THE FCC RUN ITS COURSE?
Consumer Groups Assail FCC
Decision on Internet Access Charges
WASHINGTON, DC -- The
Federal Communications Commission's decision today to reclassify
Internet Service Providers (ISPs) as interstate could make using
the Internet cost more, according to two of the nation's leading
"At a minimum, today's
decision ensures a continued morass of conflict and litigation,
with no possible gain to the public and a severe potential
loss," said Gene Kimmelman, co-director of the D.C. office of
Consumers Union. "We predict the result will be increased
costs of Internet use either directly or indirectly. Costs could
go up directly through local usage charges or federal access
charges being levied on Internet traffic. They could go up
indirectly because Internet Service Providers could decide to
reconfigure their networks to avoid the charges."
At issue is an FCC decision
that reclassifies calls to ISPs as interstate in nature. These
calls involve reciprocal compensation contracts between incumbent
local phone service providers -- like regional Baby Bells and GTE
-- and their competitors.
The consumer advocates said
the FCC's decision is "muddled" and that it appears to
avoid the fundamental consumer problem of inflated access charges.
Although the FCC appears to hope that it can avoid per-minute
charges on the Internet, the consumer groups expressed
"serious doubts" such an outcome could be avoided.
decision leaves fundamental questions unanswered," said Mark
Cooper, research director for Consumer Federation of America.
"We think that the public has every right to be fearful when
the Commission declares that a substantial portion of Internet
traffic is interstate and therefore subject to federal
jurisdiction, but FCC Chairman Kennard states that 'Dialing up the
Internet is just like a local call.'"
This decision starts the FCC
down a path that could well lead to per-minute charges on Internet
uses, like long distance calling or local measured service,
according to Kimmelman, who called such an outcome "a
disaster for consumers." FCC Commissioner Ness also came
under fire for comments he made that "one could readily
imagine, for example, that states will not seek to assess
per-minute fees on Internet-bound calls."
"The public should be
fearful that the states, goaded on by the incumbent local phone
exchange companies (ILECs), which have always wanted to impose
local measured service on consumers, could slap per-minute fees on
Internet-bound calls," said Cooper.
"If the real problem is
that inflated access charges attach to some services but not
others, the better decision for consumers would be to bring access
charges down to cost," said Kimmelman.
Last November, the CFA and
CU wrote the FCC to express their concerns about the impact of
this ISP decision on consumers. In that letter, the groups said
allowing "incumbent local exchange carriers to carve out of
(their) contracts (with competitors) the one type of traffic that
is not to their advantage and lower the rate, while they charge
the higher rate on traffic that is in their favor, is not only
fundamentally unfair, it also would be horribly anti-competitive.
No matter how the FCC tries to mince its words with respect to
exiting contracts, an FCC decision to claim jurisdiction will give
the ILECs another excuse not to pay their bills."
Legislators Propose Law
Forbidding Net Regulation
Commission (FCC) Chairman William E. Kennard has taken great pains
recently to deny that his agency wants to impose per-minute fees
on dial-up Internet access calls, but a group of five senators and
five Congress members now want his help in crafting language that
would make Internet regulation legally off limits.
The members wrote to Kennard
after receiving a deluge of phone calls and e-mails from
constituents complaining that they heard via word- of-mouth and
online that the FCC's stance on reciprocal compensation agreements
would result in per-minute access charges.
They say they want Kennard
to help them on crafting legislation that would amend the
Communications Act of 1934 to specifically forbid charges or other
regulations on Internet access.
"We were pleased to
learn of your recent statement in a Mar. 11 speech that 'as long
as I am chairman of the FCC, we will not regulate the
Internet,'" the legislators wrote. "As you make clear in
your speech, the fact that the Internet is unregulated by the FCC
has been an indispensable factor in the Internet's development and
Sens. John McCain, R-Ariz.,
and Paul Coverdell, R-Ga., signed the letter, as did Reps. Tom
Davis, R-Va.; Tom Campbell, R-Calif.; Christopher Cox, R-Calif.;
Dick Armey, R-Texas; J.C. Watts Jr., R- Okla.; Lee Terry, R-Neb.;
David Dreier, R-Calif.; and Jennifer Dunn, R-Wash.
"We... agree with you
that the Internet should remain unregulated by the FCC and,
specifically, that the government should not hit Internet users
with per-minute access charges," the letter said.
"Still, we note that at least one commissioner has voiced
concern that the FCC's recent reciprocal compensation decision in
fact 'put in jeopardy' the long-standing rule that bars local
phone companies from assessing usage-sensitive access charges on
Internet service providers."
Doubt and speculation have
formed the locus of innumerable petitions and bulk e-mail swirling
around the Internet that warn of per-minute charges, and accuse
the government of over-regulating cyberspace.
The misunderstanding arises
because of a recent FCC decision that reclassifies Internet access
calls as long distance in order to remove those calls from the
auspices of reciprocal compensation agreements. These agreements
between local phone companies require phone company A to pay phone
company B a fee when a company A customer calls a company B
customer. Baby Bells took it on the nose and were required to pay
out large fees to competitive local carriers whose main clients
are ISPs, and as a result, only take in phone calls on their modem
The baby Bells for the most
part have refused to pony up, and now will not have to do so for
calls that were made to dial-up modems. FCC and Senate Commerce
Committee officials -- who released the letter to the media -- did
not return telephone calls before deadline.