PC Access Charge Would Hurt Data Services

If the Federal Communications Commission has its way, it will soon cost a lot more to connect your personal computer to a dial-up electronic information or mail service.

A proposal under consideration could result in an extra charge of almost $5 per hour for users of CompuServe, the Source, GEnie, MCI Mail, Dow Jones News/Retrieval and other services that let you connect your computer to a phone line for such features as news, financial information, airline schedules, movie reviews and access to electronic mail.

From most cities, you reach these services by having your computer dial a local number. That connects you to a “switch” that transfers your call to a host computer, which could be anywhere in the country.

The cost of the long-distance portion of that call is usually included in the information service’s fee, which can, in some cases, be as low as $5 per hour. To save money, computer services transmit the data using special “packet switching networks” that are far more efficient than regular long-distance lines. Telenet, one of the largest data network services, charges as little as 80 cents an hour for long-distance computer communications. That’s less than 1/10 the cost of a late night coast-to-coast long-distance call.

While the cost of transmitting data across the country isn’t expected to rise, the FCC wants to levy a charge for the local phone call that connects users to the network. Under the proposed regulations, the computer services would pay about 7.5 cents a minute to connect to the local phone exchange. That cost, about $4.50 per hour, would undoubtedly be passed to the consumer.

The “carrier access charge” is nothing new. You pay it every time you make a long-distance voice call, as part of your long-distance bill. Those access charges do not currently apply to companies that only transmit data.

The issue arose in 1983, when AT&T; was forced to divest itself of the Bell operating companies that provide local service. In its monopoly era, AT&T; would use its long-distance service to subsidize local calling. Without it, basic local phone service would have been much more expensive. As part of the AT&T; breakup, the FCC replaced the subsidy with access charges to avoid a dramatic immediate increase in the cost of local service. The access charges are also used to help the local phone companies implement the transition to “One Plus” long-distance dialing, which makes it possible to choose any long-distance company and place calls by dialing 1, plus the phone number.

In 1983, the FCC decided not to apply this charge to data communications companies because the commission was convinced that the access charges would have a devastating effect on the fledgling computer communications industry. The commission agreed that the new industry needed time to mature before its users would be willing to accept such fees.

What was true in 1983 is true today. The notion of the “network nation,” where everyone uses a personal computer for banking, shopping and electronic mail, is still a dream.

Consider the numbers. CompuServe, the largest provider, claims about 370,000 subscribers. The Source serves about 65,000 people, and GEnie has about 60,000 users. When you add in all the smaller companies, the total comes to slightly more than half a million. Hardly a stampede. If you count Dow Jones News/Retrieval and MCI, which are aimed at business users, the total is still far less than a million. Ken Bosomworth, an industry analyst with International Resource Development, estimates that the companies, combined, serve approximately 250,000 home users. Even at that, I know a lot of people who have accounts that they never or rarely use.

There are lots of reasons these information services have failed to attract large numbers of users. Not the least of which is the cost of computer hardware. In France, the government-owned phone company has encouraged widespread use of its national data network by providing very low-cost terminals for home subscribers.

Another problem is that electronic mail is limited to fellow subscribers. I’d love to send “E-mail” to my aunt in Florida, but she’s not about to get a computer, let alone a modem and a subscription to an E-mail service.

The FCC makes a good moral argument for levying the charge. Computer communications, according to FCC staff attorney Ruth Milkman, “is currently priced below cost and is subsidized by long-distance users.” To Milkman, “the basic policy is that everyone who uses local exchange facilities should have to pay for them.” Nevertheless, Milkman acknowledges that the proposed access charge would have virtually no impact on the actual cost of long distance. That’s because long-distance use far exceeds that of the computer services.

Phil Walker, vice president of Telenet and chairman of the Washington-based Electronic Mail Assn., argues that “it is inappropriate to ask users of the (computer) network to subsidize local phone service.”

Walker further argues that companies like Telenet are not in the same business as the long-distance voice carriers. Computer networks, for example, do not need the “One Plus” dialing demanded by MCI, Sprint and other long-distance voice networks. The FCC tacitly acknowledges the validity of Walker’s argument by providing a 55% discount on the access charges in those areas where One Plus dialing is not yet available. By inference, that implies that more than half the charge is based on a service that computer networks don’t even want.

Of course, I’m bothered that those of us who use the services will have to pay more. But I’m more concerned about the effect it will have on those who now may never use such services. For these services to thrive, they need mass appeal--like cable TV. For that to happen, the companies have to expand offerings and make them more relevant to people’s daily lives. But mainly, they have to be more affordable. As it is, the services are too expensive. The rates need to go down, not up, before people will feel comfortable using them to make plane reservations, research consumer purchases or let their children log on for help with homework. I strongly believe in the future of information services. In time, communications technology will evolve so that we don’t even need to use dial-up lines. In the meantime, let’s give the industry a chance.

The FCC is accepting written comments from the public through Oct. 26. You can write to the commission at 1919 M St. NW, Washington, D.C. 20554. Sorry, letters only. It doesn’t subscribe to an electronic mail service.