November 14, Please contact the undersigned if you have any questions.

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1 JACK C. DAVIS PC JAMES R. NEAL MICHAEL G. OLIVA MICHAEL H. RHODES JEFFREY L. GREEN JEFFREY S. THEUER 1 KEVIN J. RORAGEN RICHARD W. PENNINGS TED S. ROZEBOOM SARA L. CUNNINGHAM JAMES F. ANDERTON, V 3 MICHAEL G. STEFANKO 7 MIKHAIL MURSHAK 4,5,6 DOMINIC R. RIOS ALAN G. ABOONA MARK A. IAFRATE November 14, 2018 OF COUNSEL: KARL L. GOTTING PLLC MICHAEL A. HOLMES PAULA K. MANIS PLLC 2,8 KELLY REED LUCAS 8 YING BEHER 1 ALSO LICENSED IN MD 2 ALSO LICENSED IN OH 3 ALSO LICENSED IN FL 4 ALSO LICENSED IN CT 5 ALSO LICENSED IN NY 6 ALSO LICENSED BY USPTO 7 ALSO CPA 8 EASTWOOD OFFICE Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 W. Saginaw Highway P.O. Box Lansing, MI Re: Case No. U Dear Ms. Kale: Enclosed for electronic filing on behalf of the Telecommunications Association of Michigan, in the above captioned case, are the Comments of the Telecommunications Association of Michigan. Please contact the undersigned if you have any questions. Very truly yours, LOOMIS, EWERT, PARSLEY, DAVIS & GOTTING, P.C. MAH:kms Enclosures Michael A. Holmes DOWNTOWN LANSING OFFICE: 124 W. ALLEGAN STREET, SUITE 700 LANSING, MI GRAND RAPIDS OFFICE: 100 GRANDVILLE AVE, SW, SUITE 202 GRAND RAPIDS, MI EASTWOOD OFFICE: 2400 LAKE LANSING ROAD, SUITE E LANSING, MI

2 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC COMMISSION In the matter, on the Commission s own ) Motion, to determine potential changes ) Case No. U To the Lifeline discount pursuant to ) MCL ) ) Comments of the Telecommunications Association of Michigan The Telecommunications Association of Michigan (TAM) 1 hereby submits the following comments in response to the solicitation of comments by the Michigan Public Service Commission ( Commission ) in its October 24, 2018 Order (Order) in the abovedocketed case. Introduction and Background The Order was issued to seek information pertaining to changes in the administration of state and federal Lifeline Programs resulting from various FCC Orders, particularly the Third Report and Order, Further Report and Order, and Order or Reconsideration in WC Docket No , Order No. FCC 16-38, rel d April 27, 2016 (2016 Lifeline Modernization Order). Of particular significance for Michigan is that the 2016 Lifeline Modernization Order revised the customer eligibility criteria for the federal Lifeline Program. As a result of those changes in the federal eligibility criteria, many customers who were previously eligible for federal Lifeline discounts under MTA Section 316 because they participated in one of four federal assistance programs or their income 1 TAM is a trade-association of whose principle members are Local Exchange Carriers serving primarily rural areas and small town in Michigan. TAM has 30 ILEC members and 6 CLEC members. As the successor to the Michigan Exchange Carriers Association (MECA), TAM administers a Lifeline Pooling Program for the majority of its members companies. The Lifeline Pool administered by TAM was originally approved by the Commission in a June 14, 1990 Order in MPSC Case No. U

3 did not exceed 150% of the federal poverty guidelines (1) will no longer be eligible to participate in the federal Lifeline Program and (2) will no longer receive the federal discounts. Conversely, the 2016 Lifeline Modernization Order added two federal assistance programs, participation in which makes customers eligible for the federal Lifeline Program. As a result, customers who participate in the two newly listed federal assistance programs that are not included in the MTA Section 316 eligibility criteria will be entitled to receive the federal Lifeline discounts but not the state Lifeline discounts. In the Order, the Commission seeks comments as follows: The Commission requests comment on the following matters related to the provisions of Section 316: (1) the amount of the current Lifeline discount being applied to eligible customer bills by the providers of BLES in Michigan pursuant to Section 316: (2) how the current discount will be affected by the change in the federal reimbursement provisions; and (3) if affected, what the new Lifeline discount for Michigan customers will be and when it will apply. Order at p 4. TAM s comments will address the three specific topics on which comments are sought in the sequence listed by the Commission in the Order. In addition, TAM will provide its perspective on public policy issues involving the administration of state and federal Lifeline programs resulting from the 2016 Lifeline Modernization Order. Discussion As the Commission indicated in the Order, the 2016 Lifeline Modernization Order changed the customer eligibility criteria for the federal Lifeline program. As will be discussed in more detail below, one result of the change in those federal eligibility criteria is that low income customers of a Michigan Basic Local Exchange Service Provider may be eligible for state Lifeline discounts under MTA 316 but not federal discounts the federal 2

4 Lifeline program or vice versa. The different sets of eligibility criteria and different Lifeline discounts under the state and federal programs, respectively, will require the administration of two separate and different Lifeline programs in Michigan. Moreover, the processes and procedures to apply these eligibility criteria will be different under the two programs. As the Commission noted: As a result of the changes to the federal eligibility criteria, after December 31, 2018, there will be two different methods for checking customer eligibility for the discount for Michigan Lifeline customers. First, all residential basic local exchange service (BLES) providers (including wireline eligible telecommunications carriers (ETCs)) operating in Michigan will continue to use the Michigan Lifeline Eligibility Database (MLED) to ensure those customers are eligible for Lifeline service pursuant to the requirements set forth in Section 316 of the MTA. Second, all ETCs (wireline and wireless) seeking federal support for Lifeline service will be responsible for ensuring that subscribers are enrolled or recertified under the FCC s new eligibility criteria, and those ETCs may choose to rely on the Universal Service Administrative Company (USAC) to conduct the eligibility recertification process. Order at pp 2-3. The result of this need to employ two different methods of verifying customers eligibility will be an increase in the administrative burden and expense for all companies that offer residential BLES services in Michigan. In addition, the existence of two separate Lifeline programs will likely cause additional customer confusion and inconvenience, as well as a significant financial burden for those low income customers who will see a drop in the amount of their Lifeline Discount because they will no longer be eligible for the federal discount. TAM appreciates that the Commission sought and received a waiver from the FCC to continue to have Michigan administer the state eligibility criteria for the federal Lifeline program, as well as two extensions of the original waiver. This waiver, as extended, postponed the day of reckoning, so to speak, but did not fix the underlying problem. TAM urges the Commission to reach out to the Michigan Legislature, as well as federal policy 3

5 makers, to take appropriate action to restore the consistency in state and federal Lifeline eligibility criteria and eliminate the need to administer two separate programs. 1.) Current Lifeline Discount amounts being applied to eligible customers bills. There are two possible discount amounts available to customers today, depending on the eligibility criteria a customer uses to qualify for the Lifeline program. For convenience of understanding TAM has identified these customers as Group A and B, respectively. Group A. Customers who qualify for the Lifeline program using one of the eligibility criteria listed below receive a federal discount and a Michigan-specific discount totaling $11.25 per month (up to $12.35 for customers age 65 or older) on voice, bundles of voice and broadband services. The $11.25 consists of a $9.25 federal discount and a $2.00 state discount. 2 Medicaid Federal Public Housing Assistance Supplemental Security Income Supplemental Nutrition Assistance Program Low-Income Home Energy Assistance Program National School Lunch Program Temporary Assistance for Needy Families Household income below 150% of Federal Poverty guideline Group B. Customers who qualify for the Lifeline program using one of the eligibility criteria listed below receive a federal discount of $9.25 per month on voice, broadband, or bundles of voice and broadband services. Customers in this Group B do not qualify for the Michigan-specific discounts. Veterans Pension Benefit Program Veterans Survivor s Benefit Program 2 The state discounts are not available for a stand-alone broadband service, only voice service or a bundle of voice and broadband service. 4

6 2.) How the current discount will be affected by the change in the federal reimbursement provisions. The 2016 Lifeline Modernization Order has eliminated federal Lifeline discounts that low income customers previously received pursuant to state eligibility criteria for those criteria which are no longer listed in the federal eligibility criteria. Participation in Low Income Home Energy Assistance Program, National School Lunch Program s Free Lunch Program, and Temporary Assistance for Needy Families will no longer qualify low income customers to receive the federal discount of $9.25. Similarly, low income customers whose household income exceeds 135% of the Federal Poverty Guidelines will no longer qualify to receive the $9.25 discount. Previously low income customers with household income up to 150% of the Federal Poverty Guidelines received the $9.25 discount. These two types of low income customers will receive only the $2.00 state discount. 3 In the 2016 Lifeline Modernization Order, the FCC preserved the authority of states to establish, administer and support state Lifeline programs with different eligibility criteria then the federal eligibility criteria. However, the FCC made it clear in the 2016 Lifeline Modernization Order that (1) such state Lifeline programs will have to be funded entirely by the state, and that (2) there will not be federal reimbursement to providers for Lifeline discounts given to customers under such state programs. 4 3 Such customers who are age 65 or older will also receive the $3.10 senior discount. 4 See 2016 Lifeline Modernization Order at

7 will apply? 3.) What the new Lifeline discount for Michigan Customers will be and when it The answer to this question revolves around the interpretation of Section 316(4), particularly, the second sentence in this subsection. MTA 316(4) provides as follows: (4) The total reduction under subsection (2) or (3) shall not exceed 100% of all end-user common line charges and the basic local exchange rate. The dollar amounts in subsections (2) and (3) shall be adjusted annually to reflect any increases or decreases in the federal contribution. As addressed above, the changes in the federal eligibility criteria (1) to eliminate 4 of the qualifying federal programs; and (2) to lower the income threshold will mean that Lifeline customers whose eligibility for federal discounts was based on criteria no longer available will have their federal contribution to their discount reduced by $9.25. It is TAM s position that MTA 316(4) should be interpreted to mean that this reduction in the federal contribution results in a $9.25 reduction in the total discount for such Lifeline customers who no longer meet the revised federal eligibility criteria. Such customers will receive only the $2.00 state discount established by the Commission s pre-mta Orders. Customers age 65 will receive an additional discount of $12.35-$9.25, or $3.10, for a total of $5.10. Conclusion As stated above, TAM urges the Commission to recommend changes to the MTA or federal policy (as reflected in the 2016 Lifeline Modernization Order) to restore the consistency between state and federal Lifeline eligibility criteria and to eliminate the loss of the federal discount for those customers who only meet the state eligibility criteria. 6

8 Such consistency will also avoid the significant burden, expense and potential confusion of having to administer two separate Lifeline programs. Respectfully submitted, TELECOMMUNICATIONS ASSOCIATION OF MICHIGAN Date: November 14, 2018 By: Michael A. Holmes (P24071) Its: General Counsel 600 W. Shiawassee Street Lansing, MI