FCC responds to fears of ISP fees

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FCC responds to fears of ISP fees

By Courtney Macavinta

http://www.news.com/News/Item/0,4,17981,00.html?dtn.head

The (http://www.fcc.gov/) Federal Communications Commission today is
clarifying the issues behind a pending report to
(http://www.congress.gov) Congress that some fear could result in
new fees for Internet service providers.

Federal lawmakers have mandated that the FCC review rules it
released in May that restructured the nation's "universal service
fund," which traditionally subsidized phone service for rural and
low-income residents but was revised to include up to $2.25 billion
in annual funding for hooking public schools and libraries up to the
Net.

Congress ordered the FCC report in part to address whether Net
service providers should have to contribute to the universal service
fund. They don't now because they are considered "enhanced service
providers."

If the FCC were to recommend to Congress that ISPs be reclassified
as "telecommunications services," online access providers could have
to pay into the fund, but only after a lengthy rule-making process.
This would be good news for telcos, which pay a big portion of the
universal service fund now and have lobbied to the FCC in the past
to collect other additional fees from ISPs to offset various costs.

The FCC is accepting public
(http://www.fcc.gov/Bureaus/Common_Carrier/Public_Notices/1998/da9800
02.html) comment on the universal service issue until January 20,
and will report to Congress in April. This has caused anxiety and
confusion for Net users because in a separate incident, an
"erroneous" email has been circulating online stating that the FCC is
accepting public comment until February on whether a per-minute
access charge should be imposed by phone carriers on Net service
providers, which is not true, an FCC spokeswoman said today.

Still, concern is still mounting in the online industry over how the
universal service funding would be collected from ISPs if they were
required to contribute. Some worry the collection vehicle would turn
out to be a telco access charge that would likely be passed on to
ISP customers. Any potential universal service charge is unrelated to
the permanent access fee proposed last year and referred to in the
erroneous email.

"Such a fee will put a lot of non-telephone company ISPs out of
business. People who have to pay the telephone companies a fee for
every minute they spend online will not stay online as long," said
Dave McClure, executive director of the (http://www.aop.org/)
Association of Online Professionals, which fought the access fees
last year. "The effect will slow the growth of the Internet."

In the past, such access charges were funneled into universal
services. But FCC officials said today that it is far too soon to
say whether ISPs will ever be classified as telcos, and subsequently
have to pay into the fund through an access charge or any other
mechanism.

According to its January 5 public notice, the FCC report will
clarify its definitions of "information service," "local exchange
carrier," and "telecommunications service," and "the impact of the
interpretation of those definitions on the provision of universal
service to consumers in all areas of the nation."

In addition, the agency will review "the application of those
definitions to mixed or hybrid services and the impact of such
application on universal service, and the consistency of the
Commission's application of those definitions, including with
respect to Internet access for educational providers, libraries, and
rural health care providers under the Act."

Despite the email notice that has been circulating on the Net, the
agency also confirmed that it has not reopened a public comment
period on whether phone carriers should be allowed to charge the
permanent ISP access fee. The email began circulating a few days
before the universal service public inquiry notice was released,
according to the FCC.

"The email circulating that says the FCC is asking for comment by
February 13, 1998, on the issue of whether the ISPs should have to
pay access charges to local phone carriers is an erroneous email," an
FCC spokeswoman said today. "In its access reform order in May of
1997, the FCC decided not to allow local telephone companies to
impose permanent access charges on ISPs. The FCC is no longer asking
for comment in this proceeding."

Still, Congress's mandate for a review of the FCC's implementation
of universal service is yet another example of certain members'
dissatisfaction with how the Telecommunications Act has been carried
out by the commission--especially issues concerning ISPs.

For example, the confirmation of William Kennard as the FCC's new
chairman also was held up until two senators were satisfied that the
commission would review universal service. Sen. Conrad Burns
(R-Montana) argued that states were footing a larger portion of the
universal access bill than the federal government.

Sen. Ted Stevens (R-Alaska) pushed through the FCC universal service
review as part of a huge appropriations bill for 1998. He forced the
issues of whether telcos should have to pay for subsidized access if
ISPs aren't contributing.

Some members of the online industry say the telephone companies may
have a point, but they contend a solution that could increase the
cost of Net access is not the best answer.

"The telephone companies rightfully feel that they shouldn't be the
only ones paying into telephone universal service if those fees are
going to go to Internet service," McClure said.

"From a global perspective, the real question is whether universal
funds are the best vehicle to make sure schools get wired to the Net
when the industry is already helping to do this privately," he said.
"If it means that a permanent Net access fee will be implemented, it
might not be the most equitable way."

The cost of Net access is expected to increase for many users.
According to the FCC rules, by the end of this year, businesses will
pay $2 per month more for each additional phone line. The cost could
be as high, however, as $4.21 per additional line by the beginning
of next year, because long distance providers will be charged $2.20
for each added line, a fee they could pass on to customers.


-------------------

Also in this issue:

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    something of a guinea pig.
- Software sends Web over TV
    Intel's Intercast technology for broadcasting data to computers has
    surfaced again, this time in software from Network Computer
    Incorporated (NCI).
- FCC responds to fears of ISP fees
    The Federal Communications Commission today is clarifying the issues
    behind a pending report to Congress that some fear could result in
    new fees for Internet service providers.
- The new world of journalism and the Internet
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- Excite may launch U.K. school deal
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    of school-aged children as part of the United Kingdom's NetYear
    program, sources said today.
- NSI protests criticism of InterNIC system
    Network Solutions (NSI), the private company that runs the Internet
    Network Information Center (InterNIC) domain name registration
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- Bonk! A New Windows Security Hole
    Microsoft is scrambling this morning to fix a newly re-opened
    security hole that can crash any Windows 95 or NT machine connected
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- New Lists and Journals
    * Merced - Discussion of Microprocessor Technology
    * LEUKAEMIE-L - Leukemia Discussion in German Language
    * DAILYHOLIDAY - 7 day a week fun holiday announcement list


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