Of the multiple issues investigated, three stand out: accusations of overpayments to providers from the Telecommunications Relay Service, or TRS, fund; manipulation of data to trigger rules that would allow the FCC to regulate cable more closely; and Martin’s micromanagement, which reportedly created a “culture of fear.”
The report begins by looking at the TRS fund. Relay services allow people who can’t hear well, or at all, to talk over the phone through intermediaries who translate speech into text. Thomas Chandler serves as chief of the FCC’s disability rights office. In May 2007, Chandler sent an e-mail to high-ranking FCC officials, warning that compensation rates to TRS providers — specifically, Sorenson Communications, which holds more than 80 percent of the TRS market thanks to what Chandler called “extraordinarily aggressive (and often illegal) marketing practices” — are too high compared to the actual cost of providing TRS. Throughout the summer and fall of 2007, Chandler presented his concerns to superiors, apparently to no avail.
“I hate to say it,” he wrote on Sept. 4, 2007, “but the whole TRS (VRS) compensation regime has become a classic fleecing of America. Shouldn’t we be more worried about this exposure than simply making the providers happy by giving them everything that they want (they now come in, and just tell us the rates they want, and it seems that is what we do).”
In his e-mail, Chandler suggested reducing the TRS providers’ take from $6.64 per minute to around $5. Sorenson, he said, still would receive “a windfall of $30-$40 million,” based on 4 million minutes per month and 50 million minutes per year. Chandler also wanted TRS users to help pay for the service. No other utility is free, he argued, “and nothing in Title IV or its legislative history suggests that is what Congress intended.”
Using Chandler’s e-mails and information from other sources, the House committee concluded there is evidence showing the FCC has failed to set reasonable compensation rates, and that telephone users have been and are being overcharged. The TRS fund money comes from surcharges on Americans’ phone bills.
There’s almost no way to tell how much money Sorenson is reaping from the TRS fund. The company is privately held. But since it receives millions in government subsidies, it seems Congress would be able to require Sorenson to open its books. And that’s what the report recommends. It wants the FCC to immediately audit Sorenson. In fact, the FCC earlier had hired a contractor to do just that, but Sorenson denied access to the people and systems needed to conduct the audit. Why Martin didn’t push back after such obvious defiance remains unclear.
‘Troubling’ Manipulation Evidence
The fireworks really go off when the committee report explores allegations that Martin manipulated cable industry data for his own ends. Staff write, “There are instances in which Martin ‘manipulated, withheld or suppressed data, reports and information.’” Martin is accused of instructing subordinates to rewrite a previous report on a la carte programming, and also of reshaping the data in the 13th Annual Video Report to Congress so he could try to invoke the so-called “70/70 Rule”.
In the a la carte matter, the House committee’s investigation confirmed suspicions that Martin reversed the first a la carte report, without seeking more public comment or conducting further studies, in a closed and unfair manner. Indeed, FCC staff had great difficulty coming up with the figures to support Martin’s predetermined conclusion, and made no bones about it to his staff. Still, in February 2006, a report touting consumer benefits via a la carte rules was sent to Congress and released to the public, although it never appeared for review by the full commission.
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