Q:Are cable providers covered under this act? A: Section 8(11) states that "Notwithstanding any other provision of this act, a provider possessing a franchise or operating with the consent of a municipality to provide and that is providing cable services within a metropolitan area is subject to an annual maintenance fee of 1 cent per linear foot of public right-of-way occupied by the provider's facilities within the metropolitan areas." Cable providers that also provide telecommunication services fall within this provision of the act, however cable providers that only provide cable television service are exempt from this provision.
Q:Is the rate cap designed to apply to the CLECs? A: The METRO Act defines ILECs by incorporating the definition contained in the Federal Telecommunications Act. 47 U.S.C. 251 (h) defines ILEC (Incumbent Local Exchange Carrier) as an entity that was providing telephone exchange service on 2/8/96. Consequently, the portion of section 8(6) that refers to ILECs would be applicable to those entities providing telephone exchange service on 2/8/96*. All others would be providers as referenced in section 8(6)(b), which states that "for all other providers in an exchange, the fee per linear foot for the provider's facilities located in the public right-of-way in that exchange shall be the same as that of the incumbent local exchange carrier."
* One exception to this is the Allband Communications Cooperative in Hillman, Michigan, which was issued a license by the Michigan Public Service Commission as a new ILEC in December of 2004.
Q:What method should providers utilize to count access lines for reporting to the METRO Authority? A: The methodology is to count actual switched wholesale (UNE-P and stand-alone loops) and retail access lines. Do not include any equivalency calculations for any facilities (e.g. T-1 = 24 lines).
Q:For telecommunication providers who share facilities, how does the METRO Authority assess their fees? A:Providers sharing poles, trenches, etc. may receive a 40% discount of their fees. This discount applies only to new facilities installed on or after November 1, 2002 pursuant to shared use agreements executed after November 1, 2002 (Sec. 9 of PA 48).
Q:How many telecommunication providers pay the maintenance fees?
A:
ILECs
40
CLECs
43
Broadband
3
Cable
17*
*Due to aggregate investment offset, cable companies are not invoiced (Sec. 8(12) of PA 48).
Q:Since inception in 2002 what amounts of maintenance fees have been collected from providers and distributed to eligible municipalities?
Q:How are the property tax provisions in section 8 applied?
A: The Michigan Public Service Commission (MPSC) administers Sections 8(14) through 8(17) of the METRO Act regarding the determination of how much of a state property tax credit a provider is able to receive from the payment of the METRO Act maintenance fee.
Section 8(14) through 8(17) of the METRO Act regarding the provider property tax credit states:
(14) A provider may apply to the commission for a determination of the maximum amount of credit available under section 13b(5) of 1905 PA 282, MCL 207.13b. Each application shall include sufficient documentation to permit the commission to accurately determine the allowable credit. Except as otherwise provided under subsection (15), the commission shall issue its determination within 45 days from the date of the application. Upon certification by the commission of the documentation provided in subdivisions (a) and (b), a provider shall qualify for a credit equal to the costs paid under this act, less the amount of any credit determined under section 13b(1) of 1905 PA 282, MCL 207.13b, and shall not be subject to subsection (16) if the provider files the following documentation under this subsection:
(a) Verification of the costs paid by the provider under this act.
(b) Verification that the provider's rates and charges for basic local exchange service, including revenues from intrastate subscriber line or end-user line charges, do not exceed the commission's approved rates and charges for those services.
(15) If the commission finds that it cannot make a determination based on the documentation required under subsection (14), it may require the provider to file its application under section 203 of the Michigan telecommunications act, 1991 PA 179, MCL 484.2203.
(16) The maximum credit allowed under subsection (14) or (15) shall be the lesser of the following:
(a) The costs paid under this act, less the amount of any credit determined under section 13b(1) of 1905 PA 282, MCL 207.13b.
(b) The amount that the costs paid under this act, together with the provider's total service long run incremental cost of basic local exchange service, exceeds the provider's rates for basic local exchange service plus any additional charges of the provider used to recover its total service long run incremental cost for basic local exchange service. "Total service long run incremental cost" means that term as defined in section 102 of the Michigan telecommunications act, 1991 PA 179, MCL 484.2102.
(17) The tax credit allowed under subsections (14) and (15) shall be the sole method of recovery for the costs required under this act. A provider shall not recover the costs required under this act through rates and charges to the end-users for telecommunication services.
Provider Eligibility for METRO Act Property Tax Credit
The Michigan Department of Treasury observations regarding the METRO Act property tax credit indicate that pursuant to sections 13b (1), (4), and (5) of Act 282 of 1905, the eligible expenditure credit in section 13b(1) and the maintenance fee credit in 13b(5) must be properly received, calculated, and applied for in the same one-year tax period. Thusly:
A. In order for a provider to receive the eligible expenditure credit, it must incur eligible expenses during the calendar year immediately preceding the tax year for which the credit is claimed. A provider is not eligible for this credit if (1) they are not subject to the annual section 8 METRO fees OR (2) they are subject to the annual fees, but fail to pay the annual fees that are due and payable as of May in that year.
B. The maintenance fee credit has the same eligibility requirements in that a provider is not eligible for this credit if they are not subject to the annual section 8 METRO fees OR they are subject to the annual fees, but fail to pay the annual fees that are due and payable as of May in that year.
Because the eligible expense credit only considers specific expenses incurred within a defined 12 month period and because the maintenance fee credit requires the payment of an annual fee by a certain date, a provider cannot accumulate (by not reporting or not paying) either multiple year expenses or annual maintenance fees and subsequently seek an accumulated credit for a future year. The qualifying criteria (eligible expenses and maintenance fees) must be fulfilled in that year or the credits are not available.
The METRO Authority annually sends a list of all provider payments for that tax period to the MPSC.
The MPSC contact person for METRO Act related questions is Ms. Susana Woolcock, (517) 241-6240.
Q: How are the credits allowed under section 6(11) in the Video Franchising Act (PA 480 of 2006) applied?
A: Section 6(11) of the Video Franchise Act states:
(11) A video service provider is entitled to a credit applied toward the fees due under subsection (1) for all funds allocated to the franchising entity from annual maintenance fees paid by the provider for use of public rights-of-way, minus any property tax credit allowed under section 8 of the metropolitan extension telecommunications rights-of-way oversight act, 2002 PA 48, MCL 484.3108. The credits shall be applied on a monthly pro rata basis beginning in the first month of each calendar year in which the franchising entity receives its allocation of funds. The credit allowed under this subsection shall be calculated by multiplying the number of linear feet occupied by the provider in the public rights-of-way of the franchising entity by the lesser of 5 cents or the amount assessed under the metropolitan extension telecommunications rights-of-way oversight act, 2002 PA 48, MCL 484.3101 to 484.3120. A video service provider is not eligible for a credit under this subsection unless the provider has taken all property tax credits allowed under the metropolitan extension telecommunications rights-of-way oversight act, 2002 PA 48, MCL 484.3101 to 484.3120.
The Michigan Public Service Commission (MPSC) administers the Video Franchise Act and explains the application of Section 6(11) relating to how/when a provider is entitled to a Metro Act property tax credit toward local franchise fees as follows (paraphrased):
The METRO Act maintenance fees paid by a provider minus any METRO Act property tax credits taken on their property tax application forms submitted to the Michigan Department of Treasury is the amount that can be applied to section 6(11) of the Video Franchise Act. If the MPSC has approved all of the METRO Act maintenance fees paid by the provider that amount can be applied as the METRO Act property tax credits to the provider's property tax forms. In most cases, the franchise fees minus the METRO Act tax credit is zero, thus there is no credit available to be applied. Unless a provider is not able to claim all of the property tax credit (or Treasury disallows any part), there would be no application of this section. Generally, all providers are allowed all of the METRO Act tax credits on their property tax application forms.
For example:
2009 METRO Act fees paid by provider XX =
$15,000,000
Minus 2009 METRO Act Property Tax Credit
Approved by MPSC
- $15,000,000
Video Service Provider Credit
$0.00
If, for some reason, a credit is due under Section 6(11) of the Video Franchise Act, the MPSC will contact METRO Authority for information regarding the amount of linear footage reported by the provider within the franchising entities' public rights-of-way and the rate to use in calculating the credit.
The MPSC contact person for Video Franchise Act questions is Mr. Ryan P. McAnany, (517) 241-6139.
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