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

Federal Communications Commission

DA 06-1100

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of

Teleconununications Relay Services

And Speech-to-Speech Services for

Individuals with Hearing and Speech

Disabilities

CG Docket No. 03-123

DECLARATORY RULING ON RECONSIDERATION

Adopted: May 25,2006

Released: May 25,2006

By the Chief, Consumo- &

Governmental Afhiirs Bureau:

I. INTRODUCTION

1.

On May 16,2006, the Consumer &

Governmental Affairs Bureau released a Declaratory

Ruling' denying a petition filed by Telco Group Inc. (Telco Grorq>),^ which requested that the

Commission either exclude international revenues fiom the end-user revenue base used to calculate

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

waive the portion of Telco Group's contribution based on its international end-user revenues.^ That

Order, however, did not contain an analysis of the conqilete record.' We therefore, on our own motion,

reconsider the merits of the Petition.

'

Teiecommunications Relay Services and Speech-to-Speech Servicesfor Individuals with Hearing and Speech

Disabilities, CG Docket No. 03-123, Declaratory Rulii^, DA 06-1043 (May 16,2006).

^ Telco Group, Inc., Petition for Declaratory Ruling, or in the Alternative, Petition for Waiver, CG Docket No. 03-

123 (filed July 26,2004) {PetUion).

'

"Teleconmnmications 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 telephone system with a person without such a disability. See 47 U.S.C. § 22S(a)(3) (definite TRS);

47 C.F.R

ver, CG Docket No. 03-

123 (filed July 26,2004) {PetUion).

'

"Teleconmnmications 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 telephone system with a person without such a disability. See 47 U.S.C. § 22S(a)(3) (definite TRS);

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

Individuals with Hearing and Speech Disabilities, CC Dockets 90-571 and 98-67 and CG Docket 03-123, Report

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

12480, para. 3 n.l8 (June 30,2004) {2004 TRS Report &

Order) (discussing how TRS woiks).

* Petition at 1. Further, Telco Group requested a stay of its payment obligation pending the Commission's

decision.

'

The May 16,2006, Declaratory Ruling did not consider reply comments filed by Telco Group in this proceeding.

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Federal Communications Commission

DA 06-1100

2.

On reconsideration, we again deny the Petition. For the reasons discussed below, we

find that the inclusion of international end-user revenues in calculating carriers' obligations to the

Interstate TRS Fimd 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 international services revenue. Because we

address the merits of the Petition, the request for stay is dismissed as moot.

n. BACKGROUND

3.

Title IV of the ADA directs the Commission to ensure that into^te and intrastate

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

to individuals with hearing and speech disabilities in the Unit^ States.^ Section 225 requires the

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

implemented this mandate in three orders.

4

e Commission to ensure that into^te and intrastate

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

to individuals with hearing and speech disabilities in the Unit^ States.^ Section 225 requires the

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

implemented this mandate in three orders.

4.

In TRS /, the Commission adopted rules identifying the relay services that carriers

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

disabilities and the TRS mandatory minimum standards that govern die provision of service.^ In TRS II,

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

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

under tMs mechanism a charge would be assessed on all common carriers that offer interstate

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

conqiensated fiom the Fund for providing TRS based on a national average TRS interstate minute of use

rate.'" In TRS III, the Commission established the Interstate TRS Fund, currently administered 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.

* 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 Services for Individuals with Hearing and Speech Disabilities, and the

Americans with Disabilities Act of1990, CO Docket No

oviding that "[cjontributions shall be made by all carriers who provide interstate 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 Services for Individuals with Hearing and Speech Disabilities, and the

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

FCC Red 4657 (July 26,1991) (TRS I); see 47 CJ.R. § 64.604 (the TRS "mandatory minimum standards").

Q

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) (TRSII). 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 fiom 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).

TRSII, 8 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) (JRS HI).

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Federal Communications Commission

DA 06-1100

»12

including, but not limited to... international... services;

5.

In its Petition, Telco Group requests that the Commission 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 con:q)rise a significant portion of their total interstate and

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

Fund that are based on its international revenues.*'

6

mission 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 con:q)rise a significant portion of their total interstate and

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

Fund that are based on its international revenues.*'

6.

Telco Group Ttiaintains 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 tire international services

revenue of a provider of primarily international services and de minimis interstate services.'* The Court

foimd that requiring a carrier to pay an assessment on its international services revenue that exceeded the

carrier's total interstate revraiue violated the equitable and nondiscriminatory contribution requirement of

the Universal Service statute. Section 254 of the Communications Act of 1934 (Act), as amoided."

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

Group argues that the Interstate TRS Fxmd 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 comparable to the TOPUC plaintifFbecause the "vast majority" of

Telco Group's revenues -

approximately 96 percent" — are derived fiom international services

Telco

Group argues that the Interstate TRS Fxmd 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 comparable to the TOPUC plaintifFbecause the "vast majority" of

Telco Group's revenues -

approximately 96 percent" — are derived fiom international services.

Moreover, Telco Groiq) argues the public interest will be served by granting the requested relief because

it will ensure Telco Group "remains as a viable con^etitor in the market for interstate services."" Telco

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

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

international and interstate markets.""

*^ 47 C.F.R. § 64.604(c)(5)(iiiKA); see also TRS III, 8 FCC Red at 5306, para. 33 (ordering clause adopting rule

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

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

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

(Dec. 21,2001)

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

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

"

Petition at 1.

'* Id. at 3 (citing Texas Office of the Public Utility Counsel v. FCC, 183 F.3d 393 (5'*' Cir. 1999) {TOPUC)).

"

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

"

Petition at 4.

Id. at3.

Id. at 9.

"

Id. at 9-10 (citii^ 2000 Biennial Regulatory Review -

Policies and Procedures Concerning the International,

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

5964

Office of the Public Utility Counsel v. FCC, 183 F.3d 393 (5'*' Cir. 1999) {TOPUC)).

"

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

"

Petition at 4.

Id. at3.

Id. at 9.

"

Id. at 9-10 (citii^ 2000 Biennial Regulatory Review -

Policies and Procedures Concerning the International,

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

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Federal Communications Commission

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7.

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

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

community.^' Telco Group filed reply comments.^

in. DISCUSSION

8.

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 fimding 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 revraiues frnm the end-user revenue base used to calculate payments due to the

Interstate TRS Fimd is denied. Because Telco Group has not demonstrated why individualized relief is

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

revenue is also denied.

9.

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 Fu^ is used to support

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

Telco Group. Inc

waiver of the interstate TRS assessment on international services

revenue is also denied.

9.

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 Fu^ is used to support

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

Telco Group. Inc. Files Petition for Declaratory Ruling or Waiver to Exclude International Revenuesfrom the

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

FCC Red 20965 (Oct. 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 obligation to pay into the Interstate TRS

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

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

whether certain calls should be considered international calls -

is distinct from the issue raised in Telco Group's

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

^

Reply of Telco Group, Inc. to Oppositions to Telco Group's Petition for Declaratory Ruling, or in the

Alternative, Petition for Waiver (filed Dec. 10,2004, in CC Docket No. 98-67).

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

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

conqiatible with U.S. equipment); TRS HI 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

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

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

conqiatible with U.S. equipment); TRS HI 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 compensated 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 Servicesfor Individuals with Hearing and Speech Disabilities, CC Docket

No. 98-67, Order, 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 Services for 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).

5965

8-67, 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).

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Federal Communications Commission

DA 06-1100

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 intmiational 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. Therefore,

this approach is both equitable and nondiscriminatory,^^ even as applied to an entity like Telco Group

that may largely have international revenues.^'

10.

In any event, 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 Grotq) or similarly situated

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

revenue from the interstate contribution base is denied.^^

Opposition of MCI at 3

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 Grotq) or similarly situated

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

revenue from the interstate contribution base is denied.^^

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

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

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

international services, would be required to conq)ete against conqranies who would have been granted a

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

^

See Telco Reply Comments at 2-3 (arguing that the TRS funding mechanism is not equitable and

nondiscriminatory as applied to Telco Group because it must pay a high proportion of its "U.S. interstate revenues

into the TRS Fund").

^

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(b)(4).

The Court found 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 contribution based on international services

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

of 'equitable and nondiscrimiiutory,' allowing it to impose prohibitive costs on carriers such as COMSAT,

is

'arbitrary and capricious'..

nd based on its international services

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

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

of 'equitable and nondiscrimiiutory,' allowing it to impose prohibitive costs on carriers such as COMSAT,

is

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

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

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

U.S.C. § 225(d)(3) (addressing jurisdictional separation of costs). Telco Group also suggests that even if TOPUC

does not tqrply in the TRS context, the Commission has the discretion to ^ly a similar rule for TRS. Telco Reply

Comments at 4. The issue presented is not, however, whether the Coimnission could apply the TOPUC principle

to TRS, but vdiether the rule the Commission did adopt for TRS (requiring payments into the Fund based on

international revenues) is reasonable and in the public interest.

Telco Groiq) also asserts that because it does not receive any TRS frinds, and does minimal business in the

United States, it should not have to pay into the Fund based on international revenues "in return for 'benefits'

largely and primarily enjoyed by other carriers." Telco Reply Comments at 3-4. The obligation to pay into the

Fund, however, is not tied to particular benefits contributors may receive from the Fimd. Under the rules, a broad

range of interstate telecommunications carriers are required to pay into the Fund, regardless of vbether they also

(continued....)

5966

onal revenues "in return for 'benefits'

largely and primarily enjoyed by other carriers." Telco Reply Comments at 3-4. The obligation to pay into the

Fund, however, is not tied to particular benefits contributors may receive from the Fimd. Under the rules, a broad

range of interstate telecommunications carriers are required to pay into the Fund, regardless of vbether they also

(continued....)

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Federal Communications Commission

DA 06-1100

11.

Telco Groin'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 Groiq)'s argument rests on the fact that a high percent of its revenues derive from

international services and therefore its TRS payment is substantially Ugher 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 funding for these services.

rv. ORDERING CLAUSES

12.

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 0.141,0.361, and 1.108 of

the Commission's rules, 47 C.F.R. §§ 0.141,0.361, and 1.108, iHsis Declaratory Ruling on

Reconsideration IS hereby ADOPTED.

13.

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

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

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

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

(Continued from previous page)

;

provide relay services paid for by the Fund or otherwise "benefit" directly fiom the provision of relay service. See

47 C.F.R. § 64.604(c)(5XiiiKA).

^'47C.F.R.§ l.y, 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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