NOTICES

Recalculation of the Pennsylvania Telephone Relay Service Surcharge

[34 Pa.B. 6219]

Public Meeting held
October 22, 2004

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

   Recalculation of the Pennsylvania Telephone Relay Service Surchage; M-00900239F0007

Order

By the Commission:

   This Order addresses the ratio used to allocate, between business and residential end users, the expenses of the Telephone Relay Service (TRS)¹ and the Telecommunications Device Distribution Program (TDDP).² A Tentative Order was entered at this docket on June 25, 2004, and published in the Pennsylvania Bulletin, at 34 Pa.B. 3656, on July 10, 2004. Comments were due by August 9, 2004. AT&T Communications of Pennsylvania, LLC (AT&T), is the only entity to have filed comments.

Background

   In 1990, at M-00900239, this Commission established the TRS. In doing so, we adopted one of two mutually exclusive funding methodologies for the TRS, choosing to surcharge access lines rather than intrastate telecommunications revenues. Act 34 of 1995³ 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 to allocate the TRS and TDDP expenses between business and residence end users.

   We opened this docket for the express purpose of allowing interested parties to comment on how the surcharge should be allocated between business and residence end users. In the 2004 Tentative Order at 4, we indicated that, effective with the recalculation for the 2005-2006 surcharge and thereafter, we would:

[A]llow 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.

   AT&T filed Comments in support of an equitable ratio between business and residence surcharges and specifically requested that this Commission ''finally and affirmatively reject any expense allocation formula that disproportionately burdens business end users.'' (AT&T Comments at 1). AT&T requested that the Commission eliminate the 2:1 ratio and instead ''equitably'' apportion the TRS and TDDP expenses between business and residential end users. (AT&T Comments at 2). No other comments were filed in response to our Tentative Order.

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 possible 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 the Commission did not adopt the PTA's proposal in this regard, the May 1990

   Order further provided 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 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.⁴

   Now, 14 years later, the 2:1 ratio has become increasingly unwieldy and non-responsive 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 more 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 such a 2:1 ratio were perpetuated for the specific programs. In fact, the combined surcharge ratio has actually fluctuated around the 2:1 ratio in recent years.⁵

Conclusion

   Finding no objections to the Tentative Order and pursuant to our authority at 66 Pa. C.S. § 703(g) to modify prior orders after notice and an opportunity to be heard, we will, commencing with the recalculation conducted in 2005, 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; Therefore,

It Is Ordered:

   1.  That this Order be published in the Pennsylvania Bulletin and served upon the Office of Consumer Advocate, the Office of Small Business Advocate, the Pennsylvania Telephone Relay Service Advisory Board, and the Pennsylvania Telephone Association.

   2.  That, henceforth and until further order of this Commission, the Telephone Relay Service surcharge ratio of business-to-residence access line surcharges shall be allowed to float from year to year with the general intent of ensuring appropriate and sufficient funding and reserves from the surcharge, equitably matching estimated income to estimated expenses as closely as possible, maintaining adequate balances, and holding 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.

JAMES J. MCNULTY,   
Secretary

______

   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, seven days a week. For more information, see http://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, be a Pennsylvania resident at least six years old, and have telephone service and the ability to learn how to use the telecommunications device. The Pa. Department of Labor and Industry, Office of Vocational Rehabilitation administers the program. For more information, see http://www.puc.paonline.com/telephone/TRS/TRS_Default.html#- Telecommunications%20Device%20Distribution%20Program%20-%20TDDP.

   ³ Dual Party Relay Service and TDDP Act, 35 P. S. §§ 6701.1--6701.4, (1995).

   ⁴ Indeed, on December 9, 2002, Governor Mark Schweiker signed Act 181 of 2002, which amended the 1995 Act by expanding the definition of ''disability'' 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 & 781). As has been the experience with adding the TDDP, funding additional program(s) exacerbates the difficulties in maintaining a fixed 2:1 ratio.

   ⁵ 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. 04-2057. Filed for public inspection November 12, 2004, 9:00 a.m.]

---

No part of the information on this site may be reproduced for profit or sold for profit.

This material has been drawn directly from the official Pennsylvania Bulletin full text database. Due to the limitations of HTML or differences in display capabilities of different browsers, this version may differ slightly from the official printed version.

---