LANSING – Before the Michigan Telecommunications Act expires at the end of the year, it will be replaced. But exactly what that replacement will look like is still unclear, especially with the Federal Communications Commission continuing to limit the state’s regulatory role. It is likely the 2005 Michigan Telecommunications Act will be pared down from the 2000 version.
“I want to get out of the way of competition and get rid of regulation where I can,” said Rep. Mike Nofs (R-Battle Creek), chair of the House Energy and Technology committee.
Nofs, in a recent interview with Gongwer News Service, said the new legislation has to be more platform-neutral.
“I don’t want to put any new regulation on any new platform,” he said. “As all those platforms get better and better, it’ll drive the price.”
A platform is the transmission mode – whether by wire, cable, satellite or other system – a telephone call gets from the originator to the receiver.
Opening up the prices to market control would encourage more companies to invest in the state and, in the end, provide customers with more choices, said Gail Torreano, president of SBC’s Michigan operations. “We need to streamline our public policy. We have to eliminate price regulation and all the tariffing regulation.”
David Waymire with the Michigan Alliance for Competitive Telecommunications agreed on the terms for ending price regulation. “As long as we’ve got competition, we can get rid of day-to-day rate regulation,” he said.
But he said there was still not enough competition for the market to control prices. He said competitors have moved into the wireline market and driven prices down, but many of those are still depending on SBC for some or all of the services they offer. Without some at least wholesale price protections, he said those companies would pull out of the state.
And Waymire said in many markets and market segments there is still little competition outside those competitive local exchange carriers. “As far as business goes, they’re the only game in town,” he said of the CLECs. “At the end of the day they must have a land line.”
Waymire said wireless carriers did not provide many of the services businesses needed, and he said in most areas of the state cable companies do not provide business broadband, limiting businesses to services provided by a wireline telephone company. Waymire said that wireless phones are too expensive at the low end to drive down the price of wireline local service.
“The cheapest cell phone is $40 a month. That means the competitive pressure for the cheapest land line is $40 a month,” he said.
Torreano said that the business community is moving to adopt wireless as a primary telephone system. “Ford in January said about 8,000 employees are going to switch to Sprint wireless phones,” she said. “That’s a fallacy that businesses aren’t using wireless.”
And she said residential customers are switching to both wireless and a growing presence of cable telephone.
Torreano said voice over Internet protocol, using high-speed Internet connections to complete telephone calls, is also a growing business market.
But Waymire said many small businesses are closed out of that market because the only available high-speed Internet provider is SBC DSL, which must be purchased with local phone service. Torreano said SBC also is seeing competition from alternative DSL providers that do not require local phone service as part of the package.
If the telecommunications act is going to be changed, Waymire said part of that package should be a structural separation of the units in the incumbent providers that control the network from those that offer retail phone service.
“SBC would not have to divest, it would just have to have an arms-length subsidiary,” he said.
SBC has long opposed efforts at structural separation, arguing the move would further eliminate their incentive to invest in the network infrastructure.
Nofs said making sure competitors had access to the last mile of the network is important, and he said the state and federal efforts to force SBC in particular to grant access to its network have worked well. But he said much of the competition will come through different technology, not through different companies having access to the current telephone network.
Scott Stevenson with the Telecommunications Association of Michigan, which represents the smaller incumbent providers in the state, said the act is holding up many new services because companies are unclear what they have permission to provide.
“Our members aren’t exactly sure how to apply the old rules to the industry they’re working in now,” he said. “It needs to be clarified what do you need regulatory approval to do.?
Stevenson said the state does need to maintain provisions for minimal service at a regulated rate. Torreano said there also needed to be requirements to continue services for the deaf and other basic communications services.
The only time Nofs said the state should insert itself in the ability of providers to enter the market is when those potential providers are municipalities. He acknowledged there may be places, like much of the Upper Peninsula, where there is not the customer base to attract commercial competitors, but he said in most cases telephone and other communications service should be left to private companies.
“Government doesn’t provide jobs,?? he said. ?What does provide jobs is private industry.?
In the same vein, Nofs said there needed to be some limits on the Broadband Development Authority. “It does bother me when I see the Broadband Development Authority go into Oakland County,” he said, arguing there is sufficient customer base for commercial providers to be able to obtain financing and develop their own networks without state assistance in that and other urban areas.
And Nofs said to some extent those in rural areas should also be allowed only limited choices. “You made a choice when you moved out in the boonies,” he said.
The regulatory focus now, Nofs said, should be for the Public Service Commission to have the tools to more quickly resolve interconnection and other disputes between providers as well as complaints by customers than to review prices.
“They need quicker turn around time to decide if they’re going to do business in Michigan,” he said of potential competitors.
Fred Anderson, also with MiACT, agreed on the need for faster action at the PSC. “If you’re the incumbent and you drag your feet, a business or hospital might throw in the towel (on trying to switch to a competitor),” he said.
But the PSC is among those who would prefer not to see changes in the act yet.
PSC Chair Peter Lark said the commission would have to review the act now that there is some certainty of it being revised. Among the key issues Lark said the commission would likely want retained was regulation of slamming and cramming (changing or adding services without customer permission) and powers to resolve customer complaints.
He said a specific proposal would await discussions among the commissioners and the telecommunications staff. “We at the PSC stand ready to assist,” he said.
Looming in the background of any state discussions on the issue is the coming rewrite of the federal telecommunications act. But Nofs said that would not derail Michigan’s work. “We’re not going to do just an extension of the date and wait to see what the federal government is going to do.?
But he said he was monitoring what Congress was doing and is prepared to make changes in any bills based on completed work there. “I wouldn’t want to get the MTA totally rewritten and then the feds do something different,” he said.
The one area where the state does need to increase its presence, Nofs said, is in providing 911 emergency communications services. Though hi
