Discussion of Issues

Issue 1: 

 Should the Commission approve FTRI’s proposed budget as outlined in Attachment A for fiscal year 2015/2016, effective July 1, 2015, and should the Commission maintain the current Telecommunications Relay Service (TRS) surcharge of $0.11 per month?

Recommendation:  Staff recommends the Commission approve Option 4 in staff’s analysis which reduces FTRI’s proposed budget by $851,774.  FTRI should determine which individual accounts of Category II, Category III, Category IV, and Category V expenses should be adjusted to equal the Commission-approved decrease.  Staff recommends that FTRI re-submit its budget within 30 days of the Commission vote.  The revised budget should show adjustments to the individual accounts reflecting the $851,774 decrease.  Staff recommends that staff be granted administrative authority to approve the resubmitted budget as long as it adheres to the Commission’s decision.  However, if the revised budget indicates an allocation of funds inconsistent with the purpose and intent of TASA, staff will bring the revised budget back to the Commission for further consideration.  Staff also recommends that the TRS surcharge be maintained at $0.11 per month for fiscal year 2015/2016, effective July 1, 2015.  The Commission should order the incumbent local exchange companies, competitive local exchange companies, and shared tenant providers to continue to bill the $0.11 surcharge for fiscal year 2015/2016, effective July 1, 2015.  (Williams, Casey, Page)

Staff Analysis: 

 Minutes of use for traditional TRS continue to decline.  Traditional relay users are transitioning to the more efficient technologies of Internet Protocol Relay,[2] Video Relay Service,[3] Captioned Telephone Service,[4] Internet Protocol Captioned Telephone Service,[5] Internet Protocol Speech to Speech service,[6] and wireless service.  Minutes of use for CapTel service have also declined.

Access lines in Florida to which the relay surcharge applies continue to decline.  FTRI points out in its filing that since fiscal year 2008, access lines have decreased from an average of 9,194,091 for that period to 6,284,851 for fiscal year 2014, a loss of 2,909,240 access lines.  FTRI maintains that declining access lines is one of the primary reasons for its projected shortfall.  As presented in its cover letter accompanying its budget, FTRI’s revenue forecast is based on a 4 percent decline in access lines.

FTRI’s proposed budget is also impacted by an increase in the cost of relay service.  FTRI will incur higher relay provider cost based on the new contract for relay service with Sprint which went into effect on March 1, 2015.  The TRS cost for the AT&T contract was $0.76 per session minute, and the CapTel cost was $1.47 per session minute.  The TRS rate offered by Sprint under the current contract is $1.09 per session minute and $1.63 per session minute for CapTel.   

FTRI Proposed Budget

            Attachment A reflects FTRI’s proposed 2015/2016 fiscal year budget, which was reviewed and adopted by the FTRI Board of Directors on March 6, 2015, prior to filing with the Commission.  After a staff review of the proposed budget, staff believes there are four options for the Commission to consider.

Option 1 – Approve FTRI budget as filed using the relay surplus account to offset the $851,774 deficit. 

FTRI’s 2015/2016 proposed budget filing includes a deficit of $851,774 which it believes can be eliminated by transferring funds from the surplus account.  Option 1 recommends that the $851,774 proposed FTRI budget deficit be eliminated by transferring funds from the relay surplus account to FTRI.

The relay surplus account was created to offset intrastate Internet Relay costs which the FCC continues to maintain in its orders should be absorbed by the states.  Presently, the interstate TRS Fund is paying for both intrastate and interstate Internet Relay such as Video Relay Service, Internet Protocol Relay Service, and Internet Protocol Captioned Telephone Service.  Traditional relay users are transitioning to these Internet Protocol technologies which are more efficient, and presently being paid through the interstate TRS fund.  However, the FCC as recently as August 2013, stated that this arrangement is only temporary.  The FCC believes Title IV and its legislative history make plain that Congress intended that the states be responsible for the cost recovery for intrastate relay services provided under their jurisdiction.[7]

 

In a February 25, 2015 FCC meeting with the National Association for State Relay Administration (NASRA), and the Telecommunications Equipment Distribution Program Association (TEDPA),[8] the FCC verbally stated that it is “exploring the option of the IP CTS funding to stay with the Interstate TRS fund and the obligation for managing the program shift to the Equipment Distribution Programs (EDP).”[9]  However, the Telecom Act, and all FCC Orders to date have indicated that states will be responsible for the cost recovery for intrastate relay services provided under their jurisdiction.

 

If the FCC were to mandate state funding of Video Relay Service, Internet Protocol Relay Service, and Internet Protocol Captioned Telephone Service, it is estimated that at least $32 million would be needed to adequately fund the state program.  Staff believes that if Florida had to absorb the intrastate costs of these Internet Protocol technologies, the maximum $0.25 per access line relay surcharge mandated by state law would be exceeded and a change in state law would be required.[10] 

The Commission, by Order PSC-06-0469-PAA-TP, issued June 1, 2006, in Docket No. 040763-TP, maintained the FTRI surcharge at $0.15/month for one year in lieu of a surcharge reduction, to prepare the state Telecommunications Relay Service Fund for assuming the intrastate costs of Video Relay Service and Internet Protocol Relay, and to allow time to determine how the costs should be recovered.  The FCC has acknowledged that should it decide to mandate state funding, such transition would come with a reasonable phase in period of up to several years to provide states with sufficient notice.

FTRI believes that the $851,774 deficit could be eliminated by using the surplus account money to offset the deficit.  If the Commission approves Option 1, staff recommends that the $851,774 proposed FTRI budget deficit be eliminated by transferring funds from the relay surplus account to FTRI.  Staff also recommends that the TRS surcharge be maintained at $0.11 per month for fiscal year 2015/2016, effective July 1, 2015.  The Commission should order the incumbent local exchange companies, competitive local exchange companies, and shared tenant providers to continue to bill the $0.11 surcharge for fiscal year 2015/2016, effective July 1, 2015.

 

Option 2 – Approve FTRI budget as filed by increasing the monthly relay surcharge from $0.11 to $0.13 to offset the $851,774 deficit. 

FTRI also believes that the $851,774 deficit could be eliminated by increasing the monthly relay surcharge.  Option 2 recommends that the $851,774 proposed FTRI budget deficit be eliminated by increasing the monthly relay surcharge from $0.11 to $0.13.  The relay surcharge has been maintained at $0.11 per month since June 2007, and is collected only from local exchange company landline access lines.  Staff has calculated that a $0.02 increase in the surcharge from $0.11 to $0.13 per month would be necessary to cover the $851,774 deficit in the FTRI proposed 2015/2016 budget.

If the Commission approves Option 2, staff recommends that the TRS surcharge be increased to $0.13 per month for fiscal year 2015/2016, effective July 1, 2015, and recommends that the Commission order the incumbent local exchange companies, competitive local exchange companies, and shared tenant providers to bill the $0.13 surcharge for fiscal year 2015/2016, effective July 1, 2015.

Option 3 – Reduce FTRI budget by $369,814, and use $481,960 of surplus funds to offset the remaining proposed deficit.

The 2015/2016 proposed budget projects total operating revenues to be $8,064,442 and total expenses to be $8,916,216.  Staff believes that FTRI should have estimated the continued decline in access lines more accurately based on historical and projected data and implemented appropriate expense reductions to address the decline.  It has been thoroughly discussed before the Commission during previous FTRI budget proceedings that the anticipated future decline in access lines will have a continued negative impact on FTRI’s budget, and that appropriate cost reductions by FTRI to mitigate the impact is necessary. 

Of the $851,774 projected deficit included in FTRI’s proposed budget, $481,960 is due to higher per minute session rates by Sprint Relay, Florida’s new relay service provider.  The remaining $369,814 deficit is attributable to FTRI expenses other than the relay service provider.

Staff understands FTRI’s desire to transfer funds from the surplus account to cover relay provider costs for the 2015/2016 fiscal year.  FTRI will incur higher relay provider costs based on the change in service provider in 2015 from AT&T to Sprint.  Option 3 mitigates some of the concerns about using the surplus account to supplement FTRI’s budget by only using the surplus account for a portion of FTRI’s projected deficit.

Staff had a communication with FTRI concerning the possibility of reducing its proposed budget on April 2, 2015.  Staff suggested to FTRI that if it believed its budget could be reduced in some manner, that it submit a revised budget.  Staff did not receive a response from FTRI.  Under Option 3, staff recommends that FTRI should reduce its budget by $369,814, and the $481,960 increase due to a change to a new relay service provider be transferred from the reserve account to FTRI.

If the Commission approves Option 3, staff recommends FTRI determine which individual accounts of Category II, Category III, Category IV, and Category V expenses should be adjusted to equal the Commission-approved budget decrease of $369,814.  Staff recommends that the $481,960 increase due to a change to a new relay service provider be transferred from the reserve account to FTRI.  Staff recommends that FTRI re-submit its budget within 30 days of the Commission vote.  The revised budget should show adjustments to the individual accounts and staff should be granted administrative authority to approve the resubmitted budget as long as it adheres to the Commission’s decision.  However, if the revised budget indicates an allocation of funds inconsistent with the purpose and  intent of TASA, staff will bring the revised budget back to the Commission for further consideration.  Staff also recommends that the TRS surcharge be maintained at $0.11 per month for fiscal year 2015/2016, effective July 1, 2015.  The Commission should order the incumbent local exchange companies, competitive local exchange companies, and shared tenant providers to continue to bill the $0.11 surcharge for fiscal year 2015/2016, effective July 1, 2015.

Option 4 – Reduce FTRI budget by $851,774 to offset the total proposed deficit.

Option 4 recommends that FTRI reduce its budget to eliminate the entire $851,774 deficit.  If the Commission approves Option 4, staff recommends FTRI reduce its proposed budget by $851,774 by determining which individual accounts of Category II, Category III, Category IV, and Category V expenses should be adjusted to equal the Commission-approved decrease.  Staff recommends that FTRI re-submit its budget within 30 days of the Commission vote.  The revised budget should show adjustments to the individual accounts reflecting an $851,774 decrease in its proposed 2015-2016 budget.  Staff recommends that staff be granted administrative authority to approve the resubmitted budget as long as it adheres to the Commission’s decision.  However, if the revised budget indicates an allocation of funds inconsistent with the purpose and  intent of TASA, staff will bring the revised budget back to the Commission for further consideration.  Staff also recommends that the TRS surcharge be maintained at $0.11 per month for fiscal year 2015/2016, effective July 1, 2015.  The Commission should order the incumbent local exchange companies, competitive local exchange companies, and shared tenant providers to continue to bill the $0.11 surcharge for fiscal year 2015/2016, effective July 1, 2015.

 

Summary

            A comparison of FTRI’s 2014/2015 Estimated Revenue & Expenses, along with each of the Options presented above is shown below. 

 

Conclusion

Option 1 would allow the $851,774 deficit to be eliminated by transferring funds from the relay surplus account to FTRI.  Option 2 would offset the $851,774 proposed FTRI budget deficit by increasing the monthly relay surcharge from $0.11 to $0.13.  Option 3 would offset the $851,774 proposed FTRI budget deficit by reducing the FTRI budget by $369,814, and using $481,960 of surplus funds to offset relay provider cost.  Option 4 would offset the $851,774 proposed FTRI budget deficit by reducing the FTRI budget by $851,774.  Options 1, 3 and 4 would maintain the relay surcharge at $0.11 per month for the 2015/2016 FTRI budget. Option 2 would increase the surcharge from $0.11 to $0.13.

It is true that landline access lines, which are charged a monthly relay surcharge, continue to decrease, but that does not mean that deaf relay services are being hindered.  Loss of landline access lines is occurring on a national basis as more and more consumers transition to wireless and Voice over Internet Protocol (VoIP) services.  Deaf and hard-of-hearing consumers are just a part of that technology transition.  Staff believes that by statute, wireless and VoIP relay services  are not within the Commission’s jurisdiction.

Although the Commission in past years has allowed FTRI to use surplus fund money for its budget deficits, recent decisions have required FTRI to live within its budget.  Staff believes the surplus account should be maintained at this time pending a final decision by the FCC of whether costs of intrastate Internet Protocol services will be shifted to the states.  Staff also believes that increasing the relay surcharge at this time would place an additional burden on consumers and should not be done. 

Therefore, staff recommends the Commission approve Option 4 in staff’s analysis which reduces FTRI’s proposed budget by $851,774.  FTRI should determine which individual accounts of Category II, Category III, Category IV, and Category V expenses should be adjusted to equal the Commission-approved decrease.  Staff recommends that FTRI re-submit its budget within 30 days of the Commission vote.  The revised budget should show adjustments to the individual accounts reflecting the $851,774 decrease.  Staff recommends that staff be granted administrative authority to approve the resubmitted budget as long as it adheres to the Commission’s decision.  However, if the revised budget indicates an allocation of funds inconsistent with the purpose and intent of TASA, staff will bring the revised budget back to the Commission for further consideration.  Staff also recommends that the TRS surcharge be maintained at $0.11 per month for fiscal year 2015/2016, effective July 1, 2015.  The Commission should order the incumbent local exchange companies, competitive local exchange companies, and shared tenant providers to continue to bill the $0.11 surcharge for fiscal year 2015/2016, effective July 1, 2015. 
Issue 2: 

 Should the docket be closed?

Recommendation:

 No.  A Consummating Order should be issued, unless a person whose substantial interests are affected by the Commission’s decision files a protest within 21 days of the issuance of the proposed agency action.  The docket should remain open to address all matters related to relay service throughout the life of the current Sprint contract.  (Williams, Casey, Page)

Staff Analysis:

 A Consummating Order should be issued, unless a person whose substantial interests are affected by the Commission’s decision files a protest within 21 days of the issuance of the proposed agency action.  The docket should remain open to address all matters related to relay service throughout the life of the current Sprint contract.