20100405_2910.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:APRIL 2, 2010
RE:2009 TELECOMMUNICATIONS RELAY SERVICE ANNUAL REPORT;
CASE NO. GNR-I0-03.
BACKGROUND
Each year the Administrator of the Idaho Telecommunications Relay Service (TRS or relay) files
a report detailing the activities and status of the program during the previous year. The Administrator
also determines the funding requirements for the following year and submits a recommended budget with
the annual report.
In 1992 , the Idaho Legislature established the Telecommunications Relay Service Act (TRS Act)
in accordance with the federal Title IV of the American with Disabilities Act. The TRS enables citizens
who are hearing or speech-impaired the ability to engage in telephone communications "in a manner
functionally equivalent to that of individuals without hearing or speech impairments.Idaho Code
~ 61-130 I. Under the Idaho TRS Act, all telephone corporations providing local or long-distance service
(not including cellular or VoIP) must provide TRS as set forth in the program and pay into the TRS Fund
based upon an allocation methodology adopted by the Commission. Idaho Code ~ 61-1305. Pursuant to
TRS Rule 202, the Commission sets the TRS funding levels each year based upon the Administrator
Annual Report. IDAP A 31.46.02.202.
THE 2009 ANNUAL REPORT
On February 9, 2010, the TRS Administrator, Mr. Robert Dunbar, submitted the 2009 TRS
Annual Report and the 2010 TRS Budget for Comm ission approval. Mr. Dunbar reported the 2009 relay
service conversation time, including interstate long distance, totaled 93 165 minutes. This represents a
32% decrease from calendar year 2008. Likewise, $190 109 for traditional relay service ($85 114) and
DECISION MEMORANDUM APRIL 2, 20 I 0
captioned telephone service (CapTel)l ($104 995) service disbursed to the TRS service provider
Hamilton Telecommunications for 2009 were approximately 18% less than 2008. Idaho s TRS fund
reimburses Hamilton Telecommunications for processing in-state traditional relay and CapTel calls, while
the National Exchange Carrier Association (NECA) reimburses Hamilton for the processing of out-of-
state relay as well as intrastate Internet relay (IR) and Internet video relay service (VRS) calls.
Mr. Dunbar reported that traditional relay usage decreased in 2009, while the CapTel usage
remained the same as 2008. In 2009, CapTel calls comprised 55% of the total TRS billed minutes
compared to 47% in 2008, and traditional relay service comprised 45% of the calls in 2009 compared to
53% in 2008. Since the 2006 introduction of CapTel in Idaho, the increase in CapTel usage has offset the
decreases in traditional relay service. CapTel usage, however, appears to have leveled off in 2009.
2009 TRS REVENUE AND EXPENSES
The TRS fund is supported by assessments on local telephone service (residential and business
local exchange lines) and billed intrastate long distance (MTS/W A TS) minutes. In 2009, the total number
of intrastate MTS/W A TS minutes reported by the telephone companies was approximately 362 225 880
compared to 325 781 100 in 2008 and the average monthly number of local telephone lines reported for
the year was 589 047 compared to 585 958 in 2008. The 2009 annual contribution to the TRS fund
totaled $200 736, a decrease of$8,631 (4%) from 2008. Contributions from local access lines totaled
$128 291 (64%) and MTS/WATS contributions were $72 446 (36%). In Order No. 30759, issued on
March 26, 2009, the per-line and per-minute assessments remained unchanged at $0.02 and $0.0002
respectively. The TRS administrative fees and expenses for 2009 were $46 605 , and included a $4 000
charge for an audit conducted in late 2008. The 2009 end-of-year balance of the TRS fund was $369 172.
The comparison of the 2009 disbursements and contributions from the previous year are as follows:
TRS Fund Disbursements
Hamilton Telecommunications
Program Administrative Expenses & Fees
Total
Interest earned on funds
Total
2009 2008
$190 109 $231 979
46,605 42,099
$237 714 $274 078
2009 2008
$128 291 $140 630
72,446 737
$200 771 $209 406
TRS Revenue Contributions
Local access service providers
MTS/W A TS providers
I CapTel allows hard-of-hearing users to hear the conversation as well as read the words on the phone s built-
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 CapTel user with a more natural conversation.
DECISION MEMORANDUM APRIL 2, 2010
2010 TRS BUDGET
Mr. Dunbar estimates the 2010 annual operating expenses to be $256 355. This budget includes
the RFP costs of issuing, evaluating and awarding the new service provider contract that will expire in
December 2010.
In the annual report, Mr. Dunbar states that traditional relay usage continued to drop in 2009
reflecting a migration to other technology-based services, and CapTel usage appears to have leveled off.
To estimate an adequate fund for 2010, Mr. Dunbar anticipates that both the revenue and usage will
remain the same as it was in 2009. If assessment rates remain at the current level, Mr. Dunbar calculates
the end-of-year reserve fund will decrease by approximately $52 000. The Administrator is, however
concerned that should the Commission decide to lower assessment rates to reduce the reserve at a faster
pace, smaller companies may determine that contributing to the fund is not worth the effort or the expense
to comply. He is also concerned that lowering the rate could accelerate the draw down too quickly after
2010 and thereby exhaust the fund reserve.
If the Commission wishes to change the rates, Mr. Dunbar suggests that the line rate remain the
same at $., and the MTS/W A TS rate be decreased from $.0002 to $.0001. This would result in an
estimated 2010 draw down of approximately $80 000, while a decrease of both rates ($.02 to $.01 and
0002 to $.0001) would result in an estimated draw down of approximately $122 555. These estimates
are based on an effective date of May 2010.
The Service Contract Request for Proposal (RFP)
The TRS service contract with Hamilton Telecommunications and CapTel expires on
December 1 , 2010. The 2010 TRS service provider RFP may see significant changes in service and
reporting requirements from those seen in past RFPs. Mr. Dunbar feels major changes are necessitated by
the urgent need to minimize the opportunity and protect the state from potential fraud. Mr. Dunbar
reports that 2009 saw more than two dozen federal indictments for nationwide fraud in the relay
community. More than $60 million dollars is alleged to have been defrauded from the federal fund.
Fortunately, these indictments involved Internet services only, but Mr. Dunbar feels it is prudent to take
preventive measures to minimize the possibility of similar activities in Idaho.
ADMINISTRATOR'S 2010 FUNDING RECOMMENDATION
Mr. Dunbar recommends the assessment rates remain unchanged in 2010. Mr. Dunbar reported
that the current TRS contribution rates should result in a reduction of the fund reserve by approximately
$51 820. At current rates, the 2010 end-of-year cash balance will be approximately $317, 352. This will
DECISION MEMORANDUM APRIL 2, 2010
preserve a comfortable cushion for unexpected expenses or changes in relay usage that may arise during
the year.
ST AFF'S RECOMMENDATION
Staff has reviewed the TRS annual report and agrees with the Administrator s recommendation to
maintain the current TRS assessment rates for the following reasons: 1) a significantly revised RFP
requirement for a service provider in Idaho may require additional time and incur greater costs for the
Administrator; 2) the new service rates with the RFP decision will not go into effect until December
2010, but rates will likely be higher and Staff feels it is best to maintain a status quo until this unknown
fact is determined; and 3) Staff sympathizes with the Administrator s concern that lowering the rate may
cause some smaller telephone companies to conclude that it is not worth the effort or expense to comply
with the TRS fund requirements. Staff, therefore, recommends that the Commission approve both the
'Administrator s proposal to maintain the current access line and MTS/W A TS assessment rates at $.02 and
0002, respectively. Staff also recommends approval of the Administrator s 2009 annual report and the
2010 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. 307597
2. Does the Commission wish to accept the annual report and adopt the Administrator s budget
for 20107
~~
LUM
Grace Seaman
i:udmemos/trs report for 2009.doc
DECISION MEMORANDUM APRIL 2, 2010