FCC Issues Important New Ruling on VRS With Retroactive Impact, Issues Related Demand Letters and Withholding Payments

ROCKLIN, Calif., March 3 /PRNewswire-FirstCall/ -- Purple Communications™, Inc. (OTC: PRPL) ("Purple"), a leading provider of text and video relay and on-site interpreting services for the Deaf and Hard of Hearing has filed an Emergency Stay Request and Application for Review with the Federal Communications Commission (FCC) in order to grant the company due process regarding the FCC's withholding of funds owed to Purple.  

Background

On February 25, 2010, the FCC issued a Declaratory Ruling addressing certain types of calls that are not compensable under the Telecommunications Relay Services (TRS) program administered by the FCC.  The Declaratory Ruling applies to all providers and is purported to clarify prior rules the FCC believes have been clear, thereby making its applicability retroactive.  

Although Purple agrees with the objectives of the FCC; 1) to ensure the integrity of the TRS Fund; 2) to eliminate potential "double dipping" opportunities for providers who employ the deaf and who also use their services in the performance of their work-related obligations; and 3) the need for clarification of the types of calls that are compensable from the TRS Fund, Purple does not concur with the recent actions that the FCC has taken in the name of achieving those objectives.  

Purple, deaf consumer organizations, and other providers have long been on record requesting that the FCC provide clarifications as to the permissibility of calls which are reimbursable under the TRS program.  As recently as August 2009, Purple and eight national consumer organizations asked the FCC to open a rulemaking process that would be transparent and allow for public discussion on which types of calls should be permissible for reimbursement under the TRS program.  In September 2009, the Commission issued an Order singling out calls between two or more deaf individuals as being non-compensable from the TRS Fund.  Although the February 25, 2010 Declaratory Ruling is purported to provide clarification of prior rules the Commission felt were in force, it is unclear why the FCC failed to take the opportunity in the September 2009 Order or earlier in order to clarify rules in the face of repeated requests by the industry participants.  Purple believes that many of the newly issued clarifications are really new definitions of rules that were not commonly understood among the industry.  Also not addressed in the September 2009 Order was the contemplation of various options for reimbursing providers for reasonable expenses incurred in connection with the processing of calls made by deaf employees or contractors of relay providers, another issue on which many, including Purple, have offered alternative cost recovery approaches.  In addition to issuing rules without a formal rule-making process involving consumer and industry group participation, the new rules are mandated as retroactive in effect for all industry providers.  

Reason for the Emergency Stay and Appeal Request

In addition to the ruling, the FCC has issued Purple a demand letter requesting reimbursement for call types that were processed in 2008 and 2009 for which are now defined under the February 25, 2010 Declaratory Ruling as non-compensable.  The FCC also notified Purple of its intention to withhold all compensation to the company, regardless of whether the compensation is related to permissible calls or not, until a resolution is reached regarding monies the FCC believes are owed back to the TRS Fund.  These extreme actions by the FCC will result in a cessation of all operations if resolution cannot quickly be achieved.  

Immediate Impact on Purple and its Deaf and Hard of Hearing Customers

As part of its cooperation with the FCC, Purple believed it was on a track of negotiating a global settlement agreement related to all historical inquiries; however, absent an immediate release of funds, Purple will soon be insolvent, forcing either a bankruptcy proceeding or liquidation of Purple.  A liquidation of Purple would result in a loss of more than 1,000 jobs, a significant percentage of which are held by deaf or hard of hearing employees and the termination of all relay- and on-site interpreting services provided to the deaf community.  This action could result in serious public safety issues in the event the traffic handled by Purple is unable to be readily absorbed in the market by remaining providers, particularly text relay services where Purple is the largest provider, or its interpreting services, which are provided to hospitals and other urgent care and medical operations.  

Through its Emergency Stay Request and Appeal, Purple is seeking an immediate release of funds, which match the description of compensable calls under the new Declaratory Ruling that would allow a proper settlement to be negotiated in due course and would afford the company the natural due process it is entitled to.

"The retroactive impact of the ruling and related financial clawbacks could be financially devastating for the industry, particularly smaller providers who employ the deaf. Too, this could further exacerbate a market structure problem with a single provider having complete domination over the market," said Dan Luis, Purple's CEO.

"Purple is proud to be an employer of hundreds of deaf and hard of hearing employees and community outreach representatives.  The cost to provide the same level of telecommunications access to a deaf employee as to a hearing employee is significantly higher.  As long as providers are allowed to recover the full costs to provide this access, we can make this element of the Declaratory Ruling work; however, we also believe that this ruling could be a civil rights setback as it places a discriminatory burden on deaf and hard of hearing employees of TRS providers, which could lead to the loss of jobs and reduced employment opportunities among the deaf in a field that serves their community," added Ronald E. Obray, Purple's vice chairman.

"Ultimately, deaf and hard of hearing consumers could become the victims due to this ruling.  This decision could potentially annihilate any small-VRS provider that employs the deaf, which would prevent a choice in providers and the incentive to innovate.  A VRS provider should not have to make a business decision to not hire deaf or hard of hearing employees, as the cost for their rights of functional equivalency is too high," said Kelby Brick, Purple's Vice President of Regulatory and Strategic Policy.

About Purple

Purple Communications is a leading provider of onsite interpreting services, video relay and text relay services, and video remote interpreting, offering a wide array of options designed to meet the varied communication needs of its customers. Purple's vision is to enable free-flowing communication between people, inclusive of differences in abilities, languages, or locations. For more information on Purple or its services, visit www.purple.us, by Internet relay by visiting www.ip-relay.com, or by video phone by connecting to purple.tv.

"i711," "Purple," and the Purple logo are registered trademarks of Purple Communications, Inc. "Purple Mail," "Powered by Purple," "i711.com," "My IP-Relay," "IP-Relay.com," "One-Tap Redial," and "P3" are either registered trademarks, trademarks, or service marks of Purple Communications, Inc. Other names may be trademarks of their respective owners. 

SOURCE Purple Communications, Inc.