**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | CG Docket No. 03-123         |
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| Telecommunications Relay         | ) |                              |
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| Speech-to-Speech Services for    |   |                              |
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| Individuals with Hearing and     | * |                              |
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**FURTHER NOTICE OF PROPOSED RULEMAKING**

**Adopted:** July 13, 2006 **Released:** July 20, 2006

**Comment Date: (45 days after publication in the Federal Register)\
Reply Comment Date: (60 days after publication in the Federal
Register)**

By the Commission: Chairman Martin, and Commissioners Copps, Adelstein,
Tate, and McDowell issuing separate statements.

Table of Contents

Heading Paragraph \#

I. introduction 1

II\. BACKGROUND 2

III\. Discussion 7

A. Cost Recovery Methodology for Traditional TRS, STS, and IP Relay 9

1\. Hamilton's MARS Plan 9

2\. Application of MARS Plan to STS 17

3\. Same Compensation Rate for Traditional TRS, STS, and IP Relay 18

4\. Alternative Cost Recovery Methodologies for Traditional TRS, STS,
and IP Relay 18

5\. Use of a "True-up" or Transition to Actual Costs 22

6\. Rate Period for Traditional TRS, STS, and IP Relay 23

B. Cost Recovery Methodology for VRS 24

1\. Appropriate Cost Recovery Methodology for VRS 24

2\. Use of a "True-up" or Transition to Actual Costs 29

3\. Rate Period for VRS 30

C. "Reasonable" Costs and Confidentiality of Provider Data 32

1\. Marketing and Outreach Expenses 33

2\. Overhead Costs 38

3\. Legal and Lobbying Expenses 40

4\. Executive Compensation 42

5\. Making Provider Cost and Demand Data Public 43

D. Management and Administration of the Fund 45

IV\. procedural matters 50

V. ordering clauses 58

# introduction

1.  In this *Further Notice of Proposed Rulemaking (Notice),* we seek
    comment on a broad range of issues concerning the compensation of
    providers of telecommunications relay services (TRS) from the
    Interstate TRS Fund (Fund).[^1] First, we seek comment on
    alternative cost recovery methodologies for interstate traditional
    TRS[^2] and Speech-to-Speech (STS),[^3] including Hamilton Relay,
    Inc.'s (Hamilton) proposed "MARS" plan ("Multi-state Average Rate
    Structure"),[^4] and also whether traditional TRS and STS should be
    compensated at the same rate. Second, this *Notice* seeks further
    comment on the appropriate cost recovery methodology for Video Relay
    Service (VRS)[^5] and the length of time the VRS rate should be in
    effect.[^6] Third, this *Notice* seeks comment on issues relating to
    the "reasonable" costs compensable under the present cost recovery
    methodology, including whether, and to what extent, marketing and
    outreach expenses, overhead costs, and executive compensation are
    compensable from the Fund. Finally, this *Notice* seeks comment on
    ways to improve the management and administration of the Fund,
    including adopting measures for assessing the performance and
    efficiency of the Fund and to deter waste, fraud, and abuse.

# BACKGROUND

2.  *TRS.* Title IV of the Americans with Disabilities Act of 1990
    (ADA), which added Section 225 to the Communications Act of 1934, as
    amended,[^7] requires the Commission to ensure that TRS is
    available, to the extent possible and in the most efficient manner,
    to persons with hearing or speech disabilities in the United
    States.[^8] The statute requires that TRS offer persons with hearing
    and speech disabilities access to a telephone system that is
    "functionally equivalent" to voice telephone service.[^9] Congress
    recognized that persons with hearing and speech disabilities have
    long experienced barriers in their ability to access, utilize, and
    benefit from telecommunications services.[^10] Congress found TRS
    necessary to "bridge the gap between the communications-impaired
    telephone user and the community at large" and emphasized that to
    "participate actively in society, one must have the ability to call
    friends, family, business\[es\] and employers."[^11] Since the
    implementation of a uniform nationwide system of TRS in 1993, the
    Commission has addressed issues relating to its provision,
    regulation, and compensation.[^12]

3.  When Section 225 was enacted and implemented, TRS calls were placed
    using a TTY connected to the Public Switched Telephone Network
    (PSTN) (traditional TRS).[^13] In March 2000, the Commission
    recognized several new forms of TRS, including STS and VRS.[^14] STS
    is used by persons with a speech disability. Specially trained CAs
    who understand the speech patterns of persons with speech
    disabilities repeat the words spoken to the other party to the
    call.[^15] The Commission made STS a mandatory service, so that all
    states with a certified state TRS program must offer this
    service.[^16] VRS is an Internet-based form of TRS that allows the
    TRS user whose primary language is American Sign Language (ASL) to
    communicate with the CA in ASL, rather than text, through a video
    link.[^17] In April 2002, the Commission recognized a second
    Internet-based form of TRS -- Internet Protocol (IP) Relay.[^18]
    Like traditional TRS, IP Relay uses text, but the user connects to
    the CA via the Internet and a personal computer or other web-enabled
    device. Most recently, in August 2003, the Commission recognized
    captioned telephone service as a form of TRS.[^19]

4.  *Compensation of TRS Providers.* Section 225 creates a cost recovery
    regime whereby providers of TRS are compensated for the costs caused
    by TRS.[^20] This regime is based on the "jurisdictional separation
    of costs."[^21] Section 225 provides that the costs caused by
    *inter*state TRS "shall be recovered from all subscribers for every
    interstate service," and the costs caused by the provision of
    *intra*state TRS "shall be recovered from the intrastate
    jurisdiction."[^22] As a general matter, the costs caused by
    *intra*state TRS are recovered by each state. [^23] No specific
    funding method is required for *intra*state TRS or state TRS
    programs.[^24] States generally recover the costs of intrastate TRS
    either through rate adjustments or surcharges assessed on all
    intrastate end users, and reimburse TRS providers directly for their
    intrastate TRS costs. Most states presently select one provider to
    offer TRS within the state.[^25]

5.  With respect to *inter*state TRS, there are two aspects to the cost
    recovery framework set forth in the regulations: (1) collecting
    contributions from common carriers providing interstate
    telecommunications services to create a fund from which eligible TRS
    providers may be compensated; and (2) compensating eligible TRS
    providers from the Fund for the costs of providing eligible TRS
    services.[^26] In creating the Interstate TRS Fund, the Commission
    enacted a shared funding mechanism based on contributions from all
    carriers who provide interstate telecommunications services. All
    contributions are placed in the Fund, which is administered by the
    TRS Fund administrator, currently the National Exchange Carrier
    Association, Inc. (NECA).[^27] The Fund administrator uses these
    funds to compensate "eligible" TRS providers[^28] for the costs of
    providing TRS. Compensation is based on per-minute rates adopted
    each year by the Commission.[^29] There are currently four different
    compensation rates for the different forms of TRS: traditional TRS,
    IP Relay, STS, and VRS.[^30]

6.  To determine the annual per-minute compensation rates under the
    present cost recovery methodology, TRS providers are required to
    submit to the Fund administrator *projected* cost and minutes of use
    data for a two-year period. Specifically, TRS providers must supply
    the administrator with "total TRS minutes of use, total interstate
    TRS minutes of use, total TRS operating expenses and total TRS
    investment," as well as "other historical or projected information
    reasonably requested by the administrator for purposes of computing
    payments and revenue requirements."[^31] Using this data, the Fund
    administrator determines the average per-minute compensation rate
    for the various forms of TRS, and submits the rates to the
    Commission for approval. The Commission issues a rate order each
    year by June 30, either approving or modifying these rates.[^32]

# Discussion

7.  In recent years, the annual determination of the TRS compensation
    rates -- and particularly the VRS rate -- under the present
    methodology has presented a variety of regulatory and administrative
    challenges.[^33] Further, comments filed in response to NECA's
    filing of proposed compensation rates for the 2006-2007 Fund
    year[^34] reflect dissatisfaction with the rate setting *process*,
    as well as with the proposed rates.[^35] For these reasons, in this
    *Notice* we seek comment on numerous issues relating to the cost
    recovery methodology used for determining the TRS compensation rates
    paid by the Fund, as well as the scope of the costs properly
    compensable under Section 225 and the TRS regime as intended by
    Congress.

8.  In so doing, we are mindful of the role of TRS as an accommodation
    under the ADA for persons with disabilities. As the Commission has
    stated, "because Title IV places the obligation on carriers
    providing voice telephone services to *also* offer TRS to, in
    effect, remedy the discriminatory effects of a telephone system
    inaccessible to persons with disabilities, the costs of providing
    TRS are really just another cost of doing business generally,
    *i.e.,* of providing voice telephone service."[^36] For this reason,
    "the annual determination of the TRS compensation rates is not akin
    to a rate-making process that determines the charges a regulated
    entity may charge its customers," but rather "it is a determination
    of a per-minute compensation rate that will cover the reasonable
    costs incurred in providing the TRS services mandated by Congress
    and our regulations."[^37] As the Commission has stated in the
    context of disallowing research and development expenses, the Fund
    is not intended to be "an unbounded source of funding for
    enhancements that go beyond \[the mandatory minimum\]
    standards."[^38] It follows that the use of TRS cost recovery
    methodologies and procedures that fairly and predictably compensate
    providers for the reasonable costs of providing service will not
    only be faithful to the intent of the ADA, but will also benefit all
    consumers.

## Cost Recovery Methodology for Traditional TRS, STS, and IP Relay

### Hamilton's MARS Plan

9.  *Background.* Hamilton requests that the Commission initiate a
    proceeding to adopt a proposed alternative cost recovery methodology
    -- the "MARS" Plan -- for determining the per-minute compensation
    rate for traditional TRS.[^39] Under the proposed MARS plan, the
    interstate traditional TRS rate would be calculated based on a
    weighted average of the *intrastate* TRS rates paid by the
    states.[^40] In addition, because some states base their TRS rate on
    "session minutes," rather than "conversation minutes,"[^41] Hamilton
    proposes using a factor to convert session minutes to conversation
    minutes.[^42] Hamilton bases its proposal on the intrastate TRS data
    from twenty-three states for which information was readily
    available.[^43]

10. According to Hamilton, the MARS plan is a superior approach to the
    current cost recovery methodology for traditional interstate TRS
    because it is grounded in competition, as most states select an
    intrastate TRS provider through a competitive bidding process.[^44]
    Hamilton also asserts that this approach would be easier and less
    costly to administer and will benefit consumers "by lowering
    interstate TRS rates to the competitively-based market value."[^45]

11. Hamilton also notes that under the present cost recovery methodology
    -- what it calls "rate of return regulation"[^46] -- the Fund
    administrator and the Commission have "to examine the minutiae of
    each TRS providers' costs and capital investments," and review all
    costs submitted by each provider to determine whether to allow or
    disallow each individual cost.[^47] Hamilton adds that this
    "complicated rate-making process \... will only get more complicated
    as providers seek to include ever more of their costs in the rate
    base."[^48] Hamilton also asserts that the present methodology
    "fails to replicate the competitive market and instead discourages
    efficiency and encourages the 'padding' of investment."[^49]

12. Hamilton asserts that, by contrast, the MARS plan would eliminate
    the need to examine any carrier data. Under the plan, the Fund
    administrator would simply collect the per-minute rate and minutes
    of use for each state, which are "presumptively competitive rates
    \... because they have been subject to a state contract competitive
    bidding process," and determine the interstate rate by averaging
    those rates, adjusted for minutes of use.[^50] Hamilton notes that
    this plan would avoid the costs associated with collecting,
    evaluating, correcting, and re-evaluating TRS provider data."[^51]

13. *Use of the MARS Plan.* We seek comment on whether we should adopt
    the MARS plan, in whole or in part (such as in a hybrid approach in
    which the MARS plan is used to set a rate cap), as the cost recovery
    methodology for traditional interstate TRS and possibly other forms
    of TRS, such as STS. As noted above, under the MARS Plan the
    compensation rate for traditional interstate TRS is based on an
    average of state rates for intrastate traditional TRS. In contrast,
    the present methodology is based on *projected* cost and demand data
    submitted by the providers. We seek comment generally on whether the
    MARS plan, because it is based on competitively bid state rates,
    will result in a fairer, more reasonable compensation rate. We urge
    commenters to address the advantages and disadvantages of the
    present methodology, the MARS plan, and any alternative approach
    based, in whole or in part, on either.[^52]

14. We also seek comment on the fact that some states compensate for
    session minutes, rather than conversation minutes. As noted above,
    the Fund presently compensates providers for conversation minutes
    (*i.e.,* actual conversation time between the calling and called
    party), not session minutes (*i.e.,* time the CA spends on a
    call).[^53] Because some state rates are based on session minutes,
    Hamilton proposed calculating a conversion factor to convert the
    session minute rates to conversation minute rates.[^54] We seek
    comment on the appropriateness of converting session minutes to
    conversation minutes, and specifically on how the factor should be
    calculated and applied. We also seek comment on whether it would be
    more appropriate to use session minutes instead of conversation
    minutes.[^55] Further, we seek comment on whether some states'
    practice of rounding call minutes to the nearest full minute might
    affect the use of the MARS plan, and if so, how.[^56]

15. We also seek comment on how the MARS plan might be implemented. For
    example, if a state rate has been based on the interstate rate,
    inclusion of that state's rate into the MARS plan calculation may
    not be appropriate.[^57] We seek comment on whether any other
    factors that might warrant excluding a particular state's rate from
    the calculation. We also seek comment on how often states adopt TRS
    compensation rates. We also seek comment on what data would be
    required from the states and the extent to which this data is
    readily available. In addition, we ask parties to comment on any
    other issues relating to the implementation of the MARS plan and the
    calculation of rates under that approach, including the costs and
    benefits of implementing this plan.

16. In addition, Hamilton proposes to weight the individual state rates
    by that states' total minutes of use so that states with relatively
    high rates and low minutes of use do not skew the average.[^58] We
    seek comment on whether it would be appropriate to weight the
    states' rates, and, if so, how a weighted rate should be calculated.

### Application of MARS Plan to STS

17. We recognize that the MARS Plan is specifically proposed as a
    methodology for developing the compensation rate for interstate
    traditional TRS.[^59] Because intrastate STS is also a mandatory
    form of TRS, we seek comment on whether the MARS plan (or a similar
    plan based on state STS rates) could also be used to determine the
    interstate STS compensation rate.[^60] We also seek comment on the
    other issues noted above concerning implementation of the MARS plan
    as applied to STS, including the exclusion of particular states'
    rates, the effect of using session minutes rather than conversation
    minutes, using a weighted average, and whether the rate period
    should be one year or some longer period.

### Same Compensation Rate for Traditional TRS, STS, and IP Relay

18. We understand that many states compensate intrastate traditional TRS
    and intrastate STS at the same rate.[^61] In addition, NECA has
    noted that in recent years, given the small demand for this service,
    the STS compensation rate has not been stable.[^62] For these
    reasons, NECA recommends in its filing for the 2006-2007 Fund year
    that the Commission consider adopting one rate that would apply to
    both STS and traditional TRS, based on consolidating the providers'
    data for these services.[^63] We therefore seek comment on whether
    the same rate should apply to both traditional TRS and STS, under
    the existing cost recovery methodology, the MARS plan (or a similar
    type of plan based on state rates), or any other methodology,
    including modified versions of the existing cost recovery
    methodology and/or the MARS plan. We further seek comment on any
    other matters relating to whether traditional TRS and STS should be
    compensated at the same rate.

19. In addition, although in the *2005 TRS Rate Order* the Commission
    adopted separate compensation rates for traditional TRS and IP Relay
    given the then-apparent cost disparity between the two
    services,[^64] we seek comment on whether IP Relay calls should also
    be compensated at the same rate as traditional TRS. We understand
    that in many instances the same CAs working at the same TRS facility
    handle traditional TRS and IP Relay calls interchangeably, and that
    the only difference between the calls is how they reach the relay
    center (*i.e.,* via the PSTN or via the Internet). We seek comment
    generally on this assumption, and on any cost differences between
    providing traditional TRS and providing IP Relay. We also seek
    comment on any other issues relating to whether IP Relay should be
    compensated at the same rate as traditional TRS.

### Alternative Cost Recovery Methodologies for Traditional TRS, STS, and IP Relay

20. We also seek comment on whether other cost recovery methodologies
    might be appropriate for traditional TRS, STS, and IP Relay, and
    easier to administer and result in more predictable rates than the
    current methodology. For example, we seek comment on whether the
    interstate traditional TRS and STS rates should simply be the same
    as the intrastate rate paid for a similar call coming into the relay
    center and handled by the same provider. Under this approach, an
    interstate traditional TRS or STS call originating in Maryland would
    be compensated at the intrastate rate for intrastate calls in the
    state of Maryland. Because the actual cost of providing a
    traditional TRS or STS call should be the same regardless of its
    jurisdictional nature, the intrastate rate may provide a reasonable
    and fair recovery for interstate calls as well.

21. We seek comment on this proposal and any related issues, including
    whether this methodology may be burdensome or overcomplicated, or
    whether there might need to be an adjustment to the compensation for
    interstate calls if, for example, the intrastate rate is impacted by
    requirements different from the interstate requirements. In these
    circumstances, for example, the compensation rate might
    appropriately be based on the *lesser* of the rate resulting from
    the MARS plan or the rate the particular state pays for intrastate
    calls. We also seek comment on this alternative.

### Use of a "True-up" or Transition to Actual Costs

22. We also seek comment on whether, under the MARS plan or any other
    cost recovery methodology for traditional TRS, STS, and IP Relay,
    there should be a "true-up" at the end of the Fund-year based on
    actual reasonable costs. Under a true-up, providers would be
    required to reimburse the Fund for any amount by which their
    payments exceed actual reasonable costs. As a result, providers'
    ultimate compensation would not be contingent on estimates of costs
    or minutes of use. Providers would receive periodic payments of
    estimated actual reasonable costs based on a particular cost
    methodology, and at the end of the Fund year the true-up would
    reconcile the providers' actual reasonable costs for providing
    service in compliance with the Commission's rules and the payments
    received. We seek comment generally on any issues relating to the
    use of a true-up, including how a true-up could be implemented, what
    record keeping requirements might be required, and when and how
    often the true-up should occur. We also seek comment on whether, and
    how, to transition to a cost recovery methodology under which rates
    are set based on actual reasonable historical costs, thus
    eliminating any need for a true-up in most, if not all, cases.

### Rate Period for Traditional TRS, STS, and IP Relay

23. Finally, we seek comment on whether the interstate traditional TRS
    rate, the interstate STS rate, and the IP Relay rate should continue
    to be set for a one-year period or whether a longer rate period is
    appropriate.[^65] We seek comment on the advantages and
    disadvantages of using either a one-year rate period or some longer
    or shorter period of time for these services.

## Cost Recovery Methodology for VRS

### Appropriate Cost Recovery Methodology for VRS

24. *Background.* Since the recognition of VRS in 2000, the Commission
    has sought comment on the appropriate cost recovery methodology on
    several occasions.[^66] Most recently, in 2004, the Commission
    sought comment on whether to adopt permanently the per-minute
    methodology, and, if so, what safeguards might be necessary to
    ensure that such a system would provide fair and reasonable
    compensation in the face of difficult to predict demand levels.[^67]
    The Commission also sought comment on whether, as an alternative,
    providers should be compensated with lump-sum or periodic payments
    of predicted costs, with a "true-up" at the end of the
    Fund-year.[^68] The Commission noted that similar procedures had
    been employed to account for differences between predicted and
    actual costs in a carrier's per-line Interstate Common Line Support
    payments.[^69]

25. In addition, the Commission sought comment on the data collection
    guidelines for the usage data that providers gave the Fund
    administrator.[^70] Specifically, it sought comment on whether
    additional or different guidelines from those used for other forms
    of TRS are necessary due to the unique aspects of VRS.[^71] The
    Commission also noted that because VRS CAs must be highly trained,
    the labor costs for VRS constituted a much higher proportion of
    overall costs than for other forms of TRS. Therefore, the Commission
    sought comment on how such costs should be accounted for and fairly
    compensated to provide for the efficient utilization of labor and
    functionally equivalent VRS.[^72] The FNPRM sought comment on other
    cost elements that pertain to the provision of VRS and how to
    determine reasonable levels of those costs.

26. Six VRS providers filed comments in response to the 2004
    FNPRM*.*[^73] Four providers supported the use of the compensation
    methodology currently in use for VRS and all other forms of
    TRS.[^74] Commenters generally opposed NECA's method of reviewing
    the providers' projected cost and demand data, including the
    disallowance of certain expenses.[^75]

27. *The Appropriate Cost Recovery Methodology.* Because of the
    continued sharp growth in the use of VRS, open issues concerning
    what costs may appropriately be included in determining the
    compensation rate under the current methodology,[^76] and the
    providers' demonstrated inability to accurately forecast
    demand,[^77] we seek additional comment on the issues raised in 2004
    (and summarized above).[^78] We also note that since 2004 the
    Commission has adopted VRS speed of answer and interoperability
    requirements,[^79] which may also affect cost recovery issues. In
    addition, recently the Commission has permitted entities desiring to
    offer VRS to be certified by the Commission.[^80] As a result, we
    expect additional VRS providers to enter the market. Many of these
    providers, like some of the existing providers, will not be
    traditional telephone companies and therefore may present unique
    cost issues. For these reasons, we believe that it is important to
    refresh the record on what the appropriate cost recovery methodology
    for VRS should be.

28. We are particularly interested in adopting a methodology that would
    result in more predictability for the providers, and be consistent
    with the principle that TRS is intended to be an accommodation for
    persons with disabilities, entitling providers to their "reasonable"
    costs of providing this service.[^81] We therefore seek comment on
    whether modifications should be made to the current methodology or
    whether there is a methodology other than the current compensation
    scheme that is more appropriate. For example, should the Commission
    adopt a compensation methodology for VRS where funds are disbursed
    based on each individual provider's actual, reasonable costs? Should
    the Commission treat VRS as a national service, seek competitive
    bids, and thereby permit the two or three lowest bidders to provide
    service at the lowest bid rate, or set compensation rates based on
    the lowest bid, with some sort of incentive or disincentive built
    into the auction process to ensure competitive bidding without
    limiting the number of ultimate providers at that rate?[^82] We seek
    comment on these proposals and any other issues relevant to adopting
    an appropriate cost recovery methodology for VRS.

### Use of a "True-up" or Transition to Actual Costs

29. We also seek comment on whether, under whatever methodology is used,
    providers should be required to reimburse the Fund for any amount by
    which their payments exceed reasonable actual costs.[^83] As noted
    above, the providers' demand forecasts for VRS have generally been
    significantly lower than actual demand, and under the current cost
    recovery methodology, when demand is underestimated the compensation
    rate will be higher, resulting in overcompensation for actual
    minutes submitted.[^84] A true-up based on reasonable actual costs
    might both minimize incentives for providers to underestimate
    projected minutes of use and overstate projected costs, and ensure
    that providers are not over-compensated. Indeed, a comparison of
    projected costs and minutes of use and actual compensation suggests
    that some VRS providers have been compensated above their actual
    costs by millions of dollars. We seek comment on whether any such
    over-compensation from the Fund can be reconciled with Section 225.
    We also seek comment on any other issues relating to the use of a
    true-up, including how a true-up could be implemented, what record
    keeping requirements might be required, and when and how often the
    true-up should occur.[^85] We also seek comment on whether, and how,
    to transition to a cost recovery methodology under which rates are
    set based on actual reasonable historical costs, thus eliminating
    any need for a true-up in most, if not all, cases.

### Rate Period for VRS

30. The Commission also previously raised the issue of whether the VRS
    rate should continue to be set for a one year period or some longer
    period.[^86] As the Commission noted, currently the rules provide
    that the compensation rates for the various forms of TRS will be
    effective for a one-year period beginning July 1 of each year.[^87]
    Because, however, the VRS rate had varied sharply from year to year
    (*e.g.,* beginning at \$5.143 in July 2000, jumping to \$17.044 in
    July 2002, and falling to \$7.751 in 2003), the Commission sought
    comment on whether this lack of consistency may make it difficult
    for VRS providers to plan and budget for the provision of this
    service, particularly with regard to labor costs and staffing.[^88]
    The Commission also recognized that, as a general matter, the
    operating expenses for VRS are more complex than with the other
    forms of TRS, and overall the costs are higher.[^89] The Commission
    therefore sought comment on whether the VRS compensation rate should
    be set for a two-year period, rather than a one-year period.[^90]

31. In view of the other issues raised in this *Notice,* as well as the
    recent interoperability and speed of answer requirements for
    VRS,[^91] we seek to refresh the record on this issue. We seek
    comment on whether a longer rate period would be appropriate for
    VRS. We seek comment on what the rate period should be, and why such
    a rate period would enable VRS providers to offer this service more
    effectively and efficiently over time. Further, given the general
    trend of decreasing compensation rates over time,[^92] we seek
    comment on how, particularly with a longer rate period, we might
    ensure that the compensation rate reasonably correlates to actual
    costs throughout the rate period. We also seek comment on the
    advantages and disadvantages of using either a one-year rate period
    or some longer or shorter period of time for VRS. Finally, we seek
    comment on whether the rate period for all forms of TRS should be
    the same, or whether they may differ.[^93]

## "Reasonable" Costs and Confidentiality of Provider Data

32. NECA's Data Collection Form sets forth several categories of costs
    related to the provision of TRS for which providers may seek
    compensation.[^94] These categories apply to all forms of TRS. As
    discussed below, in some instances these categories of costs may not
    be defined with sufficient clarity, and therefore providers may have
    been submitting costs that should not be included in the
    compensation rates as reasonable costs of providing service. For
    this reason, with regard to certain types of costs we seek comment
    on the nature and extent of such costs that are reasonable and
    consistent with Section 225.

### Marketing and Outreach Expenses

33. We seek comment on the extent to which marketing and outreach should
    continue to be compensated by the Fund. To the extent these
    activities should be covered, we seek comment on the types of
    expenses that should be covered and whether there is a distinction
    between a marketing and outreach, and if so, how each should be
    defined.

34. The Commission's rules require TRS providers to engage in outreach
    activities to ensure that "callers in their service area are aware
    of the availability and use of all forms of TRS."[^95] In 2004, the
    Commission addressed a proposal that the Fund should finance a
    national outreach campaign.[^96] Although the Commission recognized
    the importance of outreach, it concluded that the Fund could not
    finance the type of national campaign at issue.[^97] Noting that
    providers have an obligation to make the public aware of the
    availability of TRS, the Commission stated:

> We decline to permit or require the Interstate TRS Fund to fund a
> national outreach campaign. . . .\[W\]e conclude that the cost of an
> effective *national* outreach campaign would be prohibitive, with
> uncertain outcomes. Further, the amount of money that the Interstate
> TRS Fund might devote to an outreach campaign would have to be
> balanced with our efforts in other parts of this *Order* (and other
> recent orders) to more precisely define and manage the costs that
> determine the compensation rates from the Interstate TRS Fund in an
> effort to safeguard the integrity of the fund. These costs, as we have
> noted, may include costs attributable to reasonable outreach efforts,
> and in this way some of the costs for outreach are already supported
> by the Interstate TRS Fund. We also note that the majority of TRS
> calls are local and intrastate, which suggests that the state TRS
> providers and state TRS programs should be taking the lead in
> providing meaningful outreach.[^98]

We continue to recognize the importance of outreach. We also recognize
that it is important for the Commission to define with sufficient
clarity the nature of outreach expenses that may appropriately be
included in providers' cost submissions.

35. We acknowledge that in the context of the 2006-2007 ratemaking
    proceeding[^99] commenters requested further Commission guidance on
    the issue of outreach and marketing.[^100] Uncertainty regarding
    this issue may also be compounded by the Fund's administrator's Data
    Collection Form and Instructions.[^101] We note that the
    instructions separately include "Outreach" and
    "Marketing/Advertising" as "Other TRS Expenses" that may be included
    on providers' cost submissions.[^102] Moreover, "Outreach" is
    defined in the Data Collection Form as "\[e\]xpenses of programs to
    educate the public on TRS," and "Marketing/Advertising" is defined
    as "\[e\]xpenses associated with promoting TRS within the
    community."[^103] These similar definitions may have lead to
    confusion concerning the nature of outreach expenses that may
    appropriately be submitted to the Fund administrator.

36. We therefore seek comment on the nature of outreach and marketing
    expenses that may properly be compensable under Section 225, and how
    these expenses may be more precisely defined. We also seek comment
    on whether *any* marketing expenses are properly includable in the
    rates. We note that, as a general matter, the Commission's rules
    address outreach and are directed at making the public aware of the
    use and availability of TRS generally and encouraging hearing
    persons and merchants to stay on the line and accept relay
    calls.[^104] Therefore, we seek comment on whether anything more
    than non-branded educational outreach should be compensated by the
    Fund. We tentatively conclude that provider-specific "branded"
    marketing is inappropriate for compensation from the Fund, and that
    the Fund should not be used to promote any particular provider's
    service over the service of competing providers, or to encourage
    consumers to switch providers. Commenters disagreeing with this
    tentative conclusion should explain what benefits persons with
    hearing or speech disabilities may derive from branded marketing
    that would be different from more generalized outreach efforts, and
    why the public should pay for competitive marketing efforts,
    particularly where such expenses cannot be linked to lower costs. We
    also seek comment on whether it is consistent with the statute to
    fund marketing or outreach campaigns by *each* provider, since they
    may largely be duplicative and directed at the same audience.
    Finally, we seek comment generally on the nature and cost of
    outreach and marketing activities providers have funded in the past,
    as well as amount and nature of the providers' current outreach and
    marketing efforts that are geared toward hearing persons and
    merchants, so that they do not hang up on relay calls.

37. We also seek comment on whether, as NECA has suggested,[^105] the
    amount of outreach and marketing expenses compensated from the Fund
    should be based on a given percentage of the compensation rate.
    Analogously, in compensating providers for an allowance for working
    capital (*i.e.,* for the time they are out of pocket money due them
    for services rendered), the Commission has applied a factor of 1.4
    percent to the per-minute compensation rates.[^106] If a similar
    approach were applied to outreach and marketing, all providers would
    receive compensation for the costs of outreach, and NECA and the
    Commission may not have to scrutinize the individual outreach plan
    of each provider. As a result, this approach might be a simpler and
    more predictable approach to compensating providers for the
    reasonable costs of outreach. We seek comment on these assumptions
    and, if this approach were adopted, what a reasonable percentage
    would be.[^107]

### Overhead Costs

38. We seek comment on whether, consistent with Section 225, any general
    overhead costs (*i.e.,* those indirect costs that are neither
    cost-causative nor definable[^108]) should be compensable by the
    Fund as a reasonable cost of providing TRS.[^109] We note that under
    the statute, TRS was intended to be a service offered by common
    carriers because they already offer voice telephone service.
    Further, the cost recovery mechanism was intended to ensure that
    carriers recover the costs of providing this service, since
    consumers who use the service cannot be required to pay more than
    the rates paid for functionally equivalent voice communication
    services.[^110] In this light, we seek comment on whether providers'
    reasonable costs should be limited to their *marginal costs* of
    providing TRS, which would not include an allocation of general
    overhead costs.[^111] In other words, we seek comment on whether,
    consistent with the statute, the reasonable costs of providing TRS
    include only categories of costs actually incurred by providing TRS.
    We note that in the *2004 TRS Report & Order* the Commission stated
    that providers may recover reasonable overhead costs "directly
    attributable to the provision of TRS."[^112] We now seek to clarify
    whether such costs should be considered as reasonable costs of
    providing TRS and, if so, what costs are reasonably considered
    recoverable overhead costs.

39. Assuming compensation of some overhead costs is consistent with the
    statute, we seek comment on the appropriate approach to allocating
    general overhead costs to the provision of TRS. Are there
    alternatives to allocating overhead costs as a percentage of total
    revenues? What limits should be placed on the recovery of such
    costs? We are concerned, for example, that allocating overhead costs
    on the basis of revenues may result in a provider submitting
    indirect costs that are grossly disproportionate to its direct TRS
    costs. Commenters supporting a percentage approach should also
    comment on what percentage is appropriate and why. We also seek
    comment on any other issues relating to the appropriateness of the
    recovery of overhead costs under Section 225 and, if recoverable,
    how the amount of such costs should be determined.

### Legal and Lobbying Expenses

40. We seek comment on limits to the nature and amount of legal and
    lobbying expenses compensable under the "reasonableness" standard
    applicable to the compensation of all TRS costs, particularly with
    regard to such costs that are attributable to lobbying and not to
    compliance with the existing TRS rules.[^113] For example, for some
    providers these expenses have recently grown considerably, exceeding
    more than \$2 million a year. Commenters supporting the use of the
    TRS Fund for lobbying should explain what types of lobbying
    activities or expenses are appropriate for compensation from the
    Fund, and whether providers seeking reimbursement for such expenses
    should be required to disclose such activities apart from the
    Commission's *ex parte* rules or other applicable regulations.[^114]
    For example, is it lawful and reasonable under Section 225 to
    reimburse travel, hotel, and meal costs associated with
    lobbying?[^115] Are costs associated with setting up web sites and
    mail campaigns to encourage the general public to lobby the
    Commission to raise VRS rates appropriate for public funding? Is it
    reasonable under Section 225 to reimburse legal expenses associated
    with petitioning for rule changes? Should amounts allowed for legal
    and lobbying expenses be uniform for all providers, or be tied to
    the number or minutes of service provided? We also seek comment on
    any other issues relating to the appropriate compensation of legal,
    lobbying, and related expenses.

41. We also seek comment on whether it is appropriate and consistent
    with the statutory meaning of costs caused by the service for the
    Fund to reimburse the "start up" expenses of new entities seeking to
    offer TRS. For example, should the Fund reimburse the legal and
    related organizational expenses of multiple new companies that
    desire to offer TRS, particularly when there are already numerous
    providers offering service?

### Executive Compensation

42. We seek comment concerning the amount of executive compensation that
    is included in the providers' cost data, and on whether the number
    of executives for whom compensation is sought should be tied to, or
    limited by, the overall size of certain providers.[^116] Should
    reimbursement of such costs be limited and, if so, how? We seek
    comment, for example, on how we might clarify the scope and nature
    of such costs that should be considered "reasonable" costs
    compensable by the Fund, and whether they should be limited to some
    percentage of other costs or in some other way.

### Making Provider Cost and Demand Data Public

43. Historically, the Commission has honored requests by providers
    submitting projected cost and demand data to treat that information
    as confidential. As a result, the Commission addresses such data
    only in the aggregate or in some other way that does not reveal the
    individual data of a particular provider.[^117] We recognize,
    however, that this approach makes it is difficult for providers and
    the public (including entities that pay into the Fund) to comment on
    the reasonableness of the rates. We note, for example, that in
    comments to NECA's 2006-2007 rate filing, Hamilton urges the
    Commission to provide greater transparency to the rate setting
    process, including by sharing summaries of provider cost and demand
    data with the Interstate TRS Advisory Council.[^118]

44. As a result, we seek comment generally on whether the providers'
    projected (and/or actual) cost and demand data, or particular
    categories of the cost and demand data, should be made public.
    Conversely, we seek comment on whether there are categories of data
    that in particular should be given confidential treatment, and if
    so, why. We also seek comment on how keeping the data confidential
    or allowing a more open process may impact the evaluation of costs,
    public comment regarding the rates, and the rate setting process
    generally. We also seek comment on other ways to make the rate
    setting process under the current methodology more transparent.
    Finally, we seek comment on whether making this data publicly
    available would be consistent with Commission rules in other
    contexts.

## Management and Administration of the Fund

45. The Fund has grown from approximately \$40 million to over \$460
    million since 2000.[^119] In addition, the number of providers
    offering service continues to grow, particularly with regard to IP
    Relay and VRS.[^120] Further, as noted above, new issues continue to
    arise concerning the nature and extent of certain costs that may be
    appropriately compensated from the Fund. For these reasons, we seek
    comment generally on steps we may take to ensure the integrity of
    the Fund and to ensure that compensation is consistent with the
    statute.

46. *Fund Administrator.* We seek comment generally on measures the
    Commission might adopt to improve the management and administration
    of the Fund. Presently, the Commission's rules provide for the
    appointment of a Fund administrator, currently NECA.[^121] The
    administrator collects funds from all interstate carriers to create
    the Fund from which TRS providers are compensated. The administrator
    also proposes to the Commission, based on data submitted to it each
    year by the providers, the TRS compensation rates and the resulting
    Fund size and carrier contribution factor. We seek comment on how
    administration of the Fund could be improved, and whether the rules
    that govern the activities of the administrator should be modified,
    including those addressing both the billing and collection process
    and the disbursement of funds to providers. We seek input from
    providers, users, and others, including government agencies, that
    may have experience with this and similar programs.

47. We further seek comment on ways in which the Commission might better
    assess the effectiveness and efficiency of the administrator's
    management of the Fund. We seek comment, for example, on whether
    there are performance measures the Commission might implement to
    assess the effectiveness of the TRS program and the Fund
    administrator. We also seek comment on whether the Fund
    administrator should be subject to additional reporting requirements
    and, if so, what they should be. In addition, we seek comment on
    whether such measures should mimic those used in the Universal
    Service Fund context. We also seek comment on any other changes that
    might be made to the Fund administrator's role in initially
    calculating the compensation rates proposed to the Commission.
    Finally, we seek comment on whether to adopt rules to implement
    ethical standards and address conflicts of interest for officers and
    employees of the administrator.

48. *Oversight of Providers.* We also seek comment on ways to ensure
    that the compensation paid to providers is legitimate and proper
    under the Commission's rules. We note that presently the providers
    submit several types of data to the Fund administrator and the
    Commission then determines the compensation paid by the Fund,
    including projected cost and demand data that is used to determine
    the compensation rates, monthly minutes of use that are submitted to
    the Fund administrator for payment, and data indicating compliance
    with certain rules (*e.g.,* the speed of answer rule for IP Relay
    and VRS providers). We seek comment on whether there are other types
    of information that providers should be required to provide to
    ensure the integrity of Fund payments, such as financial statements,
    earning reports, and information related to any parent or affiliate.
    We also seek comment on the efficacy of the auditing powers
    presently granted the Fund administrator and the Commission under
    the Commission's rules,[^122] as well as the scope and frequency of
    such audits. Should, for example, the Commission adopt more
    specifically targeted auditing requirements to ensure program
    integrity? We also seek comment on any other issues relating how we
    might ensure the accuracy of the data submitted to determine the
    rates, and the accuracy of the monthly minutes of use data submitted
    to NECA.

49. *Deterring Waste, Fraud, and Abuse.* Finally, we invite comment on
    any other ways to achieve more fair and efficient administration and
    management, as well as to deter and detect waste, fraud, and abuse.
    We seek to ensure that with the number of providers and number of
    minutes of use continuing to increase, particularly with respect to
    VRS and IP Relay, the Fund is compensating providers only for
    legitimate minutes of use provided in compliance with the mandatory
    minimum standards, and that the compensation rates are based on
    accurate demand and cost data.

# procedural matters

50. *Comments and Reply Comments.* Pursuant to Sections 1.415, 1.419,
    and 1.430 of the Commission's rules, 47 C.F.R. §§ 1.415, 1.419,
    1.430, interested parties may file comments on or before 45 days
    after publication of this *Notice* in the Federal Register, and
    reply comments on or before 60 days after publication of this
    *Notice* in the Federal Register. All filings should refer to CG
    Docket No. 03-123. Comments may be filed using the Commission's
    Electronic Comment Filing System (ECFS) or by filing paper
    copies.[^123] For additional information on this proceeding, please
    contact Thomas Chandler in the Consumer & Governmental Affairs
    Bureau, at (202) 418-1475.

51. Comments filed through the ECFS can be sent as an electronic file
    via the Internet to <http://www.fcc.gov/e-file/ecfs.html>.
    Generally, only one copy of an electronic submission must be filed.
    In completing the transmittal screen, commenters should include
    their full name, postal service mailing address, and the applicable
    docket number: CG Docket No. 03-123. Parties may also submit an
    electronic comment by Internet e-mail. To obtain filing instructions
    for e-mail comments, commenters should send an e-mail to
    ecfshelp@fcc.gov, and should include the following words in the body
    of the message: "get form \<your e-mail address\>." A sample form
    and instructions will be sent in reply. You also may obtain a copy
    of the ASCII Electronic Transmittal Form (FORM-ET) at
    <http://www.fcc.gov/e-file/email.html>. Parties who choose to file
    by paper must file an original and four copies of each filing.
    Filings can be sent by hand or messenger delivery, by commercial
    overnight courier, or by first-class or overnight U.S. Postal
    Service mail (although we continue to experience delays in receiving
    U.S. Postal Service mail).

52. For hand deliveries, the Commission\'s contractor, Natek, Inc., will
    receive hand-delivered or messenger-delivered paper filings for the
    Commission\'s Secretary at 236 Massachusetts Avenue, NE, Suite 110,
    Washington, D.C. 20002. The filing hours at this location are 8:00
    a.m. to 7:00 p.m. All hand deliveries must be held together with
    rubber bands or fasteners. Any envelopes must be disposed of before
    entering the building. Commercial overnight mail (other than U.S.
    Postal Service Express Mail and Priority Mail) must be sent to 9300
    East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service
    first-class mail, Express Mail, and Priority Mail should be
    addressed to 445 12th Street, SW, Washington, D.C. 20554. All
    filings must be addressed to the Commission's Secretary, Office of
    the Secretary, Federal Communications Commission.

53. Comments and reply comments must include a short and concise summary
    of the substantive discussion and questions raised in the *Notice*.
    We further direct all interested parties to include the name of the
    filing party and the date of the filing on each page of their
    comments and reply comments. We strongly encourage that parties
    track the organization set forth in this *Notice* in order to
    facilitate our internal review process. Comments and reply comments
    must otherwise comply with Section 1.48 and all other applicable
    sections of the Commission's rules.[^124]

54. 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), 202-418-0432 (TTY). This Public Notice can
    also be downloaded in Word and Portable Document Format at
    \<<http://www.fcc.gov/cgb.dro>\>.

55. *Ex Parte Rules.* This matter shall be treated as a
    "permit-but-disclose" proceeding in accordance with the Commission's
    *ex parte* rules.[^125] Persons making oral *ex parte* presentations
    are reminded that memoranda summarizing the presentations must
    contain summaries of the substance of the presentations and not
    merely a listing of the subjects discussed. More than a one or two
    sentence description of the views and arguments presented is
    generally required.[^126] Other requirements pertaining to oral and
    written presentations are set forth in Section 1.1206(b) of the
    Commission's rules.

56. *Initial Regulatory Flexibility Analysis*. With respect to this
    *Notice*, an Initial Regulatory Flexibility Analysis (IRFA) is
    contained in the Appendix. As required by Section 603 of the
    Regulatory Flexibility Act, the Commission has prepared an IRFA of
    the expected impact on small entities of the proposals contained in
    the *Notice*. Written public comments are requested on the IRFA.
    Comments must be identified as responses to the IRFA and must be
    filed by the deadlines for comments on the *Notice* specified in
    paragraph 50 above. The Commission will send a copy of the *Notice*,
    including the IRFA, to the Chief Counsel for Advocacy of the Small
    Business Administration.[^127]

57. *Initial Paperwork Reduction Act of 1995 Analysis.* This document
    contains proposed or modified information collection requirements.
    The Commission, as part of its continuing effort to reduce paperwork
    burdens, invites the general public and the Office of Management and
    Budget (OMB) to comment on the information collection requirements
    contained in this document, as required by the Paperwork Reduction
    Act of 1995, Public Law 104-13. Public and agency comments are due
    60 days after date of publication of this Notice in the Federal
    Register. Comments should address: (a) whether the proposed
    collection of information is necessary for the proper performance of
    the functions of the Commission, including whether the information
    shall have practical utility; (b) the accuracy of the Commission\'s
    burden estimates; (c) ways to enhance the quality, utility, and
    clarity of the information collected; and (d) ways to minimize the
    burden of the collection of information on the respondents,
    including the use of automated collection techniques or other forms
    of information technology. In addition, pursuant to the Small
    Business Paperwork Relief Act of 2002, Public Law 107-198,
    *[see]{.underline}* 44 U.S.C. 3506(c)(4), we seek specific comment
    on how we might "further reduce the information collection burden
    for small business concerns with fewer than 25 employees."

# ordering clauses

58. Accordingly, IT IS ORDERED that, pursuant to Sections 1, 4(i) and
    (o), 225, 303(r), 403, 624(g), and 706 of the Communications Act of
    1934, as amended, 47 U.S.C. §§ 151, 154(i) and (o), 225, 303(r),
    403, 554(g), and 606, this Further Notice of Proposed Rulemaking IS
    ADOPTED.

59. ![](media/image1.wmf){width="6.944444444444445e-4in"
    height="6.944444444444445e-4in"}IT IS FURTHER ORDERED that the
    Commission\'s Consumer & Governmental Affairs Bureau, Reference
    Information Center, SHALL SEND a copy of this Further Notice of
    Proposed Rulemaking, including the Initial Regulatory Flexibility
    Analysis, to the Chief Counsel for Advocacy of the Small Business
    Administration.

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch Secretary

**Appendix**

**Initial Regulatory Flexibility Analysis**

1\. As required by the Regulatory Flexibility Act (RFA),[^128] the
Commission has prepared this present Initial Regulatory Flexibility
Analysis (IRFA) of the possible significant economic impact on a
substantial number of small entities by the policies and rules proposed
in this *FNPRM.* Written public comments are requested on this IRFA.
Comments must be identified as responses to the IRFA and must be filed
by the deadlines for comments on the *FNPRM* provided in paragraph 50 of
the item. The Commission will send a copy of the *FNPRM*, including this
IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration (SBA).[^129] In addition, the *FNPRM* and IRFA (or
summaries thereof) will be published in the *Federal Register*.[^130]

**A. Need for, and Objectives of, the Proposed Rule**

2\. In recent years, the annual determination of the TRS compensation
rates -- and particularly the VRS rate -- under the present methodology
has presented a variety of regulatory and administrative challenges,
such as the appropriateness of the current per-minute compensation
methodology and the reasonableness of expenses related to outreach,
marketing, overhead, and legal and lobbying services. Further, comments
filed in response to NECA's filing of proposed compensation rates for
the 2006-2007 Fund year reflect dissatisfaction with the rate setting
*process*, as well as with the proposed rates and certain cost
disallowances.[^131] For these reasons, in this *FNPRM* we seek comment
on numerous issues relating to the cost recovery methodology used for
determining the TRS compensation rates paid the Fund, as well as the
scope of the costs properly compensable under Section 225 and the TRS
regime as intended by Congress.

3\. This *FNPRM* addresses alternative cost recovery methodologies for
interstate traditional TRS. The present methodology for compensating
traditional TRS providers for the cost of providing interstate service
is based a per-minute compensation rate. Each year the Fund
administrator collects projected cost and demand data from the
providers, and determines an average per-minute compensation rate, which
it submits to the Commission for approval or modification. Each provider
is compensated for its minutes of use at this "pooled" rate based on the
projected cost and demand data submitted by the providers. Therefore,
providers do not receive reimbursement for their actual costs; their
reimbursements are based on the pooled rate applied to their actual
minutes of use.

4\. Hamilton Relay, Inc. has proposed an alternative methodology to
determine the compensation rate for interstate traditional TRS. Under
Hamilton's proposal -- called the "MARS plan" (Multi-state Average Rate
Structure) -- the compensation rate would be calculated based on an
average of the intrastate TRS rates paid by the states. The state rates,
under Hamilton's proposal, would be weighted based on the total minutes
of use for each state. Hamilton proposes using a weighted average
because otherwise states with a relatively high per minute intrastate
rate, but a very small number of minutes, would skew the multi-state per
minute rate higher than it should be.

5\. Hamilton asserts that its proposed plan would be superior to the
current methodology because state rates are set by a competitive bidding
process. Hamilton also asserts that its proposal would be easier and
less costly to administer. Hamilton further asserts that its proposal
would benefit consumers 'by lowering interstate TRS rates to the
competitively based market value."[^132]

6\. Hamilton also notes that under the present cost recovery methodology
-- what it calls "rate of return regulation"[^133] -- the Fund
administrator and the Commission have "to examine the minutiae of each
TRS providers' costs and capital investments," and review all costs
submitted by each provider to determine whether to allow or disallow
each individual cost.[^134] Hamilton adds that this "complicated
rate-making process \... will only get more complicated as providers
seek to include ever more of their costs in the rate base."[^135]
Hamilton also asserts that the present methodology "fails to replicate
the competitive market and instead discourages efficiency and encourages
the 'padding' of investment."[^136]

7\. Hamilton asserts that, by contrast, the MARS plan would eliminate
the need to examine any carrier data. Hamilton states that the Fund
administrator would simply collect the per-minute rate and minutes of
use for each state, which are "presumptively competitive rates \...
because they have been subject to a state contract competitive bidding
process," and would determine the interstate rate by averaging those
rates, adjusted for minutes of use.[^137] Hamilton notes that this plan
would avoid the costs associated with collecting, evaluating,
correcting, and re-evaluating TRS provider data."[^138]

8\. Given our underlying regulatory concerns, the *NRPM* seeks comment
on Hamilton's proposal. Comments are sought on the advantages and
disadvantages of this proposal compared to the current methodology, how
the proposal would be implemented, how state minutes would be measured,
and whether the rates would be set for a one year period or a longer
time. This *FNPRM* also seeks comment on whether the MARS plan would be
easier to administer and result in administrative cost. This NRPM also
seeks comment on whether the rate for interstate traditional TRS should
be compensated at the same rate as Speech to Speech (STS) service.

9\. This *FNPRM* also addresses the issue of the appropriate cost
recovery methodology for VRS and the appropriate data reporting period
for VRS. Because of the continued sharp growth in the use of VRS, open
issues concerning what costs may appropriately be included in
determining the compensation rate under the current methodology, and
also because of the providers' demonstrated inability to accurately
forecast demand,[^139] the *FNPRM* seeks additional comment on the
issues raised in 2004 (and summarized above).[^140] We also note that
recently the Commission has permitted entities desiring to offer VRS to
be certified by the Commission.[^141] As a result, we expect additional
VRS providers to enter the market. Many of these providers, like some of
the existing providers, will not be traditional telephone companies and
therefore may present unique cost issues. For this reason, we believe
that it is important to refresh the record on what the appropriate cost
recovery methodology for VRS should be.

10\. We are particularly interested in adopting a methodology that would
result in more predictability for the providers, and that would be
consistent with the principle that TRS is intended to be an
accommodation for persons with disabilities, entitling providers to
their "reasonable" costs of providing this service.[^142] We therefore
anticipate developing rules concerning a methodology other than the
current compensation scheme that is more appropriate. For example,
should the Commission adopt a compensation methodology for VRS where
funds are disbursed based on each individual provider's actual,
reasonable costs? Should the Commission treat VRS as a national service,
seek competitive bids, and thereby permit the two or three lowest
bidders to provide service at the lowest bid rate? The *FNPRM* seeks
comment on these proposals and any other issues relevant to adopting an
appropriate cost recovery methodology for VRS.

11\. The *FNPRM* also addresses certain categories of provider costs.
First, although the Commission continues to recognize the importance of
outreach, the Commission seeks ways to define with sufficient clarity
the nature of outreach and marketing expenses that may appropriately be
included in providers' cost submissions. Second, with regard to overhead
costs, the Commission notes that some providers have submitted costs
that reflect a percentage of total company overhead costs based on the
percentage of company revenues attributable to TRS.[^143] The Commission
also notes that some providers' expenses for legal and lobbying have
recently grown to more than \$2 million a year for each provider.[^144]
Finally, the Commission expresses its concern about the extent to which
some salaries of corporate officers and executives have been included in
submitted costs.[^145] This *FNPRM* therefore seeks to resolve the
extent of such costs that are "reasonable" costs of providing TRS,
including whether, and to what extent, marketing and outreach expenses,
overhead costs, and executive compensation are compensable from the
Fund.

12\. In addition, this *FNPRM* addresses whether the providers' cost and
demand data submitted to the Fund administrator should be made public.
It also seeks comment on ways to improve the management and
administration of the Fund, including adopting measures for assessing
the performance and efficiency of the Fund and to deter waste, fraud,
and abuse.

**B. Legal Basis**

13\. The authority for actions proposed in this *FNPRM* may be found in
sections 1, 4(i) and (j), 201-205, 218 and 225 of the Communications Act
of 1934, as amended, 47 U.S.C. sections 151, 154(i), 154(j), 201-205,
218 and 225.

> **C. Description and Estimate of the Number of Small Entities to Which
> the Proposed Rules Will Apply**

14\. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of, small entities that may be
affected by the proposed rules, if adopted.[^146] The RFA generally
defines the term \"small entity\" as having the same meaning as the
terms \"small business,\" \"small organization,\" and \"small
governmental jurisdiction.\"[^147] In addition, the term \"small
business\" has the same meaning as the term \"small business concern\"
under the Small Business Act.[^148] A small business concern is one
which: (1) is independently owned and operated; (2) is not dominant in
its field of operation; and (3) satisfies any additional criteria
established by the Small Business Administration (SBA).[^149]

13\. The Commission believes that the entities that may be affected by
the proposed rules are TRS providers that offer interstate traditional
TRS, interstate STS, interstate Captioned Telephone Service, IP Relay
and VRS. Neither the Commission nor the SBA has developed a definition
of "small entity" specifically directed toward TRS providers. The
closest applicable size standard under the SBA rules is for Wired
Telecommunications Carriers, for which the small business size standard
is all such forms having 1,500 or fewer employees.[^150] Currently,
there are eleven TRS providers that offer interstate traditional TRS,
interstate STS, interstate Captioned Telephone Service, IP Relay and
VRS. These providers consist of interexchange carriers, local exchange
carriers, state-managed entities, and non-profit organizations.
Approximately three or fewer of these entities are small businesses.

**D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements**

14\. The proposed methodology for setting the interstate compensation
rate for traditional TRS service may require the providers to submit
rate data to the Commission, either annually or for a multi-year period,
for the states in which they provide service. Further, adoption of a
cost recovery methodology for VRS other than the current per-minute
compensation methodology may require VRS providers to maintain different
records, although there would be no new reporting requirements.
Presently, VRS providers report their costs annually, and their minutes
of use monthly, to the Interstate TRS Fund Administrator. In addition,
the *FNPRM* contemplates adoption of a means of documenting the
"reasonable" costs compensable under the present cost recovery
methodology for all forms of TRS.

> **E. Steps Taken To Minimize Significant Economic Impact on Small
> Entities, and Significant Alternatives Considered**

15\. The RFA requires an agency to describe any significant
alternatives, specific to small businesses, that it has considered in
reaching its proposed approach, which may include the following four
alternatives (among others): "(1) the establishment of differing
compliance or reporting requirements or timetables that take into
account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for small entities; (3) the use of
performance rather than design standards; and (4) an exemption from
coverage of the rule, or any part thereof, for small entities."[^151]

16\. Adoption of Hamilton's proposed methodology for setting the
interstate traditional TRS rate would eliminate the need to file the
much more voluminous cost and demand data that providers presently must
submit to the Fund administrator. Further, if the rate period is
extended for more than one year, reporting requirements would be
lessened by less frequent data filings with the Fund administrator.
Therefore, the effect of the adoption of Hamilton's proposed methodology
would be to lessen the reporting burden on small business.

17\. In addition, adoption of a cost recovery methodology for VRS other
than the current per minute compensation methodology could eliminate
apparent dissatisfaction among the providers about the rate setting
process and improve the predictability and efficiency in reporting the
cost data and receiving the compensation for the provision of VRS. A
seamless and efficient cost recovery methodology, including clear cost
data submission guidelines, would lessen the reporting burden on small
business.

18\. Further, setting a standard of what and how the "reasonable" costs
should be compensable under the present cost recovery methodology for
all forms of TRS, including whether, and to what extent, marketing and
outreach expenses, overhead costs, and executive compensation are
compensable from the Fund, would provide guidance for the providers that
may improve the predictability in the cost of providing TRS. It would
also eliminate uncertainties with whether the costs submitted would be
compensable or not. Eliminating uncertainties would lessen the reporting
burden on small business.

19\. The majority of TRS service is provided by large interexchange
carriers and large incumbent local exchange carriers. Because we believe
that few small business entities would be impacted by these proposals,
and that the impact, if any, would be minor, it is premature to propose
specific alternatives that would minimize significant economic impact on
small businesses. Further, since we believe the rules we may adopt
pursuant to this proceeding would result in a more streamlined approach
to administering TRS for all entities, including small entities, we are
further persuaded that it would be premature to consider alternatives to
the conferral of such benefits. However, we invite comment on specific
alternatives that may minimize the economic impact of the proposed rules
on small businesses.

**F. Federal Rules That May Duplicate, Overlap, or Conflict with the
Proposed Rules**

20\. None.

**STATEMENT OF**

**CHAIRMAN KEVIN J. MARTIN**

Re: *Telecommunications Relay Services and Speech-to-Speech Services for
Individuals with Hearing and Speech Disabilities*, CG Docket No. 03-123

The Commission has taken a number of important actions relating to
Telecommunications Relay Services (TRS) over the past year. All of these
actions have been aimed at fulfilling our statutory goal of ensuring
that every person has equal access to this nation's communications
services. The proceeding we initiate today, however, may prove to be the
most important. It is appropriate, therefore, that we begin it on the
cusp of the 16^th^ anniversary of the passage of the Americans with
Disabilities Act.

Similar to the comprehensive review proceeding that we began last summer
with respect to the Universal Service Fund, today we begin a
far-reaching inquiry into the TRS Fund. Specifically, by seeking comment
on the appropriate cost methodology, what costs should be compensable,
and on ways to improve the management and administration of the Fund, we
are seeking to protect and maintain its integrity.

We are well aware that there are many Americans with hearing or speech
disabilities that depend on TRS services for their daily communication
needs. The Fund has seen dramatic growth over the past few years as more
and more individuals with disabilities tap into all the benefits that
these services offer. And, at the same time, there are an increasing
number of TRS providers. Given these circumstances, it is an appropriate
time for us to take stock of the operation of this Fund. Indeed, it is
our responsibility.

I am pleased that the Commission is undertaking this inquiry and urge
all of those that have experience with the TRS program -- particularly
its providers and users -- to participate in this proceeding. I, along
with my colleagues, remain committed to improving the quality of life
for individuals with disabilities by ensuring that they have the same
access to communication technologies as people without such
disabilities. To this end, we will take all necessary actions to ensure
that the TRS program, upon which they rely, is operated as efficiently
and effectively as possible.

**STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS**

 

Re:       *Telecommunications Relay Services and Speech-to-Speech
Services for Individuals with Hearing and Speech Disabilities,* Further
Notice of Proposed Rulemaking, CG Docket No. 03-123

 

Less than two weeks from now we will celebrate the 16^th^ anniversary of
the Americans with Disabilities Act which has done so much to ensure
that those with disabilities can access the tools they need to lead
prosperous, productive and fulfilling lives.  Today we take another step
along the path by helping to ensure that the deaf and hard of hearing
receive the Telecommunications Relay Services they are entitled to, that
providers are fairly compensated for their services, and that the
Commission is enabled to administer the program.

 

Before going forward with this rulemaking, it is important that we take
a moment to take stock and review where we have been.  While
improvements have been made over time, sometimes in the past we have
tended to address the squeakiest wheels without fixing more of the
systemic problems associated with the TRS-reimbursement program. These
include the need for better outreach to the deaf and hard of hearing
communities, the need to quickly take into account the potential and the
challenges presented by new technologies, and the need to make the TRS
rules more transparent.

 

A hero to many in both the hearing and deaf communities, Dr. I. King
Jordan, the President of Gallaudet University, told me recently that
while VRS by all accounts has revolutionized how the hearing disabled
communicate, he was astonished to find that there are still people who
just don't know about the service.  Imagine living your life with a
disability for years and then learning that there was a technology
readily available that could have eased many of the challenges you
faced, if only you had known about it.  That's just not acceptable and
it underscores why it is so important that we have the right rules in
place to guide our VRS program into the future.

 

One thing is for sure, we cannot have déjà vu all over again whereby we
are sitting in this building a year from now without a well-oiled TRS
machine.  That is why I am so encouraged by today's item, which seeks
comments on a wide range of difficult issues and looks to tackle them
head-on.  I am looking forward to constructive and creative input from
both the provider and our disability communities because we have a real
opportunity here to build a TRS system that can truly meet the needs of
these communities as well as those of the FCC. 

 

So my thanks go out to Monica Desai, the Bureau and the Disability
Rights Office for working tirelessly not only on this item but also on
the Commission's obligations to the deaf and hard of hearing.  Good job
and I look forward to bringing it all home!

**STATEMENT OF**

**COMMISSIONER JONATHAN S. ADELSTEIN**

*Re: Telecommunications Relay Services and Speech-to-Speech Services for
Individuals with Hearing and Speech Disabilities*, Further Notice of
Proposed Rulemaking, CG Docket No. 03-123

With this Notice, the Commission seeks comment on ways to improve our
administration of the Telecommunications Relay Service (TRS) Fund. The
relay services supported by the TRS Fund serve as vital connections for
and to millions of Americans with hearing and speech disabilities.
Without federal and state TRS services, these citizens would be left out
of the vital communications networks that link our economy. The
Americans with Disabilities Act (ADA) requires that telecommunications
services for those with hearing and speech disabilities be "functionally
equivalent" to those services provided to hearing individuals, and I
remain committed to the goals of the ADA.

As communications technologies continue to play a greater role in all of
our lives, relay services are an increasingly important tool, and the
disability community has been unanimous in its support of these
services. Even as use of revolutionary technologies like Video Relay
Service (VRS) has surged, the Commission's compensation rate-setting
process for our relay services has presented a variety of open questions
and controversy among providers and consumers. I have heard from
providers and consumers alike that the Commission can do more to improve
its administration of the Fund and to increase awareness of these
critical services. So, I commend the Chairman, my colleagues, and the
Consumer and Governmental Affairs Bureau for opening this comprehensive
proceeding, and I encourage commenters to think creatively about how we
can improve the administration of this valuable program. Working
together, the Commission can raise the bar and improve our relay
services for providers, contributors, and the many consumers with and
without hearing disabilities who rely on VRS.

I look forward to working with my colleagues, our CGB staff, members of
the TRS Advisory Committee, and the many members of the disabilities
community on these issues as we move forward.

**STATEMENT OF**

**COMMISSIONER DEBORAH TAYLOR TATE**

Re: *Telecommunications Relay Services and Speech-to-Speech Services for
Individuals with Hearing and Speech Disabilities, CG Docket No. 03-123.*

In 1990, Congress passed the Americans with Disabilities Act, which
entrusted the Federal Communications Commission with the task of
ensuring that individuals with speech and hearing disabilities have the
same ability to communicate through the telephone system as any other
individual. As a result, the Commission created the Interstate
Telecommunications Relay Service (TRS) Fund to compensate providers of
eligible TRS services. TRS enables persons with hearing and speech
disabilities to access the telephone system to make calls to, and
receive calls from, voice telephone users and is now available
nationwide, twenty-four hours a day, seven days a week. The TRS Fund
also supports innovative new relay services like IP relay and video
relay service that offer significant progress toward reaching the goal
of providing truly functionally equivalent services. I am pleased to
support today's item in which we seek comment on how the Commission can
improve the administration of the Fund.

Through this Further Notice of Proposed Rulemaking, I hope we can
simplify and clarify the compensation of costs associated with providing
TRS services. Greater transparency will provide everyone with the
opportunity to ascertain whether TRS compensation rates are reasonable
and appropriate.

I want to thank all those who have taken time to discuss these issues
with me. It is critically important that we understand directly from
persons with hearing and speech disabilities how these services enable
them to more effectively participate as citizens and consumers -- from
interaction with loved one to seeking a loan with a bank. We need to
know how to ensure that our programs can be more widely used and
consumer friendly. At the same time, we must continue to improve the
efficiency of the TRS compensation system to maximize the effectiveness
and long-term sustainability of this invaluable program to those who
depend upon it.

The Interstate TRS Fund brings telecommunications services to
individuals who would not otherwise have access to the telephone
network. I remain committed to encouraging the deployment of new
services to all Americans.

**STATEMENT OF**

**COMMISSIONER ROBERT M. MCDOWELL**

*Re: Telecommunications Relay Services and Speech-to-Speech Services for
Individuals with Hearing and Speech Disabilities*, Further Notice of
Proposed Rulemaking, CG Docket No. 03-123

Our Consumer and Governmental Affairs Bureau has made great strides
under the leadership of Chairman Martin to improve the availability and
choices of important services that allow individuals with hearing and
speech disabilities to obtain "functionally equivalent" communications
services. I support this Order as an important first step toward
comprehensive review of the Telecommunications Relay Services (TRS)
rate-setting process and the ultimate establishment of clear, rational
rules that allow providers to recover the reasonable costs caused by
TRS, as was envisioned by Congress when it created TRS in Title IV of
the Americans with Disabilities Act of 1990.[^152]

The goal of comprehensive reform of the TRS compensation rules cannot
simply be eliminating economic uncertainty for providers seeking to
provide TRS . We must balance the need for economic certainty with our
obligation to see that rates are set and funds dispersed in a
responsible manner, and that a program under which a provider is
entitled only to cost recovery doesn't fall prey to waste, fraud, or
abuse. The need for such balance is of particular concern when the costs
of a government program increase dramatically, as those of the TRS
program have.[^153] Hopefully, at the end of the day, we find that the
growth in the program comes from increasing and improving services to
those with hearing and speech disabilities, rather than from waste or
misuse. Requiring a more transparent process will help us to make that
determination.

I thank Monica Desai and the staff of the Consumer and Governmental
Affairs Bureau for all their hard work on these issues. I look forward
to working with my colleagues, bureau staff, the TRS Advisory Committee,
TRS providers and users, and consumer groups who support the TRS fund as
we address these issues so critical to providing access to functionally
equivalent communications services for Americans with hearing and speech
disabilities.

[^1]: 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. § 225(a)(3) (defining TRS); 47 C.F.R. § 64.601(14). As
    discussed below, the Fund compensates providers of eligible
    interstate TRS services, and other TRS services not compensated by
    the states, for their reasonable costs of providing service. *See
    generally* *Telecommunications Relay Services and Speech-to-Speech
    Services for Individuals with Hearing and Speech Disabilities*, CC
    Docket Nos. 90-571 & 98-67, CG Docket 03-123, Report and Order,
    Order on Reconsideration, and Further Notice of Proposed Rulemaking,
    19 FCC Rcd 12475, 12479-83, paras. 3-8 (June 30, 2004) (*2004 TRS
    Report & Order*).

[^2]: Traditional TRS is accomplished via text-to-voice or
    voice-to-text, with the text provided via a text telephone (TTY).
    *See* 47 C.F.R. § 64.601(14).

[^3]: STS is a form of TRS that allows persons with speech disabilities
    to communicate with voice telephone users through the use of
    specially trained communications assistants (CAs) who understand the
    speech patterns of persons with disabilities and can repeat the
    words spoken by that person. *See* 47 C.F.R. § 64.601(12).

[^4]: Hamilton raised this proposal, which would base the compensation
    rate paid by the Fund on the average of the *intrastate* TRS rates
    paid by the states, in its petition for reconsideration of the *2004
    TRS Report & Order.* Hamilton Relay Service, Inc., Petition for
    Reconsideration (filed Oct. 1, 2004) (Hamilton Petition); *see also*
    Hamilton Reply to comments filed in response to its petition for
    reconsideration (filed Nov. 30, 2004). Hamilton also raised this
    issue in its application for review of the *2004 Bureau TRS Order*,
    which adopted the compensation rates for the various forms of TRS
    for the 2004-2005 Fund year. *See Telecommunications Relay Services
    and Speech-to-Speech Services for Individuals with Hearing and
    Speech Disabilities*, CC Docket No. 98-67, Order, 19 FCC Rcd 12224
    (June 30, 2004) (*2004 Bureau TRS Order*), modified by
    *Telecommunications Relay Services and Speech-to Speech Services for
    Individuals with Hearing and Speech Disabilities*, CC Docket No.
    98-67, Order, 19 FCC Rcd 24981 (Dec. 30, 2004) (*Modified 2004
    Bureau TRS Order*). Because Hamilton is really seeking the adoption
    of a new cost recovery methodology for traditional TRS, we raise
    this issue in this *Notice*. *See also Telecommunications Relay
    Services and Speech-to-Speech Services for Individuals with Hearing
    and Speech Disabilities*, CG Docket No. 03-123, Order on
    Reconsideration, FCC 06-87 (July 12, 2006) (resolving petitions for
    reconsideration of the *2004 TRS Report & Order*);
    *Telecommunications Relay Services and Speech-to-Speech Services for
    Individuals with Hearing and Speech Disabilities*, CG Docket No.
    03-123, Memorandum Opinion and Order, FCC 06-88 (July 12, 2006)
    (resolving applications for review of the *2004 Bureau TRS Order*).

[^5]: VRS is a form of TRS that that enables the VRS user and the CA to
    communicate via a video link in sign language, rather than through
    text. VRS presently requires a broadband Internet connection. See 47
    C.F.R. § 64.601(17) (defining VRS).

[^6]: The Commission sought comment on the appropriate cost recovery
    methodology for VRS and the rate period in the *2004 TRS Report &
    Order's* Further Notice of Proposed Rulemaking (FNPRM), noting that
    the present average per minute cost methodology is currently being
    used on an interim basis for VRS. *See 2004 TRS Report & Order*, 19
    FCC Rcd at 12565-12567, 12569, paras. 234-240 (VRS cost recovery
    methodology), 247 (one or two year period for VRS).

[^7]: Pub. L. No. 101-336, § 401, 104 Stat. 327, 336-69 (1990); 47
    U.S.C. § 225.

[^8]: 47 U.S.C. § 225(b)(1).

[^9]: 47 U.S.C. § 225(a)(3).

[^10]: *See generally 2004 TRS Report & Order*, 19 FCC Rcd at
    12479-12480, para. 3 (discussing legislative history of Title IV of
    the ADA).

[^11]: *See* H.R. Rep. No. 485, Pt. 2, 101st Cong., 2d Sess. at 129
    (1990) (House Report).

[^12]: *See generally 2004 TRS Report & Order,* 19 FCC Rcd at
    12479-12486, paras. 2-13 (overview of past TRS orders).

[^13]: *See id.* at 12479, para. 3 n.18 (describing how a traditional
    TRS call works).

[^14]: *Telecommunications Relay Services for Individuals with Hearing
    and Speech Disabilities*, CC Docket No. 98-67, Report and Order and
    Further Notice of Proposed Rulemakin*g*, 15 FCC Rcd 5140, 5148-5151,
    paras. 14-20 (STS), 5152-5154, paras. 21-27 (VRS) (March 6, 2000)
    (*Improved TRS Order*).

[^15]: *Id*. at 5148, para. 14.

[^16]: *Id.* at 5149, para. 15; *see generally* 47 C.F.R. § 64.605
    (addressing state certification).

[^17]: *2000 Improved TRS Order*, 15 FCC Rcd at 5152, para. 21. The
    issue of whether VRS should be a mandatory service was raised in the
    FNPRM in the *2004 TRS Report & Order. See 2004 TRS Report & Order*,
    19 FCC Rcd at 12567-12568, paras. 243-245. That issue remains
    pending.

[^18]: *See Provision of Improved Telecommunications Relay Services and
    Speech-to-Speech Services for Individuals with Hearing and Speech
    Disabilities*, CC Docket No. 98-67, Declaratory Ruling and Second
    Further Notice of Proposed Rulemaking, 17 FCC Rcd 7779 (April 22,
    2002) (*IP Relay Declaratory Ruling*). The issue of whether IP Relay
    should be a mandatory service was raised in the FNPRM in the *2004
    TRS Report & Order. See 2004 TRS Report & Order*, 19 FCC Rcd at
    12564, paras. 231-232. That issue remains pending.

[^19]: *See Telecommunications Relay Services, and Speech-to-Speech
    Services for Individuals with Hearing and Speech Disabilities*, CC
    Docket No. 98-67, Declaratory Ruling, 18 FCC Rcd 1621 (Aug. 1,
    2003). Captioned telephone is not a mandatory service, although a
    petition for rulemaking on this issue is pending. *See* *Petition
    for Rulemaking Filed Concerning Mandating Captioned Telephone Relay
    Service and Authorizing Internet Protocol (IP) Captioned Telephone
    Relay Service*, CG Docket No. 03-123, Public Notice (Nov. 14, 2005).

[^20]: 47 U.S.C. § 225(d)(3). Congress made clear that TRS users cannot
    be required to pay for the costs of TRS. 47 U.S.C. § 225(d)(1)(D).

[^21]: 47 U.S.C. § 225(d)(3).

[^22]: 47 U.S.C. § 225(d)(3)(B); *see also* 47 C.F.R. §
    64.604(c)(5)(ii).

[^23]: On an interim basis, the costs of providing *intra*state VRS and
    IP Relay are presently paid from the Interstate TRS Fund. *See
    Improved TRS Order*, 15 FCC Rcd at 5149, para. 15 (addressing VRS);
    *IP Relay Declaratory Ruling,* 17 FCC Rcd at 7786, para. 20
    (addressing IP Relay). The issue of separation of costs relating to
    the provision of IP Relay and VRS is pending pursuant to the FNPRM
    in the *2004 TRS Report & Order. See 2004 TRS Report & Order,* 19
    FCC Rcd at 12561-12564, paras. 221-230 (IP Relay), 12565-12567,
    paras. 234-242 (VRS).

[^24]: In a state with a certified TRS program, the state "shall permit
    a common carrier to recover the costs incurred in providing
    intrastate telecommunications relay services by a method consistent
    with the requirements of \[Section 225\]." 47 U.S.C. § 225(c)(3)(B).

[^25]: The Commission's rules provide that common carriers can meet
    their obligation to provide TRS within their service areas
    "individually, through designees, through a competitively selected
    vendor, or in concert with other carriers." 47 C.F.R. § 64.603. A
    few states, *e.g.,* California, use more than one provider for
    intrastate service, an arrangement known as "multivendoring." *See
    Improved TRS Order*, 15 FCC Rcd at 5157, para. 35.

[^26]: *See* 47 U.S.C. § 225(d)(3); 47 C.F.R. § 64.604(c)(5). The
    regulations, addressing these matters separately, characterize the
    former as "cost recovery," *see* 47 C.F.R. §§ 64.604(c)(5)(ii) &
    (iii)(A)-(D), and the latter as "payments to TRS providers," 47
    C.F.R. §§ 64.604(c)(5)(iii)(E) & (F).

[^27]: The amount of each carrier's contribution is the product of the
    carrier's interstate end-user telecommunications revenue and a
    contribution factor determined annually by the Commission. 47 C.F.R.
    § 64.604(c)(5)(iii).

[^28]: 47 C.F.R. § 64.604(c)(5)(iii)(E) & (F) (setting forth the
    eligibility requirements for TRS providers seeking to receive
    compensation from the Interstate TRS Fund). Recently the Commission
    released an order providing for Commission certification of IP Relay
    and VRS providers eligible for compensation from the Fund. *See*
    *Telecommunications Relay Services for Individuals with Hearing and
    Speech Disabilities,* CG Docket No. 03-123, Report and Order and
    Order on Reconsideration, 20 FCC Rcd 20577 (Dec. 12, 2005) (*2006
    TRS Certification Order*) (adopting new VRS and IP Relay provider
    eligibility rules).

[^29]: The Fund year runs from July 1 to June 30. *See, e.g.,
    Telecommunications Relay Services and Speech-to-Speech Services for
    Individuals with Hearing and Speech Disabilities*, CG Docket No.
    03-123, Order, DA 06-1345 (June 29, 2006) (*2006 Bureau TRS Rate
    Order*).

[^30]: *See id.* (adopting separate rates for traditional TRS and IP
    Relay). The traditional TRS rate also applies to Spanish Relay
    service and captioned telephone service.

[^31]: 47 C.F.R. § 64.604(c)(5)(iii)(C).

[^32]: *Id.*; *see, e.g., 2006 Bureau TRS Rate Order* (most recent order
    adopting annual per-minute compensation rates based on providers'
    projected costs and minutes of use).

[^33]: *See 2006 Bureau TRS Rate Order,* at paras 28-29 (freezing the
    2005-2006 VRS rate for the 2006-2007 Fund year because, in part, of
    the providers' difficulty in accurately predicting minutes of use);
    *Telecommunications Relay Services and Speech-to-Speech Services for
    Individuals with Hearing and Speech Disabilities*, CC Docket No.
    98-67, CG Docket No. 03-123, Order, 20 FCC Rcd 12237, at
    12246-12248, paras. 23-28 (June 28, 2005) (*2005 TRS Rate Order*)
    (adopting 2005-2006 VRS rate based on median rate of the providers
    because record reflected that the average rate would unfairly
    penalize most providers and providers' cost projections may have
    been based on various levels of service quality); *2004 TRS Report &
    Order,* 19 FCC Rcd at 12537-12552, paras. 163-200 (addressing
    challenges to the 2003-2004 compensation rates, including
    disallowances for profit, engineering costs, and labor costs); *2004
    Bureau TRS Order,* 19 FCC Rcd at 12237-12241 paras. 35-46
    (addressing cost disallowances and challenges to the adoption of the
    2004-2005 compensation rates).

[^34]: *See* NECA, *Interstate Telecommunications Relay Services Fund
    Payment Formula and Fund Size Estimate*, CG Docket No. 03-123, filed
    May 1, 2006 (*2006 NECA Filing*).

[^35]: *See, e.g.,* Sprint Nextel Corporation (Sprint Nextel) Comments
    (May 17, 2006) at 1-2; Communication Services for the Deaf, Inc.
    (CSD) Comments (May 17, 2006) at 6-8; Hamilton Comments (May 17,
    2006) at 2-6; Hands On Video Relay Services, Inc. (Hands On) Reply
    Comments (May 24, 2006); Telecommunications for the Deaf, Inc.,
    National Association of the Deaf, Deaf and Hard of Hearing Consumer
    Advocacy Network, and California Coalition of Agencies Serving the
    Deaf and Hard of Hearing (collectively, Consumer Groups) Reply
    Comments (May 24, 2006); CSD Reply Comments (May 24, 2006)*.*

[^36]: *2004 TRS Report & Order,* 19 FCC Rcd at 12543, para. 179.

[^37]: *Id.*

[^38]: *Id.* at 12547-12548, para. 189. The size of the Fund has
    increased from approximately \$70 million in 2001 to over \$460
    million in 2006. *See 2006 Bureau TRS Rate Order,* at para. 30 n.91.

[^39]: Hamilton Petition at iii, 1-4.

[^40]: *Id.* at 9. Hamilton proposes using a *weighted* average because,
    otherwise, states with a relatively high per minute intrastate rate,
    but a very small number of minutes, would skew the multi-state per
    minute rate higher than it should be. *Id.* at 11.

[^41]: *Id.* at 10 & Exh. 1 (column E). Presently, the Fund compensates
    providers for conversation minutes (or completed minutes), which are
    measured by conversation time between the calling and called party.
    Conversation minutes do not include time for call set-up, ringing,
    waiting for the called party to answer, or call wrap-up, and do not
    encompass calls that reach a busy signal or are not answered.
    Session minutes include all the time the CA spends on a call to the
    relay center, *i.e.,* from the time the call is connected to the CA,
    regardless of whether the called party answers the call. *See
    generally* Hamilton Petition at 10 n.21.

[^42]: *Id.* at 10. Hamilton would use a factor on 1.46 to convert
    session minutes to conversation minutes based on historical data
    available to the Commission and Fund administrator. Using this
    method, one conversation minute equals 1.46 session minutes. *Id.*

[^43]: The twenty-three states are: Alabama, Alaska, Arizona,
    California, Colorado, Connecticut, Florida, Hawaii, Iowa, Maine,
    Maryland, Minnesota, Montana, Nevada, New Hampshire, New Jersey,
    North Carolina, North Dakota, Ohio, Oregon, Tennessee, Wisconsin,
    and Wyoming. *See* Hamilton Petition, at 11, Ex. 1. Hamilton notes
    that some state information is not publicly available, but that the
    Commission could obtain such information from states that have
    certified TRS programs. Hamilton Petition at 9 & n.19.

[^44]: *Id.* at iii.

[^45]: *Id.* at 2-3.

[^46]: *See, e.g., id.* at iii. Under the present cost recovery
    methodology, TRS providers are entitled to compensation for the
    reasonable costs of providing service, which includes a rate or
    return on capital investment but not profit or a mark-up on
    expenses. *See, e.g., 2004 TRS Report & Order*, 19 FCC Rcd at
    12542-12544, paras. 177-182; *Telecommunications Relay Services and
    Speech-to-Speech Services for Individuals with Hearing and Speech
    Disabilities*, CC Docket No. 98-67, Order, 18 FCC Rcd 12823, 12835,
    para. 35 (June 30, 2003) (*2003 Bureau TRS Order*). We note that
    traditional rate of return regulation would provide for the refund
    of over earnings, or some other true-up mechanism, neither of which
    is present in the current TRS regime.

[^47]: Hamilton Petition at 12.

[^48]: *Id.*

[^49]: *Id.* at 7.

[^50]: *Id.* at 12-13.

[^51]: Hamilton Reply Comments at 3 (Nov. 30, 2004). In response to
    Hamilton's petition for reconsideration, comments were filed by MCI,
    Inc. (MCI Comments) (Nov. 15, 2004); the United States Telecom
    Association (USTA Comments) (Nov. 15, 2004); and Hands On Video
    Relay Services, Inc. (Hands On) (Nov. 15, 2004). The commenters
    generally support Hamilton's request. USTA Comments at 1-4; MCI
    Comments at 2-4; Hands On Comments at 3.

[^52]: We note, for example, that MCI asserts that this methodology
    would permit providers to receive a return on expenses, which it
    maintains should be approximately twenty percent, which the
    Commission presently does not allow. MCI Comments at 2-3. USTA
    asserts that when "pricing is based on competition rather than
    regulation, the cost o\[f\] providing the service and the resulting
    price at which it is offered generally decreases, thereby reducing
    the amount that carriers must contribute through end user
    assessments in order to support TRS." USTA Comments at 3.

[^53]: *See* note 41, *supra.*

[^54]: Hamilton Petition at 10.

[^55]: MCI asserts that the Commission should use session rather than
    conversation minutes. MCI Comments at 3.

[^56]: Presently, the actual conversation time of each completed call is
    recorded in minutes and seconds, or seconds and tenths of seconds
    (for calls less than a minute), and the conversation times for all
    calls are totaled each month. If the conversation time of each call
    were rounded to the fullest minute, the total monthly conversation
    time would be substantially greater than under the current approach.
    MCI asserts that if the MARS plan were adopted the Commission should
    adopt the state practices of rounding calls to the nearest full
    minute. MCI Comments at 3.

[^57]: *See, e.g.,* Hamilton Petition at 11 n.23 (noting that the
    intrastate rate paid by California "is determined by the interstate
    rate, so the inclusion of California's rate in the MARS Plan may be
    circuitous").

[^58]: *See* Hamilton Petition at 11 & Exh.1.

[^59]: As noted above (note 30), however, the compensation rate for
    traditional TRS presently also applies to Spanish relay and
    captioned telephone service.

[^60]: We recognize that because presently all VRS and IP Relay calls
    are paid by the Fund, and not by the states, the MARS plan could not
    apply to those forms of TRS because there is not state data upon
    which to base a rate calculation.

[^61]: *See generally 2006 NECA TRS Rate Filing*.

[^62]: *Id.* For example, since 2002 the STS rate has ranged from
    \$1.440 to \$4.045.

[^63]: *Id.*

[^64]: *2005 TRS Rate Order*, 20 FCC Rcd at 12245, paras. 21--22. The
    data submitted for the 2005-2006 Fund year reflected that IP Relay
    costs were approximately 11 percent less than traditional TRS costs,
    and therefore a combined rate significantly over-compensated IP
    Relay providers and under-compensated traditional TRS providers.
    *Id.*

[^65]: MCI asserts that the Commission should seek comment on whether
    the TRS rate should apply for a two-year period, rather than the
    present one-year period. MCI Comments at 4. We note that in the
    FNPRM in the *2004 TRS Report & Order*, the Commission sought
    comment on whether the compensation rate for VRS should be set for a
    one-year or two-year period. *See 2004 TRS Report & Order,* 19 FCC
    Rcd at 12569, para. 247. We seek further comment on that issue below
    (paras. 30-31).

[^66]: *See Improved TRS Order,* 15 FCC Rcd at 5152-5156, paras. 22,
    26-27, 32-33 (directing the TRS Advisory Council to develop cost
    recovery guidelines for VRS); *Telecommunications Services for
    Individuals with Hearing and Speech Disabilities, Recommended TRS
    Cost Recovery Guidelines, Request by Hamilton Telephone Company for
    Clarification and Temporary Waivers,* CC Docket No. 98-67,
    Memorandum Opinion and Order (continued) (continued from previous
    page) and Further Notice of Proposed Rulemaking, 16 FCC Rcd 22,948,
    22958-22960, paras. 30-36 (Dec. 21, 2001) (declining to adopt a
    permanent cost recovery methodology for VRS and seeking additional
    comment on this issue); *2004 TRS Report & Order*, 19 FCC Rcd at
    12487-12490, paras. 17-24 (declining to adopt a permanent cost
    recovery methodology for VRS), at 12565-12567, paras. 234-240 (FNPRM
    seeking additional comments and noting that although the Commission
    had previously sought comment on this issue, the relative infancy
    and unique characteristics of VRS made it difficult to determine
    what the appropriate cost recovery methodology should be).

[^67]: *2004 TRS Report & Order,* 19 FCC Rcd at 12565, para. 235.

[^68]: *Id.* at 12565-12566, para. 236.

[^69]: *Id.* (citing *Multi-Association Group (MAG) Plan for Regulation
    of Interstate Services of Non-Price Cap Incumbent LEC and IXCs,* CC
    Docket No. 00-256, Second Report and Order and Further Notice of
    Proposed Rulemaking, CC Docket Nos. 98-77 & 98-166, Fifteenth Report
    and Order, 16 FCC Rcd 19613, 19665-19689, paras. 120-178 (Nov. 8,
    2001)).

[^70]: *Id.* at 12566, para. 237; *see* *generally* *Telecommunications
    Relay Services and the Americans with Disabilities Act of 1990,* CC
    Docket No. 90-571, Third Report and Order, 8 FCC Rcd 5300, 5305,
    para. 30 (July 20, 1993) (*TRS III*) (instructing the Fund
    administrator to fashion a form for the submission of projected
    costs).

[^71]: *2004 TRS Report & Order,* 19 FCC Rcd at 12566, para. 237.

[^72]: *Id.* at 12566, para. 238

[^73]: CSD Comments (October 18, 2004); Hamilton Comments (October 18,
    2004); Hands On Comments (October 15, 2004); MCI Comments (October
    18, 2004); Sorenson Comments (October 18, 2004); Sprint Comments
    (October 18, 2004); *see 2004 TRS Report & Order,* 19 FCC Rcd at
    12565-12567, paras. 234-240.

[^74]: CSD Comments at 19 (recommended using the per minute compensation
    methodology based on *session* minutes instead of c*onversation*
    minutes currently in use); Hands On Comments at 29; Sorenson
    Comments at 12; Sprint Comments at 8. No individuals or
    non-providers filed comments on this issue.

[^75]: *See, e.g.,* Hands On Comments at 28-40; MCI Comments at 1-8.

[^76]: *See, e.g.,* paras*.* 32-42, *infra.*

[^77]: *See* Reply Comments of the National Exchange Carrier
    Association, Inc. to *2006 NECA TRS Rate Filing* (filed May 24,
    2006) at 5-6 & Ex. 4 (noting that "\[s\]ince the inception of the
    service, providers' forecasts have been significantly lower than
    actual demand").

[^78]: *See 2004 TRS Report & Order*, 19 FCC Rcd at 12565-12567, paras.
    234-240; *see* paras. 24-26, *supra.*

[^79]: *See Telecommunications Relay Services and Speech-to-Speech
    Services for Individuals with Hearing and Speech Disabilities*, CG
    Docket No. 03-123, CC Docket No. 98-67, Report and Order, 20 FCC Rcd
    13168 (July 19, 2005) (*VRS Speed of Answer Order*);
    *Telecommunications Relay Services and Speech-to-Speech Services for
    Individuals with Hearing and Speech Disabilities*, CG Docket 03-123,
    Declaratory Ruling and Further Notice of Proposed Rulemaking, FCC
    06-57 (May 9, 2006) (*VRS Interoperability Order*).

[^80]: *See 2006 TRS Certification Order*.

[^81]: *See 2004 TRS Report & Order*, 19 FCC Rcd at 12543, para. 179.

[^82]: As noted above, many states award contracts for the provision of
    intrastate TRS to a single provider through a competitive bidding
    process.

[^83]: We note that in 2004 the Commission sought comment on whether the
    cost recovery methodology might include "a lump sum payment or
    periodic payments of estimated actual costs with a 'true-up' at the
    end of the fund year." *Id.* at 12565-12566, para. 236.

[^84]: *See* para 27, *supra.*

[^85]: *See generally* para. 22, *supra,* addressing use of a true-up
    for traditional TRS, STS, and IP Relay.

[^86]: *2004 TRS Report & Order*, 19 FCC Rcd at 12569, para. 247.

[^87]: *Id.*; *see* 47 C.F.R § 64.604(c)(5)(iii)(H).

[^88]: *2004 TRS Report & Order*, 19 FCC Rcd at 12569, para. 247.

[^89]: *Id.*

[^90]: *Id.* In response to this issue, four comments were filed. Two
    providers agreed that a two-year period rate would allow them to
    provide this service more effectively. Sorensen Comments at 14; CSD
    Comments at 27. Two other providers recommended that the Commission
    maintain a one-year reporting period. Hamilton Comments at 7; Hands
    On Comments at 31.

[^91]: *See VRS Interoperability Order; VRS Speed of Answer Order.*

[^92]: *See <http://www.neca.org/media/0605RELAYRATESHISTORY.xls>*
    (NECA's chart of TRS rate history).

[^93]: *See* para. 23, *supra*, addressing rate period for traditional
    TRS, STS, and IP Relay.

[^94]: *See 2006 NECA Filing* at Appendix A.

[^95]: 47 C.F.R. § 64.604(c)(3).

[^96]: *2004 TRS Report & Order*, 19 FCC Rcd at 12512--12513, para. 90.
    This issue had previously been addressed by the Commission in the
    *Second Improved TRS Order & NPRM*. *See Telecommunications Relay
    Services and Speech-to-Speech Services for Individuals with Hearing
    and Speech Disabilities, Second Report and Order*, Order on
    Reconsideration, and Notice of Proposed Rulemaking, CC Docket No.
    98-67, CG Docket No. 03-123, FCC 03-112, 18 FCC Rcd 12379, at
    12441-12442, paras. 128-133 (June 17, 2003) (*Second Improved TRS
    Order & NPRM*).

[^97]: *2004 TRS Report & Order*, 19 FCC Rcd at 12515, para. 97.

[^98]: *Id.*

[^99]: *See 2006 NECA Filing.*

[^100]: *See, e.g.,* Sorenson Comments at 17-25; Verizon Comments at
    2-9; CSD Comments at 6-11; Hamilton Comments at 1-8; Hands On
    Comments at 11-18.

[^101]: *See 2006 NECA Filing* at Appendix A.

[^102]: *Id.*

[^103]: *Id.*

[^104]: 47 C.F.R. § 64.604(c)(3) ("Public access to information").

[^105]: NECA Reply Comments at 4-5 n.13.

[^106]: *See 2004 Bureau TRS Order*, 19 FCC Rcd at 12231, para. 16 &
    n.53.

[^107]: We note that Sorenson opposes this approach, stating, in part,
    that VRS is still in its "infancy" and needs to be more "robustly
    funded" than traditional TRS. Sorenson *Ex* Parte comments to the
    *2006 NECA Filing* (June 7, 2006) at 5-6.

[^108]: Cost-causative indirect costs would include, for example, the
    fringe benefits paid to an employee who, as part of his or her job,
    works on the provision of TRS. If 40 percent of such person's salary
    is attributable to TRS, then 40 percent of the fringe benefits would
    be attributable to TRS. Other indirect costs may be allocated on a
    definable basis. For example, if 30 percent of a provider's office
    space was used for CAs, then 30 percent of the rent expenses should
    be attributable to TRS. Our concern here is with generally allocable
    indirect (overhead) costs that do not fall within either of these
    categories.

[^109]: NECA's Data Collection Form and Instructions lists "Other
    Corporate Overheads" as a compensable expense. *See 2006 NECA
    Filing* at Appendix A. This appears to be catch-all category for
    other administrative TRS expenses not listed in the instructions.
    *Id.*

[^110]: 47 U.S.C. § 225(d)(1)(D).

[^111]: In recent years, some providers have submitted costs to NECA
    that reflect a percentage of total company overhead costs based on
    the percentage of company revenues attributable to TRS.

[^112]: *2004 TRS Report & Order*, 19 FCC Rcd at 12544, para. 182 &
    n.520.

[^113]: NECA's Data Collection Form and Instructions includes a category
    for "\[e\]xpenses incurred for legal and regulatory services. *See
    2006 NECA Filing* at Appendix A.

[^114]: *See, e.g.,* 47 C.F.R. § 1.1200 *et seq.* (the Commission's *ex
    parte* rules).

[^115]: We assume, for example, that for any such costs to be
    compensable at a minimum there would have to be a showing that the
    lobbying benefited consumers, rather than the providers.

[^116]: In the *2004 TRS Report & Order*, the Commission stated that it
    was "concerned about the extent to which some salaries of corporate
    officers and executives have been included in submitted costs," and
    instructed providers to "delineate the percentage of such persons'
    salaries that the provider maintains is attributable to the
    provision of TRS." *Id.*

[^117]: *See, e.g., 2004 Bureau TRS Order,* 19 FCC Rcd at 12232, para.
    18 n.57 (noting that because "the providers' cost data submissions
    are confidential, \[the order does\] not discuss in detail the
    adjustments made to individual submissions or particular categories
    of costs").

[^118]: Hamilton Comments (May 17, 2006) at 8-9; *see also* Hands On
    Reply Comments at 1 (noting that the rate setting process is not
    transparent). Sorenson supports the provision of data to the
    Interstate TRS Advisor Council if it can be done without revealing
    competitively sensitive information. Sorenson Relay Comments (May
    24, 2006) at 8-9.

[^119]: *See <http://www.neca.org/media/0605RELAYRATESHISTORY.xls>*
    (chart of rate and Fund size history).

[^120]: *See Notice of Certification of Snap Telecommunications, Inc. as
    a Provider of Video Relay Service (VRS) Eligible for Compensation
    from the Interstate Telecommunications Relay Service (TRS) Fund*, CG
    Docket No. 03-123, Public Notice, FCC 06-67 (May 8, 2006);
    *ERRATUM - Notice of Certification of Snap Telecommunications, Inc.
    as a Provider of Video Relay Service (VRS) Eligible for Compensation
    from the Interstate Telecommunications Relay Service (TRS) Fund*, CG
    Docket No. 03-123, Public Notice (May 9, 2006); *Notice of
    Certification of Healinc Telecom, LLC as a Provider of Video Relay
    Service (VRS) Eligible for Compensation from the Interstate
    Telecommunications Relay Service (TRS) Fund*, CG Docket No. 03-123,
    Public Notice, DA 06-1243 (June 9, 2006); *Notice of Certification
    of GoAmerica, Inc. as a Provider of Internet Protocol Relay (IP
    Relay) and Video Relay Service (VRS) Eligible for Compensation from
    the Interstate Telecommunications Relay Service (TRS) Fund*, CG
    Docket No. 03-123, Public Notice, DA 06-1244 (June 9, 2006).

[^121]: 47 C.F.R. § 64.604(c)(5)(iii); *TRS III*, 8 FCC Rcd at 5301,
    para. 7 (appointing NECA as the initial Fund administrator for a
    two-year term, after which time the Commission will entertain
    proposals by other parties interested in becoming the administrator
    and solicit alternate proposals); *Appointment of the
    Telecommunications Relay Services (TRS) Fund Administrator and
    Composition of the TRS Advisory Committee,* CC Docket No. 90-571,
    Memorandum Opinion and Order, 10 FCC Rcd 7223, at 7224, paras. 8-9
    (June 29, 1995) (reappointing NECA as Fund administrator, and
    adopting a four-year term ending July 25, 1999); *Appointment of the
    Telecommunications Relay Services (TRS) Fund Administrator and
    Composition of the Interstate TRS Advisory Council,* CC Docket No.
    90-571, Memorandum Opinion and Order, 14 FCC Rcd 10553, at
    10555-10557, paras. 6-11 (July 1, 1999) (reappointing NECA to
    another four-year term as Fund administrator). By letter dated July
    11, 2003, the Commission extended the term of NECA as the Fund
    administrator to a month-to-month basis, which presently continues.

[^122]: 47 C.F.R. § 64.604(c)(5)(iii)(E).

[^123]: *See Electronic Filing of Documents in Rulemaking Proceedings*,
    GC Docket No. 97-113, Report and Order, 13 FCC Rcd 11322, 11326,
    para. 8 (April 6, 1998).

[^124]: *See* 47 C.F.R. § 1.48.

[^125]: 47 C.F.R. §§ 1.200 *et seq*.

[^126]: *See* 47 C.F.R. § 1.1206(b)(2).

[^127]: *See* 5 U.S.C. § 603(a). In addition, the NPRM and IRFA (or
    summaries thereof) will be published in the Federal Register.

[^128]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. §§ 601-612, has
    been amended by the Small Business Regulatory Enforcement Fairness
    Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857
    (1996).

[^129]: *See* 5 U.S.C. § 603(a).

[^130]: *See* *id.*

[^131]: *See* para. 7, *supra.*

[^132]: *See* para. 10, *supra.*

[^133]: *See* para. 11, *supra.*

[^134]: *Id.*

[^135]: *Id.*

[^136]: *Id.*

[^137]: *See* para. 12, *supra.*

[^138]: *Id.*

[^139]: *See* para. 27, *supra.*

[^140]: *Id.*

[^141]: *Id.*

[^142]: *See* para. 28, *supra.*

[^143]: *See* para. 38, *supra.*

[^144]: *See* para. 40, *supra.*

[^145]: *See* para. 42, *supra.*

[^146]: 5 U.S.C. § 603(b)(3).

[^147]: 5 U.S.C. § 601(6).

[^148]: 5 U.S.C. § 601(3) (incorporating by reference the definition of
    \"small business concern\" in 15 U.S.C. 632). Pursuant to the 5
    U.S.C. 601 (3), the statutory definition of a small business applies
    \"unless an agency, after consultation with the Office of Advocacy
    of the Small Business Administration and after opportunity for
    public comment, establishes one or more definitions of such term
    which are appropriate to the activities of the agency and publishes
    such definition(s) in the Federal Register.\"

[^149]: 15 U.S.C. § 632.

[^150]: 13 C.F.R. § 121.201, NAICS Code 517110.

[^151]: 5 U.S.C. § 603(c)(1)-(4).

[^152]: *See* 47 U.S.C. § 225.

[^153]: *See* [Relay Services' Reimbursement Rate, Contribution Factor &
    Fund Size History]{.underline} at
    [www.neca.org](http://www.neca.org/), tracking TRS fund growth from
    roughly \$40 million in 1999 to more than \$440 million in 2005.