But Miracom needs FCC approval to gain access to a government fund that would allow deaf customers to use the app for free.
The FCC, troubled that the $700 million fund has become riddled with fraud, is refusing to grant any new companies access to the fund. In some cases, the agency found, scammers were using phones meant for the deaf to hide their identity. In others, doctors were paid to refer patients to the service — whether they needed it or not.
The fund stands to become heavily burdened as aging baby boomers join the 48 million Americans who have some form of hearing loss. Fraud, therefore, is something agency officials say that they can’t afford.
The FCC declined to comment for this story, but in a January government filing it said that fraud puts the fund “in jeopardy and threatens to deprive people who are deaf or hard of hearing of the benefits of the program.”
Deaf community advocates worry that the FCC’s delays are hindering progress that is critical for those who have trouble hearing as the world increasingly moves to mobile technology. “The more competition you have in the field, the better,” said Lise Hamlin, director of public policy at the Hearing Loss Association of America. “There’s no motivation to get better.”
That’s certainly a worry for Miracom. The company’s investors are growing impatient, and company executives say they are worried that it will have to kill the app.
“The product would go away, the opportunity would go away,” said Chuck Owen, chief operating officer of Miracom. “We do want to provide this service, but not at all costs.”
The Interstate Telecommunications Relay Services Fund’s fraud problems came to light in 2012. The fund pays for technology that allows the deaf to speak to other users through live operators or computer software that transmits their conversations in real time. Miracom, Sprint, AT&T, Purple and other service providers are reimbursed for every minute of a relay call.
As of October 2012, providers logged about 8 million minutes of calls per month.
Some providers have given out special captioned phones for free to those who didn’t need them, according to government filings. Others were paying audiologists who referred patients to the captioned telephone program against suggested guidelines.
The FCC also found that the service was attracting scammers who want to avoid the cost of making a call or disguise their identity. (The transcriptionists at the center of the calls are prohibited from revealing what they hear or alerting authorities if they suspect a crime.)
In May, AT&T paid an $18.3 million fine after the FCC accused the company of failing to adequately verify the identities of those registering for the phones. The registration process, the agency said, made it too easy for foreign scammers to use the phones to buy goods with stolen credit card numbers. In a complaint filed by the Justice Department at the time, the government said the fraudulent calls accounted for up to 95 percent of AT&T’s call volume paid for through the fund.
That type of fraud helped prompt an explosion of demand for the fund, which is supported by fees from approved service providers. This was especially pronounced in the area of Internet-supported services, in which the FCC saw spending on Internet caption services rise from $40 million in the first half of 2012 to $70 million in the second half.
At the current growth rate, the FCC expects the overall fund to reach $1 billion by the middle of 2014.
The FCC has become sensitive to the appearance of fraud in its public programs after it faced scrutiny this year for Lifeline, known as the Obama phone program. It subsidizes phone costs for low-income Americans, but investigators found that it was being used by people who did not qualify.
To keep the telecommunications relay fund from running into similar problems, the FCC has proposed an overhaul in the way the fund is run, including prohibiting service providers from paying doctors who refer patients to the service and requiring customers to provide registration information.
The FCC has proposed new rules to address fraud, but has not scheduled a final vote.
Meanwhile, members of the deaf and hard-of-hearing community have become frustrated with the delays. Technology advances have made instant communication the norm, while they suffer through clunky conversations with captioned land-line phones or inaccurate voice-recognition software.
Miracom says its app would be helpful to people such as Mark Hope, a program manager for the U.S. Navy. He had to evacuate his office at the Washington Navy Yard during last month’s shooting. Hope, who has been mostly deaf since birth, said a captioned mobile phone would have let him communicate more quickly with colleagues and emergency personnel.
Hope told The Washington Post in an e-mail that he would have been able to “call 911 and quickly get proper directions without any mix-up or miscommunication as would otherwise be the case.” Also, he said, he would have been able to better reassure his family that he was unharmed, rather than communicating by text and e-mail, which drained his phone’s battery.
“The one true benefit of InnoCaption is the peace of mind and the reassurance that your communication with loved ones will be easily and quickly accessible,” he said.
As the world becomes more dependent on cellphones, deaf community activists say, technology that allows the deaf and hard of hearing to use mobile devices is becoming critical.
“From my perspective, I don’t know whether InnoCaption is end all and be all, but the concept of a mobile caption system is hugely important,” said Hamlin, of the Hearing Loss Association of America. “You can’t text message a tow company.”