FCC Reclassifies Internet Calls as Long-Distance, Provoking Protests
The Federal Communications Commission said Thursday that phone calls made to connect to Internet service providers should be considered long-distance instead of local, a ruling that big local phone companies have sought based on the argument that they are not recouping all their costs for handling Internet calls.
While FCC officials say consumers won’t have to pay long-distance charges in order to reach the global computer network, others--including one FCC commissioner--warned that the decision could ultimately shift fees now borne by the industry to consumers. That could lead to higher prices for people who access the Internet through services such as America Online.
“This will inevitably lead to price increases for consumers for Internet services, and most likely it will be in the form of per-minute charges,” said Gene Kimmelman, co-director of the Washington office of Consumers Union.
Although a customer usually dials a local phone number to reach an Internet service provider, that call could ultimately wind up connecting to a computer server anywhere on the World Wide Web. That means that calls to ISPs must be considered interstate, not local, in nature, the FCC said.
Commissioners said the intent of the action is to give the FCC the regulatory authority to set fees that local phone companies must pay one another as they hand off calls from one network to another en route to the Internet. Until now, those fees have been determined by state regulators, and the FCC said its decision won’t change any of the so-called reciprocal compensation agreements that are already in effect.
FCC Chairman William Kennard said the decision also wouldn’t change the way calls to Internet service providers are charged.
“I know that rumors have been spread by some people about adding per-minute charges for long-distance charges for the Internet,” Kennard said. “These rumors are totally false.”
But consumer advocates insist that the decision opens the door for local phone companies to find a way to charge the kind of per-minute access fees that long-distance companies such as AT&T;, MCI WorldCom and Sprint pay for voice calls.
If the Baby Bells and GTE go to court over the matter, the FCC will have fewer legal defenses to protect consumers, said Mark Cooper, director of research for Washington-based Consumer Federation of America.
“The biggest fear for consumers is that this is the first step toward metered Internet access,” said Paul Misener, chief of staff for FCC Commissioner Harold Furchtgott-Roth, who did not support Thursday’s decision.
“The telephone companies would charge your local friendly ISP per-minute access fees, and those access fees would be passed along to yours truly,” he said.
The U.S. Telephone Assn., a Washington lobbying group that represents local phone companies, hailed the FCC’s decision to classify calls to Internet service providers as interstate calls.
SBC Communications, the San Antonio-based parent company of Pacific Bell, does not support charging per-minute long-distance fees for Internet access, said spokesman Selim Bingol.
Companies that provide Internet access said they are confident the FCC decision won’t result in higher prices for their customers.
“The FCC made it perfectly clear that they did not intend any change in the current regime for Internet access pricing,” said George Vradenburg, general counsel for AOL in Dulles, Va.
The decision could also harm consumers if the FCC does away with the fees that monopoly local phone companies pay to the upstart local phone providers that serve ISPs, said David Eiswert, an Internet consultant with the Strategist Group in Washington. Those fees totaled $600 million last year and are estimated to top $1 billion this year.
But if they can’t be collected, the upstarts would probably raise the prices they charge to ISPs, Eiswert said. The ISPs, in turn, could raise prices for consumers, although he added that competition among Internet service providers would probably keep prices in check.
