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[at-l] Internet and Regional Phone Cos.

I'm aware that this doesn't have much to do with hiking, but I know there
was some discussion of this earlier, so thought I would post this news bit
taken off of Yahoo this a.m.  If you're not interested, hit the trash button
now!  Sorry about sucking up all the bandwidth. Apologies to multi list users.


Thursday February 6 10:02 AM EST 

Phone, Internet Firms Wage War Of Words Over Fees

By Michelle V. Rafter 

LOS ANGELES - Regional phone companies and Internet service providers are
waging a war of words over Internet traffic on the nation's local telephone
network and who should pay for upgrades as the online boom continues. 

As a drama, the phone companies vs. Internet providers contest is dry,
complicated stuff, lacking the sex appeal of, say, the power struggle
between Netscape and Microsoft for control of the personal computer desktop. 

Even so, analysts and other industry watchers counsel consumers and
businesses to take heed of the tug of war because it could affect how much
they pay to use the Internet, and ultimately, how they connect to it. 

In one corner, Pacific Bell, Bell Atlantic and other regional phone carriers
say the growth of Internet traffic is pushing local telephone networks to
the breaking point. 

Pacific Bell, for example, says Internet surfers use its phone lines an
average of 45 minutes a day -- more than twice the amount the network was
built to handle. Heavy Internet use in Silicon Valley led to brief service
outages in that area earlier this year, the company said. 

Pacific Bell and other local phone companies say they've poured millions of
dollars into hardware improvements as a result of Internet traffic,
improvements they claim would otherwise have been unnecessary. 

To help defray costs, phone companies think providers should pay for service
on a per-minute basis, the way long-distance companies do, rather than by
the line, like other business phone customers. Internet providershave been
exempt from paying so-called access fees under a 1983 federal ruling meant
to foster growth of
compute data networks. 

On the other side, Internet service providers say phone companies have it
all wrong. A recent report sponsored by the Internet Access Coalition, an
industry lobby group, maintains computer traffic poses no threat to
localphone networks and that earlier phone-company studies identifying
trouble spots were based on theoretical
claims and a few areas with engineering and planning problems that could
easily be rectified. 

If Internet traffic was such a threat, phone companies wouldn't be
exacerbating the problem by jumping into the Internet access business
themselves, providers say. 

Rather than hurting phone companies, Internet traffic has been a windfall,
according to the coalition. In 1995,local phone companies spent a total of
$245 million adding 6 million residential phone lines used primarilyfor
Internet access, but reaped $1.4 billion in revenue on those lines, the
group said. 

If providers are required to pay access fees, they'll have no choice but to
raise their rates, which could stifle Internet growth just as it's taking
off, they say. 

Internet providers and phone companies are arguing their respective
positions in Washington, where the Federal Communications Commission is
considering the access-fee issue. 

As part of ongoing telecommunication industry reform, the FCC said in late
December it would cut access fees levied on long-distance carriers and is
investigating options for doing that. But the agency held off making a
decision affecting Internet use to allow time for parties with an interest
in the issue to present their cases. 

The FCC took the unusual step of setting up an e-mail address -- isp@fcc.gov
-- consumers and others can use to send their thoughts. Internet providers
and phone companies have until Feb. 21 to submit formal comments,and the
agency is expected to make a ruling later this year. 

Even if the FCC levies access fees on providers and companies raise rates
accordingly, it won't dampen consumers' love affair with the Internet, some
analysts said. 

If, for example, Internet providers passed through an access fee of 1 cent a
minute, a subscriber spending 10 hours online a month would pay an extra $6
-- hardly a deterrent, said David Goodtree, an analyst with Forrester
Research in Cambridge, Mass. 

"Cable TV rates have doubled in the last three or four years, we got nothing
more for it, but cable subscribership didn't go down because of it,"
Goodtree said. 

On one point everyone agrees -- the nation's current analog telephone
network eventually will not be able to handle demand from Internet users,
and must be supplanted by a digital system better suited to transmitting
computer data. 

Both phone companies and Internet providers have begun working on solutions.
Phone carriers that have offered digital ISDN (integrated services digital
network) lines are stepping up their marketing efforts. Phone companies and
Internet providers are investigating a new technology called digital
subscriber line, or DSL,which routes Internet phone traffic around analog
phone-company switches into all-digital networks. 

But inevitably, discussion of DSL and other new technologies circles back to
who'll pay for upgrades. Sky Dayton, president of Internet provider
Earthlink Networks in Pasadena, Calif., believes it is in phone companies'
best interests to spend on digital upgrades because of the profit potential
from selling them to
companies such as his. 

But why should phone companies pick up all the costs when Internet service
providers will benefit, too, says Pacific Bell spokesman Bob Deward. 

(Michelle V. Rafter writes about cyberspace and technology from Los Angeles.
Reach her at mvrafter@deltanet.com. Opinions expressed in this column are
her own.) 

Copyright, Reuters Ltd. All rights res

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