ISPs vs Bells - Email FCC

[Derrick Storren <dekkard@sprynet.com>]

Baby Bells want us to pay by the minute.  An opportunity to tell the FCC
what we think via email at isp@fcc.gov -- article follows.
*****************************************

By Michelle V. Rafter 

LOS ANGELES - Regional phone companies and Internet service providers
are waging a war of words over Internet traffic on the nation's local
telephone network and who should pay for upgrades as the online boom
continues. 

As a drama, the phone companies vs. Internet providers contest is dry,
complicated stuff, lacking the sex appeal of, say, the power struggle
between Netscape and Microsoft for control of the personal computer
desktop. 

Even so, analysts and other industry watchers counsel consumers and
businesses to take heed of the tug of war because it could affect how
much they pay to use the Internet, and ultimately, how they connect to
it. 

In one corner, Pacific Bell, Bell Atlantic and other regional phone
carriers say the growth of Internet traffic is pushing local telephone
networks to the breaking point. 

Pacific Bell, for example, says Internet surfers use its phone lines an
average of 45 minutes a day -- more than twice the amount the network
was built to handle. Heavy Internet use in Silicon Valley led to brief
service outages in that area earlier this year, the company said. 

Pacific Bell and other local phone companies say they've poured millions
of dollars into hardware improvements as a result of Internet traffic,
improvements they claim would otherwise have been unnecessary. 

To help defray costs, phone companies think providers should pay for
service on a per-minute basis, the way long-distance companies do,
rather than by the line, like other business phone customers. Internet
providers have been exempt from paying so-called access fees under a
1983 federal ruling meant to foster growth of compute data networks. 

On the other side, Internet service providers say phone companies have
it all wrong. A recent report sponsored by the Internet Access
Coalition, an industry lobby group, maintains computer traffic poses no
threat to local phone networks and that earlier phone-company studies
identifying trouble spots were based on theoretical claims and a few
areas with engineering and planning problems that could easily be
rectified. 

If Internet traffic was such a threat, phone companies wouldn't be
exacerbating the problem by jumping into the Internet access business
themselves, providers say. 

Rather than hurting phone companies, Internet traffic has been a
windfall, according to the coalition. In 1995, local phone companies
spent a total of $245 million adding 6 million residential phone lines
used primarily for Internet access, but reaped $1.4 billion in revenue
on those lines, the group said. 

If providers are required to pay access fees, they'll have no choice but
to raise their rates, which could stifle Internet growth just as it's
taking off, they say. 

Internet providers and phone companies are arguing their respective
positions in Washington, where the Federal Communications Commission is
considering the access-fee issue. 

As part of ongoing telecommunication industry reform, the FCC said in
late December it would cut access fees levied on long-distance carriers
and is investigating options for doing that. But the agency held off
making a decision affecting Internet use to allow time for parties with
an interest in the issue to present their cases. 

The FCC took the unusual step of setting up an e-mail address --
isp@fcc.gov -- consumers and others can use to send their thoughts.
Internet providers and phone companies have until Feb. 21 to submit
formal comments, and the agency is expected to make a ruling later this
year. 

Even if the FCC levies access fees on providers and companies raise
rates accordingly, it won't dampen consumers' love affair with the
Internet, some analysts said. 

If, for example, Internet providers passed through an access fee of 1
cent a minute, a subscriber spending 10 hours online a month would pay
an extra $6 -- hardly a deterrent, said David Goodtree, an analyst with
Forrester Research in Cambridge, Mass. 

"Cable TV rates have doubled in the last three or four years, we got
nothing more for it, but cable subscribership didn't go down because of
it," Goodtree said. 

On one point everyone agrees -- the nation's current analog telephone
network eventually will not be able to handle demand from Internet
users, and must be supplanted by a digital system better suited to
transmitting computer data. 

Both phone companies and Internet providers have begun working on
solutions. Phone carriers that have offered digital ISDN (integrated
services digital network) lines are stepping up their marketing efforts.
Phone companies and Internet providers are investigating a new
technology called digital subscriber line, or DSL, which routes Internet
phone traffic around analog phone-company switches into all-digital
networks. 

But inevitably, discussion of DSL and other new technologies circles
back to who'll pay for upgrades. Sky Dayton, president of Internet
provider Earthlink Networks in Pasadena, Calif., believes it is in phone
companies' best interests to spend on digital upgrades because of the
profit potential from selling them to companies such as his. 

But why should phone companies pick up all the costs when Internet
service providers will benefit, too, says Pacific Bell spokesman Bob
Deward. 

(Michelle V. Rafter writes about cyberspace and technology from Los
Angeles. Reach her at mvrafter@deltanet.com. Opinions expressed in this
column are her own.) 

Copyright, Reuters Ltd. All rights reserved