Commissioners			Public Service Commission
	John G. Strand      	6545 Merchantile Way
	John C. Shea        	P.O. Box 30221
	David A. Svanda	        Lansing, Michigan 48909-7721

John Engler, Governor

DEPARTMENT OF COMMERCE
Kathleen M. Wilbur, Acting Director

Federal Communications Commission
1919 M Street, N.W.
Washington, D.C. 20554

Dear Sirs:

Attached are comments from the Michigan Public Service Commission in CC Docket No. 96-45. Respectfully submitted,

John G. Strand, Chairman
John C. Shea, Commissioner
David A. Svanda, Commissioner

In the Matter of
Federal-State Joint Board on
Universal Service

Before the
Federal Communications Commission
Washington, D.C. 20554

CC Docket No. 9645

Comments of the Michigan Public Service Commission

April 11, 1996

Comments of the Michigan Public Commission

Introduction:

On March 8, 1996, the Federal Communications Commission (FCC) issued a Notice of Proposed Rulemaking and Order Establishing Joint Board (Notice) to implement the Congressional directives set out in Section 245 of the Communications Act of 1934, as amended by the Telecommunications Act of 1996. The FCC initiated this rulemaking to define services that will be supported by federal universal support mechanisms, to define those support mechanisms and to recommend other changes to the FCC's regulations to implement the universal service directives of the 1996 Act. Due to the limited available to respond to this Notice, the Michigan Public Service Commission will limit its comments to the area which it feels is fundamental to developing an approach to universal service support which serves the national and state specific public interest.

The Michigan Public Service Commission comments will cover the following areas:

The definition of core services to be covered by any support mechanisms;

The method for administering the support mechanism;

The scope and identification of services for low income persons.

Core Services to be Covered by a Universal Service Support Mechanism

The Michigan Public Service Commission believes the FCC should adopt a definition of core services which embodies universally available and affordable basic telecommunications services Rather than create a list of specific FCC should consider local exchange service and access to toll service as basic to the needs of the nation's citizens. These services should be defined in a matter which will permit universal service support to apply to different services as telecommunications technology advances. As the telecommunications marketplace or the customers therein perceive more and different services necessary to preserve the public health, safety and general welfare, those services should be candidates for support. Current Michigan law offers an approach which provides the FCC with the appropriate definition for core services. This definition is:

Core services: the provision of an access line and usage within and between local calling areas for the transmission of high-quality 2-way interactive switched voice or data communication.

In order to avoid disputes concerning universal service support fund subsidization between states, the Michigan Public Service Commission recommends the FCC utilize the following approach. A national funding mechanism should be established. The funds collected would then be applied to support universal service on a individual state basis. For example, the funds generated in Michigan would be collected using the FCC prescribed method. These would then be used to support universal in high cost areas within Michigan.

The FCC should determine the magnitude of the universal service support funding by determining variation of a specific area's cost of service from a national norm. While Michigan uses a long run incremental cost of service approach to determine just and reasonable rates, historical costs would appear to be the most readily available and consistent across the country. Historical costs should therefore be used to establish that norm. In keeping with recommended state-specific cost support, company specific study areas by state should be utilized.

Once the size of the support funding has been determined, the funding mechanism should be one which determines contributions based on a provider's gross revenues from the provision of telecommunications services by providers (as defined by the Act). Funds should be collected via a flat rate which would be billed monthly.

Scope and Identification of Services for Low Income Persons

As a component of universal service, the Michigan Public Service Commission believes low income assistance for telecommunications services should continue and be modestly expanded in scope. Low income assistance should consist of the following programs:

1. Link-Up America

2. Lifeline assistance coupled with limitations on price increase percentage within a specified time period

3. Special needs equipment vouchers or subsidization

4. A special low income local service offering with very low price and very limited features: e.g., toll restrictions limited number of local calls with free calls to schools, medical services and emergency services.

Conclusion

The Michigan Public Service Commission encourages the FCC to develop an approach to maintenance of universally available, reasonably priced telecommunications services which incorporates the flexibility to change over time with little or no administrative intervention. Further, as Congress allowed the States and the State Commissions the opportunity to deal with local telecommunications issues in the Telecommunications Act of 1996, the FCC should structure a support program which sets only broad guidelines affording the States substantial discretion to administer support funding.