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*****************************************************                            Before the                           
                Federal Communications Commission
                      Washington, D.C. 20554
                                 
In the Matter of                )
                                )
Telecommunications Relay Services,)          CC Docket No. 90-571
and the Americans with Disabilities)
Act of 1990                     )

                             ORDER

     Adopted:  December 2, 1998         Released:  December 2, 1998


By the Deputy Chief, Common Carrier Bureau:

                         I.  INTRODUCTION
                                 
     1.   On October 1, 1998, pursuant to section 64.604(c)(4)(iii)(H) of the Commission's
Rules, the Telecommunications Relay Services (TRS) Fund Administrator (Adminstrator), the
National Exchange Carrier Association, Inc. (NECA), filed its annual report.  The report included
the proposed TRS payment formula for the 1999 calendar year, and the fund size estimate for the
period April 26, 1999 through March 26, 2000.  This filing was placed on public notice and
comments were filed by two parties. 

     2.   In this Order, we approve NECA's proposed payment rate to TRS providers for 1999. 
In addition, we calculate the carriers' contribution factor to the TRS Fund for the April 26, 1999
through March 26, 2000 period, and we adopt a contribution factor of .00038.  We also adopt the
1999 TRS Fund Worksheet, FCC Form 431.

                         II.  BACKGROUND
                                 
     3.   TRS permits persons with hearing and speech disabilities to communicate by
telephone with persons who do not have such disabilities.  TRS facilities are equipped with special
equipment and staffed by communications assistants (CAs) who relay conversations between people
who use text telephones and people who use traditional telephones.  Title IV of the Americans with
Disabilities Act of 1990 (ADA) requires the Commission to ensure that TRS is available, to the
extent possible, in the United States to individuals with hearing and speech disabilities.  To fulfill
this mandate, in 1991, the Commission adopted rules that require the provision of TRS, set
minimum operational, functional, and technical standards for TRS providers, and established a
shared-funding mechanism (TRS Fund) for compensating TRS providers for the costs of providing
interstate TRS.  The Commission appointed NECA to be the TRS Fund Administrator, and
directed NECA to establish an unpaid, voluntary advisory committee to monitor cost recovery
matters.

     4.   The Commission's rules require all carriers providing interstate telecommunications
services to contribute to the TRS Fund.  The amount contributed is the product of the carrier's gross
interstate revenues for the previous year and a contribution factor determined annually by the
Commission.  Contributions are calculated in accordance with a TRS Fund Worksheet. The TRS
Fund Worksheet is prepared each year by the Commission and published in the Federal Register. 
Payments from the fund are made by the Administrator to eligible TRS providers and are designed
to cover the latter's reasonable costs incurred in providing interstate TRS.  TRS providers must file
with NECA "true and adequate data necessary to determine TRS Fund revenue requirements and
payments."  Based on this information, the Administrator files with the Commission each year a
proposed payment formula and estimated fund requirements for the following year.  This payment
formula is subject to Commission approval.  Last year, based on the Administrator's filing, the
Commission adopted a contribution factor of .00039 for the April 1998 through March 1999 funding
period, and approved a payment rate of $1.168 per interstate TRS minute of use for the 1998
calendar year.

                         III.  DISCUSSION
                                 
     5.   NECA Filing.  NECA proposes a payment rate of $1.179 per interstate TRS minute
of use for the 1999 calendar year, a .9 percent increase from the 1998 payment rate.  NECA also
projects a nationwide interstate TRS demand of 38 million minutes for the April 1999 through
March 2000 period.  The payment rate and demand estimate are based on cost and demand data
submitted to NECA by TRS providers pursuant to section 64.604(c)(4)(iii)(C) of the Commission's
rules.  For the April 1999 through March 2000 period, NECA estimates reimbursements to TRS
providers of $44.4 million, administrative costs of $403,000, and interest income of $1,530,000 for
a total estimated Fund requirement of $43.3 million.  NECA states, however, that an approximate
$9.3 million surplus in funds from last year's TRS Fund will decrease the actual April 1999 - March
2000 Fund requirement to $34 million.



     6.   Comments.  Mr. Gregory and Ms. Viera assert that the TRS reimbursement formula
should be tied to the quality and efficiency of TRS.  Ms. Viera contends that the Commission
should require:  (1) that states remit to the TRS Interstate Fund a portion of any liquidated damages
recovered from TRS providers in an amount that is proportionate to the volume of interstate calls
made on the provider's facilities throughout any period of time that the TRS provider is not in
compliance with the terms of its contract; (2) that members of NECA's Interstate TRS Advisory
Council be placed in a better position to monitor the quality of service furnished by TRS providers
through increased access to, inter alia, all confidential TRS reports related to the certification
process and responses to the TRS Center Data Request; and (3) that a reimbursable category for
research and development expenses be created to encourage the development of new technologies. 


     7.   Mr. Gregory argues that approval of the payment rate that NECA proposes will
violate Section 225(d)(2) of the Communications Act, which requires the Commission to ensure that
TRS "regulations ... do not discourage or impair the development of improved technology."  He
asserts that the current rules discourage providers from attempting to improve current technologies,
claiming that the TRS reimbursement formula does not include incentives for research and
development or depreciation allowances for hardware and software purchases.  He encourages the
Commission to require NECA to use a modified reimbursement formula to account for these items,
so as to encourage the improvement of TRS, particularly its transmission speed.  Mr. Gregory also
urges the Commission to direct NECA to "populate the Interstate Relay Advisory Council with at
least one member of the speech disabled community."  

     8.   We recognize, along with the commenters, the importance of ensuring quality service
for TRS.  Indeed, many of the proposals and tentative conclusions reached by the Commission in
its recent Improved Services NPRM are related to improving the quality of TRS service.  Mr.
Gregory's and Ms. Viera's comments regarding improvement of the quality of TRS service are best
addressed in the context of that rule making proceeding, where the record will be more fully and
appropriately developed.  We will therefore include their comments as part of that record and defer
further consideration of these issues to that proceeding.  

     9.   We will, however, address in this Order Mr. Gregory's request that the Commission
direct NECA to appoint to the Council "a member of the speech disabled community."  The
Commission's rules require the Council to be an "advisory committee of persons from the hearing
and speech disability community, TRS users (voice and text telephone), interstate service providers,
state representatives, and TRS providers. . . ."  To ensure that each of these groups is well
represented, the Commission specifically directed that "each group shall select its own representative
to the committee."  To the extent that individuals nominate persons for Council vacancies, we
encourage them to consider nominating individuals within these groups that would provide the
Council with a diverse range of experiences and perspectives.  To the extent that NECA is involved
in seeking nominations for Council vacancies, we encourage it to utilize a wide range of resources
within these groups to ensure that the Council's membership reflects a broad range of experience and
perspectives.

     10.  Payment Rate.  We have reviewed NECA's filing regarding the proposed payment
rate, and we find that the rate will compensate TRS providers for the reasonable costs of providing
interstate TRS.  Accordingly, pursuant to section 64.604(c)(4)(iii)(E) of the rules, we approve the
proposed payment rate of $1.179 per minute of interstate TRS use for the 1999 calendar year.

     11.  Contribution Factor.  Based upon NECA's estimates, and pursuant to the requirements
of section 64.604(c)(4)(iii)(B) of the rules, we calculate a contribution factor of .00038 for the April
26, 1999 through March 26, 2000 period.  The contribution factor is based on a projected funding
base for 1997 gross carrier interstate revenues of $9.8 billion, projected 1998 TRS Fund outlays of
$43.3 million, a surplus carryover of $9.3 million, and a safety margin of 10 percent, for a net 1999
funding requirement of $38.3 million.  The new contribution factor should ensure adequate funding
of this service pursuant to the requirements of section 225 of the Act, 47 U.S.C.  225.



     12.  1999 TRS Fund Worksheet.  Finally, we also adopt the 1999 TRS Fund Worksheet
(FCC Form 431), which incorporates the new contribution factor.  The worksheet is attached as
Appendix A.  The 1999 TRS Fund Worksheet is subject to the requirements of the Paperwork
Reduction Act of 1995, and will be submitted to the Office of Management and Budget (OMB) for
approval.

     13.  On September 25, 1998, the Commission released a Notice of Proposed Rulemaking
and Notice of Inquiry that proposes, inter alia, to replace the existing TRS Fund Worksheet with a
Telecommunications Reporting Worksheet.  In the event that the Telecommunications Reporting
Worksheet replaces the TRS Fund Worksheet prior to the required April submission of the TRS
Fund Worksheet, the TRS contribution rate may change.  However, that proceeding would not affect
the reimbursement rate adopted herein.  

                      IV.  ORDERING CLAUSES
                                 
     14.  Accordingly, IT IS ORDERED, pursuant to section 225 of the Communications Act
of 1934, as amended, 47 U.S.C.  225, and sections 0.91, 0.291, and 65.604(c)(4) of the
Commission's rules, 47 C.F.R.  0.91, 0.291, 64.604(c)(4), that: (a)  the payment rate of $1.179 to
TRS providers per interstate minute of use is approved, and shall be in effect from January 1, 1999
through December 31, 1999; and (b)  the TRS Fund contribution factor shall be .00038 for the period
April 26, 1999 through March 26, 2000; and (c)  the 1999 TRS Fund Worksheet is hereby adopted,
subject to approval by the Office of Management and Budget.

     15.  IT IS FURTHER ORDERED, that the Secretary shall provide a copy of this Order
to each state utility commission and to the Chief Counsel for Advocacy of the Small Business
Administration.

                              FEDERAL COMMUNICATIONS COMMISSION




                              Yog R. Varma
                              Deputy Chief, Common Carrier Bureau