CAPITOL BRIEFINGS: Local telecom firms criticize bill to change rates

By Amy Lane

LANSING - Telecommunications companies are at odds over a bill headed to Gov. Jennifer Granholm that will change the rates local calling providers can charge long-distance companies for access to their networks.

At issue is House Bill 4257, passed Dec. 3 by the state House and last week by the Senate, that would end the ability of local exchange providers to charge intrastate access rates that exceed levels that the federal government allows for interstate services.

Under existing law, small local phone companies with 250,000 or fewer customers and competing local phone providers have been able to charge intrastate access rates that exceed federal interstate levels.

The new bill prevents any provider from charging rates higher than federal interstate rates.

Supporters such as AT&T Inc. say that will provide parity between costs of interstate and intrastate calls. It creates "a level playing field for telephone providers," said Joe Steele, a public affairs consultant to AT&T's Michigan operations and a senior vice president at Washington-based Vox Global.

But the access-rate and other changes drew fire from competing local phone and Internet service providers.

The Michigan Internet and Telecommunications Alliance said requiring companies to lower the rates they charge to use their networks will make it unfeasible to expand or upgrade networks.

Companies should be able to use their own business model to set rates, said John Truscott, spokes-man for the alliance and president of the John Truscott Group, a Lansing-based public relations, public affairs, government relations and business development firm.

Competitive local-exchange carriers will have five years to reduce their rates.

Mark Iannuzzi, president of TelNet Worldwide Inc., a Troy-based voice and data communications services provider, said the legislation will make TelNet cautious about future investment.

He said part of the cost driver in access charges are fees that TelNet and others pay to companies like AT&T for leasing their facilities to serve homes and businesses. Iannuzzi said there needed to be a comprehensive look at all costs in any move to alter the charges.

In addition, under the bill, small "incumbent" local phone companies that must lower their rates will receive partial compensation for the lost revenue for 12 years under a new fund to be set up, while competitive local exchange carriers that also must lower their access rates will not receive compensation.

Scott Stevenson, president of the Telecommunications Association of Michigan, a group that includes AT&T and small local-phone companies, said the reimbursement reflects that rural providers built and maintain networks to serve all customers in their licensed territories.

"The incumbent providers have the obligation to serve everyone," he said, as opposed to "a competitive provider who can choose where to serve, when to serve and who to serve."

Providers of retail intrastate telecommunications services, including the competitive carriers, incumbent phone companies and wireless companies, would pay into the fund that would provide reimbursements. The Michigan Public Service Commission will determine the size of the assessments based on companies' retail revenues, said Robin Ancona, director of the PSC's telecommunications division.

The fund's overall size will be determined by a formula that takes into account the difference between intrastate rates charged by the small local-phone companies and the interstate rate, and the minutes of use for which the companies bill.

The PSC estimates the fund's size to be $16 million annually.

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Luke Haase
231.932.0400
mediarelations@telnetww.com