Internet Phone Calls Escape Full Force Of FCC Regulation, but Face New Fees
By JOHN SIMONS, WSJ April 13
WASHINGTON -- Companies that offer telephone service over the Internet have escaped broad government oversight for now, but regulators last week said they might force some to pay the fees charged traditional phone companies.
In a report to Congress on Friday, the Federal Communications Commission said it will require Internet telephony firms on a case-by-case basis to pay per-minute access fees to local phone companies for originating and terminating long-distance calls, thus boosting the cost of those calls. It also raised the possibility that after further review, it could require Internet telephone-service providers to pay into the nation's universal-service fund.
But the FCC -- apparently mindful of protests from Internet companies and the Clinton administration, which promotes a hands-off regulatory approach to cyberspace -- decided against far-reaching regulation for now, particularly regarding possible universal-service fund payments. The agency's cautiousness, however, might end up satisfying none of the parties embroiled in the debate.
Traditional telephone carriers spend billions of dollars a year in per-call local access fees and payments to the universal-service fund. The program subsidizes telephone service in rural and low-income inner-city areas and helps pay costs of wiring the nation's schools and libraries for computer service.
Two weeks ago, a draft of the FCC's report had called for classifying all Internet-telephony providers as "telecommunications services" as opposed to "information services," which are exempt from fees. Under the telecommunications designation, those companies would have been forced to pay universal-service fees.
In its final report, the FCC acknowledged that some Internet-telephone services "bear the characteristics of telecommunications services." But FCC Chairman William Kennard said, "A more definitive determination demands that we have a better factual record."
That doesn't mean Internet-telephone companies, which offer rates much lower that traditional phone service, will have full reprieve. The FCC will hear complaints from telephone companies that want to collect access fees from Internet firms using the company's lines for phone calls. It will also develop criteria to make judgments about which companies should pay universal service fees, officials said.
Using the Internet instead of public-switched networks, consumers can place calls from computer to computer, computer to telephone, and even phone to phone, anywhere in the world. Much like an e-mail message, those calls travel over telephone wires, then bounce between the Internet's maze of routers and switches using a software system known as "IP," or Internet Protocol.
Analysts estimate that less than 1% of all voice calls now take place over the Internet. But that figure is expected to grow rapidly over the next few years as companies such as AT&T Corp. and Qwest Communications Inc. implement plans to use IP for inexpensive phone services nationwide. Some Internet-service providers such as IDT Corp., Hackensack, N.J., have leveraged their Internet experience to enter the international voice-telephony market.
Under former FCC Chairman Reed Hundt, Internet telephony was seen as a tool that could increase competition in the long-distance market and bring down prices. But some larger telephone carriers have complained that the Internet providers use their switching networks while skirting the universal service fees. Republican Sen. Ted Stevens of Alaska asked the FCC to look into the matter and issue Friday's report.
With Congress in recess until April 20, there was no formal reaction from Capitol Hill to the FCC report. But aides close to the issue said it is unlikely to appease Mr. Stevens, who wants Internet-service providers to be regulated.
Traditional phone companies, meanwhile, were clearly chagrined by the FCC's approach. "They are merely telephone companies dressed up to look like Internet services," said BellSouth spokesman John Schneidawind, referring to the Internet-telephone firms. He suggested that his company may soon lodge a complaint with the FCC to seek access fees.
Barbara Dooley, executive director of the Commercial Internet Exchange in Herndon, Va., a coalition of 150 Internet service providers, visited the FCC several times last week, pleading with commissioners. Ms. Dooley argued that Internet-service providers already pay universal-service charges indirectly when they lease lines from larger companies.
"They came down on the side of keeping us unregulated, but we're still concerned about their ambivalence regarding Internet telephony," Ms. Dooley said, noting that other countries might follow the U.S. if the FCC eventually decides to regulate Internet-telephony firms.
|
