SENATE BILL No. 886 November 10, 1999, Introduced by Senators HAMMERSTROM, DUNASKISS, NORTH, SHUGARS, SCHUETTE, MC MANUS and KOIVISTO and referred to the Committee on Technology and Energy. A bill to amend 1991 PA 179, entitled "Michigan telecommunications act," by amending section 304a (MCL 484.2304a), as added by 1995 PA 216. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 304a. (1) Upon filing with and the approval of the 2 commission, a basic local exchange provider shall restructure its 3 rates for basic local exchange, toll, and access services to 4 ensure that the rates are not less than the total service long 5 run incremental cost of providing each service. 6 (2) NO LATER THAN APRIL 1, 2000, A BASIC LOCAL EXCHANGE PRO- 7 VIDER SHALL FILE WITH THE COMMISSION THE COST STUDY OR THE 8 ADOPTED TOTAL SERVICE LONG RUN INCREMENTAL COST THAT THE PROVIDER 9 WILL USE TO RESTRUCTURE ITS RATES UNDER SUBSECTION (1). The 10 provider may determine when each rate is restructured and may 05075'99 SAT 2 1 phase in the IMPLEMENTATION OF THE rate restructuring until 2January 1DECEMBER 31, 2000.After January 1NO LATER THAN 3 DECEMBER 31, 2000, the provider's rates for basic local exchange, 4 toll, and access services shall not be less than the total serv- 5 ice long run incremental cost for each service. 6 (3) The rate restructuring may include, but is not limited 7 to, 1 or more of the following: 8 (a) Touchtone capability and associated charges into basic 9 local exchange services at rate levels no greater than the sum of 10 the current basic local exchange service rates and the touchtone 11 service rates. Residential customers with rotary dial service 12 may retain such service at their current rate. 13 (b) Within basic local exchange rates, all or part of the 14 existing rate elements and charges for other services that are 15 designed to recover the costs associated with the local exchange 16 network. 17 (c) Restructure existing basic local exchange rates to 18 reflect the existing variations in costs to provide basic local 19 exchange services based upon differences in geographic areas, 20 classes of customers, calling patterns and volumes, technology, 21 and other factors. 22 (4) The commission shall have 45 days from the date of a 23 filing under this section to review the proposed rate restructur- 24 ing to ensure that the rates are not less than the total service 25 long run incremental costs of the service, or that the rate 26 restructuring brings rates that are below such costs closer to 27 the costs. If the commission is unable to make a determination 05075'99 3 1 within the allowed 45 days under this subsection, the commission 2 shall have an additional 45 days to review the rate 3 restructuring. 4 (5) If the commission does not complete its review within 5 the time period required under subsection (4), the rate restruc- 6 turing is considered approved under this section. The basic 7 local exchange provider may implement the restructured rates 8 10 days following commission approval or the end of the period 9 provided for commission review, whichever is earlier. 10 (6) Except as provided in subsection (7), for the purposes 11 of this section and the act, providers who, together with any 12 affiliated providers, provide basic local exchange service or 13 basic local exchange and toll service to less than 250,000 14 end-users in this state may determine total service long run 15 incremental cost through preparation of a cost study or may 16 determine that their total service long run incremental cost is 17 the same as that of a provider with more than 250,000 end-users. 18 (7) A provider of basic local exchange service with less 19 than 15,000 end-users in this state may determine that their 20 total service long run incremental cost is the same as that of a 21 provider with more than 250,000 end-users. 22 (8) NOTWITHSTANDING ANY OTHER PROVISION OF THIS ACT, THE 23 COMMISSION SHALL DO BOTH OF THE FOLLOWING: 24 (A) NO LATER THAN JULY 1, 2000, INVESTIGATE THE NECESSITY OF 25 AND, IF APPROPRIATE, IMPLEMENT AN INTRASTATE UNIVERSAL SERVICE 26 SUPPORT FUND TO SUPPORT CERTAIN BASIC LOCAL EXCHANGE PROVIDERS 27 WHO ARE ELIGIBLE TELECOMMUNICATIONS CARRIERS, UNDER 47 05075'99 4 1 U.S.C. 214(e)(2) AND THE RULES OF THE FEDERAL COMMUNICATIONS 2 COMMISSION. A PROVIDER MAY RECEIVE SUPPORT IF ITS TOTAL SERVICE 3 LONG RUN INCREMENTAL COSTS PLUS A REASONABLE SHARE OF THE COMMON 4 COSTS OF PROVIDING SERVICES FOR WHICH UNIVERSAL SERVICE SUPPORT 5 MAY BE MADE AVAILABLE EXCEED THE BENCHMARK RATE AS DETERMINED BY 6 THE COMMISSION FOR THE SERVICES. THE SUPPORT SHALL BE LESS ANY 7 FEDERAL UNIVERSAL SERVICE SUPPORT RECEIVED OR OTHER REVENUE 8 RECEIVED FOR RECOVERY OF THE SAME OR SIMILAR COSTS OF PROVIDING 9 THE SUPPORTED SERVICES. IF A UNIVERSAL SERVICE SUPPORT FUND IS 10 ESTABLISHED, THE COMMISSION SHALL REQUIRE THAT ALL COSTS OF THE 11 FUND BE RECOVERED FROM ALL TELECOMMUNICATIONS PROVIDERS THAT PRO- 12 VIDE SERVICES IN THIS STATE ON A COMPETITIVELY NEUTRAL AND NON- 13 DISCRIMINATORY BASIS. THE GROUP OF SERVICE FUNCTIONALITIES TO BE 14 INCLUDED AS SUPPORTED TELECOMMUNICATIONS SERVICES THAT CONSTITUTE 15 UNIVERSAL SERVICE SHALL BE THE SAME AS THOSE DEFINED BY THE FED- 16 ERAL COMMUNICATIONS COMMISSION FOR HIGH COST SUPPORT. THE SUP- 17 PORT SHALL BE PORTABLE AMONG ALL ELIGIBLE TELECOMMUNICATIONS CAR- 18 RIERS IN THE SAME MANNER PRESCRIBED BY THE RULES OF THE FEDERAL 19 COMMUNICATIONS COMMISSION. IN DETERMINING WHETHER THERE IS A 20 NECESSITY FOR THE UNIVERSAL SERVICE SUPPORT FUND, THE COMMISSION 21 SHALL MAKE FINDINGS REGARDING ALL OF THE FOLLOWING: 22 (i) VERIFY THAT BEFORE RECEIVING ANY FUNDS FROM A UNIVERSAL 23 SERVICE SUPPORT FUND, THAT THE BASIC LOCAL EXCHANGE PROVIDER IS 24 CHARGING A RATE NO LESS THAN THE BENCHMARK RATE. 25 (ii) ESTABLISH A BENCHMARK RATE FOR THE SUPPORTED GROUP OF 26 TELECOMMUNICATIONS SERVICE FUNCTIONALITIES. THE BENCHMARK RATE 27 SHALL BE 135% OF THE COMPARABLE WEIGHTED AVERAGE BASIC LOCAL 05075'99 5 1 EXCHANGE SERVICE RATE PROVIDED FOR UNDER SECTION 304B(1)(B) OF 2 THE 2 PROVIDERS OF BASIC LOCAL EXCHANGE SERVICE WITH THE GREATEST 3 NUMBER OF ACCESS LINES IN THIS STATE AT THE TIME THE FUND IS 4 CREATED. 5 (iii) IDENTIFY THE TELECOMMUNICATIONS PROVIDERS FROM WHOM 6 THE COSTS OF THE FUND SHALL BE RECOVERED AND THE MECHANISMS TO BE 7 USED TO DETERMINE AND ESTABLISH A COMPETITIVELY NEUTRAL AND NON- 8 DISCRIMINATORY FUNDING BASIS. PROVIDERS SHALL ESTABLISH A COM- 9 PETITIVELY NEUTRAL BASIS UPON WHICH THEIR CONTRIBUTIONS TO THE 10 FUND ARE RECOVERED. 11 (iv) APPROVE A PLAN FOR THE ADMINISTRATION AND OPERATION OF 12 THE FUND BY A NEUTRAL THIRD PARTY THAT PROVIDES FOR IMPLEMENTA- 13 TION OF THE FUND TO OCCUR BY OCTOBER 1, 2000 AND IS CONSISTENT 14 WITH THE REQUIREMENTS OF THIS SUBSECTION. 15 (B) UPON REQUEST OR ITS OWN MOTION, AFTER NOTICE AND HEAR- 16 ING, DETERMINE WHETHER, BASED UPON CHANGES IN TECHNOLOGY OR OTHER 17 FACTORS, THE FINDINGS MADE UNDER SUBDIVISION (A) SHOULD BE 18 AMENDED CONSISTENT WITH SUBDIVISION (A). 05075'99 Final page. SAT