs well-documented 
costs that:
    (1) belong to a category of costs that the Commission has deemed 
allowable;
    (2) result from new TRS requirements or other causes beyond the 
provider's control;
    (3) are new costs that were not factored into the applicable 
compensation formula; and
    (4) if unrecovered, would cause a provider's current allowable-
expenses-plus-operating margin to exceed its revenues.
0
5. Add Sec.  64.642 to subpart F to read as follows:


Sec.  64.642  Compensation for Internet Protocol Captioned Telephone 
Service provided with communications assistants (CA-Assisted IP CTS).

    (a) For the period from ___, through ___, TRS Fund compensation for 
the provision of CA-Assisted internet Protocol Captioned Telephone 
Service shall be as described in this section.
    (b) For Fund Year ___, comprising the period from ___, through ___, 
the Compensation Level for CA-Assisted internet Protocol Captioned 
Telephone Service shall be $X.XXXX per minute.
    (c) For each succeeding Fund Year through ___, the per-minute 
Compensation Level (LFY) shall be determined in accordance 
with the following equation:

LFY = LFY-1 * (1+IFFY-PFFY)

where IFFY is the Inflation Adjustment Factor for that 
Fund Year, determined in accordance with paragraph (d) of this 
section and PFFY is the Productivity Adjustment Factor 
for that Fund Year, determined in accordance with paragraph (e).

    (d) The inflation adjustment factor for a Fund Year 
(IFFY), to be determined annually on or before June 30, is 
equal to the difference between the Initial Value and the Final Value, 
as defined herein, divided by the Initial Value. The Initial Value and 
Final Value, respectively, are the values of the Employment Cost Index 
compiled by the Bureau of Labor Statistics, U.S. Department of Labor, 
for total compensation for private industry workers in professional, 
scientific, and technical services, for the following periods:
    (1) Final Value. The fourth quarter of the Calendar Year ending 6 
months before the beginning of the Fund Year; and
    (2) Initial Value. The fourth quarter of the preceding Calendar 
Year.
    (e) The productivity adjustment factor for a Fund Year 
(PFFY), to be determined annually on or before June 30, is 
[to be added].
    (f) In addition to LFY, a CA-assisted internet Protocol 
Captioned Telephone Service provider shall be paid a per-minute 
exogenous cost adjustment if claims for exogenous cost recovery are 
submitted by the provider and approved by the Commission on or before 
June 30. Such exogenous cost adjustment shall equal the amount of such 
approved claims divided by the provider's projected minutes for the 
Fund Year.
    (g) An exogenous cost adjustment shall be paid if a CA-assisted 
internet Protocol Captioned Telephone Service provider incurs well-
documented costs that:
    (1) belong to a category of costs that the Commission has deemed 
allowable;
    (2) result from new TRS requirements or other causes beyond the 
provider's control;
    (3) are new costs that were not factored into the applicable 
compensation formula; and
    (4) if unrecovered, would cause a provider's current allowable-
expenses-plus-operating margin to exceed its revenues.

[FR Doc. 2023-01679 Filed 2-1-23; 8:45 am]
BILLING CODE 6712-01-P