House Votes No on ISP Access Charges

BOSTON (05/20/2000) - Leroy Grey, president of Raven-Villages Internet, a small Internet service provider in Romney, West Virginia, thought testifying in front of the House Commerce Committee hearing on HR 1291 was a good idea. That is, he thought so until May 10.

That's when the Commerce Committee clarified that Internet telephony (voice calls via the Internet) is excluded from the legislation designed to limit the Federal Communications Commission's (FCC) powers to impose local access charges on Internet providers.

The full House approved the measure Tuesday. Grey said he's unsure how the bill may ultimately affect his business, which provides Internet telephony and other Web-based services.

Local access charges, which some confuse with taxation on goods purchased online, are per-minute fees paid by long-distance providers to the regional Bell operating companies in return for connections to the regional loops.

BellSouth Corp. in Atlanta said it's paid an average of 2 cents per minute.

The fees are placed in a universal access fund to help offset local service costs for low-income consumers.

Rep. Fred Upton (Republican-Michigan) introduced HR 1291 last year. An Upton spokesman said the bill wasn't intended to keep the FCC from regulating access charges on voice calls via the Net. In a prepared statement, Upton said it was an effort to prevent future regulation by the FCC that might result in per-minute access charges.

But Rep. Edward Markey (Democrat-Massachusetts.) said, "The prohibition contained in the bill actually prohibits very little. And [it] gives the FCC a big legislative wink at access charges to Internet telephony providers."

Moreover, Markey said, it only prohibits access charges for universal service, which means the FCC could still levy per-minute Internet access charges as long as the funds derived aren't earmarked for the universal fund. Markey's attempt at an amendment to resolve his concerns failed when the house approved HR 1291.

Committee Confused

Grey said the Commerce Committee members seemed confused about the Internet telephony issue. "[The Internet] is all data, including telephony," Grey said. He said Rep. Christopher Cox (Republican-California) is a committee member who seemed to understand this. Others on the panel, he said, seemed more interested in sorting out how "the whole long-distance market could unravel [as a result of IP telephony]."

According to FCC spokeswoman Joy Howell, the FCC thought HR 1291 was a non-issue. "Congress has the prerogative to legislate policy, and we respect that right," she said. "But in this case, we think it is superfluous. We have no intention of imposing access charges to the Internet. The chairman has no interest in imposing old regulatory schemes on new technology."

"The word of the day is complicated," said John Morabito, vice president of federal and regulatory affairs at Global Crossing Ltd. in Hamilton, Bermuda. He said he believes some of the processes at the FCC need to be reformed. "You wouldn't subject IP telephony to an older regulatory regime," he said. "At the same time, if IP telephony is a telecommunications service, then it should be treated that way."

Courtney Quinn, an analyst at The Yankee Group in Boston, said, "Why ban something that the FCC doesn't see as a possibility of regulating? Down the line, I suppose you could see the FCC getting involved. At the moment, though, they're wary of getting too heavy-handed with regulations."

HR 1291 now goes to the Senate Commerce Committee.

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