vision2020@moscow.com: Possible Internet usage cost increase

Possible Internet usage cost increase

Tom Lamar (tlamar@moscow.com)
Fri, 21 Feb 1997 01:12:51 -0800

>From: techsupport@fsr.net
>Date: Thu, 20 Feb 1997 23:07:28 -0800
>Subject: Possible Internet usage cost increase
>
>Dear First Step Internet/Tribune Internet Service User,
>
>Please take a minute to read this and respond to isp@fcc.gov if you feel
>inclined one way or the other.
>
>
>
>- --------- Begin forwarded message ----
>
>We are writing you this to inform you of a very important matter currently
>under review by the FCC. Your local telephone company has filed a proposal
>with the FCC to impose per minute charges for your internet service. They
>contend that your usage has or will hinder the operation of the telephone
>network. It is our belief that Internet usage will diminish if users were
>required to pay additional per minute charges. The FCC has created an
>email box for your comments, responses must be received by February 21,
>1997. Send your comments to isp@fcc.gov and tell them what you think.
>Every phone company is in on this one, and they are trying to sneak it in
>just under the wire for litiagation. Let everyone you know here this one.
>
>Please forward this email to all your friends on the internet so all our
>voices may be heard!
>
>
>- -----------------Copy of Article------------
> ISPs Could Owe New Fees
>
> To Telcos if FCC Gives its OK
>
> By Michelle V. Rafter
>
>
>Internet service providers may soon be forced to pay nearly $1 an hour
>per user to local regional Bell operating companies (RBOCs) for local
>modem dial-up connections, according to telecom industry analysts.
>
> However, the Federal Communications Commission last month gave ISPs
>a reprieve, temporarily excusing them from paying those costs to local
>phone companies. If the access fee is eventually imposed, it could
>threaten the $19.95 monthly flat-rate Internet access fee set by AT&T,
>AOL, and other ISPs.
>
> AOL said it would pass any such fee on to its customers but might
>generate savings in other line charges. Other ISPs are still pondering
>what action to take.
>
> ISPs don't pay access fees at present because of a 1983 FCC order
>that exempted "enhanced service providers" from paying for connections in
>order to help foster development of a data-services market.
>
> "And now we have one, and now they're going to have to pay," said David
>Goodtree, an analyst with Forrester Research in Cambridge, Mass.
>
> ISPs May Find Themselves Facing a New Cost Although the FCC's temporary
>reprieve gave every appearance that Internet service providers had won the
>latest round in the battle over local phone company access fees, analysts
>and company execs believe that ultimately they'll be required to pay.
>
> The temporary ISP fee exclusion was part of a larger preliminary
>ruling by the Federal Communications Commission that will eventually cut
>long distance carriers' access rates to the home via local telephone
>carriers. Those previous higher-than-cost long distance rates are, in
>great part, being used by RBOCs to subsidize the local cost of free
>Internet dial-up access. The commission left the door open for future
>action by issuing a so-called notice of inquiry seeking comment from
>providers and RBOCs on possible future access fees.
>
> Local carriers have argued that ISPs are getting a free ride by not
>paying the fees, and that the resulting Internet boom is clogging voice
>networks, forcing them to invest in costly service expansions. Internet
>providers have countered that imposing fees would stifle growth just when
>the Internet is finally taking off. MCI maintains that the RBOCs' dire
>warnings about voice network congestion caused by skyrocketing modem use
>are scare tactics intended to pressure regulators into pushing unfair
>access charges onto ISPs.
>
> But many industry insiders see the handwriting on the wall. The FCC
>decision to cut the fees long-distance companies are paying RBOCs for
>access to the local loop is part of a larger plan for overall telecom
>industry deregulation. Once that's completed, it's a good bet the agency
>will impose some type of fees on ISPs, insiders said.
>
> It's not clear what those charges might be. Long distance companies
>currently pay local carriers access fees of about 3.2 cents per minute,
>with the exact amount varying from one RBOC or region to the next.
>Depending on how the FCC acts in the near future, those fees could drop to
>1 cent to 1.5 cents a minute, or 60 to 90 cents an hour, Goodtree and
>others said. In the preliminary notice, issued Dec. 24, the FCC said it is
>considering either cutting long distance companies' access fees in phases,
>or allowing the market to dictate rates. The agency is expected to hear
>comments on the matter through February and to make a decision by midyear.
>Most likely any fees set for long distance carriers will also be used to
>determine the cost basis for ISP access fees.
>
> Because so much is up in the air, ISPs are having a hard time
>calculating what impact access fees could have on their business costs
>this year. If ISPs passed the access fees on to customers, the consumer
>side of the business might dry up, said James Isaacs, an executive at
>Concentric Network Corp. in Cupertino, Calif. Or, Isaacs said, ISPs could
>get around the problem by offering ISDN, DSL, and other high-speed
>connections for which consumers would gladly pay a premium. Most RBOCs are
>themselves offering ISDN connections to local ISPs, with line charges
>running as high as $1.00 to $1.50 per hour.
>
> "You'll get to a pricing arrangement that's healthy for network
>operations and for RBOCs," Isaacs said. RBOCs charge anywhere from $1.20
>per hour (US West) to $22 per hour (SNET) for home access to ISPs using
>ISDN.
>
> America Online would likely pass on any new access fees to customers,
>AOL attorney Jill Lesser said. She didn't indicate whether fees would
>spell the end of AOL's new $19.95-a-month flat rate; if access fees are
>imposed, the company might save on the monthly costs it now pays local
>providers for each modem phone line it uses. "I can't give a good answer
>what a cost shift would be," Lesser said. Even so, even at 60 cents an
>hour the cost of a user who stays connected for several hours per day
>could easily exceed $100 per month.
>
> Other ISPs are adopting a wait-and-see attitude. "When it becomes
>reality, we'll respond, but we're not getting too scared by anything
>looming on the horizon," said Lev Kaye, sales vice president at
>InterAccess, a Chicago ISP with 14,000 dial-up customers. An AT&T WorldNet
>spokesperson said the telecom giant doesn't object to paying access fees
>once they're brought down to cost.
>
> The Interactive Services Association, an industry trade group that
>includes ISPs and RBOCs, has yet to take a stand on the issue. The ISA's
>public policy committee met Jan. 9 and is currently drafting a position
>paper it plans to make public late this month.
>
> The FCC took the unusual step of setting up an e-mail box at
>isp@fcc.gov for ISPs and consumers to send informal comments. The deadline
>for submitting formal comments is Feb. 21, and March 24 for replies to
>comments. The agency will post all formal comments on its Web site at
>www.fcc.gov/isp.html.
>
> . Rafter writes Internet columns for Reuters
> and the Chicago Tribune's Web edition.
>
>
> --------------------------------------------------
> Reprinted from Web Week, Volume 3, Issue 2,
> January 20, 1997 c Mecklermedia Corp. All rights
> reserved. Keywords: access_providers
> government_regulation_michelle_v Date: 19970120
>
> [http://www.iworld.com]
>
>------------------------------
>

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