0001 by xumiaomaio

VIEWS: 9 PAGES: 44

									Walter S. Foster            Scott A. Storey                Mark H. Canady           Dirk H. Beckwith           Robert M. Hartley         Of Counsel
   1878-1961                Charles A. Janssen             Eric E. Doster           Bruce A. Vande Vusse       Johanna M. Novak          Lawrence B. Lindemer
Richard B. Foster           Charles E. Barbieri            Stephen J. Rhodes        Anne M. Seurynck           Emily L. Matthews         John W. Ester
   1908-1996                James B. Jensen, Jr.           Melissa J. Jackson       Richard L. Hillman         Benjamin J. Price         David VanderHaagen
 Theodore W. Swift          Scott L. Mandel                Steven H. Lasher         Alan T. Rogalski           Ronald D. Richards, Jr.   Michael G. Harrison
   1928-2000                Michael D. Sanders             Nancy L. Kahn            Andrea J. Hool             Joseph E. Kozely          Allan O. Maki
John L. Collins             Sherry A. Stein                Deanna Swisher           Steven L. Owen             Pamela C. Dausman         Frederick B. Bellamy
   1926-2001                Brent A. Titus                 Mark J. Burzych          John M. Naber              Terrence G. Quinn         Gilbert M. Frimet
                            Brian A. Kaser                 Alan G. Gilchrist        Francis J. O’Donnell       Jacqueline E. Bayley      Deborah J. Williamson
Webb A. Smith               Robert E. McFarland            Thomas R. Meagher        Rebecca S. Davies          Ethan E. Rii
Allan J. Claypool           Stephen J. Lowney              Douglas A. Mielock       Barbara J. Oyer            Dana M. Bennett
Gary J. McRay               Kenneth T. Brooks              Scott R. Forbush         Claire V. Groen            Tina M. Sellers
Robert J. McCullen          Patricia A. Calore             Peter R. Albertins       Jennifer Kildea Dewane
Stephen I. Jurmu            Michael J. Bommarito           Christopher A. Ballard   John P. Nicolucci
William K. Fahey            Jean G. Schtokal               Scott A. Chernich        Michael D. Homier
Stephen O. Schultz          Glen A. Schmiege               Donald E. Martin         Molly L. Chan
William R. Schulz           Brian G. Goodenough            Jennifer M. Van Horn     Keith A. Castora
David H. Aldrich            Matt G. Hrebec                 Paul J. Millenbach       Kirsten M. McNelly


Writer's Direct Phone: 517.371.8154   Fax: 517. 367.7154                                             Reply To: Lansing



April 2, 2004
                                                                                       Hand Delivery and Electronic Service
Mary Jo Kunkle
Executive Secretary
Michigan Public Service Commission
6545 Mercantile Way
Lansing, MI 48911

Dear Ms. Kunkle:

Re:               In the matter of the application of the Michigan Exchange Carriers Association,
                  Inc. to determine if SBC’s discontinuance of toll service in the exchanges of
                  Hiawatha Telephone Company, Midway Telephone Company, Ontonagon
                  County Telephone Company, and Chippewa County Telephone Company is
                  authorized pursuant to the Michigan Telecommunications Act.
                  MPSC Case U-14100

Enclosed for filing please find the original plus four copies of (1) the Michigan Exchange
Carriers Association, Inc.’s Application to Determine if Discontinuance is Authorized
and to Prevent SBC from Discontinuing Service at this Time; (2) the Direct Testimony
of Agris Pavlovskis; (3) the Direct Testimony of James Patrick Brogan III; and (4) a
Certificate of Service. Please time-stamp the extra copy of the documents, and return
them with our courier.

Thank you for your assistance. If you have any questions, please feel free to call.

Very truly yours,

FOSTER, SWIFT, COLLINS & SMITH, P.C.
                                                           Digitally signed by

                  Ronald D. Richards                       Ronald D. Richards Jr.
                                                           DN: cn=Ronald D.
                                                           Richards Jr., c=US

  Signature Not
  Verified
                  Jr.                                      Date: 2004.04.02
                                                           14:29:28 -05'00'


Ronald D. Richards Jr.

Enclosures
cc:    William J. Champion III (via e-mail and 1st class mail))
       Harvey J. Messing (via e-mail and 1st class mail)
Mary Jo Kunkle
April 2, 2004
Page 2


bcc:      Agris Pavlovskis (via e-mail and 1st class mail)
          James Patrick Brogan III (via 1st class mail)
          Glen A. Schmiege (w/o encs)

S:\154\MECA\MPSC-Kunkle.040204.wpd
                                STATE OF MICHIGAN

              BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

In the matter of the application of            )
the Michigan Exchange Carriers                 )
Association, Inc. to determine if SBC’s        )
discontinuance of toll service in the          )
exchanges of Hiawatha Telephone                )
Company, Midway Telephone                      )      MPSC Case No. U-14100
Company, Ontonagon County                      )
Telephone Company, and Chippewa                )
County Telephone Company is                    )
authorized pursuant to the Michigan            )
Telecommunications Act.                        )
___________________________________            )

        APPLICATION TO DETERMINE IF DISCONTINUANCE IS AUTHORIZED
       AND TO PREVENT SBC FROM DISCONTINUING SERVICE AT THIS TIME

        The Michigan Exchange Carriers Association, Inc. (“MECA”), by its attorneys,

Foster, Swift, Collins & Smith, P.C., applies on behalf of its members to this

Commission, pursuant to MCL 484.2313(3), to determine whether discontinuance of

intraLATA toll service by Michigan Bell Telephone Company d/b/a SBC (“SBC”) in the

exchanges of Hiawatha Telephone Company, Midway Telephone Company,

Ontonagon County Telephone Company, and Chippewa County Telephone Company

(the    “Hiawatha   companies”)     is   authorized    pursuant    to   the   Michigan

Telecommunications Act, MCL 484.2101 et seq. (“MTA”). MECA opposes SBC’s

proposed discontinuance of service. That discontinuance is not authorized pursuant

to the MTA since alternative telecommunication providers are not furnishing the same

service to the customers in the affected exchanges, discontinuance is not in the public

interest, discontinuance would be detrimental to universal availability of toll service,

and there is no order authorizing changes to SBC’s toll calling plans. See MCL

484.2313(1) and (3), MCL 484.2205(2), and MCL 484.2312(4). More specifically,

discontinuance is inappropriate because:
       •     Discontinuance is contrary to this Commission’s November 5, 1998,
             Order in Case No. U-11525, which requires SBC to demonstrate that
             another provider is offering the same services to customers, including an
             optional toll calling plan that follows the structures of the Adjacent
             Exchange Toll Calling Plans (“AETCPs”) offered by SBC.

       •     Discontinuance is contrary to MTA section 313(1), which also contains
             the “same service” requirement.

       •     Discontinuance is not in the public interest and is contrary to MTA
             sections 313(3) and 205(2) since it will deprive customers of high quality,
             optional toll calling plans at flat rates.

       •     Discontinuance will harm customers by eliminating vital plans and
             reducing competitive alternatives.

       •     A Commission order requires the plans to remain in place, and no
             Commission order has authorized their alteration or elimination.

                           IMMEDIATE ACTION REQUIRED

       SBC published a notice referencing Case No U-14021, which indicates that it

intends to discontinue service on May 3, 2004. MECA requests that the Commission

act quickly to either (1) reject SBC’s notice of discontinuance on its face because SBC

has not demonstrated that another provider is offering the same services or (2)

schedule a hearing on this application and inform SBC that it cannot withdraw service

until a hearing is held. In order to give effect to the process established by section

313(3), it is clear that the provider cannot be allowed to discontinue service once an

appropriate application is filed in opposition to it. The public interest will be severely

harmed if SBC is allowed to discontinue service contrary to Commission order and

law.

                  GENERAL INFORMATION ABOUT THE PARTIES

       MECA is an association whose membership is comprised of 33 small

incumbent local exchange carriers (“ILECs”) in Michigan, including the Hiawatha



                                            2
companies in whose exchanges SBC proposes to discontinue service. MECA’s

members generally serve rural areas of the state. MECA has been involved since its

inception in 1987 in representing these ILECs before the Commission, in

administering the access and other tariffs that are filed on their behalf, and in

providing information, representation, and general assistance to its members in

intercompany relations, legislative matters, and general business matters relating to

telecommunications issues of interest to its members. MECA has been involved in

many proceedings at the Michigan Public Service Commission on their behalf,

including Case No. U-11525, involving SBC’s attempt to discontinue its provision of

stand-alone toll service to CLECs and the rural ILECs.

      SBC provides intraLATA toll service to customers residing in the exchanges of

MECA's members and to other customers throughout much of the state of Michigan.

      MECA's members provide access service to SBC in their exchanges where

SBC originates and terminates intraLATA toll service.

      BACKGROUND AND HISTORY OF SBC’S SERVICE DISCONTINUANCE

      SBC has attempted to discontinue its originating intraLATA toll service from

customers in rural ILEC exchanges in the past without allowing the Commission to

consider whether such discontinuance is authorized and in the public interest.

      The first attempt was in 1997 with regard to the service that SBC had provided

in Frontier Communications of Michigan exchanges. SBC, however, failed to follow

statutory discontinuance procedures and to give the Commission the chance to

consider public interest issues in a timely manner. Rather, in light of subsequently

expressed public concern, the Commission stepped forward to initiate an investigation

into the withdrawal. See In the matter, on the Commission’s own motion, to investigate

                                          3
Ameritech Michigan’s provision of intraLATA toll service to customers of competing basic

local exchange service providers, Case No. U-11525 (September 12, 1997 Order

Initiating Investigation). In its final order it the case, the Commission declared that

SBC must comply with applicable statutory requirements before it may withdraw

service from any exchange. (Case No. U-11525, November 5, 1998 Order). Among

other things, the Commission clarified the minimum requirement for discontinuance

that is set forth in MTA section 313(1), stating:

      The Commission finds that, pursuant to Section 313(1), before a
      telecommunication provider may lawfully discontinue providing . . . toll
      service to an exchange in which it presently serves, the provider must
      demonstrate that another provider is offering the same services to
      customers within that exchange. Those services must include an
      optional toll calling plan that follows the structures of the AETCP,
      although not necessarily the rates, as provided in the June 19, 1991
      order in Cases Nos. U-9568 and U-9569. Accordingly, before Ameritech
      Michigan may exit an exchange, it must demonstrate that there is
      another provider that offers customers in that exchange the option to
      purchase a one-half hour block-of-time, a two-hour block-of-time, or
      unlimited calling for a flat rate, although it is not necessary for the rates
      to be the same as those charged by the existing provider. [Case No. U-
      11525, November 5, 1998 Order, p 21 (emphasis added)].

SBC appealed from the Commission order in Case No. U-11525, but its appeal was

rejected soundly by the Court of Appeals. See Ameritech Michigan v Michigan Public

Service Comm, Ct App Docket No. 216126 (unpublished decision of December 28,

2001).

      Nevertheless, despite SBC’s failure to follow applicable statutory procedures,

the Commission did not require SBC to reenter the Frontier exchanges to provide toll

service. Since Staff had withdrawn its initial challenge to the SBC action, the

Commission found that it would be inappropriate to effectively re-open a case and

order SBC to return to exchanges that it had abandoned over one year and three


                                           4
months earlier in reliance on the lack of any objection.       (Case No. U-11525,

November 5, 1998 Order, p 20). However, the Commission explicitly stated that SBC

may not rely on its decision as precedent to support a withdrawal from any other

exchange. Id.

      SBC’s second discontinuance of service was in the local exchanges of Ace

Telephone Company of Michigan, Inc. in early 2003. See In the matter of SBC

Ameritech Michigan’s notice of discontinuance of intrastate intraLATA toll service to

customers in the local exchanges of Ace Telephone Company of Michigan, Inc., Case No.

U-13656. In that case, after SBC filed its notice of discontinuance, MECA and Ace

Telephone Company of Michigan, Inc. filed pleadings raising public interest issues

and seeking certain determinations, conditions, or assurances regarding the existing

intercarrier compensation paradigm between SBC and the small ILECs. However,

neither MECA nor Ace objected to the discontinuance due to the existence of

alternative calling plans for calling to adjacent exchanges. SBC responded to the

network issues by asserting once again that the public interest should not be reviewed

and also arguing that interconnection issues were not appropriate in the case. The

Commission did not address or resolve any of these issues, apparently finding the

lack of opposition to discontinuance to be persuasive, since the Commission did not

act on the MECA and Ace requests. SBC has now discontinued service, without the

case being closed.

      Here, MECA and the Hiawatha companies oppose discontinuance and have

filed timely applications with supporting testimony. Thus, here, the Commission

should hold a hearing to consider the statutory requirements and the public interest

thoroughly. On its face, SBC’s March 3, 2004, Notice of Discontinuance fails to

                                          5
demonstrate that another provider is offering the “same services” to customers, as is

required by this Commission’s order in Case No. U-11525. In light of this failure and

other statutory requirements, the Commission should make a determination that

SBC’s discontinuance of its AETCPs is not appropriate and is not authorized pursuant

to the MTA.

                        COMMISSION AUTHORITY TO REVIEW

       This Commission has the statutory authority to determine if discontinuance is

authorized and in the public interest.

       Pursuant to MTA Section 313(3), MCL 484.2313(3); MSA 22.1469(313)(3), a

person or other telecommunication provider affected by discontinuance may apply to

the Commission to determine if discontinuance is “authorized pursuant to this act.”

Despite SBC’s protestations to the contrary, MECA has continuously pointed out that

there are two parts to this determination.1 The first part is whether the minimum

standard of section 313(1) (the existence of an alternative, similarly structured

AETCP) is met. The second part is whether other criteria in other sections of the act

support discontinuance.




       1
          SBC has on prior occasions attempted to restrict a discontinuance proceeding to
review of a single criterion, i.e. whether one or more alternative providers are providing toll
service in the affected exchanges. This standard, however, is contained only in the first
subsection of section 313. That subsection is not an affirmative grant of authority to a
telecommunication provider to withdraw service if there is an alternative provider; rather,
it is a limitation that sets forth a fundamental prerequisite to discontinuance by stating that
the provider “may not” discontinue service unless there is an alternative provider of the
same service. In addition to the minimum criterion of subsection (1), other criteria in the
MTA apply under subsection (3). This should not be a surprise to SBC since MECA has
continuously referred SBC to this aspect of the law, including in briefs in the MPSC and
appellate proceedings in Case No. U-11525.

                                              6
       Discontinuance is not authorized if it conflicts with legislative restrictions in other

sections of the act, such as section 205(2), MCL 484.2205(2). Among other things,

section 205(2) requires the Commission to consider the quality, general availability,

and conditions for the regulated service, prior Commission orders, and the public

interest. MCL 484.2205(2). In addition, in accordance with section 312(4), SBC’s

AETCP “shall remain in effect . . . until altered by order of the commission.” MCL

484.2312(4) (emphasis added). Further, section 312(3), MCL 484.2312(3), states that

the Commission shall require that toll service is universally available to all persons

within the state.

       Here, SBC’s discontinuance is not authorized due to the lack of alternative

calling plans, the harm to public interest, the detriment to universally available service,

and the conflict with Commission orders and statutory requirements for AETCPs.

         SBC’S PROPOSED DISCONTINUANCE OF SERVICE IN THE
     EXCHANGES OF HIAWATHA, MIDWAY, ONTONAGON, AND CHIPPEWA
              IS NOT AUTHORIZED PURSUANT TO THE MTA

       SBC is proposing an exodus from twenty exchanges where local service is

provide by four ILECs in the Upper Peninsula.

       SBC is the provider of AETCPs in these exchanges. SBC’s AETCPs are high-

quality, reasonably priced alternatives to measured toll service. Numerous customers

in the affected, rural, Upper Peninsula exchanges rely on these plans to call adjacent

exchanges at a flat rate. Other providers do not offer equivalent AETCPs.

       As noted above, SBC is required to demonstrate that another provider is

offering the same services, including AETCPs, to customers in the affected

exchanges. SBC has not done so. In SBC’s Notice of Discontinuance that it filed with

this Commission, SBC did not even address the availability of AETCPs from other

                                              7
providers.   Rather, SBC states only that one or more alternative providers are

providing “intrastate intraLATA toll service” in the exchanges for which SBC intends

to discontinue service. (SBC Notice, para. 3). SBC’s notice is therefore deficient on

its face for failure to satisfy the statutory requirement and failure to comply with this

Commission’s order in Case No. U-11525 that SBC demonstrate that another provider

is offering the “same service” in each of the affected exchanges. Neither the notice

that SBC filed with this Commission nor the notice that SBC provided to customers

identifies any alternative plans.    Customers were not given adequate notice of

alternative choices.

      With regard to the public interest, pricing and availability of the AETCPs must

also be considered. If customers lack comparable AETCPs, the public interest will

certainly not be served by SBC’s discontinuance of its plans.

                                  MECA’S POSITION

      MECA takes the position that the Commission should not allow SBC to

discontinue intraLATA toll service to the specified exchanges at this time.

Discontinuance is not authorized pursuant to the MTA. There has been no showing

that adequate alternative services are available to customers.                Moreover,

discontinuance is contrary to the public interest and the Commission’s obligation to

preserve universally available toll service; and discontinuance would be improper

without a Commission proceeding to review SBC’s AETCPs and an order allowing

them to be eliminated.

      More specifically, MECA’s position is that SBC should not be allowed to

withdraw its AETCPs at this time in the absence of adequate, alternative plans from

other providers. SBC should be required to continue its AETCPs at least until the

                                           8
Commission is able to compare other viable alternatives for customers to call adjacent

exchanges.    SBC, however, has failed to show that adequate alternatives are

available. If, in the future, SBC shows that adequate, alternative plans are made

available by other providers, SBC must be required to give sufficient notice to its

customers of the alternative plans and their prices. If there are no comparable plans,

the Commission should order SBC to continue to provide its AETCPs to all customers.

In the alternative, the Commission should consider grandfathering existing customers

who desire SBC’s AETCPs and requiring SBC to continue providing AETCP service

to them if the Commission allows SBC to otherwise withdraw intraLATA toll service

in these exchanges.

           MECA AND ITS MEMBERS–INTEREST AND COORDINATION
                           OF PRESENTATION

      MECA is a voluntary association formed as a nonprofit corporation on a non-

stock basis. It is organized on a membership basis pursuant to MCL 450.2302.

MECA's members generally serve the rural areas of the state. MECA's members

primarily provide basic local exchange service and access service.

      MECA’s purpose is to provide information, representation and general

assistance to its members in intercompany relations, regulatory matters, legislative

matters, and general business matters relating to rural telecommunications issues of

interest to ILECs and to administer tariffs filed by the Association on behalf of its

members.     MECA has expert knowledge and information regarding the issues

involved in this case and many aspects of the telecommunications industry. MECA

has filed and administers MPSC tariffs for its members. MECA also addresses

general access and interconnection issues between its members and other providers.



                                          9
Significantly, MECA was granted intervention in and participated in the cases

establishing the AETCPs for SBC and Verizon (Case Nos. U-9568 and U-9569), the

non-adjacent exchange calling plan case that was eventually dismissed (Case No. U-

9946), the SBC rate case in which SBC attempted to modify its AETCPs to exclude

customers in MECA’s members’ exchanges that was subsequently dismissed (Case

No. U-9720), the case investigating SBC’s attempts to withdraw its toll service (Case

No. U-11525), SBC’s application to alter its AETCPs that was subsequently dismissed

(Case No. U-12077), and the expanded local calling case for local calling to adjacent

exchanges (Case No. U-12528). MECA’s participation here will provide continuity,

rare insightfulness, and a unique perspective to help the Commission with its

determination regarding the continuing need for AETCPs.

      On March 3, 2004, SBC filed a Notice of Discontinuance of Intrastate IntraLATA

Toll Service with this Commission indicating that it intends to discontinue the provision

of intrastate intraLATA toll service on May 3, 2004, to customers in the exchanges of

the subsidiaries of Hiawatha Communications, Inc. SBC also published a notice of

discontinuance on or about March 3, 2004, indicating that a person or provider

affected by the discontinuance could apply to this Commission by April 16, 2004, to

determine whether the discontinuance is authorized.          MECA is now filing this

application and supporting testimony on behalf of itself and its members, including the

Hiawatha companies.

      MECA and its members will suffer an injury if SBC is not required to continue

providing its AETCPs that are part of its intrastate intraLATA toll service. MECA's

members will suffer an injury from the loss of toll access revenues. The quality and

availability of service in their exchanges will also be greatly diminished.         The

                                           10
availability of the AETCPs is important not only to the Hiawatha companies but also

to all of MECA’s members. The ILECs will be harmed if SBC is given authority to

discontinue service without a statutorily-mandated public interest review. In turn,

MECA will be harmed because it is the advocate for its members on these issues.

MECA will suffer an injury as an association acting on behalf of its members and also

will be impacted by potential loss of membership if it is not allowed to adequately

represent its members.

      In Michigan, associations are in a special position and courts have recognized

(for judicial economy and policy reasons) that they do not need separate grounds for

standing but may act on behalf of their members in legal proceedings. White Lake

Improvement Ass’n v City of Whitehall, 22 Mich App 262, 274; 177 NW2d 473 (1970);

Muskegon Building and Construction Trades v Muskegon Area Intermediate School Dist,

130 Mich App 420; 343 NW2d 579 (1983), overruled on other grounds, Western

Michigan University Bd of Control v Michigan, 455 Mich 531; 565 NW2d 828 (1997);

Michigan Soft Drink Ass’n v Treasury Dept, 206 Mich App 392; 522 NW2d 643 (1994);

Telephone Ass’n of Michigan v Public Service Comm, 210 Mich App 662; 534 NW2d 223

(1995); In Re Filing Requirements, 210 Mich App 681; 534 NW2d 234 (1995). Michigan

Trucking Ass’n v Michigan Public Service Comm, 225 Mich App 424; 571 NW2d 734

(1997). The federal courts have also recognized the importance of association

standing as a representative of the association’s constituents. See National Motor

Freight Ass’n, Inc v United States, 372 US 246; 83 S Ct 688; 9 L Ed 2d 709 (1963); and

Hunt v Washington State Apple Advertising Comm, 432 US 333; 97 S Ct 2434; 53 L Ed

2d 383 (1977).




                                         11
      In addition, the Michigan Court of Appeals has recognized that a nonprofit

corporation may have standing to maintain an action to vindicate the interests of its

members. White Lake Improvement Ass’n v City of Whitehall, supra at 274. Similar to

the plaintiff in Whitehall, MECA is a nonprofit corporation that was created as a

telecommunications association for the purpose of representing and advocating the

interests of its members. Since 1987, MECA has vigorously advocated on behalf of

its members on numerous issues, including access and toll plans, before the Michigan

Public Service Commission and the Federal Communications Commission. For the

past seventeen years, MECA has routinely assisted its members and provided subject

matter expertise in cases involving toll service, toll access service, and

interconnection with SBC and other toll providers. Indeed, MECA was instrumental

in presenting evidence to this Commission to ensure that the AETCPs were

implemented and that they were to remain in place in the exchanges of MECA’s

members.

      The Michigan Court of Appeals has previously held that MECA itself had

standing to file an appeal from a Commission decision where its “members have a

substantial interest,” which is affected in a “manner different than the citizenry at

large.” In Re Filing Requirements, supra.

      MECA historically has advocated on behalf of its members’ collective interests

at the Michigan Public Service Commission. MECA files and maintains access tariffs

on behalf of its members and appears in all types of regulatory proceedings for them.

MECA has participated in access rate cases, generic inquiries, certification filings, toll

carrier change of service applications, cost study cases, Lifeline filings, and numerous

other types of proceedings at this Commission. MECA meets the standards laid out

                                            12
by this Commission in In Re Michigan Bell, Case Nos. U-8083, U-8084 and U-8085

(May 20, 1986 Order) pp 39-43, where the Commission found that an association of

telephone companies acting in a representative capacity on behalf of its members had

standing to represent them before the Commission. Like the telephone association

in that proceeding, MECA here is acting in a representative capacity on behalf of the

companies that provide telecommunication services; MECA was constituted in its

articles of incorporation and bylaws to represent its members in regulatory matters;

and the members have authorized MECA to represent them.

      Since MECA’s members clearly fall within the zone of interests of the MTA and

will suffer an injury in fact, their standing provides a basis for MECA’s standing as

their representative.

      Moreover, since MECA was organized to protect the rights and interests of its

members, it has a direct interest in SBC’s full compliance with the MTA and

Commission orders. Otherwise MECA, whose existence and health is dependent on

its members continued existence, will suffer the increased risk of membership loss.

In legal terminology, it will “wither or die” if it is unable to effectively protect its

members. Muskegon Trade, supra, at 428. Thus, MECA has a substantial interest in

this proceeding and will be detrimentally affected in a manner different from the public

at large, which will ensure sincere and vigorous advocacy in the instant case.

Therefore, MECA has standing to participate.

      MECA and its members have an interest in this case arising from the matters

set forth in the above paragraphs and the issues that will be or may be addressed in

this case. MECA has participated in numerous cases at the Michigan Public Service

Commission on behalf of its members, and MECA can provide valuable information

                                          13
and argument regarding the public interest and the facts at issue regarding access

and toll service.    MECA has information and expertise that can assist this

Commission.

      MECA will coordinate its presentation with its members in order to avoid

unnecessary delay or complication of the proceedings. In fact, MECA can help

expedite proceedings by coordinating its members’ presentations. MECA and the

Hiawatha companies have already coordinated their presentations by working

together to prepare a common set of testimony with the same witnesses testifying on

behalf of MECA and the Hiawatha companies. Both applications are supported by the

testimony of Mr. James Brogan III and Mr. Agris Pavlovskis. MECA and the Hiawatha

companies are filing separate applications to preserve their rights, but have

coordinated their filings and intend to continue to coordinate throughout the

proceedings.

                    CONCLUSION AND REQUEST FOR RELIEF

      MECA      respectfully   requests   that   this   Commission    determine    that

discontinuance of service by SBC is neither authorized nor in the public interest.

      MECA also respectfully requests that this Commission take immediate action

to schedule a hearing or reject SBC’s notice of discontinuance so that SBC does not

discontinue service on May 3, 2004, as indicated in its notice, to the detriment of the

public interest. If SBC discontinues service, MECA respectfully requests that the

Commission issue a cease and desist order, impose fines and penalties, take

whatever action is reasonable or necessary to protect and make whole ratepayers

and other persons who suffer an economic loss due to SBC’s actions, and order SBC

to pay MECA’s attorney fees and costs, pursuant to MCL 484.2601.

                                          14
                               Respectfully submitted,

                               FOSTER, SWIFT, COLLINS & SMITH, P.C.
                               Attorneys for the Michigan Exchange Carriers
                               Association, Inc.
                                                                                       Digitally signed by Ronald D.
                                                                                       Richards Jr.

                                                              Ronald D. Richards Jr.   DN: cn=Ronald D. Richards Jr.,



Dated: April 2, 2004           By: _________________________
                                                                                       c=US
                                                                                       Date: 2004.04.02 14:31:03 -05'00'
                                     Signature Not Verified




                                  Glen A. Schmiege (P37112)
                                  Ronald D. Richards Jr. (P61007)
                                  313 S. Washington Square
                                  Lansing, MI 48933
                                  (517) 371-8100
S:\154\MECA\DisconAPP4-1.wpd




                                15
                               STATE OF MICHIGAN

             BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

In the matter of the application of        )
the Michigan Exchange Carriers             )
Association, Inc. to determine if SBC’s    )
discontinuance of toll service in the      )
exchanges of Hiawatha Telephone            )
Company, Midway Telephone                  )     MPSC Case No. U-14100
Company, Ontonagon County                  )
Telephone Company, and Chippewa            )
County Telephone Company is                )
authorized pursuant to the Michigan        )
Telecommunications Act.                    )
___________________________________        )




                       Direct Testimony of Agris Pavlovskis




Dated: April 2, 2004
 1   Q.   Please state your name and business address.

 2   A.   My name is Agris Pavlovskis. My business address is 124 W. Allegan, Suite 1400,

 3        Lansing, Michigan, 48933.

 4   Q.   By whom are you employed, Mr. Pavlovskis?

 5   A.   I am employed by the Michigan Exchange Carriers Association, Inc. (“MECA”).

 6   Q.   Please describe MECA.

 7   A.   MECA is an association whose membership is comprised of 33 small incumbent

 8        local exchange carriers (“LECs”) in Michigan. MECA administers a Lifeline services

 9        pool and several intrastate tariffs, and addresses telecommunications-related

10        matters on behalf of its members. MECA’s members generally serve the rural areas

11        of the state.

12   Q.   What is your position with MECA?

13   A.   I am the President of MECA.

14   Q.   Please describe your education and experience in the telecommunications

15        industry.

16   A.   In December 1972, I graduated from the University of Oregon, Eugene, Oregon;

17        and, in December 1976, I received my M.S. in Economics from Portland State

18        University, Portland, Oregon. My graduate work was concentrated in econometrics.

19        Upon graduation, I taught the principles of economics at Portland Community

20        College from January 1977 until March 1978.

21               In August 1977, I was employed by the City of Portland as a Management

22        Analyst, in the Bureau of Management and Budget. In that capacity, I performed



                                               2
 1        statistical and budget analysis and forecasted service demand levels for several of

 2        the city’s bureaus.

 3               In October of 1978, I was employed by Continental Telephone Service

 4        Corporation, Western Region, as a Senior Economist/Cost Analyst. I conducted

 5        both embedded cost studies and incremental cost studies for various telephone

 6        services.

 7               In February 1981, I accepted the position of Senior Analyst/Finance within

 8        that same corporation. As a Senior Analyst/Finance, my duties were to administer

 9        the long-term debt and acquire long term loans for Continental Telephone’s Western

10        Region operating companies; I provided expert cost of capital testimony in rate case

11        proceedings; I also conducted financial studies and performed other duties as

12        assigned.

13               In August of 1984, I assumed the position of Coordinator/Access Costs. My

14        duties were to develop toll access rates by conducting FCC Part 36 cost separation

15        studies and FCC Part 69 access cost allocations; and I also testified on these and

16        toll access issues.

17               In September 1988, I joined MECA as the administrator of its intrastate

18        access pool. I was made President in 1993.

19   Q.   Have you ever testified before this Commission or any other regulatory

20        agency?

21   A.   Yes. I have testified on the cost of capital in the states of Arizona and Oregon. I

22        have also testified on access charges and on telecommunications competition in the

23        states of Idaho and Nevada. I have testified before this Commission on behalf of

                                               3
 1        MECA in Case No. U-9368 regarding Lifeline service, in Case No. U-10138

 2        regarding intraLATA dialing parity, in Case No. U-10860 regarding establishment of

 3        interconnection arrangements between basic local exchange service providers, in

 4        Case No. U-11525 regarding the provision of intraLATA toll service to customers of

 5        competing basic local exchange service providers, and in Case No. U-12528

 6        regarding implementation of the local calling area provisions of the Michigan

 7        Telecommunications Act.

 8   Q.   On whose behalf are you testifying?

 9   A.   I am testifying on behalf of MECA and its members, including Hiawatha Telephone

10        Company, Midway Telephone Company, Ontonagon County Telephone Company,

11        and Chippewa County Telephone Company (the “Hiawatha companies”).

12   Q.   How is intraLATA toll service provided in the exchanges of MECA’s members?

13   A.   When this Commission established the regulatory scheme for intraLATA toll and

14        access services, MECA’s members did not provide toll service. MECA’s members

15        relied on the toll tandems of Michigan Bell Telephone Company d/b/a SBC (“SBC”)

16        and Verizon North Incorporated (“Verizon”), while providing primarily only basic local

17        exchange service and access service. On the other hand, since SBC and Verizon

18        had toll tandems, in addition to local service and access service they provided

19        intraLATA toll service, including toll service in the exchanges of the MECA

20        companies.    To this day, MECA’s members primarily still provide only local

21        exchange service and access service, though some members do have toll affiliates.




                                                4
 1        Customers in small LEC exchanges are simultaneously local service customers of

 2        the LECs and toll service customers of SBC, Verizon, and other interexchange

 3        carriers.

 4               As a result, MECA’s members “subtend” the toll tandems of SBC and

 5        Verizon. MECA’s members provide access service to SBC, Verizon, and other

 6        interexchange carriers in exchanges where those carriers provide toll service.

 7        MECA’s members do not have networks to carry calls between exchanges other

 8        than for EAS and expanded local calling in some cases. Interexchange carriers,

 9        including SBC and Verizon, carry all non-local calls originating in small LEC

10        exchanges and terminating in other exchanges.

11   Q.   What is the purpose of your testimony?

12   A.   The purpose of my testimony is to provide the Commission with information

13        concerning the history, purpose, and importance of the Adjacent Exchange Toll

14        Calling Plans (“AETCPs”); the attempts by SBC to withdraw its intraLATA toll service

15        and eliminate or alter its AETCPs; and important public policy, public interest, and

16        other considerations (such as quality of service, general or universal availability of

17        toll service, pricing and affordability, and applicable Commission orders) affecting

18        this Commission’s determination of whether SBC’s proposed discontinuance of

19        service in the Hiawatha companies’ exchanges is appropriate and authorized

20        pursuant to the Michigan Telecommunications Act (“MTA”). I also recommend a

21        course of action to protect customers and the public interest.




                                                5
 1   Q.   What is MECA’s position in this proceeding?

 2   A.   MECA takes the position that the Commission should not allow SBC to

 3        discontinue intraLATA toll service to the specified exchanges at this time.

 4        Discontinuance is not authorized pursuant to the MTA. There has been no

 5        showing that adequate alternative services are available to customers.

 6        Moreover, discontinuance is contrary to the public interest and the

 7        Commission’s obligation to preserve universally available toll service; and

 8        discontinuance would be improper without a Commission proceeding to review

 9        SBC’s AETCPs and an order allowing them to be eliminated.

10               More specifically, MECA’s position is that SBC should not be allowed to

11        withdraw its AETCPs at this time in the absence of adequate, alternative plans

12        from other providers. SBC should be required to continue its AETCPs at least

13        until the Commission is able to compare other viable alternatives for customers

14        to call adjacent exchanges. SBC, however, has failed to show that adequate

15        alternatives are available.     If, in the future, SBC shows that adequate,

16        alternative plans are made available by other providers, SBC must be required

17        to give sufficient notice to its customers of the alternative plans and their prices.

18        If there are no comparable plans, the Commission should order SBC to

19        continue to provide its AETCPs to all customers.           In the alternative, the

20        Commission should consider grandfathering existing customers who desire

21        SBC’s AETCPs and requiring SBC to continue providing AETCP service to

22        them if the Commission allows SBC to otherwise withdraw intraLATA toll

23        service in these exchanges.

                                                6
 1   Q.   What are AETCPs?

 2   A.   AETCPs are optional, discount toll calling plans that allow customers to call adjacent

 3        exchanges at reduced toll rates. The SBC and Verizon AETCPs, as ordered by the

 4        Commission, provide residential customers with three options.             Residential

 5        customers have the option to purchase a one-half hour block of time, a two-hour

 6        block of time, or unlimited calling for a flat rate. Also, business customers have the

 7        first two options available.

 8   Q.   Are you familiar with the history, purpose, and importance of the AETCPs?

 9   A.   Yes. I was responsible for MECA’s filings in all the prior proceedings involving the

10        AETCPs and I testified in Case No. U-11525. MECA participated actively in these

11        cases to assure that the AETCPs were implemented and that they remain in place.

12        More specifically, MECA participated in the cases establishing the AETCPs for

13        SBC and Verizon (Case Nos. U-9568 and U-9569), the non-adjacent exchange

14        calling plan case that was eventually dismissed (Case No. U-9946), the SBC

15        rate case in which SBC attempted to modify its AETCPs to exclude customers

16        in MECA’s members’ exchanges that was subsequently dismissed (Case No.

17        U-9720), the case investigating SBC’s attempts to withdraw its toll service

18        (Case No. U-11525), SBC’s subsequent appeal of the Commission order in that

19        same case to the Michigan Court of Appeals, SBC’s application to alter its

20        AETCPs that was subsequently dismissed (Case No. U-12077), and the

21        expanded local calling case for local calling to adjacent exchanges (Case No.

22        U-12528). MECA also monitored changes to the MTA affecting AETCPs. I

23        also receive input from our members regarding the plans and customer needs

                                                7
 1        in their exchanges. My involvement in these matters has made me very

 2        familiar with the history, purpose, and importance of the AETCPs.

 3   Q.   Please describe the history and purpose of the AETCPs.

 4   A.   The AETCPs were ordered after the Commission had initiated a broad inquiry

 5        into the scope of local calling and extended area service (“EAS”) in Case No.

 6        U-9153.   EAS allows calls that would otherwise be toll calls (since they

 7        originate and terminate in different exchanges) to be treated as local calls,

 8        without the customer incurring any charges beyond a monthly, flat-rated, local

 9        service bill. Many policy issues were considered by the Commission prior to

10        making a determination that it would address customer concerns regarding the

11        scope of local calling not by expanding EAS areas but by implementing

12        AETCPs. Thus, the Commission’s solution to an important customer issue was

13        to mandate flat rate, discount toll calling to adjacent exchanges.

14              The specific plans for SBC and Verizon were established after contested

15        case hearings in an order in Consolidated Case No. U-9568 and U-9569. The

16        Commission ruled that the AETCPs must be offered to all of SBC’s and

17        Verizon’s toll customers regardless of whether their customers were located in

18        SBC, Verizon, or MECA’s members’ exchanges.              The AETCPs are an

19        important part of an overall policy of providing low cost calling between areas

20        with a community of interest. They are generally more beneficial to customers

21        than other optional toll calling plans offered by interexchange carriers.

22              When the Legislature enacted the MTA in 1991, the MTA included a

23        specific provision in section 312, requiring the AETCPs as ordered by the

                                              8
 1        Commission to remain in effect until altered by order of the Commission. Such

 2        was the public importance of these plans. The statute now requires AETCPs

 3        in some form to be offered by all toll providers and the language has been

 4        cleaned up, simplified, and modified to some extent.           Nevertheless, the

 5        requirement remains that the AETCPs shall remain in effect until altered by

 6        order of the Commission.

 7               Even when the MTA was amended in 2000 to require SBC and Verizon

 8        to offer expanded local calling to adjacent exchanges, the Legislature continued

 9        to require the AETCPs while exempting the small LECs from the obligation to

10        provide expanded local calling.

11   Q.   Are the AETCPs important?

12   A.   Yes. They were important to customers when they were implemented, and they

13        remain important yet today.

14               The Commission established a good policy when it ordered the AETCPs as

15        a solution to calling area concerns. This policy was far-sighted and customers have

16        benefitted by having the AETCPs available to them. The Legislature agreed when

17        it codified them in the MTA. The Commission even reiterated its commitment to

18        them in its decision in Case No. U-11525 when it rejected SBC’s attempts to avoid

19        statutory procedures before withdrawing intraLATA toll service from any given

20        exchange. These plans remain important today, especially in rural areas, such as

21        the Upper Peninsula exchanges of the Hiawatha companies. Customers in these

22        exchanges do not have expanded local calling available to them to call adjacent

23        exchanges at a flat rate.

                                               9
 1               It is especially important that customers have high-quality, low-cost, flat-rate

 2        options available to them. The original structure of the AETCPs as ordered by the

 3        Commission for SBC and Verizon has proven to be popular and effective. I have

 4        been unable to find other interexchange carriers who have implemented similar

 5        plans. Rather, their offerings appear to be very limited and do not provide viable

 6        alternatives for customers.

 7   Q.   Are you familiar with any attempts by SBC to alter or eliminate its AETCPs?

 8   A.   Yes. MECA has monitored these situations and has been involved in Commission

 9        proceedings relating to them.

10   Q.   Please describe SBC’s prior attempts to alter or eliminate its AETCPs.

11   A.   SBC has periodically attempted to undermine the AETCPs or to eliminate its

12        obligation to provide them. SBC attempted this unsuccessfully on several occasions

13        since 1989. First, in the case originally establishing the AETCPs in 1989, SBC had

14        proposed to discriminate against its own toll customers in small LEC exchanges by

15        providing the AETCPs to only the exchanges where SBC was the local provider.

16        Second, in 1990, SBC filed a rate case, U-9720, in which it proposed to deaverage

17        and exclude its toll customers in small LEC exchanges from its AETCP offerings.

18        Third, in 1997 and 1998 in Case No. U-11525, SBC attempted to attack the AETCPs

19        by changing the focus of a case that was initiated as an investigation into whether

20        SBC’s pattern of providing intraLATA toll services was consistent with applicable law

21        and the public interest. Rather than responding directly to the inquiry about the

22        lawfulness of its past activity, SBC attempted to alter the focus of the case by

23        inserting issues that would assist SBC in future attempts to withdraw toll service,

                                                10
 1        including the AETCPs. SBC redoubled its efforts and sought even greater authority

 2        to discontinue service in an appeal to the Court of Appeals. Fourth, in 1999, SBC

 3        filed an application proposing AETCP rate increases.      All these attempts to

 4        undermine or alter the AETCPs failed or were withdrawn due to opposition.

 5   Q.   Has SBC withdrawn intraLATA toll service in any exchanges?

 6   A.   Yes, in limited circumstances. SBC withdrew service in the exchanges of Frontier

 7        Communications of Michigan and the exchanges of Ace Telephone Company of

 8        Michigan, Inc.

 9   Q.   Please describe the circumstances surrounding withdrawal of service on

10        these two occasions and the Commission’s involvement.

11   A.   SBC withdrew service in 1997 from the exchanges served by Frontier

12        Communications of Michigan.       SBC, however, failed to follow statutory

13        discontinuance procedures and to give the Commission the chance to consider

14        public interest issues in a timely manner. Rather, in light of subsequently

15        expressed public concern, the Commission stepped forward to initiate an

16        investigation into the withdrawal in September 1997 in Case No. U-11525. In

17        its final order it the case, the Commission declared that SBC must comply with

18        applicable statutory requirements before it may withdraw service from any

19        exchange.    Among other things, the Commission clarified the minimum

20        requirement for discontinuance that is set forth in MTA section 313(1), stating:

21              The Commission finds that, pursuant to Section 313(1), before a
22              telecommunication provider may lawfully discontinue providing .
23              . . toll service to an exchange in which it presently serves, the
24              provider must demonstrate that another provider is offering the


                                             11
 1         same services to customers within that exchange. Those
 2         services must include an optional toll calling plan that follows
 3         the structures of the AETCP, although not necessarily the rates,
 4         as provided in the June 19, 1991 order in Cases Nos. U-9568 and
 5         U-9569. Accordingly, before Ameritech Michigan may exit an
 6         exchange, it must demonstrate that there is another provider that
 7         offers customers in that exchange the option to purchase a one-
 8         half hour block-of-time, a two-hour block-of-time, or unlimited
 9         calling for a flat rate, although it is not necessary for the rates to
10         be the same as those charged by the existing provider. [Case No.
11         U-11525, November 5, 1998 Order, p 21 (emphasis added)].
12
13   SBC appealed from the Commission order in Case No. U-11525, but its appeal

14   was rejected by the Court of Appeals.

15         Nevertheless, despite SBC’s failure to follow applicable statutory

16   procedures, the Commission did not require SBC to reenter the Frontier

17   exchanges to provide toll service. Since the Staff had withdrawn its initial

18   challenge to the SBC action, the Commission found that it would be

19   inappropriate to effectively re-open a case and order SBC to return to

20   exchanges that it had abandoned over one year and three months earlier.

21   However, the Commission explicitly stated that SBC may not rely on its

22   decision as precedent to support a withdrawal from any other exchange.

23         SBC’s second discontinuance of service was in the local exchanges of

24   Ace Telephone Company in early 2003. In Case No. U-13656, after SBC filed

25   its notice of discontinuance, MECA and Ace Telephone Company filed

26   pleadings raising public interest issues and seeking certain determinations,

27   conditions, or assurances regarding the existing intercarrier compensation

28   paradigm between SBC and the small ILECs. However, neither MECA nor Ace



                                         12
 1        objected to the discontinuance due to the existence of alternative calling plans

 2        for calling to adjacent exchanges. SBC responded to the network issues by

 3        asserting once again that the public interest should not be reviewed and also

 4        arguing that interconnection issues were not appropriate in the case. The

 5        Commission did not address or resolve any of these issues, apparently finding

 6        the lack of opposition to discontinuance to be persuasive, since the

 7        Commission did not act on the MECA and Ace requests. SBC has now

 8        discontinued service, without the case being closed.

 9   Q.   Why is withdrawal of service from the Hiawatha companies’ exchanges

10        different from withdrawal of service from Ace’s exchanges?

11   A.   Here, MECA and the Hiawatha companies oppose discontinuance and have

12        filed timely applications with supporting testimony. Also, unlike Ace Telephone

13        Company, the Hiawatha companies do not have expanded local calling to

14        adjacent exchanges and do not have an affiliate that provides toll service.

15        Customers of the Hiawatha companies would be left without adequate options

16        for calling adjacent exchanges.

17   Q.   Has SBC demonstrated that another provider is offering the same services

18        that SBC now offers to customers in the Hiawatha companies’ exchanges?

19   A.   No. SBC’s March 3, 2004, Notice of Discontinuance fails to demonstrate that

20        another provider is offering the “same services” to customers, as is required by

21        this Commission’s order in Case No. U-11525. SBC has not identified any

22        providers with optional toll calling plans that follow the structures of the AETCP.

23        SBC has not demonstrated that there is another provider that offers customers

                                              13
 1        in each exchange the option to purchase a one-half-hour block of time, a two-

 2        hour block of time, and unlimited calling for a flat rate. SBC merely asserts that

 3        one or more alternative providers are providing “intrastate intraLATA toll

 4        service” in the exchanges. This is wholly inadequate to meet the “same

 5        service” standard.

 6   Q.   Are you aware of any other toll providers that offer AETCPs with the same

 7        structure as SBC’s AETCPs in the Hiawatha companies’ exchanges?

 8   A.   No. MECA has attempted to find the tariffs of other interexchange carriers

 9        providing service in these Upper Peninsula exchanges and to determine

10        whether any provider offers adequately structured AETCPs. I have not yet

11        found any substitute plans with the same structure. As a telecommunications

12        professional with many years experience working with tariffs, I cannot imagine

13        how an ordinary SBC customer on his own in the Hiawatha companies’

14        exchanges could find an alternative with the same structure as SBC’s AETCPs.

15        Many tariffs are hard to find. Most do not have links to the MPSC website.

16        Others are extremely complex and difficult to decipher.

17   Q.   Did SBC provide its toll customers with information about alternative plans?

18   A.   No. SBC’s published notice to customers showed a blatant indifference to their

19        needs. SBC did not in the notice or elsewhere identify any alternative toll

20        providers, let alone give customers the details of any plans or a means of

21        contacting other providers. SBC did not even offer to help its customers with

22        a transition to another toll provider. Rather, SBC did just the opposite, stating

23        to its own toll customers, “If you have any questions, please contact your local

                                              14
 1        telephone provider.” It is inappropriate for SBC to transfer the burden to the

 2        Hiawatha companies to sort out the implications of SBC’s discontinuance of its

 3        service to SBC’s own toll customers. This is SBC’s obligation when it decides

 4        to attempt to discontinue service to its customers. The Hiawatha companies

 5        should not be placed in a position of recommending alternative toll carriers

 6        when there are rules against interfering in the selection of a toll carrier. Also,

 7        the Hiawatha companies should not have to attempt to address these matters

 8        with customers when the Hiawatha companies oppose the discontinuance.

 9        SBC’s cavalier attitude toward its own customers, as a result of outsourcing its

10        management to other states, shows poor corporate citizenship in Michigan.

11        SBC’s withdrawal under these circumstances would leave customers in a

12        precarious position.

13   Q.   Is it necessary to have another provider with an AETCP structured like SBC’s

14        prior to allowing SBC to discontinue service?

15   A.   Yes. The “same service” requirement, which includes the need for another provider

16        to offer an AETCP with the same three-tier flat-rate structure, is a minimum standard

17        that must be met before a toll provider can attempt to discontinue service in an

18        exchange.

19   Q.   Should the Commission consider public policy when making its determination

20        regarding discontinuance?

21   A.   Yes, if the law allows it.




                                               15
 1   Q.   What public policy considerations do you believe are important?

 2   A.   Important considerations include quality of service, general or universal availability

 3        of toll service and AETCPs, pricing and affordability, and the general public interest.

 4   Q.   What is universal availability?

 5   A.   In my opinion, universal availability is not just the nominal existence of service that

 6        can be purchased by all citizens in the state. Without adequate price and quality

 7        options for customers, toll service, though nominally in existence, would not truly be

 8        “available.” In the telecommunications industry, numerous policy issues factor into

 9        whether a service is universally available.            For example, the Federal

10        Communications Commission (“FCC”) considered numerous policy issues with

11        regard to its universal service determinations. The FCC considered principles such

12        as quality; reasonableness and affordability of rates; access in rural and high cost

13        areas to telecommunications services (including toll services) reasonably

14        comparable in quality and price to those in urban areas; and competitive neutrality.

15        Congress also believed these concepts to be important. Our state should have no

16        less concern for toll service being universally available to customers.

17   Q.   Would SBC’s discontinuance of service be detrimental to the universal

18        availability of toll service in Michigan?

19   A.   Yes. SBC’s AETCPs help to reduce the price differences between urban and rural

20        areas and to keep telephone service at affordable levels.




                                                16
 1   Q.   Is pricing an important consideration regarding discontinuance of service?

 2   A.   Without adequate, reasonably-priced alternatives, customers will be harmed, which

 3        is not in the public interest.

 4   Q.   Are you aware of any other toll providers in the Hiawatha companies’

 5        exchanges who have calling plans with the same prices as SBC’s AETCPs?

 6   A.   No. While it is difficult to know exactly what plans are available, I was unable to

 7        determine whether there were other providers with calling plans that are the same

 8        as SBC’s plans.

 9   Q.   Would SBC’s discontinuance of service be in the public interest?

10   A.   No. For all the reasons discussed above, discontinuance would be adverse to the

11        public interest. SBC has made no showing that its customers have adequate

12        alternatives to its toll service.

13   Q.   Has SBC filed an application with the Commission to alter its AETCPs?

14   A.   No. The prior Commission order in Case No. U-11525 found that no change to

15        SBC’s AETCP was warranted at the time and that SBC’s provision of AETCP

16        “should remain in place.” Despite this order, SBC here simply filed a notice of

17        discontinuance of toll service without getting permission to modify its AETCP.

18   Q.   In your opinion, would SBC’s discontinuance be consistent with the MTA?

19   A.   No.

20   Q.   What do you propose that the Commission do with regard to SBC’s intended

21        discontinuance?

22   A.   In accordance with the public interest, the Commission should not allow SBC



                                              17
 1        to discontinue intraLATA toll service to the specified exchanges at this time.

 2        More specifically, SBC should not be allowed to withdraw its AETCPs at this

 3        time in the absence of adequate, alternative plans from other providers. SBC

 4        should be required to continue its AETCPs at least until the Commission is able

 5        to compare other viable alternatives for customers to call adjacent exchanges.

 6        SBC, however, has failed to show that adequate alternatives are available. If,

 7        in the future, SBC shows that adequate, alternative plans are made available

 8        by other providers, SBC must be required to give sufficient notice to its

 9        customers of the alternative plans and their prices. If there are no comparable

10        plans, the Commission should order SBC to continue to provide its AETCPs to

11        all customers.     In the alternative, the Commission should consider

12        grandfathering existing customers who desire SBC’s AETCPs and requiring

13        SBC to continue providing AETCP service to them if the Commission allows

14        SBC to otherwise withdraw intraLATA toll service in these exchanges.

15   Q.   Please explain your “grandfathering” proposal.

16   A.   “Grandfathering” is a concept that has been used by the Commission to exempt

17        existing customers of a particular service from the need to change to a new

18        service when the existing one is being eliminated. For example, when local

19        providers were allowed to require all new customers to purchase touchtone

20        service, those existing customers with rotary dial service were allowed to retain

21        their service at rotary dial rates. The old service is simply phased out as

22        customers switch to the new service or move away. “Grandfathering” prevents

23        service disruption and allows customers to retain desired services, while also

                                             18
1             allowing the provider to move forward with its plans to discontinue other service

2             offerings. Grandfathering in this case would accommodate those customers

3             with AETCPs, while also allowing SBC to discontinue other intraLATA toll

4             services.

5   Q.        Does this conclude your prepared direct testimony?

6   A.        Yes, it does.



    S:\154\MECA\AgrisTestimony4-1.wpd




                                                 19
                               STATE OF MICHIGAN

              BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

In the matter of the application of        )
the Michigan Exchange Carriers             )
Association, Inc. to determine if SBC’s    )
discontinuance of toll service in the      )
exchanges of Hiawatha Telephone            )
Company, Midway Telephone                  )     MPSC Case No. U-14100
Company, Ontonagon County                  )
Telephone Company, and Chippewa            )
County Telephone Company is                )
authorized pursuant to the Michigan        )
Telecommunications Act.                    )
__________________________________         )




                   Direct Testimony of James Patrick Brogan III




Dated: April 2, 2004
 1   Q.   Please state your name and business address.

 2   A.   My name is James Patrick Brogan III. I am known as Jay Brogan. My business

 3        address is 108 W. Superior Street, Munising, Michigan 49862.

 4   Q.   By whom are you employed and in what capacity?

 5   A.   I am employed by Hiawatha Communications Incorporated (“HCI”) and manage the

 6        operations of all four of its local exchange carrier subsidiaries, Midway Telephone

 7        Company, Ontonagon County Telephone Company, Hiawatha Telephone Company,

 8        and Chippewa County Telephone Company (the “Hiawatha companies”). I am Vice

 9        President and Chief Operating Officer of HCI.

10   Q.   On whose behalf are you testifying?

11   A.   I am testifying on behalf of the Hiawatha companies and the Michigan Exchange

12        Carriers Association, Inc. (“MECA”).

13   Q.   Would you detail your educational background?

14   A.   I graduated from Lake Superior State University in 1989 with a Bachelors Degree

15        in Business. I also have an Associates Degree from Lake Superior State University

16        in Computer Engineering Technology.

17   Q.   Please explain your experience in the field of telecommunications?

18   A.   Since 1985, I have held various positions with the Hiawatha companies and HCI.

19        In 1985, I became Combination Man for Ontonagon County Telephone Company.

20        In 1989, I was promoted to Assistant Operations Manager for Ontonagon County

21        Telephone Company.

22              In 1999, I accepted the position of Director of Strategic Planning for HCI.

23        From 2002 to the present, I have been employed as the Vice President and Chief

24        Operating Officer of HCI.


                                                 2
 1               Also, I have worked on various projects for the independent telephone

 2        industry. I currently am on the Board of Directors of the Telecommunications

 3        Association of Michigan (“TAM”), and I am the Chairman of the TAM Small

 4        Company Committee and the TAM Foundation.

 5   Q.   Have you ever testified on telecommunications issues?

 6   A.   Yes, I have testified before the Michigan Senate Energy and Technology Committee

 7        regarding rural broadband development in Michigan.

 8   Q.   Are you familiar with the Hiawatha companies’ exchanges?

 9   A.   Yes. In my position with the Hiawatha companies, I have spent much time in the

10        companies’ exchanges and the communities located there.              I was raised in

11        Ontonagon, Michigan, and attended elementary, middle, and high schools there.

12        I currently live in Munising, Michigan.     I am a lifelong resident of the Upper

13        Peninsula.

14   Q.   Are you familiar with the AETCPs offered by Michigan Bell Telephone

15        Company d/b/a SBC (“SBC”) and SBC’s proposed discontinuance of toll

16        service?

17   A.   Yes. I am familiar with the SBC toll service offerings to SBC’s toll customers in our

18        exchanges since these customers are also our local service customers and since

19        we provide access service to SBC. Further, I have monitored SBC’s attempts to

20        discontinue service and have had discussions with SBC personnel regarding

21        discontinuance and the Hiawatha companies’ opposition to it.

22   Q.   What is the purpose of your testimony?

23   A.   The purpose of my testimony is to state the Hiawatha companies’ position and to

24        offer factual support for our Application. Specifically, my testimony will describe (1)

                                                 3
 1        the number of customers in the Hiawatha companies’ exchanges that currently are

 2        subscribed to SBC’s AETCPs, (2) the size and demographics of the service territory

 3        in the Hiawatha companies’ exchanges, (3) the discussions with SBC regarding

 4        discontinuance of service and the Hiawatha companies’ opposition to it, and (4) the

 5        lack of alternatives to SBC’s AETCPs.

 6   Q.   What is the Hiawatha companies’ position regarding SBC’s discontinuance of

 7        service?

 8   A.   The Hiawatha companies oppose SBC’s discontinuance. It is contrary to the public

 9        interest and is not authorized under the Michigan Telecommunications Act (“MTA”).

10   Q.   How many customers in the Hiawatha companies’ exchanges currently are

11        subscribed to the AETCPs provided by SBC?

12   A.   Currently, Midway Telephone Company has 242, Ontonagon County Telephone

13        Company has 7, Hiawatha Telephone Company has 72, and Chippewa County

14        Telephone Company has 359.

15   Q.   Please describe the general character of the Hiawatha companies’ exchanges.

16   A.   The Hiawatha companies serve very rural areas in the Upper Peninsula. Midway

17        Telephone Company has 698 residential and 94 business access lines in a service

18        territory of 930 square miles, or 0.85 customers per square mile. Ontonagon County

19        Telephone Company has 2,880 residential and 1,263 business access lines in a

20        service territory of 957 square miles, or 4.33 customers per square mile. Hiawatha

21        Telephone Company has 4,611 residential and 1,640 business access lines in a

22        service territory of 2,408 square miles, or 2.59 customers per square mile.

23        Chippewa County Telephone Company has 1,222 residential and 518 business




                                               4
 1        access lines in a service territory of 227 square miles, or 7.67 customers per square

 2        mile.

 3   Q.   Please describe the general economic conditions in these exchanges.

 4   A.   There is not a lot of large industry or economic activity in these rural exchanges, and

 5        the unemployment rate is high. Some communities have been hit hard by plant

 6        closings, such as the Copper Range Mine in White Pine, which employed about

 7        2000 people in the western Upper Peninsula. The people in our exchanges need

 8        affordable telecommunications service.

 9   Q.   Is there a need for AETCPs in these exchanges?

10   A.   Yes. Customers rely on the AETCPs for low-cost calling to areas where they have

11        a community of interest. Due to the rural character of our exchanges, schools,

12        hospitals, emergency services, business centers, state and county offices, courts,

13        dentist offices, attorney offices, employers, grocery stores, and other necessary

14        services often are not located in the same exchange as the caller. In thirteen of our

15        exchanges, a toll call is needed to reach a hospital, a school, or the police–or all

16        three of them. Many of these facilities are located in nearby adjacent exchanges.

17        Even friends and family often are in a neighboring exchange. The AETCPs are an

18        integral part of the package of telecommunication services needed by customers to

19        reach their communities of interest.

20                The communities served by Midway Telephone Company and Chippewa

21        County Telephone Company are especially reliant on adjacent exchange toll calling.

22        The communities served by Midway have fallen on hard economic times. Hospitals,

23        schools, and police all require a toll call that is an adjacent exchange call in almost

24        all circumstances.    The relevant business and town centers are in adjacent


                                                 5
 1        exchanges in Iron River, Bruce Crossings, Ewen, and L’Anse. The same is true for

 2        people in Brimley and Bay Mills who need to call Sault Ste. Marie from Chippewa’s

 3        service area.

 4   Q.   Have you had any discussions with SBC regarding its discontinuance of

 5        service in your exchanges?

 6   A.   Yes. SBC has raised the prospect on several occasions beginning in 2002, but SBC

 7        did not follow through until its recent notice was published and filed. The Hiawatha

 8        companies have consistently expressed their opposition to SBC’s proposed

 9        discontinuance. When SBC first raised the possibility of discontinuing service in

10        September 2002, we explained that we were not in favor of SBC’s decision to

11        withdraw. We explained our position again in October 2002 and warned SBC not

12        to tell the Staff that we were on board with SBC’s plans. They obviously did not

13        withdraw toll service at that time, but we heard from them again in January 2003.

14        We again reiterated that we were not on board with their plan. SBC obviously did

15        not discontinue service at that time but postponed their plans indefinitely. We heard

16        from them again in late January 2004 that they intended to withdraw service, and

17        once again we are opposed to it. We have informed the Staff of the developments

18        and our opposition to discontinuance throughout this time.

19   Q.   What impact would there be if SBC discontinued its service?

20   A.   Customers in the Hiawatha companies’ exchanges would be stranded without

21        reasonable alternatives to call areas where they have a community of interest.

22   Q.   Have other toll providers indicated that they will have adjacent exchange toll

23        calling options to assist the affected customers?




                                                6
 1   A.       I am aware of none who have offered to provide customers with a low-cost, flat-rate

 2            alternative to SBC’s plans.

 3   Q.       Do customers generally support SBC’s discontinuance of intraLATA toll

 4            service?

 5   A.       No. Customers are generally opposed to it. We have received many calls and

 6            comments from customers in opposition to discontinuance, asking what they can do

 7            to prevent it. Customers have also filed comments with the MPSC in opposition to

 8            it.

 9   Q.       Does this conclude your prepared direct testimony?

10   A.       Yes.

11
12   S:\154\MECA\BroganTestimony4-1.wpd




                                                   7
                               STATE OF MICHIGAN

                 BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

In the matter of the application of           )
the Michigan Exchange Carriers                )
Association, Inc. to determine if SBC’s       )
discontinuance of toll service in the         )
exchanges of Hiawatha Telephone               )
Company, Midway Telephone                     )                            MPSC Case No. U-14100
Company, Ontonagon County                     )
Telephone Company, and Chippewa               )
County Telephone Company is                   )
authorized pursuant to the Michigan           )
Telecommunications Act.                       )
__________________________________            )


                            CERTIFICATE OF SERVICE

       Ronald D. Richards Jr., being duly sworn, deposes and says that he is an
employee of Foster, Swift, Collins & Smith, P.C., and that on April 2, 2004, copies of
the Michigan Exchange Carriers Association, Inc.’s Application to Determine if
Discontinuance is Authorized and to Prevent SBC from Discontinuing Service at this
Time, the Direct Testimony of Agris Pavlovskis, The Direct Testimony of James
Patrick Brogan III, along with a copy of this Certificate of Service were served upon:

William J. Champion III                       Harvey J. Messing
Dickinson Wright, PLLC                        Loomis, Ewert, Parsley, Davis                                                     &
215 S. Washington Square, Ste 200             Gotting, P.C.
Lansing, MI 48933                             232 S. Capitol Avenue, Suite 1000
                                              Lansing, MI 48933-1525
E-Mail:          wchampion@dickinson-
                 wright.com                   E-Mail: hjmessing@loomislaw.com



Service was accomplished via electronic mail and by depositing same in a United
States Postal Service mail depository, enclosed in envelopes bearing first-class
postage, fully prepaid, and properly addressed.
                                                                                            Digitally signed by Ronald D.
                                                                                            Richards Jr.

                                                   Ronald D. Richards Jr.                   DN: cn=Ronald D. Richards Jr.,
                                                                                            c=US


                                              ______________________________
                                                  Signature Not Verified                    Date: 2004.04.02 14:32:39 -05'00'




                                              Ronald D. Richards Jr.



S:\154\MECA\COS.wpd

								
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