The Michigan Chamber believes that broadband deployment is an important economic development issue. The Chamber also agrees with those who think state government can and should play a more proactive role in encouraging private sector development of Michigan's telecommunications infrastructure.

Two of the greatest barriers to broadband deployment in Michigan today are: 1) over regulation by local government and, 2) disincentives to investment in current state tax law. We urge the legislature and administration to make removing these existing barriers to broadband deployment a top priority. We also encourage the legislature and administration to consider prompt action of other policy alternatives intended to leverage free market principles more effectively.

The Michigan Chamber also reaffirms its support for: meaningful tax incentives for broadband deployment, and strong "fair play" standards to prevent the public sector from using its regulatory authority and tax-exempt status to engage in unfair competition with the private sector.

In keeping with the Michigan Chamber's support for free enterprise and limited government, we believe the debate over broadband deployment must not be allowed to turn into an effort to re-regulate Michigan's telecommunication industry. On-going regulatory issues concerning Michigan's Telecommunication's Act, such as end user line charges or structural separation, are public policy questions that can and should be addressed separately.

We oppose a state agency with open-ended powers over broadband, including:

• the ability to own and operate facilities,
• the authority to regulate broadband, and
• the authority to give grants and levy charges.

Instead, the Michigan Chamber supports legislation to provide limited and carefully targeted community assistance to allow local officials to develop their own "last mile" solutions for broadband deployment. In order to maximize administrative efficiency and promote flexible local solutions, we recommend that this legislation be modeled after Public Act 32 of 1986, the "Emergency Telephone Service Enabling Act" which allows communities to provide 9-1-1 service, or the State Water Pollution Control Revolving Fund which provides low interest loans to local governments for storm water and waste water infrastructure.

Furthermore, the Michigan Chamber supports the following recommendations based upon the Michigan Economic Development Corporation's LinkMichigan report:

Statewide Public User Aggregation

State government should join forces with higher education users, K-12 users, local government users and other public partners willing to aggregate their collective purchasing demand and ask private sector-bidders interested in serving the state to provide advanced telecommunications services to each. 

Tax and Permitting Fairness

State government should establish a common tax and fee system to replace all of the differing systems in place around the state today. This legislation should be developed with minimal revenue impact and, while recognizing appropriate differences, place all carriers under a common system. Such a system should be linked to a central one-stop right-of-way application and permitting system administered by the state.

Access to Information

State and local governments should be provided access to more detailed information about the location of telecommunications.

The Michigan Telecommunications Act (MTA) establishes a state regulatory framework for an important industry that continues to transform itself due to emerging technologies, evolving customer demands, and regulatory developments at the federal level. Since enactment in 1991, the MTA has been revised and updated on several occasions to reflect changes in technology, markets and the regulatory environment. In keeping with this legislative history, the Michigan Chamber supports revising and updating the MTA before the law sunsets on December 31, 2005 in a way that continues to provide certainty and predictability in Michigan’s pro-competitive telecommunications policy.

The Michigan Chamber supports legislation to amend the MTA so that all providers are able to compete freely and fairly. To carry out this pro-competitive policy, the Chamber advocates the following:

• Maintain the role of the Public Service Commission (PSC) as the arbitrator of disputes between providers and retain existing state regulatory authority over wholesale matters, including interconnection agreements.
• Maintain adequate consumer protections such as prohibiting slamming or cramming.
• Maintain retail price regulation on essential residential telephone service so that customers have a basic option available with PSC oversight.
• Preserve the current prohibited conduct provisions of the Act.
• Allow providers to offer other retail services and combinations of retail services without PSC price regulation.
• Prohibit schools from selling or disposing of excess network capacity for competitive purposes.
• Allow local governments to invest in networks for internal purposes, but prohibit competition against the private sector.
• Maintain the current requirement that state regulations be consistent with federal regulations.
• Ensure that providers investing in network infrastructure in Michigan are not subject to state rules that are more burdensome than federal regulations.
• Maintain the PSC’s role in administering and enforcing state and federal regulations.
• Retain the requirement that the PSC prepare an annual progress report to the Legislature on the state of telecommunications competition in Michigan and revising the report to include additional information from public sources on the level of competition.

Due to a lack of consensus within our membership, the Michigan Chamber takes no position on the franchise issue.

Background

Michigan’s Telecommunications Act (MTA), enacted in 1991, was the focus of major rewrites in 1995 and 2000, and amended in 1997, 1998, 1999 and 2002. This important law is currently scheduled to sunset or expire on December 31, 2005.

According to the Michigan Public Service Commission (PSC), the MTA encouraged competition in the provision of local communication services, the introduction of new and enhanced services, and among other things, emphasized streamlining the process for new entrants into the telecommunications marketplace. The PSC has issued over 176 licenses to companies to provide local service in Michigan. The MTA is also widely recognized in the private sector as one of the better state statutes in the country.

On May 31, 2005, the PSC issued its fifth annual report on the status of telecommunications competition in Michigan. In releasing that report, PSC Chairman Peter Lark said, “Michigan continues to be a leader in the nation in offering telecommunications services to customers. As telephone competition has grown, customers have benefited.”

Chairman Lark also said, “This year’s report, however, does show that the increase in competition is the smallest since the Commission issued its annual report. My fellow commissioners and I will carefully watch what happens to Michigan’s competitive local exchange market in 2005 and beyond. The full effect of the Federal Communications Commission’s order, which no longer requires local providers to offer competitors the use of a platform of their facilities at regulated rates after March 11, 2006, is not yet known. The PSC will continue to work to preserve competition in Michigan during this transitional time and thereafter.” The entire report is available on the MPSC web site at: www.michigan.gov/mpsc.

This policy proposal is recommended for approval by the Michigan Chamber’s Energy, Technology & Telecommunications Committee and is the result of extensive discussions among member firms.