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Internet doings at FCC

Poster: hfeld@ids2.idsonline.com (Harold Feld)

Greetings from Yaakov, actually Harold Feld in this case.

I have seen some recent traffic about FCC doings and the Internet.  While
it is true that the old "modem tax" got shot down in '88, there have been
some recent developments that explain why this rumor has resurfaced.

1) The 1996 Telecommunications Act requires telephone companies ("telcos")
to pay into a "universal service fund" devoted to providing telephone
service to rural residential areas (areas which would prove unprofitable
and thereofre probably unserviced if left strictly to the free market).
The FCC determined that ISPs did not qualify under the statute as telcos
and therefore were not subject to universal service payments.

Some folks in Congress and the telcos were unhappy about this, and have
made noises that the FCC should reconsider its decision.  FCC has taken no
action as of yet.

2) Telcos are extremely unhappy about the treatment of Internet connect
charges as local, rather than long distance calls.  At the moment, if your
dial-in number is in your local calling range, you are charged local rates.
Telcos have petitoned the FCC to change this and treat Internet
connections as long-distance calls -- on the theory that web-surfing ties
up long-distance lines.  Two issues lie below the surface here.  First, the
scheme by which local exchange carriers compensate long-distance carriers
for data/packet transfers depends on the characterization of the call.
(Even if your provider maintains its own backbone, there is usually some
transfer along public lines.)  Second, telcos are running scared of
Internet telephony.  Charging long-distance rates would help kill the
development of technology in this area.

The telcos submitted a petition for rule-making on the subject.  To the
best of my knowledge, FCC has not responded to the petition.  The
Commission, so far, has toed the Administration line on keeping a hands-off
tax-free approach to the Internet to foster development.

In short, FCC has taken *no* action hostile to the Internet, although some
folks out there would like it to do so.

Sorry for the interruption.


Harold Feld, Esq.
Asst. General Counsel A-TCPIP/DNRC

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