Re: [at-l] internet access (No Consumer Per-Minute Charges to Access ISP's

[WHHAWKINS@aol.com]

In a message dated 3/5/99 7:40:13 AM EDT, hikenet@interactive.net writes:

<< The FCC is passing some new regulations on what a local call is vs a long
 distance
 call. Apparently some people have figured out that there is some type of
 reimbursement charge and these new small local companies get thousands of
 calls in ( people dialing
 into internet IPS ) and calls out.  After all the ISP only responses.
  >>

I Copied The Iinformation below from the FCC'S web site. In this is info, is
information on the FCC's Feb 25, 1999 ruling. 

Wildbill

FACT SHEET

                                                       February 1999

         No Consumer Per-Minute Charges to Access ISPs


The following fact sheet provides information in response to erroneous reports
that the FCC is
planning to impose per-minute usage charges on consumer access to Internet
Service Providers
(ISPs). It also discusses the FCC's February 25, 1999 decision relating to
dial-up traffic bound
for ISPs. The bottom line is that the FCC has no intention of assessing per-
minute charges on
Internet traffic or changing the way consumers obtain and pay for access to
the Internet.


1. What is the source of this misunderstanding?

The FCC has been considering issues relating to certain carrier-to-carrier
payments, so-called
"reciprocal compensation." These payments compensate a local telephone company
for
completing a local call that is placed by one of its competitor's customers.
On February 25, 1999,
the FCC adopted a Declaratory Ruling regarding these carrier-to-carrier
payments and initiated a
new proceeding to consider the matter in light of conclusions reached in the
Declaratory Ruling.
The following is an example of how the carrier-to-carrier payments at issue
work:

          If a customer of Phone Company A makes a local call to a customer of
Phone Company
     B, Phone Company A must compensate Phone Company B for handling the last
leg of
     the call. This payment structure, called reciprocal compensation, may
have been
     negotiated by the two phone companies, or may be based on a decision of
the state
     regulatory authority. The reciprocal compensation payment by Company A to
Company
     B may be based on a per-minute charge for the length of the call, or some
other
     negotiated basis.

          Reciprocal compensation is thus paid between telephone companies for
use of the local
     phone network. Reciprocal compensation is not paid by consumers or by
Internet service
     providers. Accordingly, reciprocal compensation does not determine
consumer Internet
     charges. Typically, the companies involved are an incumbent local
telephone company
     (ILEC) currently serving a large number of subscribers, and a competing
local telephone
     company (CLEC) that has only recently entered the market and has fewer
subscribers.


2. So why is this suddenly an issue?

There is a dispute in the telephone industry over whether calls to ISPs are
subject to reciprocal
compensation, and that is the matter the FCC is considering. In the example
above, if the
consumer dials up the Internet over the phone lines of Phone Company A, and
the ISP is served
by Company B, the question is whether Company A must compensate Company B for
delivering
the call to the ISP. That is the only issue before the Commission with regard
to this matter. Thus,
the manner in which consumers pay for Internet access is not before the
Commission and the
Commission repeatedly has stated that it will not change the manner in which
consumers obtain
and pay for Internet access. Rumors to the contrary persist, however, and the
FCC has received
hundreds of thousands of e-mails on the subject over the last two years.


3. Are phone companies paying reciprocal compensation for Internet traffic
now?

All 26 state regulatory commissions that have considered the issue have found
that the phone
company that originates a call to an ISP must pay reciprocal compensation to
the competing
phone company for delivering that traffic to an ISP, but many companies are
withholding
payment while pursuing appeals.

Many incumbent local telephone companies argue that Internet traffic is not
local, because it
often begins in one state and ends in another state, and therefore should not
be subject to
reciprocal compensation. These parties say that Internet traffic is more like
long distance traffic,
where the local phone company does not terminate the call locally, but rather
hands the call off to
a long distance company that carries the call over its interstate network to a
distant location.
Long distance companies pay access charges to the local phone company. If two
local phone
companies are involved in carrying the call to the long distance provider, the
two local
companies share the access charges paid by the long distance company and no
reciprocal
compensation is due.  Unlike long distance carriers, ISPs do not pay access
charges to local
telephone companies.


4. What did the FCC conclude in its February 25, 1999 decision?

The Declaratory Ruling concludes that carriers are bound by their existing
interconnection
agreements, as interpreted by state commissions, and thus are subject to
reciprocal compensation
obligations to the extent provided by such agreements or as determined by
state commissions. 
The Declaratory Ruling finds that Internet traffic is jurisdictionally mixed
and appears to be
largely interstate in nature.  But, the Declaratory Ruling preserves the rule
that exempts the
Internet and other information services from interstate access charges.  This
means that those
consumers may continue to access the Internet by dialing a seven-digit number
and will not incur
long distance charges when they do so.  In a notice of proposed rulemaking,
the Commission
also asked for comment on proposals governing future carrier-to-carrier
compensation for
handling this traffic.


5. If reciprocal compensation does have to be paid in the case of Internet
traffic (either
through state or FCC decisions), won't the phone companies that have to pay
that
compensation be forced to impose a surcharge on their Internet customers or on
ISPs (who
will pass is through to consumers)?

No. While the rates consumers pay for local telephone service are regulated by
the states, and not
the FCC, most states require phone companies to charge a flat rate for
unlimited local usage. A
local telephone company could not alter these local rates to include an
internet surcharge without
approval from the state commission. Moreover, local telephone companies are
obtaining
increased revenue from internet traffic, because many consumers are installing
second lines
dedicated to Internet traffic. Consumers pay for these lines just as they
would pay for any second
phone line.

Similarly, the local phone company cannot impose any charges on the ISP, even
if it is forced to
pay reciprocal compensation for traffic delivered by a CLEC to that ISP,
because the ILEC has
no direct billing relationship with the ISP.


6. Will the FCC's decision that calls bound for ISPs are interstate require
ISPs have to pay
access charges to local companies?

No. The FCC has a special exemption for ISPs, under which ISPs are treated as
local phone
customers and are exempt from interstate access charges paid by carriers.
Thus, rather than
paying higher access charges, ISPs simply purchase phone lines from the local
phone company
as any local business would do.  Nothing in the FCC's February 25, 1999
decision affects this
exemption.


7. Why is it necessary to consider this issue if 26 states have already
decided it?

As discussed in the Declaratory Ruling, the FCC has jurisdiction over calls
between states, while
each state has jurisdiction for calls within its borders. Thus, the FCC has a
statutory obligation
regarding this traffic. In addition, a uniform national policy regarding
inter-carrier compensation
for the delivery of ISP traffic will aid the development of Internet, which is
not confined by state,
or even national, boundaries.
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