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May 17, 2007

Providers Criticize NECA Proposal for TRS Payment Fund Formula

The annual payment fund formula and fund size estimated for the Interstate Telecommunications Relay Service recommended by the National Exchange Carrier Association came under fire from TRS providers, telcos, and advocates in comments filed by the FCC, with several stating that the recommendations, if adopted, would discourage usage of TRS services by the hearing impaired.

In a filing with the Commission earlier this month, NECA proposed per-minute compensation rates based on alternative rate calculations for the various forms of TRS. These calculations result in proposed rates ranging from $1.5601 to $1.7225 for traditional TRS; $2.4964 to $3.3278 for speech-to-speech (STS) service; $1.1002 to $1.2268 for Internet protocol relay service; and $4.3480 to $6.4370 for video relay services. The alternative methodologies result in a proposed carrier contribution factor ranging from 0.0052 to 0.0075, and a fund size requirement ranging from $397 million to $575.4 million.

But several providers, most notably those offering video relay services, castigated the reimbursement rates offered by NECA, saying they were unlawful and did not follow statutory mandate to expand VRS. They also criticized the lack of predictability in the rate setting process.

Sorenson Communications, Inc., for example, said while NECA was required to propose a single rate for VRS, it instead offered 24 different rates, only one of which - the per-minute rate of $6.7738 - it claims is legal. "The other 23 rates are unlawful and contrary to the need for greater predictability that [FCC Chairman Kevin J. Martin] and all four Commissioners have urged in the TRS rate setting process," it said. "Sixteen of the proposed rates are not based on the average of providers' cost and demand projections."

Hands On Video Relay Services, Inc., went even further, saying it opposed the adoption of any of the 24 different VRS rates. "Instead, the FCC should task NECA with recommending a multi-year tiered rate structure," it said. "While it is considering and adopting such a rate structure, the FCC should, on an interim basis, either continue the existing VRS rate or adopt a simplified tiered structure."

And CSDVRS, LLC said the latest NECA calculations continue a disturbing trend by that organization. "The past several years have been characterized by sudden, erratic, and unexpected shifts in VRS cost recovery," it said. "Unfortunately, this year has been no different, with the seemingly haphazard recommendation of no fewer than 24 possible VRS rates, based on at least six different rate methodologies."

Sprint Nextel Corp. said that the proposal "provides even more additional evidence that the framework for establishing the compensation rates to be paid to relay providers is dysfunctional." It criticized NECA's use of alternative methodologies in drafting some of the rates, saying "NECA's recommended rates must be based on the methodology that the Commission has adopted and not how that methodology may be changed sometime in the future."

AT&T, Inc., meanwhile, focused its argument on NECA's decision not to use part of a $45 million surplus this year to reduce the 2007-08 funding requirement, instead retaining it as part of a "safety margin" for the coming year. "The current fund estimate does not identify any specific concerns that appear to justify retaining this safety margin," it said. "There is no demonstrable need to retain the entire current surplus." - Ted Gotsch, [email protected]

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