HB-4257, As Passed House, December 3, 2009

SUBSTITUTE FOR

HOUSE BILL NO. 4257

A bill to amend 1991 PA 179, entitled

"Michigan telecommunications act,"

by amending section 310 (MCL 484.2310), as amended by 2005 PA 235.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 310. (1) Except as provided by this section, the

commission shall not review or set the rates for toll access

services.

(2) A provider of toll access services shall set the rates for

intrastate switched toll access services ~~. Access service~~ at rates

~~and charges set by a provider~~ that do not exceed the rates allowed

for the same interstate services by the federal government ~~are just~~

~~and reasonable~~ and shall use the access rate elements for

intrastate switched toll access services that are in effect for

that provider and are allowed for the same interstate services by

the federal government. Eligible providers shall comply with this

subsection as of the date established for the commencement of the

operation of the restructuring mechanism under subsection (9).

Providers other than eligible providers shall not charge intrastate

toll access service rates in excess of those rates in effect as of

July 1, 2009 and shall reduce the differential, if any, between

intrastate and interstate switched toll access service rates in

effect as of July 1, 2009 in no more than 5 steps of at least 20%

each of the differential on the following dates: January 1, 2011;

January 1, 2012; January 1, 2013; January 1, 2014; and January 1,

2015. Providers may agree to a rate that is less than the rate

allowed by the federal government.

(3) Two or more providers that each have less than 250,000

access lines may agree to joint toll access service rates and

pooling of intrastate toll access service revenues.

(4) A provider of toll access services shall make available

for intrastate access services any technical interconnection

arrangements, including colocation required by the federal

government for the identical interstate access services.

(5) A provider of toll access service, whether under tariff or

contract, shall offer the services under the same rates, terms, and

conditions, without unreasonable discrimination, to all providers.

All pricing of special toll access services and switched access

services, including volume discounts, shall be offered to all

providers under the same rates, terms, and conditions.

(6) If a toll access service rate is reduced, then the

provider receiving the reduced rate shall reduce its rate to its

customers by an equal amount. The commission ~~shall~~ may investigate

and ensure that the provider has complied with this subsection.

~~(7) This section shall not apply to basic local exchange~~

~~providers that have 250,000 or fewer customers in this state.~~

(7) In order to restructure intrastate switched toll access

service rates, there is hereby established in the department of

energy, labor, and economic growth an intrastate switched toll

access rate restructuring mechanism as a separate interest-bearing

fund. The state treasurer shall direct the investment of the

restructuring mechanism. Money in the restructuring mechanism shall

remain in the restructuring mechanism at the close of the fiscal

year and shall not revert to the general fund.

(8) An eligible provider is entitled to receive monthly

disbursements from the restructuring mechanism as provided in

subsection (11) in order to recover the lost intrastate switched

toll access service revenues resulting from rate reductions under

subsection (2).

(9) The restructuring mechanism shall be administered by the

commission. The restructuring mechanism shall be established and

shall begin operation within 270 days after the effective date of

the amendatory act that added this subsection. Subject to the

preceding sentence, the commission shall establish the date for

commencing the operation of the restructuring mechanism and shall

notify the participants in the restructuring mechanism at least 30

days in advance of that date. The commission shall recover its

actual costs of administering the restructuring mechanism from

assessments collected for the operation of the restructuring

mechanism.

(10) The commission shall establish the procedures and

timelines for organizing, funding, and administering the

restructuring mechanism. The commission shall report to the

legislature and the governor annually regarding the administration

of the restructuring mechanism. The report shall include the total

amount of money collected from contributing providers, the total

amount of money disbursed from the restructuring mechanism annually

to each eligible provider, the costs of administration, and any

other information considered relevant by the commission. Any

company–specific information pertaining to access lines, switched

toll access services minutes of use, switched toll access demand

quantities, contributions, and intrastate telecommunications

services revenues submitted to the commission under this subsection

are confidential commercial or financial information and exempt

from public disclosure pursuant to section 210.

(11) The initial size of the restructuring mechanism shall be

calculated as follows:

(a) Within 60 days of the effective date of the amendatory act

that added this subsection each eligible provider shall submit to

the commission information and all the supporting documentation

that establishes the amount of the reduction in annual intrastate

switched toll access revenues which will result from the reduction

in rates required in subsection (2). The reduction shall be

calculated for each eligible provider as the difference between

intrastate and interstate switched toll access service rates in

effect as of July 1, 2009, multiplied by the intrastate switched

House Bill No. 4257 (H-6) as amended December 3, 2009

access minutes of use and other switched access demand quantities

for the calendar year 2008.

(b) The commission shall compute the size of the initial

restructuring mechanism disbursements for each eligible provider

and shall inform each eligible provider of that computation within

60 days after receiving the information and supporting

documentation from the eligible providers under subdivision (a).

(12) The restructuring mechanism shall be created and

supported by a mandatory monthly contribution by all providers of

retail intrastate telecommunications services and all providers of

commercial mobile service. Interconnected voice over internet

protocol services shall not be considered an intrastate

telecommunications service for the purposes of this section and

interconnected voice over internet protocol service providers shall

not be required to pay, directly or indirectly, the mandatory

monthly contributions established in this subsection. A provider of

telecommunications services [to a provider of interconnected voice over

internet protocol services shall not pay a mandatory monthly contribution related to those interconnected voice over internet protocol services] or attempt to pass

through any mandatory monthly contributions, directly or

indirectly, to a provider of interconnected voice over internet

protocol services. Nothing in this act grants the commission

authority over commercial mobile service providers or voice over

internet protocol service providers except as is strictly necessary

for administration of the restructuring mechanism.

(13) Within 60 days of the effective date of the amendatory

act that added this subsection, each contributing provider shall

report its 2008 intrastate retail telecommunications services

revenues to the commission. [Notwithstanding anything in subsection (12),

House Bill No. 4257 (H-6) as amended December 3, 2009

if the federal communications commission determines that interconnected

voice over internet protocol services may be subject to state regulation

for universal services purposes, the commission may open a proceeding to

determine who is required to participate in a universal service fund.

]

(14) The initial contribution assessment percentage shall be a

uniform percentage of retail intrastate telecommunications services

revenues determined by projecting the total amount necessary to

cover the initial intrastate switched toll access rate

restructuring mechanism disbursement levels for 12 months,

including projected cash reserve requirements, actual and projected

administrative costs, and projected uncollectible contribution

assessments, divided by the 2008 calendar year total retail

intrastate telecommunications services revenues in this state, less

projected uncollectible revenues, reported to the commission. The

commission shall issue an order establishing the initial

calculation of the contribution assessment percentage within 150

days of the effective date of the amendatory act that added this

subsection. The commission may increase or decrease the

contribution assessment on a quarterly or other basis as necessary

to maintain sufficient funds for disbursements.

(15) Each contributing provider shall remit to the commission

on a monthly basis an amount equal to its intrastate retail

telecommunications services revenues, less uncollectible revenues,

multiplied by the contribution assessment percentage determined

under subsection (14), according to a time frame established by the

commission. These contributions shall continue until the end of the

period for which eligible providers are entitled to receive monthly

disbursements from the restructuring mechanism under subsections

(11) and (16).

(16) The commission shall recalculate the size of the

restructuring mechanism for each eligible provider 4 years from the

date the initial restructuring mechanism becomes operational

pursuant to subsection (9) and again 4 years thereafter. The

recalculation process shall be as follows:

(a) The restructuring mechanism shall be recalculated each

time as the difference between the intrastate switched toll access

rates in effect as of July 1, 2009 and the interstate switched toll

access rates in effect at the time of the recalculation, multiplied

by the intrastate switched toll access minutes of use and other

switched access demand quantities for the calendar year 2008.

(b) The recalculated restructuring mechanism shall be further

adjusted during the first recalculation by the percentage change,

if any, in the number of access lines in service for each eligible

provider from December 31, 2008 to December 31 of the year

immediately preceding the year in which the adjustment is made.

during the second recalculation by the percentage change, if any,

in the number of access lines in service for each eligible provider

from December 31 of the year of the first recalculation to December

31 of the year immediately preceding the second recalculation.

(d) Each eligible provider is entitled to receive monthly

disbursements from the restructuring mechanism for a period of no

more than 12 years from the date the restructuring mechanism is

established under subsection (9), at which time the restructuring

mechanism shall cease to exist.

(17) The money received and administered by the commission for

the support and operation of the restructuring mechanism created by

the amendatory act that created this subsection shall not be used

by the commission or any department, agency, or branch of the

government of this state for any other purpose, and that money is

not subject to appropriation, allocation, assignment, expenditure,

or other use by any department, agency, or branch of the government

of this state.

(18) If the federal government adopts intercarrier

compensation reforms or takes any action that causes or requires a

significant change in interstate switched toll access service

rates, the commission may initiate, or any interested party may

file an application for, a proceeding pursuant to section 203

within 60 days of that action to determine whether any

modifications to the size, operation, or composition of the

restructuring mechanism are warranted. During the pendency of that

proceeding, the requirement in subsection (2) for eligible

providers to set intrastate switched toll access service rates

equal to interstate switched toll access service shall be

temporarily suspended by those providers. Intrastate access rates

may not be increased above the levels that exist at the time of the

suspension. Following notice and hearing, upon a showing of good

cause, the commission may stop or place certain conditions on the

temporary suspension.

(19) If the federal government changes the federal universal

service contribution methodology so that it is not based on a

percentage of total interstate telecommunications services

revenues, the commission shall modify the contribution methodology

for the restructuring mechanism to be consistent with the federal

methodology. The commission shall initiate a proceeding to modify

the contribution methodology for the restructuring mechanism and to

establish a reasonable time period for transition to the new

contribution methodology.

(20) Disputes arising under this section may be submitted to

the commission for resolution pursuant to sections 203 and 204.

(21) If any contributing provider subject to this section

fails to make the required contributions or fails to provide

required information to the commission, the commission shall

initiate an enforcement proceeding under section 203. If the

commission finds that a contributing provider has failed to make

contributions or to perform any act required under this section, a

contributing provider shall be subject to the remedies and

penalties under section 601.

(22) Eligible providers and contributing providers shall

provide information to the commission that is required for the

administration of the restructuring mechanism. Company-specific

information pertaining to access lines, switched toll access

services minutes of use, switched toll access demand quantities,

contributions, and intrastate telecommunications services revenues

submitted to the commission under this subsection is confidential

commercial or financial information and exempt from public

disclosure pursuant to section 210.

(23) As used in this section:

(a) "Commercial mobile service" means that term as defined in

section 332(d)(1) of the telecommunications act of 1996, 47 USC

332.

(b) "Contributing provider" means an entity required to pay

into the restructuring mechanism.

carrier as defined in section 251 of the telecommunications act of

1996, 47 USC 251, that as of January 1, 2009 had rates for

intrastate switched toll access services higher than its rates for

the same interstate switched toll access services, and that

provides the services and functionalities identified by rules of

the federal communications commission described at 47 CFR

54.101(a).

(d) "Interconnected voice over internet protocol service"

means that term as defined in 47 CFR 9.3.

(e) "Restructuring mechanism" means the intrastate switched

toll access rate restructuring mechanism established in this

section.