20080328Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:MARCH 24, 2008
RE:2007 TELECOMMUNICATIONS RELAY SERVICE ANNUAL REPORT;
CASE NO. GNR-08-01.
BACKGROUND
Title IV of the Americans with Disabilities Act requires all states to provide a
Telecommunications Relay Service (TRS) program that allows citizens who are hearing or
speech-impaired to engage in telephone communications "in a manner functionally equivalent to
that of individuals without hearing or speech impairments." This requirement is codified in
Idaho Code ~ 61-1301. Under the Idaho TRS Act, all telephone corporations providing local or
long-distance service (not including cellular or VoIP) pay into the TRS Fund to defray the costs
of providing TRS services. Idaho Code ~ 61-1305. Pursuant to TRS Rule 202, the Commission
sets the TRS funding levels each year based upon the Administrator s Annual Report. IDAPA
31.46.02.202.
THE 2007 ANNUAL REPORT
On January 25, 2008, the TRS Administrator, Mr. Robert Dunbar, submitted the 2007
TRS Annual Report and the 2008 TRS Budget for Commission approval. Mr. Dunbar reported
the 2007 relay service conversation time, including interstate long distance, totaled 190 173
minutes. This represents a 28% decrease from calendar year 2006. Likewise, disbursements of
$250 755 to the TRS service provider, Hamilton Telecommunications, for in-state relay calls
were approximately 6% less than 2006. Idaho s TRS fund reimburses Hamilton
Telecommunications for processing in-state traditional relay and captioned telephone (CapTel)
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calls, while the National Exchange Carrier Association (NECA) reimburses Hamilton for
processing out-of-state relay calls.
Mr. Dunbar reported that traditional relay usage decreased in 2007 while the CapTel
devices adopted by the hard-of-hearing users increased by 32%. The increase in CapTel billed
minutes largely offset the 28% decrease in traditional relay use. CapTel allows hard-of-hearing
users to hear the conversation as well as read the words on the phone s built-in screen. A trained
operator "re-voices" the conversation from a caller into the voice-recognition technology that
converts the words into a text message and provides the CarTel user with a more natural
conversation.
CERTIFICATION OF THE IDAHO TRS PROGRAM
On June 22, 2007, the Federal Communications Commission (FCC) released Order DA
07-2761 , in CG Docket No. 03123. In this document, the FCC announced that it would accept
applications for the renewal of state TRS program certification for a five-year period. On behalf
of the Idaho Public Utilities Commission, Mr. Dunbar submitted the required information and
documentation that demonstrated the Idaho TRS system is meeting or exceeding all mandatory
minimum standards specified in 47 CFR 64.604 ofthe FCC rules. See Title IV of the Americans
with Disabilities Act, 47 U.C. 225 ofthe Communications Act. Mr. Dunbar received
confirmation that the FCC received Idaho s application. The FCC will review the applications
and recertify the states in mid 2008.
2007 TRS REVENUE AND EXPENSES
The TRS fund is supported by assessments on local telephone service (per access line)
and billed intrastate long distance (MTS/W A TS or "toll") minutes. In 2007, the total number of
intrastate toll minutes reported by the telephone companies was approximately 312 000 000, and
the average number oflocal telephone lines reported per month was 647 800. The 2007 annual
contribution to the TRS fund totaled $289 173 , a decrease of$135 982 (32%) from 2006. This
decrease reflected the sharp 2007 fourth quarter reduction in lines and toll minutes, but it also
reflected the decrease in assessment rates made by the Commission in 2007. In Order No.
30273 , issued on March 16 2007, the line rate was decreased from $0.03 to $0.02 and the
DECISION MEMORANDUM - 2 -MARCH 24, 2008
intrastate per minute toll rate was decreased from $0.0003 to $0.0002. The TRS administrative
fees and expenses for 2007 were $42 157, and the end-of-year balance ofthe TRS fund was
$469 726. The comparison ofthe 2007 disbursements and contributions to the previous year are
as follows:
TRS Fund Disbursements 2007 2006
Hamilton Telecommunications $250 755 $265 580
Program Administrative Expenses & Fees
Total $292 912 $310 969
TRS Revenue Contributions 2007 2006
Local access service providers $199 922 $267 535
MTS/W A TS providers 251 157 620
Interest earned on funds 189
Total $289 236 $425 344
2008 TRS BUDGET AND TRENDS
Mr. Dunbar estimated the 2008 annual operating expenses to be $284 356. This budget
includes a forecasted 20 percent decrease in traditional relay minutes of use and a corresponding
increase in CapTel use. Mr. Dunbar also anticipates a continued decrease in both the number of
lines and billed toll minutes as seen in the fourth quarter of 2007.
In last year s annual report, Mr. Dunbar advised the Commission ofthe FCC's intent to
require the state commissions to assume payment for intrastate Internet services that include
Internet Relay (IR) and Video Relay (VRS) services. These Internet services are currently
funded through NECA. The FCC did not take action in 2007, but Mr. Dunbar reiterated that this
situation warrants continued monitoring during 2008. As previously noted by the Administrator
estimated assessments for intrastate IR and VRS would quadruple the current TRS budget and
would necessitate an immediate increase in the assessment rates.
ADMINISTRATOR'S 2008 FUNDING RECOMMENDATION
Mr. Dunbar developed the 2008 budget, by taking into consideration the reduced relay
usage trend, the 2007 fourth quarter revenue reduction associated with decreased number of lines
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and toll minutes reported by the telephone companies, and the possibility of a change in the FCC
Internet funding shift. Mr. Dunbar acknowledged that should the FCC transfer the responsibility
of funding the IR and VRS services to the states, Idaho s current TRS fund balance would
provide an adequate five- to six-month reserve. Thus, Mr. Dunbar recommends that the TRS
assessment rates remain unchanged for 2008.
STAFF'S RECOMMENDATION
Staff has reviewed the TRS annual report and agrees with the Administrator
recommendation to maintain the current TRS assessment rates. Staff also agrees with the
Administrator that the fund reserve allows the Commission adequate time to react to any future
possibility of federally imposed changes that may occur regarding IR and VRS funding. Staff
therefore, recommends that the Commission approve the Administrator s proposal to maintain
the current access line and MTS/W A TS assessment rates and the Administrator s 2008 budget.
COMMISSION DECISION
1. Does the Commission wish to accept the Administrator s recommendation to
maintain the current TRS contribution levels adopted in Order No. 30273?
2. Does the Commission wish to accept the annual report and adopt the Administrator
budget for 2008?
3. Does the Commission wish to change the assessment distribution or the methodology
in some other way?
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i:udmemosltrs report for 2007
DECISION MEMORANDUM - 4 -MARCH 24, 2008