Telephone companies have urged the Federal Communications Commission to charge Internet service providers long-distance connection fees, arguing that the Internet service strains their switches and networks.
They say it's only fair to allocate those costs to the provider. The fees would compensate them for the burden that Internet providers place on switching equipment.
However, the Internet Access Coalition, a group of Internet service providers and software makers, accuses the phone companies of looking hungrily at Internet providers to make up for some of the money they are about to lose from long-distance carriers that currently use their lines.
The phone companies' revenues from the Internet far exceed their costs, the coalition says, citing the extra phone lines consumers have installed to access the Web. The coalition says phone companies have seen revenues rise at a rate of $1.6 billion annually because of the new lines, more than quadruple any costs they incurred.
The U.S. Telephone Association accused the coalition of "misleading consumers" and expressed concern about the Internet's rapid growth.
`SOMEONE HAS TO PAY'
"Someone has to pay for that usage, the subsequent wear and tear on the network and the new equipment additions," the group said in a statement.
"Internet use is responsible for disproportionately increased network costs at Pacific Bell," said Lee Bauman, VP-local competition at Pacific Bell. "This year Pacific Bell will spend close to $100 million in order to accommodate Internet use over what would be otherwise necessary."
The FCC in December said the phone companies aren't entitled to long-distance fees from Internet providers, but is seeking industry comment regarding the issue.
The agency separately is looking into the long-term needs of the Internet.
"It's an open-ended inquiry," said Kevin Werbach, FCC counsel for new technology policy.
Both sides want a new system built, but there are differences on how it will work.
The Internet Access Coalition wants the FCC to allow companies to set up a national digital lines system that could be accessed through local lines but is otherwise separate from the normal phone system. The digital networks would compete with each other.
Telephone companies want to provide the national system themselves and want the FCC to let them charge all providers for access.