Case Background
The
Telecommunications Access System Act of 1991 (TASA) established a statewide
telecommunications relay system. Section 427.704(1), Florida Statutes (F.S.),
provides that the Florida Public Service Commission (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 deaf, hard of hearing, or speech impaired. TASA
provides for the purchase and distribution of specialized telecommunications
devices as defined in Section 427.703(11), F.S. As defined by Section
427.703(16), F.S., this system is to provide telecommunications service for
deaf or hard of hearing persons that is functionally equivalent to the service
provided to hearing persons.
The
telecommunications access system provides deaf or hard of hearing persons
access to basic telecommunications services by using a specialized
Communications Assistant that relays information between the deaf or hard of
hearing person and the other party to the call. The primary function of the
telecommunications access system is accomplished through the use of a
Telecommunications Device for the Deaf (TDD). The person using the TDD types a
message to the Communications Assistant who in turn voices the message to the
other party or types the message to a Captioned Telephone that displays
real-time captions of the conversation.
Florida
Telecommunications Relay, Inc. (FTRI), a non-profit corporation formed by the
local exchange telephone companies, was selected by the Commission to serve as
the telecommunications access system administrator. FTRI is primarily
responsible for the purchase and distribution of specialized telecommunications
equipment. As part of this process, FTRI contracts with other organizations to
assist in the distribution of equipment and provide customer training on the
proper use of the equipment and the relay service. FTRI also conducts marketing
to raise awareness of available specialized equipment and related relay
service. Finally, FTRI pays the relay services provider that is selected by the
Commission through a request for proposals process. The current relay service
provider is T-Mobile USA, Inc. (T-Mobile).
FTRI, as the
TASA Administrator, is funded through the Telecommunications Relay Service
(TRS) surcharge. This surcharge was capped by the Florida Legislature at a
maximum of $0.25 per switched access line (landline) per month, with a limit of
25 lines per account billed. Only local exchange telecommunications companies
are required to collect and remit this surcharge to FTRI. The initial TRS
surcharge was set at $0.05 per access line per month. The Commission has changed the surcharge
through the years to meet FTRI’s budgetary needs. The monthly surcharge is
currently $0.09 per access line.
As part of its
oversight responsibilities of the telecommunications access system, the
Commission reviews and approves a budget submitted by FTRI on an annual basis. On
May 6, 2024, FTRI submitted its Fiscal Year 2024/2025 budget for the
Commission’s consideration, which is included as Attachment A. FTRI also compared its proposed budget to
the Commission-approved 2023/2024 budget, as well as the estimated revenue and
expenses. FTRI’s estimated revenue and expenses were based on actual data from
the first two quarters and estimated data for the third and fourth quarters of
the current fiscal year. On May 13, 2024, FTRI filed third quarter financial
information. With this updated information, staff formulated its own estimated
expenses for Fiscal Year 2023/2024, which is reflected in Attachment B.
This
recommendation addresses FTRI’s proposed budget and recommended TRS surcharge
for Fiscal Year 2024/2025. The TRS surcharge is the only rate the Commission
establishes for telecommunications companies. The Commission is vested with
jurisdiction pursuant to Chapter 427, F.S.
Discussion
of Issues
Issue 1:
Should the Commission approve FTRI's proposed Fiscal
Year 2024/2025 budget as presented in Attachment A?
Recommendation:
Yes. Staff recommends the Commission approve FTRI’s
proposed budget expenses of $3,286,708 for Fiscal Year 2024/2025, effective
upon issuance of the consummating order. (Williams, Fogleman, Imig, Harper)
Staff Analysis:
Traditional
Telecommunications Relay Service
The
traditional TRS cost to FTRI as approved in the T-Mobile contract is currently
$1.60 per session minute. T-Mobile’s projections indicate that traditional TRS
minutes of use during Fiscal Year 2024/2025 will decrease by 25 percent from
the current fiscal year. It has been observed that traditional relay users are
transitioning to the following services:
·
IP Relay
·
VRS
·
IP CTS
·
Wireless Service
CapTel
Service
The CapTel
cost to FTRI as approved in the T-Mobile contract is currently $1.67 per
session minute. CapTel service uses a specialized telephone that provides
captioning of the incoming call for a deaf or hard of hearing person.
T-Mobile’s projections show that CapTel minutes of use during Fiscal Year 2024/2025
will decline by 45 percent from the current fiscal year. CapTel users are also
transitioning to other forms of advanced services as listed above.
Florida
Telecommunications Relay, Inc. Budget
Attachment
A reflects FTRI’s Fiscal Year 2024/2025 proposed budget, which was reviewed and
adopted by FTRI’s Board of Directors prior to filing with the Commission. FTRI’s
proposed budget projects total expenses of $3,286,708. FTRI also proposed the
Commission reduce the current $.09 surcharge to $.08 per line, which would
result in total surcharge revenue of $2,349,642. FTRI projects $1,099,754 in
interest income during Fiscal Year 2024/2025 through investments in its Investment
Trust Money Market account and 3-month T-bills. As a result, FTRI’s total
operating revenue is estimated to be $3,449,396.
T-Mobile’s
forecasted Fiscal Year 2024/2025 traditional TRS minutes of use are 487,992,
while its forecasted CapTel minutes of use are 84,435. FTRI’s proposed TRS and
CapTel service provider expense for Fiscal Year 2024/2025 is $921,793. For
comparison, the Commission-approved budget for the current fiscal year
reflected traditional TRS minutes of 651,963 and CapTel minutes of 153,345,
with a total TRS and CapTel service provider expense of $1,299,227.
Analysis
Staff
developed an estimate of FTRI’s final expenses for Fiscal Year 2023/2024, which
is presented in Attachment B. Staff used actual data from the first three
quarters and took an average of those three quarters to estimate the fourth.
Staff’s estimates were then used as one element in evaluating FTRI’s proposed
budget, along with analyzing past Commission-approved FTRI budgets to identify
and evaluate ongoing cost reduction measures.
Below is
staff’s review of selected items from FTRI’s proposed budget expense by
category.
Category
I – Relay Services
Category I captures Dual Party
Relay (DPR) provider expenses for traditional TRS and CapTel service currently
provided by T-Mobile. In Fiscal Year 2023/2024, basic TRS and CapTel minutes of
use decreased from the prior fiscal year. Based on continued advancements in
technology, along with the expansion of consumer choice, it appears that
minutes of use for these services will continue to decline.
The relay
service expenses are calculated using the minutes of use forecasted by T-Mobile
and the relay service contract rates. The current T-Mobile contract rates are
$1.60 for TRS and $1.67 for CapTel, which when applied to the forecasted
minutes of use results in FTRI’s proposed $921,793 total relay service expense.
Staff
recommends approval of $921,793 for DPR provider expenses.
Category
II – Equipment & Repairs
Category
II expenses reflect the purchase of equipment to be distributed to clients and
the repairs that FTRI must make to keep the equipment in working order. FTRI
has requested $465,154 for Fiscal Year 2024/2025. FTRI’s proposed budget
represents a $63,696 increase in expense from the current Commission-approved
budget.
The
proposed increase in equipment and repairs expense is largely associated with increased
demand for VCP Hearing Impaired phones and In-Line Amplifier equipment, in
addition to replacement of legacy equipment with more advanced devices, such as
the new XLC8GLT Deluxe captioning device. FTRI explained that it no longer purchases
traditional CapTel devices associated with CapTel service. The XLC8GLT Deluxe device
will replace the current XLC8 and will include a large captioning screen that
only works with landlines and allows the customer to view larger captions on the
screen via an installed application. FTRI further proposes that, going forward,
the Caption Call Equipment line item be renamed Caption Devices to more accurately
reflect the advanced technology.
Staff
recommends approval of the proposed $465,154 for equipment and repairs expense.
Category III – Equipment Distribution
& Training
Category
III reflects the cost of distributing equipment throughout the state and the
training of consumers in the use of that equipment. FTRI’s proposed budget
requests $262,000 for distribution and training, which reflects a $53,766
decrease from the current Commission-approved budget.
Expenses
related to Regional Distribution Centers (RDCs) are the largest component of
Category III expenses. FTRI’s proposed budget for RDCs is $200,000, which is
$49,291 lower than the current Commission-approved budget. FTRI proposes no
increase in Fiscal Year 2024/2025 to the fees paid per service provided by
RDCs. FTRI is hopeful that the increase in these fees made in Fiscal Year
2023/2024 will continue to incent RDCs to provide more services. FTRI stated
that it has seen a small increase in services provided by RDCs in the current Fiscal
Year.
Staff recommends
approval of FTRI’s $262,000 proposed budget for Category III expenses.
Category
IV – Outreach
Outreach
efforts are designed to promote FTRI’s equipment distribution services and to
raise awareness about Florida relay service. FTRI’s proposed Fiscal Year 2024/2025
Outreach budget increases expense by $16,873.
FTRI
employs various forms of communication in its outreach strategy. FTRI plans to
continue advertising in newspapers using free-standing insert ads (flyers) in
markets where effective. However, FTRI acknowledges that it has witnessed rapid
changes in the newspaper industry. In response, FTRI will continue to utilize
other print tools such as direct mail post cards and coupon book
advertisements. FTRI also plans to continue expanding its digital marketing
campaign, including increased use of banner ads on websites, as well as
targeted email and social media campaigns.
The
Commission has encouraged FTRI to research and consider more technologically
advanced and cost-effective forms of outreach. For example, the Commission
encouraged FTRI to consider adding an online chat function to help with
customer inquiries. FTRI implemented the chat function, termed “FTRI Chat,” in
its Fiscal Year 2022/2023 budget.
Staff
recommends approval of FTRI’s proposed budget for Category IV expenses.
Category
V – General & Administrative
Category V
reflects expenses associated with FTRI’s operations, such as office and
furnishings, employee compensation, contracted services (auditors, attorney and
computer consultants), computers, and other operating expenses. FTRI is
proposing $1,058,455 for Fiscal Year 2024/2025, which represents a $35,624
decrease in Category V expense from the current Commission-approved budget.
Staff
recommends approval of FTRI’s Category V expenses.
Conclusion
Staff recommends the Commission approve FTRI’s proposed budget
expenses of $3,286,708 for Fiscal Year 2024/2025, effective upon issuance of
the consummating order.
Issue 2:
What TRS surcharge should the Commission approve for
Fiscal Year 2024/2025?
Recommendation:
Staff recommends the Commission approve FTRI’s proposal
to reduce the TRS surcharge from $0.09 to $0.08. Staff recommends the
Commission order all local exchange companies to bill the $0.08 TRS surcharge
for Fiscal Year 2024/2025, effective September 1, 2024. (Williams, Fogleman,
Imig, Harper)
Staff Analysis:
Based
on current industry trends, FTRI estimates that access lines will decrease at
the rate of approximately nine percent from the current fiscal year as more
consumers transition away from landline phones. Holding the TRS surcharge
constant, a decrease in access lines results in a decrease in revenues to
support FTRI’s activities. FTRI’s proposal to reduce the TRS surcharge from
$0.09 to $0.08 per access line places further downward pressure on revenues. If
approved, the lower surcharge of $0.08 is expected to generate $2,349,642 in
surcharge revenue.
FTRI also
maintains a reserve account with a current balance of approximately $20
million. The reserve account represents funds that were originally set aside in
anticipation that the Federal Communications Commission (FCC) might delegate
intrastate costs associated with Video Relay Service (VRS) and Internet
Protocol Caption Telephone Service (IP-CTS) to states. Though conversations
continue, there remains no clear indication that the FCC will delegate VRS and
IP-CTS authority to states in the foreseeable future. FTRI currently invests
the reserve account in three-month treasury bills and money market accounts to
generate interest income. FTRI estimates interest income for Fiscal Year
2024/2025 will be $1,099,754, representing a $417,714 increase from Fiscal Year
2023/2024.
The sum of
the surcharge revenue, $2,349,642, with the estimated interest income, $1,099,754,
results in the total operating revenue of $3,449,396. Even with a decrease in
the surcharge, FTRI’s proposed budget will result in an estimated surplus for
Fiscal Year 2024/2025 of $162,688.
Staff
supports the reduction to $0.08 because it balances the budget more precisely compared
to maintaining the current $0.09 surcharge.
Conclusion
Staff recommends the Commission approve FTRI’s proposal to
reduce the TRS surcharge from $0.09 to $0.08. Staff recommends the Commission order
all local exchange companies to bill the $0.08 TRS surcharge for Fiscal Year
2024/2025, effective September 1, 2024.
Issue 3:
Should this docket be closed?
Recommendation:
If no person whose substantial interests are
affected by the proposed agency action files a protest within 21 days of the
issuance of the order, this docket should be closed upon the issuance of a
consummating order. (Imig, Harper)
Staff Analysis:
At the conclusion of the protest period, if no
protest is filed this docket should be closed upon the issuance of a
consummating order.
