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Proposed Rule2023-01679

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

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Published

February 2, 2023

Issuing agencies

Federal Communications Commission

Abstract

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

Full Text

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<title>Federal Register, Volume 88 Issue 22 (Thursday, February 2, 2023)</title>
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[Federal Register Volume 88, Number 22 (Thursday, February 2, 2023)]
[Proposed Rules]
[Pages 7049-7057]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-01679]

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

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

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

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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

[[Page 7050]]

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

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

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

FOR FURTHER INFORMATION CONTACT: Michael Scott, Disability Rights
Office, Consumer and Governmental Affairs Bureau, at (202) 418-1264, or
<a href="/cdn-cgi/l/email-protection#8bc6e2e8e3eaeee7a5d8e8e4ffffcbede8e8a5ece4fd"><span class="__cf_email__" data-cfemail="abe6c2c8c3cacec785f8c8c4dfdfebcdc8c885ccc4dd">[email&#160;protected]</span></a>.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking, document FCC 22-97, adopted on December 21,
2022, released on December 22, 2022, in CG Docket Nos. 03-123, 13-24,
and 22-408. The full text of document FCC 22-97 is available for public
inspection and copying via the Commission's Electronic Comment Filing
System (ECFS). To request materials in accessible formats for people
with disabilities (Braille, large print, electronic files, audio
format), send an email to <a href="/cdn-cgi/l/email-protection#c9afaaaafcf9fd89afaaaae7aea6bf"><span class="__cf_email__" data-cfemail="ddbbbebee8ede99dbbbebef3bab2ab">[email&#160;protected]</span></a> or call the Consumer and
Governmental Affairs Bureau at (202) 418-0530.
Ex Parte Rules. This proceeding shall be treated as a ``permit-but-
disclose'' proceeding in accordance with the Commission's ex parte
rules. 47 CFR 1.1200 et seq. Persons making ex parte presentations must
file a copy of any written presentation or a memorandum summarizing any
oral presentation within two business days after the presentation
(unless a different deadline applicable to the Sunshine period
applies). Persons making oral ex parte presentations are reminded that
memoranda summarizing the presentation must (1) list all persons
attending or otherwise participating in the meeting at which the ex
parte presentation was made, and (2) summarize all data presented and
arguments made during the presentation. If the presentation consisted
in whole or in part of the presentation of data or arguments already
reflected in the presenter's written comments, memoranda, or other
filings in the proceeding, the presenter may provide citations to such
data or arguments in his or her prior comments, memoranda, or other
filings (specifying the relevant page and/or paragraph numbers where
such data or arguments can be found) in lieu of summarizing them in the
memorandum. Documents shown or given to Commission staff during ex
parte meetings are deemed to be written ex parte presentations and must
be filed consistent with Sec. 1.1206(b) of the Commission's rules. In
proceedings governed by Sec. 1.49(f) or for which the Commission has
made available a method of electronic filing, written ex parte
presentations and memoranda summarizing oral ex parte presentations,
and all attachments thereto, must be filed through the electronic
comment filing system available for that proceeding, and must be filed
in their native format (e.g., .doc, .xml, .ppt, searchable .pdf).
Participants in this proceeding should familiarize themselves with the
Commission's ex parte rules.

Synopsis

Background

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

[[Page 7051]]

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

Proposed Rules

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

[[Page 7052]]

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

[[Page 7053]]

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

[[Page 7054]]

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

[[Page 7055]]

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

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

As amended, this provision would read:

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

Initial Regulatory Flexibility Analysis

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

Need for, and Objectives of, the Proposed Rules

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

[[Page 7056]]

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

Legal Basis

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

Small Entities Impacted

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

Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements

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

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

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

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

55. None.

Initial Paperwork Reduction Act of 1995 Analysis

The Commission seeks comment on proposed rule amendments that may
result in modified information collection requirements. If the
Commission adopts any modified information collection requirements, the
Commission will publish another notice in the Federal Register inviting
the public to comment on the requirements, as required by the Paperwork
Reduction Act, Public Law 104-13; 44 U.S.C. 3501-3520. In addition,
pursuant to the Small Business Paperwork Relief Act of 2002, the
Commission seeks comment on how it might further reduce the information
collection burden for small business concerns with fewer than 25
employees. Public Law 107-198, 44 U.S.C. 3506(c)(4).

List of Subjects in 47 CFR Part 64

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

Katura Jackson,
Federal Register Liaison Officer.

Proposed Regulations

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

PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS

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

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

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

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

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

Sec. 64.640 Compensation for IP Relay.

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

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

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

[[Page 7057]]

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

L<INF>FY</INF> = L<INF>FY-1</INF> * (1+IF<INF>FY</INF>-PF<INF>FY</INF>)

where IF<INF>FY</INF> is the Inflation Adjustment Factor for that
Fund Year, determined in accordance with paragraph (d) of this
section and PF<INF>FY</INF> is the Productivity Adjustment Factor
for that Fund Year, determined in accordance with paragraph (e).

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

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

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

L<INF>FY</INF> = L<INF>FY-1</INF> * (1+IF<INF>FY</INF>-PF<INF>FY</INF>)

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

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

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