2010-17575. Structure and Practices of the Video Relay Service Program

AGENCY:

Federal Communications Commission.

ACTION:

Notice.

SUMMARY:

In this document, the Commission takes a fresh look at its video relay service (VRS) rules so that the Commission can ensure that this vital program is effective, efficient, and sustainable in the future. VRS allows persons with hearing or speech disabilities to use American Sign Language (ASL) to communicate with friends and family and to conduct business in near real time. In this proceeding, the Commission seeks to improve the program to ensure that it is available to and used by the full spectrum of eligible users, encourages innovation, and is provided efficiently so as to be less susceptible to the waste, fraud, and abuse that plague the current program and threaten its long-term viability. The Commission's goal is to solicit a wide range of thoughts and proposals for making the program work better for those who could benefit from it and those who pay into it.

DATES:

Comments are due on or before August 18, 2010. Reply comments are due on or before August 3, 2010.

ADDRESSES:

Federal Communications Commission, 445 12th Street, SW., Washington, DC 20554

You may submit comments, identified by [CG Docket number 10-51 and/or FCC Number 10-111, by any of the following methods:

• Electronic Filers: Comments may be filed electronically using the Internet by accessing the Commission's Electronic Comment Filing System (ECFS) http://fjallfoss.fcc.gov/​ecfs2/​ or the Federal eRulemaking Portal: http://www.regulations.gov. Filers should follow the instructions provided on the website for submitting comments. For ECFS filers, in completing the transmittal screen, filers should include their full name, U.S. Postal Service mailing address, and the applicable docket or rulemaking number, which in this instance is CG Docket No. 10-51.
• Parties may also submit an electronic comment by Internet e-mail. To get filing instructions, filers should send an e-mail to [e-mail], and include the following words in the body of the message, “get form <your e-mail address>.” A sample form and directions will be sent in response. In addition, parties submitting an electronic copy must send a copy of such filing to (1) Mark Stone, Consumer and Governmental Affairs Bureau, [e-mail]; (2) Nicholas Alexander, Wireline Competition Bureau, [e-mail]; (3) Diane Mason, Consumer and Governmental Affairs Bureau, [e-mail]; and (4) Nicholas A. Degani, Wireline Competition Bureau, [e-mail].
• Paper Filers: Parties who choose to file by paper must file an original and four copies of each filing. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. In addition, parties must send one copy of each pleading to: the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Washington, DC 20554.
• All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission. All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St., SW, Room TW-A325, Washington, DC 20554. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building. The filing hours are 8 a.m. to 7 p.m.
• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street, SW., Washington DC 20554.

FOR FURTHER INFORMATION CONTACT:

Diane Mason, Consumer and Governmental Affairs Bureau, Disability Rights Office, at [phone] (voice), [phone] (TTY), or e-mail at [e-mail].

SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's Structure and Practices of the Video Relay Service Program, Notice of Inquiry, document FCC 10-111, adopted on June 8, 2010, and released on June 28, 2010, in CG Docket No. 10-51. The full text of document FCC 10-111 and copies of any subsequently filed documents in this matter will be available for public inspection and copying via ECFS and during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW, Room CY-A257, Washington, DC 20554. They may also be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone: [phone], fax: [phone], or e-mail http://www.bcpiweb.com. Pursuant to 47 CFR 1.415 and 1.419, interested parties may file comments and reply comments regarding document FCC 10-111 on or before the dates indicated on the first page of this document. All filings related to this Notice should refer to CG Docket No. 10-51. The Commission strongly encourages parties to develop responses to this Notice that adhere to the organization and structure of this Notice. Furthermore, the Commission is specifically interested in concrete data or analyses that respond to the questions in this Notice.

Pursuant to 47 CFR 1.1200 et seq., this matter shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules. Persons making oral ex parte presentations are reminded that memoranda summarizing the presentations must contain summaries of the substance of the presentation and not merely a listing of the subjects discussed. More than a one or two sentence description of the views and arguments presented generally is required. Other rules pertaining to oral and written ex parte presentations in permit-but-disclose proceedings are set forth in 47 CFR 1.1206(b).

People with Disabilities: To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an e-mail to [e-mail] or call the Consumer and Governmental Affairs Bureau at [phone] (voice) or [phone] (tty).

Paperwork Reduction Act. Document FCC 10-111 does not contain proposed information collections subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

Synopsis

1. The Commission presents document FCC 10-111 in two parts. In part I, the Commission asks broad questions on exactly how VRS providers should be compensated if the Commission retains the current, multiple provider model for delivering VRS. In part II, the Commission asks whether it should consider fundamental changes to the delivery of VRS and market structure for the service. In both parts, the Commission's objective is to find ways to ensure that this vital program is effective, efficient, and sustainable. The Commission specifically seeks comment on the most effective and efficient way to make VRS available and to determine what is the most fair, efficient, and transparent cost recovery methodology. The Commission expects to complete this proceeding before Interstate TRS Fund (Fund) year 2011-12, which begins on July 1, 2011.

Part I—Adjustments and Modifications to Improve the Current Video Relay Service Compensation Methodology

2. Accounting Issues. In this section, the Commission asks a series of questions about appropriate accounting methods for VRS providers. The Commission suggests that VRS providers should all be incurring the same types of compensable costs, and seeks comment on the extent to which this is the case. The Commission also seeks comment on whether part 32 continues to provide the best system of accounting for VRS providers, along with what specific sub-accounts are appropriate to require for all VRS providers. Next, the Commission seeks comment on whether it should set reasonableness limits on the compensability of costs in total or for specific cost categories, and on whether the Commission should set limits for other types of costs, such as cash working capital, building costs and dividend payments.

3. Company-Specific Compensation. The Commission seeks comment on whether to establish company-specific compensation for each provider, in order to establish a fairer methodology for all providers and to achieve greater accuracy in matching compensation to costs than an averaged or three-tiered system. Among other things, this section asks commenters to address the extent to which the tiered system should continue as is, whether a company-specific compensation methodology that continues to disburse funds based on minutes of use would require company-specific demand projections, or whether this type of compensation methodology could be based on historical demand, adjusted by an industry-wide projected growth factor to establish the size of the fund. The Commission also seeks comment on the proper use of historical cost information, including whether historical costs should be used to establish compensation rates to achieve the efficient delivery of VRS; the factors that should be applied to historical costs to develop reasonable projected costs; and how demand growth factors can be considered relevant to provider compensation.

4. Outreach and Marketing Costs. The Commission seeks comment on whether, and the extent to which, the Fund should compensate providers for outreach and marketing activities, including whether such funding should be capped for each provider.

5. Research and Development Costs. Newly emerging communication technologies could offer significant potential for achieving greater functional equivalency for VRS users, and we recognize that Congress has directed the Commission to ensure that its TRS regulations do not discourage or impair the development of improved technology. The Commission therefore seeks comment on whether and, if so, the extent to which, the Commission should revise its rules to explicitly permit compensation for research and development, as well as what controls the Commission should put in place to ensure that such compensation is provided equitably across all VRS providers.

6. Videophone Equipment. In this section, the Commission asks about the cost, quality and availability of different videophones and how these compare with voice telephones. It also seeks comment on actions the Commission should take to ensure that affordable videophone equipment is available to VRS users, and the extent to which efforts should be made to switch VRS users over to mainstream video technology so they can acquire phones from retail establishments rather than be dependent on individual providers for their phones.

7. Protection of Providers from Under-Compensation and Avoidance of Over-Compensation. The Commission seeks comment on ways to prevent providers from being under- or over-compensated. For example, the Commission asks about using a “true up” and whether it should continue the current process for allowing providers a rate-of-return on capital investment. Commenters should address the administrative burdens, as well as the potential benefits of their proposals.

8. Certification. The Commission's rules currently allow potential VRS providers to receive compensation from the Interstate TRS Fund if they: (a) become part of a certified state program, (b) subcontract for another entity eligible to provide TRS, or (c) receive certification directly from the Commission. The Commission is concerned that the current certification process does not offer adequate oversight and assurance that certified VRS providers are offering satisfactory service and are only seeking reimbursement for authorized service. The Commission asks how the Commission's rules should be changed to sufficiently deter potential fraud and abuse.

Part II—Broader and Economic Issues Concerning Video Relay Service

9. In this part, the Commission asks whether it should consider fundamental changes to the delivery of VRS, including questions on the structure of the VRS market. The Commission focuses on three key issues. Among other things, the Commission seeks to ensure that the VRS program fully serves the needs of its intended users as well as it can, to improve the efficiencies of this program, and to reduce opportunities for fraud and abuse.

The Components of Video Relay Service

10. VRS communications require the interaction of three separate yet interlinked components: videophone equipment, video communication service, and ASL relay interpreter service. Although some VRS providers now supply all three components as a single package, we question whether this vertical integration is necessary, and therefore separate them for purposes of the analysis herein.

11. Videophone Equipment. The Commission seeks to understand the types of videophone equipment most used by deaf and hard-of-hearing individuals, what functionalities they need, and what role standards-setting should play with respect to protocols and functionalities. The Commission specifically seeks comment on whether it is feasible for the Commission to adopt technical standards that would ensure the continuation of videophone equipment functionality after a consumer switches default providers. The Commission also seeks to understand the extent to which VRS users are limited to using videophone equipment specifically designed for VRS use, as well as the extent to which changes in the VRS program should occur that would allow users to utilize off-the-shelf equipment for VRS calls.

12. Video Communication Service. The Commission asks about the functionalities that VRS users need from video communication service providers, and the extent to which the separation of broadband transmission service from VRS affects what constitutes functionally equivalent service. Several years ago, interconnected Voice over Internet Protocol (VoIP) was primarily provided as an over-the-top, nomadic service. Today, many facilities-based broadband providers offer interconnected VoIP with quality-of-service guarantees. The Commission asks whether video communication service will witness a comparable transition in the near future

13. Relay Interpreter Service. The Commission asks about the functionalities that VRS users need from ASL relay interpreter services, and the extent to which CAs have met the quality-of-service expectations of VRS users. Parties are also asked to provide feedback on ways that the needs of VRS users may evolve over the next three to five years.

14. General View of VRS Components. Looking at these components together, the Commission asks how and why VRS users currently choose or switch their providers, including how the incentives and costs associated with switching VRS providers differ from the incentives and costs of switching other video communications service providers. Is there any need for the three components described above to be vertically integrated?

The Demand for Video Relay Service

15. In this section, the Commission seeks data about (1) The number of current VRS users; (2) the extent to which there may be technological barriers to using VRS; (3) the trends in VRS minutes of use per user over time; and (4) to what extent potential VRS users are meeting their communications needs through other means. The Commission also seeks information about other reasons why potential users do not actually use VRS.

The Supply of Video Relay Service

16. In this section, the Commission seeks to understand the provision of VRS from a supplier's perspective and the obstacles that might limit competition among VRS providers or otherwise reduce efficiency in the provision of this service. Among other things, the Commission notes that under the present VRS model, multiple providers offer substantially similar services with no opportunity for price competition. In undertaking this review, the Commission considers each of the three components described earlier, i.e., relay interpreter service, video communications service, and videophone equipment.

The Regulation of Video Relay Service

In this section, the Commission seeks to understand how its regulations, including the current regime for compensating VRS providers, have affected the structure of the market and demands on the Fund.

17. Paying for VRS Today. The Interstate TRS Fund compensates VRS providers using an industry-wide per-minute rate each year. The Commission seeks comment on the existing TRS reimbursement structure and on other aspects of its regulation of VRS.

18. The Principle of Cost-Causation. The Commission seeks comment on whether the cost-recovery aspects of its current VRS regulations may distort the incentives of VRS providers and, in turn, may affect the expectations of users. When a cost causer does not internalize all the costs it causes, the incentives of both providers and users may be distorted. The Commission is concerned that its VRS compensation rules may have created such economic distortions.

The Incentives of Providers

19. The Commission wants to ensure not only that the VRS program is available and fully responsive to the needs of people with hearing and speech disabilities, but also that the use of VRS is driven by real demand, not artificial stimulation. The Commission seeks comment on what measures it should take to better realize the goal of reimbursing VRS providers for the costs of providing relay service, to ensure that VRS providers have incentives to provide and promote use of VRS, without creating incentives for VRS providers to encourage high-volume use that VRS users would otherwise not incur. The Commission is particularly interested in knowing: (1) How it can encourage competition that would reduce the costs of VRS; (2) how it can channel the efforts of VRS providers to foster innovation and improve services for VRS users; (3) what data or analyses are particularly important to understand in choosing how to restructure the VRS market to improve its efficiency and effectiveness; (4) if the Commission decides to modify either what constitutes VRS or the regulation of VRS, how it should structure the transition to avoid service disruptions; and (5) what institutional oversight is required at the federal and state level, and how extensive must that oversight be to combat waste, fraud, and abuse.

20. Choice of VRS Provider. The Commission seeks comment on whether, if it decided to use competitive bids to award VRS contracts to a single provider or a limited number of providers, there are ways to ensure that consumers would still be able to receive functionally equivalent service. In addition, it seeks comment on whether competitive bidding or a single contract model could work for certain components of VRS communications, such as the relay interpreter component. Furthermore, it solicits comment on how, if such a contract were to be awarded, the contract should pay the winning bidder (e.g., using a flat, fixed fee for service, a per-minute compensation rate, a per-user compensation rate, or some other method).

21. Other Models. The Commission seeks comment on the merits of applying rate-of-return regulation, modified price cap regulation, forward-looking cost model support, or reverse auctions to the provision of VRS. The Commission also seeks comment on whether structural and accounting safeguards might be effective at encouraging efficiency in the VRS market. Finally, the Commission seeks comment on issues related to jurisdictional separations, insofar as the Commission has thus far treated all VRS calls as interstate calls paid for by the Fund.

The Incentives and Needs of VRS Users

22. The Commission seeks comment in this section on how to better align the incentives of VRS users with cost-causation principles. The Commission first seeks input on how to ensure that it properly identifies functionally equivalent voice services and rates. The Commission then seeks comment on how to structure any federal subsidies to ensure that VRS providers meet the needs of VRS users without over-compensating VRS providers.

23. Videophone Equipment. In Part I, the Commission asks numerous questions concerning the current functionalities, costs, and distribution of videophone equipment. These same questions equally apply to the Commission's consideration of changes to the structure of the VRS program in the future, and are inherently intertwined with questions regarding what is the most effective, efficient, and sustainable structure.

24. Individual Subsidies and Vouchers. The Commission seeks comment on whether VRS users would be better served if the Commission did not subsidize particular components of VRS communications, but instead directly subsidized the VRS needs of those individuals. The Commission also seeks input on whether it should issue vouchers directly to deaf and hard-of-hearing individuals to spend on the end user equipment and other components of the TRS program, such as broadband Internet access service.

25. Consumer Incentives. The Commission seeks comment on whether, if this is not already the case, the incentives for VRS use need to be aligned with the cost of providing the service in a way that makes the use of this service comparable to the use of voice communications services. In this regard, the Commission seeks comment on whether the lack of usage restrictions on VRS creates any incentives for VRS use that do not exist for voice telephone use. The Commission also seeks comment on whether the cost of broadband service as a prerequisite for VRS use is a disincentive for potential VRS users to use VRS.

Other Regulations Affecting VRS Communications

The Commission seeks input on the effect of its VRS user registration requirements on competition among VRS providers in the various components. In addition, it asks whether it should impose additional reporting requirements on VRS providers, for example separately reporting each driver of the Fund (number of users, compensable minutes of use per user, and estimated cost per minute of use). Finally, the Commission seeks comment on what other VRS regulations it should adopt or modify now to prepare for the future.

Ordering Clause

Pursuant to sections 4(i)-(j), 201(b), 225, and 303(r), 47 U.S.C. 154(i)-(j), 201(b), 225, and 303(r), document FCC 10-111 is adopted.

Federal Communications Commission.

Marlene H. Dortch,

Secretary.