LANSING – The Public Service Commission is looking forward to filings this month on proposed rate changes for telephone competitors that could eliminate some charges, including the last mile fee.

MPSC Commissioner Robert Nelson said AT&T has offered an alternative to current wholesale rates paid by competitors to SBC and Verizon that would push those competitors to invest in their own switching equipment and networks but would cut costs for leasing the final loop between customers and the first switches.

But it is still not clear whether SBC, which faces the most competition in the state, will accept the proposal or some version of it.

Nelson said the proposal would take two positive steps: it would move toward facilities-based competition and it would keep states involved in the fee-setting process.

“This is a way out of what some people call artificial competition,” Mr. Nelson said. “That really is the goal Congress had in mind when they passed the ’96 act.”

While businesses and residents have options for their local telephone service, many of those options involve companies reselling services provided by the incumbent telephone companies. SBC and other incumbent providers have argued the rates for those services, which are set by the PSC and other state commissions, do not cover the costs of providing service to competitors and their customers.

The AT&T proposal would gradually increase the rates for services such as switching and billing, but would reduce the rates for the “last mile” loop, the part of the telephone network competitors have argued would be prohibitively expensive to duplicate.

“If the Bell companies accept this offer, the industry’s leaders can turn confrontation into conciliation by solving one of the most significant controversies since the inception of the Telecommunications Act of 1996,” said AT&T CEO David Dorman in a statement announcing the proposal. “This is a giant step forward that will relieve the Bell companies of the leasing obligations to which they most object and allow AT&T to expand the use of its own facilities to serve local customers.”

Nelson said the key for the PSC is that AT&T plans to file its proposed rates at the state level. Under a federal court ruling, which is currently stayed, only the Federal Communications Commission has the authority to set terms and conditions for telephone service under the Federal Telecommunications Act.

Nelson said the commission is hoping the rate proposal could be filed and addressed in the next month.

“Everybody’s trying to get a lot of these agreements done before June 15 in the event that stay is lifted,” he said.

The current stay expires June 15, but a number of parties are trying to appeal the ruling further. But for the proposal to come to Michigan, SBC and AT&T would have to reach agreement and present that agreement to the PSC. It is still not clear that SBC will agree to the proposal.

“We are encouraged that AT&T is following our lead to negotiate wholesale rates, as directed by the FCC,” SBC officials said in a statement. “We are reviewing the information with the hope that AT&T has made a serious proposal. However, we have initial concern about AT&T’s sincerity, since it appears they are proposing more setbacks than improvements.”

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