2017-2018 TRS Filing Presentation Washington DC March 29, 2017 - - PowerPoint PPT Presentation

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2017-2018 TRS Filing Presentation Washington DC March 29, 2017 - - PowerPoint PPT Presentation

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2017-2018 TRS Filing Presentation Washington DC March 29, 2017 Road Map MARS-based Services Rate Development Process Current versus Proposed Rates / Demand Table Demand Trend Charts IP CTS Cost Trends Demand Trend

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SLIDE 1

2017-2018 TRS Filing Presentation

Washington DC March 29, 2017

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SLIDE 2

Road Map

 MARS-based Services

  • Rate Development Process
  • Current versus Proposed Rates / Demand Table
  • Demand Trend Charts

 IP CTS

  • Cost Trends
  • Demand Trend

 IP Relay

  • Demand Trend
  • Rate Proposal

 Video Relay Service

  • Cost Trends
  • Demand Trend
  • Rate Alternatives

 Fund Requirement

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SLIDE 3

MARS Based Rate Calculation

 Sample Data from Certified State Programs and Providers

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State Intrastate Rate per Minute Payment Basis Total Intrastate Conversation Minutes Total Intrastate Session Minutes Total $

A $1.26 CM 860,269.07 1,529,497.00 $1.083,939.03 B $0.85 SM 141,312.42 189,595.98 $161,156.58 C $0.93 SM 57,071.00 85,445.00 $79,463.85 D $1.30 CM 926,051.13 1,466,050.19 $1,199,236.21 Other Costs not in Rate $100,000.00

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MARS Based Rate Calculation

 Traditional TRS and Speech to Speech done together

  • Total Intrastate Payments per minute compensation

$17,967,433

  • Total Intrastate Conversation Minutes

7,676,149

  • Other Costs Paid to Providers

$4,436452

  • Per minute Rate for Traditional TRS

$2.9186

  • Per Minute Speech to Speech Outreach Additive

$1.1310

  • Per minute Rate for Speech to Speech

$4.0496

 Caption Telephone and IP Caption Telephone

  • Total Intrastate Payments per minute compensation

$34,096,176

  • Other Costs Paid to Providers

$125,800

  • Total Intrastate Conversation Minutes

17,706,054

  • Per minute Rate for Caption Telephone Services

$1.9328 4

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MARS Based Services Alt 1

May 1, 2016 Filing May 1, 2017 Filing Service Demand Rate Fund Rqmt Demand Rate Fund Rqmt

Traditional TRS 2,300,487 $2.6155 $6,016,925 1,809,140 $2.9186 $5,280,156 Speech to Speech 134,620 $3.7465 $504,356 160,112 $4.0496 $648,390 Caption Telephone 5,520,101 $1.9058 $12,900,014 4,290,592 $1.9328 $8,292,856 IP Caption Telephone 284,112,735 $1.9058 $541,462,050 402,308,884 $1.9328 $777,582,611 Total 292,067,943 $558,503,539 408,568,728 $784,404,013

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  • 50,000

100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 31-Jan-12 31-Mar-12 31-May-12 31-Jul-12 30-Sep-12 30-Nov-12 31-Jan-13 31-Mar-13 31-May-13 31-Jul-13 30-Sep-13 30-Nov-13 31-Jan-14 31-Mar-14 31-May-14 31-Jul-14 30-Sep-14 30-Nov-14 31-Jan-15 31-Mar-15 31-May-15 31-Jul-15 30-Sep-15 30-Nov-15 31-Jan-16 31-Mar-16 31-May-16 31-Jul-16 30-Sep-16 30-Nov-16 31-Jan-17 31-Mar-17 31-May-17 31-Jul-17 30-Sep-17 30-Nov-17 31-Jan-18 31-Mar-18 31-May-18

Traditional TRS

Actual Trend

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2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 31-Jan-12 31-Mar-12 31-May-12 31-Jul-12 30-Sep-12 30-Nov-12 31-Jan-13 31-Mar-13 31-May-13 31-Jul-13 30-Sep-13 30-Nov-13 31-Jan-14 31-Mar-14 31-May-14 31-Jul-14 30-Sep-14 30-Nov-14 31-Jan-15 31-Mar-15 31-May-15 31-Jul-15 30-Sep-15 30-Nov-15 31-Jan-16 31-Mar-16 31-May-16 31-Jul-16 30-Sep-16 30-Nov-16 31-Jan-17 31-Mar-17 31-May-17 31-Jul-17 30-Sep-17 30-Nov-17 31-Jan-18 31-Mar-18 31-May-18

STS

Actual Trend

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100000 200000 300000 400000 500000 600000 700000 800000 900000 1000000 1/1/2012 3/1/2012 5/1/2012 7/1/2012 9/1/2012 11/1/2012 1/1/2013 3/1/2013 5/1/2013 7/1/2013 9/1/2013 11/1/2013 1/1/2014 3/1/2014 5/1/2014 7/1/2014 9/1/2014 11/1/2014 1/1/2015 3/1/2015 5/1/2015 7/1/2015 9/1/2015 11/1/2015 1/1/2016 3/1/2016 5/1/2016 7/1/2016 9/1/2016 11/1/2016 1/1/2017 3/1/2017 5/1/2017 7/1/2017 9/1/2017 11/1/2017 1/1/2018 3/1/2018 5/1/2018

CTS

actual trend

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  • 5,000,000

10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16

IP-CTS Actual Minutes

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SLIDE 10

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  • 5,000,000

10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 Jun-14 Dec-14 Jul-15 Jan-16 Aug-16 Mar-17 Sep-17 Apr-18 Oct-18

IP-CTS Linear Regression Forecast

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SLIDE 11

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  • 5,000,000

10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 45,000,000 50,000,000 Jun-14 Dec-14 Jul-15 Jan-16 Aug-16 Mar-17 Sep-17 Apr-18 Oct-18 May-19

IP-CTS Providers Forecast

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  • 0.2000

0.4000 0.6000 0.8000 1.0000 1.2000 1.4000 1.6000

IP-CTS Cost Trends:2015-2018

Facilities CA Related Non-CA Relay Center Indirect Depreciation Marketing Outreach Other Return on Investment

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SLIDE 13

IP-CTS Cost Trend Data

Category

2015 2016 2017 2018 Facilities

0.0386 0.0326 0.0307 0.0304

CA Related

0.2819 0.2672 0.3062 0.3314

Non-CA Relay Center

0.0559 0.0488 0.0498 0.0519

Indirect

0.2830 0.1529 0.1533 0.1350

Depreciation

0.0402 0.0275 0.0243 0.0202

Marketing

0.0579 0.0759 0.0787 0.0770

Outreach

0.0903 0.0710 0.0656 0.0645

Other

0.6259 0.6101 0.5889 0.5691

Return on Investment

0.0124 0.0106 0.0097 0.0082

Total Cost

1.4863 1.2965 1.3071 1.2876

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MARS Revenue Alt 2

Price Minutes Revenue IP-CTS $1.30 402,308,884 $523,001,549 Other MARS Revenue $14,221,402 Total MARS Revenue $537,222,951

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Video Relay Service

 Current Compensation Tiers:

  • Emergent Tier 1 (0- 500,000 minutes per month)
  • Tier 1 (0-500,000 minutes per month)
  • Tier 2 (500k – 1 million minutes per month)
  • Tier 3 (> 1 million minutes per month)

 Proposed Tiers

  • Emergent Tier 1 (0- 500,000 minutes per month)
  • Tier 1 (0-1,000,000 minutes per month)
  • Tier 2 (1 million – 2.5 million minutes per month)
  • Tier 3 ( greater than 2.5 million minutes per month)

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Video Relay Service

 Cost Categories

  • Facilities-

 Land, Buildings, Utilities, Property Taxes, etc.

  • CA Related-

 Salaries and Benefits plus Subcontractor

  • Non-CA Relay Center Expenses-

 Management, Staff, Telecom Billing and other “Center Expenses

  • Indirect Expenses

 Accounting, Legal, Engineering, R&D, Operations Support, etc.

  • Depreciation Expense

 Depreciation Expense associated with Capital Investment

  • Marketing Expense
  • Other Expense
  • Return on Investment @ 11.25% plus tax on equity return

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SLIDE 17

VRS Per Minute Component Costs in Dollars

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Category

2015 2016 2017 2018 Facilities

0.1911 0.2085 0.2145 0.2183

CA Related

1.3964 1.3920 1.5072 1.5450

Non-CA Relay Center

0.3508 0.3339 0.3345 0.3371

Indirect

0.5212 0.5788 0.5338 0.5271

Depreciation

0.0956 0.0999 0.1036 0.1020

Marketing

0.1297 0.1451 0.1472 0.1493

Other

  • Return on Investment

0.0423 0.0355 0.0351 0.0352

Total Cost

2.7270 2.7937 2.8758 2.9140

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SLIDE 18

Combined Cost without CPE and Outreach

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  • 0.5000

1.0000 1.5000 2.0000 2.5000 3.0000 3.5000 Facilities CA Related Non-CA Relay Center Indirect Depreciation Marketing Other Return on Investment Total Cost

Combined Cost per minute

2015 2016 2017 2018

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Combined Cost with CPE and Outreach

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  • 0.5000

1.0000 1.5000 2.0000 2.5000 3.0000 3.5000

Combined Cost including CPE and Outreach

2015 2016 2017 2018

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0.1911 0.2085 0.2145 0.2183 1.3964 1.3920 1.5072 1.5450 0.3508 0.3339 0.3345 0.3371 0.5212 0.5788 0.5338 0.5271 0.0956 0.0999 0.1036 0.1020 0.1297 0.1451 0.1472 0.1493

  • 0.0423

0.0355 0.0351 0.0352

VRS Cost Per Minute

Facilities CA Related Non-CA Relay Center Indirect Depreciation Marketing Other Return on Investment

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Rate Proposals

year 1 year 2 year 3 Year 4 high end rates July 2017- Dec 2017 Jan 2018- June 2018 July 2018-Dec 2018 Jan 2019- June 2019 July 2019-Dec 2019 Jan 2020- June 2020 July 2020-Dec 2020 Jan 2021- June 2021 Tier one emergent 5.29 5.29 5.29 5.29 5.29 5.29 5.29 5.29 Tier One 4.82 4.82 4.82 4.82 4.82 4.82 4.82 4.82 Tier Two 4.35 4.35 4.35 4.35 4.35 4.35 4.35 4.35 Tier Three 3.49 3.49 3.49 3.49 3.49 3.49 3.49 3.49 Low end rates Tier one emergent 4.82 4.71 4.60 4.49 4.39 4.28 4.17 4.06 Tier One 4.06 3.98 3.90 3.82 3.73 3.65 3.57 3.49 Tier Two 3.49 3.43 3.37 3.31 3.26 3.20 3.14 3.08 Tier Three 2.83 2.80 2.77 2.74 2.72 2.69 2.66 2.63

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VRS Revenue: High Rate Proposal

July – December 2017 January – April 2018

Demand Rate Revenue Emergent

608,530 $5.29 $3,219,124

Tier 1

5,378,239 $4.06 $21,835,650

Tier2

3,407,175 $4.06 $13,833,161

Tier 3

12,315,316 $3.49 $42,980,453

Total

21,709,260 $81,868,388

Demand Rate Revenue

1,494,600 $5.29 $7,906,434 10,749,405 $4.82 $51,812,132 6,747,630 $4.35 $29,352,191 25,585,273 $3.49 $89,292,603 44,576,908 $178,363,360

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May – June 2017

Demand Rate Revenue

1,995,539 $5.29 $10,556,401 16,060,167 $4.82 $77,410,005 10,478,906 $4.35 $45,583,241 36,510,246 $3.49 $127,420,760 65,044,858 $260,970,407

Total: $521,202,155

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VRS Revenue: Low Rate Proposal

July – December 2017 January – April 2018

Demand Rate Revenue Emergent

608,530 $4.82 $2,933,115

Tier 1

5,378,239 $4.06 $21,835,650

Tier2

3,407,175 $4.06 $13,833,161

Tier 3

12,315,316 $3.49 $42,980,453

Total

21,709,260 $80,582,379

Demand Rate Revenue

1,494,600 $4.71 $7,039,566 10,749,405 $3.98 $42,782,632 6,747,630 $3.43 $23,144,371 25,585,273 $2.80 $71,638,754 44,576,908 $178,363,360

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May – June 2017

Demand Rate Revenue

1,995,539 $4.82 $9,618,498 16,060,167 $4.06 $65,204,278 10,478,906 $3.49 $36,571,382 36,510,246 $2.83 $103,323,996 65,044,858 $260,970,407

Total: $440,905,836

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TRS Fund Requirement for 2017-2018

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 MARS Based Services w/o IP CTS $14,573,209  IP CTS at MARS

$743,754,755

 Average IP CTS Cost

$534,580,112

 IP-Relay

$7,750,396

 Other Low

$194,257,000

 Other High

$242,502,000

 VRS Low Rate Proposal

$440,905,836

 VRS High Rate Proposal

$521,202,123

 2016-2017 Fund Size

$ 1,144 Million

 2017-2018 Low Estimate $ 1,035 Million  2017-2018 High Estimate $ 1,373 Million