USTA Shoots Down AT&T Phone Relief

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The local phone industry is opposing a proposal by AT&T Corp. that calls
for regulatory relief for companies that route phone calls over the Internet --
an issue being monitored by cable operators with Internet-protocol-telephony
ambitions.

In October, AT&T asked the Federal Communications Commission to exempt
Internet-based phone calls from having to pay per-minute access charges that
apply to traditional long-distance calls.

On Wednesday, the local phone companies -- which collectively receive
billions of dollars in access charges annually from AT&T and other
long-distance carriers -- said AT&T's proposal would have "potentially
catastrophic consequences" for the sustainability of affordable local phone
service everywhere in the country.

Access charges are used to promote universal service, a subsidy program aimed
at phone consumers in rural and high-cost areas. The fund also subsidizes poor
consumers and Internet connections to schools and libraries.

The regulatory status of IP telephony has been a sleeper issue for the cable
industry for several years, and it is expected to take on greater significance
as cable-modem providers add voice applications. However, the National Cable
& Telecommunications Association did not file initial comments on AT&T's
proposal.

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