Issue #191, April 1, 1999  

FCC’s Latest Fiasco Could Cost ISPs – And You 

By Stephen Lawton

     Just how naïve does the Federal Communications Commission (FCC) think the average American is? I fear we’re hearing bureaucratic doublespeak again — if you name a skunk Flower, everyone will think it smells just fine. Well, this just smells. 
     What’s got my dander up? It’s the FCC’s ruling that states calls to your local ISP are actually interstate calls for purposes of phone company billing. In reality, it’s a battle between the Baby Bells and smaller phone companies that often provide services to ISPs. The ruling means the smaller companies, called competitive local exchange carriers, or CLECs, have to pay the local exchange carriers, or LECs, for completing calls from your company or home to your local ISP. 
     The LECs contend a phone call to an ISP does not terminate once it reaches the ISP, but rather when the caller gets on the Internet and goes out of state. The argument is: Since the call can make a connection to an out-of-state Web site, the call must be billed as though the caller did make a connection out of state. Never mind that a company might be calling its ISP to upload new Web pages to its own server — that’s immaterial. What is material is that the Baby Bells get a piece of the action. 
     The CLECs claim that the user’s call terminates at the ISP’s offices, which means it’s simply a local phone call. Anything that happens after the Internet connection is made is separate from the original phone call. MCI WorldCom claims that for the LECs to share in the profits, the local call must cross state lines. The FCC rejected both claims. 
     MCI WorldCom is appealing the ruling in the Court of Appeals for the District of Columbia; other appeals also are expected. 
     By siding with the LECs, the FCC contends this is “just” an issue between phone companies and will not affect users. Right. When was the last time your phone company — or your vendor’s phone company — had its rates raised and did not pass on the increase? Don’t strain your brain trying to figure that one out — the likelihood is never. Let’s face it — if a company’s costs go up, it normally passes on the costs to its customers. In this case, it’s quite possible that the CLECs will have to charge ISPs more for their phone service since the FCC is saying that the CLECs need to reimburse the LECs for allowing you and me to use the local phone line to reach the ISP. 
     The FCC says it has “absolutely not” opened the door to new Internet charges. It also has a special exemption for ISPs that treats them as a local phone customers. According to the FCC: “Consumers should see no changes in their Internet or phone bills, either in the short run or long run, as a result of this order.” Frankly, I don’t trust it. No, the FCC didn’t raise your phone bill or Internet fees directly, but this scheme to placate the Baby Bells at the expense of Internet users and CLECs bodes ill for everyone, despite the FCC’s claims to the contrary. 
     For the full text version of the FCC document, plus additional comments and a FAQ, point your browser to 

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