Of Interest.....
Phone, Internet firms wage war of words over fees
LOS ANGELES (Reuter) - 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 Corp. 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(at)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(at)deltanet.com.
Opinions expressed in this column are her own.) |
