FCC Proposal Would Expand USF Contribution Base for Internet Telecommunications Relay Service

November 13, 2020 | by Andrew Regitsky

FCC Proposal Would Expand USF Contribution Base for Internet Telecommunications Relay Service

This week we discuss a topic that is rather esoteric but important to the numerous companies that provide Telecommunications Relay Service (TRS) to the deaf and hearing impaired and as a result contribute to the Connect America Fund (CAF).  As time has gone by, the FCC has modified the TRS Fund to account for the fact that more carriers each year are providing this service over the Internet.  There are three ways to provide Internet-based TRS:

Internet Protocol Captioned Telephone Service - Enables an individual who can speak but who has difficulty hearing over the telephone to use a telephone and an Internet Protocol-enabled device via the Internet to simultaneously listen to the other party and read captions of what the other party is saying. 

Video Relay Service - Enables persons with hearing disabilities who use American Sign Language to communicate with voice telephone users through video equipment, rather than through typed text.

IP Relay Service - Enables people with a hearing or speech disability to use Telecommunications Relay Service through a computer or web-enabled device to communicate through the telephone system with hearing persons.

In 2000, the FCC determined that Internet-based TRS providers should contribute to the Universal Service Fund.  Initially, it decided that as an interim measure all the costs of providing Internet-based TRS should be paid by contributors to the TRS Fund based only on their interstate end-user telecommunications revenue—even though Internet-based TRS is used for both interstate and intrastate calling.

In 2019, the Commission revised this funding mechanism, and required Internet Protocol Captioned Telephone Service to include intrastate as well as interstate end-user revenues.  It did not change the funding mechanism for Video Relay Service and IP Relay.

Now the Commission is poised to change the contribution base for Video Relay Service and IP Relay.  At its upcoming November meeting, the agency is expected to adopt a Notice of Proposed Rulemaking (NPRM) in Docket 03-123 which would do the following:

Amend the Commission’s rules to provide that TRS Fund contributions to support Video Relay Service and IP Relay would be calculated based on the total interstate and intrastate end-user revenues of each telecommunications carrier and Voice over Internet Protocol (VoIP) service provider—in the same manner as current contributions to support Internet Protocol Captioned Telephone Service.  

Require that TRS Fund contributors’ payments to support Video Relay Service and IP Relay are calculated by applying a single contribution factor to a contributor’s total end-user revenues.

Not impact the total contributions needed to support Video Relay Service and IP Relay.

The Commission takes these actions for several reasons:

First, the current funding mechanism was authorized as an interim measure to speed the development of these services and was not intended to be permanent.  It has worked!  Video Relay Service has become the second largest TRS program, and IP Relay, now accounts for more annual minutes than all state TRS programs combined. 

The interim method has led to inequalities for TRS providers, especially as the Fund has grown to $1.6 billion annually with almost all attributable to Internet-based TRS.

The recovery of Video Relay Service and IP Relay costs based on interstate revenues alone causes distortions in the pricing of interstate and intrastate voice services due to inaccurate market signals regarding their relative costs.

Finally, the total amount of end-user revenues from which TRS Fund contributions are drawn has been steadily decreasing over time, worsening the impact of the current funding arrangement on interstate service providers and users and increasing any existing distortion between intrastate and interstate service prices. Expanding contributions to support Video Relay Service and IP Relay to encompass intrastate as well as interstate revenues would strengthen the sustainability of these services.

Internet-based TRS providers should closely follow this proceeding.  Once a final order is issued, expected in the first half of 2021, they are likely to have only 7 months to adopt the expanded contribution methodology.

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