20060306_1488.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:MARCH 3, 2006
RE:2005 TELECOMMUNICATIONS RELAY SERVICE ANNUAL REPORT
On January 20 2006, Idaho s Telecommunications Relay Service (TRS) Administrator
Mr. Robert Dunbar, submitted the 2005 TRS Annual Report to the Commission. He reported the
relay service conversation time, including interstate long distance, totaled 362 086 minutes. This
represents an 11 % decrease from calendar year 2004. Likewise, disbursements to Hamilton
Telecommunications of$366 119 for in-state relay calls were approximately 11 % less than 2004.
Idaho s TRS Fund reimburses Hamilton Telecommunications for handling in-state relay traffic
while the National Exchange Carrier Association (NECA) reimburses Hamilton for out-of-state
relay service.
2005 TRS REVENUE AND EXPENSES
The TRS fund is supported by assessments on local access lines and on billed intrastate
MTS/W ATS minutes. The total number of intrastate toll minutes reported to the Administrator
during calendar year 2005 was approximately 286 206 000, and the total number oflines
reported was approximately 665 850. The annual contributions decreased by $6 900 in 2005 and
the end-of-year fund balance was $359 000. Program administrative expenses were higher in
2005 due to the TRS Request for Proposal activities, renegotiation of the service contract with
Hamilton Telecommunications and the independent TRS audit.
Fund Disbursements 2005 2004
Hamilton Telecommunications
Program Administrative Expenses & Fees
Total
$366 120
61,463
$427 583
$413 469
33,815
$447 284
DECISION MEMORANDUM - 1 -MARCH 3, 2006
TRS Revenue Contributions 2005 2004
Local access service providers $319 006 (61%)$323 125 (61%)
MTS/W A TS providers 200 340 (39%)203 157 (39%)
Interest earned on funds 142 112
Total $519 488 $526 394
2006 TRS BUDGET AND TRENDS
Mr. Dunbar estimated the 2006 annual operating expense requirement would be
approximately $409 130. This includes a forecasted 10 percent decrease in traditional relay
usage reflecting continued user migration to Internet and video relay. The Administrator
anticipated the line count and long distance billed minutes during 2006 would remain stable with
only a slight decrease of 1.4%. As in previous annual reports, the Administrator reminds the
Commission, should the Federal Communications Commission (FCC) require states to pay for
additional relay-related services such as Internet and video relay, the TRS fund will be quickly
exhausted and the financial situation will require an immediate reevaluation of the assessments.
ADMINSTRA TOR'S RECOMMENDATIONS
Based on the estimated 2006 budget requirements and the downward trend in relay usage
Mr. Dunbar recommended an adjustment to the TRS contributions. He presented four options
for Commission review.
Option 1: Assessment levels remain unchanged. Mr. Dunbar stated that if the current
assessment levels of $.04 per month per access line and $.0007 per minute per intrastate
MTS/W ATS remain the same, the estimated reserve balance would be approximately $459 000.
Option 2: Reduce the MTS/W A TS rates only.In this option, Mr. Dunbar proposed a
reduction in the intrastate MTS/W ATS per minute rate to $.0003 , providing a reserve balance of
approximately $359 000.
Option 3: Reduce both the access line and MTS/W A TS rates.In this option, Mr. Dunbar
reduced the access line rate to $.02 per month per access line and the intrastate MTS/W A TS per
minute rate to $.0006. This option would result in an estimated reserve balance of approximately
$281 000.
DECISION MEMORANDUM - 2 -MARCH 3, 2006
Mr. Dunbar noted that adoption of emerging technology such as Voice over IP (VoIP)
will likely have the greatest impact on the MTS/W A TS contribution and, therefore, favors a
greater reduction in this assessment. The Administrator also cited Idaho as the only state
currently assessing toll and suggested that the Commission may want to contemplate elimination
of this assessment in the future.
ST AFF'S RECOMMENDATION
Based on the proposed TRS budget for 2006, Staff agrees with the Administrator
recommendation to reduce the TRS assessment rates. After reviewing the annual report and
assessing the TRS usage, Staff believes the Commission may wish to consider another option of
reducing the access line rate to $.03 and reducing the MTS/W ATS per minute rate to $.0003.
These reductions would provide an estimated reserve balance of approximately $270 000.
COMMISSION DECISION
1. Does the Commission wish to reduce the TRS contribution from levels authorized by
Order No. 29754 and adopt Staffs recommendation to reduce the access line rate to $.03 and the
MTS/W ATS assessment to $.0003?
2. Does the Commission wish to change the distribution or the methodology in some
other way?
ce Seaman
i:udmemos/trs report for 2005
DECISION MEMORANDUM - 3 -MARCH 3 , 2006