NOTICES

Recalculation of the Pennsylvania Telecommunications Relay Service Surcharge

[34 Pa.B. 3656]

Public Meeting held
June 24, 2004

Commissioners Present:  Terrance J. Fitzpatrick, Chairperson; Robert K. Bloom, Vice Chairperson; Glen R. Thomas; Kim Pizzingrilli; Wendell F. Holland

Recalculation of the Pennsylvania Telecommunications Relay Service Surcharge; M-00900239F0007

Tentative Order

By the Commission:

   This Tentative Order is issued to solicit comments on the ratio used to allocate costs between business and residential end users of the costs of the Telephone Relay Service (TRS)¹ and the Telecommunications Device Distribution Program (TDDP).² Comments are due 30 days after this Tentative Order has been published in the Pennsylvania Bulletin.³

Background

   In 1990, at M-00900239, this Commission established the TRS. In doing so, the Commission adopted one of two mutually exclusive funding methodologies for the TRS, choosing to surcharge access lines rather than intrastate telecommunications revenues. Act 34 of 1995⁴ subsequently expanded the TRS operations and use of the TRS surcharge to fund the TDDP. The 1995 Act provides, in pertinent part, that an ''additional use'' of the TRS surcharge shall be to fund the TDDP ''as calculated by the commission . . . under the methodology established by the commission in order[s] entered May 29, 1990, and July 9, 1990,'' at M-00900239 (1990 Orders). We periodically recalculate, at least annually and effective July 1 of each year, the TRS surcharge as it applies to business and residence end users.

Discussion

   In calculating the annual TRS surcharge, the Commission has traditionally attempted to use a 2:1 (business-to-residence) ratio to apportion between business and residence end users the costs of TRS/TDDP funding. Neither the 1990 Orders nor the 1995 Act mandate a permanent, fixed or specific business-to-residence ratio for the surcharge. The 1990 Orders' choice of methodology manifested a decision to surcharge access lines rather than revenue. The 2:1 ratio for assessing the costs against access lines merely reflected rate structure patterns of the day where business services greatly subsidized residential services. The 1995 Act provided for TDDP funding by building upon the access-line-surcharge methodology used in the 1990 Orders for the TRS; it did not mandate a particular ratio.

   Further, the May 1990 Order clearly contemplated adjustments to the ratio and even to the methodology, especially if other surcharges were imposed upon telecommunications services. Specifically, the May 1990 Order, at page 30, provided that:

The [Pennsylvania Telephone Association (PTA) further requests] that in the event the funding of any other public interest service offering, including Emergency 911, via a surcharge is ordered by the General Assembly or the Commission, the LEC may revise the Relay Service surcharge to be consistent with the funding mechanism employed for such subsequent public interest service.

   While this Commission did not adopt the PTA's proposal in this regard, we further stated that:

While on first reading the PTA's request seems to be reasonable, we would be remiss if we did not require the LECs[,] or the PTA on behalf of the LECs, to file a Petition with the Commission requesting a revision to the Relay Service surcharge mechanism in order to be consistent with the particular public interest service funding mechanism. We believe that to grant, at this time, the request based upon an occurrence which may take place, at some undetermined future date, and without the benefit of the particular public interest or its funding mechanism, would be a gross neglect of our statutory duty and responsibilities. Thus, we will deny the PTA's request at this time.

   May 1990 Order at Page 30.

   Thus, the 2:1 ratio is clearly subject to adjustment at our discretion. Additionally, legislative changes to the 1995 Act affect the surcharge, as well.⁵

   The 2:1 ratio has become increasingly unwieldy and nonresponsive to market realities, especially in the wake of competition. Additionally, with the nature of the costs of the TRS and the TDDP and the fluctuations in access line counts, it has become increasingly difficult to maintain a 2:1 ratio for the surcharge without incurring deficiencies or surpluses in funding. The surcharge (combined and/or at the program level) cannot be assessed as a partial cent. Further, it would be virtually impossible to generate incoming funds in line with expected expenses if a 2:1 ratio were perpetuated for the specific programs. In fact, the combined surcharge ratio has fluctuated around the 2:1 ratio in recent years.⁶

   Accordingly, under the Commission's authority at 66 Pa.C.S. § 703(g) to modify prior orders after notice and an opportunity to be heard, we will allow the overall ratio to float from year to year with the general intent of ensuring appropriate and sufficient funding and reserves from the surcharge. This will more equitably match estimated income to estimated expenses as closely as possible, maintain adequate balances and hold the overall components of the surcharge as low as possible. These factors may take precedence over a purely arithmetic attempt to achieve or maintain a specific target ratio.

Conclusion

   Because the time interval for each annual recalculation process is extremely short, we have initiated this proceeding for interested parties to comment on the plan; Therefore,

It Is Ordered That:

   1.  This Tentative Order will be served upon the jurisdictional local service providers, the Office of Consumer Advocate, the Office of Small Business Advocate, the Pennsylvania Telephone Relay Service Advisory Board and the Pennsylvania Telephone Association.

   2.  This Tentative Order shall be published in the Pennsylvania Bulletin and posted on the Commission's website.

   3.  Interested parties shall have 30 days after publication to file written comments. In addition to filing written comments with the Secretary's Bureau, parties shall provide written and electronic copies (on disk in Microsoft® Word 2002 or Word-compatible format) of their Comments to Eric Jeschke, Bureau of Fixed Utility Services and Louise Fink Smith, Law Bureau.

JAMES J. MCNULTY,   
Secretary

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   ¹ The Pennsylvania TRS is a telephone service provided by AT&T and regulated by this Commission offering persons who are hearing, deaf, hard of hearing or speech-disabled ways to connect using the telephone: Traditional Relay, Video Relay, and Internet Relay. Each conversation is relayed by a trained Communications Assistant who follows a strict code of ethics and confidentiality. The TRS is available 24-hours a day, 7 days a week. For more information, see www.parelay.net/.

   ² The TDDP provides specialized telecommunications devices, such as text telephones and amplifiers, at no charge to qualifying persons who are deaf or hard of hearing, who have speech and language disorders or who have a physical disability that prevents them from using standard telecommunication equipment. To qualify, the person must have gross incomes of less than 200% of the Federal poverty level and must be a resident of this Commonwealth, at least 6 years of age and must have telephone service and the ability to learn how to use the telecommunications device. The Department of Labor and Industry, Office of Vocational Rehabilitation, administers the program. For more information, see www.puc.paonline.com/telephone/TRS/TRS_Default.html#Telecommunications%20Device%20Distribution%20Program%20 %20TDDP.

   ³ While this Tentative Order will be published in conjunction with our Order in Ultratec®--CapTel Technology Trial, M-00900239F0007, we request that parties commenting in both proceedings file separate comments in each proceeding.

   ⁴ Dual Party Relay Service and TDDP Act, 35 P. S. §§ 6701.1--6701.4 (1995).

   ⁵ Indeed, on December 9, 2002, Governor Mark Schweiker signed Act 181 of 2002, which amended the 1995 Act by expanding the definition of disabilities to include any disability that prevents a person from using standard telecommunication equipment. Further, the 1995 Act is again under consideration for amendment to expand the use of the surcharge to also fund the ''Newsline Program,'' which provides access to newspapers by the blind and print-disabled. See Senate Bill 79 (Mowery) (Printer's Number 950; prior Printer's Numbers 74 and 78). As has been the experience with adding the TDDP, funding additional programs exacerbates the difficulties in maintaining a fixed 2:1 ratio.

   ⁶ The surcharges for 2003-2004 and for 2004-2005 are:

Year		TRS	TDDP	Total	Ratio (Business to Residence)
2003-2004	Business	$0.15/month	$0.02/month	$0.17/month	2.15:1
	Residence	$0.08/month	$0.00/month	$0.08/month
2004-2005	Business	$0.12/month	$0.01/month	$0.13/month	1.86:1
	Residence	$0.06/month	$0.01/month	$0.07/month

[Pa.B. Doc. No. 04-1262. Filed for public inspection July 9, 2004, 9:00 a.m.]

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