Telecommunications Relay Services and Speech-to-Speech Services for Individuals With Hearing and Speech Disabilities, 54009-54017 [E6-14901]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 71, Number 177 (Wednesday, September 13, 2006)]
[Proposed Rules]
[Pages 54009-54017]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-14901]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CG Docket No. 03-123; FCC 06-106]


Telecommunications Relay Services and Speech-to-Speech Services 
for Individuals With Hearing and Speech Disabilities

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Commission seeks comment on a broad 
range of issues concerning the compensation of providers of 
telecommunications relay services (TRS) from the Interstate TRS Fund 
(Fund). The Commission seeks comment on: Alternative cost recovery 
methodologies for interstate traditional TRS and Speech-to-Speech 
(STS), including Hamilton Relay, Inc.'s (Hamilton) proposed ``MARS'' 
plan (``Multi-state Average Structure''), and also whether traditional 
TRS and STS should be compensated at the same rate; the appropriate 
cost recovery methodology for Video Relay Service (VRS) and the length 
of time the VRS rate should be in effect; issues relating to 
``reasonable'' costs compensable under the present cost recovery 
methodology, including whether, and to what extent, marketing and 
outreach expenses, overhead costs, and executive compensation are 
compensable from the Fund, and ways to improve the management and 
administration of the Fund, including adopting measures for assessing 
the performance and efficiency of the Fund and to deter waste, fraud, 
and abuse.

DATES: Comments are due on or before October 30, 2006. Reply comments 
are due on or before November 13, 2006. Written Paperwork Reduction Act 
(PRA) comments on the proposed information collection requirements 
should be submitted on or before November 13, 2006.

ADDRESSES: You may submit comments, identified by [CG Docket number 03-
123 and/or FCC Number 06-106], by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web Site: https://
www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: FCC504@fcc.gov or phone (202) 418-
0539 or TTY: (202) 418-0432.
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document. In addition, you may submit your 
PRA comments by e-mail or U.S. postal mail. To submit your comments by 
e-mail send them to PRA@fcc.gov, and to Kristy L. LaLonde, OMB Desk 
Officer, Room 10234 NEOB, 725 17th Street, NW., Washington, DC 20503, 
or via the Internet to Kristy--L.--LaLonde@omb.eop.gov, or via fax at 
(202) 395-5167. To submit your comments by U.S. postal mail, mark it to 
the attention of Leslie F. Smith, Federal Communications Commission, 
445 12th Street, SW., Room 1-C216, Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Thomas Chandler, Consumer & 
Governmental Affairs Bureau, Disability Rights Office at (202) 418-1475 
(voice), (202) 418-0597 (TTY), or e-mail at Thomas.Chandler@fcc.gov. 
For additional information concerning the PRA information collection 
requirements contained in this document, contact Leslie Smith at (202) 
418-0217, or via the Internet at PRA@fcc.gov.

SUPPLEMENTARY INFORMATION: The Further Notice of Proposed Rulemaking 
Telecommunications Relay Services and Speech-to-Speech Services for 
Individuals with Hearing and Speech Disabilities, (2006 Cost Recovery 
FNPRM); CG Docket No. 03-123, FCC 06-106, contains proposed information 
collection requirements subject to the PRA of 1995, Public Law 104-13. 
It will be submitted to the Office of Management and Budget (OMB) for 
review under section 3507 of the PRA. OMB, the general public, and 
other Federal agencies are invited to comment on the proposed 
information collection requirements contained in this document. This is 
a summary of the Commission's document FCC 06-106, TRS and STS Services 
for Individuals with Hearing and Speech Disabilities, 2006 Cost 
Recovery FNPRM, CG Docket No. 03-123, adopted July 13, 2006, released 
July 20, 2006, seeking comment on issues concerning the compensation of 
TRS providers from the Fund. Pursuant to Sec. Sec.  1.415 and 1.419 of 
the Commission's rules, 47 CFR 1.415 and 1.419, interested parties may 
file comments and reply comments on or before the dates indicated on 
the first page of this document. Comments may be filed using: (1) The 
Commission's Electronic Comment Filing System (ECFS), (2) the Federal 
Government's eRulemaking Portal, or (3) by filing paper copies. See 
Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121, 
May 1, 1998.
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: https://www.fcc.gov/cgb/ecfs/ or the Federal eRulemaking Portal: https://www.regulations.gov. Filers 
should follow the instructions provided on the Web site for submitting 
comments.
     For ECFS filers, if multiple docket or rulemaking numbers 
appear in the caption of this proceeding, filers must transmit one 
electronic copy of the comments for each docket or rulemaking number 
referenced in the caption. In completing the transmittal screen, filers 
should include their full name, U.S. Postal Service mailing

[[Page 54010]]

address, and the applicable docket or rulemaking number, which in this 
instance is CG Docket No. 03-123. Parties may also submit an electronic 
comment by Internet e-mail. To get filing instructions, filers should 
send an e-mail to ecfs@fcc.gov, and include the following words in the 
body of the message, ``get form .'' A sample form 
and directions will be sent in response.
     Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. If more than one 
docket or rulemaking number appears in the caption in this proceeding, 
filers must submit two additional copies of each additional docket or 
rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail (although the Commission continues to experience delays in 
receiving U.S. Postal Service mail). All filings must be addressed to 
the Commission's Secretary, Office of the Secretary, Federal 
Communications Commission.
     The Commission's contractor will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing 
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be 
held together with rubber bands or fasteners. Any envelopes must be 
disposed of before entering the building.
     Commercial mail sent by overnight mail (other than U.S. 
Postal Service Express Mail and Priority Mail) must be sent to 9300 
East Hampton Drive, Capitol Heights, MD 20743.
     U.S. Postal Service first-class, Express, and Priority 
mail should be addressed to 445 12th Street, SW., Washington, DC 20554.
    Pursuant to Sec.  1.1200 of the Commission's rules, 47 CFR 1.1200, 
this matter shall be treated as a ``permit-but-disclose'' proceeding in 
which ex parte communications are subject to disclosure. Persons making 
oral ex parte presentations are reminded that memoranda summarizing the 
presentations must contain summaries of the substance of the 
presentation and not merely a listing of the subjects discussed. More 
than a one or two sentence description of the views and arguments 
presented is generally required. Other requirements pertaining to oral 
and written presentations are set forth in Sec.  1.1206 (b) of the 
Commission's rules.
    People with Disabilities: To request materials in accessible 
formats for people with disabilities (Braille, large print, electronic 
files, audio format), send an e-mail to fcc504@fcc.gov or call the 
Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 
418-0432 (TTY).

Initial Paperwork Reduction Act of 1995 Analysis

    The 2006 Cost Recovery FNPRM contains proposed information 
collection requirements. The Commission, as part of its continuing 
effort to reduce paperwork burdens, invites the general public and the 
Office of Management and Budget (OMB) to comment on the information 
collection requirements contained in this document, as required by the 
PRA of 1995, Public Law 104-13. Public and agency comment are November 
13, 2006. Comments should address: (a) Whether the proposed collection 
of information is necessary for the proper performance of the functions 
of the Commission, including whether the information shall have 
practical utility; (b) the accuracy of the Commission's burden 
estimates; (c) ways to enhance the quality, utility, and clarity of the 
information collected; and (d) ways to minimize the burden of the 
collection of information on the respondents, including the use of 
automated collection techniques or other forms of information 
technology. In addition, pursuant to the Small Business Paperwork 
Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506 (c)(4), the 
Commission seeks specific comment on how it may ``further reduce the 
information collection burden for small business concerns with fewer 
than 25 employees.''
    OMB Control Number: 3060-0463.
    Title: Telecommunications Relay Services and Speech-to-Speech 
Services for Individuals with Hearing and Speech Disabilities, 2006 
Cost Recovery Further Notice of Proposed Rulemaking, CG Docket No. 03-
123, FCC 06-106.
    Form No.: N/A.
    Type of Review: Revision of currently approved collection.
    Number of Respondents: 5,060.
    Number of Responses: 5,066.
    Respondents: Business and other for-profit entities; State, Local 
or Tribal Government.
    Estimated Time per response: 10 hours.
    Frequency of Response: Annual and on occasion reporting 
requirement; Recordkeeping; Third party disclosure.
    Total Annual Hourly Burden: $11,148.
    Total Annual Costs: $0.
    Privacy Act Impact Assessment: No impact(s).
    Needs and Uses: On December 21, 2001, the Commission released the 
2001 TRS Cost Recovery MO&O & FNPRM, In the Matter of 
Telecommunications Relay Services for Individuals with Hearing and 
Speech Disabilities, Recommended TRS Cost Recovery Guideline, CC Docket 
No. 98-67, FCC 01-371. In the 2001 TRS Cost Recovery MO&O &FNPRM, the 
Commission directed the TRS administrator to continue applying the 
average per minute compensation methodology to develop traditional TRS 
compensation rates; required TRS providers to submit certain TRS-
related costs and demand data to TRS Fund administrator; and directed 
the TRS administrator to expand the TRS Center Data Request, a form for 
providers to itemize their actual and projected cost and demand data, 
to include specific sections to capture STS costs and completed 
conversation minutes for STS and VRS.
    On July 20, 2006, the Commission released a 2006 Cost Recovery 
FNPRM, In the Matter of Telecommunications Relay Services and Speech-
to-Speech Services for Individuals with Hearing and Speech 
Disabilities, CG Docket No. 03-123, FCC 06-106. The Commission seeks 
comment on a broad range of issues concerning the compensation of 
providers of TRS from the Interstate TRS Fund (Fund). In the 2006 Cost 
Recovery FNPRM, the Commission seeks comment on: (1) Hamilton's 
proposed ``MARS'' plan and alternative cost recovery methodologies for 
traditional TRS, STS and Internet Protocol (IP) Relay, including any 
possible changes to the existing TRS Center Data Request form; (2) 
appropriate cost recovery methodology for VRS, including possible 
changes to the existing TRS Center Data Request form; and (3) the basis 
of ``reasonable'' costs of providing all forms of TRS that should be 
compensable under present cost recovery methodology, including 
marketing and outreach expenses, overhead costs and executive 
compensation. Also, in the 2006 Cost Recovery FNPRM, the Commission 
proposes to improve the efficiency of the rate setting process, and to 
ensure the reasonableness of the compensation rates for all forms of 
TRS. The 2006 Cost Recovery FNPRM proposes a mandatory reporting 
requirement that TRS providers compensated from the Interstate TRS Fund 
would be required to submit rate data to the Commission, either 
annually or for a multi-year period, for the states in which they 
provide service.

[[Page 54011]]

Synopsis

Background

TRS Cost Recovery Framework

    TRS. When section 225 of the Communications Act was enacted and 
implemented, TRS calls were placed using a TTY connected to the Public 
Switched Telephone Network (PSTN) (traditional TRS). In March 2000, the 
Commission recognized several new forms of TRS, including STS and VRS. 
STS is used by persons with a speech disability. Specially trained 
Communications Assistants (CAs) who understand the speech patterns of 
persons with speech disabilities repeat the words spoken to the other 
party to the call. The Commission made STS a mandatory service, so that 
all states with a certified state TRS program must offer this service. 
VRS is an Internet-based form of TRS that allows the TRS user whose 
primary language is American Sign Language (ASL) to communicate with 
the CA in ASL, rather than text, through a video link. In April 2002, 
the Commission recognized a second Internet-based form of TRS--IP 
Relay. Like traditional TRS, IP Relay uses text, but the user connects 
to the CA via the Internet and a personal computer or other web-enabled 
device. Most recently, in August 2003, the Commission recognized 
captioned telephone service as a form of TRS.
    Compensation of TRS Providers. Section 225 of the Communications 
Act creates a cost recovery regime whereby providers of TRS are 
compensated for the reasonable costs caused by TRS. This regime is 
based on the ``jurisdictional separation of costs.'' Section 225 of the 
Communications 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.'' As a general 
matter, the costs caused by intrastate TRS are recovered by each state. 
No specific funding method is required for intrastate TRS or state TRS 
programs. States generally recover the costs of intrastate TRS either 
through rate adjustments or surcharges assessed on all intrastate end 
users, and reimburse TRS providers directly for their intrastate TRS 
costs. Most states presently select one provider to offer TRS within 
the state.
    With respect to interstate TRS, there are two aspects to the cost 
recovery framework set forth in the regulations: (1) Collecting 
contributions from common carriers providing interstate 
telecommunications services to create a fund from which eligible TRS 
providers may be compensated; and (2) compensating eligible TRS 
providers from the Fund for the costs of providing eligible TRS 
services. In creating the Interstate TRS Fund, the Commission enacted a 
shared funding mechanism based on contributions from all carriers who 
provide interstate telecommunications services. All contributions are 
placed in the Fund, which is administered by the TRS Fund 
administrator, currently the National Exchange Carrier Association, 
Inc. (NECA). The Fund administrator uses these funds to compensate 
``eligible'' TRS providers for the costs of providing TRS. Compensation 
is based on per-minute rates adopted each year by the Commission. There 
are currently four different compensation rates for the different forms 
of TRS: traditional TRS, IP Relay, STS, and VRS.
    To determine the annual per-minute compensation rates under the 
present cost recovery methodology, TRS providers are required to submit 
to the Fund administrator projected cost and minutes of use data for a 
two-year period. Specifically, TRS providers must supply the 
administrator with ``total TRS minutes of use, total interstate TRS 
minutes of use, total TRS operating expenses and total TRS 
investment,'' as well as ``other historical or projected information 
reasonably requested by the administrator for purposes of computing 
payments and revenue requirements.'' Using this data, the Fund 
administrator determines the average per-minute compensation rate for 
the various forms of TRS, and submits the rates to the Commission for 
approval. The Commission issues a rate order each year by June 30, 
either approving or modifying these rates.

Discussion

    In recent years, the annual determination of the TRS compensation 
rates--and particularly the VRS rate--under the present methodology has 
presented a variety of regulatory and administrative challenges. 
Further, comments filed in response to NECA's filing of proposed 
compensation rates for the 2006-2007 Fund year reflect dissatisfaction 
with the rate setting process, as well as with the proposed rates. 
Thus, the Commission seeks comment on numerous issues relating to the 
cost recovery methodology used for determining the TRS compensation 
rates paid by the Fund, as well as the scope of the costs properly 
compensable under section 225 of the Communications Act and the TRS 
regime as intended by Congress.
    In so doing, the Commission is mindful of the role of TRS as an 
accommodation under the ADA for persons with disabilities. As the 
Commission has stated, ``because Title IV places the obligation on 
carriers providing voice telephone services to also offer TRS to, in 
effect, remedy the discriminatory effects of a telephone system 
inaccessible to persons with disabilities, the costs of providing TRS 
are really just another cost of doing business generally, i.e., of 
providing voice telephone service.'' For this reason, ``the annual 
determination of the TRS compensation rates is not akin to a rate-
making process that determines the charges a regulated entity may 
charge its customers,'' but rather ``it is a determination of a per-
minute compensation rate that will cover the reasonable costs incurred 
in providing the TRS services mandated by Congress and our 
regulations.'' As the Commission has stated in the context of 
disallowing research and development expenses, the Fund is not intended 
to be ``an unbounded source of funding for enhancements that go beyond 
[the mandatory minimum] standards.'' It follows that the use of TRS 
cost recovery methodologies and procedures that fairly and predictably 
compensate providers for the reasonable costs of providing service will 
not only be faithful to the intent of the ADA, but will also benefit 
all consumers.

Cost Recovery Methodology for Traditional TRS, STS, and IP Relay

Hamilton's MARS Plan
    Hamilton requests that the Commission initiate a proceeding to 
adopt a proposed alternative cost recovery methodology--the ``MARS'' 
Plan--for determining the per-minute compensation rate for traditional 
TRS. Under the proposed MARS plan, the interstate traditional TRS rate 
would be calculated based on a weighted average of the intrastate TRS 
rates paid by the states. In addition, because some states base their 
TRS rate on ``session minutes,'' rather than ``conversation minutes,'' 
Hamilton proposes using a factor to convert session minutes to 
conversation minutes. Hamilton bases its proposal on the intrastate TRS 
data from twenty-three states for which information was readily 
available.
    According to Hamilton, the MARS plan is a superior approach to the 
current cost recovery methodology for traditional interstate TRS 
because it is grounded in competition, as most states select an 
intrastate TRS provider through a competitive bidding process. Hamilton 
also asserts that this approach

[[Page 54012]]

would be easier and less costly to administer and will benefit 
consumers ``by lowering interstate TRS rates to the competitively-based 
market value.''
    Hamilton also notes that under the present cost recovery 
methodology--what it calls ``rate of return regulation''--the Fund 
administrator and the Commission have ``to examine the minutiae of each 
TRS providers'' costs and capital investments,'' and review all costs 
submitted by each provider to determine whether to allow or disallow 
each individual cost. Hamilton adds that this ``complicated rate-making 
process * * * will only get more complicated as providers seek to 
include ever more of their costs in the rate base.'' Hamilton also 
asserts that the present methodology ``fails to replicate the 
competitive market and instead discourages efficiency and encourages 
the `padding' of investment.''
    Hamilton asserts that, by contrast, the MARS plan would eliminate 
the need to examine any carrier data. Under the plan, the Fund 
administrator would simply collect the per-minute rate and minutes of 
use for each state, which are ``presumptively competitive rates * * * 
because they have been subject to a state contract competitive bidding 
process,'' and determine the interstate rate by averaging those rates, 
adjusted for minutes of use. Hamilton notes that this plan would avoid 
the costs associated with collecting, evaluating, correcting, and re-
evaluating TRS provider data.''
    Use of the MARS Plan. The Commission seeks comment on whether the 
it should adopt the MARS plan, in whole or in part (such as in a hybrid 
approach in which the MARS plan is used to set a rate cap), as the cost 
recovery methodology for traditional interstate TRS and possibly, other 
forms of TRS, such as STS. Under the MARS Plan the compensation rate 
for traditional interstate TRS is based on an average of state rates 
for intrastate traditional TRS. In contrast, the present methodology is 
based on projected cost and demand data submitted by the providers. The 
Commission seeks comment generally on whether the MARS plan, because it 
is based on competitively bid state rates, will result in a fairer, 
more reasonable compensation rate. The Commission urges commenters to 
address the advantages and disadvantages of the present methodology, 
the MARS plan, and any alternative approach based, in whole or in part, 
on either.
    The Commission also seeks comment on the fact that some states 
compensate for session minutes, rather than conversation minutes. The 
Fund presently compensates providers for conversation minutes (i.e., 
actual conversation time between the calling and called party), not 
session minutes (i.e., time the CA spends on a call). Because some 
state rates are based on session minutes, Hamilton proposed calculating 
a conversion factor to convert the session minute rates to conversation 
minute rates. The Commission seeks comment on the appropriateness of 
converting session minutes to conversation minutes, and specifically on 
how the factor should be calculated and applied. The Commission also 
seeks comment on whether it would be more appropriate to use session 
minutes instead of conversation minutes. Further, the Commission seeks 
comment on whether some states' practice of rounding call minutes to 
the nearest full minute might affect the use of the MARS plan, and if 
so, how.
    The Commission also seeks comment on how the MARS plan might be 
implemented. For example, if a state rate has been based on the 
interstate rate, inclusion of that state's rate into the MARS plan 
calculation may not be appropriate. The Commission seeks comment on 
whether any other factors that might warrant excluding a particular 
state's rate from the calculation. The Commission also seeks comment on 
how often states adopt TRS compensation rates. The Commission also 
seeks comment on what data would be required from the states and the 
extent to which this data is readily available. In addition, the 
Commission asks parties to comment on any other issues relating to the 
implementation of the MARS plan and the calculation of rates under that 
approach, including the costs and benefits of implementing this plan.
    In addition, Hamilton proposes to weight the individual state rates 
by that states' total minutes of use so that states with relatively 
high rates and low minutes of use do not skew the average. The 
Commission seeks comment on whether it would be appropriate to weight 
the states' rates, and, if so, how a weighted rate should be 
calculated.
Application of MARS Plan to STS
    The Commission recognizes that the MARS Plan is specifically 
proposed as a methodology for developing the compensation rate for 
interstate traditional TRS. Because intrastate STS is also a mandatory 
form of TRS, the Commission seeks comment on whether the MARS plan (or 
a similar plan based on state STS rates) could also be used to 
determine the interstate STS compensation rate. The Commission also 
seeks comment on other issues concerning implementation of the MARS 
plan as applied to STS, including the exclusion of particular states' 
rates, the effect of using session minutes rather than conversation 
minutes, using a weighted average, and whether the rate period should 
be one year or some longer period.
Same Compensation Rate for Traditional TRS, STS, and IP Relay
    NECA has noted that in recent years, given the small demand for 
this service, the STS compensation rate has not been stable. NECA 
therefore recommends in its filing for the 2006-2007 Fund year that the 
Commission consider adopting one rate that would apply to both STS and 
traditional TRS, based on consolidating the providers' data for these 
services. The Commission seeks comment on whether the same rate should 
apply to both traditional TRS and STS, under the existing cost recovery 
methodology, the MARS plan (or a similar type of plan based on state 
rates), or any other methodology, including modified versions of the 
existing cost recovery methodology and/or the MARS plan. The Commission 
further seeks comment on any other matters relating to whether 
traditional TRS and STS should be compensated at the same rate.
    The Commission seeks comment on whether IP Relay calls should also 
be compensated at the same rate as traditional TRS. The Commission 
understands that in many instances the same CAs working at the same TRS 
facility handle traditional TRS and IP Relay calls interchangeably, and 
that the only difference between the calls is how they reach the relay 
center (i.e., via the PSTN or via the Internet). The Commission seeks 
comment generally on this assumption, and on any cost differences 
between providing traditional TRS and providing IP Relay.

Alternative Cost Recovery Methodologies for Traditional TRS, STS, and 
IP Relay

    The Commission also seeks comment on whether other cost recovery 
methodologies might be appropriate for traditional TRS, STS, and IP 
Relay, and easier to administer and result in more predictable rates 
than the current methodology. For example, the Commission seeks comment 
on whether the interstate traditional TRS and STS rates should simply 
be the same as the intrastate rate paid for a similar call coming into 
the relay center and handled by the same provider. Under this approach, 
an interstate traditional TRS or STS call originating in Maryland would 
be compensated at the intrastate

[[Page 54013]]

rate for intrastate calls in the state of Maryland. Because the actual 
cost of providing a traditional TRS or STS call should be the same 
regardless of its jurisdictional nature, the intrastate rate may 
provide a reasonable and fair recovery for interstate calls as well.
    The Commission seeks comment on this proposal and any related 
issues, including whether this methodology may be burdensome or 
overcomplicated, or whether there might need to be an adjustment to the 
compensation for interstate calls if, for example, the intrastate rate 
is impacted by requirements different from the interstate requirements. 
In these circumstances, for example, the compensation rate might 
appropriately be based on the lesser of the rate resulting from the 
MARS plan or the rate the particular state pays for intrastate calls. 
The Commission also seeks comment on this alternative.
Use of a ``True-up'' or Transition to Actual Costs
    The Commission also seeks comment on whether, under the MARS plan 
or any other cost recovery methodology for traditional TRS, STS, and IP 
Relay, there should be a ``true-up'' at the end of the Fund-year based 
on actual reasonable costs. Under a true-up, providers would be 
required to reimburse the Fund for any amount by which their payments 
exceed actual reasonable costs.
    The Commission seeks comment generally on any issues relating to 
the use of a true-up, including how a true-up could be implemented, 
what record keeping requirements might be required, and when and how 
often the true-up should occur. The Commission also seeks comment on 
whether, and how, to transition to a cost recovery methodology under 
which rates are set based on actual reasonable costs, thus eliminating 
any need for a true-up in most, if not all, cases.
Rate Period for Traditional TRS, STS, and IP Relay
    Finally, the Commission seeks comment on whether the interstate 
traditional TRS rate, the interstate STS rate, and the IP Relay rate 
should continue to be set for a one-year period or whether a longer 
rate period is appropriate. The Commission seeks comment on the 
advantages and disadvantages of using either a one-year rate period or 
some longer or shorter period of time for these services.

Cost Recovery Methodology for VRS

The Appropriate Cost Recovery Methodology
    Because of the continued sharp growth in the use of VRS, open 
issues concerning what costs may appropriately be included in 
determining the compensation rate under the current methodology, and 
the providers' demonstrated inability to accurately forecast demand, 
the Commission seeks additional comment on the issues raised in 2004 
(and summarized above). The Commission also notes that, since 2004, the 
Commission has adopted VRS speed of answer and interoperability 
requirements, which may also affect cost recovery issues. In addition, 
the Commission has recently permitted entities desiring to offer VRS to 
be certified by the Commission. As a result, the Commission expects 
additional VRS providers to enter the market. Many of these providers, 
like some of the existing providers, will not be traditional telephone 
companies and therefore, may present unique cost issues. For these 
reasons, the Commission believes that it is important to refresh the 
record on what the appropriate cost recovery methodology for VRS should 
be.
    The Commission is particularly interested in adopting a methodology 
that would result in more predictability for the providers, and be 
consistent with the principle that TRS is intended to be an 
accommodation for persons with disabilities, entitling providers to 
their ``reasonable'' costs of providing this service. The Commission 
therefore seeks comment on whether modifications should be made to the 
current methodology or whether there is a methodology other than the 
current compensation scheme that is more appropriate. For example, 
should the Commission adopt a compensation methodology for VRS where 
funds are disbursed based on each individual provider's actual, 
reasonable costs? Should the Commission treat VRS as a national 
service, seek competitive bids, and thereby permit the two or three 
lowest bidders to provide service at the lowest bid rate, or set 
compensation rates based on the lowest bid, with some sort of incentive 
or disincentive built into the auction process to ensure competitive 
bidding without limiting the number of ultimate providers at that rate? 
The Commission seeks comment on these proposals and any other issues 
relevant to adopting an appropriate cost recovery methodology for VRS.
Use of a ``True-up'' or Transition to Actual Costs
    The Commission also seeks comment on whether, under whatever 
methodology is used, providers should be required to reimburse the Fund 
for any amount by which their payments exceed reasonable actual costs. 
A true-up based on reasonable actual costs might both minimize 
incentives for providers to underestimate projected minutes of use and 
overstate projected costs, and ensure that providers are not over-
compensated. The Commission seeks comment on whether any such over-
compensation from the Fund can be reconciled with section 225 of the 
Communications Act.
Rate Period for VRS
    In 2004, Commission sought comment on whether it is difficult for 
VRS providers to plan and budget for the provision of this service, 
particularly with regard to labor costs and staffing. 2004 TRS Report 
and Order, 19 FCC Rcd at 12569, paragraph 247; published at 69 FR 
53346, September 1, 2006 and 69 FR 53382, September 1, 2004. The 
Commission also recognized that, as a general matter, the operating 
expenses for VRS are more complex than with the other forms of TRS, and 
overall the costs are higher. The Commission therefore sought comment 
on whether the VRS compensation rate should be set for a two-year 
period, rather than a one-year period.

``Reasonable'' Costs and Confidentiality of Provider Data

    NECA's Data Collection Form sets forth several categories of costs 
related to the provision of TRS for which providers may seek 
compensation. These categories apply to all forms of TRS. As discussed 
below, in some instances these categories of costs may not be defined 
with sufficient clarity, and therefore providers may have been 
submitting costs that should not be included in the compensation rates 
as reasonable costs of providing service. For this reason, with regard 
to certain types of costs the Commission seeks comment on the nature 
and extent of such costs that are reasonable and consistent with 
section 225 of the Communications Act.

Marketing and Outreach Expenses

    The Commission seeks comment on the extent to which marketing and 
outreach should continue to be compensated by the Fund. To the extent 
these activities should be covered, the Commission seeks comment on the 
types of expenses that should be covered and whether there is a

[[Page 54014]]

distinction between a marketing and outreach, and if so, how each 
should be defined.
    The Commission seeks comment on the nature of outreach and 
marketing expenses that may properly be compensable under section 225 
of the Communications Act, and how these expenses may be more precisely 
defined. The Commission also seeks comment on whether any marketing 
expenses are properly includable in the rates. The Commission notes 
that, as a general matter, the Commission's rules address outreach and 
are directed at making the public aware of the use and availability of 
TRS generally and encouraging hearing persons and merchants to stay on 
the line and accept relay calls. 47 CFR 64.604(c)(3) of the 
Commission's rules (``Public access to information''). Therefore, the 
Commission seeks comment on whether anything more than non-branded 
educational outreach should be compensated by the Fund. The Commission 
tentatively concludes that provider-specific ``branded'' marketing is 
inappropriate for compensation from the Fund, and that the Fund should 
not be used to promote any particular provider's service over the 
service of competing providers, or to encourage consumers to switch 
providers. The Commission also seeks comment on whether it is 
consistent with the statute to fund marketing or outreach campaigns by 
each provider, since they may largely be duplicative and directed at 
the same audience. Finally, the Commission seeks comment generally on 
the nature and cost of outreach and marketing activities providers have 
funded in the past, as well as amount and nature of the providers' 
current outreach and marketing efforts that are geared toward hearing 
persons and merchants, so that they do not hang up on relay calls.
    The Commission also seeks comment on whether, as NECA has 
suggested, the amount of outreach and marketing expenses compensated 
from the Fund should be based on a given percentage of the compensation 
rate.

Overhead Costs

    The Commission seeks comment on whether, consistent with section 
225 of the Communications Act, any general overhead costs (i.e., those 
indirect costs that are neither cost-causative nor definable) should be 
compensable by the Fund as a reasonable cost of providing TRS. The 
Commission notes that under the statute, TRS was intended to be a 
service offered by common carriers that already offer voice telephone 
service. Further, the cost recovery mechanism was intended to ensure 
that carriers recover the costs of providing this service, since 
consumers who use the service cannot be required to pay more than the 
rates paid for functionally equivalent voice communication services. 47 
U.S.C. 225(d)(1)(D). In this light, the Commission seeks comment on 
whether providers' reasonable costs should be limited to their marginal 
costs of providing TRS, which would not include an allocation of 
general overhead costs. In other words, the Commission seeks comment on 
whether, consistent with the statute, the reasonable costs of providing 
TRS include only categories of costs actually incurred by providing 
TRS.
    Assuming compensation of some overhead costs is consistent with the 
statute, the Commission seeks comment on the appropriate approach to 
allocating general overhead costs to the provision of TRS. Are there 
alternatives to allocating overhead costs as a percentage of total 
revenues? What limits should be placed on the recovery of such costs? 
Commenters supporting a percentage approach should also comment on what 
percentage is appropriate and why.

Legal and Lobbying Expenses

    The Commission seeks comment on limits to the nature and amount of 
legal and lobbying expenses compensable under the ``reasonableness'' 
standard applicable to the compensation of all TRS costs, particularly 
with regard to such costs that are attributable to lobbying and not to 
compliance with the existing TRS rules. Should amounts allowed for 
legal and lobbying expenses be uniform for all providers, or be tied to 
the number or minutes of service provided?
    The Commission also seeks comment on whether it is appropriate and 
consistent with the statutory meaning of costs caused by the service 
for the Fund to reimburse the ``start up'' expenses of new entities 
seeking to offer TRS. For example, should the Fund reimburse the legal 
and related organizational expenses of multiple new companies that 
desire to offer TRS, particularly when there are already numerous 
providers offering service?

Executive Compensation

    The Commission seeks comment concerning the amount of executive 
compensation that is included in the providers' cost data, and on 
whether the number of executives for whom compensation is sought should 
be tied to, or limited by, the overall size of certain providers. 
Should reimbursement of such costs be limited and, if so, how? The 
Commission seeks comment, for example, on how the Commission might 
clarify the scope and nature of such costs that should be considered 
``reasonable'' costs compensable by the Fund, and whether they should 
be limited to some percentage of other costs or in some other way.

Making Provider Cost and Demand Data Public

    Historically, the Commission has honored requests by providers 
submitting projected cost and demand data to treat that information as 
confidential. The Commission recognizes, however, that this approach 
makes it is difficult for providers and the public (including entities 
that pay into the Fund) to comment on the reasonableness of the rates. 
The Commission therefore seeks comment generally on whether the 
providers' projected (and/or actual) cost and demand data, or 
particular categories of the cost and demand data, should be made 
public. The Commission seeks comment on whether there are categories of 
data that in particular should be given confidential treatment, and if 
so, why.

Management and Administration of the Fund

    The Fund has grown from approximately $40 million to over $460 
million since 2000. In addition, the number of providers offering 
service continues to grow, particularly with regard to IP Relay and 
VRS. Further, as noted above, new issues continue to arise concerning 
the nature and extent of certain costs that may be appropriately 
compensated from the Fund. For these reasons, the Commission seeks 
comment generally on steps the Commission may take to ensure the 
integrity of the Fund and to ensure that compensation is consistent 
with the statute.
    Fund Administrator. The Commission seeks comment generally on 
measures the Commission might adopt to improve the management and 
administration of the Fund. Presently, the Commission's rules provide 
for the appointment of a Fund administrator, currently NECA. The 
administrator collects funds from all interstate carriers to create the 
Fund from which TRS providers are compensated. The administrator also 
proposes to the Commission, based on data submitted to it each year by 
the providers, the TRS compensation rates and the resulting Fund size 
and carrier contribution factor. The Commission seeks comment on how 
administration

[[Page 54015]]

of the Fund could be improved, and whether the rules that govern the 
activities of the administrator should be modified, including those 
addressing both the billing and collection process and the disbursement 
of funds to providers. The Commission seeks input from providers, 
users, and others, including government agencies, that may have 
experience with this and similar programs.
    The Commission further seeks comment on ways in which the 
Commission might better assess the effectiveness and efficiency of the 
administrator's management of the Fund. The Commission seeks comment, 
for example, on whether there are performance measures the Commission 
might implement to assess the effectiveness of the TRS program and the 
Fund administrator. The Commission also seeks comment on whether the 
Fund administrator should be subject to additional reporting 
requirements and, if so, what they should be. In addition, the 
Commission seeks comment on whether such measures should mimic those 
used in the Universal Service Fund context. The Commission also seeks 
comment on any other changes that might be made to the Fund 
administrator's role in initially calculating the compensation rates 
proposed to the Commission. Finally, the Commission seeks comment on 
whether to adopt rules to implement ethical standards and address 
conflicts of interest for officers and employees of the administrator.
    Oversight of Providers. The Commission also seeks comment on ways 
to ensure that the compensation paid to providers is legitimate and 
proper under the Commission's rules. The Commission seeks comment on 
whether there are other types of information that providers should be 
required to provide to ensure the integrity of Fund payments, such as 
financial statements, earning reports, and information related to any 
parent or affiliate. The Commission also seeks comment on the efficacy 
of the auditing powers presently granted the Fund administrator and the 
Commission under the Commission's rules, as well as the scope and 
frequency of such audits. See 47 CFR 64.604(c)(5)(iii)(E) of the 
Commission's rules.
    Deterring Waste, Fraud, and Abuse. Finally, the Commission invites 
comment on any other ways to achieve more fair and efficient 
administration and management, as well as to deter and detect waste, 
fraud, and abuse. The Commission seeks to ensure that, with the number 
of providers and number of minutes of use continuing to increase, 
particularly with respect to VRS and IP Relay, the Fund is compensating 
providers only for legitimate minutes of use provided in compliance 
with the mandatory minimum standards, and that the compensation rates 
are based on accurate demand and cost data.

Initial Regulatory Flexibility Analysis

    As required by the Regulatory Flexibility Act (RFA), the Commission 
has prepared this present Initial Regulatory Flexibility Analysis 
(IRFA) of the possible significant economic impact on a substantial 
number of small entities by the policies and rules proposed in this 
2006 Cost Recovery FNPRM. Written public comments are requested on this 
IRFA. See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601-612, has been amended 
by the Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA), Public Law Number 104-121, Title II, 110 Statute 857 (1996). 
Comments must be identified as responses to the IRFA and must be filed 
by the deadlines for comments on the 2006 Cost Recovery FNPRM indicated 
on the first page of this document. The Commission will send a copy of 
the 2006 Cost Recovery FNPRM, including this IRFA, to the Chief Counsel 
for Advocacy of the Small Business Administration (SBA). See 5 U.S.C. 
603(a).

A. Need for, and Objectives of, the Proposed Rule

    In recent years, the annual determination of the TRS compensation 
rates--and particularly the VRS rate--under the present methodology has 
presented a variety of regulatory and administrative challenges, such 
as the appropriateness of the current per-minute compensation 
methodology, the accuracy of provider demand projections, and the 
reasonableness of expenses related to outreach, marketing, overhead, 
and legal and lobbying services and Further, comments filed in response 
to NECA's filing of proposed compensation rates for the 2006-2007 Fund 
year reflect dissatisfaction with the rate setting process, as well as 
with the proposed rates and certain cost disallowances. For these 
reasons, in this 2006 Cost Recovery FNPRM, the Commission seeks comment 
on numerous issues relating to the cost recovery methodology used for 
determining the TRS compensation rates paid the Fund, as well as the 
scope of the costs properly compensable under section 225 and the TRS 
regime as intended by Congress.
    This 2006 Cost Recovery FNPRM addresses alternative cost recovery 
methodologies for interstate traditional TRS. The present methodology 
for compensating traditional TRS providers for the cost of providing 
interstate service is based a per-minute compensation rate. Each year 
the Fund administrator collects projected cost and demand data from the 
providers, and determines an average per-minute compensation rate, 
which it submits to the Commission for approval or modification. Each 
provider is compensated for its minutes of use at this averaged rate 
based on the projected cost and demand data submitted by the providers. 
Therefore, providers do not receive reimbursement for their actual 
costs; their reimbursements are based on the averaged rate applied to 
their actual minutes of use.
    Hamilton Relay, Inc. has proposed an alternative methodology to 
determine the compensation rate for interstate traditional TRS. Under 
Hamilton's proposal--called the ``MARS plan'' (Multi-state Average Rate 
Structure)--the compensation rate would be calculated based on an 
average of the intrastate TRS rates paid by the states. The state 
rates, under Hamilton's proposal, would be weighted based on the total 
minutes of use for each state. Hamilton proposes using a weighted 
average because otherwise states with a relatively high per minute 
intrastate rate, but a very small number of minutes, would skew the 
multi-state per minute rate higher than it should be.
    Hamilton asserts that its proposed plan would be superior to the 
current methodology because state rates are set by a competitive 
bidding process. Hamilton also asserts that its proposal would be 
easier and less costly to administer. Hamilton further asserts that its 
proposal would benefit consumers ``by lowering interstate TRS rates to 
the competitively based market value.''
    Hamilton also notes that under the present cost recovery 
methodology--what it calls ``rate of return regulation''--the Fund 
administrator and the Commission have ``to examine the minutiae of each 
TRS providers' costs and capital investments,'' and review all costs 
submitted by each provider to determine whether to allow or disallow 
each individual cost. Hamilton adds that this ``complicated rate-making 
process * * * will only get more complicated as providers seek to 
include ever more of their costs in the rate base.'' Hamilton also 
asserts that the present methodology ``fails to replicate the 
competitive market and instead discourages efficiency and encourages 
the `padding' of investment.''
    Hamilton asserts that, by contrast, the MARS plan would eliminate 
the need to examine any carrier data.

[[Page 54016]]

    Hamilton states that the Fund administrator would simply collect 
the per-minute rate and minutes of use for each state, which are 
``presumptively competitive rates * * * because they have been subject 
to a state contract competitive bidding process,'' and would determine 
the interstate rate by averaging those rates, adjusted for minutes of 
use. Hamilton notes that this plan would avoid the costs associated 
with collecting, evaluating, correcting, and re-evaluating TRS provider 
data.''
    Given our underlying regulatory concerns, the 2006 Cost Recovery 
FNRPM seeks comment on Hamilton's proposal. Comments are sought on the 
advantages and disadvantages of this proposal compared to the current 
methodology, how the proposal would be implemented, how state minutes 
would be measured, and whether the rates would be set for a one year 
period or a longer time. This 2006 Cost Recovery FNPRM also seeks 
comment on whether the MARS plan would be easier to administer and 
result in administrative cost. This 2006 Cost Recovery FNRPM also seeks 
comment on whether the rate for interstate traditional TRS should be 
compensated at the same rate as Speech to Speech (STS) service.
    This 2006 Cost Recovery FNPRM also addresses the issue of the 
appropriate cost recovery methodology for VRS and the appropriate data 
reporting period for VRS. Because of the continued sharp growth in the 
use of VRS, open issues concerning what costs may appropriately be 
included in determining the compensation rate under the current 
methodology, and also because of the providers' demonstrated inability 
to accurately forecast demand, the 2006 Cost Recovery FNPRM seeks 
additional comment on the issues raised in 2004 (and summarized above). 
The Commission also notes that recently the Commission has permitted 
entities desiring to offer VRS to be certified by the Commission. As a 
result, the Commission expects additional VRS providers to enter the 
market. Many of these providers, like some of the existing providers, 
will not be traditional telephone companies and therefore may present 
unique cost issues. For this reason, the Commission believes that it is 
important to refresh the record on what the appropriate cost recovery 
methodology for VRS should be.
    The Commission is particularly interested in adopting a methodology 
that would result in more predictability for the providers, and that 
would be consistent with the principle that TRS is intended to be an 
accommodation for persons with disabilities, entitling providers to 
their ``reasonable'' costs of providing this service. The Commission 
therefore anticipates developing rules concerning a methodology other 
than the current compensation scheme that is more appropriate. For 
example, should the Commission adopt a compensation methodology for VRS 
where funds are disbursed based on each individual provider's actual, 
reasonable costs? Should the Commission treat VRS as a national 
service, seek competitive bids, and thereby permit the two or three 
lowest bidders to provide service at the lowest bid rate? The 2006 Cost 
Recovery FNPRM seeks comment on these proposals and any other issues 
relevant to adopting an appropriate cost recovery methodology for VRS.
    The 2006 Cost Recovery FNPRM also addresses certain categories of 
provider costs. First, although the Commission continues to recognize 
the importance of outreach, the Commission seeks ways to define with 
sufficient clarity the nature of outreach and marketing expenses that 
may appropriately be included in providers' cost submissions. Second, 
with regard to overhead costs, the Commission notes that some providers 
have submitted costs that reflect a percentage of total company 
overhead costs based on the percentage of company revenues attributable 
to TRS. The Commission also notes that some providers' expenses for 
legal and lobbying have recently grown to more than $2 million a year 
for each provider. Finally, the Commission expresses its concern about 
the extent to which some salaries of corporate officers and executives 
have been included in submitted costs. This 2006 Cost Recovery FNPRM 
therefore seeks to resolve the extent of such costs that are 
``reasonable'' costs of providing TRS, including whether, and to what 
extent, marketing and outreach expenses, overhead costs, and executive 
compensation are compensable from the Fund.
    In addition, this 2006 Cost Recovery FNPRM addresses whether the 
providers' cost and demand data submitted to the Fund administrator 
should be made public. It also seeks comment on ways to improve the 
management and administration of the Fund, including adopting measures 
for assessing the performance and efficiency of the Fund and to deter 
waste, fraud, and abuse.

B. Legal Basis

    The authority for actions proposed in this 2006 Cost Recovery FNPRM 
may be found in sections 1, 4(i) and (j), 201-205, 218 and 225 of the 
Communications Act of 1934, as amended, 47 U.S.C. sections 151, 154(i), 
154(j), 201-205, 218 and 225.

C. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules Will Apply

    The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of, small entities that may be 
affected by the proposed rules, if adopted. 5 U.S.C. 603(b)(3). The RFA 
generally defines the term ``small entity'' as having the same meaning 
as the terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' 5 U.S.C. 601(6). In addition, the term 
``small business'' has the same meaning as the term ``small business 
concern'' under the Small Business Act. 5 U.S.C. 601(3) (incorporating 
by reference the definition of ``small business concern'' in 15 U.S.C. 
632). Pursuant to the 5 U.S.C. 601(3), the statutory definition of a 
small business applies ``unless an agency, after consultation with the 
Office of Advocacy of the Small Business Administration and after 
opportunity for public comment, establishes one or more definitions of 
such term which are appropriate to the activities of the agency and 
publishes such definition(s) in the Federal Register.'' A small 
business concern is one which: (1) Is independently owned and operated; 
(2) is not dominant in its field of operation; and (3) satisfies any 
additional criteria established by the Small Business Administration 
(SBA). 15 U.S.C. 632.
    The Commission believes that the entities that may be affected by 
the proposed rules are TRS providers that offer interstate traditional 
TRS, interstate STS, interstate Captioned Telephone Service, IP Relay 
and VRS. Neither the Commission nor the SBA has developed a definition 
of ``small entity'' specifically directed toward TRS providers. The 
closest applicable size standard under the SBA rules is for Wired 
Telecommunications Carriers, for which the small business size standard 
is all such forms having 1,500 or fewer employees. 13 CFR 121.201, 
NAICS Code 517110. Currently, there are eleven TRS providers that offer 
interstate traditional TRS, interstate STS, interstate Captioned 
Telephone Service, IP Relay and VRS. These providers consist of 
interexchange carriers, local exchange carriers, state-managed 
entities, and non-profit organizations. Approximately three or fewer of 
these entities are small businesses.

[[Page 54017]]

D. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements

    The proposed methodology for setting the interstate compensation 
rate for traditional TRS service may require the providers to submit 
rate data to the Commission, either annually or for a multi-year 
period, for the states in which they provide service. Further, adoption 
of a cost recovery methodology for VRS other than the current per-
minute compensation methodology may require VRS providers to maintain 
different records, although there would be no new reporting 
requirements. Presently, VRS providers report their costs annually, and 
their minutes of use monthly, to the Interstate TRS Fund Administrator. 
In addition, the 2006 Cost Recovery FNPRM contemplates adoption of a 
means of documenting the ``reasonable'' costs compensable under the 
present cost recovery methodology for all forms of TRS.

E. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    The RFA requires an agency to describe any significant 
alternatives, specific to small businesses, that it has considered in 
reaching its proposed approach, which may include the following four 
alternatives (among others): ``(1) The establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance or 
reporting requirements under the rule for small entities; (3) the use 
of performance rather than design standards; and (4) an exemption from 
coverage of the rule, or any part thereof, for small entities.'' 5 
U.S.C. 603(c)(1)-(4).
    Adoption of Hamilton's proposed methodology for setting the 
interstate traditional TRS rate would eliminate the need to file the 
much more voluminous cost and demand data that providers presently must 
submit to the Fund administrator. Further, if the rate period is 
extended for more than one year, reporting requirements would be 
lessened by less frequent data filings with the Fund administrator. 
Therefore, the effect of the adoption of Hamilton's proposed 
methodology would be to lessen the reporting burden on small business.
    In addition, adoption of a cost recovery methodology for VRS other 
than the current per minute compensation methodology could eliminate 
apparent dissatisfaction among the providers about the rate setting 
process and improve the predictability and efficiency in reporting the 
cost data and receiving the compensation for the provision of VRS. A 
seamless and efficient cost recovery methodology, including clear cost 
data submission guidelines, would lessen the reporting burden on small 
business.
    Further, setting a standard of what and how the ``reasonable'' 
costs should be compensable under the present cost recovery methodology 
for all forms of TRS, including whether, and to what extent, marketing 
and outreach expenses, overhead costs, and executive compensation are 
compensable from the Fund, would provide guidance for the providers 
that may improve the predictability in the cost of providing TRS. It 
would also eliminate uncertainties with whether the costs submitted 
would be compensable or not. Eliminating uncertainties would lessen the 
reporting burden on small business.
    The majority of TRS service is provided by large interexchange 
carriers and large incumbent local exchange carriers. Because the 
Commission believes that few small business entities would be impacted 
by these proposals, and that the impact, if any, would be minor, it is 
premature to propose specific alternatives that would minimize 
significant economic impact on small businesses. Further, since the 
Commission believes the rules adopted pursuant to this proceeding will 
result in a more streamlined approach to administering TRS for all 
entities, including small entities, the Commission further persuaded 
that it would be premature to consider alternatives to the conferral of 
such benefits. However, the Commission invites comment on specific 
alternatives that may minimize the economic impact of the proposed 
rules on small businesses.

F. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    None.

Ordering Clauses

    Pursuant to the authority contained in sections 1, 4(i) and (o), 
225, 303(r), 403, 624(g), and 706 of the Communications Act of 1934, as 
amended, 47 U.S.C. 151, 154(i) and (o), 225, 303(r), 403, 554(g), and 
606, this Further Notice of Proposed Rulemaking is adopted.
    The Commission's Consumer & Governmental Affairs Bureau, Reference 
Information Center, SHALL SEND a copy of this Further Notice of 
Proposed Rulemaking, including the Initial Regulatory Flexibility 
Analysis, to the Chief Counsel for Advocacy of the Small Business 
Administration.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
 [FR Doc. E6-14901 Filed 9-12-06; 8:45 am]
BILLING CODE 6712-01-P