Document Headings

                    Document headings vary by document type but may contain                    the following:                  
                -                       the agency or agencies that issued and signed a document                    
                -                       the number of the CFR title and the number of each part                      the document amends, proposes to amend, or is directly                      related to                    
                -                       the agency docket number / agency internal file number                    
                -                       the RIN which identifies each regulatory action listed in                      the Unified Agenda of Federal Regulatory and Deregulatory                      Actions                    

                    See the                                          Document Drafting Handbook                                        for more details.                  

###### Federal Communications Commission

          - 47 CFR Part 64
          - [CG Docket No. 03-123; DA 05-2066]

# AGENCY:

Federal Communications Commission.

# ACTION:

Final rule; clarification.

# SUMMARY:

                        In this document, the Consumer & Governmental Affairs Bureau (the Bureau) clarifies under delegated authority, that telecommunications relay service (TRS) providers offering free or discount long distance service to TRS consumers as an incentive to use a particular TRS provider's relay service, or as an incentive for a consumer to make more or longer TRS calls, constitutes an impermissible financial incentive in violation of the                         *Financial Incentives Declaratory Ruling.*                         TRS providers in violation of the                         *Financial Incentives Declaratory Ruling*                         will be ineligible for compensation from the Interstate TRS Fund.                    

# DATES:

Effective January 12, 2006.

# FOR FURTHER INFORMATION CONTACT:

                        Thomas Chandler, Consumer & Governmental Affairs Bureau, (202) 418-1475 (voice), (202) 418-0597 (TTY), or e-mail                         *Thomas.Chandler@fcc.gov.*

# SUPPLEMENTARY INFORMATION:

                    This is a summary of Commission document DA 05-2066, adopted July 27, 2005, released July 28, in CG Docket No. 03-123. This document does not contain new or modified information collections requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, it 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,                     *sec*44 U.S.C. 3506(c)(4). Copies of any subsequently filed documents in this matter will be available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. They may also be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc. (BCPI), Portals II, 12th Street, SW., Room CY-B402, Washington, DC 20554. Customers may contact BCPI at their Web site:                     *http://www.bcpiweb.com*                     or call 1-800-378-3160. To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an e-mail to                     *fcc504@fcc.gov*                     or call the Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice) or (202) 418-0432 (TTY). This document can also be downloaded in Word and Portable Document Format (PDF) at                     *http://www.fcc.gov/​cgb.dro.*

## Synopsis

                    On January 26, 2005, the Bureau, under delegated authority, issued the                     *Financial Incentives Declaratory Ruling*                     concluding that any program that offers any kind of financial incentive or reward for a consumer to place a TRS call, including minimum usage arrangements or programs (whether or not tied to the acceptance of equipment), violates section 225 of the Communications Act.                     *See Telecommunications Relay Services and                               ( print page 54299)                            Speech-to-Speech Services for Individuals With Hearing and Speech Disabilities,*                     CC Docket No. 98-67, CG Docket No. 03-123, Declaratory Ruling, 20 FCC Rcd 1466-1468, paragraph 4, released January 26, 2005, published at 70 FR 9239, February 25, 2005, (                    *Financial Incentives Declaratory Ruling*). The Bureau explained that “in view of the intent and nature of section 225 of the Communications Act, and the obligation placed on entities providing voice telephone services to also offer TRS as an accommodation to persons who, because of a disability, cannot meaningfully use the voice telephone system, the Bureau interprets section 225 of the Communications Act and the implementing regulations to prohibit a TRS provider's use of any kind of financial incentives or rewards, including arrangements tying the receipt of equipment to minimum TRS usage, directed at a consumer's use of their TRS service.” The Bureau further explained that because the Interstate TRS Fund, and not the consumer, pays for the cost of the TRS call, such financial incentives are tantamount to enticing consumers to make calls that they might not ordinarily make. The Bureau therefore concluded that, effective March 1, 2005, any TRS provider offering such incentives for the use of any of the forms of TRS will be ineligible for compensation from the Interstate TRS Fund.                

                    The                     *Financial Incentives Declaratory Ruling*                     was in response to a TRS provider's customer loyalty program which offered the provider's customers the opportunity to have their DSL or cable modem bill reimbursed by the provider through the accumulation of points based on minutes of use of the provider's TRS service. Sprint Corporation (Sprint) sought clarification whether its free long distance service promotion violated the prohibition against TRS financial incentives set forth in the                     *Financial Incentives Declaratory Ruling.**See*                     Letter from Spring to Thomas E. Chandler, Chief, Disability Rights Office, Consumer & Governmental Affairs, Federal Communications Commission, dated February 7, 2005, regarding                     *Declaratory Ruling*                     (DA 05-140) issued January 26, 2005 in CC Docket No. 98-67 and CG Docket No. 03-123 (                    *Ex Parte*                     Communication) (                    *Sprint Letter*).                

                    As Sprint explained, it provides traditional TRS in a state (California) that has more than one provider of this service (                    *i.e.,*                     a “multi-vendor”) state.                     *See Sprint Letter*                     at 1-2. Therefore, a TRS consumer in that state can choose which available TRS provider he or she wants to handle his or her TRC call. To give the consumers an incentive to use Sprint's relay service, Sprint adopted a promotion whereby long distance calls would be free to consumers who select Sprint as their provider of both relay and long distance services.                     *See Sprint Letter*                     at 1. Providers of traditional TRS may not charge consumers for the cost of the TRS service; the may, however, charge the consumer for long distance service. The Commission's rules require providers of traditional TRS to offer their consumers access to the consumer's long distance carrier of choice.                     *See*47 CFR 64.604(b)(3). In other words, TRS consumers must be afforded the same opportunity given to non-TRS consumers to use whichever long distance service they choose when making a long distance call.                     *See generally 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, Second Report and Order, Order on Reconsideration, and Notice of Proposed Rulemaking, 18 FCC Rcd 12375, 12412-12415, paragraphs 54-61, released June 17, 2003, published at 69 FR 53346, September 1, 2004, (                    *2004 TRS Report & Order*). (The Bureau notes that the carrier of choice rule is presently waived for the provision of Internet Protocol Relay Service (IP Relay) and Video Relay Service (VRS).                     *See, e.g., 2004 TRS Report & Order,*                     19 FCC Rcd 12594, Appendix E.) Sprint asserted that is free long distance program is distinguishable from the kind of financial incentive programs prohibited by the                     *Financial Incentives Declaratory Ruling,*                     and therefore should be permissible. Sprint asserted that, unlike customer loyalty programs, the free long distance program does not provide any benefits independent of the calls themselves, and therefore there is no incentive to make unnecessary TRS calls. Sprint also noted that discounts from standard rates have long been characteristic of the super-competitive long distance market. Finally, Sprint noted that even if the Bureau found that Sprint's free long distance program violated the                     *Financial Incentives Declaratory Ruling,*                     the Bureau should make clear that the prohibition applies only to                     *inter*                    state long distance service, and not                     *intra*                    state long distance service.                     *See Sprint Letter*                     at 2, note 1. On March 11, 2005, Nordia, Inc., another provider of traditional TRS in California, addressed by letter the provision of free long distance service along with traditional TRS service.                     *See*                     letter from Vinson & Elkins (Counsel for Nordia, Inc.) to Thomas E. Chandler, Chief, Disability Rights Office, Consumer & Governmental Affairs, Federal Communications Commission, dated March 11, 2005, regarding Declaratory Ruling Regarding Hands-On Video Relay Services, Inc., CC Docket No. 98-67 and CG Docket No. 03-123.                

## Discussion

                    The Bureau finds that offering free or discount long distance service (subject to the exceptions noted below) to TRS consumers as an incentive to use a particular TRS provider's relay service, or as an incentive for a consumer to make more or longer TRS calls, constitutes an impermissible financial incentive in violation of the                     *Financial Incentive Declaratory Ruling.*                     When customers receive either free or heavily discounted long distance service, they have an incentive to make more or longer calls than they would make in the absence of such a program. Consequently, the Interstate TRS Fund, which compensates providers on a per-minute basis, is bill for minutes the customers might not have generated but for the incentive program. Although Sprint raises this issue in the context of a multi-vendor state, we note that our conclusion applies to TRS providers whether or not they are the only provider in a state. Free or discount long distance programs for traditional TRS consumers run afoul of the Commission's financial incentives prohibition not because they might cause a consumer to select one provider's service instead of another provider's service, but because such programs may have the effect of causing a TRS consumer to make more or longer TRS calls than be or she would otherwise make.                

                    This document shall be effective January 12, 2006. The record reflects that some providers may not be able to immediately change their automated billing system.                     *See*                     Letter from MCI to Marlene H. Dortch, Secretary, Federal Communications Commission, dated June 10, 2005, regarding CC Docket No. 98-67 and CG Docket No. 03-123 (indicating that MCI would need 45 days to comply with ruling proscribing free long distance); Letter from Vinson & Elkins (Counsel for Nordia, Inc.) to Thomas E. Chandler, Chief, Disability Rights Office, Consumer & Governmental Affairs, Federal Communications Commission, dated June 16, 2005, regarding Nordia Billing for Interstate Calls (indicating company would require 9 to 12 months to implement billing system). The Bureau believes that 120 days is a reasonable time for providers to come into compliance.                          ( print page 54300)    

                    There are, however, two important limitations to the Bureau's conclusion with respect to free or discount long distance service to TRS consumers. First, the                     *Financial Incentives Declaratory Ruling*                     and this document apply only with respect to free or discount                     *inter*                    state long distance service, not                     *intra*                    state long distance service. Second, the Bureau recognizes that provider have long offered discount long distance service to TRS consumers who use a TTY under the rationale that, given the nature of traditional TRS, it take substantially longer for parties to a traditional TRS call to have a conversation than it would for two hearing parties to have the same conversation. Therefore, providers have been permitted to offer discount long distance service to TRS consumers so, long as the discounts reasonably relate, under the functional equivalency principle, to equalizing the cost of the call based on the added length of a TRS call. The Bureau prohibits only those long distance discounts for TRS consumers that go beyond ensuring that the long distance service cost of the TRS call is equivalent to what that cost would have been for hearing parties. Programs directed at giving the consumer an incentive to make a TRS call in the first place, or to place a longer TRS call than consumer might otherwise make, are prohibited under this document.                

                    Nothing in the                     *Financial Incentives Declaratory Ruling*                     or this document precludes interstate TRS providers that also offer long distance service from offering discounts to all of their consumer when the same discount applies to both voice and TRS calls. The Bureau addresses herein only the situation where TRS consumers, but not other consumers, are given free long distance service (or discount long distance service) as incentive for the consumer to use the particular TRS provider that also offer the long distance service, or to make more or longer TRS calls.                

## Ordering Clauses

                    Pursuant to the authority contained in section 225 of the communications Act of 1934, as amended, 47 U.S.C. 225, and §§ 0.141, 0.361, and 1.3 of the Communication Rules, 47 CFR 0.141, 0.361, 1.3, this document is hereby                     *adopted.*

Any TRS provider offering to TRS consumers financial incentives relating to free or discount long distance service, as set forth above, shall be eligible for compensation from the Interstate TRS Fund.

This document shall be effective January 12, 2006.

Federal Communications Commission.

Monica Desai,

Chief, Consumer & Governmental Affairs Bureau.

[FR Doc. 05-18250 Filed 9-13-05; 8:45 am]

BILLING CODE 6712-01-M