Should the FCC pay Sorenson to fight FCC regulation and lobby Congress?
February 5, 2025
A company accused of violating federal regulations has sought to use federal funds for costs it incurred to defend those violations. After an audit, a designated administrator of the Federal Communications Commission (FCC) has rejected such use of FCC funds by Sorenson Communications. The audit also stated that Sorenson could not be reimbursed for the money it spends on hiring various lobbyists to push its interests in Congress.
Sorenson, owned by the private equity arm of Ariel Investments, responded with an appeal that described the FCC auditors’ conclusions as “plainly erroneous” and asked the FCC to issue a ruling that labels these expenses as appropriate.[1]
Sorenson provides Video Relay Services (VRS), which enables people with hearing disabilities who use American Sign Language (ASL) to communicate with voice telephone users through video equipment. Providers of these services are reimbursed through the FCC and are required through federal Telecommunications Relay Service (TRS) regulations to meet certain standards, such as: being available 24 hours a day/7 days a week; answering 85% of calls within 10 seconds; and ensuring confidentiality, among others.
The FCC Audit Report states: “Legal expenses incurred during the FCC Enforcement Bureau’s investigation . . . are the result of the Provider’s non-compliance with its [Telecommunication Relay Service (TRS)] obligation. These expenses would not have been incurred if the Provider was in compliance with its TRS obligations and did not benefit Sorenson’s end-user TRS consumers. Applicable standards do not classify such litigation expenses as automatically recoverable in regulatory settings.”[2]
According to Sorenson’s appeal, the legal costs incurred for defending itself in an FCC investigation should be allowable because they are a regular cost of doing business.[3]
Similarly, Sorenson distinguishes between lobbying and “educating Congress” about VRS and FCC oversight: “The Administrator erroneously found that Sorenson included the costs of ’lobbying activities’ in its RSDRs. Sorenson included the costs associated with its educational activities with members of the U.S. Congress.”[4]
Sorenson appears to argue that it should receive FCC reimbursements for costs incurred to fight FCC regulation, even as the FCC alleges Sorenson has violated the law.
Last year, PESP published a report about the VRS industry, which is currently dominated by Sorenson and one other private equity owned firm, ZP Better Together (though ZP’s private equity owners are in the process of selling ZP Better Together). The report, titled “Lost in Interpretation: Private equity’s capture of a vital sign language translation tool,” highlights important problems the industry is facing, including high turnover of the interpreters that make the service run due to low wages and difficult working conditions. Interpreters have joined the Office of Professional Employees International Union (OPEIU) and seek to meet with Sorenson and its private equity owners to reach an agreement that would improve working conditions for interpreters and service to deaf VRS users through workforce investment and improved working conditions. Ariel has refused to engage with the union.
Interpreters have expressed concern about Sorenson’s investment in fighting allegations of wrongdoing and lobbying Congress instead of spending that money on improved working conditions for interpreters.
“For months, we have been seeking a meeting with Sorenson’s owners to try and improve wages and health issues interpreters are facing and the major service quality issues facing Deaf, Hard-of-Hearing, and Deaf-Blind consumers, but they have refused to meet with us. The FCC should not reward this behavior with more unwarranted generosity from the TRS Fund,” said Meg Huseman, a Sorenson interpreter and union supporter.
The FCC will open public comment on Sorenson’s effort to label litigation and lobbying costs as reimbursable with federal funds. PESP plans to oppose this effort and will encourage more public attention to discourage misuse of federal funds and support both interpreters and users of VRS.
Interpreters have also engaged with investors in Ariel to ensure they are aware of the ongoing issues at Sorenson and the fiduciary risks they pose.
Ariel, which owns 52.5% of Sorenson, is an investment firm with almost $14 billion assets under management.
Ariel has refused to engage with OPEIU about the problems interpreters are facing at Sorenson Communications.
Such an appeal to the FCC by a private equity owned firm creates reputational risks for the firm and its investors, particularly in the context of a nationwide appeal from interpreters to invest in the workforce and improve service to users, instead of increased lobbying and efforts to minimize oversight by the FCC. Ariel investors should encourage the firms to mitigate such reputational risks for investors and instead address the underlying issues that interpreters have brought forward around wages, working conditions, turnover, and improved service to the Deaf community.
[1] Sorenson’s Petition for declaratory ruling regarding the 2022 and 2023 cost submission performance audit report, January 10, 2025, Page 9; Sorenson “seek[s] a declaratory ruling reaffirming that allowable Telecommunication Relay Service (“TRS”) costs (i.e., reportable TRS operating costs) include costs associated with (1) responding to and defending against enforcement proceedings related to a provider’s compliance with the TRS Rules and (2) educating members of the U.S. Congress and other policy makers on the TRS program generally and a TRS provider’s operations specifically.”
[2] Ibid. Page 7.
[3] Ibid. Page 10; “The legal expenses at issue were all related to Sorenson’s response to and defense of a Commission investigation of Sorenson’s compliance with the Commission’s rules while providing TRS. In particular, the Commission investigated CaptionCall’s compliance with IP CTS marketing and registration rules. The resulting legal expenses of that investigation are allowable because they were incurred as a direct result of, and in support of, Sorenson’s provision of TRS.”
[4]Ibid. Page 16.
