morning morning in may please the cord on don really for sorenson yes c c has conceded that the tiered rate structure that it preserved in the two thousand seven hundred order is highly inefficient that's a serious problem because section twenty five requires the f c c to ensure that functionally equivalent services provided in the most efficient manner now the f c c is trying to solve that problem by redefining  functional equivalence means and claiming that it is necessary to keep all current providers in the market to ensure a functional equivalent with section two twenty five does not support the idea of keeping consumer choice alive for the sake of consumer choice the relevant text what it requires is that deaf persons be afforded the ability to engage in communication by phone in a manner that is functionally equivalent to that of a hearing person it's about communication capability not consumer choice so the statute doesn't support that and to the extent the f c c looked into communication capability and that's trying to preserve the spanish determined was that this isn't great but monopoly would be less efficient in the long term and far less we look reliable as a means for ensuring that we will have services provided in a way that's affordable for the fund going forward so it's all going to work better if it's not a monopoly several points in answer to that your honor they did say something along those lines also but several problems with their rationale first what they did here in contrast of course what they didn't two thousand and thirteen order where they said that section to twenty five efficiency requirement is incompatible with the tiered rate structure because of the official and they adopted a transition plan to try to move to greater efficiency now it's four years later and what they're saying is we're going to stick with tiered rates in the hope that at some point in the future we will be in a position where we have closed the efficiency well not just a whole i mean they did say that we haven't yet got rid of  platform but we haven't yet really had enough time for example pervy interoperability transferability of technology to kick in that it just started within the last year and so the transition needed to go longer to see if these reforms would work they just weren't ready to cut off a transition point yet because the only option seemed to be monopoly or continue the transition longer or let these other market reforms have more time to to get some traction and investigate other technological developments and seem to be happening very rapidly with that be unreasonable if that's how we read their decision well i think it isn't reasonable because i think it's important to drill down on what the record actually shows about the structural reforms and i'll focus specifically on iraq were billeted but let me make a more general point first if i could which is that there were a number of structural reforms that the f c c relied on of two thousand and thirteen and thinking it would close the efficiency neutral platform in a band and the portability of quitman it's implemented didn't have the desire effect if she sees acknowledge that what's left is in iraq or ability you know what the record shows and i think if you just trace through the sides you'll see that i'll be happy to provide them is that the iraq ability has been largely implemented and what what sorensen showed in his comments in the record supported by declarations which you can find at  two ninety four and three sixty five of the joint appendix is that with respect to all carriers but one global p r s in europe ability problem has been solved you'll notice the commission doesn't address that  footnote eighty three j fifteen two comments from the smaller providers those comments can be found that j q seventy two to seventy three and what you will them because when their customers can't connect with someone so they blame their own company it's it's a company that runs so the whole idea here that the system that failed to that what the record shows you based on the empirical evidence of decorations we can as the problem solve except for one of the two companies that makes up that small three percent and i really don't think that what you're talking about is trying to close this efficiency gap that couldn't be closed not only with the structural reforms four years ago but remember there was a glide path there where the company's rates got lowered year by year on the sumption that they were going to be become more efficient and there was an end to so so what's your predict judgement about what will take place if your proposal is about a single single so what we proposed on it was a single rate with a now an analogy to a price cap approach said a single ra matched the predicted efficiency with a big difference between what we proposed and what the f c c did is that our proposal actually builds in the a drive towards efficiency to close efficiency gap their proposal doesn't it relies entirely on competitor that's going to result and sourcing getting paid far more than the actual cost of delivering service why isn't that alternative form of inefficiency that they were entitled to sort of pick  the best of two bad options to make two points about that first with respect to specific rates and then with respect to the overall approach with it with respect to the specific rate we had indicated a rate of three dollars and seventy three cents that's public information and the commission rejected that saying you run the numbers on that that's going to cost the fund more than you have or haven't hurt your rate system especially that's an apples to oranges comparison you know very important way calculated that three seventy three number based on new sumption that we would be compensated for the costs of research and development might be the commission disallowed those costs if you take those costs out of our number and really run holding everything else constant the number you come up with cost the funding even in the short term so so that seems to me not justified but then hopefully can i just interject and i do want to allow you to get to your second point but if you take out the r and d costs and and are talking about a lower per minute rate is that a rate that is enough on this record to allow any competitor to remain in the market we believe so  or it won't allow the small that's the smallest to with that make up three percent for many but you know they've been in the market a long time and so far as they tried that they haven't gone above this three percent threshold and that's because that in fact it does the opposite i think this is really important point that if you contrast what the commission didn't two thousand and thirteen where they did have a glide path through each company they did something we disagreed with and if they had started a different place for different if they thought there was a realistic prospect of that they would have tried to drive towards efficiency in the long term the fundamental problem with their system is there is nothing in it that drives towards officials in a long term well they have a four year rate that they put in place and they're going to be revisiting it so that's one backend assurance and part of i mean i think part of what i'd like to hear from you is you identify efficiency as lowest cost per minute but clearly the commission is also including in its understanding of efficiency market mechanisms that well the pressure on providers to improve the quality and nature of their services and one of the concerns that they have is if you're fighting so hard to get the same total amount of money but to get it at a flat rate rather than a tiered rate what's in it for you know you know and what's in it for you on one version is to be the dominant or exclusive provider and that is on some lights not efficient in terms of pressure to improve the quality of the service you know that's really important point i'm glad you're raised to again i don't think that this we're told so that rational does not hold up and let me try to explain why with the stat you start with the statutory terms what it requires is that functional equivalence be provided in the most efficient with all due respect innovation above functional equivalent is not something that functional good was requires you don't have to take my word for it but why do you say innovation above the functional equivalen equivalence of evolves over time as we who are hearing phone users know the functional equivalent of baseline has changed over the last decade or two and that's going to continue to be the case is so the question is what's the mechanism to keep propelling not for the deaf community to points on that first your honor the statute itself as it's currently constructed has a built in hydraulic mechanism to achieve that it says that the service that must be provided to death persons has to be functionally equivalent to the service provider the hearing person so as technology advances and quality improves and innovation occurs with respect to hearing persons the law of acquires that that be matched to the extent possible you can't be in this business and you can't meet the minimum standards of the f this very order and some paragraph eleven of the water which is a j a six now what the f c c is discussing here in this paragraph is the question of whether the companies in the business should be compensated out of the fine for research and development costs to advance their services beyond what functional equivalent requires and what the f c c says unimpeached us only in paragraph minatory minimum standards the standards yes you see as promulgated to ensure functional equivalent are not necessary for the provision of functionally equivalent service and that is because mandatory minimum standards that that is because a paraphrase but the back quote mandatory minimum standards to find the level of functionality that your rest provided must provide so what they're saying here is we will not cover the r and d cost of innovation it's an inappropriate use of the fund but then to try to justify that your great structure you're going to say well if we spend this additional money for that would otherwise be inefficient and that your great system will create some spurs to innovation but when you heard me that actually you could flip that i mean it says the commission is disallowing tourist funds support for individual provider research beyond meeting minatory minimum standards but let's say you have a big spurt forward in technology for the non deaf community and there's a there's a conundrum how is the deaf community going to have functionally equivalent forward technological advance that it sounds like is something that at least paragraph might allow because it's research and development to to parallel to meet the functional equivalence goal as opposed to going beyond meeting that goal and you still if there is a translation involved so simply having a law that ties what deaf people should be provided to what's going on in here in telecommunications that's just a legal requirement there's a technological engine that has to produce the functionally equivalent service that's all right see right and that's so that's something that i think that c c is concerned about and that i don't see as necessarily being foreclosed or devalued by paragraph eleven at work yes i would the reason i would push back on that respect for your honor is that the question the f c c has to answer to justify the maintenance of a to raise is not just whether it might create some spur innovation but whether it is in the language of the statute the most efficient manner of doing so and seems to me justify this spirit of innovation idea on the ground that is the most efficient manner of trying to incentivize innovation to close that gap i wonder just stepping back if you could tell us a little bit about what  the competition in this very lopsided market how do you how do individual deaf people choose services and is there a growing market for these services are there people who might want them who don't have them so you know your i don't apologize i don't know the specific answer the question really growing markets going i don't think so though i think it's relatively stable market there's an obligation under the law that to the extent possible that persons be provided with is functionally equivalent service that obligation actually falls what was on the common carriers the phone companies and twenty five c and that the system has evolved as a way to accomplish it and in terms of the way in which this system works i do think one point really important is that it goes to this efficiency down problem is that the way in which companies normally have incentive to become more efficient is price competition they need to lower their costs so  separate still incentive to lower your cost because whatever the price is that's allowed well you'll get more of that as i don't see you know not really i think that's the best answer that i know the commission has said that the here's the problem with that way of thinking and that in the experience of the prior four years vividly illustrates the problem with it that you may have a short term incentive to lower your cost because it will increase your margins in the short term but if at the end of the four year period you know that you're going to be engaged in another round of cost base rate setting you're going to cluster self money the next time around is a new race going to be set off a lower costs and that's incentive rate making cases and if a court wants to be happy to provide citations and and i do think that that's i mean that's why there just isn't anything in the system to close the efficiency gap so four years from now they're not going to be in any position better than they are now over time for alcohol for us yes but also the higher rates now oh well what happened with us from two thousand virgins i was seventeen they try to make them go down didn't work they went back and they checked them back up if you look at the rates they s now problems they're higher than the rates before and if you look at the number of minutes to which those rates apply they're vastly greater number of minutes to a source higher rate supply so you look at that they would this is less efficient now than it was when the system started it more expensive than it was when the system started and there's nothing in place to try to close efficient gap and so we just think you cannot just order i says one question to follow up on his question about technological advancements  i understand right is it is it true that if you had to do research and development to catch up to technological developments that were happening for the hearing community that would more efficient way to do is just included in human the standards that everybody's got to do it it's available there's a guarantee that it's available and you don't incur these kinds of costs and that's the problem with the way the f c c is approaching this you really can't justify what they've done in terms of functional equivalent and yet that is the sole way they try to justify the concerns that monopoly which would be the practical effect of the other approaches would leave them out of life in company very little incentive to than any of the other companies in providing a service and this operating or statute requires that the service be provided in the most efficient manner possible and therefore it's probably not sorensen is the most price efficient at this stage is because it got a highly subsidized and very great head start in the market and interoperability is only just beginning to be resolved and that that's a bigger hurdle than the commission believed and that there really is a concern that if sorenson is the only provider that there really won't be good for the quality of service or the price going forward what's your response to that so responses first sort of wasn't the first out of the gate you know  concern over time again i think the question that the commission's got to answer and it doesn't even try to answer here is whether it's concern is addressed most efficiently by this tiered rate structure and keeping these other companies particularly the really tiny ones afloat now what i would suggest that there be one way of thinking about why the risk is not as great as your honest question maybe suppose this is to look at  three little i four which is a page eleven of the appendix to our brief and what this provides is that if a company falls below the minimum standards on a given day  one day nonpayment is a very very substantial fine and so i think that in answer to your arms question what the commission's going to do because the statute requires that the services you provide in the most efficient manner is the answer the question ok good morning and may it please the court my name is anthony k a council for the video we lay services communication association public reserve thirty seconds of my time for a bubble please in twenty thirteen this court ruled that by adopting a new there are ten thousand people with whom the organization communicates on a regular basis by e mail and to whom on whose behalf they advocate one that's membership right then the defense matters it's not well there's no there's no regular basis would count as a member and they don't have any role in selecting leadership or they don't pay dues no they do not they have any role in the positions  is whether it is actually a membership organization which is what we were probing if it were her position there's a different argument that her position would suffice but if it's not a membership organization in the first place then her an associate to be an association i mean it can be a so yes what i'm not saying that there is one i'm not going to concede that there is one but it's very clear that ms hayes who has submitted comments in this docket for years before she at will she is the director so she's the only person making those ultimate decisions but she does that you know in communication with other individuals with whom she speaks who are deaf and hearing is disabled and  you know on a regular basis at meetings around the country through e mail communications i mean that you're you're trying to i mean i'm not going to say that this is like you know  don't like those nations they take you stop writing checks and you let them know that you're withdrawing or resign as a member does that happen here people just unsubscribe but people with unsubscribe i think you are about to explain the distinct from whether she has standing as a member of a membership organization and that's the case that you presented your brief was that you have a membership organization to represent a membership organization and she's the member for for standing purposes and that's a different corey and it's not as clear that you've made that case given the lack of evidence that this is in fact a membership organization well i mean the set forth there is that so long as any individual member has standing the association has standing right and but the question is and that was a situation in which there was no doubt that it was a membership organization so it doesn't really speak to this question i'm not waterway while she uses the v a r services and her complaint is that there's going to be a decline in euro services and service quality if cut rates are cut we don't know what speculative service she uses to me because whether she would be affected adversely affected in a way that order would remedy is a question well the consistent the general concern that she's raised is that by reducing rates without having conducted a valuation of service quality metrics that it's unclear what but it's a there's a general concern that for all of the providers not just sorenson that  cuts have shown in the past that service quality has gone down particularly with interpretating quality and interpret it as important for the you know for the members of for deaf people in generally because because observe i mean that's based on her observation that and in discussing with her her biggest concern is that the cline in the quality of interpreter served what she said i mean you say a concern to some and it's as i read her submissions they were more sort of you know i think the law is being violated but that really bothers me because you know i like this law and i'm someone who could be who could be affected by this law but she doesn't say anywhere that she's been injured or facing imminent injury actually sounds like i didn't suffer it myself maybe she heard from someone else or something but actually if if i had suffered interiorization i wouldn't go well it appears there was a deterioration right that's how we speak but it was worse for me on monday right kind of at least how i would read that language why i mean with respect i think that the general the general concern here is a perception that she has from her experience as the director that over time as rates get cut the service quality goes down and ironically it's the f c c that this should have been evaluating service quality metrics over the last trying to make is that with out objective and objective analysis of service quality metrics there's no way to know whether these rate cuts are going to contribute to a further deterioration in service quality and it's just a basic if you're trying to deliver functionally equivalent services understanding understanding whether or not the service the level of service quality is up is not important and there's one can assume that if rates keep getting cut it's going to impact services negatively not positively mr kay is there a growing market for these services or is it basically a fixed number of p most of them have access to the men and the same most don't have access well that most many people don't have access so there should be a growing market and in my opinion is this the kind of thing so there are deaf people who don't have access because it's get was deaf people are disproportionately lower income and lower income people have a harder care for all care for broadband and broadband as one of the things you need to have access to be or services is that c c is in the process of including broadband  among businesses or individuals and if i wanted to call a deaf person i couldn't use v r s because i don't have it in my home it's just like what you pick up the phone and you call a person that you know who is deaf and it gets routed through or if i had a biker a deaf houseguest that person couldn't call from my house no not unless they brought their own video phone or use the tablet or some other you know face time i mean there are ways of there are other forms of technology that you can use now besides a video phone but a video phone is is what's used by most people and is it really better i wondered about that why a desktop with a camera isn't just going to put this whole question about equipment table i wondered that too but i you know as a practical matter a lot of that you know you're dealing with a lot of elderly people and people who are not adapted to the changes in technology yet so survive so so equipment like video phones is still  hearing individuals comparable quality telephone service to the services provided and vigils functional equivalency is the term the set you uses hot according to sorenson heart this simply involves the f c c setting minimum standards and once it sets the minimum standards that it has to adopt the the lowest cost way of implementing standards the question has taken a different approach for several mandatory minimum standards and we are not going to look at the issue from the perspective of the consumer it's a technological quibble it's me and how service is provided by service providers we won't look at it when it comes to innovation we won't look at it when it comes to access to the necessary equipment and then all of a sudden here for the first time without explaining all the times you've previously defined functional equivalency as compliance with mandatory minimum you're saying let's let's throw away then a little nugget here where we look at it from the consumer's perspective and say they'd like to have choice well i'd also like to have broadband on equipment they can afford but she refused to look at it then so isn't there commission has a number of occasions talked about the fact that it needs to consider consumer choice in the benefits of competition because functional equivalent is a changing consideration one element where they said one element well the commission was not faced with with someone saying you can only limited to that it's true of the guy they were they were faced with i want to when people said hey let's let's support providing this was that the statute did not extend to the provision of a quote because because the statute talked about services equivalence services that's right equivalent services it didn't look at the consumer's interest and choice which you're doing now you look at it only from a technological service perspective and now to say we'd like consumers to have the same choices that everyone else does seems to me inconsistent with the statement that we're not even got we're not going to allow these companies  and we choose not to adopt a policy of allowing service provider sporadic with the commission to interpret the statute to restrict compensation to the provision of the service needs to be equivalent to the statutory tax rises even so the tax compels us statutory tax says we don't look at the consumer how it how it feels on the consumer and what options they have we look at the service and we provide an equivalence service there's nothing there that says consumer choice one since service is not the same as consumer choice well so much choices from their perspective looks at them from the consumer side and that seems to me a change quite a change in the f c c position well i hear and i'm obviously not making myself clear on this but if the commission had understood whether the address to this issue of providing equipment in the past if the commission it understood that the statute permitted compensation for that i believe but it may very well i just included compensation for that as an element of consumer choice if i can just let it be much like what i was just going to say bracketing be equipment question you pointed us to paragraph thirteen and you talk about competition to ensure a range of service offerings and incentive to improve p r s offerings and maintaining higher standards of service quality than if it faced no competition and i wondered if you could give us examples of the kinds of service improvements or benefits that are encompassed within functional equivalent services bracketing and putting to side the commission has said is not encompass well earth provider answers phone when the consumer calls but commission has a rule on that for the i r s that requires speed of answer to be two minutes now no one really thinks that if you picked up your regular phone because of the end of inadequacy of the record that was remanded with the commission has attempted to do so that standard remains in effect but the commission has attempted to do to provide the benefits of competition is that  publishes providers performance and their actual performance is significantly less than two minutes that's a very helpful are there other examples of of service improvements i th point i was curious what were examples that would substantiate the point that you were making by reference to paragraph thirty one which was that competition was important to improve ers offerings higher standards of quality of as i understood it the mandatory minimum service and you mentioned answer time are there other aspects that are now part of mandatory minimum service but where the quality could be really affected by competition or not there are mandatory minimum interpreters they require interpret certain none of this is on section sixty four point six so this is again what cysts sixty four point six zero four of the rules but this is right the beginning think fourteen of our statutory then the sixty four point six zero for a operational standards which actually go beyond technical standards and right at the beginning  think this is this is a fairly general requirement this is an area for example with and which i think there is competition now there's competition for getting the best interpreters and this is something that the this service metrics perceiving the commission has begun it's trying to determine how it can measure all of the quality of service of something like this and make this available to the public so that there are two users of p r s hot so that they w able to make a choice if they have a choice between a company that provides better quality interpreters of them and some of the others is there anything in the record about for example  incentive based wages or from different companies if i were a very scaled down and a cell interpreter i might expect to get a higher wage if there's more than one company bidding for my consumer choice because that's what people who are not deaf have that's what i read to think where they say well you know back to thirty one one of the reasons that paragraph thirty one trace seventeen one of the reasons the commission says service if the interpreter isn't doing the temperature's job but when i heard the commission talking about consumer choice it was and it seems to make perfect sense that the not deaf people have choice of providers and the deaf community should as well but that seems perfectly sensible it just seems quite inconsistent with the f c c is decisions time again before that functional example those sites and footnote ninety two i think address that issue you're older and and i think it's certainly true that it is a thing different there than what we just said and that is that we want to have choice because we think they should have choice like dynamic and evolving process in the commission's attempt to address that issue and to ensure that it's a commission said it's time now like an evolving yes it's from a technological perspective or from a together because by providing consumer choice it provides competitive and seventy four for providers to prove their service let me ask you mr vaz what we need to happen before twenty twenty one for the providers to be on a more equal footing where the f c c might migrate toward a one rate is that a goal still for the f c c to migrate toward one r affect a commission would consider that ideal because that would be to the extent that we're looking at lower cost that would be that would be a more efficient right and what would need to happen is that on deck i'm not sure i can say it's what would need to happen is that the of the smaller providers would have to become larger and when you're when you're in a market when one one zero one entity controls eighty percent of the market it's not good it's unlikely it's going to change commission made those judgments secondly oh of the of the smaller providers are working things out this and this and sanctions quite new i mean for twenty ten order it's been a decade yes it has been for for more than ten years but the new commissioner saying that the smaller companies are using working together well what do you mean by that well that the two of the smaller companies have combined in their point to  and twenty or four sooner they will become one somewhat larger company are the combined they will have what percentage of the market based on current numbers maybe ten percent not sure exactly the facts changing as well but the third provider of mr rosen is are presenting this we want to who mr rosen is representing well is this also increasing it's still in the emerging category and i think it's like perhaps three percent of the market imposing this tear great structure this revised one will actually not not just keep these smaller companies alive keep them on life support but will actually  any realistic prospect that it will empower them to take over another i'm a share of the market to actually have we compete with someone who's got eight percent of the market now if that's what the f c c needs to find to say flat rate it would be big enough to accommodate at least one other provider well that's when there wasn't a they wouldn't survive it was that so i said we get paid too much but that's not the same as the competition's arrived so what the commission sa it would actually be cheaper if you dispute that i'm sorry but that that's a sorensen said that when the commission made that conclusion sorenson's number had included research and development costs that the f c c said subsequently said we're not going to include  oversee from the perspective of a waste of use what the commission did that i would point out is the commission devoted six billion dollars to research and development but the agency itself will oversee  decree that they are have up to three years to do that and that as i understand the commission's order they're permitted to be treated as separate whether they are in fact separate or not for purposes of qualifying under that tier is and i wondered why that is and whether that's not arbitrary and if so what the support for that is i don't i don't think that's the proper characterization of what they're permitted to do is to just to continue operating as separate companies until their merger is complete or until twenty twenty one may have to complete it if they completed before twenty twenty of them then they will then they will operate as a unified  company so it's i mean they're still they're still operating as separate entities right now and the have not completed the merger and what is their criterion by which i was let me ask you mr rosen your view about the potential markets that may be untapped is this an issue of everybody competing for aspects of a market that is already participating in the customer base already participating or are there new customers that may enter the market if there are more appealing products and or elderly people who can't either afford the technology or are sort of limited in their technological capabilities how big is that market would you identify areas of service equivalence that either now or in the near future you believe will benefit from provider competition we heard from mr posh about speed of answer about the quality and versatility of interpreters are there other aspects under equivalent service that where mr rose and you don't mean to concede that the only factor that matters for efficiency under the statute is price do you not not so you're talking about service quality and delivery of equivalent service to the consumer as something that the f c c wants to do offici anything more than minimum standards and what the f c c has position historically has been on that i'm sorry but what they're saying just isn't right i'm going to identify four places to look first is paragraph eleven of this very order where they to find functional quibbles is limited to meeting the standards and fourth point i'd like to make about that is that of course it's about equipment but it's not just about equipment and paragraph eleven shows you that it's r and d to judgment about interrupt ability uyghurs the court to compare the declaration of swanson submitted which is that j three sixty five and six declaration containing specific evidence about what's happened on the issue a which is one short paragraph that carries over from jay to seventy two to seventy three and i think i just don't think that it's of the the commission could responsibly conclude based on that and that alone that the ability is a serious impediment and the it's and the solving whatever is left to solve and it's going to make a material difference in this market moving forward one last point just coming question of interpreters  direct the court's attention to j seven hundred five where you will see that sorensen passed the commission in this proceeding to increase the rate at which they would compensate interpreters because we made the that the cost of hiring good interpreters is going up and we don't just compete with other v r s companies we compete with all kinds of people who need interpreter and the commission said no again wouldn't fund directly the improvement say and and what they were lying on this year great system by making an argument that they're going to move it indirectly that's what they do just a question out of curiosity how do blind and deaf people use video relay services yet these people who are legally blind but have some science or is that having someone come to your house or got i apologize you know i don't know the answer should know the answer to that but i don't but i do i mean sorenson does provide some deaf blind services but again just to repeat my basic point that you're making sure that the deaf blind population gets functionally equivalent service is really important the way to do it is to make it a minimum standard that's the way to do it that would be much more efficient much less costly guarantee that the service of the provider and so hoping that the that it's provided through maintaining all of these companies through the tears racist thank you thank you very much