[Federal Register Volume 88, Number 35 (Wednesday, February 22, 2023)]
[Rules and Regulations]
[Pages 10853-10855]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-03553]


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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 127353]


Order Denying Petition for Reconsideration of 2020 IP CTS 
Compensation Order

AGENCY: Federal Communications Commission.

ACTION: Denial of petitions for reconsideration.

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SUMMARY: In this document, the Federal Communications Commission (FCC 
or Commission) denies petitions for reconsideration of several aspects 
of the Commission's final rule setting compensation from the 
Telecommunications Relay Services (TRS) Fund for the provision of 
Internet Protocol Captioned Telephone Service (IP CTS). The document 
also denies a related request filed jointly by six IP CTS providers. In 
denying these petitions and requests, the Commission finds that they do 
not raise any new arguments or provide sufficient evidence that the 
Commission's initial treatment of the issues in question was incorrect 
or incomplete. Additionally, the Commission finds that it fully 
considered the issues, based its decision on the evidence in the 
record, and fully explained the rationale behind its decision.

DATES: This ruling is effective March 24, 2023.

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 Order 
on Reconsideration, 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. 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.

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

[[Page 10854]]

costs reported by the providers. The Commission also 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 (CA).
    4. In the 2020 IP CTS Compensation Order, published at 85 FR 64971, 
October 14, 2020, the Commission adopted the average-cost methodology. 
To close the gap between compensation and average provider cost, while 
avoiding disruption to the provision of IP CTS from immediate 
application of the average cost methodology, the Commission implemented 
the resulting reductions in stages, by approximately 10% annually, 
until the compensation level reached the level of providers' average 
allowable costs (plus a 10% operating margin). 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.
    5. T-Mobile USA, Inc. (T-Mobile) and IDT Telecom, Inc. (IDT) filed 
petitions for reconsideration of the 2020 IP CTS Compensation Order. T-
Mobile requests reconsideration of the Commission's determination of 
provider compensation, arguing that the Commission did not have a 
reasoned basis for adopting a single compensation formula rather than a 
tiered structure and did not adequately consider certain costs. IDT, 
while not contesting the level of provider compensation, contends that 
the Commission should have reduced the applicable TRS Fund contribution 
factor to parallel the reduction in IP CTS compensation.
    6. On May 25, 2021, six of the seven then-certified providers of IP 
CTS (the Joint Providers) filed a letter requesting that the Commission 
halt the reduction in IP CTS compensation from $1.42 per minute to 
$1.30 per minute scheduled for July 1, 2021. On July 1, 2021, the 
compensation adjustment to $1.30 per minute became effective.

Final Ruling

    7. T-Mobile Petition and Joint Providers Request to Freeze 
Compensation. The Commission denies T-Mobile's petition for 
reconsideration of the Commission's decision in the 2020 IP CTS 
Compensation Order to adopt an average-cost methodology for IP CTS and 
to set per-minute compensation levels of $1.42 and $1.30 for TRS Fund 
Years 2020-21 and 2021-22, respectively. For similar reasons, the 
Commission also denies the related request of six IP CTS providers 
(Joint Providers), in a May 2021 ex parte letter, to reverse the $1.30 
formula previously set for 2021-22, and instead to freeze in place the 
$1.42 formula adopted for the 2020-21 Fund Year, thereby continuing 
that higher compensation level for a second year.
    8. The T-Mobile petition does not identify any reason warranting 
reconsideration. The Commission provided a reasoned explanation for 
both its decision to set a single compensation level based on average 
cost and its rejection of the tiered structure alternative advocated by 
some IP CTS providers. While T-Mobile claims that the Commission 
continued using its average cost methodology due to inertia and 
administrative convenience, the Commission cited numerous reasons for 
retaining the methodology, including that it relies on reasonably 
reliable and consistent cost data, which is subject to audit; provides 
substantial incentives and opportunities for individual TRS providers 
to increase their efficiency and capture the resulting profits; and 
provides a measure of transitional stability at a time of technological 
change. Although T-Mobile disputes whether providers could actually 
increase their efficiency, the Commission reasonably concluded that the 
record indicated such improvements were likely, especially with the 
introduction of fully automatic IP CTS.
    9. T-Mobile argues that average cost compensation would force 
providers to degrade service ``by moving to automatic speech 
recognition (ASR) technology before this newer technology achieves the 
same quality levels as current IP CTS offerings. However, the 
Commission found that, based on then-current testing, ASR-only IP CTS 
already could deliver captions far more quickly than IP CTS provided 
with communications assistants, and with comparable or greater 
accuracy. More recent testing buttresses that assessment.
    10. T-Mobile also argues that the Commission inappropriately 
rejected a ``superior alternative,'' i.e., adoption of a tiered 
compensation structure. T-Mobile points to nothing in the record to 
support its claim that a tiered structure would be ``superior,'' other 
than the fact that several providers believed so. In any event, the 
Commission fully addressed this question in the 2020 IP CTS 
Compensation Order, providing a detailed explanation for its finding 
that tiered compensation levels are not appropriate for IP CTS. T-
Mobile offered no arguments not previously considered as to why the 
Commission should have reached a different result.
    11. Third, T-Mobile argues that the Commission failed to account 
for the expenses and uncertainty associated with the COVID-19 pandemic. 
To the contrary, the Commission made significant efforts to ensure that 
the impact of the pandemic was appropriately considered in the IP CTS 
compensation decision, including extending the expiration date of the 
compensation period and directing the TRS Fund administrator to request 
and collect additional cost and demand data for January to June 2020 
from CA-assisted IP CTS providers to file an updated 2020 TRS Rate 
Report. Based on the additional data reported by the providers, the TRS 
Fund administrator found that increased expenditures during the 
pandemic had been offset by increased call volumes, resulting in no net 
increase in per-minute costs, as a group or even individually. In fact, 
per-minute costs were lower due to increased demand during the 
pandemic. Recognizing that the lower per-minute costs might not 
persist, the Commission set compensation in a conservative fashion, 
based on the higher pre-pandemic cost estimates.
    12. T-Mobile argues that reliance on the TRS Fund administrator's 
report was misplaced because the report addressed only the initial 
months of the pandemic and did not reflect additional costs allegedly 
incurred later on. However, neither the rulemaking record nor T-
Mobile's petition include any actual estimates of these allegedly 
unconsidered costs. Indeed, subsequent provider reports indicate 
substantial declines in per-minute costs for the period in question.
    13. Finally, contrary to T-Mobile's contention, the Commission 
provided a reasonable explanation of its decision to continue setting a 
uniform compensation level for IP CTS, applicable to both the CA-
assisted and ASR-only modes. As the Commission explained, absent 
sufficient information to assess the costs of the new ASR-only mode, it 
would have been arbitrary to attempt to devise a separate compensation 
formula for ASR-only IP CTS, and also would have run the risk of 
creating an inappropriate disincentive for adoption of this promising 
technology. In addition, the Commission reasonably relied on evidence 
that, to the extent that a single compensation formula encouraged IP 
CTS providers to increase their use of ASR-only captioning, the result 
would be an improvement in service quality.
    14. The Commission also denies the request of the Joint Providers 
to maintain the IP CTS compensation level at $1.42 per minute for the 
2021-22 TRS

[[Page 10855]]

Fund year. The Joint Providers' request is essentially a late-filed 
petition for reconsideration of the 2020 IP CTS Compensation Order, 
which established a lower compensation level, $1.30 per minute, for 
that period. In any event, the Commission finds no merit in the Joint 
Providers' arguments. Like T-Mobile, the Joint Providers argue that a 
compensation freeze is needed to protect service quality and that the 
COVID-19 pandemic introduced cost uncertainties for IP CTS providers. 
However, as addressed above, the record established that the $1.30 per 
minute rate afforded an opportunity for providers to recover their 
reasonable per-minute costs of providing IP CTS, plus a reasonable 
operating margin. In addition, the uncertainties introduced by the 
pandemic and its effect on provider costs were already considered, 
addressed, and factored into the compensation plan adopted in the 2020 
IP CTS Compensation Order. Accordingly, the Commission denies the 
petition of T-Mobile for reconsideration and the request of the Joint 
Providers for a freeze of the $1.42 per minute compensation level.
    15. IDT Petition. The Commission also denies IDT's petition for 
reconsideration of the Commission's 2020 IP CTS Compensation Order. IDT 
argues that, when the Commission adopted a mid-year reduction in the IP 
CTS compensation formula for the 2020-21 TRS Fund Year (reducing the 
compensation level from $1.58 to $1.42 per minute), the Commission also 
should have made a mid-year reduction in the applicable TRS Fund 
contribution factor. However, the Commission's rules already address 
such circumstances by detailing a process to address the collection of 
excess funding for a TRS Fund Year, by applying the excess against the 
funding requirement for the following year. In accordance with this 
rule, in June 2021 the Commission took account of the surplus in the 
TRS Fund when determining the contribution requirement and contribution 
factor for the 2021-22 TRS Fund Year. The lower contribution 
requirement for 2021-22 thus offset, for all TRS Fund contributors, the 
excess funding provided in the previous year. Because the contributors 
already received the benefit of the excess being applied to the funding 
requirement for the following year, no further action is warranted. 
Accordingly, the Commission denies IDT's petition as moot.

Ordering Clauses

    T-Mobile's Petition for Reconsideration of the compensation 
formulas adopted in the 2020 IP CTS Compensation Order is denied.
    The Joint Providers' request to freeze compensation at the $1.42 
compensation level is denied.
    IDT's Petition for Reconsideration of the contribution requirements 
adopted in the 2020 IP CTS Compensation Order is denied as moot.

Congressional Review Act

    The Commission will not send a copy of the Order on Reconsideration 
to Congress and the Government Accountability Office pursuant to the 
Congressional Review Act (CRA), see 5 U.S.C. 801(a)(1)(A), because it 
does not adopt any rule as defined in the Congressional Review Act, 5 
U.S.C. 804(3).

Federal Communications Commission.
Katura Jackson,
Federal Register Liaison Officer.
[FR Doc. 2023-03553 Filed 2-21-23; 8:45 am]
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