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Federal Register / Vol. 86, No. 52 / Friday, March 19, 2021 / Proposed Rules
TRS Fund contribution base for VRS
and IP Relay to include intrastate revenues of telecommunications carriers and VoIP service providers for several reasons.
3. First, the current funding arrangements were authorized as interim measures to speed the development of these services and were not intended to be permanent. Twenty years later, the primary purpose of these interim arrangements has been achieved. VRS has grown to be the second largest TRS program, and even IP Relay, with much lower demand than VRS, now accounts for more annual minutes than all state TRS programs combined.
4. Second, the inherent inequities and limitations of the interim contribution arrangement for these services loom much larger today, given the current size of the TRS funding requirement more than $1.6 billion for TRS Fund Year 202021. Nearly all of this amount is attributable to support for the three internet-based relay servicesIP CTS, VRS, and IP Relay. IP CTS is projected to cost the TRS Fund approximately $1
billion and is supported by all end-user telecommunications and VoIP revenues, with a contribution factor of less than 1%. VRS and IP Relay, with projected expenditures of $575 million in Fund Year 202021, are supported by a 1.33%
contribution only from interstate enduser telecommunications and VoIP
revenues, with no contribution from intrastate revenues. By contrast, approximately 58% of IP CTS costs are funded from intrastate end-user revenues, and 75% of the costs of relay services provided through state TRS
programs are funded from intrastate sources.
5. The burden of supporting the $575
million annual cost of VRS and IP Relay has widely disparate impacts on TRS
Fund contributors, based solely on the extent of interstate usage of their services. In TRS Fund Year 202021, for example, providers of interstate-only services must contribute approximately 1.33% of their annual end-user revenues to support VRS and IP Relay. By contrast, service providers for which only 42% of end-user revenues are interstate the industry average contribute only 0.56% of annual enduser revenues to support these services.
And providers of intrastate-only services, of which there are at least 200, contribute nothing to support VRS and IP Relay, despite consumers use of VRS
and IP Relay to make intrastate calls.
6. Third, the recovery of VRS and IP
Relay costs based on interstate revenues alone appears likely to cause distortions in the pricing of interstate and intrastate
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voice services due to inaccurate market signals regarding their relative costs. As the Commission has recognized in various contexts, applying artificial regulatory distinctions or other disparate treatment to providers of similar services may create unintended market distortions, which can reduce the effectiveness of competition in ensuring efficient pricing of telecommunications services.
7. Fourth, the total amount of enduser revenues from which TRS Fund contributions can be 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 VRS and IP Relay to encompass intrastate as well as interstate revenues would strengthen the sustainability of these services.
8. The Commission seeks comment on this proposal and its costs and benefits.
Are there additional aspects of the current state of the VRS and IP Relay programs that support either altering or maintaining the current interstate-only funding mechanism? Are there differences between those programs and IP CTS, such that the interim funding arrangement for VRS and IP Relay should be retained, notwithstanding the facts stated above and the Commissions 2019 determination that the interim plan was no longer suitable for IP CTS?
9. Legal Authority. Section 225 of the Act requires the Commission to ensure that both interstate and intrastate TRS
are available, to the extent possible and in the most efficient manner. 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. Section 225
of the Act also authorizes, but does not require, the establishment of stateadministered TRS programs and funding mechanisms, subject to approval by the Commission.
10. The Commission believes it has statutory authority to include the intrastate end-user revenues of telecommunications carriers and VoIP
service providers in the calculation of TRS Fund contributions to support VRS
and IP Relay, to the extent that these services continue to be funded solely through the TRS Fund. Section 225 of the Act expressly directs the Commission to ensure that both
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interstate and intrastate TRS are available and grants the Commission broad authority to establish regulations governing both interstate and intrastate TRS, including TRS cost recovery.
Congress expressly carved section 225
out from the Acts general reservation of state authority over intrastate communications, and responsibility for administering TRS is shared with the states only to the extent that a state applies for and receives Commission approval to exercise such authority. The Commission believes this analysis equally supports the Commissions authority to adopt the same approach to funding an appropriate share of the costs of VRS and IP Relay from intrastate revenues. The Commission seeks comment on the above analysis and assumptions. Are there differences between the provision of IP CTS and the provision of VRS and IP Relay that could affect the Commissions statutory analysis?
11. Implementation. The Commission proposes to apply a separate contribution factor for VRS and IP Relay which is applied to all interstate and intrastate end-user revenues of each TRS Fund contributor, using a single contribution factor to determine the total level of support required for all three services from a contributors total intrastate and interstate end-user revenues. To implement this approach, the TRS Fund administrator would determine a revenue requirement for all three services, based on the applicable compensation rates and projected demand. Next, based on the total intrastate and interstate end-user revenue data reported by TRS Fund contributors on Forms 499A, the TRS
Fund administrator would compute a separate TRS Fund contribution factor for the three services, by dividing the revenue requirement by contributors total intrastate and interstate end-user revenues.
12. The Commission tentatively concludes that implementation of this approach does not require separation of VRS and IP Relay costs, because a single contribution factor would apply to contributors total interstate and intrastate end-user revenues, regardless of the proportion of VRS and IP Relay minutes and costs that might be deemed interstate or intrastate. Accordingly, it would not be necessary to refer this matter to a Federal-State Joint Board, absent a state request to include VRS or IP Relay in state program offerings. The Commission seeks comment on this implementation proposal and tentative conclusion. Is the above approach reasonable, equitable to all providers, and consistent with the requirements of
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