AT&T Wants IP-Phone Exemption

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AT&T Corp. is seeking a broad federal ruling that would exempt Internet-based phone calls from the per-minute access charges that apply to traditional long-distance calls.

On Oct. 18, AT&T filed for an exemption with the Federal Communications Commission — a move likely to trigger a lobbying war with the Baby Bell phone companies, which rely on billions of dollars in long-distance access charges to subsidize their rural customers.

"Yet again, AT&T is trying to convince regulators that AT&T alone should get special treatment," said Allison Remsen, director of media relations for the United States Telecommunications Association. "Long-distance calls are long-distance calls, no matter how they're packaged, and there is no logical reason why AT&T should be excused from paying access charges when other providers are forced to pay them."

The USTA represents hundreds of incumbent phone carriers, including all the Baby Bells except Qwest Communications International Inc.

ISP parity bid

With the filing, AT&T is effectively asking the FCC to treat phone-to-phone calls that travel via the Internet in the same fashion as it treats such Internet-service providers as America Online. AOL does not pay access charges for connecting dial-up subscribers to the Internet.

"Any other rule would effectively sanction taxes on the Internet," AT&T said in the 33-page filing.

AT&T said it turned to the FCC because local phone companies — such as Verizon Communications Inc. and Sprint Corp. — were either slapping access charges onto Internet voice traffic or refusing to complete such calls.

The request could affect cable companies, who are considering using IP telephony instead of the traditional circuit-switched method of routing voice communications.

Comcast Corp., in particular, is moving forward with IP telephony next year. An access-charge exemption could give the MSO (in the process of merging with AT&T's cable unit) a regulatory edge over firms that are required to collect such fees from customers.

Just as big as the access-charge issue is the debate over the regulatory classification of IP telephony.

Issue at FCC

If the FCC classifies IP telephony via cable as an information service, MSOs would enjoy many regulatory exemptions. But they would not be protected by rules that benefit competitive telecommunications carriers, such as the right to interconnect and exchange traffic with incumbents.

Many policy analysts have said the ISP access-charge exemption, first adopted by the FCC in 1983, fueled the Internet's rapid growth, because providers could offer flat-rate monthly plans to subscribers who could remain online for hours without facing per-minute usage fees.

Whether IP telephony will enjoy the same explosive growth is unclear. In the filing, AT&T said that IP telephony providers today represent between 1 percent and 5 percent of all long-distance calls.

AT&T told the FCC that one IP telephony service it tested, called Connect-N-Save, was not successful and was withdrawn from the market.

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