Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : IDT *(idtc) following this new issue?* -- Ignore unavailable to you. Want to Upgrade?

To: Tom Gebing who wrote (1160)	10/29/1998 4:35:00 PM
From: Tom Gebing	Read Replies (1) \| Respond to of 30916

FCC To Reclassify Internet Access As Long Distance October 28, 1998: 7:01 p.m. ET cnnfn.com WASHINGTON, D.C., U.S.A. (NB) -- By Robert MacMillan, Newsbytes. The Federal Communications Commission Friday may issue a ruling that classifies telephone calls made to access Internet service providers as long distance calls rather than local calls. A source within a key long distance provider told Newsbytes that no one is sure whether this will cause consumers to pay more because of potential increased long distance fees, or whether they will pay less because of the elimination of reciprocal compensation agreements. "The FCC order is expected to be kind of hazy on the subject," the source said, adding that consumers may not notice any immediate changes. A source for MCI-WorldCom told Newsbytes that the long distance classification likely will result in higher long distance fees because ISPs will have to pay more money in access fees, which would translate into higher costs for subscribers. In theory, this plan would eliminate the reciprocal compensation fees that current traditional local phone services (called ILECs, or Incumbent Local Exchange Carriers) pay for completing each others' calls, but if the majority of the five FCC commissioners can come to an agreement, the ILECs, mainly baby Bell companies, still would have to pay the reciprocal compensation fees that have been allowed by 24 states. The reciprocal compensation fee is a mandated program that requires a local phone company whose customer makes a call to a line run by another local phone company to pay a fee to that receiving company. While the baby Bells had argued for a system like this, many upstart local phone companies have signed on Internet service providers (ISPs) as their main customers. Since the ISPs run modem banks that only receive calls for Internet access, the baby Bells have wound up owing far more money than they intended, and earning much less than they desired. So far, however, the baby Bells have refused to pay out, saying that if the FCC rules that Internet access calls are long distance calls, then it should not owe the new local phone companies any reciprocal money at all. Although these reciprocal agreements are upheld in 23 different states, and although the FCC so far plans to let those contracts stand, they all eventually will expire once the FCC recognizes all Internet service connection calls to modem banks as long distance calls. Since many new local phone companies, called CLECs or Competitive Local Exchange Carriers, rely on reciprocal compensation fees for a large part of their livelihood, the FCC order and the eventual expiration of related contracts may send them either scurrying for new revenue sources or completely out of business.