DATE:	April 24, 2008
TO:	Office of Commission Clerk (Cole)
FROM:	Division of Competitive Markets & Enforcement (Moses, Casey) Office of the General Counsel (Tan)
RE:	Docket No. 040763-TP – Request for submission of proposals for relay service, beginning in June 2005, for the hearing and speech impaired, and other implementation matters in compliance with the Florida Telecommunications Access System Act of 1991.
AGENDA:	05/06/08 – Regular Agenda – Interested Persons May Participate
COMMISSIONERS ASSIGNED:			All Commissioners
PREHEARING OFFICER:			Edgar
CRITICAL DATES:			None
SPECIAL INSTRUCTIONS:			Anticipate the need for sign language interpreters and assisted listening devices.  Place near the beginning of the agenda or at a time certain to reduce interpreter costs.
FILE NAME AND LOCATION:			S:\PSC\CMP\WP\040763.RCM.DOC

 

 Case Background

The Florida Relay System (FRS) provides hearing impaired persons access to basic telecommunications services by using a specialized communications assistance operator (CA) that relays information between the hearing impaired person and the other party of the call.  The primary function of the FRS is accomplished by the hearing impaired person using a Telecommunications Device for the Deaf (TDD) which has a keyboard and screen.  The person using the TDD types a message to the CA who in turn voices the message to the other party.  The reverse of this process completes messages to the hearing impaired person.  This is how the term “relay” originated. 

The Telecommunications Access System Act of 1991 (TASA) established a statewide telecommunications relay system and became effective May 24, 1991.  It is authorized under Chapter 427, Florida Statutes.  Section 427.701(1), Florida Statutes, provides that the Florida Public Service Commission (FPSC or Commission) shall establish, implement, promote, and oversee the administration of the statewide telecommunications access system to provide access to telecommunications relay services by persons who are hearing impaired or speech impaired, or others who communicate with them.  This system provides telecommunications service for hearing impaired persons functionally equivalent to the service provided to hearing persons.  TASA provides funding for the distribution of specialized telecommunications devices and provision of intrastate relay service through the imposition of a surcharge of up to $0.25 per landline access line per month.  Accounts with over 25 access lines are billed for only 25 lines.  According to the Florida Coordinating Council for the Deaf and Hard of Hearing 2007 Report to the Governor, Legislature, and Supreme Court of Florida, there are nearly three million deaf and hard of hearing persons in Florida.

Florida Telecommunications Relay, Inc. (FTRI), a non-profit corporation formed by the local exchange telephone companies (LEC), was named by the FPSC to serve as the TASA administrator.  On July 1, 1991, the LECs began collecting an initial $.05 per access line surcharge pursuant to Order No. 24581.  Since that time, the surcharge has changed to reflect the budgetary needs and is currently $0.11.

Section 427.706, Florida Statutes, provides for up to 10 members on an advisory committee to assist the FPSC with the implementation of the Florida relay system.  Two members of the advisory committee have recently resigned and two replacements are being recommended.  The purpose of this recommendation is to address FTRI’s 2008-2009 proposed budget and appoint replacement committee members for those who have resigned. 

The Commission is vested with jurisdiction over these matters pursuant to Chapter 427, Florida Statutes.

 

Discussion of Issues

Issue 1: 

 Should the Commission approve FTRI’s proposed budget as outlined in Attachment A for the fiscal year 2008-2009, effective July 1, 2008, and should the Commission maintain the current Telecommunications Relay Service (TRS) surcharge of $0.11 per month?

Recommendation: 

  Staff recommends that the Commission approve FTRI’s proposed budget as outlined in Attachment A for the fiscal year 2008-2009, effective July 1, 2008, and recommends that the TRS surcharge be maintained at $0.11 per month for the fiscal year 2008-2009, effective July 1, 2008.  Staff also recommends that the Commission order the incumbent local exchange companies, competitive local exchange companies, and shared tenant providers to continue to  bill the $0.11 surcharge for the fiscal year 2008-2009, effective July 1, 2008.  (Moses, Casey)

Staff Analysis: 

 As shown in Table A, the trend for minutes of use for traditional TRS has been declining.  It is projected that the traditional TRS minutes will continue to decline at a rate of approximately three percent per month in 2008-2009.  Traditional relay users are transitioning to the more efficient technologies of IP Relay,[1] Video Relay Service[2] (VRS), CapTel captioning service, and Blackberry or Palm wireless devices. 

       

 

Table A – Florida Traditional TRS Minutes July 2005 – February 2008

 

 

VRS and IP Relay

The relay users who use IP Relay and VRS are presently having their relay minutes of use paid through the interstate TRS fund.  However, the Federal Communications Commission (FCC) has stated that this arrangement is only temporary.  The FCC believes Title IV of the Americans with Disabilities Act[3] and its legislative history make it clear that Congress intended that the states be responsible for the cost recovery for intrastate relay services provided under their jurisdiction.[4] 

 

In November of 2007, the FCC reiterated its goal of allocating VRS and IP Relay costs by intrastate and interstate to have states assume the cost of VRS and IP Relay.  In FCC 07-186,[5] the FCC stated that Section 225 of the Telecommunications Act provides that the costs caused by interstate TRS shall be recovered from all subscribers for every interstate service, and the costs caused by the provision of intrastate TRS shall be recovered from the intrastate jurisdiction.   In footnote 15 of that Order, the FCC noted, “The issue of separation of costs relating to the provision of IP Relay and VRS is pending pursuant to the FNPRM in the 2004 TRS Report & Order.”

                        

Presently, there are no means available to automatically determine the geographic location of IP Relay and VRS calls; therefore, there is no way to determine if a particular IP Relay or VRS call is interstate or intrastate.  The FCC is examining ways to determine whether these calls are interstate or intrastate, and will eventually transfer the cost burden of intrastate IP Relay and VRS calls to the states.

Presently the VRS compensation rate is $6.77 per minute for the first 50,000 minutes per month, $6.50 per minute for 50,001 minutes to 500,000 minutes per month, and $6.30 per minute over 500,000 minutes per month.  For the last six months of 2007, Florida averaged 280,591 VRS terminating minutes per month.  Using the last intrastate/interstate relay cost allocation used by the FCC for the two-line CapTel phone as an estimate, states would be responsible for 89% of the VRS costs or approximately $19,640,628 per year for Florida.  Both intrastate and interstate VRS costs are presently being paid from the federal TRS Fund.

 

The IP Relay compensation rate is currently $1.293 per minute, compared to the traditional TRS compensation rate of $0.75 per minute.  For the last six months of 2007, Florida averaged 321,780 IP Relay terminating minutes per month.  Using the last FCC intrastate/interstate relay cost allocation as an estimate, states would be responsible for 89% of the IP Relay costs or approximately $4,443,534 per year for Florida.  Both intrastate and interstate IP Relay costs are also presently being paid from the federal TRS Fund.

The FCC has not formally opined on the time frame when the IP Relay and VRS costs will shift to the states or what the intrastate/interstate cost allocation will be, but when it does happen, additional funding through statutory changes may have to be pursued because of the statutory cap of $0.25 per access line for TRS in Florida.  Staff estimates that the total monthly responsibility of intrastate IP Relay and Video Relay costs would be approximately $2,007,013 per month or $24,084,162 annually.

The $24,084,162 additional IP Relay and VRS costs could increase the budget for Florida TRS to over $36 million and likely exceed the current $0.25 cap per access line allowed by statute.  If this happens, a legislative change may be necessary to either increase the present TRS cap or have all carriers such as wireless and VoIP providers charge the surcharge rather than just landline carriers.  Another alternative is to have the FCC fund the entire relay program.  The timeline for a legislative change may impair the stability of the Florida TRS fund.  To keep the Florida legislature advised as to the FCC proposal for states to absorb the costs of intrastate VRS and IP Relay costs, the last two Commission annual Relay Reports to the President of the Senate and the Speaker of the House of Representatives have included information and updates on the FCC proposal. 

In order to minimize the impact of this change on the Florida TRS Fund, the Commission took action in the 2006-2007 FTRI budget year by maintaining a $0.15 per month TRS surcharge to create a reserve to handle the initial costs of the intrastate VRS and IP Relay cost burden.[6]  It is estimated that this will provide a reserve in the Florida TRS fund of $17,558,856 by the end of the current fiscal year in June 2008.  Interest earned on this amount should increase the reserve amount enough to accommodate the initial intrastate VRS and IP Relay costs should the FCC make a decision in the next fiscal year.

CapTel Service

CapTel service, which is a telephone that provides captioning of the incoming call for a hearing impaired person, has had its minutes of use steadily increase over the past year.  It is projected that the CapTel minutes of use will continue to increase at a rate of approximately three percent per month in 2008-2009.  The CapTel cost as approved in the current Sprint Relay contract is $1.37 per minute. Table D shows the historical CapTel minutes of use from July 2005 through February 2008.

 

 Table B – CapTel minutes of use July 2005 – February 2008

FTRI Budget

            The FTRI 2008-2009 fiscal-year budget was reviewed and approved by the FTRI Board of Directors[7] on March 24, 2008, prior to the filing of its budget with the FPSC.  The proposed budget includes an increase of approximately $1.6 million from the 2007-2008 budget year.  However, FTRI believes that the TRS surcharge can remain at $0.11 per access line for the 2008-2009 fiscal year.  The three major increases in the budget are for voice amplified telephones ($769,037), relay provider services ($598,573), and outreach expenses ($176,998).

            The increases for voice amplified telephones and outreach expenses are a result of FTRI’s commitment to increase its new clients during the next fiscal year.  FTRI plans to add three new regional TRS equipment distribution centers for Florida consumers during the 2008-2009 fiscal year.  The start-up inventory for these three new distribution centers and resulting increase in new clients as a result of outreach efforts will increase the demand for voice amplified telephones.

Estimated minutes of use of traditional relay service ($0.75/minute) for the 2008-2009 fiscal year show a decrease of approximately three percent per month while the estimated minutes of use of CapTel captioning service ($1.37/minute) show an increase of approximately three percent per month.  The difference in the costs of the two services account for the estimated $598,573 increase in relay provider services for the 2008-2009 budget year.   

After analysis of the proposed budget, staff believes FTRI should have sufficient funds for its 2008-2009 fiscal-year budget and will have ample monies in the reserve account to address the initial cost of implementing VRS and IP Relay when that mandate occurs.  Therefore, staff believes that the surcharge should be maintained at $0.11 per month to cover the FTRI 2008-2009 budget.  A comparison of the FTRI 2007-2008 approved budget and the FTRI 2008-2009 proposed budget is shown below.  

                                               

Conclusion:

Staff has reviewed FTRI’s 2008-2009 fiscal year budget request and believes it is reasonable.  Staff also believes the Commission’s actions to minimize the impact of funding the intrastate costs of VRS and IP Relay have provided sufficient reserve in the TRS Fund to allow enough time for legislators to make any necessary changes which may be needed to the TRS statute.  The current TRS surcharge of $0.11 should meet FTRI’s budget needs for the 2008-2009 fiscal year.  Therefore, staff recommends that the TRS surcharge be maintained at $0.11 per month for the fiscal year 2008-2009, effective July 1, 2008.  Staff also recommends that the Commission order the incumbent local exchange companies, competitive local exchange companies, and shared tenant providers to continue to  bill the $0.11 surcharge for the fiscal year 2008-2009, effective July 1, 2008. 

 

Issue 2: 

Should the Commission approve Ms. Kim Schur and Mr. Richard Herring as Advisory Committee members to replace Mr. Rick Kottler and Ms. Kathy Borzell effective immediately?

Recommendation: 

 Yes, the Commission should approve Ms. Kim Schur and Mr. Richard Herring as Advisory Committee members to replace Mr. Rick Kottler and Ms. Kathy Borzell effective immediately.  (Moses, Casey)

Staff Analysis: 

 Section 427.706, Florida Statutes, provides for up to 10 members on an advisory committee that assists the Commission with the implementation of the relay system.  Section 427.706(1)(b), Florida Statutes, requires, to the extent practicable, one hearing-impaired person recommended by the Self-Help for the Hard of Hearing (now known as the Hearing Loss Association of Florida) be included as a member of the advisory committee.  Ms. Kathy Borzell has served in the position for many years, but has submitted her resignation.  As shown in Attachment B, the Hearing Loss Association of Florida has nominated Mr. Richard Herring to replace Ms. Borzell on the advisory committee.  Mr. Herring has worked as the New Jersey division director of the Division of the Deaf and Hard of Hearing in the Department of Human Services, and also was the chairman of the New Jersey Relay Advisory Board.  Staff believes Mr. Herring would be a valuable addition to the advisory committee.

Section 427.706(1)(f), Florida Statutes, requires that one person with experience in providing relay services recommended by the Deaf Service Center Association be included on the Advisory Committee.  Mr. Rick Kottler has served in this position but has resigned because of other commitments.  As shown in Attachment C, the Deaf Service Center Association has nominated Ms. Kim Schur to take Mr. Kottler’s position on the committee.  Ms. Schur is the Director of the League for the Hard of Hearing-Florida in Ft. Lauderdale.  Her knowledge and experience should be very beneficial as a member of the Advisory Committee.

Staff supports these nominations and recommends that the Commission should approve Ms. Kim Schur and Mr. Richard Herring as Advisory Committee members to replace Mr. Rick Kottler and Ms. Kathy Borzell effective immediately. 

 

 

Issue 3: 

 Should this docket be closed?

Recommendation: 

 No, this docket should not be closed.  (Tan)

Staff Analysis: 

 This docket should remain open for the duration of the contract period with Sprint as the relay provider.  This docket is used to monitor relay and contract issues that arise during the contract term.