The Battle Over Bandwidth Fees By Michelle V. Rafter April 23, 1997 For months, telephone companies and Internet service providers have squabbled over who should pick up the tab for all of the thousands of people who use local phone lines to dial into the Internet. Enough, already. Phone companies want ISPs to pay minute-by-minute access fees to help pay for multi-million-dollar upgrades, which they claim are necessary to relieve Internet-related congestion on local phone networks. Up until now, service providers haven't paid access fees because of a 14-year-old Federal Communications Commission exemption for so-called "enhanced services providers." Back in the old, un-wired days, the exemption was meant to jump-start the country's data-services markets. Phone companies say the data-service engines are now running, and they want to ride. But ISPs claim phone companies' reports of network congestion are exaggerated, and maintain that if they're burdened with access charges, it'll lead to higher prices for consumers, stunting the industry just as it's taking off. The whining really picked up after Christmas Eve, when the FCC decided to look into the matter and invited all the parties involved — including the public — to comment. Surprise! More than 320,000 people wrote into a special FCC e-mailbox on the issue. And even bigger surprise — the vast majority weighed in against new fees. To support their case, Pacific Telesis, Bell Atlantic, and other major regional phone companies filed enormous briefs and conducted studies. PacTel, for one, estimated that Internet traffic on its network could equal voice traffic by 2001. On the other hand, one ISP lobby group, the Commercial Internet Exchange Association, pointed out that phone companies are getting into the Internet access business at the same time that they're asking Uncle Sam for permission to raise rates for their potential rivals. (You can read all the formal comments from 41 companies and a sampling of informal comments from the public at the FCC's ISP access fees Web site.) Odds are, whatever the FCC's decision later this year, ISPs won't like it. Size-wise, there's simply no contest. The phone companies are the 800-pound gorillas in this match-up, and they're old hands at lobbying Washington D.C. Provider folk need to stop whining and start figuring how a different cost structure is going to affect their business and customers. Nobody knows what kind of surcharge the FCC might slap on ISPs, but if it's anything like the fees long-distance companies pay, it would average a penny a minute or less. That's peanuts for people who aren't online much, an extra $6 for someone who averages 10 hours online a month. Net junkies like me, on the other hand, who are constantly online, could see our monthly bills double or triple. The real solution — and amazingly, phone companies and ISPs agree on this — is to move Internet traffic off telephone networks that weren't designed to move digital data in the first place. Moving Net traffic onto DSL lines and other packet-switched networks will eventually bypass the whole access-fee issue. Phone companies and ISPs are already starting to work on this one. Even farther along are cable TV operators, who've already started nationwide roll-outs of high-speed cable-modem services over upgraded hybrid fiber/coaxial cable networks. Ironic, isn't it, that in the battle between phone companies and ISPs, they could both end up as losers? Michelle V. Rafter writes Internet columns for Reuters and the Chicago Tribune, and is in process of scamming a trial cable-modem connection from her friendly neighborhood cable company.