In early March, 2002, this writer had the opportunity to discuss captioning issues with one of the early pioneers of the captioning industry, known for his efforts in software development. This prominent software developer mused, in closing e-mail to MCS, how could it be that with demand for captioning rising, and the availability of captioners limited, that prices for captioning were continuing to fall? The purpose of this article is to attempt to explain the reason for this economic anomaly, and the impact on the quality of realtime closed captioning.

     On April 16, 2002, MCS attended a meeting hosted by the NCRA (National Court Reporters Association) in Virginia to discuss issues related to the quality of captioning. The meeting was attended by six captioning companies, consumer representatives of three major deaf and hard-of-hearing organizations, and telephone participation by the Department of Education. A forthcoming initiative to develop a new exam for captioner certification was discussed. A number of issues which impact on the quality were discussed.

We support NCRA's initiative to seek better indicators to identify the most qualified realtime writers, as well as efforts to seek consumer input from deaf and hard-of-hearing viewers.

MCS supports such a new certification, if current CRR (certified realtime reporters) are "grandfathered," and completion of certification by certain classes of reporters (i.e., RPR designation) under this new exam will generate educational credits toward maintaining the RPR certification. While the captioning industry needs to identify reporters who are better prepared to become realtime captioners, these exams (including the CRR) are, at best, indicators, not predictors, of an individual's ability to be a realtime closed captioner. In addition, the certification process must not be structured in a way to constitute another burden or disincentive for existing captioners, who might lose their incentive to remain captioners at a time when the industry needs their skills. We support NCRA's initiative to seek better indicators to identify the most qualified realtime writers, as well as efforts to seek consumer input from deaf and hard-of-hearing viewers.

     Throughout this meeting on "quality," a salient point impacting on quality was not mentioned, perhaps because of the delicacy, as well as the legality, of discussing the matter of price, as it relates to quality in a trade association meeting. MCS believes there is no direct correlation between the price of the finished product (realtime captioning) and quality. MCS's objective has always been to provide our clients high quality, cost-effective captioning to networks and consumers at a price which may not be the highest price, and, therefore, represent the best value to consumers.

In producing realtime captioning, the quality production component is the individual skilled writer who produces the finished product -- realtime captioning.

For example, from a consumer viewpoint, both a Lexus and Mercedes may represent quality, but afford different value to consumers based on pricing differences. In our meeting, it was correctly noted that individuals with the "RMR" (Registered Merit Reporter) are among the most highly skilled in the industry. With many years of reporting experience, these individuals have perfected their writing, punctuation, grammar skills, and, from our experience, are better prepared to transition to broadcast captioning. The economic reality is that they are generally among the highest wage earners in the court-reporting profession.

     The bottom-line reality is that if consumers expect consistent, high-quality captioning as the number of hours of closed captioning are expanded, the newer people entering the captioning industry must be sourced from the more experienced (i.e., RMR) pool within the profession. At the same time, however, some broadcast and cable networks have been responsive to "barter advertising" schemes, where they -- a broadcast or cable network -- provide advertising spots in exchange for the right to provide closed captioning by the captioning company willing to work on this basis.

The bottom-line reality is that if consumers expect consistent, high-quality captioning as the number of hours of closed captioning are expanded, the newer people entering the captioning industry must be sourced from the more experienced (i.e., RMR) pool within the profession.

This scheme involves substantial business and financial risk, except for the largest of captioning companies, which may have the ability to absorb losses from not selling advertising spots, in an effort to increase market share. However, this economic model (captioning funded by barter, in which the video programmer pays nothing for closed captioning), along with pricing pressure on captioning companies from most networks in this economic environment, has contributed to decreasing profit margins at most, if not all, captioning companies. The consumer must be made aware of this economic situation.

     The FCC, in promulgating its Report and Order mandating closed captioning in 1998, clearly identified guidelines to determine when the cost of captioning would constitute an "undue burden" for a video programmer. Clearly, the FCC must have envisioned that networks would pay the cost of closed captioning -- this is implicit in setting financial guidelines which describe the basis under which undue burden exemptions would be granted to networks. In doing so, the FCC adopted a percentage of gross revenues test, based on the reasonableness of cost to the video programmer. In fact, requests for undue-burden exemptions have been sought in only a few instances, and were denied by the FCC.

     We believe deaf and hard-of-hearing consumers have the right to expect the laws of supply and demand, and efficient markets would apply to the captioning industry, i.e., that broadcast and cable networks would contract to obtain the highest quality at the best price to meet their captioning requirements.

The barter economic model -- selling of advertising for the right to caption so that the video programmer pays nothing for closed captioning -- places the captioning industry's ability to attract talented writers, and pay them for their services, at considerable risk.

The barter economic model -- selling of advertising for the right to caption so that the video programmer pays nothing for closed captioning -- places the captioning industry's ability to attract talented writers, and pay them for their services, at considerable risk. In this economic model, "barter for captioning," the video programmer incurs "no cost" by giving the captioning company advertising spots to sell in exchange for the right to caption. In reality, the underlying motive of the video programmer is a desire to not pay for closed captioning.

     However, the barter economic model involves substantial economic risk. If advertising spots cannot be sold, there is a real economic risk to the captioning company. The reality is, the most talented writers in the court-reporting industry have other employment options within the court-reporting industry, other than captioning. The barter model, clearly, does not work for smaller emerging companies who cannot sustain the economic risk of selling advertising spots, while being obligated to pay market-based income to the most experienced writers.

The notion that a video programmer need not pay, or make provision as a fixed cost for closed captioning, when fixed costs for audio for hearing viewers are provided in budgeting, discriminates explicitly against deaf and hard-of-hearing viewers.

In addition, the notion that a video programmer need not pay, or make provision as a fixed cost for closed captioning, when fixed costs for audio for hearing viewers are provided in budgeting, discriminates explicitly against deaf and hard-of-hearing viewers. Are they (deaf and hard-of-hearing viewers) not entitled to receive the same quality of access as hearing viewers? Additionally, the barter model utilized by some broadcast and cable networks and/or promoted by a captioning company may be predatory in nature, restrictive of competition, and, therefore, damaging to the development of the closed captioning industry.

     MCS believes the following initiatives must be undertaken, perhaps jointly, by the National Court Reporters Association and consumer organizations representing deaf and hard-of-hearing organizations:

1. Implementation of an education campaign to broadcast and cable companies, and consumers, to explain closed captioning -- specifically, the differences between realtime and off-line captioning, and the particular skill and process involved in realtime captioning. Broadcast and cable companies, particularly individuals charged with the responsibility for providing (and budgeting) closed captioning, must have a keener understanding of the exceptional skill necessary and the process of realtime captioning to be willing to pay a fee that represents the economic worth and value of the realtime skill provided to consumers.
   
   
2. NCRA must continue efforts to seek funding for the training of realtime reporters from Congress, and to expand the number of court-reporting schools who are designated to receive federal funding for the training of realtime reporters.
   
   
3. Involvement of the appropriate regulatory agencies, (i.e., FCC, FTC) at the request of consumer groups to request rulemaking to clarify the responsibilities of video programmers to pay for closed captioning, and obtain the best value for quality captioning, at costs consistent with the current FCC guidelines set for determining whether such costs constitute an undue burden for programmers. Additionally, jointly or severally, consumer groups and professional organizations representing court reporters may well seek clarification from the FTC as to whether the barter scheme, which involves "no cost for captioning" incurred by the cable or broadcaster in exchange for the sale of advertising spots by the captioning company, involves a predatory pricing, market-control scheme in violation of antitrust regulations.

     In summary, the closed captioning industry, if it is to evolve into an industry where consistent, high-quality captioning is provided to the consumer, must operate on the economic laws of supply and demand, as all other industries operate. Otherwise, a competitive marketplace for services offered by talented individuals to provide the quality of captioning access expected by deaf and hard-of-hearing viewers will not evolve, as was originally envisioned by the FCC when access through closed captioning was mandated by Congress. Costs for closed captioning must be budgeted in the same way audio costs for hearing viewers are considered -- we must have a level playing field in the way deaf and hard-of-hearing consumers are treated by broadcast and cable networks. If broadcast and cable companies willingly budget for closed captioning costs, as they do for hearing viewers (and pay a realistic cost for the skill necessary to provide quality captioning), consumers can expect consistent quality captioning provided on video programming.

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