Don't even try to rain on my parade!! <gg> FCC seen claiming authority over Internet calls
October 28, 1998
WASHINGTON (Reuters) - Reuters [BR] via
NewsEdge Corporation : The Federal
Communications Commission is expected to
decide as soon as Friday that telephone calls
people make to connect their computers to
Internet service providers are more like long
distance calls than local calls and therefore
subject to the agency's jurisdiction.
But the agency will try not to reverse rulings
by 23 states that the regional Bell companies
must pay hundreds of millions of dollars to
upstart local carriers on such calls, people
familiar with the agency's plans said
Tuesday.
If a majority of the commission's five
members can agree on such an approach,
the Bells would have to pay the charges in
dispute to new carriers including units of long
distance giants MCI WorldCom Inc. and AT&T
Corp. as well as smaller firms like e.spire
Communications Corp. based in Annapolis,
Maryland, and Focal Communications Corp. of
Chicago, Ill.
But, under that approach, as existing
contracts between the companies expired
over the next year, the FCC would reform
the charges, called ''reciprocal
compensation,'' to reduce or eliminate the
one-sided payments that flow to carriers
serving Internet providers.
''The current reciprocal compensation gravy
train is running out of track,'' said industry
analyst Scott Cleland of Legg Mason
Precursor group. ''This may come as a
surprise to some people but they were in
denial.''
Industry and agency officials said the
commission's plans were still in flux on
Tuesday, but the broad outlines of a decision
had formed.
The agency must issue a narrower but
related decision on a service offered by GTE
Corp. by Friday and is aiming to complete the
reciprocal compensation issue at the same
time in a separate decision, they said.
The legality of the massive payments turns
on whether calls to Internet service
providers are more like ordinary local calls,
subject to fee arrangements between
carriers but not the FCC's authority, or are
more like long distance calls, regulated by
the FCC but not subject to fee exchanges.
Under the arrangements negotiated between
the Bells and new local carriers, companies
must pay each other a small fee for
completing the local calls of each other's
customers. Payments are not required for
long distance calls.
So far, 23 states including California, Texas
and New York have ruled that calls to
Internet service providers are like local calls
and that the large local carriers must pay
fees.
The FCC plan would find that, for future
reference, the calls should be treated like
long distance calls but that since the agency
had not made a clear statement earlier, the
decisions by the states covering prior
arrangements between companies should
stand.
The Bells, including New York-based Bell
Atlantic Corp. , Atlanta-based BellSouth
Corp. and San Antonio, Texas-based SBC
Communications Inc., have argued
unsuccessfully to the states that calls to
Internet providers should be treated as long
distance and exempted from reciprocal
compensation.
When the contracts were negotiated several
years ago, the Bells pushed for reciprocal
compensation expecting that they would be
completing many more calls for the new
carriers than the new carriers would be
completing for them.
But the new carriers turned the agreements
to their advantage by serving the modem
banks of Internet providers, which receive
thousands of calls from their customers but
never make any calls.
REUTERS@
[Copyright 1998, Reuters] |
