Intel, Microsoft, Apple, Digital, CompuServe, AOL, and other computer manufacturers and industry groups released a report Wednesday refuting telephone companies' demands for access charges for local Internet connections, and instead calling for healthy competition and better transmission technologies.
"What the phone companies are asking for is an up-front payment, and maybe later down the line implementing the appropriate technology," said Paul Misener, manager of telecom policy at Intel and chairman of the steering committee for Internet Access Coalition, the industry group that released the study. "This would suppress demand for the Internet."
The report, drafted by the independent consulting firm of Economics and Technology Inc., characterized congestion problems on the Internet as "overblown," and said that recent service outages at Netcom and AOL were isolated incidents that would not be solved by charging local access fees to ISPs.
"The problem of congestion is confined to the particular customer (ISP or otherwise) who orders an insufficient number of lines," the report concluded. "And such situations are best resolved by marketplace forces."
Last October, the chairman and CEO of Pacific Telesis, Philip Quigley, warned that the sharp growth in online activity is raising Pacific Bell's equipment and service costs, and suggested the potential for "a meltdown in the network."
The Bell Operating Companies - Ameritech, Bell Atlantic, Pacific Bell, Bell South, US West, and SBC Communications - argue that Internet service providers should pay a per-minute access charge to the local phone companies. Currently, online services pay state-regulated local business line rates - not subject to carriers' access charges. But if the Baby Bells have their way, ISPs would be viewed as interstate service providers that interconnect with local networks, and so would be charged for each local connection.
In December, the Federal Communications Commission tentatively concluded that local telephone companies could not charge ISPs for local access, after the Baby Bells submitted reports concluding that local access charges were essential for keeping up with the new demand for Internet access.
And people are installing more and more secondary lines in their homes strictly for the purpose of accessing the Internet. The FCC says the number of secondary residential lines increased to 9.2 percent in 1992, 14.7 percent by 1995, and 1996 figures may reach 16 percent.
But the computer manufacturers and trade groups also say that revenue gained from so many additional residential lines - an estimated US$3.5 billion from 1990-1995 - would more than cover the costs of installing the lines.
The Internet Access Coalition will present the report to the FCC next week, and begin "developing the technical aspects of Internet access," Misener said.
