[Federal Register Volume 85, Number 3 (Monday, January 6, 2020)]
[Rules and Regulations]
[Pages 462-466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-27391]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 64
[CG Docket Nos. 13-24 and 03-123; FCC 19-118; FRS 16309]
TRS Fund Contributions
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, the Federal Communications Commission (FCC
or Commission) modifies the cost recovery rules for internet Protocol
Captioned
[[Page 463]]
Telephone Service (IP CTS) so that intrastate as well as interstate
end-user revenues of telecommunications carriers and Voice over
internet Protocol (VoIP) service providers are included in the
calculation of Telecommunications Relay Services (TRS) Fund
contributions to support the costs of providing IP CTS.
DATES: Effective Date: This rule is effective February 5, 2020.
Compliance Date: Intrastate carriers and VoIP service providers
shall be required to contribute revenue to fund intrastate IP CTS
starting July 1, 2020.
FOR FURTHER INFORMATION CONTACT: Michael Scott, Consumer and
Governmental Affairs Bureau, at (202) 418-1264, or email
[email protected].
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order, document FCC 19-118, adopted November 22, 2019, released
November 25, 2019, in CG Docket Nos. 13-24 and 03-123. The Commission
sought comment on the issue in the Further Notice of Proposed
Rulemaking (2018 IP CTS Modernization FNPRM), published at 83 FR 33899,
July 18, 2018. The full text of document FCC 19-118 will be available
for public inspection and copying via the Commission's Electronic
Comment Filing System (ECFS) and during regular business hours at the
FCC Reference Information Center, Portals II, 445 12th Street SW, Room
CY-A257, Washington, DC 20554. To request materials in accessible
formats for people with disabilities (Braille, large print, electronic
files, audio format), send an email to [email protected], or call the
Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice) or
(202) 418-0432 (TTY).
Congressional Review Act
The Commission sent a copy of document FCC 19-118 to Congress and
the Government Accountability Office pursuant to the Congressional
Review Act, 5 U.S.C. 801(a)(1)(A).
Final Paperwork Reduction Act of 1995 Analysis
Document FCC 19-118 does not contain new or modified information
collection requirements subject to the Paperwork Reduction Act of 1995,
Public Law 104-13. Therefore, it also does not contain any new or
modified information collection burden for small business concerns with
fewer than 25 employees, pursuant to the Small Business Paperwork
Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).
Synopsis
1. Section 225 of the Communications Act of 1934, as amended (the
Act), requires the Commission to ensure that ``interstate and
intrastate'' TRS are available to individuals who are deaf, hard of
hearing, or deaf-blind or who have a speech disability. 47 U.S.C. 225.
Section 225 of the Act also authorizes, but does not require, the
establishment of state-administered TRS programs, subject to approval
by the Commission. The Act directs the Commission to adopt, administer,
and enforce regulations governing the provision of interstate and
intrastate TRS, including rules on cost separation, which ``shall
generally provide'' that interstate TRS costs are recovered from
interstate services and intrastate TRS costs are recovered from the
intrastate jurisdiction. 47 U.S.C. 225(d)(3)(B). To provide for the
recovery of interstate TRS costs, the Commission established the
interstate TRS Fund in 1993. Interstate telecommunications carriers, as
well as providers of interconnected and non-interconnected VoIP
service, are required to contribute to the TRS Fund, on a quarterly
basis, a specified percentage of their interstate end-user revenues for
the prior year. The scope of the TRS Fund changed beginning in 2000. To
encourage the development of internet-based TRS, including IP CTS, the
Commission adopted interim measures authorizing use of the TRS Fund to
compensate TRS providers for all compensable costs of internet-based
TRS calls, whether interstate or intrastate. Meanwhile, TRS Fund
contributions continued to be collected solely from providers of
interstate telecommunications and VoIP services based on a percentage
of their interstate end-user revenues.
2. The Commission amends its rules to provide that TRS Fund
contributions for the support of IP CTS shall be calculated based on
the total interstate and intrastate end-user revenues of each
telecommunications carrier and VoIP service provider. As a result, TRS
Fund contributions will be required from providers of intrastate-only
telecommunications and VoIP services. The total contributions needed to
support the TRS Fund will not be affected. The Commission makes this
change for several reasons.
3. First, the current arrangement, whereby all IP CTS costs are
compensated from the TRS Fund, with contributions limited to a
percentage of contributors' interstate revenues, was authorized only as
an interim measure, to speed the development of IP CTS.
4. Second, the inherent inequities and limitations of this
contribution arrangement loom much larger today, given the current size
of the IP CTS funding requirement. Today, IP CTS expenditures are
projected to be $913 million in Fund Year 2019-20--64.5% of TRS Fund
payments to TRS providers. As a result, the burden of supporting IP CTS
has widely disparate impacts on TRS Fund contributors, based solely on
the extent of interstate usage of their services. And providers of
intrastate-only services contribute nothing to support IP CTS.
5. Third, this asymmetric allocation of the IP CTS funding burden
has not been shown to be justified by the jurisdictional
characteristics of the telephone calls for which captions are provided
via IP CTS. IP CTS, which is available to consumers in every state,
provides captions for both intrastate and interstate phone calls.
6. Fourth, the recovery of IP CTS costs based on interstate
revenues alone may create unintended market distortions, improperly
increasing the price of, and reducing the demand for, interstate
telephony services.
7. Fifth, the total amount of interstate end-user revenues from
which TRS Fund contributions can be drawn has been steadily decreasing
over time, worsening the impact on interstate service providers and
users. Ensuring that contributions to support IP CTS are calculated
based on intrastate as well as interstate revenues will not only
address the asymmetry of the funding burden but also strengthen the
funding base for this service.
8. Legal Authority. The Commission has statutory authority under
section 225 of the Act to include the intrastate end-user revenues of
telecommunications carriers and VoIP service providers in the
calculation of TRS Fund contributions to support IP CTS. Section 225
expressly directs the Commission to ensure that both interstate and
intrastate TRS are available and grants the Commission broad authority
to establish regulations governing both interstate and intrastate TRS,
including, explicitly, TRS cost recovery. 47 U.S.C. 225(b), (d)(3).
Indeed, Congress expressly carved section 225 out from the Act's
general reservation of state authority over intrastate communications.
47 U.S.C. 152(b).
9. Where a state undertakes to offer intrastate TRS through a state
program, section 225 of the Act allows the state to determine how its
program is funded. However, if a type of TRS (such as IP CTS) is not
made available through a state program, the Commission--which
[[Page 464]]
is mandated to ensure the availability of both interstate and
intrastate TRS--necessarily retains authority to enable cost recovery.
Indeed, section 225 of the Act affords the Commission, without
limitation, ``the same authority, power, and functions with respect to
common carriers engaged in intrastate communication as the Commission
has in administering and enforcing the provisions of this [Act] with
respect to any common carrier engaged in interstate communication.'' 47
U.S.C. 225(b)(2) (emphasis added). This includes the authority to
collect contributions from intrastate carriers where necessary to
ensure that the provision of TRS is adequately funded--and Congress has
elsewhere prescribed that VoIP service providers shall ``participate in
and contribute to the Telecommunications Relay Services Fund . . . in a
manner prescribed by the Commission . . . consistent with and
comparable to the obligations of other contributors to such Fund.'' 47
U.S.C. 616.
10. A contrary reading of section 225 of the Act could hinder the
Commission's ability to continue ensuring the availability of
technologically advanced versions of TRS, such as IP CTS, which are far
more widely used and enable more effective communication than the older
versions offered through state programs. Internet-based TRS has not
been added to state programs largely due to jurisdictional concerns.
Given the apparent limits on state commissions' authority, the
Commission's ability to structure appropriate funding for internet-
based TRS should not be artificially constrained by a distorted reading
of the federal statute.
11. Arguments for Deferral. The Commission sees no need to defer
expansion of the contribution base in order to address the matter of
how IP CTS is classified as a service. The text of section 225 of the
Act leaves no doubt that TRS--whatever the classification, and whether
or not the internet is involved--can be used for intrastate as well as
interstate calling, and that the resulting costs are recoverable from
providers of intrastate as well as interstate telecommunications and
VoIP services. The Commission also declines to defer this matter
pending referral to and completion of Joint Board proceedings. The
Commission is not modifying how TRS cost separation is determined.
Indeed, Fund contributions will be implemented without cost separation,
and will be unaffected by how many IP CTS minutes might be deemed
intrastate or interstate. Finally, the Commission declines to defer
expansion of the IP CTS contribution base pending further measures to
address waste, fraud, and abuse, which are based on the incorrect
assumption that such expansion is needed solely due to the current
level of program costs.
12. Implementation. The Commission adopts a single contribution
factor for IP CTS that is applied to all the end-user revenues of each
TRS Fund contributor. First, the TRS Fund administrator shall determine
an IP CTS revenue requirement, which shall include the portion of the
TRS Fund reserve that is attributable to IP CTS. Next, based on the
total intrastate and interstate end-user revenue data reported by TRS
Fund contributors on Forms 499-A, the TRS Fund administrator shall
compute a separate TRS Fund contribution factor for IP CTS, by dividing
the IP CTS revenue requirement by contributors' total intrastate and
interstate end-user revenues. This contribution factor shall then be
used to determine the portion of each contributor's total end-user
revenue that must be paid into the TRS Fund to support IP CTS.
13. The single-factor method requires only minor modification of
the current TRS Fund contribution rules, is simple and feasible to
administer, and distributes the funding obligation in a reasonably
equitable manner, ensuring that each TRS Fund contributor pays the same
percentage of its total interstate and intrastate end-user revenues for
support of IP CTS. An alternative approach, which would entail the
calculation of separate contribution factors for interstate and
intrastate IP CTS, based on estimates of the proportions of IP CTS
minutes and provider costs that are interstate and intrastate, is
impracticable at this time.
14. The Commission directs the Wireline Competition Bureau to
revise the instructions for Form 499-A as necessary to conform to
document FCC 19-118. The Commission also directs the Universal Service
Administrative Company (USAC) and the TRS Fund administrator to take
steps to ensure that providers of telecommunications services and VoIP
services, including entities with only intrastate revenue, are able to
register and remit payment to the TRS Fund.
15. Compliance date. Intrastate carriers and VoIP service providers
shall be required to contribute revenue to fund intrastate IP CTS
starting with TRS Fund Year 2020-21. This will allow a reasonable time
for the Commission to amend relevant forms, for any carriers and VoIP
service providers that have only intrastate revenue to register and
prepare for submission of IP CTS contributions to the TRS Fund
administrator, and for the TRS Fund administrator and USAC to process
such registrations in accordance with the rules adopted herein.
16. Economic Impact. If TRS Fund expenditures on IP CTS were to
continue at the 2019-20 level of approximately $913 million, then
approximately 41% of this total, or $374 million, would be contributed
as a percentage of interstate end-user revenues, and 59%, or $539
million, would be contributed as a percentage of intrastate end-user
revenues. This represents a $539 million transfer in the incidence of
TRS Fund contributions from the interstate to the intrastate
jurisdiction, although the total funding requirement does not change.
17. Expanding the TRS Fund contribution base for IP CTS to include
intrastate revenues will likely reduce the TRS funding costs that are
passed on by contributing providers to users of interstate
telecommunications and VoIP services, and concomitantly increase the
costs included in rates paid by users of intrastate services. To the
extent it has such effects, this rule change will remove distortions in
the relative prices of intrastate and interstate services, reducing
such prices where they are high and raising such prices somewhat where
they are low.
18. The State Program Alternative. In the 2018 IP CTS Modernization
FNPRM, as an alternative way to address the inequity in IP CTS cost
recovery, the Commission sought comment on whether to require that IP
CTS be included in all state-administered TRS programs. Under this
approach, contributions to the TRS Fund would continue to be based on
interstate end-user revenues only. However, the Fund would support only
interstate IP CTS costs, while the states themselves would determine
how to fund intrastate IP CTS, just as they currently do for non-
internet-based forms of TRS. The Commission concludes that this
alternative would not be practicable or beneficial at this time. To
date, no state has indicated any degree of readiness to take
responsibility for administering and funding intrastate IP CTS, and a
number of states raise questions regarding their authority under state
law to incorporate IP CTS into state programs. In addition, mandating
the inclusion of IP CTS could lead some states to terminate their TRS
programs. Further, state administration of IP CTS could lead to the
elimination of competition among multiple IP CTS providers, a result
that would conflict with the Commission's prior support of
[[Page 465]]
such competition to encourage higher quality IP CTS offerings.
19. Although the Commission is not mandating states to incorporate
IP CTS into their TRS programs, a state is not precluded from seeking
Commission approval to add IP CTS to a state-funded TRS program. If, at
some future point, a state seeks authority to fund and administer IP
CTS, the Commission will address at that time the related issues of
competition policy and program efficiency. In the event that a state's
request to fund and administer intrastate IP CTS is approved,
appropriate steps will be taken at that time to identify or estimate
intrastate IP CTS minutes and costs and determine by how much to reduce
the TRS Fund contributions from telecommunications and VoIP service
providers operating within the state.
Final Regulatory Flexibility Analysis
20. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), the Commission incorporated an Initial Regulatory
Flexibility Analysis (IRFA) into the 2018 IP CTS Modernization FNPRM.
The Commission sought written public comment on the proposals in the
2018 IP CTS Modernization FNPRM, including comment on the IRFA. No
comments were received in response to the IRFA.
Need For, and Objectives of, the Rules
21. Document FCC 19-118 modifies the cost recovery rules for IP CTS
to provide a fair and reasonable allocation of the funding burden for
TRS. Specifically, providers of intrastate as well as interstate
telecommunications and VoIP services must contribute to the TRS Fund
for the support of IP CTS, based on a percentage of their total annual
end-user revenues from intrastate, interstate, and international
services. The TRS Fund administrator will compute a separate TRS Fund
contribution factor for IP CTS, by dividing the IP CTS revenue
requirement by contributors' total intrastate and interstate end-user
revenues. This contribution factor shall then be used to determine the
portion of each contributor's total end-user revenue that must be paid
into the TRS Fund to support IP CTS. Requiring contributions to include
intrastate revenue to support IP CTS removes contribution asymmetry and
ensures intrastate revenue is available to support intrastate IP CTS.
This action both reduces the inequitable burden on providers of
interstate telecommunications and VoIP services and strengthens the
funding base for this critical service.
Summary of Significant Issues Raised by Public Comments in Response to
the IRFA
22. No comments were filed in response to the IRFA.
Response to Comments by the Chief Counsel for Advocacy of the Small
Business Administration
23. The Chief Counsel did not file any comments in response to the
proposed rules in this proceeding.
Small Entities Impacted
24. The rules adopted in document FCC 19-118 will affect the
obligations of intrastate and interstate telecommunications carriers,
as well as providers of interconnected and non-interconnected VoIP
service. These services are included in the economic categories: Wired
Telecommunications Carriers, Telecommunications Resellers, Wireless
Telecommunications Carriers (except Satellite), and All Other
Telecommunications.
Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements
25. Expanding the TRS Fund contribution base to include intrastate
revenue for IP CTS will require providers of intrastate
telecommunications and VoIP services that are not currently registered
with the TRS Fund administrator to register with the administrator and
submit contribution payments to the TRS Fund. Contributors to the TRS
Fund will see two contribution rates, one for IP CTS and another for
all other forms of TRS, but there will not be a change to how entities
report their revenues on the FCC Form 499-A for purposes of
contributing to the TRS Fund.
Steps Taken To Minimize Significant Impact on Small Entities, and
Significant Alternatives Considered
26. Expanding the TRS Fund contribution base to include intrastate
revenue for IP CTS requires small entities that provide only intrastate
telecommunications and VoIP services to register with and submit
payment to the TRS Fund administrator. However, such burdens would be
offset by the public benefits of appropriately funding the provision of
IP CTS from a broader contribution base. Expanding the contribution
base to include intrastate revenue will also reduce the contribution
burden of providers of interstate telecommunications and VoIP service
by increasing the number of overall contributors to include providers
of intrastate-only telecommunications and VoIP services, and by
expanding the total revenue from which providers make contributions,
thereby decreasing each individual provider's total annual contribution
from interstate end-user revenues. In addition, expanding the
contribution base ensures a more equitable distribution of costs that
better aligns with use of interstate and intrastate IP CTS.
Specifically, the adopted contribution approach ensures that each
contributor pays the same percentage of its total interstate and
intrastate end-user revenues for support of IP CTS. The prior approach,
by contrast required that 100% of the contributions be based on
interstate revenues, even though it is likely that less than half of IP
CTS minutes are interstate.
Ordering Clauses
27. Pursuant to sections 1, 2, and 225 of the Communications Act of
1934, as amended, 47 U.S.C. 151, 152, 225, document FCC 19-118 is
adopted, and part 64 of title 47 is amended.
List of Subjects in 47 CFR Part 64
Individuals with disabilities, Telecommunications,
Telecommunications relay services.
Federal Communications Commission Secretary.
Marlene Dortch,
Final Rules
For the reasons discussed in the preamble, the Federal
Communications Commission amends 47 part 64 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. 154, 201, 202, 217, 218, 220, 222, 225,
226, 227, 228, 251(a), 251(e), 254(k), 262, 403(b)(2)(B), (c), 616,
620, and 1401-1473, unless otherwise noted.
0
2. Amend Sec. 64.604 by revising paragraphs (c)(5)(ii) and
(c)(5)(iii)(A), (B), and (I) to read as follows:
Sec. 64.604 Mandatory minimum standards.
* * * * *
(c) * * *
(5) * * *
(ii) Cost recovery. Costs caused by interstate TRS shall be
recovered from all subscribers for every interstate service, utilizing
a shared-funding cost recovery mechanism. Except as noted in this
paragraph (c)(5)(ii), costs caused by intrastate TRS shall be recovered
from
[[Page 466]]
the intrastate jurisdiction. In a state that has a certified program
under Sec. 64.606, the state agency providing TRS shall, through the
state's regulatory agency, permit a common carrier to recover costs
incurred in providing TRS by a method consistent with the requirements
of this section. Costs caused by the provision of interstate and
intrastate VRS and IP Relay shall be recovered from all subscribers for
every interstate service, utilizing a shared-funding cost recovery
mechanism. Costs caused by the provision of interstate and intrastate
IP CTS, if not provided through a certified state program under Sec.
64.606, shall be recovered from all subscribers for every interstate
and intrastate service, using a shared-funding cost recovery mechanism.
(iii) * * *
(A) Contributions. Every carrier providing interstate or intrastate
telecommunications services (including interconnected VoIP service
providers pursuant to Sec. 64.601(b)) and every provider of non-
interconnected VoIP service shall contribute to the TRS Fund as
described in this paragraph (c)(5)(iii): For the support of TRS other
than IP CTS on the basis of interstate end-user revenues; and for the
support of IP CTS on the basis of interstate and intrastate revenues.
Contributions shall be made by all carriers who provide interstate or
intrastate services, including, but not limited to, cellular telephone
and paging, mobile radio, operator services, personal communications
service (PCS), access (including subscriber line charges), alternative
access and special access, packet-switched, WATS, 800, 900, message
telephone service (MTS), private line, telex, telegraph, video,
satellite, intraLATA, international and resale services.
(B) Contribution computations. Contributors' contributions to the
TRS fund shall be the product of their subject revenues for the prior
calendar year and the applicable contribution factors determined
annually by the Commission. The contribution factor shall be based on
the ratio between expected TRS Fund expenses to the contributors'
revenues subject to contribution. In the event that contributions
exceed TRS payments and administrative costs, the contribution factor
for the following year will be adjusted by an appropriate amount,
taking into consideration projected cost and usage changes. In the
event that contributions are inadequate, the fund administrator may
request authority from the Commission to borrow funds commercially,
with such debt secured by future years' contributions. Each subject
contributor that has revenues subject to contribution must contribute
at least $25 per year. Contributors whose annual contributions total
less than $1,200 must pay the entire contribution at the beginning of
the contribution period. Contributors whose contributions total $1,200
or more may divide their contributions into equal monthly payments.
Contributors shall complete and submit, and contributions shall be
based on, a ``Telecommunications Reporting Worksheet'' (as published by
the Commission in the Federal Register). The worksheet shall be
certified to by an officer of the contributor, and subject to
verification by the Commission or the administrator at the discretion
of the Commission. Contributors' statements in the worksheet shall be
subject to the provisions of section 220 of the Communications Act of
1934, as amended. The fund administrator may bill contributors a
separate assessment for reasonable administrative expenses and interest
resulting from improper filing or overdue contributions. The Chief of
the Consumer and Governmental Affairs Bureau may waive, reduce, modify
or eliminate contributor reporting requirements that prove unnecessary
and require additional reporting requirements that the Bureau deems
necessary to the sound and efficient administration of the TRS Fund.
* * * * *
(I) Information filed with the administrator. The Chief Executive
Officer (CEO), Chief Financial Officer (CFO), or other senior executive
of a provider submitting minutes to the Fund for compensation must, in
each instance, certify, under penalty of perjury, that the minutes were
handled in compliance with section 225 of the Communications Act of
1934 and the Commission's rules and orders, and are not the result of
impermissible financial incentives or payments to generate calls. The
CEO, CFO, or other senior executive of a provider submitting cost and
demand data to the TRS Fund administrator shall certify under penalty
of perjury that such information is true and correct. The administrator
shall keep all data obtained from contributors and TRS providers
confidential and shall not disclose such data in company-specific form
unless directed to do so by the Commission. Subject to any restrictions
imposed by the Chief of the Consumer and Governmental Affairs Bureau,
the TRS Fund administrator may share data obtained from carriers with
the administrators of the universal support mechanisms (see Sec.
54.701 of this chapter), the North American Numbering Plan
administration cost recovery (see Sec. 52.16 of this chapter), and the
long-term local number portability cost recovery (see Sec. 52.32 of
this chapter). The TRS Fund administrator shall keep confidential all
data obtained from other administrators. The administrator shall not
use such data except for purposes of administering the TRS Fund,
calculating the regulatory fees of interstate and intrastate common
carriers and VoIP service providers, and aggregating such fee payments
for submission to the Commission. The Commission shall have access to
all data reported to the administrator, and authority to audit TRS
providers. Contributors may make requests for Commission nondisclosure
of company-specific revenue information under Sec. 0.459 of this
chapter by so indicating on the Telecommunications Reporting Worksheet
at the time that the subject data are submitted. The Commission shall
make all decisions regarding nondisclosure of company-specific
information.
* * * * *
[FR Doc. 2019-27391 Filed 1-3-20; 8:45 am]
BILLING CODE 6712-01-P