In the Matter of Telecommunications Relay Services And Speech-to-Speech Services for Individuals with Hearing and Speech Disabilities

Federal Communications Commission

DA 06-1043

Before the

Federal Communications Commission

Washington, B.C. 20554

In the Matter of

Telecommunications Relay Services

And Speech-to-Speech Services for

Individuals with Hearing and Speech

Disabilities

CG Docket No. 03-123

DECLARATORY RULING

Adopted: May 16,2006

Released: May 16,2006

By the Chief, Consumer &

Governmental Aflfeirs Bureau:

L INTRODUCTION

1.

We deny a petition for declaratory ruling filed by Telco Group, Inc. (Telco Group)'

requesting that the Commission either exclude international revenues from the end-user revenue base

used to calculate payments due to the Interstate Telecommunications Relay Service^ Fund (Fund), or in

the alternative, waive the portion of Telco Group's contribution based on its intonational end-user

revenues.^ Further, Telco Group requests a stay of its payment obligation pending the Commission's

decision. For the reasons discussed below, we find that the inclusion of international end-user revenues

in calculating carriers' obligations to the Interstate TRS Fund is appropriate. In addition, we are unable

to find good cause to waive the portion of Telco Group's Interstate TRS Fund assessment based on its

intonational services revenue. Because we address the merits of the Petition, the request for stay is

dismissed as moot.

'

Telco Groiq), Inc., Petition for Declaratory Ruling, or in the Alternative, Petition for Waiver, CG Docket No. OS-

OS

(filed July 26, 2004) {Petition).

^ "Telecommtinications Relay Service" (TRS), created by Title IV of the Americans with Disabilities Act of 1990

(ADA), enables an individual with a hearing or speech disability to communicate by telephone or other device

through the telqthone system with a person without such a disability. See 47 U.S.C. § 225(a)(S) (defining TRS);

47 C.F.R

r, CG Docket No. OS-

OS

(filed July 26, 2004) {Petition).

^ "Telecommtinications Relay Service" (TRS), created by Title IV of the Americans with Disabilities Act of 1990

(ADA), enables an individual with a hearing or speech disability to communicate by telephone or other device

through the telqthone system with a person without such a disability. See 47 U.S.C. § 225(a)(S) (defining TRS);

47 C.F.R. § 64.601(14); see generally Telecommunications Relay Services and Speech-to-Speech Servicesfor

Individuals with Hearing and Speech Disabilities, CG Dockets 90-571 and 98-67 and CG Docket 0S-12S, Report

and Order, Order on Reconsideration, and Further Notice of Proposed Rulemaking, 19 FCC Red 12475, at 12479-

12480, para. S n. 18 (Jime SO, 2004)

(2004 TRS Report &

Order) (discussing how TRS works).

^Petition at 1.

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Federal Communications Commission

DA 06-1043

n. BACKGROUND

2.

Title IV of the ADA directs the Conunission to ensure that interstate and intrastate

telecommunications relay services are available, to the extent possible and in the most efficient manner,

to individuals with hearing and speech disabilities in the United States/ Section 225 requires the

Commission to establish regulations to ensure the quality of relay service/ The Commission initially

inq)lemented this mandate in three orders.

3.

In TRS I, the Commission adopted rules identifying the relay SCTvices that carriers

offering voice telephone transmission services must provide to persons with hearing and speech

disabiUties and the TRS mandatory minimum standuds that govern the provision of service.^ In TRS II,

the Commission adopted a shared funding mechanism for interstate TRS cost recovery, spreading the

cost of providing TRS to all subscribers of every interstate service.^ The Commission also proposed that

under this mechanism a charge would be assessed on all common carriers that off(^ interstate

telecommunications services to create the Interstate TRS Fxmd, and that the providers would be

compensated hum the Fund for providing TRS based

mechanism for interstate TRS cost recovery, spreading the

cost of providing TRS to all subscribers of every interstate service.^ The Commission also proposed that

under this mechanism a charge would be assessed on all common carriers that off(^ interstate

telecommunications services to create the Interstate TRS Fxmd, and that the providers would be

compensated hum the Fund for providing TRS based on a national average TRS interstate minute of use

rate.® In TRS III, the Commission estabhshed the Interstate TRS Fimd, currently administoed by the

National Exchange Carrier Association (NECA), to reimburse TRS providers for the costs of providing

interstate TRS.' That order also finalized the contribution methodology for payments into the Fund and

defined the interstate services subject to the contribution assessment. The Commission adopted a

regulation providing that "[cjontributions shall be made by all carriers who provide interstate services,

including, but not limited to ... international... services."'"

"

See generally Pub. L. 101-336, 104 Stat 327,366-69 (July 26,1990), codified at 47 U.S.C. § 225; see also 47

U.S.C. § 225(b)(1).

® 47 U.S.C. § 225(b).

"

See Telecommunications Relay Servicesfor Individuals with Hearing and Speech Disabilities, and the

Americans with Disabilities Act of1990, CC Docket No. 90-571, Report and Order and Request for Comments, 6

FCC Red 4657 (July 26,1991) (TRS

I)', see 47 C.F.R. § 64.604 (the TRS "mandatory minimum standards").

'

See Telecommunications Servicesfor Individuals with Hearing and Speech Disabilities, and the Americans with

Disabilities Act of1990, CC Docket No. 90-571, Order on Reconsideration, Second Report and Order, and Further

Notice of Proposed Rulemaking, 8 FCC Red 1802,1805-1806, at paras. 19-27 (Feb. 25, 1993) (TRS II)

,1991) (TRS

I)', see 47 C.F.R. § 64.604 (the TRS "mandatory minimum standards").

'

See Telecommunications Servicesfor Individuals with Hearing and Speech Disabilities, and the Americans with

Disabilities Act of1990, CC Docket No. 90-571, Order on Reconsideration, Second Report and Order, and Further

Notice of Proposed Rulemaking, 8 FCC Red 1802,1805-1806, at paras. 19-27 (Feb. 25, 1993) (TRS II). Under

Section 225(d)(3), the Commission's regulations governing the jurisdictional separation of costs shall generally

provide that the costs caused by interstate TRS shall be recovered fixnn all subscribers to every interstate service,

and the costs caused by intrastate TRS shall be recovered by the states. 47 U.S.C. § 225(d)(3).

^ TRS II, S FCC Red at 1806, paras. 23-26.

See Telecommunications Services, and the Americans with Disabilities Act of1990, CC Docket No. 90-571,

Third Report and Order, 8 FCC Red 5300 (July 20, 1993) (TRS III).

47 CJ.R. § 64.604(c)(5)(iii)(A); see also TRS III, 8 FCC Red at 5306, para. 33 (ordering clause adopting rule

amendments set forth in Appendix B); Telecommunications Servicesfor Individuals with Hearing and Speech

Disabilities, Recommended TRS Cost Recovery Guidelines, CC Docket No. 98-67, Memorandum Opinion and

Order and Further Notice ofProposed Rulemaking, 16 FCC Red 22948,22949-22950, para. 2

(Dec. 21,2001)

(noting that TRS III required "that every earner providing interstate telecommunications services contribute to the

TRS Fund on the basis of... interstate and international revenues").

5248

d Speech

Disabilities, Recommended TRS Cost Recovery Guidelines, CC Docket No. 98-67, Memorandum Opinion and

Order and Further Notice ofProposed Rulemaking, 16 FCC Red 22948,22949-22950, para. 2

(Dec. 21,2001)

(noting that TRS III required "that every earner providing interstate telecommunications services contribute to the

TRS Fund on the basis of... interstate and international revenues").

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Federal Communications Commission

DA 06-1043

4.

In its Petition, Telco Group requests that the Conraiission exclude international revenues

from the revenue base used to calculate payments due to the Interstate TRS Fund, "at least for those

carriers whose international revenues conqjrise a significant portion of their total interstate and

international revenues," or in the alternative, find good cause to waive Telco Group's obligations to the

Fund that are based on its international revenues."

5.

Telco Group maintains that such relief is warranted because, in what Telco Group argues

is an analogous case involving the Universal Service Fund (USF), the United States Court of Appeals for

the Fifth Circuit required the Commission to revisit the USF assessment on the international services

revenue of a provider of primarily intemational services and de minimis interstate services." The Court

found that requiring a carrier to pay an assessment on its intemational services revenue that exceeded the

carriCT's total interstate revenue violated the equitable and nondiscriminatory contribution reqmrement of

the Universal Service statute. Section 254 of the Commimicatiohs Act of 1934 (Act), as amended

provider of primarily intemational services and de minimis interstate services." The Court

found that requiring a carrier to pay an assessment on its intemational services revenue that exceeded the

carriCT's total interstate revenue violated the equitable and nondiscriminatory contribution reqmrement of

the Universal Service statute. Section 254 of the Commimicatiohs Act of 1934 (Act), as amended.

Although the Interstate TRS Fund is govemed by Section 225 of the Act, rather than Section 254, Telco

Group argues that the Interstate TRS Fimd contribution rules also are "designed to be equitable and

nondiscriminatory" and, therefore, the relief afforded in TOPUC should be extended to TRS.''* Telco

Group argues that its circumstance is coirqicirable to the TOPUC plaintiff because the "vast majority" of

Telco Group's revenues -

approximately 96 percent" -

are derived from intemational services.

Moreover, Telco Group argues the pubhc interest will be served by grantir^ the requested relief because

it will ensure Telco Groiq) "remains as a viable competitor in the market for interstate services."'^ Telco

Group adds that the "high payment obligations also hinder Telco Group's ability to conqrete outside the

United States, and so contradict the Commission's efforts to promote and encourage competition in the

intemational and interstate markets.""

6.

On October 25, 2004, the Telco Group Petition was place on Public Notice.'* Two

oppositions were filed, one from a carrier and one from an organization representing the deaf

community." Telco Group did not file any reply comments.

"

Petition at 1.

Id. at 3 (citing Texas Office ofthe Public Utility Counsel v. FCC, 183 F.3d 393 (S* Cir. 1999) (TOPUC)).

TOPUC, 183 F.3d at 434-435; see 47 U.S.C. § 254(b)(4).

''* Petition at 4.

Id. at 3.

"/</. at 9.

"

Id. at 9-10 (citing 2000 Biennial Regulatory Review -

Policies and Procedures Concerning the Intemational,

Interexchange Marketplace, IB Docket No. 02-202, Report and Order, 16 FCC Red 10647 (March 20,2001))

ting Texas Office ofthe Public Utility Counsel v. FCC, 183 F.3d 393 (S* Cir. 1999) (TOPUC)).

TOPUC, 183 F.3d at 434-435; see 47 U.S.C. § 254(b)(4).

''* Petition at 4.

Id. at 3.

"/</. at 9.

"

Id. at 9-10 (citing 2000 Biennial Regulatory Review -

Policies and Procedures Concerning the Intemational,

Interexchange Marketplace, IB Docket No. 02-202, Report and Order, 16 FCC Red 10647 (March 20,2001)).

'* Telco Grotqt, Inc. Files Petition for Declaratory Ruling or Waiver to Exclude Intemational Revenuesfrom the

Revenue Base Used to Calculate Payment to the Interstate TRS Fund, CC Docket No. 98-67, Public Notice, 19

FCC Red 20965 (Get 25,2004).

"

Comments were filed by MCI (MCI)

(Nov. 26,2004) and Telecommunications for the Deaf, Inc. (TDI) (Nov.

24,2004). Late filed comments were filed by Globecomm Systems, Inc. ("GSI") on February 14,2006. On that

same date, GSI also filed a petition for declaratory ruling that there is no obhgation to pay into the Interstate TRS

(continued....)

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Federal Cooiinuiiications Commission

DA 0^1043

in. DISCUSSION

7.

Telco Group's Petition is premised on the congruence between Section 254 of the Act,

which establishes Universal Service requirements, and Section 225 of the Act, which establishes

requirements for the provision of TRS. Sections 254 and 225, however, differ in fundamental and, in this

case, dispositive ways. Unlike USE assessments, contributions to the Interstate TRS Fund are used, in

part, to reimburse international relay calls. Therefore, in this case, the public interest lies in ensuring

adequate funding for interstate TRS -

including international TRS -

by assessing contributions on as

broad a revenue base as can be justified. Accordingly, Telco Group's request that the Commission

exclude international revenues fixjm the end-user revenue base used to calculate payments due to the

Interstate TRS Fund is denied

calls. Therefore, in this case, the public interest lies in ensuring

adequate funding for interstate TRS -

including international TRS -

by assessing contributions on as

broad a revenue base as can be justified. Accordingly, Telco Group's request that the Commission

exclude international revenues fixjm the end-user revenue base used to calculate payments due to the

Interstate TRS Fund is denied. Because Telco Group has not dranonstrated why individualized relief is

appropriate, the coitpany's request for waiver of the interstate TRS assessment on international services

revenue is also denied.

8.

Unlike the Universal Service Fund, which does not directly support international services

but only may be used only to support domestic services, the Interstate TRS Fund is used to support

international TRS.^ Therefore, unlike the USE assessments at issue in TOPUC, excluding international

revenues from the revenue base used for calculating TRS contributions would not serve the public

interest. With the TRS Fund, it is not the case -

as in TOPUC -

that a provider of only de minimis

interstate service may be required to bear a disproportionately heavy burden in subsidizing the provision

of such services by other carriers. Contributions to the Interstate TRS Fund based on Telco Group's

international services revenue can, in turn, be used to subsidize international TRS. Moreover, Telco

Group is required to contribute the same percentage of its interstate and international revenues to the

Interstate TRS Fund as other carriers that provide both interstate and international services. This

approach is both equitable and nondiscriminatory.^'

(Continued from previous page)

Fund based on revenues arising from trafiBc that does not originate or terminate in the United States. Globecomm

Systems, Inc., Petition for Declaratory Ruling (filed Feb. 14,2006)

te and international revenues to the

Interstate TRS Fund as other carriers that provide both interstate and international services. This

approach is both equitable and nondiscriminatory.^'

(Continued from previous page)

Fund based on revenues arising from trafiBc that does not originate or terminate in the United States. Globecomm

Systems, Inc., Petition for Declaratory Ruling (filed Feb. 14,2006). Because ihe issue in the GSI petition -

whether certain calls should be considered international calls -

is distinct fix)m the issue raised in Telco Group's

Petition, we will address GSI's petition in a separate order.

TRS I Order, 6 FCC Red at 4660-4661, para. 18 (discussing comments that relay services should relay

international calls that originate or terminate in the United States provided that equipment of the foreign cotmtry is

compatible with U.S. equipment); TRS III Order, 8 FCC Red at 5301, para. 9 n. 14 (in adopting rule requiring

contributions to the Fund to be based on, inter alia, international services. Commission notes Sprint's argument

"that international services should be included because TRS providers will be conqjensated by the administrator for

international TRS minutes of use"). IP Relay service is an exception to this rule. See, e.g.. Telecommunications

Relay Services and Speech-to-Speech Services for Individuals with Hearing and Speech Disabilities, CC Docket

No. 98-67, OrdCT, 19 FCC Red 12224,12242, at para. 48 n.l21 (June 30,2004) (noting that the Fund "does not

currently reimburse providers for the costs of providing international calls via IP Relay"); Telecommunications

Relay Services and Speech-to-Speech Servicesfor Individuals with Hearing and Speech Disabilities, CC Docket

No. 98-67, Order, 18 FCC Red 12823,12837," at para. 42 (June 30,2003)

(noting that in March 2003 NECA was

directed to suspend payment to TRS providers for international IP Relay service minutes); see also 2004 TRS

Report &

Order, 19 FCC Red at 12525, para

via IP Relay"); Telecommunications

Relay Services and Speech-to-Speech Servicesfor Individuals with Hearing and Speech Disabilities, CC Docket

No. 98-67, Order, 18 FCC Red 12823,12837," at para. 42 (June 30,2003)

(noting that in March 2003 NECA was

directed to suspend payment to TRS providers for international IP Relay service minutes); see also 2004 TRS

Report &

Order, 19 FCC Red at 12525, para. 129 (noting that although Fund does not pay for international IP

Relay service calls, it does pay for international Video Relay Service calls).

Opposition of MCl at 3. As MCl notes, "it would be discriminatory if Telco Group, and other internationally-

oriented carriers, were allowed to exclude international revenues from the TRS contribution base. Conopanies such

as MCl, vdio also earn international revenues by providing international prepaid calling services, as well as other

(continued....)

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Federal Communications Cominission______^_^_DA06-10^

9.

Moreover, TOPUC is specifically based on the equitable and nondiscriminatory

contribution requirement of Section 254.^ Section 225, however, contains no such express requirement.

In the absence of such language, and particularly because international services are supported by the

Interstate TRS Fund, the Commission is not bound by the TOPUC decision to reduce or eliminate

Interstate TRS Fund assessments on international services for Telco Group or similarly situated

providers.^^ Accordingly, Telco Group's request for a declaratory ruling excluding international services

revenue fiom the interstate contribution base is denied.

10.

Telco Groiqi's request for waiver of the interstate TRS assessment on its international

services revenue is also denied

uce or eliminate

Interstate TRS Fund assessments on international services for Telco Group or similarly situated

providers.^^ Accordingly, Telco Group's request for a declaratory ruling excluding international services

revenue fiom the interstate contribution base is denied.

10.

Telco Groiqi's request for waiver of the interstate TRS assessment on its international

services revenue is also denied. Although the Commission may waive a provision of its rules for "good

cause shown,"^" Telco Group's argument rests on the fact that a high percent of its revenues derive fi-om

international services and therefore its TRS payment is substantially higher that it would be if

international revenues were not included and burdensome.^' As noted above, however, because the Fund

supports both international and interstate TRS, TRS assessments are based on both international and

interstate revenues, and the fact that some contributors have relatively more international revenues, or

more interstate revenues, is not relevant to ensuring adequate fimding for these services.

IV. ORDERING CLAUSES

11.

Accordingly, IT IS ORDERED that, pursuant to the authority contained in Section 225 of

the Communications Act of 1934, as amended, 47 U.S.C. § 225, and Sections 0.141 and 0.361 of the

Commission's rules, 47 C.F.R. §§ 0.141 and 0.361, Telco Group's Petition for Declaratory Ruling or, in

the Alternative, Petition for Waiver, is DENIED.

12.

mS

FURTHER ORDERED that, having addressed the merits of the Petition for

Declaratory Ruling or, in the Alternative, Petition for Waiver, Telco Group's Petition for Stay Pending

Resolution of Petition for Declaratory Ruling or, in the Alternative, Petition for Waiver is MOOT.

13.

To request materials in accessible formats (such as Braille, large print, electronic files, or

(Continued from previous page)

international services, would be required to concrete against companies who would have been granted a

discriminatory cost advantage were the Commission to grant Telco Group's request." Id

ition for Declaratory Ruling or, in the Alternative, Petition for Waiver is MOOT.

13.

To request materials in accessible formats (such as Braille, large print, electronic files, or

(Continued from previous page)

international services, would be required to concrete against companies who would have been granted a

discriminatory cost advantage were the Commission to grant Telco Group's request." Id.

^

Section 254 states that "[a]ll providers of telecommunications services should make an equitable and

nondiscriminatory contribution to the preservation and advancement of universal service." 47 U.S.C. § 254(bX4).

The Court foimd that requiring COMSAT, a satellite provider of primarily international services along with de

minimis interstate service offerings, to contribute to the Universal Service Fund based on its international services

revenues was inequitable and discriminatory given that COMSAT's contributioit based on international services

revenue would exceed the conqiany's total interstate revenues. The Court stated that "the agency's interpretation

of 'equitable

nondiscriminatory,' allowing it to inqiose prohibitive costs on earners such as COMSAT,

is

'arbitrary and capricious'... [because] COMSAT and carriers like it will contribute more in umversal service

payments than ttey will generate from inteistate service." TOPUC, 183 F.3d at 434-435.

With respect to contributions, the only limiting language of Section 225 is jurisdictional in nature. See 47

U.S.C. § 225(d)(3) (addressing jurisdictional separation of costs).

^^47C.F.R. § 1.3; see generally 2004 TRS Report & Order, 19 FCC Red at 12520, para. 110 (discussing standard

for waiving Commission rules).

Petition at 9-10.

5251

nerate from inteistate service." TOPUC, 183 F.3d at 434-435.

With respect to contributions, the only limiting language of Section 225 is jurisdictional in nature. See 47

U.S.C. § 225(d)(3) (addressing jurisdictional separation of costs).

^^47C.F.R. § 1.3; see generally 2004 TRS Report & Order, 19 FCC Red at 12520, para. 110 (discussing standard

for waiving Commission rules).

Petition at 9-10.

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Federal Communications Commission

DA 0^1043

audio format), send an e-mail to fcc504@.fcc.gov or call the Consumer &

Governmental Affairs Bureau

at (202) 418-0530 (voice) or (202) 418-0432 (TTY). This Order can also be downloaded in Word and

Portable Document Formats (PDF) at http://www.fcc.gov/cgb.dro.

FEDERAL COMMUNICATIONS COMMISSION

Monica S. Desai, Chief

Consumer &

Governmental Affairs Bureau

5252