SBC Michigan's request is reasonable

by Larry Meyer
MRA Chairman and CEO

A struggle is brewing between SBC Michigan and its competitors—you may have seen or heard ads for both sides in the media. Having reviewed the arguments, Michigan Retailers Association supports SBC Michigan’s filing at the Michigan Public Service Commission.

Michigan’s largest local telephone company is making a reasonable business request for the ability to recover the cost of providing and maintaining the lines that it leases to its competitors. It doesn’t make sound business sense to have a company subsidize its competitors.

The current below-cost wholesale rates not only hurt SBC Michigan and its employees, but also Michigan businesses and consumers. Many competitive phone companies in our state are not investing in their own facilities and they are not creating Michigan-based jobs. And without this change, SBC Michigan has fewer dollars to invest in jobs and infrastructure.

Our economy is suffering because of these low wholesale rates, and that makes our state less desirable for new businesses and residents to grow and relocate. Consumers also are not getting the benefits of an advanced network, improved efficiency and opportunities for new and innovative technology applications.

Michigan’s wholesale rates should be right around $25, an increase of roughly $10. Even one of the largest competitors to SBC Communications agrees, as evidenced by Sage Telecom’s seven-year deal with SBC to replace the regulatory-mandated wholesale rates. This negotiation demonstrates that telephone companies can come together and accomplish fair, market-based agreements.

The Commission needs to establish accurate wholesale pricing now, which truly reflects SBC Michigan’s costs. A positive ruling on this issue will spur investment and job growth in Michigan’s telecommunications industry and our economy. Michigan’s consumers, businesses and economy deserve to have a solid telecommunications industry they can depend upon.

State government says it is committed to growing jobs and increasing investments in Michigan. SBC Michigan’s ability to recover the cost of providing the lines it leases to competitors is necessary for Michigan’s continued growth and success.