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Technology Stocks : Voice-on-the-net (VON), VoIP, Internet (IP) Telephony -- Ignore unavailable to you. Want to Upgrade?

To: Stephen B. Temple who wrote (1675)	10/29/1998 7:59:00 AM
From: Stephen B. Temple	Read Replies (1) \| Respond to of 3178

OT> This makes sense> Internet Traffic Phone Fees May End October 29, 1998 WASHINGTON - The Associated Press via NewsEdge Corporation : Federal regulators are looking into whether telephone companies have to continue paying each other fees for carrying data traffic to America Online and other Internet service providers that's en route to cyberspace. The Federal Communications Commission is considering suggesting, possibly this week, either eliminating or reducing the fees once companies' current contracts expire, industry sources said Wednesday. The decision would depend on a finding by the FCC that data traffic destined to Internet service providers, and from there to the Internet, is interstate communication. That would make it not subject to fees, because they can be imposed only on traffic deemed local. Such a decision, which has not yet been made, would give the FCC some jurisdiction over data traffic headed to the Internet. The commission suggestion, if ultimately adopted, is not expected to affect home computer users, FCC officials said. They like the industry sources spoke on condition of anonymity. The compensation issue has pitted major local phone companies including GTE and the regional Bells against other phone companies called competitive local exchange carriers, or CLECs, such as ICG Communications, e.spire Communications Inc., MCI WorldCom and AT&T's Teleport. GTE and the Bells pay these and other phone companies millions of dollars more in fees than they take in. GTE and the Bells argue that this data traffic is interstate and not subject to termination fees, known as reciprocal compensation. But 23 state commissions have deemed that the traffic is local, is subject to termination fees and to their jurisdiction. Fees to terminate all kinds of telecommunications traffic are contained in larger agreements between phone companies to connect each others' calls. Some Bell company representatives insist that these termination fees never were intended to apply to data traffic carried to Internet service providers. Because more traffic destined to Internet service providers originates on Bell company networks, they end up paying out a lot more in termination fees to CLECs than they take in. All five Bells, according to Wall Street estimates, are responsible for $600 million this year in the fees, although some companies have not paid them. Wall Street firms say it's hard to determine how much money is at stake because there are no officially reported figures. Many existing contacts involving termination fees among the Bells and the CLECs are supposed to expire next year. The Clinton administration and the CLEC industry urged the FCC to preserve existing contracts. Telecommunications sources believe the FCC's recommendation will do that. If the FCC's suggestion is adopted, any changes would affect future contracts. Separately, the FCC is expected to conclude Friday that GTE's high-speed data service is an interstate service, as GTE and the administration contend it is, the sources said. GTE's case, however, doesn't involve another phone company routing data traffic to Internet service providers, so the fee wasn't at issue. But CLECS were watching the case closely as a signal from the commission on how it may handle the reciprocal compensation dispute. The issue before the FCC in the GTE case is purely jurisdictional, determining whether GTE must file tariffs for its high-speed services at the FCC or with state regulators, which in turn would review them.