(fwd) The FCC, Internet Service Providers and Access Charges
Jennifer Heise
jahb at Lehigh.EDU
Wed Mar 12 22:02:36 EST 1997
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[From the FCC Web site.]
THE FCC, INTERNET SERVICE PROVIDERS AND ACCESS CHARGES
This fact sheet offers informal guidance on an issue that has generated a
great deal of public interest. For more specific details about the
proceedings currently before the Commission, please visit our web site
(http://www.fcc.gov/isp.html) or public reference room or call our
duplicating contractor for a copy of CC Docket Numbers 96-262, 94-1, 91-213
and 96-263.
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The Federal Communications Commission (FCC) has requested public comment on
issues relating to the charges that Internet Service Providers (ISPs) and
similar companies pay to local telephone companies.
On December 24, 1996, the FCC opened a proceeding to reform the system of
interstate access charges. Each long distance telephone call you make
includes per-minute fees that your long distance carrier pays to the
originating and terminating local telephone companies over whose facilities
that call also travelled. Those fees, which are designed to recover the
costs to local telephone companies for use of their facilities, are
referred to as "access charges."
As part of this proceeding, the FCC sought comment on the treatment of
ISPand other "enhanced service providers" that also use local telephone
companies' facilities. Since the access charge system was established in
1983, enhanced service providers have been classified as "end users" rather
than "carriers" for purposes of the access charge rules, and therefore they
do not pay the per-minute access charges that long-distance companies pay
to local telephone companies.
This issue is being considered on two different tracks.
I. Notice of Proposed Rulemaking on Access Charge Reform
The Notice of Proposed Rule Making (NPRM) on Access Charge Reform
seeks comment on proposals to restructure the entire system of
access charges paid to local telephone companies. The Commission
is seeking to make the access charge system more consistent with
the development of local competition in the telephone industry,
and with principles of economic efficiency.
As part of this process, the Commission considered whether
enhanced service providers, such as ISPs, should be required to
pay interstate access charges. The Commission tentatively
concludes that ISPs should not be subject to access charges as
currently constituted.
If you want to learn more about this issue you should read
paragraphs 282 through 290 in the Notice of Proposed Rulemaking
(the rest of the document covers other issues). You can also
access this document on the FCC's Web site, or you can obtain
this section of the document by calling our fax on demand system
at 202/418-2830 and requesting document numbers, 96-262, 94-1,
91-213 and 96-263.
The final deadline for comments on the Notice of Proposed
Rulemaking is Friday, February 14, 1997.
You can submit formal comments by delivering or mailing five
copies to: Federal Communications Commission, Office of the
Secretary, Room 239, 1919 M Street, NW, Washington, D.C. 20554.
You can also send informal comments via email. If your email
concerns the question of whether Internet and other enhanced
service providers should pay access charges, it should be
addressed to isp at fcc.gov. If your email concerns other issues in
the Access Reform NPRM, it should be addressed to access at fcc.gov.
II. Notice of Inquiry On Internet and Interstate Information Services
In a Notice of Inquiry (NOI) launched with this same Access
Reform proceeding, the FCC is seeking to identify what policies
would best facilitate the development of the high-bandwidth data
networks of the future, while preserving efficient incentives for
investment and innovation in the underlying voice network. The
NOI does not make any specific proposals, but seeks comment
generally on the implications of information services such as
Internet access for the telephone network.
If you want to learn more about this issue you should read
paragraphs 311 through 318, the NOI contained within the Access
Reform document. You can also obtain this document from the FCC's
Web site, or you can obtain this section of the document by
calling our fax on demand system at 202/418-2830 and requesting
document numbers, 96-262, 94-1, 91-213, and 96-263.
The deadline for comments on the Notice of Inquiry is March 24,
1997. Reply comments, submitted in response to the initial round
of comments, will be accepted through the close of business on
April 23, 1997.
You can submit formal comments by delivering or mailing five
copies to: Federal Communications Commission, Office of the
Secretary, Room 239, 1919 M Street, NW, Washington, D.C. 20554.
You can also send informal comments via email by addressing them
to isp at fcc.gov.
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Frequently Asked Questions on Internet Services and Access Charges
Q: Does the FCC regulate the rates charged by Internet Service Providers
(ISPs)?
A: No. ISPs are considered "enhanced service providers" under FCC rules.
The FCC does not regulate the rates that enhanced service providers charge
to their subscribers.
--------------------------------------
Q: How does the FCC regulate the rates that local telephone companies
charge to ISPs?
A: ISPs purchase local phone lines so that customers can call them. Under
FCC rules, enhanced service providers ISPs are considered "end users" when
they purchase services from local telephone companies. Thus, ISPs pay the
same rates as any other business customer, and these rates are set
separately in each state. By contrast, long-distance companies are
considered "carriers," and they pay interstate access charges regulated by
the FCC.
--------------------------------------
Q: How are access charges different from the rates ISPs pay now?
A: Today, ISPs typically purchase "business lines" from local phone
companies. Business lines usually include a flat monthly charge, and a
per-minute charge for making outgoing calls. Because ISPs receive calls
from their subscribers rather than making outgoing calls, ISPs generally do
not pay any per-minute charges for their lines, which is one reason many
ISPs do not charge per-minute rates for Internet access. Access charges, by
contrast, include per-minute fees for both outgoing and incoming calls. The
rate levels of interstate access charges are also in many cases higher than
the flat business line rates ISPs pay today.
--------------------------------------
Q: Have local phone companies requested authority from the FCC to charge
per-minute rates to ISPs?
A: Since 1983, there has been an ongoing debate about whether enhanced
service providers should be required to pay access charges, based on the
contention that these companies use local networks in the same manner as
long-distance carriers. In June 1996, four local telephone companies
(Pacific Bell, Bell Atlantic, US West, and NYNEX) submitted studies to the
FCC concerning the effects of Internet usage on these carriers' networks.
The companies argued that the existing rate structure did not reflect the
costs imposed on local telephone companies to support Internet access, and
that Internet usage was causing congestion in part of the local network. In
connection with these studies and other pleadings, several local phone
companies have asked the FCC for authority to charge interstate access
charges to ISPs, although they have not filed a formal petition for
rulemaking.
--------------------------------------
Q: Is the FCC considering allowing local phone companies to impose access
charges on ISPs?
A: The FCC has requested public comment on whether ISPs should pay current
access charges, and more generally on how Internet and interstate
information services that use local telephone networks should be treated.
The FCC's initial proposal is that ISPs should not be required to pay
current access charges, but the Commission has made no final decisions.
--------------------------------------
Q: On what issues is the FCC asking for public comment?
A: In the Notice of Proposed Rulemaking, the FCC is asking for comment on
whether ISPs and other enhanced service providers should pay the access
charges now paid by long-distance companies.
In the Notice of Inquiry, the FCC is asking for comment on how to create
incentives for companies to make the most efficient use of the telephone
network for Internet and other information services, and on the impact of
different rate structures for ISPs on network usage and deployment of new
technologies.
For more specific questions, see the Access Reform document itself. The
NPRM and NOI are part of the same document, which is available on the FCC
Web site at http://www.fcc.gov/isp.html.
--------------------------------------
Q: What is the difference between a Notice of Inquiry (NOI) and a Notice of
Proposed Rulemaking (NPRM)?
A: A NOI is the earliest step in the FCC's process and typically asks
questions in an effort to gather enough information to make informed
proposals on a given topic. A NPRM is a request for comment on specific
proposals made by the Commission. After the FCC reviews the comments filed
in response to an NPRM, the FCC can issue a Report and Order adopting new
rules.
--------------------------------------
Q: Is the FCC worried about the effects of different pricing structures on
the ISP industry, and on usage of the Internet?
A: Yes. The Commission expressed concern about the effects that imposition
of access charges could have on the competitive ISP marketplace, and also
noted that the Internet would likely not have grown so rapidly in recent
years if most users had been required to pay per-minute rates for Internet
access. At the same time, local telephone companies have argued that
per-minute rates would more accurately reflect the costs that ISPs impose
on the network, and would provide sufficient revenues to fund network
upgrades needed to more efficiently handle data traffic.
--------------------------------------
Q: What are the deadlines for filing comments?
A: For the NPRM, which asks whether ISPs should pay current access charges,
the final deadline is February 14, 1997.
For the NOI, which asks for comment more generally about the implications
of Internet and interstate information services, the comment deadline is
March 24, 1997, and the reply deadline is April 23, 1997.
Please note that both sets of deadlines have been moved back from what was
originally established in the Access Reform document released in December
1996, in response to petitions for extensions of time to file comments.
--------------------------------------
Q: How do I file comments on this issue?
A: You can submit formal comments by delivering or mailing five copies to:
Federal Communications Commission, Office of the Secretary, Room 239, 1919
M Street, NW, Washington, D.C. 20554. Your comments must include the docket
numbers, 96-262. 94-1, 91-213, and 92-253. More information on filing
formal comments is available on the FCC Web site at
http://www.fcc.gov/ccb/.
Because of the importance of these issues to the Internet community, the
FCC has also established an email box for informal comments at isp at fcc.gov.
--------------------------------------
Q: Will comments filed by other parties be available for review?
A: Formal comments are available for review in the FCC Reference Center in
Washington DC. In addition, we will make available on the FCC Web site at
http://www.fcc.gov/; any copies of formal comments we receive in electronic
form.
--------------------------------------
Q: Is the FCC considering "surcharges" or "taxes" for use of the Internet
or online services?
A: No. The FCC has sought comment on whether ISPs should be treated as end
users or carriers, and has proposed initially to keep the current system in
place. The debate involves charges levied by local phone companies, not
government taxes.
--------------------------------------
Q: Is this the "FCC modem tax" that has been floating around the Internet
in various forms for several years?
A: The "modem tax" referred to a proposal in 1987 to require enhanced
service providers to pay interstate access charges, which at that time were
significantly higher than they are today. The 1987 proposal was abandoned
in 1988. The current Access Reform proceeding is entirely separate, and the
FCC has specifically proposed not to require enhanced service providers to
pay access charges.
--------------------------------------
Q: What is the next step in the process?
A: The Commission will review the comments filed in response to the NPRM
and NOI. The FCC has expressed its intention to issue a Report and Order on
reforming the interstate access charge system by May 1997. As for the NOI
on Internet and interstate information services, the record does not close
until late April. Based on that record, the Commission will decide whether
at a later date to issue an NPRM seeking comment on specific proposals. The
Commission also held a public forum on Access and Bandwidth on January 23,
1997, in order to more fully address questions relating to the implications
of Internet services for the telephone network. The transcript of the forum
and related materials are available on the FCC Web site at
http://www.fcc.gov/bandwidth/.
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Last Updated 3/7/97
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