Providers, Deaf Groups Seek TRS/VRS Rate Freeze; Others Wary of Costs

The parties responded June 4 to a Consumer and Governmental Affairs Bureau public notice in docket 10-51 seeking comment on proposals by Rolka Loube Associates, the administrator of the interstate TRS fund, on TRS compensation rates, funding needs and the industry contribution factor. The notice didn't seek comment on a proposal by providers of VRS -- the biggest part of the TRS fund at a projected $573 million for the funding year beginning on July 1 -- to freeze their compensation rates instead of implementing FCC-ordered cuts July 1 as part of a glide path down to cost-based levels from rates the commission considered excessive. The bureau said it would seek comment on that proposal separately.

The six VRS providers voiced disappointment that the FCC was moving to adopt an industry contribution factor without considering their March 30 proposal to freeze VRS compensation at the current $5.29 per minute for providers with average monthly minutes of 0-500,000 (Tier I), $4.82 for 500,001-1 million (Tier II) and $4.25 for more than 1 million (Tier III) rather than having Tier I and III rates cut to $5.06 and $4.06 per minute July 1, followed by further cuts Jan. 1. "Rate cuts will inevitably degrade the quality of VRS service, and innovation is not possible in an environment of continually falling rates," said ALS Services, Convo Communications, CSDVRS, Hancock Jahn Lee & Puckett, Purple Communications and Sorenson Communications.

The VRS providers urged the FCC to seek comment on their proposal and adopt it before the looming rate cuts occur, but if not, they said the commission could still adopt it after July 1. They said the proposed rate stabilization would be less than 20 percent of a two-month reserve fund that Rolka Loube proposed to maintain. Because they had to plan for the coming July 1 cuts, they warned degraded service could include "less customer care, lower pay for interpreters, slower technical upgrades, and less support for community projects." Postponing the rate cuts would increase VRS funding to about $600 million for next funding year, Rolka Loube projected.

In separate comments, ALS said the FCC was ignoring VRS provider costs. "The Commission’s message to the Joint Providers has been to do more with less; improve service quality, improve response times, implement a new user registration data base, verify user eligibility, provide information to users, ensure interoperability, implement new technology, and innovate," ALS said. "Yet the Commission continues to focus on rate reductions based on a long standing determination that VRS providers as a whole have -- and continue to be -- overcompensated, despite financial data ... showing otherwise. ... Something has to give."

Telecommunications for the Deaf and Hard of Hearing Inc. (TDI), National Association of the Deaf and other consumer advocates urged the FCC to consider holding off on any rate changes for at least six months to allow time for responding to a recent GAO report urging the commission to strengthen its TRS management (see 1505080038). The advocacy groups said they don't have confidence in the accuracy of Rolka Loube's projected VRS provider costs and the estimated demand of the IP captioned telephone service (IPCTS), the second-biggest TRS category and projected to cost $364 million next funding year.

TDI Executive Director Claude Stout told us through an interpreter that he understands the FCC has to "make sure money is not wasted" by VRS/TRS providers, but he said the agency must also ensure its mechanisms fairly compensate providers for their legitimate costs so that services are maintained. "We are very concerned because some providers have already left the market for the IP relay service, and we don't want to see that happen again" on VRS, he said.

Sprint, a TRS provider, said it didn't object to Rolka Loube's proposed rates, but urged the FCC to continue using the multistate average rate structure (MARS) methodology for determining the IPCTS rate. Sprint said it was concerned that the FCC plans to change to a new methodology that "would not reflect the true costs of providing service." Hamilton Relay agreed, saying MARS was "the most effective and reliable TRS rate mechanism ever adopted by the commission, including price cap plans and cost-based, rate of return methodologies." Hamilton also urged the FCC to focus on implementing GAO recommendations rather than "harmful rate cuts."

Comptel, which represents smaller carriers paying into TRS, said the proposed industry contribution factor of 0.01635 of interstate and international telecom revenue would be a 34 percent increase over the factor adopted last June. The FCC should closely scrutinize the proposed increase, which was driven by a 32 percent increase in the projected size of the fund, from $793 million to $1.1 billion, and by a $1.12 billion decrease in the industry revenue base, Comptel said. The FCC should let carriers identify and recover their TRS costs in line items on their phone bills, Comptel said.

IDT Telecom, an international carrier that pays into the fund, said it opposed the proposed budget for IPCTS and the overall TRS contribution factor. IDT said the FCC was violating its jurisdictional separations mandates by funding intrastate IPCTS, IP relay service and VRS from interstate and international telecom revenue, which IDT said should be segregated. The IDT proposal would shift TRS costs from long-distance providers to local telcos.

An industry representative suggested that the FCC would implement the rate cuts and contribution factor as proposed, and doubted any near-term changes would be major in scope. The IDT jurisdictional proposal "would be a chaotic change," the representative told us. Another industry source also was skeptical the FCC would make major policy changes before July 1 but said it's becoming more difficult to justify the status quo: "With the spotlight recently shined on TRS as a result of the GAO report as well as this proceeding, there's hope that reform is coming soon."

The Consumer & Governmental Affairs Bureau issued a public notice Tuesday reminding states and interstate TRS providers that they must submit by July 1 their annual consumer complaint log summaries for the period from June 1, 2014, to May 31, 2015.