NECA Spring TRS Filing Presentation
13 04 2010Folks..
Yours Truly attended one of the biannual meetings of Interstate TRS Advisory Council meeting at the National Harbor, MD on April 8, 2010.
The meeting was an eye opener and I am happy to post the presentation by the NECA. Read the presentation carefully as it will ultimately impact y’all.
It explains MARS rate for TRS (not Internet-based services like IP Relay or VRS). Slide 4 and subsequent slides after that. MARS simply combines all the states’s reimbursement rates (as result of RFP procedure) – taking several factors into account – and then do an averaging to come up with reimbursement rates. Different than the traditional way of cost-break down analysis. MARS is lot easier way to do the accounting.
However, what you all should be looking at is the proposed VRS rates. Current three year period for tiered reimbursement rates for VRS will expire on June 30, 2010. Slide 17.
Slide 18 lists current VRS rates. Slide 19 and 20 and a few other slides explain what costs are considered in calculating rates for VRS. It mentions return on investment at 11.25%. Definition of "investment" ultimately means not ALL of investments into VRS will have that 11.25%. I do not know the details of that yet.
See slide 26 states that "weighted average cost" which to me is similar to average break-even cost for current is $3.95. Slide also stated that projections by providers for 2010 – 2011 is $5.61 as the weighted cost average.
Slide 27 shows "alternative" VRS rates at between $6.04 and $5.64. Different than current rates of between $6.23 and $6.70.
Rest of slides offered alternative VRS rates as well. Lower than above alternative rates.
I think I would be stating the obvious if the VRS rates go down to $4 something, only one VRS provider will survive that.
eyes open & thumbs up,
Ed
Long LInk: https://www.neca.org/cms400min/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=3249
A couple of random comments (all regarding VRS):
1.) Who was that provider who submitted in a projected rate of $17.99 a minute? (slide 27 vs. 28)
2.) Why are the reported costs much less than the projected costs? I’m assuming that the reported costs were the actual costs.
3.) Average # of users for July was 224,370?!?! So that means we have a lot of providers competing for a VERY VERY VERY small segment of the population (ASL users). Removing the fraudulent #s (exactly how much?) would make the targeted population for the VRS industry more insignificant (to a degree). And given the interoperability rules which makes everything much in flux for the providers from month to month (as they cannot depend on a steady revenue like the subscriptions would provide the telecom providers) so it looks like the FCC made this into a very precarious environment forcing the providers to do what they think they have to do in order to survive. Not sure if that’s efficient per Congress’ mandate.
@CNW – I wonder the same thing – who is the provider behind $17.99 a minute rate?
On slide 26, titled VRS Facts – it states that the average number of users since July 2009 is 224,370.
224,370 has got me thinking about how many people registered? Is that accurate? I’ve always heard the number of 400,000 thrown around. Clarify?
Which provider projected its costs to be $17.99 per minute? (See slide 28). That’s just irresponsible.
Also, can we assume that the provider-projected costs include the effect of the recent Declaratory Ruling? In other words, if the DR is reversed or modified, then provider-projected costs will have to be modified downward as well. Correct?
Good questions y’all commented! Good comments as well!
Dunno which VRS provider that showed $17.99. Remember these costs were based on certified VRS providers, so that means it is one of the 9 VRS providers.
As for 224,370. I suspect many of them have yet to register.
Actual cost vs projected cost. Yes, that is a good question. It has to do with what FCC/NECA consider to be allowable costs and not allowable costs.
eyes open & thumbs up..
I am still trying to make heads or tails on the 224,370 figure.
The slide says “Average number of users since July 2009-224,370″
What does that mean? Is that the average number of users per month?
Or is it the unique number of users since July 2009?
It’s really unclear since they didn’t provide enough context.
I don’t think any provider would survive that. There are only really five companies at this point, anyway, right? But the government wants there to be just one (or just a few) and no competition of any kind, so I guess they are looking for their dream.
Every time they cut the budget, new ones pop up. Why?
http://www.acevrs.com/
Is it new, or just one more CSD white label?
Ed…
What is the significance of individual consumers’ or advocacy groups’ role in determining the rates for VRS? Isn’t this something that should be negotiated between FCC/NECA and VRS industry providers? Would it be more beneficial to invest our time and energy on clarifying our VRS needs and expectations of quality of services provided to us?
VC
VC,
Good question.
It is abundantly clear that a lot of time and energy have been expended on VRS needs and expectations of quality of services and likely will continue in the future.
However, the rates are what determines the quality of services. It is obvious from vast feedback from VRS users that quality of services and video conferences are desired features. To make that happen, rates need to be at reasonable rates. Recent NECA report was a telling factor. It shows average cost (break even cost) as reported by the VRS industry was at $5.53 yet NECA chose $4.05 as an average break-even cost and works from that. This information is shared with public; it does not take much sense to figure out what would happen if the rate is at little over $4. So even though it impacts general populace indirectly, the indirect has become a direct impact so to speak.
eyes open & thumbs up..
Ed,
I agree that there is a need for adequate rate to help improve the quality of service; however, I’d like to present a need for VRS consumers to emphasize a stronger message directly to FCC in hope to obtain a more functionally equivalent technology and service.
Ed, I know you know the RFP process very well and this is for the benefit of your readers…..In the state Telecommunications Relay Service (TRS) bidding process, the Public Utilities Commission – PUC/PSC determines the scope of work and technology specifications. The feedback on the quality of service and technology specifications is gathered by the TRS administrative group and passed on to the PUC/PSC for final approval to be included in the RFP. It has always been up to telecommunication relay service providers to determine the rate they are able to sufficiently meet the RFP. I understand that this has caused some companies to “under bid” in order to win the bid and it had a negative impact on the quality of service. These companies that did not accurately bid their service and failed to follow through their contract obligations often were not selected for the new contract. It has always been the TRS users who were dissatisfied with the TRS providers’ technology or quality of service that drove the TRS administrative groups and PUC to spell out the specifications more clearly in subsequent RFPs.
I would not want the FCC to use a RFP process and I do want to see them (FCC) clearly spell out the expectations of minimum technology requirements and the quality of service in order to be certified as a VRS provider. The minimum technology requirements and the quality of service should be at a level that is functionally equivalent to hearing people’s technology today…not 10 – 20 years ago. In addition to compensating the VRS providers for the service, I believe there should be sufficient funding allocated to each VRS provider to fund their own R&D to bring our technology at a level that’s functionally equivalent to hearing people’s technology. This is probably the only way to promote a much needed competition among VRS providers and to bring the standards of deaf people’s technology up to date.
I am concerned that FCC would perpetuate government’s usual practice in providing “basic and minimum” services to the public. This would be a great disservice to the VRS industry because the ADA clearly states that deaf people are entitled to a functionally equivalent service therefore, we should be demanding FCC to ensure that VRS providers are providing technology and services that are functionally equivalent. If we do not take the time to clearly explain to FCC what our needs are, they would only assume that the technology we have today is “functionally equivalent.” They may see no reason to raise the rate but every reason to cut the rate. It becomes even more critical that we define what is functionally equivalent before they determine the new rate.
The point I am trying to make is that we as consumers and/or advocacy groups should be on FCC’s case like we used to be with the state TRS administrators and PUCs/PSCs to demand that they meet the VRS users’ needs rather than worrying about or telling them how much they should pay the VRS providers. This should be up to the FCC to negotiate with the VRS providers to determine the rate that is sufficient for the providers to stay in business and yet meet the minimum standards mandated by FCC.
I personally don’t care how much or how the FCC pays VRS providers…I just want to experience a true functionally equivalent service NOW, not 20 years from now.
VC
VC,
Your comments are well thought out and makes a whole lot of sense. I was a regulator for Texas (TPUC) for 19 years. What galls me most was incumbent provider often will hold back new features until the RFP times comes out and then they would include new feature/new technology innovation/etc with a proposal. Texas had 5 year contract. Often the only way to get new features if for TPUC to ask for it during the contract term.
So agree with the essence of what ure trying to say.
eyes open & thumbs up..
I’m curious:
This FCC document (http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-10-761A1.pdf) says that actual historical cost methodology “results in rates of $5.7754 for Tier I, $6.0318 for Tier II, and $3.8963 for Tier III.” But the presentation Ed posted, on slide 29, suggests that the composite costs (with a rate of return on investment presumably built in) are $4.27 for Tier I, $4.11 for Tier II, and $3.99 for Tier III.
Why are the number from the two documents so different?
Very good question, ADS! I asked that same question before but did not get any definite answers from anyone. However, if you take a look at NECA’s latest filing with the FCC (not this PPT Ed’s linking to here), it becomes somewhat clear that these are the projected costs that the providers came up with… what they think it would cost them to provide the service for the following year. Presumably, the providers can game the totals by inflating them to pay for their bloated middle-management salaries, executives, sales/marketing, and so on…
For example, it pointed out that a company ‘planned’ to hire more interpreters but pointed out that the said company did not have any growth in minutes for the past several years so it couldn’t understand why the costs would increase. There’s a lot more information in that filing. And one provider actually submitted in a projected cost of 80 dollars a minute. That’s a certified provider!
And, I guess for the projected costs minus actual costs, the providers pocket the difference. So, it is becoming increasingly apparent that the whole rate-setting process is a joke and has always been. This is what Tom referred to as the ‘Great Fleecing of America.’
Anyone that has been in business for any lenth of time knows that if you take the current rate and cut it by half, NO ONE survives, not even the most efficient provider. And if the proposed rate takes out the biggest provider, who will step in and pick up the slack? I hope we all held on to our TTYs!
I don’t understand the tiered rates? Why does the FCC feel that is necessary for VRS? Everyone is providing the same service. How can a provider get paid one amount and anothe provideer another amount?
One company is already bankrupt? How can this be?
My concern is with the tiered rates. If we lose VRS companies because of the tiered rates, then FCC is taking away choices of VRS providers to deaf people. As long as the VRS business is following FCC laws, they all should be treated and paid equally. Let the competition happen. This is not a one for all and all for one. Everyone has a preference. By decreasing costs for a bigger company and increasing costs for a smaller company, it reeks of favorism and strips the deaf community of provider choices.
“I think I would be stating the obvious if the VRS rates go down to $4 something, only one VRS provider will survive that. ”
Actually, only the smallest providers would survive, if the 3 tier system stays in place. That is, until they have to buy more equipment, hire more people, and invest in their company to be able to handle the huge influx of new customers. Then of course, a majority of their calls will fall into the 3rd tier, and they wouldn’t be able to handle that.
Adam – Amen!
If a company that grossed more than a billion dollars over the last three years by buying interpreting for less than $40 an hour and reselling it for nearly $400 an hour can’t now, somehow squeeze by on $234 an hour, something is terribly wrong with the system. What is broken is the private-for-profit model.
Perhaps, as was the case in the recent health care debates, it’s time to look at public options. Certainly this service can be performed for $234 an hour. Hits to quality? Sure, but no worse than those sustained by gross over-expansion and the hiring of uncertified, unqualified, unprepared interpreters.
When I was wee, long distance phone calls actually did cost $6.30 a minute. It was unthinkable then, as it should be now, to sit on hold for an hour or more at $6.30 a minute. If VRS is to remain “free” and unlimited, the costs are going to have to come down. Way down. Just for comparison’s sake, look at how much the EU spends on interpreting, including the European Parliament and the Court of Justice. Hint: It’s less than one company grossed last year… That doesn’t make sense. It is not sustainable.
“nearly $400 an hour can’t now, somehow squeeze by on $234 an hour”
it should be
nearly $150 an hour can’t now, somehow squeeze by on $100 an hour