that is, those customers who get special rates because of income based eligibility for them. This surcharge amounts to 11 or 12 cents, depending on the type of customer and location.

Now, moving directly to the legislation before you. I am sure that you all are aware that it does represent an extension of FCC jurisdiction over intrastate telecommunications services. Nowhere else, to my knowledge, is the FCC authorized to certify the manner in which intrastate communications services are provided. Regulation of the telecommunications industry historically has been exercised pursuant to a joint Federal and State framework, with regulators in each jurisdiction free to pursue their preferred regulatory approaches in their respective jurisdictions.

It is this framework that has allowed and encouraged States to serve as experimental laboratories for the development of new ideas, services, and technologies, and indeed, this is precisely what has happened in the case of relay services for the hearing and speech impaired.

California and New York were able to serve as laboratories for the development of the service; lessons learned in California, which started before New York, and elsewhere, were applied in New York, and with one exception, we have a phenomenally successful service today.

So, therefore, I can endorse the general approach taken in the legislation, because it will overcome the obstacle prevented by the one exception; the inability to complete interstate calls.

The approach, which is FCC certification of States that meet minimal standards, appears to be minimally intrusive as a means of making interstate relay services a reality, but I do have some concerns with the details of the certification process, and this is the meat of my comments today.

I believe the scope of the FCC's certification review is unnecessarily broad. That review should be limited explicitly to ensuring that relay systems developed in the various States and by the FCC are compatible, just as the various networks available across the country today to the non-impaired community are compatible.

The more detailed standard setting by the FCC called for in section 225(d) is unnecessary, at least insofar as it pertains to the intrastate portions of this service. The requirements specified here relate to matters traditionally regulated by the States, such as terms of access to the local network, operator practices, and so forth.

These are matters with which the States have tremendous experience and expertise. Therefore, aside from the compatibility issue, we believe that the criteria specified in this section should be limited to the interstate functions of a relay service over which the FCC must exercise primary jurisdiction.

Therefore, I would urge you to amend section 225(d) in two particular ways. In particular, section 225(d)(1)(D) specifies that users of relay services should not pay rates greater than those paid for functionally equivalent voice communication services.

It is important for States to have the option of providing these services at discounted rates to compensate for the generally longer transmission times involved in completing a relay-assisted call.

While the report language of the Senate Compromise Package indicates an intent to permit this pricing flexibility, some ambiguity remains, as well as ambiguity in the meaning of the term "functionally equivalent".

Therefore, I believe that this language should be clarified to ensure retention of States' ability to provide such discounts. In addition, section 225(d)(1)(E) should be modified I would propose to allow for justifiable restrictions on relay system calls.

For example, the exclusion of coin sent-paid calls to the system is necessitated by the technical inability to collect coins. Another instance where the service in New York cannot guarantee call completion is calls placed in a language other than English.

Such calls can be relayed only if there is an operator on duty who can speak and understand the other language that the caller wants to make the call in.

And, finally, calls to some information services cannot be successfully completed given the current state of technology. One example is the simultaneous conversation conducted on a group bridged line, which is popularly known as gab lines.

States' ability to make such judgments concerning allowable call restrictions should be preserved under the legislation. In sum, Mr. Chairman, I appreciate the opportunity to testify here today, and I again commend your effort, and I look forward to helping in any way that I can to shape a bill that will make interstate relay services a reality.

Mr. MARKEY. And we would like to work with you on that as well. Any questions? If not, our next witness will be Mr. Merrill Tutton, who is the vice president of Consumer Services of AT&T. Mr. Tutton.

STATEMENT OF MERRILL R. TUTTON

Mr. TUTTON. Thank you, Mr. Chairman. AT&T and myself appreciate very much the opportunity to present our comments on Title IV of the "Americans with Disabilities Act of 1989." AT&T supports very much the efforts to establish universal telecommunications rely service.

And we feel that Title IV provides a very unique opportunity to bring about a nationwide relay service that establishes a new communications structure for a whole segment of the population that has not existed before.

As you know, AT&T, through its Bell Laboratories and our manufacturing arm, has researched and developed new technologies and designed new products to serve the disabled persons for a long time. As well, AT&T has provided telecommunications services and products to those with hearing disabilities through Operator Services for the deaf, and our National Special Needs Center.

We have a fair amount of experience in this area. For that reason, I think we provide a very unique and a valuable perspective on the requirements for a successful relay system, because we have been at it.

We have learned a number of things over the past few years from operating relay systems in three different States. Two specific

lessons that we have learned I would like to share with you that I think that have a valuable insight in shaping this bill.

First, the dual party relay benefits the entire community, and just not the speech and hearing impaired. Now, in recognition of these benefits, many States have structured the service so that users pay only the costs that otherwise would have been paid for the telephone call, but have spread the remaining costs over the entire population, recognizing that the entire population receives the benefit of this infrastructure and these people being able to communicate.

Second, States have placed the responsibility for the implementation and administration on a central agency, one entity that provides functions, such as selecting who the service provider ought to be, and collaborating on the development of outreach programs to market the service to the speech and hearing-impaired community, so that they understand what is available, and the education on... how to use it.

As well as a very valuable aspect of managing the administration and the other financial tasks that go along with a successful operation.

Now, based on the lessons that we have learned and the experience that we have had over the years, as well as the three States that we are currently operating in, where we have been selected as the provider of the dual party relay-California, New York, and Alabama-and that we have been selected in the State of Illinois, and are currently in contract negotiations on how to make that exactly meet the needs of the citizens of Illinois, I strongly suggest that the ADA bill can be strengthened in two critical areas.

One, the bill places a direct obligation to provide the dual party relay on over the 1,500 carriers around the United States. Now, although Title IV recognizes the benefits of centralization, it does not specifically authorize nor direct the Federal Communications Commission to select individual service providers.

Now, we believe that unless the FCC is mandated to structure a nationwide system in the most efficient manner, there will result an unnecessary confusion, duplication of effort, cost inefficiency, and potentially incompatible systems. We think that is a severe problem.

Second, an area that needs to be strengthened is that the bill places restrictions on interstate funding that threaten the creation of a successful interstate relay service. Now, while preserving the State flexibility in funding the relay service, Title IV denies such flexibility to the FCC, by prohibiting the Commission from permitting carriers to: "Propose a fixed monthly charge on residential customers to cover the cost of providing interstate telecommunications service."

We believe that is a restriction that needs to be removed, and that the Federal Communications Commission should be given the flexibility to tailor the appropriate funding mechanism that puts the proper economic incentives to deliver the high quality service that I believe you all envision with this bill.

I summarize my recommendations by saying that, one, the FCC should have flexibility, similarly to what has been accorded the States to exercise its authority and to determine the appropriate

funding vehicle, and this probably ought to be done in cooperation with the States, as was suggested by Commissioner Thorpe.

Proper planning should be similar to that which has been adopted in those States that have implemented successful relay services. We should take a lesson from those who have had success, and apply a broad based funding mechanism across the general population, recognizing that everyone receives a benefit.

And, last, the primary incentive for efficiency and innovation in the provision of the relay service is clearly a requirement that the service provider must satisfy the end user through some sort of central agency that is selecting and administrating the service, or administering the service so that the best possible service is provided to the users.

In closing, I want you to clearly know that AT&T supports very strongly the goal of a nationwide relay system, and wants to ensure that such a system will provide the quality service that the hearing and speech-impaired people expect and deserve. Thank you for the opportunity to make a comment.

STATEMENT OF MERRILL R. TUTTON, ON BEhalf of AmerICAN TELEPHONE AND

TELEGRAPH COMPANY

AT&T welcomes the opportunity to present these comments on Title IV of the "Americans with Disabilities Act of 1989." AT&T has a long history of providing services to persons with disabilities. As you may be aware, it was during his efforts to help people with hearing disabilities that Alexander Graham Bell invented the telephone in 1876. Over the years since then AT&T, through Bell Laboratories and our manufacturing arm, has researched and developed new technologies and designed many new products to serve disabled persons. In addition, AT&T has provided telecommunications services and products to those with hearing disabilities through our Operator Services for the Deaf and our National Special Needs Center, including Telecommunication Devices for the Deaf ("TDDs").

AT&T strongly supports efforts to establish universal telecommunications relay services, and has filed comments supporting such a system with the Senate Subcommittee on the Handicapped and the FCC. We believe Title IV presents a unique opportunity to ensure an efficient, innovative telecommunications relay system that will truly meet the needs and expectations of those with hearing disabilities. Because of our experience in providing relay service at the State level, we believe we provide a unique and valuable perspective on the requirements of a successful relay system.

AT&T currently provides state-wide telecommunications relay services in three States-Alabama, California and New York. In California alone, AT&T regularly processes more than 250,000 calls each month. AT&T also has been awarded via competitive bid the contract to provide relay service in Illinois, and is in the process of negotiating a contract there. In each of these States, we have observed certain characteristics that are critical to the successful implementation of relay service. First, these four States have recognized that provision of relay service benefits the entire community, and not just the hearing or speech impaired. Relay service permits those without disabilities to communicate with those who heretofore may have been inaccessible as a practical matter via the telephone. It permits businesses to market more easily to those with disabilities. It makes available to the hearing and speech impaired a greater array of products and services so they may have greater control over their lives. Relay service also offers disabled persons employment opportunities that would not be available without telephone access to the hearing population.

In recognition of these benefits to the community at large, all States providing relay service have structured the service so that the relay service user pays only the costs he or she would otherwise have incurred for the telephone call. The States have spread the remaining costs of the service across the entire population of the State. Alabama, for example, funds relay service via a 20cts per month charge included in the local telephone rate for basic exchange service. California imposes a surcharge (presently 0.3 percent of intrastate telephone charges). Illinois will fund its relay service by a 30 per month surcharge per local telephone line. And in New

York, relay service costs are spread across the community by allowing the local exchanges companies ("LECs") to recover such costs in their non-competitive revenue requirements.

Other States funding relay service using a monthly surcharge on local exchange lines include: Arizona (6cts); Louisiana (5cts); Minnesota (10cts); Oklahoma (5cts); Oregon (10cts); South Dakota (10cts); Utah (10cts); and Washington (10cts). Recently enacted legislation calls for funding of State relay service via a monthly surcharge in Colorado (10cts), Montana (10cts), and North Carolina (unspecified). Other States that have proposed funding by use of a surcharge are: Georgia (unspecified); Michigan (10cts); and Nebraska (10cts). In several States, these surcharges also fund TDD distribution programs.

Second, these States have placed responsibility for relay service implementation and administration on a central agency or entity. In California, the Deaf Equipment Acquisition Fund Trust (the "D.E.A.F. Trust") and its administration committee are responsible for administering the service, and are in the process of negotiating a contract with AT&T. In Illinois, the Illinois Telecommunications Access for the Deaf and Severely Hearing-Impaired Corporation, a not-for-profit corporation, issued a Request for Proposal, evaluated AT&T's response, recommended awarding of the contract to AT&T, and currently is negotiating a contract with AT&T. In Alabama, a Fund Administration Committee authorized by the Alabama Public Service Commission administers the relay system and the funds received as a result of the 20cts monthly charge. Even in New York, where the Public Service Commission requires each LEC to provide relay service, the LECs and the Commission recognized the need to centralize the provision of such service and, at the Commission's urging, each LEC contracted with AT&T to provide the service.

Based on our experience with successful State relay service, we believe that an efficient, innovative, nationwide relay service should be based on funding by the general public and should be implemented and administered by a central organization. This organization should select a provider or providers for the service via competitive bidding so that end users can realize the efficiencies and innovation which competition promotes. Title IV reflects Congressional recognition of the importance of these two requirements, broad-based funding and centralized implementation and standard setting, by vesting in the FCC the responsibility to set standards for a nationwide relay service and giving the States the discretion to continue spreading the costs of State relay service across the entire community. Yet, in two critical areas, Title IV contains shortcomings that could very well destroy its promise of effective access to telecommunications for disabled Americans.

First, while providing the FCC the authority and responsibility to establish "functional requirements" and "standards" for the provision of relay services by common carriers, the bill does not explicitly direct the Commission to select specific relay service providers via a competitive process. Instead, the bill places a direct obligation on over 1,500 intrastate and interstate common carriers to provide relay service. Although Title IV recognizes the benefits of centralization by providing that such carriers can provide the required services "through designees, or in concert with other carriers," it does not specifically authorize nor direct the FCC to select individual service providers. We believe that unless the Commission is mandated to structure a nationwide system in the most efficient manner and select the service providers necessary to provide such service, unnecessary confusion, duplication of effort, inefficiency, and potentially incompatible systems will result.

In this regard, we note that the FCC recently has proposed centralized administration of interstate relay service with the National Exchange Carrier Association ("NECA") administering the funding and operation of the system, including the selection of service providers via competitive bidding. CC Docket No. 87-124,, Order Completing Inquiry and Further Notice of Proposed Rulemaking, July 21, 1989. While AT&T has serious reservations regarding this proposal, especially the FCC's proposed funding vehicles, the Commission has properly recognized the importance of centralized administration of any relay system.

Second, the restrictions placed on interstate funding threaten the creation of a successful interstate relay service. Title IV implicitly recognizes that those States that have successfully implemented relay service have done so by spreading the cost of such service across the entire community, either by a monthly surcharge on telephone bills or by recovery in rates for non-competitive LEC services. Thus, Title IV provides for certification by the FCC of State systems that meet minimum service standards, and specifically provides that the Commission "shall not refuse to certify a State plan based solely on the method such State will implement for funding intrastate telecommunication relay services." Yet, while preserving State flexibility in funding relay service, Title IV denies such flexibility to the FCC by prohibiting