TRS Fund Contributions, 462-466 [2019-27391]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[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]


=======================================================================
-----------------------------------------------------------------------

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.

-----------------------------------------------------------------------

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