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Video Relay Services: Removing the Profit Incentive Of Hiring a Deaf Employee – And Keeping That Employee

On February 25, 2010, in an ongoing response to the November arrests of 26 Video Relay Services (VRS) executives and employees for defrauding the United States Government, the Federal Communications Commission (FCC) issued a declaratory ruling regarding its VRS program. While most of the policy declarations were non-controversial, one policy statement that prohibits VRS companies from being compensated for their deaf employees’ use of VRS almost immediately caused confusion and consternation within the VRS universe and the deaf community at large. This ruling may have the effect of forcing VRS companies to hire fewer deaf and hard-of-hearing employees – not a small issue in a community that is fiercely proud of its ability to work productively and run their own businesses in the context of their limited ability to hear. I am no lawyer, but I believe this may be allowed under the Americans with Disabilities Act, because this law has an “undue hardship” clause which protects companies in cases where reasonable accommodation costs would negatively impact their ability to effective operate their business.

(As a direct result of the FCC’s ruling, and prior FCC decisions as far back as last June to withhold funds from VRS providers for certain calls, Purple Communications sent the FCC an Emergency Stay Request and an application for review of the FCC’s rulings.)

The three major points of the FCC’s ruling are summarized here, with the third point dominating current conversation by word-of-mouth and through the blogosphere:

  1. International-to-international calls are not compensable by the TRS Interstate Fund. In other words, if I am in Paris and I want to call a restaurant on the other side of town for a reservation, I cannot use any VRS service for this as it is based in the United States. However, my wife, who grew up outside Toronto and still has family there, can still call her mother on VRS from New York. What is not clear is whether I can call my mother in Massachusetts from a chalet in the Swiss Alps.
  2. Voice Carry Over (VCO) calls used by hearing people for the purposes of free long-distance calling are strictly prohibited and not compensable.
  3. Calls made by deaf or hard-of-hearing VRS employees as part of work are not compensable.

Several VRS companies have hired many deaf and hard-of-hearing employees, not just for their skills, but for their insights into the deaf and hard-of-hearing market, and also because it makes good business sense, it projects an appearance of attention to the needs of the deaf market, and has a positive impact on their brand.

Kelby Brick, Vice President of Regulatory and Strategy Policy at Purple Communications, slammed the FCC, saying that “[VRS] providers . . . that hire many deaf and hard-of-hearing employees, including managers and executives, will be at a competitive disadvantage because the reimbursement rate will be skewed toward those providers with less expenses as a result of not hiring deaf and hard-of-hearing employees.” This appears to be a veiled shot at Sorenson Communications, which controls between 75%-80% of the VRS market, and whose management structure does not proportionally staff as many deaf and hard-of-hearing people as does Purple and ZVRS.

At first glance, a deaf VRS employee utilizing his company’s own network to make his own work-related call, and making it compensable by the TRS Fund, would be a conflict of interest. However, upon closer look, such a ruling, without appropriate adjustment to the TRS Fund rate, would either bankrupt some VRS companies or force them to hire fewer deaf and hard-of-hearing employees. If a deaf employee uses VRS for work-related calls five hours a week, over 50 weeks (assuming 2 weeks of vacation), the cost to the VRS company would be $100,000 – substantially more than the average salary of a typical VRS employee. Five hours is a conservative assumption, as many deaf VRS managers and executives use their company’s services more frequently.

A VRS employee, who asked not to be named, voiced frustration with the FCC’s stance. The employee says there are many conference calls involving deaf and hearing VRS employees across different locations, and the use of VRS is necessary for the full and complete participation of the deaf employees in the company’s business decisions. The FCC told the company, according to the employee, that instant messaging or direct video streaming could be used for deaf employees who wish to participate. The employee said, “There is no functional equivalence with these alternate choices. They are time-consuming, and they put us at a competitive disadvantage to those companies who do not rely on as many deaf employees for their business decisions.”

As a result of the FCC’s ruling, if the VRS companies plan to include the cost of the deaf employees’ VRS calls as business expenses in their reports to the FCC, the reimbursement rate – currently approximately $6.50 per minute – could be reset substantially higher. Whether that is palatable to the FCC, the telephone companies who contribute the money to the funds, and the U.S. Government is open to debate.

In order for VRS companies to continue providing quality services to the deaf and hard-of-hearing community, it is essential that they hire deaf and hard-of-hearing people for the following reasons:

  1. On merit, of course.
  2. They provide an intuitive, deep understanding of the deaf community that hearing employees cannot hope to replicate. This is essential for developing VRS features that more directly address the needs of the deaf community, and for customer service that is quick, responsive, and respectful to that community.
  3. Having deaf employees within the company builds up trust between deaf and hard-of-hearing customers and the company itself, which is crucial to the company’s brand equity.

If the FCC effectively bars the reimbursement to companies of minutes used by their own deaf and hard-of-hearing employees, these companies face a choice: hire fewer deaf and hard-of-hearing employees, or keep these employees and watch their competitive financial advantage erode as other companies with lower cost structures (as a result of fewer deaf employees, not because of efficient business practices) pursue a more efficient capital structure, since less of their funds would be tied up in labor and operational requirements.

Over the past eight years since the reimbursement of video relay providers by the TRS Fund was approved, the TRS Fund rate was set with the intent of covering the costs of providing the VRS services, and on top of it, a margin of profit that enables these companies to reinvest the profits into improving the delivery of their VRS features. Initially set at $4.50 per minute, it went as high as $7.00 before leveling off at $6.50. These rates are set on an annual basis after substantial discussions between the VRS companies, consumer advocates, and the FCC.

At the moment, it is difficult to estimate what the TRS Fund rate should be if the deaf employees’ calls are treated as business expenses instead of reimbursable minutes. However, I do not believe that increasing the TRS Fund rate to cover these costs serve any good purpose. In addition to the expected negative reaction from telecommunications providers, it will still incentivize VRS providers to encourage higher usage of VRS by their own deaf employees, whether for good intentions or ill will.

To remove the profit incentive, all minutes utilized by deaf employees should be reimbursable at-cost on a per-company basis (NOT industry-wide), instead of the public TRS Fund rate. In other words , if the TRS Fund rate is currently $6.50 a minute, and $4.90 is estimated to be the cost basis for a particular VRS provider, then each minute used by that provider’s deaf employees should be reimbursed at the internal at-cost rate of $4.90 instead of the higher public-use rate.

Setting the at-cost rate for each company instead of across the industry will remove the incentive of companies with lower operational cost structures to continue receiving benefit from an industry-wide internal rate. In other words, if the internal rate is set industry-wide at $4.90, those companies whose operational costs are less than $4.90 would realize higher profits with more deaf and hard-of-hearing employees — again, not a fair way to reimburse. A better case can be made by setting the at-cost rate on a per-company basis.

As in any business, the profit incentive must and will always exist in the VRS industry.  This incentive should flow from successful development, execution and marketing of products that are highly acclaimed by deaf and hard-of-hearing consumers, not simply by hiring fewer deaf employees who could otherwise place a burden on their own operating costs.

5 comments… add one
  • Sam Smith March 5, 2010, 5:23 pm

    I thought this was a wonderful write-up and I would like to combine it with the following url so those of us who are researching this whole topic and key decision on affecting our productivity, creativity and economy can be better informed.


  • anon March 5, 2010, 7:11 pm

    Everyone knows that Kelby Brick is the “VRS employee who asked not to be named” in this blog, right?

  • Mario March 6, 2010, 8:13 am

    I understand that FCC made the decision after one of the VRS company has been caught by having their Deaf employees to generate minutes by call anywhere even in international such as using people from China to make VRS calls to make minutes for this VRS company.

    This abuse should be banned because it is greedy and unethical business practice. Also these practices are not helping Deaf community in any form.

    Moreover, most of the VRS companies already have few Deaf employees to work in upper lever of management. Most of the Deaf employees of VRS companies are working in the lower level of management or independent contractors. But the products of VRS are for its Deaf community. It does not make sense to not having Deaf employees to work in the upper level management to serve its Deaf community in the first place.

    From the ethical business practice, any conference calls between the hearing employees and Deaf employees shall consider as BUSINESS expenses because they make their BUSINESS decisions. And business expenses is tax deduction under IRS as long as they make profit. If not, the company is not making any profit.

    FCC is right to make this decision because FCC wants to see all VRS companies to take advantage of using tax deduction instead of reimbursement.

    I do not see any reason why VRS company will not hire any Deaf employees to work for VRS company. For the reason, the FCC already ban its hearing employees of VRS company to take any advantage to using VCO instead of paying long distance to make any VRS calling to its Deaf customers.

    It will be great to see any VRS company to hire a large number of Deaf employees to promote its VRS service to its Deaf customers. Also I would suppose any Deaf-owned VRS business as such as every member from the Deaf community will do same thing.

    The profit incentives are not about saving any VRS company. If a VRS company has a large Deaf employees and have its ethical business practices, the VRS company will be successful

  • i don't get it March 8, 2010, 10:38 pm

    If a deaf employee uses VRS for work-related calls five hours a week, over 50 weeks (assuming 2 weeks of vacation), the cost to the VRS company would be $100,000 – substantially more than the average salary of a typical VRS employee. Five hours is a conservative assumption, as many deaf VRS managers and executives use their company’s services more frequently.

    So why not use another VRS provider? They’re free. And *gasp!* those VRS companies can use your services!

    • Michael Janger March 8, 2010, 11:33 pm

      If a deaf employee uses VRS for work-related calls five hours a week, over 50 weeks (assuming 2 weeks of vacation), the cost to the VRS company would be $100,000 – substantially more than the average salary of a typical VRS employee. Five hours is a conservative assumption, as many deaf VRS managers and executives use their company’s services more frequently.

      So why not use another VRS provider? They’re free. And *gasp!* those VRS companies can use your services!

      Brilliant thought. This really illustrates the absurdity of the FCC directive.

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