[Federal Register Volume 87, Number 136 (Monday, July 18, 2022)]
[Rules and Regulations]
[Pages 42656-42661]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-15278]



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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CG Docket No. 03-123, RM-11820; FCC 22-48; FR ID 96083]


Internet Protocol Relay Service Compensation Formula

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, to ensure that the providers of 
Telecommunications Relay Service (TRS) are compensated for the 
provision of internet Protocol Relay Service (IP Relay), the Federal 
Communications Commission (Commission) adopts a formula to compensate 
such providers from the Interstate TRS Fund for the provision of 
service for the next four-year compensation period.

DATES: This rule is effective July 18, 2022.

FOR FURTHER INFORMATION CONTACT: William Wallace, Consumer and 
Governmental Affairs Bureau, at (202) 418-2716, or email 
<a href="/cdn-cgi/l/email-protection#f6a19f9a9a9f979bd8a1979a9a979593b6909595d8919980"><span class="__cf_email__" data-cfemail="26714f4a4a4f474b0871474a4a4745436640454508414950">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order, document FCC 22-48, adopted on June 25, 2022, released on 
June 30, 2022, in CG Docket No. 03-123 and RM-11820. The Commission 
previously sought comment on these issues in a Notice of Proposed 
Rulemaking (Notice), published at 86 FR 64440, November 18, 2021. The 
full text of document FCC 22-48 can be accessed electronically via the 
FCC's Electronic Document Management System (EDOCS) website at 
www.fcc.gov/edocs or via the FCC's Electronic Comment Filing System 
(ECFS) website at www.fcc.gov/ecfs. To request materials in accessible 
formats for people with disabilities (Braille, large print, electronic 
files, audio format), send an email to <a href="/cdn-cgi/l/email-protection#9cfaffffa9aca8dcfaffffb2fbf3ea"><span class="__cf_email__" data-cfemail="dcbabfbfe9ece89cbabfbff2bbb3aa">[email protected]</span></a>, or call the 
Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice).

Congressional Review Act

    The Commission sent a copy of document FCC 22-48 to Congress and 
the Government Accountability Office pursuant to the Congressional 
Review Act, 5 U.S.C. 801(a)(1)(A).

Final Paperwork Reduction Act of 1995 Analysis

    Document FCC 22-48 does not contain new or modified information 
collection requirements subject to the Paperwork Reduction Act of 1995, 
Public Law 104-13. Therefore, it also does not contain any new or 
modified information collection burden for small business concerns with 
fewer than 25 employees, pursuant to the Small Business Paperwork 
Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

Synopsis

    1. IP Relay is an internet-based text-to-voice relay service. With 
IP Relay, an individual with a hearing or speech disability can 
communicate with voice telephone users by transmitting text via the 
internet. The text transmission is delivered to an IP Relay call 
center, where a communications assistant (CA) converts the user's text 
to speech for the hearing party and converts that party's speech to 
text for the IP Relay user.
    2. IP Relay is supported entirely by the Interstate TRS Fund. Under 
the current methodology for determining IP Relay provider compensation, 
a base level of per-minute compensation is determined every three 
years, based on the weighted average of providers' reasonable costs. 
The base compensation level approved by the Commission is subject to 
annual adjustments for inflation and efficiency based on pre-approved 
factors, as well as ad hoc adjustment in the event that a provider 
incurs eligible ``exogenous'' costs. The current inflation factor is 
the Gross Domestic Product--Price Index (GDP-PI). After three years, a 
new reasonable-cost-based compensation level is determined for the next 
period. The current compensation period began July 1, 2019, and ended 
June 30, 2022.

Reasonable-Cost Based Compensation

    3. The Commission continues the practice of periodically resetting 
the base level of IP Relay compensation based on a determination of 
reasonable provider cost. While certain criteria for determining 
reasonable IP Relay costs need adjustment in light of subsequent 
experience, the record does not support more radical changes in the IP 
Relay compensation methodology. The Commission has developed a 
consistent approach to determining the reasonable costs of providing 
TRS, which can be applied without imposing undue administrative burdens 
on either providers or the Commission. Further, although any ratemaking 
method is subject to imprecision, provider cost data, which is subject 
to audit, has been reasonably reliable and consistent. T-Mobile fails 
to support its claim that the current methodology ``precludes any 
increase in compensation regardless of the extent to which the costs of 
supplying the service may have risen.'' To the contrary, over the last 
eight years, compensation has risen from $1.0147 to $1.7146 per minute, 
due to rising costs and waivers of certain allowable-cost criteria.
    4. Outreach. The Commission revises its allowable-cost criteria to 
provide that reasonable costs associated with IP Relay provider 
outreach are recoverable from the TRS Fund. The concerns underlying the 
Commission's 2013 decision to terminate TRS Fund support for IP Relay 
outreach are no longer applicable. The pilot National Outreach Program, 
established to provide coordinated national outreach for both video 
relay service (VRS) and IP Relay, expired in 2017 and has not been 
reauthorized. In the absence of a Commission-directed outreach program, 
IP Relay provider outreach activity no longer represents wasteful 
duplication of effort. Further, the company providing IP Relay appears 
to be reasonably well positioned to communicate with potential users. 
In addition, the concern that TRS providers tend to focus on 
competitive marketing of their own brand, rather than outreach to new 
users, is not applicable to the current IP Relay context, in which only 
one company offers the service.
    5. The Commission also finds that there is an affirmative need for 
TRS Fund support of IP Relay outreach. Given the limited current use of 
the service, the Commission's rules should not discourage providers 
from making efforts to effectively educate consumers--especially 
relatively narrow subgroups of eligible users, such as consumers who 
are deafblind--regarding the availability of and improvements to the 
service. Further, with only one IP Relay provider, the Commission 
believes that provider outreach expenditures are more likely to be 
focused on educating potential new users about the service rather than 
on encouraging or preventing ``churn'' among existing customers. 
Finally, the Commission acknowledges the Consumer and Governmental 
Affairs Bureau's (Bureau) conclusion that a review of the outreach 
reports submitted by T-Mobile indicates that its outreach activity 
since 2016 has not shown that it is misdirected toward ineligible 
users. The Commission does not find it necessary at this time to impose 
a quantitative limit on allowable outreach

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costs or require specific reporting to the Commission on IP Relay 
outreach activity. When the Commission periodically resets the base 
compensation level based on a determination of reasonable cost, the 
administrator's review of reported expenses will help the Commission to 
assess whether outreach expenses are reasonable and directed toward 
permissible purposes.
    6. Indirect Overhead. The Commission concludes that the record does 
not support modifying, for IP Relay, the current prohibition on TRS 
Fund support of general overhead costs, where a company has both TRS 
and non-TRS lines of business and it is not possible to assign such 
costs directly to the company's TRS. In 2007, the Commission concluded 
that, when a company provides both TRS and non-TRS services, general 
overhead costs should not be supported by the TRS Fund. Therefore, 
overhead costs cannot be allocated to TRS based on a formula, e.g., by 
multiplying a company's total overhead costs by the percentage of the 
company's total revenues that are derived from TRS. In adopting the 
rule, the Commission reasoned that because ``Congress placed the 
obligation to provide TRS on common carriers that were already offering 
voice telephone service,'' the rule is necessary for consistency with 
the statute and to avoid having the TRS Fund subsidize non-TRS 
services.
    7. The comments do not persuade the Commission that this rationale 
is flawed. Although the Commission sought comment on a number of 
questions relevant to this issue, none of the comments addresses those 
questions in any detail. For example, the record does not provide any 
explanation of what kinds of costs fall into this category, the amount 
of such costs that would be allocated to TRS, were such allocation 
allowed, and why overhead costs attributable to TRS could not be 
directly assigned.
    8. Cost of Telephone Numbers. The Commission revises its allowable-
cost criteria for IP Relay to allow TRS Fund support of an IP Relay 
provider's reasonable costs of acquiring North American Numbering Plan 
telephone numbers. There is no valid rationale for prohibiting support 
of such costs. In 2008, the Commission reasoned that such costs are not 
attributable to the use of a relay service to facilitate a call, noting 
that analogous costs incurred by voice service providers are typically 
passed through to their customers. However, given that the Commission's 
rules require IP Relay providers to issue telephone numbers, the 
Commission finds it illogical to treat number acquisition costs as 
``not attributable to the use of relay to facilitate a call.'' Further, 
the circumstances relevant to recovery of such costs by voice service 
providers and IP Relay providers are not equivalent. While voice 
service providers have a billing relationship with their consumers, IP 
Relay providers typically do not, and there would be little point in 
creating such a relationship for the sole purpose of passing through 
what likely would be a de minimis monthly charge for any particular IP 
Relay user.
    9. Research and Development. Currently, the TRS Fund supports 
research and development conducted by a TRS provider to ensure that its 
service meets the Commission's minimum TRS standards, but it does not 
support the cost of developing TRS enhancements that exceed this 
criterion. The question of whether to modify the criterion for research 
and development affects other forms of TRS and is currently at issue in 
a parallel proceeding, the 2021 VRS Compensation NPRM, published at 86 
FR 29969, June 4, 2021. For these reasons, the Commission defers 
resolution of this question to a later time.

Operating Margin

    10. The Commission adopts its proposal to allow an IP Relay 
provider a reasonable operating margin--i.e., an allowance for recovery 
of a designated percentage of allowed expenses, in lieu of return on 
capital investment. In the 2017 VRS Compensation Order, published at 82 
FR 39673, August 22, 2017, the Commission acknowledged VRS providers' 
claims that a percentage return on booked costs for investment in fixed 
plant was insufficient to compensate them for the cost of raising 
capital to operate a labor-intensive business like VRS. Accordingly, 
the Commission amended its compensation rules to specify a percentage 
of allowable expenses as a reasonable operating margin for VRS 
providers. The Commission also adopted this approach for internet 
Protocol Captioned Telephone Service (IP CTS) compensation.
    11. Like VRS and IP CTS, IP Relay requires providers to invest 
relatively little in physical plant. Therefore, for the same reasons as 
described above, the Commission concludes that allowing an IP Relay 
provider a reasonable margin over expenses, which is not tied to the 
relatively low investment in physical plant that is needed for the 
provision of this service, will help ensure sufficient investment in 
the provision of this service. Taking this step appropriately 
harmonizes the Commission's general approach to compensation 
methodology for all forms of internet-based TRS.
    12. When setting the operating margin for VRS, the Commission 
reviewed the operating margins for various interpretation and 
translation services and government contractors who are paid for 
services mandated by law and supervised by the government. The 
Commission selected the range from 7.6% to 12.35% as a reasonable range 
of operating margins for VRS. The cost structure of IP Relay is similar 
to that of VRS in that an IP Relay provider also relies on 
communications assistants to relay conversations between a hearing 
party and a non-hearing party. Given these similarities, the range of 
operating margins deemed reasonable for VRS is also a reasonable range 
for IP Relay.
    13. In setting a margin within this range, the Commission 
recognizes that, because there is currently only one IP Relay provider, 
the Commission's risk-benefit analysis is different for IP Relay than 
for VRS and IP CTS. If the operating margin should turn out to be 
significantly lower than margins that currently can be earned in 
comparable lines of business, the current provider might exit the 
business, leaving consumers stranded. To guard against this risk, the 
Commission sets the IP Relay operating margin at 12%, near the high end 
of the reasonable range.
    14. The Commission does not agree with T-Mobile's argument that an 
operating margin above the current range is needed. The benchmark 
advocated by T-Mobile is based on ``the average operating margin 
obtained by T-Mobile and comparable communications providers'' such as 
Verizon, AT&T, CCO Holdings, LLC (Charter Communications), and Comcast 
Corporation. Such businesses are capital intensive rather than labor 
intensive, requiring more long-term capital investment to build and 
maintain physical plant. Indeed, the essential dissimilarity in capital 
requirements between such companies and TRS providers is what led the 
Commission to adopt an operating-margin approach for TRS in the first 
place.
    15. Given these significant differences between TRS and the more 
capital-intensive market segments in which T-Mobile otherwise operates, 
the Commission is unpersuaded by T-Mobile's argument that providing an 
operating margin somewhat lower than those earned by more capital 
intensive operations would force T-Mobile ``to redirect resources 
currently allocated to that service to other service offerings,'' or 
even to exit the IP Relay business altogether. The logic of T-Mobile's

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argument is not sound. Although the allowed operating margin for IP 
Relay may be lower than the actual operating margin for more capital-
intensive lines of business, the return on investment--given the 
relatively small proportion of capital investment needed for TRS--is 
likely to be higher. Therefore, the capital resources allocated to IP 
Relay are likely to be well rewarded.
    16. The Commission also does not agree that the recent surge of 
inflation dictates a higher operating margin ``to provide some cushion 
against the cost increases T-Mobile Accessibility would have to absorb 
before the next annual adjustment.'' As discussed below, the 
compensation formula includes an inflation adjustment factor linked to 
an appropriate index. The Commission does not find a valid reason to 
include an additional inflation factor in the operating margin. 
Inflation affects all businesses, and the record does not contain 
evidence showing such a unique impact on IP Relay as to warrant special 
treatment in setting the allowed operating margin. Further, if, due to 
an increase in the inflation rate, the annual adjustment factor 
applicable to a given year lags behind actual inflation in that year, 
any resulting losses are likely to be offset by windfall gains in a 
future year, when the actual inflation rate subsides below the 
applicable adjustment factor derived from the previous year's higher 
rate.

Projected vs. Historical Costs

    17. The Commission adopts its proposal to use projected costs and 
demand as the basis for calculating the base compensation level for IP 
Relay. Historically, this was the Commission's practice in setting 
cost-based compensation for any form of TRS. However, the Commission 
found that VRS and IP CTS providers' projections of cost and demand 
proved unreliable, resulting in overcompensation of providers. For 
those services, therefore, the Commission has adopted a different 
approach, averaging providers' projected per-minute costs for the 
current calendar year and historical per-minute costs for the preceding 
calendar year. The Commission found that this blended approach was 
consistently a more accurate predictor of actual costs for both VRS and 
IP CTS.
    18. Until 2019, however, the base level for IP Relay compensation 
was still set based on projected costs only. In that year, the Bureau 
switched to the blended approach, to align the IP Relay methodology 
with those for VRS and IP CTS.
    19. As explained in the 2021 IP Relay Compensation NPRM, provider 
projections of IP Relay costs have proved to be substantially more 
accurate than those for VRS and IP CTS. A comparison of T-Mobile's cost 
projections with the actual cost per minute reported between 2015 and 
2019 demonstrates that, in the case of IP Relay, the results of the 
projected-only approach have proven to be reasonably accurate. The 
Commission concludes that this difference with its findings regarding 
VRS and IP CTS justifies a return to the practice of using projected-
only costs and demand when setting IP Relay compensation levels.

Compensation Period and Adjustments

    20. Duration of Compensation Period. The Commission finds that the 
IP Relay compensation formula established in document FCC 22-48 should 
remain in place for a four-year period. As the Commission has 
previously recognized, multi-year compensation periods are generally 
beneficial in the TRS context. Longer periods give providers more 
certainty regarding future compensation and provide a significant 
incentive for increased efficiency, as cost reductions during a multi-
year period do not immediately result in reduced compensation the 
following year. A multi-year compensation period can thus reduce the 
risk of rewarding inefficiency, discouraging innovation, and 
incentivizing providers to incur unnecessary costs, all potential 
effects of annual cost-of-service compensation setting.
    21. The Commission concludes that current conditions justify 
increasing the compensation period from three to four years. IP Relay 
costs and demand have been relatively stable and accurate in recent 
years, and T-Mobile does not anticipate any significant changes to the 
service in the near future. A four-year period will provide T-Mobile a 
substantial degree of predictability in its reimbursements from the 
Fund, improving its ability to plan future operations. Although T-
Mobile recommends a longer compensation period, the Commission has not 
previously set a period longer than four years for any form of 
internet-based TRS. Given the inherent uncertainty of setting 
compensation formulas in the absence of price competition, the 
Commission declines at this time to extend the compensation term beyond 
previous precedent.
    22. The Commission delegates authority to the Chief of the Bureau 
to extend the compensation period by Order, should such extension prove 
to be necessary to prevent the termination of TRS Fund support for IP 
Relay (e.g., if, due to unanticipated data issues or other delays, a 
situation arises where there is insufficient time remaining for the 
Commission to complete a determination of a revised compensation 
formula for the next compensation period).
    23. Inflation Adjustment. The Commission will continue to apply an 
annual adjustment to IP Relay compensation to account for inflation 
after the first year of the cycle. As the adjustment factor, the 
Commission adopts the Bureau of Labor Statistics' Employment Cost Index 
for professional, scientific, and technical services. The Commission 
concludes that, because IP Relay is a labor-intensive service, this 
seasonally adjusted index, which includes translation and interpreting 
services, will more accurately reflect changes in relevant costs. 
Although T-Mobile urges continued use of the Gross Domestic Product-
Price Index (GDP-PI) as the appropriate inflation factor, it fails to 
justify the use of such a broad-gauged index, which tracks price 
increases throughout the economy, including businesses with 
proportionately lower labor costs, in light of the availability of a 
more narrowly focused index that is more likely to reflect actual TRS 
cost changes.
    24. The Commission delegates authority to the Chief of the Bureau 
to approve annual inflation adjustments for IP Relay, beginning with 
Fund Year 2023-24. The Commission directs the TRS Fund administrator to 
specify in its annual TRS Fund report, beginning with the report due 
May 1, 2023, the index values for each quarter of the previous calendar 
year and the last quarter of the year before that. The Commission also 
directs the TRS Fund administrator to propose a compensation level for 
IP Relay that is adjusted from the previous year by a percentage equal 
to the percentage change in the index between the first and fifth 
quarters specified in the report. After notice and opportunity for 
comment, the Chief of the Bureau, acting under delegated authority, 
shall review the administrator's proposed adjustment and approve it, or 
make any necessary modifications to ensure consistency with the 
Commission's rules and orders.
    25. Efficiency Adjustment. At this time, the Commission does not 
find it necessary to offset the inflation factor with an efficiency 
factor analogous to those of price-cap regulation. The paired inflation 
and efficiency adjustments are a feature of price-cap regulation 
designed to reflect the likelihood that a regulated company will become 
more productive or efficient. In 2007, when the Commission made the 
decision to

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apply an efficiency factor to this service, IP Relay was a relatively 
new service, for which substantial efficiency improvements might be 
expected. In recent years, by contrast, usage of this 20-year-old 
service has been relatively stable, and per-minute costs have not 
decreased. Without the presence of multiple competing providers, there 
is less likelihood of a competitive incentive to achieve annual 
efficiency gains. The Commission declines to adopt a negative 
efficiency factor, as recommended by T-Mobile. In adopting the 
Employment Cost Index for professional, scientific, and technical 
services as the inflation adjustment factor, the Commission has 
directly addressed T-Mobile's concern regarding rising labor costs in 
the TRS sector.
    26. Exogenous Costs. Under the current methodology, the IP Relay 
compensation level can be adjusted to permit recovery of exogenous 
costs. These are defined as ``costs beyond the control of the IP Relay 
providers that are not reflected in the inflation adjustment,'' such as 
costs necessitated by a new service requirement adopted by the 
Commission. In the Notice, the Commission asked whether it should align 
the criteria for exogenous costs in the IP Relay compensation regime 
with those adopted in the 2017 VRS Compensation Order. Under the VRS 
criteria, which also apply to IP CTS compensation, an upward 
compensation adjustment for well-documented exogenous costs is 
available for costs that (1) belong to a category of costs that the 
Commission has deemed allowable, (2) result from new TRS requirements 
or other causes beyond the provider's control, (3) are new costs that 
were not factored into the applicable compensation formula, and (4) if 
unrecovered, would cause a provider's current costs (allowable expenses 
plus operating margin) to exceed its revenues.
    27. The Commission finds that these exogenous cost criteria are 
also appropriate for IP Relay. Although T-Mobile urges deletion of the 
last criterion, contending that exogenous cost should be recoverable 
even if recovery would add to the provider's revenues, the Commission 
finds that this criterion is appropriate to ensure that exogenous cost 
recovery is warranted, i.e., necessary for a provider to recover its 
reasonable costs. Any exogenous cost claims should be submitted to the 
TRS Fund administrator with the provider's annual cost report, so that 
the administrator can review such claims and make appropriate 
recommendations. The Commission delegates authority to the Bureau to 
make determinations regarding timely submitted exogenous cost claims, 
following notice and opportunity for comment.

Alternative Compensation Methodology

    28. The Commission is unpersuaded that it should derive IP Relay 
compensation by proxy, from the Multi-State Average Rate Structure 
(MARS) based compensation formula for interstate traditional (TTY-
based) TRS, as advocated by T-Mobile. To implement its proposed 
approach, T-Mobile explains, the Commission would take as a starting 
point the current MARS-based formula for interstate traditional TRS, 
which is calculated annually as a weighted average of the per-minute 
compensation levels for intrastate traditional TRS (and speech-to-
speech relay service (STS)) in each state TRS program. Next, the 
Commission would (1) multiply the interstate traditional TRS formula by 
projected IP Relay minutes for the next Fund Year, (2) subtract from 
that figure those annual costs that are incurred by T-Mobile in 
providing traditional TRS but not IP Relay, and (3) add in those annual 
costs that are incurred in providing IP Relay but not traditional TRS. 
The resulting funding total would be divided by projected IP Relay 
demand to determine the per-minute compensation level.
    29. Flaws in T-Mobile's Proposal. The Commission concludes that 
reliance on T-Mobile's proposed MARS-based methodology would not result 
in compensation that is commensurate with the reasonable costs of IP 
Relay. Notwithstanding some functional and operational similarities 
between IP Relay and traditional TRS, the record does not support T-
Mobile's claim that the services have similar cost structures. T-Mobile 
itself acknowledges that there are substantial differences between the 
costs of the two services, as illustrated by the substantial 
subtractions and additions included in its proposal. The record shows 
that a cost-based compensation level for IP Relay (including a 
reasonable operating margin), as determined in this Report and Order, 
is $1.9576, less than half the compensation level for traditional TRS 
($4.5098). The disparity between per-minute IP Relay costs and 
traditional TRS compensation has increased over time, and it is 
reasonable to assume that it will continue increasing.
    30. Even if there were not such a large disparity between the 
proposed proxy and actual costs, T-Mobile's proposed formula must be 
rejected, as it would be substantially more difficult to apply than the 
current methodology and less likely to result in a compensation formula 
that that aligns with reasonable provider costs. T-Mobile acknowledges 
that a substantial portion of the compensation for traditional TRS 
reflects costs unique to state-program TRS, including sales staff, 
account management/support staff, equipment distribution programs, 
outreach programs, and state-mandated call centers, none of which apply 
to IP Relay. To avoid over-compensation for IP Relay, all these costs 
(which are not currently reported to the TRS Fund administrator) must 
be estimated and then subtracted from total compensation for 
traditional TRS. T-Mobile also asserts that IP Relay includes 
additional costs not included in state-program TRS--for outreach, 
website operation, and regulatory compliance. Verifying the accuracy of 
these complex calculations would require a level of effort much greater 
than that currently required to review IP Relay costs alone. Although 
T-Mobile claims that the state-program-specific costs are included in a 
separate Monthly Recurring Charge (MRC), which is separately reported 
to the Fund administrator, T-Mobile cautions that some costs relevant 
to IP Relay are included in some states' MRCs, and therefore argues 
that the MRCs cannot be subtracted in their entirety. As a further 
complication, some of the state-program compensation that is used to 
calculate the interstate traditional TRS formula represents 
compensation for state-program STS. Since the actual costs of STS may 
be different from those for providing traditional TRS, ensuring that 
such differences do not distort the estimates for traditional TRS could 
require yet another calculation, further increasing the complexity of 
T-Mobile's proposed methodology.
    31. Further, the record does not indicate that T-Mobile's costs for 
providing traditional TRS are currently reviewed by state regulatory 
authorities. Therefore, the costs identified by T-Mobile as unique to 
traditional TRS would need to be collected, reported, and audited by 
the TRS Fund administrator--even though none of those costs is actually 
relevant to providing IP Relay. And because these costs are to be 
subtracted in establishing the compensation formula, the provider would 
have no special incentive to ensure that it has identified all relevant 
traditional TRS costs. Instead, the burden would be on the TRS Fund 
administrator, who would have no access to the underlying raw data, to 
ensure that no costs unique to

[[Page 42660]]

traditional TRS have been omitted or underreported. Such a process 
would not be conducive to producing accurate cost estimates.
    32. T-Mobile claims that the calculation could be simplified after 
the first year by continuing indefinitely to apply the percentage cost 
difference initially calculated. In subsequent years, T-Mobile 
suggests, the MARS formula simply could be adjusted by a constant 
percentage factor, which represents the initially calculated ratio of 
the net difference in the costs of the two services to total 
traditional TRS compensation. While such a simplified approach may be 
less burdensome than repeatedly recalculating the relevant costs, it 
would remove IP Relay compensation even further from any plausible 
relationship to actual IP Relay costs. Such reliance on the initially 
calculated cost difference to set compensation for future years would 
be especially misleading given the record evidence that the cost 
difference between the services is continually increasing. By contrast, 
the methodology the Commission adopts relies on readily available data 
collected by the TRS Fund administrator from providers of IP Relay with 
reasonable adjustments based on Department of Labor statistics. The 
Commission does not need to engage in the unusually complicated 
calculations entailed by T-Mobile's proposal when a simpler and more 
accurate methodology is readily available.

Compensation Level for 2022-2023

    33. TRS Fund Year 2022-23 will be the first year of a new 
compensation cycle for IP Relay, which will extend for four years, 
through June 30, 2026. With the addition of a 12% operating margin to 
the average of T-Mobile's projected per-minute costs for calendar years 
2022 and 2023--based on the most recent submissions of cost and demand 
data to the Fund administrator--the resulting base compensation formula 
is $1.9576 per minute, a 14.2% increase from the current compensation 
level of $1.7146 per minute. This base level of compensation shall be 
applicable during Fund Year 2022-23. For the second, third, and fourth 
years, compensation for IP Relay shall be adjusted in accordance with 
the inflation and exogenous cost adjustment factors adopted above.

Final Regulatory Flexibility Analysis

    34. As required by the Regulatory Flexibility Act of 1980, as 
amended, the Commission incorporated an Initial Regulatory Flexibility 
Analysis (IRFA) into the 2021 IP Relay Compensation NPRM. The 
Commission sought written public comment on the proposals in the NPRM, 
including comment on the IRFA. No comments were received in response to 
the IRFA.
    35. Need for, and Objectives of, the Rules. Document FCC 22-48 
addresses how telecommunications relay service (TRS) providers receive 
compensation from the Interstate TRS Fund for the provision of 
Interstate Protocol Relay Service (IP Relay). The Commission adopts a 
new four-year compensation formula using a cost-based methodology with 
the initial year's compensation level based on an average of providers' 
projected costs and demand for the next two years, with annual 
adjustments for inflation and unanticipated exogenous costs, if any. 
The methodology ensures that IP Relay providers are compensated for the 
reasonable costs of providing the service and increases the assurance 
that IP Relay is made available in the most efficient manner.
    36. Summary of Significant Issues Raised by Public Comments in 
Response to the IRFA. No comments were filed in response to the IRFA.
    37. Response to Comments by the Chief Counsel for Advocacy of the 
Small Business Administration. The Chief Counsel did not file any 
comments in response to the proposed rules in this proceeding.
    38. Description and Estimate of the Number of Small Entities to 
which the Rules will Apply. All Other Telecommunications.
    39. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements. Adoption of a new compensation methodology for 
IP Relay does not result in any new or modified reporting, 
recordkeeping, or other compliance requirements on IP Relay providers.
    40. Steps Taken to Minimize Significant Impact on Small Entities, 
and Significant Alternatives Considered. By reforming the compensation 
methodology for IP Relay, the Commission is (1) taking steps to ensure 
that providers of IP Relay are fairly compensated for the provision of 
IP Relay; and (2) to ensure that functionally equivalent service and an 
efficient IP Relay market are maintained over the long term in 
accordance with the Commission's statutory obligations. Reforming the 
compensation methodology for IP Relay will not affect the burdens on IP 
Relay providers or other small entities.

Ordering Clauses

    41. Pursuant to sections 1, 2, and 225 of the Communications Act of 
1934, as amended, 47 U.S.C. 51, 152, and 225, document FCC 22-48 is 
adopted, and the Commission's rules are amended.
    42. The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of the document FCC 22-
48, including the Final Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 64

    Individuals with Disabilities, Telecommunications, Telephones.

Federal Communications Commission.
Marlene Dortch,
Secretary, Office of the Secretary.

Final Rule

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 64 as follows:

PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS

0
1. The authority citation for part 64 continues to read as follows:

    Authority: 47 U.S.C. 151, 152, 154, 201, 202, 217, 218, 220, 
222, 225, 226, 227, 227b, 228, 251(a), 251(e), 254(k), 255, 262, 
276, 403(b)(2)(B), (c), 616, 620, 716, 1401-1473, unless otherwise 
noted; Pub. L. 115-141, Div. P, sec. 503, 132 Stat. 348, 1091.

Subpart F--Telecommunications Relay Services and Related Customer 
Premises Equipment for Persons With Disabilities

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2. The authority citation for subpart F continues to read as follows:

    Authority: 47 U.S.C. 151-154; 225, 255, 303(r), 616, and 620.


0
3. Add Sec.  64.640 to read as follows:


Sec.  64.640  Compensation for IP Relay.

    (a) For the period from July 1, 2022, through June 30, 2026, TRS 
Fund compensation for the provision of IP Relay shall be as described 
in this section.
    (b) For Fund Year 2022-23, comprising the period from July 1, 2022, 
through June 30, 2023, the Compensation Level for IP Relay shall be 
$1.9576 per minute.
    (c) For each succeeding Fund Year through June 30, 2026, the per-
minute Compensation Level (L<INF>FY</INF>) shall be determined in 
accordance with the following equation:

L<INF>FY</INF> = L<INF>FY-1</INF> * (1+IF<INF>FY</INF>)

where IF<INF>FY</INF> is the Inflation Adjustment Factor for that 
Fund Year, determined in accordance with paragraph (d) of this 
section.

    (d) The inflation adjustment factor for a Fund Year 
(IF<INF>FY</INF>), to be determined

[[Page 42661]]

annually on or before June 30, is 1/100 times the difference between 
the values of the Employment Cost Index compiled by the Bureau of Labor 
Statistics, U.S. Department of Labor, for total compensation for 
private industry workers in professional, scientific, and technical 
services, for the following periods:
    (1) The fourth quarter of the Calendar Year ending 6 months before 
the beginning of the Fund Year; and
    (2) The fourth quarter of the preceding Calendar Year.
    (e) In addition to L<INF>FY</INF>, an IP Relay provider shall be 
paid a per-minute exogenous cost adjustment if claims for exogenous 
cost recovery are submitted by the provider and approved by the 
Commission on or before June 30. Such exogenous cost adjustment shall 
equal the amount of such approved claims divided by the provider's 
projected minutes for the Fund Year. Exogenous cost adjustments, if 
any, are not included in the previous Fund Year's per-minute 
Compensation Level (L<INF>FY-1</INF>) for purposes of paragraph (c) of 
this section.
    (f) An exogenous cost adjustment shall be paid if an IP Relay 
provider incurs well-documented costs that:
    (1) Belong to a category of costs that the Commission has deemed 
allowable;
    (2) Result from new TRS requirements or other causes beyond the 
provider's control;
    (3) Are new costs that were not factored into the applicable 
compensation formula; and
    (4) If unrecovered, would cause a provider's current allowable-
expenses-plus-operating margin to exceed its revenues.

[FR Doc. 2022-15278 Filed 7-15-22; 8:45 am]
BILLING CODE 6712-01-P


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