DE 98-182 Sprint Communications Company, L.P. Petition to Increase Price for Telecommunications Relay Service Order Approving Increase in Price for Telecommunications Relay Service O R D E R N O. 23,178 March 30, 1999 APPEARANCES: Jennifer A. Duane, Esq. For Sprint Communications, L.P.; Curtis L. Groves, Esq. For MCI WorldCom; William Homeyer for the Office of Consumer Advocate; Kathryn M. Bailey for the Staff of the New Hampshire Public Utilities Commission. I. PROCEDURAL HISTORY On October 13, 1998, Sprint Communications Company, L.P.(Sprint) filed with the New Hampshire Public Utilities Commission (Commission) a petition to increase the price per minute for Telecommunications Relay Service (TRS) by 10 cents, or 15.2%, and to increase its outreach cost $1,000 per month, an increase of 16%. In 1998, Sprint billed an average of approximately 50,000 total session minutes per month at 66 cents per minute. The filing requests authority to provide service for 76 cents per session minute. The proposed increase equates to approximately 1 cent per access line per month for basic exchange service. On September 10, 1991, the Commission awarded Sprint the franchise to provide TRS in Re: Dual Party Relay Service-Telecommunications Relay Service, 76 NHPUC 593 (1991). While most other states contract for TRS and issue a Request for Proposal (RFP) periodically to obtain the best service for the best price, the Commission's lack of contracting authority for utility service required that it award a franchise to provide TRS in New Hampshire. The Commission also established the New Hampshire Telecommunications Relay Service Advisory Board (Advisory Board), composed of representatives from various organizations, to advise the Commission on necessary improvements to the New Hampshire TRS, on the resolution of complaints where necessary, and on technological developments in other TRS centers. See 76 NHPUC 593, 597 (1991). On June 2, 1998, the Federal Communications Commission (FCC) granted the Commission's application to recertify Sprint's TRS program pursuant to Title IV of the Americans with Disabilities Act of 1990, as amended, 47 U.S.C. Section 225(f)(2) and section 64.605(b) of the FCC's rules, 47 C.F.R. section 64.605(b). The terms of Sprint's service have not been revised since the franchise was awarded in 1991. The franchise award has remained in effect, and numerous improvements have been made over the years without an increase in price. On August 16, 1994, the Commission reduced the monthly TRS surcharge from ten cents per access line to two cents per access line in order to reduce an over-recovery. Re Relay New Hampshire, 79 NH PUC 451 (1994). On September 5, 1995, the Commission approved the recommendation of the Advisory Board to include both voice carry over (VCO)-to-VCO service and VCO-to-text telephone service. Re Relay New Hampshire 80 NH PUC 566 (1995). In addition, Sprint agreed to provide intrastate directory assistance through NH TRS, waive the implementation fee, the monthly recurring fee, and the charge to relay users when requesting phone numbers within the state from the Relay New Hampshire service. On August 5, 1996, the Commission approved Sprint's proposal to modify the full-time outreach program associated with TRS, introduce the Relay Ambassador program, and offer enhanced services that included every TRS feature Sprint offered nationwide, such as Real Time Relay Features, customer data base (making available a number of other services), and single line answering machine message retrieval service. Re Sprint, 81 NH PUC 592 (1996). On February 17, 1998, by Order No. 22,850 in Docket DE 98-007, the Commission increased the amount collected in basic exchange rates for TRS to 8 cents per access line per month, as the balance in the fund had been utilized, pursuant to an act of the Legislature, to establish a telecommunications equipment distribution program. The Commission directed Staff to analyze this charge again in December 1998 to insure that an over-collection did not recur. As a result of the proposed TRS price increase in this proceeding, Staff recommended the 8 cent charge per access line remain in effect pending the outcome of Sprint's petition. Staff further advised the Commission that basic exchange rates would not need to be increased to accommodate the requested 10 cent per minute increase. On January 28, 1999, the Commission issued an Order of Notice regarding Sprint's filing in this docket. According to the Order of Notice, the filing raised, inter alia, issues related to whether, at 76 cents per minute Sprint is providing the highest level TRS possible, or whether another provider could offer better service for the same price or the same service for a better price. The Commission gave other potential TRS providers and the public an opportunity to comment on whether the Commission should consider undertaking a proceeding to reissue an RFP for a franchise to provide TRS in New Hampshire, or, in the alternative, authorize a 10 cent per minute increase to the existing arrangement. The Commission also sought comments from the public who use TRS on the quality of service provided by Sprint as well as their experience using other providers. A hearing was held on February 19, 1999. II. POSITIONS OF THE PARTIES AND STAFF A. Sprint Sprint presented the testimony of Andrew Brenneman, a representative from Sprint's Sales Office, and John Moore, Sprint Relay New Hampshire Account Manager. Mr. Brenneman stated that Sprint has worked closely and effectively with various consumer groups throughout the state such as the TRS Advisory Board, the New Hampshire Association for the Deaf (NHAD), and Self Help for the Hard of Hearing - New Hampshire (SHHH-NH). According to Sprint, thirty percent (30%) of the calls received through Relay New Hampshire are initiated by hearing people, making New Hampshire the state with the highest percentage of calls initiated by hearing people in all of the 23 states in which Sprint provides relay service. Sprint is currently the nation's largest relay service provider, with 23 contracts, plus the Federal Relay Service and 11 call centers nationwide. Sprint currently has 16 account managers in various states that are deaf and hard of hearing. In addition, there are some deaf and hard-of-hearing managers and supervisors, working at relay centers. Mr. Brenneman stated that another major component for measuring service quality is the average speed of answer. In 1998, the average speed of answer was 2.6 seconds for all Relay New Hampshire calls due, in part, to Geotel, intelligent call routing, which provides much faster routing of calls, a benefit that has been provided virtually free to New Hampshire consumers. In addition, Relay New Hampshire has benefited from more than 300 technological enhancements that Sprint has added to its TRS platform over the past eight years. The reasons for the proposed price adjustment according to Mr. Brenneman, include: technological enhancements; new and more complex software supporting the TRS platform; enhancements which enable a more cost-effective overall TRS operation, providing better service and faster response to occasional outages or service degradations; the costs of retaining experienced staff; maintaining functional equivalency; the cost to maintain current team support, including billing, operations, engineering and other expense items; superior product platform; and Account Manager cost, lease and office support. Using the Consumer Price Index (CPI) as a measurement tool in evaluating the need to increase the existing price for TRS, Mr. Brenneman stated that since the inception of Relay New Hampshire in 1991, the average annual increase in the CPI has been between two to three percent resulting in an overall cost increase of twenty percent. Sprint has not had an increase in its rate which was established as 66 cents per session minute for the current monthly volume in 1991. The National Exchange Carrier Association (NECA), which administers the TRS Interstate Fund by closely monitoring payments into the fund by the telecommunications providers and fund disbursements to relay services, shows a current reimbursement rate that equates to eighty-four cents ($0.84) per session minute. Sprint's proposed rate increase represents a 15 percent adjustment. Using the CPI and applying it to Sprint's 1991 rate would result in a rate of seventy-nine cents ($0.79) per session minute. Sprint maintains that it is able to keep the rate below that cost due to technological innovation in their TRS systems. Sprint's 11 call centers around the country allow them to reduce costs by utilizing advanced technology to route traffic to the next available agent within Sprint's system allowing consumers to be served faster and at lower cost. Sprint also committed to maintaining this rate, at a minimum, for a period of three years, barring the imposition of pending federal and state mandates that may require Sprint to increase its relay rate to comply with those obligations. Mr. Brenneman did state, however, that if the Commission decided to issue an RFP, Sprint could not commit to a bid price of 76 cents per minute because of the need to review the business case and to consider the cost for the RFP process, which could involve a substantial cost and extensive use of time, money and resources. B. MCI WorldCom MCI WorldCom suggested that the Commission take the opportunity to issue an RFP and allow competitive bidding for the TRS service in New Hampshire. MCI WorldCom believes that the Commission should reexamine the question of whether or not the State of New Hampshire and the deaf community are receiving the best possible combination of relay service and price, and that a competitive bidding process would ensure the optimal price and service combination. MCI WorldCom averred that it provides a high quality relay service in many states, including Massachusetts. MCI WorldCom would not say what rate they could bid on, nor whether they would bid, without seeing the specifications contained in a Request for Proposal. In response to customer comments regarding service in other states, namely Massachusetts and California, MCI WorldCom stated there was a controversy involving the provision of service out of the Massachusetts Relay Center, which was settled in April of 1998 setting forth a testing plan for MCI's relay service. MCI is tested through 200 test calls each month, placed by independent parties hired by Bell Atlantic. MCI is tested on typing speed, typing accuracy, answer times are measured, answering machine protocol, and whether their Communications Assistants ask callers whether they are familiar with relay. MCI indicated that over the last four months, they have met the standards in their entirety, paying only a portion of the penalties in the previous four months. C. OFFICE OF CONSUMER ADVOCATE The OCA did not present a position at the hearing. D. Staff Staff did not present a position at the hearing. E. OTHER PROVIDER COMMENTS Hamilton Telecommunications, which had submitted a proposal in 1991 when the service was first established, notified the Commission that it had decided not to submit comments or pursue the New Hampshire TRS franchise at this time. However, it desired to be considered as a potential bidder if, and when, a request for proposal was issued in the future. AT&T, which had also submitted a proposal in 1991 when the service was first established, recommended that the franchise for the TRS service should be made available to competitive bids from as wide a range of companies as possible. AT&T suggested that consideration of proposals in a competitive process may offer the possibility of a lower price than suggested by Sprint and consideration of additional concepts of service, new ideas and products. III. PUBLIC COMMENTS Public statements were made by William Case, Joan Case, Michael Ritter, President of NHAD, David Steele, President of the Black Deaf Advocates, a Boston based organization, Michael St. Pierre, Chairperson of the TRS Advisory Board, a member of the Governor's Commission on Disability and past chairman of the TRS Consumer Council, Carol Magglin, Nancy Perron, past chairman of the TRS Consumer Council, Donald Varley, President of SHHH-NH, and past chairman of the TRS Advisory Board, and Mary McGuire, all in favor of retaining Sprint as the provider of TRS Service in New Hampshire, and concerned about switching over to another provider, especially MCI, describing negative experiences in Massachusetts and California. In written and oral comments, Mr. Varley stated that Sprint Relay New Hampshire "has shown excellent performance in providing quality relay services for the deaf people" in eight years since the service began. He cautioned the Commission about situations in other states when relay services became intolerable due to a change of operations from Sprint to other vendors. In support of Sprint, Mr. St. Pierre stated that New Hampshire was often the first state to receive technological advances in TRS in the country. He also advised that bidding processes can be good and bad and recommended that cost should not be the biggest issue. Mr. Ritter commented, in writing and orally, that Sprint has become a "living partner" combining superior technology, on the cutting edge of technological revolution, with a strong commitment to customer service. He, too, cautioned against changing providers and having to rebuild the system all over again, especially when it functions so well. IV. COMMISSION ANALYSIS The purpose of this proceeding is to determine whether Sprint is providing the highest level TRS possible at the proposed cost, or whether another provider could offer better service for the same price or the same service for a better price, and whether the Commission should issue an RFP for a franchise to provide TRS in New Hampshire, or approve Sprint's proposed increase. Based on Sprint's presentation and comments by the public, we are convinced that the choice of Sprint to be New Hampshire's TRS provider in 1991 continues to be the right decision. By all measures of performance, Sprint appears to be providing the highest possible level of service without an increase in cost for over eight years. The proposed increased is in line with industry benchmarks and increases in the CPI. From both a service and cost standpoint, we see no reason to change TRS providers at this time. We are not persuaded that a bid process will result in lower costs or better service. We see no need to risk this important means of communication for the mere possibility that costs may be lower or service better. In addition, transition from one service provider to another can result in significant disruptions to the community of TRS users who rely so heavily on this service. Finally, the proposed increase in the TRS rate and Outreach costs will not result in an increase in basic exchange rates. We commend Sprint for its efforts over the past eight years, for their technological and service improvements, for their customer relations and for their commitment to providing functional equivalency with the traditional telephone user community. Nonetheless, we will continue to monitor service to determine whether a re-examination of the franchise is reasonable and ask the Advisory Board to monitor service as well and advise us accordingly. Based upon the foregoing, it is hereby ORDERED, that Sprint's request for an increase in its current reimbursement rate from sixty-six cents ($0.66) per session minute to seventy-six cents ($0.76) per session minute is hereby approved; and it is FURTHER ORDERED, that Sprint's request for an increase in its outreach cost from $6,250 per month to $7,250 per month is hereby approved; and it is FURTHER ORDERED, that the amount collected in basic exchange rates be unchanged at 8 cents per month and the amount collected in seasonal rates, during the off season, if applicable, remain unchanged at 4 cents per month. By order of the Public Utilities Commission of New Hampshire this thirtieth day of March, 1999. Douglas L. Patch Susan S. Geiger Nancy Brockway Chairman Commissioner Commissioner Attested by: Thomas B. Getz Executive Director and Secretary