Proposed Rule2021-11681
Video Relay Service Compensation
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 4, 2021
Issuing agencies
Federal Communications Commission
Abstract
In this document, the Federal Communications Commission (FCC or Commission) seeks comment on the adoption of compensation rates for Telecommunications Relay Services (TRS) Fund support of providers of video relay service (VRS). Because the compensation rates now in effect will be expiring, the adoption of new compensation rates is necessary so that VRS providers can continue to provide service and be compensated.
Full Text
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[Federal Register Volume 86, Number 106 (Friday, June 4, 2021)]
[Proposed Rules]
[Pages 29969-29975]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-11681]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 64
[CG Docket Nos. 03-123 and 10-51; FCC 21-61; FR ID 29574]
Video Relay Service Compensation
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Federal Communications Commission (FCC
or Commission) seeks comment on the adoption of compensation rates for
Telecommunications Relay Services (TRS) Fund support of providers of
video relay service (VRS). Because the compensation rates now in effect
will be expiring, the adoption of new compensation rates is necessary
so that VRS providers can continue to provide service and be
compensated.
ADDRESSES: You may submit comments, identified by CG Docket Nos. 03-123
and 10-51, by either of the following methods:
<bullet> Federal Communications Commission's Website: <a href="https://www.fcc.gov/ecfs/filings">https://www.fcc.gov/ecfs/filings</a>. Follow the instructions for submitting
comments.
<bullet> Paper Filers: Parties who choose to file by paper must
file an original and
[[Page 29970]]
one copy 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. Currently, the Commission does not
accept any hand delivered or messenger delivered filings as a temporary
measure taken to help protect the health and safety of individuals, and
to mitigate the transmission of COVID-19. 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 21-61 at
<a href="https://docs.fcc.gov/public/attachments/FCC-21-61A1.pdf">https://docs.fcc.gov/public/attachments/FCC-21-61A1.pdf</a>.
FOR FURTHER INFORMATION CONTACT: Michael Scott, Consumer and
Governmental Affairs Bureau, at (202) 418-1264, or email
<a href="/cdn-cgi/l/email-protection#175a7e747f76727b3944747863635771747439707861"><span class="__cf_email__" data-cfemail="034e6a606b62666f2d50606c7777436560602d646c75">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking (NPRM), document FCC 21-61, adopted on May 20,
2021, released on May 21, 2021, in CG Docket Nos. 03-123 and 10-51. The
full text of document FCC 21-61 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 <a href="/cdn-cgi/l/email-protection#b7d1d4d4828783f7d1d4d499d0d8c1"><span class="__cf_email__" data-cfemail="74121717414440341217175a131b02">[email protected]</span></a> or call the Consumer and Governmental
Affairs Bureau at (202) 418-0530.
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 rule 1.1206(b). In proceedings governed by
rule 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.
Initial Paperwork Reduction Act of 1995 Analysis
Document FCC 21-61 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 document 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).
Synopsis
1. In document FCC 21-61, the Commission seeks comment on the
adoption of compensation rates for TRS Fund support of providers of
VRS.
2. Section 225 of the Communications Act of 1934, as amended (the
Act), 47 U.S.C. 225, requires the Commission to ensure the availability
of TRS to persons who are deaf, hard of hearing, deafblind, or have
speech disabilities, ``to the extent possible and in the most efficient
manner.'' TRS are defined in section 225 of the Act 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 person without hearing or speech disabilities] to communicate using
voice communication services.'' VRS is a form of TRS that allows people
with hearing or speech disabilities who use sign language to
communicate with voice telephone users through video equipment. VRS is
supported entirely by the Interstate TRS Fund (TRS Fund), and VRS
providers are paid compensation for the provision of VRS in accordance
with the Commission's rules and orders.
3. In 2007, the Commission introduced a tiered rate structure for
compensating VRS providers, to reflect the per-minute cost
differentials among VRS providers and to ensure both that, in
furtherance of promoting competition, the newer providers would cover
their costs, and the larger and more established providers were not
overcompensated due to economies of scale. Under a tiered rate
structure, a VRS provider's monthly compensation payment is calculated
based on the application of different rates to specified ``tiers'' of
minutes. The highest rate is applied to an initial tier of minutes up
to a defined maximum number, a lower rate is applied to the next tier,
again up to a second defined maximum number of minutes, and a still
lower rate is applied to any minutes in excess of the second maximum.
Since 2007, the Commission has periodically modified the tier structure
and rates to align them more closely with the actual costs incurred by
providers of varying size and levels of usage.
4. In 2013, the Commission made numerous regulatory changes
affecting the VRS program. The Commission directed the Managing
Director to contract with a neutral third party to build, operate, and
maintain a video communications service platform, which would enable
smaller VRS providers to compete more effectively, without having to
operate their own service platforms. The Commission also expected that
the development of a standard user-device interface would make it
easier for smaller providers to compete for customers without having to
replace the free devices routinely distributed by the largest VRS
provider. After completing such structural reforms, the Commission
anticipated being able to transition from the tiered rate structure to
a single compensation rate for each element of the relay service. The
Commission sought to align annual TRS Fund expenditures more closely
with allowable provider costs. The Commission adopted a four-year
interim compensation plan, whereby all the tiered rates would be
reduced in stages on a ``glide path'' toward closer
[[Page 29971]]
alignment with the weighted-average cost of providing VRS.
5. In 2017, the Commission reassessed its VRS compensation policy
in light of intervening developments. The neutral VRS platform had
proved to be impracticable. To the extent that the 2013 reforms had
been implemented, they had not changed market conditions sufficiently
to justify adoption of a single compensation rate. Accordingly, the
Commission chose to defer consideration of major changes in the
compensation system. Instead, to preserve choice among suppliers for
VRS users, the Commission decided to maintain tiered compensation rates
for the next four years. The Commission adopted a 3-tier rate structure
for the four-year period and added an emergent rate to the tiered rate
structure applicable to VRS providers with no more than 500,000 total
monthly minutes.
6. In setting VRS compensation for Fund Year 2021-22 and beyond,
the Commission proposes to continue using a tiered rate structure. The
Commission seeks comment on the costs and benefits of this proposal and
on the underlying rationale, discussed below.
7. First, developments over the last four years do not appear to
warrant reconsideration of the Commission's 2017 assessment that the
expectations and assumptions underlying the 2013 proposal to transition
away from tiered compensation rates have not been borne out by
experience. The reforms introduced in 2013 appear to have run their
course, and further competitive improvements resulting from their
implementation do not seem likely.
8. Second, certain fundamental facts also appear unlikely to
change. VRS addresses a limited segment of the communications
marketplace. As a result, there are built-in limitations on total
demand for VRS, which appears to have stabilized relative to the high
growth rates that occurred 10-15 years ago. Further, the Commission is
unaware of any innovations substantial enough to cause a major change
in the economics of providing VRS in the foreseeable future.
9. Third, in light of the above, there appears to be little reason
to expect major changes in most VRS providers' relative per-minute
costs. Today, there are only four certified VRS providers. No new
entrants have sought certification to provide VRS since 2011. The
current providers continue to operate at dramatically different scales,
and there continues to be vast differences in the per-minute costs of
VRS providers.
10. Notwithstanding the foregoing limitations, the Commission sees
no reason to change the VRS compensation policy objectives the
Commission has long pursued: (1) To continue bringing total TRS Fund
payments into closer alignment with allowable costs, and (2) to
preserve and promote quality-of-service competition among multiple
providers. By offering VRS users a choice among multiple providers, the
Commission has found, it can most effectively carry out the statutory
mandate to ensure that ``functionally equivalent'' VRS is available to
all eligible individuals, ``to the extent possible and in the most
efficient manner,'' in accordance with the Commission's minimum TRS
standards and subject to rules that ``do not discourage or impair the
development of improved technology.'' Enabling multiple VRS providers
to compete for customers based on service quality, the Commission has
found, will best ensure that: (1) Diverse service offerings are
available, analogous to those afforded voice service users; (2) niche
services are provided to meet the needs of certain segments of the sign
language-using population, such as individuals who speak Spanish or are
deafblind; and (3) VRS providers have incentives to maintain high
standards of service quality and improve their VRS offerings. It might
be less costly in the short run to set TRS Fund compensation in such a
way that only the lowest-cost VRS provider can continue offering
service. However, the Commission continues to believe that in the long
run, the removal of competitive choices risks degradation of service
quality and elimination of diverse offerings, both of which are needed
for functionally equivalent service to all eligible users. And, because
``efficient service is not just about cost but also quality,'' Sorenson
Communications, LLC v. FCC, 897 F.3d 214, 228 (D.C. Cir. 2018), the
Commission also believes that a policy of maintaining a choice of
service offerings can be pursued consistently with the mandate that TRS
be made available ``in the most efficient manner.'' 47 U.S.C.
225(b)(1). As the D.C. Circuit has explained, ``competition promotes
efficiency by preventing subpar service from a monopolist who has no
fear of losing customers; i.e., it promotes compliance with the service
quality required by the mandatory minimum standards.'' Sorenson at 229.
The Commission seeks comment on these beliefs.
11. Accordingly, in setting compensation policy for the next
period, under the current regulatory structure, the Commission
tentatively concludes that it will best serve the purposes of section
225 of the Act if it structures VRS compensation to continue supporting
an ecosystem in which multiple VRS providers can compete for minutes of
use based on quality of service. The Commission seeks comment on this
tentative conclusion and the premises set forth above, as well as any
relevant data. The Commission also seeks comment on how best to set VRS
compensation to promote the above benefits of allowing consumers a
choice of VRS providers. Which past measures have succeeded or failed
in this regard? What should the Commission's role be, if any, in
supporting more effective quality-of-service competition?
12. The Commission invites commenters to suggest alternatives to
retaining a tiered-rate compensation methodology. The Commission urges
commenters advocating alternatives to explain their proposals in
detail, including how such proposals can deliver the benefits that the
Commission has found are achievable through VRS competition (i.e.,
making functionally equivalent TRS available to all eligible
individuals in the most efficient manner, in accordance with minimum
TRS standards, without discouraging or impairing the development of
improved technology).
Alternative Approaches for Setting Tiered Compensation Rates
13. The Commission seeks comment on two overarching issues. First,
should it adopt modified VRS compensation rates at this time, or
``freeze'' the current rates until a reliable, post-COVID-19 pandemic
baseline for cost and demand has been established? Second, if the
Commission decides to move forward with rate-setting at this time,
should the Commission retain the current setup, with an emergent rate
and the current tier structure, or should it eliminate the emergent
rate and adopt a modified tier structure, to improve provider
incentives and move expenditures closer to costs?
Deferring Rate Changes to After the Pandemic
14. In light of the protracted duration of the COVID-19 pandemic,
the significant demand changes associated with it, and the consequent
increase in uncertainty as to future costs and demand, the Commission
seeks comment about the feasibility of setting new VRS compensation
rates at this time. In 2020, following the outbreak of the COVID-19
pandemic and efforts to reduce its spread, VRS providers
[[Page 29972]]
experienced an unanticipated increase in VRS traffic levels. Providers
incurred some additional costs resulting from the need for operational
adjustments, such as migrating communications assistants from call
centers to working at home, and hiring additional staff to cope with
increased demand.
15. The TRS Fund administrator reports that the increased expenses
incurred by VRS providers during the pandemic were more than offset by
increased call volumes, resulting in a significant reduction in
providers' average cost per minute from 2019 to 2020. Specifically,
average demand has risen during the pandemic period by approximately
25%, and average per-minute provider costs declined from 2019 to 2020
by approximately 5.3%. At this time, the effects of the pandemic
continue to be felt across the VRS industry, and it is unclear whether
VRS traffic levels will return to a lower, pre-pandemic level. For many
years, the Commission has found that the most reliable reference points
in setting VRS compensation rates are the actual costs reported for the
previous calendar year (in this case 2020) and the projected costs for
the current calendar year (in this case 2021). Parties have raised the
concern that, if the Commission relies on 2020 and 2021 data (as it
would under the current practice), its estimate of per-minute costs
could turn out to be understated in relation to actual post-pandemic
costs, and rates set in reliance on 2020-21 data might not reasonably
compensate VRS providers for the costs they will incur in the next rate
period.
16. In light of these uncertainties regarding future VRS costs and
demand, should the Commission maintain the existing VRS compensation
tiers and rates for the next two TRS Fund rate periods, i.e., until
June 30, 2023, to allow the effects of the COVID-19 pandemic to
resolve, so that future rates can be set based on cost and demand data
that more reliably reflect post-pandemic conditions? Under a rate
freeze approach, providers receiving compensation at the emergent rate
on June 30, 2021, as well as any new entrants, would continue to be
compensated at the emergent rate. Or should the Commission move forward
with adopting modified compensation rates based on current cost and
demand estimates, which could be adjusted to address the likelihood of
a reversion to pre-pandemic demand levels?
17. What are the likely costs and benefits of freezing current
compensation rates for two years? The Commission invites advocates of
this approach to explain and document the dimensions of any risk of
further demand fluctuations they perceive. The Commission also seeks
comment on whether such risks could or could not be mitigated by
adopting a more conservative approach to ratemaking, such as by relying
on 2019 costs as an additional benchmark for rate-setting. According to
the TRS Fund administrator's estimate, the current rates allowed
providers, on average, to recover 31.4% above allowable expenses in TRS
Fund Year 2020-21--operating margins that are substantially above the
zone of reasonableness (7.75%-12.35%) the Commission set in 2017. Is
the risk of future changes in costs and demand so substantial that it
warrants maintaining what appear to be over-compensatory compensation
rates? Are there other effects that changing the compensation rate
during this period could have on the provision of VRS?
18. In addition, it has been suggested that increased VRS demand,
as well as limitations on in-person education during the pandemic, has
constricted the current supply of VRS communications assistants as well
as the number of American Sign Language (ASL) interpreters entering the
training ``pipeline'' for future availability for VRS employment. The
Commission invites commenters to submit any evidence that would support
a prediction of additional increases in such labor costs, the likely
extent of such increases, and whether such increases are likely to be
temporary or permanent.
19. If the Commission decides to move forward and set revised
compensation rates for 2022 and beyond, it invites parties to comment
on how cost and demand estimates should be adjusted, if at all, to
account for possible post-COVID costs and demand. Are 2020 and
projected 2021 cost and demand data sufficiently reliable to serve as a
reasonable basis to set rates for a new multi-year rate cycle? Should
the Commission look only at provider-projected costs, e.g., for 2021
and 2022, without considering historical costs? Alternatively, should
the Commission substitute 2019 cost and demand data, in anticipation
that VRS costs and demand may decrease to pre-pandemic levels once the
pandemic subsides? Or should the Commission assume that demand will
remain higher than 2019 levels, and if so, how much higher? What labor
cost adjustments, if any, should be applied?
Retaining or Modifying the Current Rate Structure
20. If the Commission decides to move forward and adopt a modified
VRS compensation plan, what, if any, changes to the current rate
structure would be warranted?
21. Emergent rate. The Commission seeks comment on whether to
retain or eliminate the emergent rate for VRS providers with no more
than 500,000 monthly minutes. Has there been any change in
circumstances since 2017 that would justify retaining the emergent
rate, notwithstanding the Commission's previously stated intention to
terminate the emergent rate after June 2021? The Commission notes that
no new applicants have requested certification to provide VRS since
2011. Are any firms currently planning or considering whether to apply
for VRS certification? Have relevant circumstances changed for current
beneficiaries of the emergent rate? For example, has any provider
subject to the emergent rate managed to expand its market share, and if
so, to what extent is continued application of the emergent rate still
necessary? The Commission also notes that in 2017 it did not purport to
assure cost recovery for every emergent VRS provider, but only to
provide a reasonable opportunity for cost recovery, on a temporary
basis, for those that have demonstrated an ability to grow
substantially. Alternatively, are there other benefits from continuing
to support very high-cost providers, even if they fail to reduce their
per-minute costs substantially? Among the advantages of the tiered-rate
system is that it allows support for smaller providers offering
``niche'' services to meet the needs of subsets of the signing
population. Should the Commission make the continued application of the
emergent rate conditional on a provider's success in providing specific
niche services not offered by others? To assist its determinations
regarding tier structure, the Commission seeks comment on the specific
services and features offered by each VRS provider. To what extent do
providers offer niche services or features targeted to specific user
populations, to provide functionally equivalent communication for such
users? For example, GlobalVRS states that in addition to providing ASL-
to-English VRS, it provides ASL-to-Spanish VRS. Do other providers
currently offer ASL-to-Spanish VRS, and to how many customers? Are
there significant qualitative differences among such offerings? Which
providers, if any, offer a service to deafblind users--and to how many
users--that permits the deafblind user to speak using ASL, while the CA
communicates to the deafblind user in English or Spanish text that can
be read by a refreshable Braille reader? Do other providers offer
[[Page 29973]]
this type of service, or others, to deafblind users, and if so, what
kind of service is offered to how many users?
22. As for costs, in addition to the greater TRS Fund expenditures
needed to support very high-cost providers, would the costs of
perpetuating a special rate for such providers include lessened
incentives to innovate, reduce costs, and grow market share? What other
costs result from the emergent rate? Are the benefits of retaining the
emergent rate sufficient to justify the costs? If retained, should the
Commission alter the maximum-minutes criterion for applying the
emergent rate?
23. Tier Structures. The Commission also seeks comment on whether
to retain or modify the current tier structures, whereby Tier I
includes a provider's first 1 million monthly minutes, Tier II includes
additional minutes up to 2.5 million, and Tier III includes all minutes
above 2.5 million. The Tier I limit of 1 million minutes was adopted to
ensure that as providers grew large enough to leave the emergent
category, they would be subject to a rate that reflects their size and
likely cost structure and that is appropriately lower than the marginal
rate applicable to larger providers. Does this tier boundary continue
to be appropriate? For example, has the ZVRS-Purple merger resulted in
increased efficiencies? If so, what is the scale of such efficiencies,
and does the existence of such efficiencies support the conclusion that
substantial economies of scale can be achieved by growing above the
benchmark of 1 million monthly minutes? Alternatively, if the emergent
rate is eliminated, should Tier I be subdivided, so as to apply
different rates, for example, to a provider's first 500,000 and second
500,000 minutes, or to a provider's first 300,000 minutes and its next
700,000 minutes? Are such changes warranted by relevant scale economies
in the provision of VRS or a need to support niche services, as
discussed above? Would these alternatives unduly limit a provider's
incentive to increase its monthly minutes beyond 300,000 or 500,000?
24. The Commission also seeks comment on whether to retain or
modify the structures of Tiers II and III. To what extent has the gap
in per-minute costs between Sorenson and ZP Better Together, LLC (ZP),
narrowed? The Commission seeks comment on whether the retention of a
tier boundary at 2.5 million minutes is supported by experience over
the past four years. Is the Commission's 2017 finding--that substantial
scale economies are likely to be present even at the 2.5 million
minutes level--still supportable or are scale economies exhausted below
that level? Alternatively, does experience show that substantial
economies are likely present above the current boundary? If the current
Tier II upper boundary is no longer appropriate, should the boundary be
increased or decreased, and to what level? Alternatively, should the
Commission create a fourth tier, and with what boundaries? Should the
current Tiers II and III be merged? More broadly, how should the
Commission account for increasing economies of scale in setting VRS
rates, and at what scale do such economies stop increasing? The
Commission encourages providers to submit recent real-world data
relevant to whether the provision of VRS continues to be characterized
by substantial scale economies and the appropriate boundaries for
setting tiered rates that reasonably reflect those economies.
25. With respect to all three tiers, what marketplace distortions,
if any, may be created by retaining tier boundaries--or drawing new
ones--that are not closely correlated to scale economies? What other
costs and benefits are relevant to retaining or adjusting the number of
tiers or the tier boundaries?
26. Additional Compensation for Specialized Services. The
Commission also seeks comment on whether it would serve the objectives
of section 225 of the Act for a VRS provider to receive additional per-
minute compensation from the TRS Fund (in addition to the amount
payable under the tiered formula) for the provision of certain
specialized services, such as, for example, service to deafblind
consumers, Spanish-ASL interpreting, or responding to requests that
Certified Deaf interpreters be added to a call. What criteria should
the Commission use to decide which, if any, specialized services should
be supported by additional compensation and how to define the
circumstances in which such services will be compensated? How should
the additional reasonable costs of such services be determined for the
purpose of setting an appropriate amount of additional compensation?
What measures should the Commission take to prevent waste, fraud, and
abuse in the provision of, or requests for, such specialized services?
Setting Tiered Rate Levels
27. Assuming that the Commission adopts adjusted compensation rates
at this time, it seeks comment on the appropriate rate level for each
tier. In 2017, the Commission sought to set the rates for each tier to
limit the likelihood that any provider's total compensation will be
insufficient to provide a reasonable margin over its allowable
expenses, and to limit the extent of any overcompensation of a provider
in relation to its allowable expenses and reasonable operating margin.
The Commission believes it should maintain this goal in setting tiered
rates, although by setting rates for providers in discrete size classes
based on general cost differentials between large, medium-sized, and
small providers, the Commission does not seek or purport to guarantee
all providers recovery of their individual costs. The Commission seeks
comment on this belief.
28. Operating Margin. The Commission proposes that VRS compensation
rates 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%). The Commission is unaware of relevant
changes in financial markets or other conditions affecting the VRS
industry that would warrant reassessment of the zone of reasonableness.
The Commission seeks comment on this proposal, including any changes
that would justify setting a higher or lower range of reasonable
operating margins. Is the current allowable operating margin sufficient
to attract capital, new entry, and promote functionally equivalent VRS
services? What has been providers' experience since 2017? Further,
should the Commission set a specific allowed operating margin within
this range, and if so, at what percentage?
29. Allowable Costs. To the extent that, notwithstanding the
Commission's history of comprehensive consideration of allowable cost
issues, parties believe it is important to revisit allowable cost
issues, the Commission urges commenters to state specifically in what
respects the Commission's prior determinations on allowable costs are
no longer valid, describe in detail any respects in which relevant
circumstances have changed in the intervening period, and explain how
the outcome they seek is consistent with, and furthers the purposes of,
section 225 of the Act.
30. Marginal Cost Benchmarks. The Commission continues to believe
that marginal cost for a provider of relevant size would be an
appropriate benchmark for Tier II or Tier III rates if it can be
reasonably estimated. Of particular concern, some VRS providers
distribute substantial amounts of free
[[Page 29974]]
user equipment as a marketing device to add or retain customers. In
light of the waste and market disruption that can result from the use
of device giveaways to recruit customers, the Commission seeks comment
on whether to limit the compensation rates for tiers above Tier I to
levels that do not exceed a reasonable percentage above a relevant
provider's marginal allowable cost of providing an additional minute of
service. The Commission also believes this approach to setting rates
will help ensure that the TRS Fund is not providing de facto support
for the costs of user devices, contrary to section 225 of the Act and
the Commission's longstanding rule precluding the use of the TRS Fund
to support such distribution of user devices. The Commission seeks
comment on the above-stated beliefs, and on how the Commission should
estimate marginal allowable cost for purposes of applying a marginal-
cost benchmark. For example, what expense categories should be included
or excluded when calculating the marginal cost of providing an
additional minute of VRS? Would a per-minute average of the operating
expenses reported in Part B of the TRS Fund administrator's annual
expense reporting form for VRS providers--which includes salaries and
benefits for relay center staff, including communications assistants,
telecommunications expenses, billing expenses, and relay center
expenses--serve as a reasonable proxy for the marginal expense of
providing an additional VRS minute? Should the marginal cost benchmark
for a given tier be calculated as a weighted average of the marginal
cost for those VRS providers for which that tier currently defines (or
is projected to define) the highest applicable rate? The Commission
seeks comment on whether marginal cost is an appropriate metric, or
whether the Commission should consider alternative metrics. Would
marginal-cost benchmarks for Tiers II and III deter continued
investment in the service? Would they cause providers to ``put on the
brakes'' and stop competing as the Commission feared in 2017? Or would
they appropriately discourage providers from incurring wasteful
marketing and other costs? What increment over marginal cost would be
needed to ensure that beneficial effects are achieved, and detrimental
effects are avoided?
31. Rate Levels. The Commission also seeks comment on where to set
rates for the emergent rate (if retained) and Tiers I-III. If the
emergent rate is retained, should the Commission increase it, e.g., to
the weighted average 2019 cost per minute for the current emergent
providers, plus a 10% operating margin, maintain it at the current
level of $5.29, or decrease it, e.g., to the weighted average of the
emergent providers' projected cost per minute for 2022, plus a 10%
operating margin? For Tier I, the Commission seeks comment on whether
to increase the rate, e.g., to $5.29 (the current emergent rate),
maintain the current $4.82 rate, or reduce it, e.g., to the weighted
average of the emergent providers' projected cost per minute for 2022,
plus a 10% operating margin. For Tier II, the Commission seeks comment
on whether to maintain the rate at $3.97, or decrease it, e.g., to the
level of the weighted-average marginal allowable expense per minute
(plus a reasonable operating margin) of those providers for which the
Tier II rate is the lowest applicable rate. For Tier III, the
Commission seeks comment on whether to maintain the current $2.63 rate
or decrease it, e.g., to the level of the weighted-average marginal
allowable expense per-minute (plus a reasonable operating margin) of
those providers for which the Tier III rate is the lowest applicable
rate. The Commission also invites parties to submit other suggested
rate levels for each tier, with justification and supporting data.
32. To the extent the current tier structure is modified, as
discussed above, the Commission seeks comment on appropriate rates for
the modified tiers. Are there other factors the Commission should
consider in determining appropriate rates of compensation for each
tier? As an alternative, should the Commission consider Sorenson's
suggestion to establish a unitary compensation rate for non-emergent
providers at or about $3.33, the current average per-minute
compensation paid across all VRS providers? Should the Commission also
consider ZP's proposal that the Commission keep the existing rates but
increase the benchmark for Tier II from 2.5 million to 5 million
minutes, under the theory, in ZP's view, that doing so would allow
continued competition and increased investment in the community? The
Commission seeks comment on these proposals.
Rate Period and Adjustments
33. Rate Period. The Commission seeks comment on the duration of
the next rate period. In the current circumstances, what rate period
will appropriately balance the needs for administrative efficiency,
rate certainty, and cost-reduction incentives with the need for a
timely review of how VRS costs may change in the future?
34. Glide Path. If the Commission makes substantial reductions in
any tiered rate, should it transition to that level in stages to avoid
disruption of service to VRS consumers? What would be a reasonable
annual percentage rate reduction for this purpose? For IP CTS, the
Commission recently adopted a ``glide path'' for the IP CTS
compensation rate, with a 10% annual reduction towards cost-based
rates. Would a 10% annual reduction be appropriate for VRS?
35. Price Indexing Adjustments. The Commission seeks comment on
whether a price indexing formula, analogous to price-cap factors,
should be applied to tiered rates during a multi-year rate period, and
on the appropriate indices to use to reflect inflation and
productivity. Is the application of price indexing factors needed to
ensure that VRS providers have a reasonable opportunity to recover
costs, to provide a sufficient incentive to reduce costs, or to prevent
overcompensation of providers due to predictable future productivity-
related cost declines? If adopted, how should a price-indexing approach
be structured in the context of tiered rates, e.g., to account for any
disparities in expected productivity gains between small and large
providers?
Initial Regulatory Flexibility Analysis
36. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), the Commission has prepared this 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 this
IRFA. Comments must be identified as responses to the IRFA and must be
filed by the deadline for comments specified in the DATES section. The
Commission will send a copy of document FCC 21-61 to the Chief Counsel
for Advocacy of the Small Business Administration (SBA).
Need For, and Objectives of, the Proposed Rules
37. The Commission intends to develop a multi-year cost-based
compensation rate methodology for VRS. To develop a complete record the
Commission seeks comment on maintaining a tiered rate structure,
including the specifics for the tiered structure and for setting such
rates, and in the alternative, freezing the current rates. The
Commission is making these proposals for the purpose of allowing
recovery of reasonable provider costs and ensuring that functionally
[[Page 29975]]
equivalent VRS is provided in the most efficient manner. The Commission
seeks comment on these proposals, which include a number of various
policy questions and alternatives for consideration.
Legal Basis
38. The authority for this proposed rulemaking is contained in
sections 1, 2, and 225 of the Communications Act of 1934, as amended,
47 U.S.C. 151, 152, 225.
Small Entities Impacted
39. The proposals in the NPRM will affect obligations of VRS
providers. These services can be included within the broad economic
category of All Other Telecommunications.
Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements
40. The proposed compensation methodologies will not create
reporting, recordkeeping, or other compliance requirements.
Steps Taken To Minimize Significant Impact on Small Entities, and
Significant Alternatives Considered
41. The Commission is taking steps to minimize the impact on small
entities and considering significant alternatives by identifying
multiple methodologies for compensating VRS providers for the provision
of VRS. The Commission seeks comment on maintaining tiered rates,
including the specifics for the tiered structure and for setting such
rates, and in the alternative, freezing the current rates. The
Commission will consider these proposals to determine the best
compensation methodology for ensuring choice among suppliers for VRS
users and to help maintain functionally equivalent service and maintain
an efficient VRS market over the long term in accordance with the
Commission statutory obligations. The Commission seeks comment on the
effect these proposals will have on all entities that provide VRS,
including small entities.
42. The Commission also 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 the
NPRM. The Commission expects to consider the economic impact on small
entities, as identified in comments filed in response to the NPRM, in
reaching its final conclusions and acting in this proceeding.
Federal Rules Which Duplicate, Overlap, or Conflict With, the
Commission's Proposals
43. None.
Federal Communications Commission.
Marlene Dortch,
Secretary, Office of the Secretary.
[FR Doc. 2021-11681 Filed 6-3-21; 8:45 am]
BILLING CODE 6712-01-P
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