Two Bells Toll for ITSP Access Payments While A Third Joins the NextGen Ring
After months of loose threats, two Bell operating
companies came through on their promises to assess
access charges on the long distance traffic carried by
Internet protocol (IP) telephony providers.
Within a week of each other, BellSouth Corp.
(www.bellsouth.com) and US WEST Inc.
(www.uswest.com) sent letters notifying IP providers
and competitive local exchange carriers (CLECs) they
had 60 days to transition their traffic over to the Bell
companies' access services.
Meanwhile, Bell Atlantic Corp. (www.bellatlantic.com)
announced it will terminate calls from Internet
telephony settlements provider ITXC Corp.
(www.itxc.com) in IP format beginning later this year in
the New York City area.
"There is an ironic contrast between the actions of
BellSouth and the actions of Bell Atlantic," says Tom
Evslin, ITXC chairman and CEO. "BellSouth seems to
be saying, 'I have a God-given right to collect a toll on
all of this traffic, whether I add any value or not [and]
whether the marketplace accepts my toll or not."
Industry analysts, IP telephony providers and CLECs
question the motives behind BellSouth's and US
WEST's recent moves relating to access charges, since
revenue from IP long distance is barely a blip on the
radar screen. Of BellSouth's $4 billion in annual
revenue from access, it's estimated that less than $1
million could be derived from IP long distance
providers, says Jonathan Haller, principal analyst at
Current Analysis Inc. (www.currentwire.com).
"BellSouth is executing its regulatory strategy to make
life as difficult as possible for the ISPs (Internet service
providers) and CLECs. And they're trying to force the
FCC's (Federal Communications Commission's) hand
in defining an 'integrated service provider,'" Haller
says. US WEST--not known as a leader in the
regulatory arena--is riding on its Bell brethren's
coattails, he suspects.
The Bell companies, though, may be running scared of
the potential growth of the nascent IP telephony
industry, suggest some competitors. For instance, US
WEST cites studies that show about 13 percent of all
toll traffic will be provided over IP networks by 2000.
IP telephony providers and CLECs alike are already
strapping on their gloves to fight the plan. They say
there are no rules from the FCC that require IP long
distance service to be subject to access charges.
"The Bells are pulling out a public policy position," says
Cindy Schonhaut, senior vice president of government
and external affairs at ICG Netcom
(www.icgnetcom.com), a CLEC that now offers 5.9
cents-a-minute IP long distance. "They're trying to
goad one of us into a lawsuit."
The reason for assessing access charges, says
BellSouth, is that it does not consider these long
distance-over-IP services to qualify under the FCC's
definition of "information services." "Long distance
communications completed [via the Internet or IP
technology] do not have the characteristics of
'information services.' Instead, they have the
characteristics of telecommunications services,"
BellSouth said in a letter posted on its website that it
reportedly sent to an IP telephony company and five
CLECs, all unnamed, that have IP telephony
customers in the BellSouth region.
BellSouth and US WEST's formal plans come after
initially suggesting in the spring of 1998 that they were
going to start charging IP telephony providers for
access to their local network, just as they do traditional
circuit-switched long distance companies (Sounding
Board, May/June, page 8). Those comments were
made as the FCC submitted its April 10 report to
Congress on access charge and universal service
reform issues. The FCC's report, however, did not
specifically say that IP telephony providers are subject
to access charges. The report did note that some
phone-to-phone IP long distance services bear the
characteristics of telecom service. But the FCC said in
absence of a full record on the topic, it would make
decisions on a case-by-case basis if the issue was put
before the commission.
The six providers cited by BellSouth will have until
early November to transition their traffic to telco's
access services from local exchange services, says
Ernest Bush, BellSouth's vice president of federal
regulatory. If carriers do not respond, then BellSouth
will send out another letter indicating that 60 days from
that point the telco will begin measuring each IP
telephony provider's usage and begin sending out bills.
"There won't be service disconnection," says Bush.
BellSouth will likely seek collection through court
action, he added.
US WEST sent letters to 10 IP telephony providers,
which it would not identify. The telco will be working
with those companies through mid-November to
transition their traffic to access services. If it doesn't
receive cooperation, US WEST will examine its legal
options, says Kenneth Gitten, director of switched
services at US WEST. "But our first choice is
negotiation," he adds. New IP providers in US WEST
territory shouldn't expect to be able to receive the
telco's local exchange service. "We won't fill any new
orders for local exchange service," says Gitten. "We
don't plan to sell them something they shouldn't have.
They should be purchasing access services." |
