On March 13, 2014, the Michigan Senate concurred in Michigan House of Representatives’ Substitute H-2 of SB 636, a bill which will streamline the process for discontinuing the provision of landline basic local exchange service in the State of Michigan. The Bill, which is now enrolled will be forwarded to Governor Rick Snyder for his consideration.

If signed by the Governor, the Bill, which would take immediate effect, will eliminate the requirement that a provider seeking to discontinue service in an exchange demonstrate that “1 or more alternative providers for toll service, or 2 or more alternative providers for basic local exchange service, are furnishing a comparable voice service to the customers in the exchange.” This requirement and various current notice requirements would be replaced with a streamlined process at the Michigan Public Service Commission (“Commission”), under which a provider could discontinue service to a local exchange by filing a notice with the Commission, publishing a notice in newspapers of local circulation, and serving both local customers and any interconnecting telecommunications providers. The bill does, not however, grant the right to a hearing or place the burden on withdrawing providers to present evidence that comparable service exists. If a customer or  interconnecting provider believes that alternative technologies do not provide reliable access to 9-1-1 services, they “may apply to the Commission to determine if the discontinuance of service is authorized under” the Bill. The Commission “may commence a proceeding to determine if the discontinuance of service is authorized under” the Bill. The Commission has a total of 180 days to make such a determination. If the Commission determines that there is no other “voice service provider offering comparable voice service with reliable access to 9-1-1 and emergency services through any technology or medium and shall conduct a request for service process to identify a willing provider of comparable voice service with reliable access to 9-1-1 and emergency services in that area, including the current provider.”

The Bill does not address how a discontinuance of service in an exchange will impact existing Interconnection Agreements and incumbent carriers’ requirements to provide access to the last mile loop under such Interconnection Agreements and specifically declines to create or expand any existing Commission jurisdiction and authority over “wholesale rights, duties, and obligations, including, but not limited to, interconnection and exchange voice traffic.” While the Bill defines "Comparable Voice Service" to “include[s] any 2-way voice service offered through any form of technology, including voice over internet protocol services and wireless services, that is capable of placing calls to and receiving calls from a provider of basic local exchange service,” it does not address whether or not such lines if used for alternative services, such as voice over internet protocol (“VoIP”), would be available for required resale under the Federal Telecommunications Act.

While the Bill anticipates that VoIP and wireless technologies would fill the void in areas where incumbent carriers discontinue service, the Bill does not address how the high cost installation and maintenance of such lines necessary for offering VoIP would be offered in rural areas, where incumbents would be most likely to discontinue service.

The Bill would also delay an anticipated rate reduction for many Michigan consumers by extending the date on which the intrastate switched toll access rate restructuring mechanism (“restructuring mechanism”) was to have been recalculated to adjust for changes in the number of access lines from Fall of 2014 to March 13, 2018. The restructuring mechanism was created in 2009 in 2009 PA 182, MCL 484.2310, to require certain incumbent local exchange carriers to lower their intrastate switched toll access rates to that which they were charging for interstate switch toll access. Those incumbent carriers which, 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 (“eligible providers”) draw funds from the restructuring mechanism in order to recover the lost intrastate switched toll access service revenues resulting from the required rate reductions. All other providers of retail intrastate telecommunications services and all providers of commercial mobile service are required to fund the restructuring mechanism. The anticipated 2014 recalculation was expected to significantly lower the amount contributing providers paid into the restructuring mechanism fund, thus lowering rates to Michigan consumers. Under the Bill, the anticipated rate relief expected from contributions to the restructuring mechanism will be delayed until 2018. However, the Bill does allow the Commission to reduce the amount disbursed from the restructuring mechanism on a pro rata basis for each exchange in which an eligible provider discontinues service.

SB 636 initially passed the Senate on a vote of 31-4 on December 5, 2013. Substitute H-2 passed the House on March 11, 2014 on a vote of 71-39. It was concurred in by the Senate on March 13, 2013 on a vote of 33-5 and given immediate effect.