02-1982. Telecommunications Services for Individuals With Hearing and Speech Disabilities; Recommended Telecommunications Relay Services Cost Recovery Guidelines; Request by Hamilton Telephone Company for Clarification and Temporary Waivers

AGENCY:

Federal Communications Commission.

ACTION:

Final rule; guidelines and clarification.

SUMMARY:

In this Memorandum Opinion and Order (MO&O), the Federal Communications Commission (FCC or Commission), adopts cost-recovery guidelines for telecommunications relay services (TRS), speech-to-speech relay services (STS), and video relay services (VRS). These guidelines are based, in part, on the recommendation of the Interstate TRS Advisory Council and the TRS Fund Administrator (Advisory Council and Fund Administrator, respectively). The MO&O also addresses Hamilton Telephone Company's (Hamilton) petition for clarification. The Commission agrees that, under the current rules, there is no mandate for VRS providers to provide STS. The Commission also finds that VRS providers are not required to provide Spanish relay service at this time. VRS allows individuals with hearing and speech disabilities who use sign language to communicate with voice telephones.

DATES:

Effective February 28, 2002.

FOR FURTHER INFORMATION CONTACT:

Pam Slipakoff, 202/418-7705, Fax [phone], TTY 202/418-0484, [e-mail], Network Services Division, Common Carrier Bureau.

SUPPLEMENTARY INFORMATION:

This is a summary of the Memorandum Opinion and Order, CC Docket No. 98-67, FCC 01-371, adopted December 17, 2001 and released December 21, 2001. The full text of the MO&O is available for inspection and copying during the weekday hours of 9 a.m. to 4:30 p.m. in the FCC Reference Center, Room CY-A257, 445 12th Street, SW., Washington, DC 20554, or copies may be purchased from the Commission's copy contractor, Qualex International, 445 12th Street, SW., Suite CY-B402, Washington, DC 20554, phone [phone].

Synopsis of the Memorandum Opinion and Order CC Docket No. 98-67

1. Title IV of the Americans with Disabilities Act of 1990 (ADA) requires the Commission to ensure that TRS is available to the extent possible and in the most efficient manner to persons with hearing or speech disabilities in the United States. The Commission first ordered all carriers to provide TRS services nationwide on July 26, 1991. The rules for cost recovery were established in the TRS Third Report and Order, 58 FR 39671 (July 26, 1993). The Commission's rules require TRS providers to submit annually to the TRS Fund Administrator the data necessary to compute the TRS Fund requirements and payments. The administrator uses these data to develop formulas that are filed annually with the Commission. Payments to relay service providers are distributed based on the approved formulas. The compensation formulas are based on conversation minutes of use for completed interstate TRS calls. The TRS Third Report and Order required that the cost of interstate TRS be recovered from all subscribers of every interstate service, utilizing a shared funding cost recovery mechanism. The TRS Third Report and Order further mandated that every carrier providing interstate telecommunications services contribute to the TRS Fund on the basis of gross interstate and international telecommunications revenues. In its July 1998 Biennial Review streamlining carrier reporting requirements, the Commission changed the contribution base from gross interstate and international telecommunications revenues to end user interstate and international telecommunications revenues.

2. On March 6, 2000, the Commission released the Improved TRS Order, 65 FR 38490 (June 21, 2000), which amended the rules governing the delivery of TRS by expanding the kinds of relay services available to consumers and by improving the quality of relay services. The Improved TRS Order changed many of the definitions and standards for traditional TRS and added STS and Spanish relay services as requirements. It also permitted the recovery of VRS costs through the interstate TRS funding mechanism. Finally, the Improved TRS Order directed the Advisory Council and the Fund Administrator to develop recommendations for how the compensation formula for each service should be structured.

3. On November 9, 2000, the Advisory Council and the Fund Administrator submitted recommended guidelines outlining proposed cost recovery procedures for traditional TRS, STS, and VRS. The recommendations were originally placed on Public Notice on December 6, 2000, with comments due on January 5, 2001 and reply comments due on January 19, 2001. On July 9, 2001, a public notice was placed in the Federal Register, seeking additional comment on the recommendations. 66 FR 35765 (July 9, 2001).

4. On April 6, 2001, Hamilton filed a request for clarification and temporary waiver of certain aspects of the Improved TRS Order relating to the provision of VRS. Hamilton requested clarification and temporary, two-year waivers of portions of §§ 64.603 and 64.604 of the Commission's rules. On July 16, 2001 the Common Carrier Bureau (Bureau) issued a public notice seeking comment on Hamilton's waiver request.

Cost Recovery for Improved Traditional TRS

5. The Advisory Council and the Fund Administrator recommended that the Commission: (1) Continue to use the current national average costing and pricing methodology for the annual development of the interstate cost recovery reimbursement rate; (2) review the TRS Center Data Request to ensure that various sections and categories continue to be appropriate and up to date; (3) use the same allocation methodology in place today for allocating toll-free and 900 call minutes between interstate and intrastate demand; and (4) direct that Spanish relay costs be collected separately to test whether they are significantly different from English relay costs, and continue to reimburse providers on completed conversation minutes at a single national average reimbursement rate if there is no difference between the Spanish and English relay per-minute costs. The Commission adopts all except the fourth of these recommendations.

6. The Commission believes that the current average costing methodology represents an efficient and reasonable method of compensating eligible providers for the cost of furnishing interstate TRS. The Commission further believes that the average costing methodology will promote efficiency and that any cost increases incurred by providers will be minimal. Although the Commission believes that the current TRS Center Data Request captures all of the changes that were established by the Improved TRS Order, the Commission wants to ensure that all providers are fairly compensated. The Commission therefore directs the TRS administrator to review the TRS Center Data Request, and report to Bureau on an ongoing basis, any changes necessary to ensure that TRS providers are fairly compensated for additional costs imposed by the Improved TRS Order. The Commission also agrees with the Advisory Council and the Fund Administrator's recommendation that the same minutes of use allocation methodology in place for toll-free call minutes should be used for 900 call minutes. The Commission adopts the toll-free minutes methodology and find that it should be applied to 900 calls as well.

7. At this time, the Commission sees no need to adopt the Advisory Council and the Fund Administrator's recommendation that Spanish relay costs initially be collected separately and tested to determine whether they are significantly different from English relay costs. Because there is no evidence in the record that Spanish relay costs will differ significantly from English relay costs, the Commission conclude that providers should be reimbursed on completed conversation minutes for both English and Spanish relay costs at a single national average reimbursement rate. If, however, TRS providers believe that their costs for providing Spanish and English relay will differ significantly, they may track these data separately to verify that the costs are, in fact, different. If any TRS provider can demonstrate that the costs are different and, thus, that the services should be reimbursed at different rates, it may petition the Commission to establish different reimbursement rates for English and Spanish relay.

Cost Recovery for Speech-to-Speech Relay Service

8. The Improved TRS Order required STS to be in place by March 1, 2001. STS uses CAs who have been specially trained to understand different speech patterns, and to repeat the words spoken by the person with the speech disability. The Advisory Council and the Fund Administrator made the following recommendations for STS cost recovery: (1) The same cost recovery methodology used for computing the reimbursement rate in place today for traditional TRS interstate cost recovery could be used to develop the STS reimbursement rate; (2) due to its unique characteristics, a separate reimbursement rate based on STS costs and minutes should be calculated; (3) the TRS Center Data Request should be expanded to include specific STS sections to capture the costs and minutes separately from traditional TRS or VRS; and (4) providers should be reimbursed for completed conversation minutes at the national average reimbursement rate for STS. The Commission adopts each of these recommendations.

9. The Commission favors the national average per minute methodology used for traditional TRS and believe it should be applied to STS as well. The Commission also adopts a separate per-minute national average compensation formula for STS and orders the TRS administrator to develop annually a national average STS reimbursement rate for compensating STS providers. As with traditional TRS, each provider of STS services will be compensated at the national average rate for every completed conversation minute. Given that STS service is of a more recent origin, the Commission does not yet have sufficient data to conduct an up-front evaluation of its costs. Consequently, the Commission adopts the Advisory Council and the Fund Administrator's recommendation that the TRS Center Data Request be expanded to capture separately STS costs and minutes. The Commission therefore orders the TRS administrator to expand the TRS Center Data Request to include specific sections to capture STS costs and completed conversation minutes for STS.

Cost Recovery for Video Relay Services

10. The Improved TRS Order did not require VRS, but did allow the costs of intrastate and interstate costs for VRS to be reimbursed from the interstate TRS Fund while the Commission continues to evaluate the service. The Advisory Council and the Fund Administrator made the following four recommendations with respect to VRS cost recovery: (1) The same methodology for rate development in place today for traditional TRS interstate cost recovery could be used to develop the VRS reimbursement rate; (2) providers should be reimbursed based on completed conversation minutes at a national average reimbursement rate; (3) the TRS Center Data Request should be expanded to include specific VRS sections to capture VRS costs and demand separately; and (4) due to its unique characteristics, a separate reimbursement rate based on VRS costs and demand should be calculated.

11. The Commission agrees with the Advisory Council and the Fund Administrator's recommendation that due to the unique characteristics of VRS, a separate reimbursement rate for VRS should be calculated. The Commission agrees with the Advisory Council and the Fund Administrator's recommendation that the TRS Center Data Request should be expanded to include specific sections to capture separately VRS costs and minutes for this service. The data provided to NECA by VRS providers demonstrate that VRS costs and payment requirements are materially different from those for traditional TRS. In light of the differences in technology and the reportedly higher cost associated with providing VRS, the Commission will require NECA to expand the TRS Data Request to include data that are specific to VRS. Thus, the Commission adopts these two aspects of the Advisory Council and the Fund Administrator's Recommendation regarding cost recovery for VRS.

12. The Commission declines at this time, however, to adopt permanently the Advisory Council and the Fund Administrator's recommendations to use the same methodology for rate development in place today for traditional TRS interstate cost recovery, and to develop a VRS reimbursement rate based on completed conversation minutes of use at a national average reimbursement rate. Although the national average compensation methodology has all the benefits that we described above, the Commission is not convinced that this methodology will provide adequate incentives to carriers to provide video relay services. The Commission finds that additional comments on this recommendation are necessary and seek comment in the Further NPRM related to this MO&O (Published elsewhere in this issue of the Federal Register.).

13. In the interim, the Commission directs the TRS administrator to establish an interim VRS cost recovery rate using the average per minute compensation methodology used for traditional TRS. The interim rate shall be in effect until such time that the Commission is able to collect and assess additional data regarding what the permanent VRS compensation methodology should be.

Petition for Clarification

14. In this MO&O the Commission clarifies that § 64.603 of the Commission's rules mandates the provision of STS generally, this mandate does not extend to relay service providers in their provision of VRS because VRS is in its infancy. Because the provision of VRS is not mandatory at this time, the Commission does not wish to make it more burdensome for the providers that wish to provide VRS on a voluntary basis. If, however, VRS providers choose to offer speech-to-speech service they will be eligible for reimbursement from the TRS fund. As VRS is deployed and demand for the service increases, the Commission may reexamine this issue.

15. The Commission also clarifies that, under the current rules, VRS providers are not required to provide Spanish relay service at this time. The Commission find that because VRS is still in its infancy and is not yet required, it is not feasible to require that it be provided in languages other than American Sign Language (ASL). If, however, VRS providers choose to offer Spanish relay service they will be eligible for reimbursement from the TRS fund. As Spanish relay services are deployed and demand for the service increases, the Commission may reexamine this issue.

Final Paperwork Reduction Act Analysis

16. This MO&O contains some new information collections for the cost recovery mechanism, which will be submitted to OMB for approval, as prescribed by the Paperwork Reduction Act.

Final Regulatory Flexibility Analysis

17. As required by the Regulatory Flexibility Act of 1980, as amended, (RFA), 5 U.S.C. 603, an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Federal Register summary for the Interstate Fund Advisory Council and the TRS Fund Administrator's Recommended TRS Cost Recovery Guidelines. The Commission sought written public comment on the proposals in the cost recovery guidelines, including comment on the IRFA. The comments received addressed only the general recommendations, not the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA. 5 U.S.C. 604.

Need for, and Objective of this Memorandum Opinion and Order

18. This proceeding was initiated to formulate an appropriate method of cost recovery for TRS, VRS and STS relay service providers. These cost recovery methods take into account changes in the TRS market and technology as well as the development of the new VRS and STS services. The new cost recovery guidelines will allow all relay providers to efficiently and effectively recover their reimbursable costs. Such reimbursement will also encourage the development of new technologies to aid individuals with speech and hearing disabilities.

Summary of Significant Issues Raised by Public Comments in Response to the IRFA

19. No comments were filed in response to the IRFA in this proceeding. The Commission has nonetheless considered any potential significant economic impact of the rules on small entities. The comments filed in this proceeding address the recommendations of the Interstate Fund Advisory council and the TRS Fund Administrator and do not specifically address small entities.

Description and Estimate of the Number of Small Entities to Which the Actions Taken Will Apply

20. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. 5 U.S.C. 604(a)(3). The RFA defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” 5 U.S.C. 601(6). In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. 5 U.S.C. 601(3). A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). 15 U.S.C. 632. We note that any small entities affected by action taken herein should not be adversely affected. Furthermore, like all other entities affected, this action aids small businesses by allowing them to recover costs for providing relay services. Below, we further describe and estimate the number of small entity licensees and regulatees that may be affected by these rules. The most reliable source of information regarding the total numbers of certain common carrier and related providers nationwide, as well as the numbers of commercial wireless entities, appears to be data the Commission publishes annually in its Telecommunications Industry Revenue report, regarding TRS.

21. TRS Providers. Neither the Commission nor the SBA has developed a definition of “small entity” specifically applicable to providers of telecommunications relay services (TRS). The closest applicable definition under the SBA rules is for telephone communications companies other than radiotelephone (wireless) companies. The SBA defines such establishments to be small businesses when they have no more than 1,500 employees. According to the FCC's most recent data, there are approximately 12 interstate TRS providers, which consist of interexchange carriers, local exchange carriers, state-managed entities, and non-profit organizations. Approximately five or fewer of these entities are small businesses. The FCC notes that these providers include several large interexchange carriers and incumbent local exchange carriers. Some of these large carriers may only provide TRS service in a small area but they nevertheless are not small business entities. Consequently, the FCC estimates that there are fewer than 5 small TRS providers that may be affected by the proposed rules, if adopted.

22. Wireline Carriers and Service Providers. The SBA has developed a definition of small entities for telephone communications companies except radiotelephone (wireless) companies. The Census Bureau reports that there were 2,321 such telephone companies in operation for at least one year at the end of 1992. According to the SBA's definition, a small business telephone company other than a radiotelephone company is one employing no more than 1,500 persons. All but 26 of the 2,321 non-radiotelephone companies listed by the Census Bureau were reported to have fewer than 1,000 employees. Thus, even if 26 of these companies had more than 1,500 employees, there would still be 2,295 non-radiotelephone companies that might qualify as small entities or small incumbent local exchange carriers (LECs). The FCC does not have data specifying the number of these carriers that are not independently owned and operated, and thus are unable at this time to estimate with greater precision the number of wireline carriers and service providers that would qualify as small business concerns under the SBA's definition. Consequently, the FCC estimates that fewer than 2,295 small telephone communications companies other than radiotelephone companies are small entities or small incumbent LECs.

23. We have included small incumbent LECs in this present RFA analysis. As noted above, a “small business” under the RFA is one that, inter alia, meets the pertinent small business size standard (i.e., a telephone communications business having 1,500 or fewer employees), and “is not dominant in its field of operation.” 15 U.S.C. 632. The SBA's Office of Advocacy contends that, for RFA purposes, small incumbent LECs are not dominant in their field of operation because any such dominance is not “national” in scope. We have therefore included small incumbent LECs in this RFA analysis, although we emphasize that this RFA action has no effect on FCC analyses and determinations in other, non-RFA contexts.

Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements

24. The cost recovery requirements adopted herein should not require additional recordkeeping requirements for relay service providers. Providers have already been using similar methods to recover costs for traditional TRS and these methods are also similar to the new STS and VRS cost recovery guidelines. Furthermore, we are not mandating specific recordkeeping and compliance requirements. Rather, we are informing carriers that if they are seeking reimbursement there are guidelines to follow. How they record their data, however, is the carriers' choice. If any additional costs are imposed, they should be minimal because the tracking procedures are similar to those already in place for traditional TRS. Furthermore, these costs will impose no greater burden on small entities because all carriers must provide the same data for cost recovery. In addition, these measures will promote more efficient service and allow the TRS providers to be reimbursed more accurately for their costs, thus negating any minimal costs imposed by these requirements. Furthermore, the money received by small entities will enable them to more effectively compete in other areas such as the development of new technologies.

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

25. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its approach, which may include the following four alternatives: (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities. 5 U.S.C. 603(c).

26. The Commission concludes that the cost recovery guidelines adopted herein will have no adverse economic impact on small entities because these rules are designed to allow all providers, including all small entities to be accurately reimbursed. Furthermore, the Advisory Council, which proposed guidelines for the rules herein, consists of members of state regulatory bodies, relay users, members of the disabilities community, large and small TRS providers, and large and small TRS contributors. As a result, the cost recovery measures adopted herein are the result of input from the industry, including small business entities.

27. The Commission considered certain alternatives and found the measures adopted herein to be the most appropriate. For example, for Spanish language relay, we considered the alternative of requiring these costs to be collected separately and tested to determine whether they are significantly different from English relay costs. After careful analysis, however, we concluded that Spanish and English relay costs were sufficiently similar to calculate reimbursement based on completed conversation minutes for both Spanish and English relay.

28. In addition, because of the unique characteristic of the developing VRS market, we declined to adopt permanently the alternatives suggested by the Advisory Council and the Fund Administrator, i.e. the recommendation to use the same methodology for rate development in place today for traditional TRS interstate cost recovery for the development of a VRS reimbursement rate. We also declined to develop, as an alternative, a VRS reimbursement rate based on completed conversation minutes of use at a national average reimbursement rate. Although the national average compensation methodology has all the benefits that we described above, we are not convinced that this methodology will provide adequate incentives to carriers to provide video relay services. Instead, we found that additional comments on these recommendations are necessary and seek comment in the Further NRPM related to this MO&O (Published elsewhere in this issue of the Federal Register.).

29. Accordingly, this MO&O directs the TRS administrator to adopt an interim VRS cost recovery rate using the average per minute compensation methodology used for traditional TRS. Such an interim methodology will allow the Commission time to further consider VRS cost recovery and evaluate the comments on these recommendations that will be received in response to the Further NPRM related to this MO&O.

30. Thus, while significant alternatives have been considered, we believe that the actions taken herein are in the best interests of all entities, including small businesses.

Report to Congress

31. The Commission will send a copy of the Memorandum Opinion and Order, including this FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act. 5 U.S.C. 801(a)(1)(A). In addition, the Commission will send a copy of the Memorandum Opinion and Order including FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the Memorandum Opinion and Order and FRFA (or summaries thereof) will also be published in the Federal Register. 5 U.S.C. 604(b).

Ordering Clauses

32. Pursuant to the authority contained in § 64.604 of the Commission's Rules, 47 CFR 64.604, and in sections 1, 2, 4, 225, 255 and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154, 225, 255, 303(r) the recommendations of the Advisory Council and the Fund Administrator relating to traditional TRS and STS are adopted to the extent described herein.

33. Pursuant to the authority contained in § 64.604 of the Commission's Rules, 47 CFR 64.604, and in sections 1, 2, 4, 225, 255 and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154, 225, 255, 303(r) the recommendations of the Advisory Council and the Fund Administrator relating to the need for a separate reimbursement rate for VRS and expansion of the TRS Data Center Request to include specific sections for VRS reporting are adopted as described herein.

34. Pursuant to the authority contained in § 64.604 of the Commission's Rules, 47 CFR 64.604, and in sections 1, 2, 4, 225, 255 and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154, 225, 255, 303(r) the TRS administrator shall use the TRS reimbursement rate methodology, on an interim basis, to develop the VRS reimbursement rate, pending further action by the Commission.

35. Pursuant to the authority contained in § 64.603 of the Commission's Rules, 47 CFR 64.603, and in sections 1, 2, 4, 225, 255 and 303(r), of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154, 225, 255, 303(r) § 64.603 of the Commission's rules does not require VRS providers to offer Speech-to-Speech services or Spanish relay services at this time.

36. The collections of information contained herein are contingent upon approval by the Office of Management and Budget and will go into effect upon announcement in the Federal Register.

37. The Commission's Consumer Information Bureau, Reference Information Center, shall send a copy of this Memorandum Opinion and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of Small Business Administration.

Federal Communications Commission.

William F. Caton,

Deputy Secretary.