News

Calif. Data Ops Battle Bell Fees

6/06/1999 8:00 PM Eastern

Internet competitors are dueling with SBC Communications
Inc.'s Pacific Bell unit to convince the California Public Utilities Commission that
linking consumers to the Internet constitutes a local call.

At stake are millions of dollars in fees, called reciprocal
compensation -- small, per-minute fees paid to local telephone carriers that complete
local calls.

But regional Bell operating companies argued to the Federal
Communications Commission that access to the Web constitutes a long-distance call -- a
definition that would free the telcos from the responsibility of paying the fees. That,
Internet-service providers said, will hike access rates.

"We favor reciprocal compensation. We find it
disingenuous in the extreme that the incumbent [local-exchange carriers] favored this
scheme when the pattern favored them," California Cable Television Association vice
president of regulatory affairs Alan Gardner said.

Cable operators are less affected by the potential change
than other ISPs because most operators in the state have contracts with @Home Network, a
private network.

But operators that provide ISP access via a different
network that uses, or even touches, that of an incumbent LEC could see their prices rise.

States began examination of this issue last year, with
some, including California, voting on classification of Internet calls.

But they deferred action pending a ruling by the FCC. In
February, the commission opined that the calls are long-distance, leaving it to the states
to set final policy.

Since then, the Massachusetts Department of
Telecommunications and Energy sided with Bell Atlantic Corp., ruling that Internet calls
are long distance. A cable executive in that state said the ruling will have little impact
because operators there (MediaOne Group Inc. is dominant) use their own networks.

California regulators voted last year to classify the calls
as local. But when the issue was scheduled for a vote again earlier this month, it was
delayed 30 days.

Two commissioners left the board after the election of a
new governor last year, and they have yet to be replaced. The three remaining include the
two who supported the LECs' point of view.

The California Association of Competitive
Telecommunications Cos. warned that if its members are unable to receive compensation from
Pacific Bell, the only way to make up the money is to raise consumers' rates.

Gardner is banking on the PUC to reiterate its local-call
ruling of last year, but to open a new docket on policy for the entire state.

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