ACCESS FEES FOR VANS
by Sam Simon

[note: Sam has been moderating a lively discussion on this
topic in "Access Fees for Vans" on STC which has been ported to
other networks. This material has been excerpted with
permission from that discussion. His viewpoint on this issue is
a little different from that which others have expressed
online. Sam is an attorney in Washington, DC who runs a BBS on
telecommunications policy. He has presented briefs on this
issue representing a coalition of public interest groups. ENA
encourages its members and others to participate actively in
discussion of this issue - contact your ENA porter for
information abuot where the discussion is taking place on your
home system.]

On June 10, 1987, the FCC proposed to revoke a 1982 exemption
for VANS (Value Added Networks) - also referred to as "enhanced
service providers" - from access fees for access to local
exchange companies. What this means, if enacted, is that
Telenet, Tymnet, MCIMail and others who provide interstate data
service will have to pay the same fees for access to local
telephone companies as voice users do. Here is how it will
work:

Each call, voice or data, will have to pay the following
fees:

* ORIGINATING ACCESS - The cost of leaving the local network
and being carried to the point of presence of the carrier is
Columbus, OH calling to The Source in Mclean, VA you have to
pay Ohio Bell .69 cents ($.0069) per minute for the cost of
carrying your data call from your home to Telenet's node (point
of presence) in the Columbus calling area. Right now if you
were to make a call over MCI or AT&T "voice" you would pay that
same charge to have the call carried from your home to those
companies "point of presence."

* TERMINATING ACCESS - Your call is then carried to McLean,
Va and terminates, perhaps, at C&P telephone who then takes it
to The Source in McLean. If that is the case, then there is a
charge of 4.33 cents ($.0433) per minute for terminating
access, or the cost of taking the call from Telenet node to The
Source location. Again, if there were a voice call, it would
be paid for carriage from the long distance company point of
presence to destination.

* VARIABLE COST - In addition, there is about a 3.45
cents ($.0345) per minuyte "variable cost" charge. The first
two charges are based on paying part of the fixed cost of the
local network. The last charge is the added variable cost
added by the call.

Voice users have been paying these costs since 1982. The FCC
had exempted VANS on policy grounds, and now wish to revoke the
exemption. Is it fair to have voice pay more than data for the
identical services? What are the arguments for or against this
change? Will you reduce your calling if the cost goes up $5.00
an hour? What can be done about it?

Data users will probably react negatively to this proposal
because it is about raising costs. But it is important to
understand the positions and issues here. Voice users already
pay these fees. Now, I happen to think voice and data uses
ought to be treated the same. It seems to me that by having a
more favorable data rate than voice rate the FCC has been
fostering an unfortunate split between voice and data users.

On the other hand, the FCC claims that they didn't impose
these fees initially becasue of the potential of rate shock,
but now that the access fees have been reduced by almost 40%
from 1982, the rate shock won't be as severe.

My thought is to suggest to the FCC a transition period over
the next 18 months, to coincide with imposition of new
subscriber line charges. The subscriber line charges, which add
dollars to your local bill each month but reduce your long
distance bill because access charges go down, are going up from
the present $2.00 per month (residential) to $3.50 by february
or March of 1989. My suggestion is that the FCC start at some
point below the anticipated March 1989 price in January 1988,
and increase to the March 1989 price in one or two steps. That
to me is a transition which will give the vans the time to do
some cost cutting.

Let me point out that Centrex users faced exactly the same
problem, and the local telecommunications companies cried that
if access charges applied to Centrex lines like regular lines
they would go out of businesss. So the FCC threw them a sop,
kept them down to $2.00 for the first couple of years, and now
are boosting them to regular business rates. Centrex is doing
just fine, despite all the noise.

Telenet and Tymnet are going to say the sky is falling, but in
fact with time and real competition they will find a way to
keep rates low and recover their access costs too.

These are NOT in fact "new charges". Pre break-up, you were
in fact paying much more for all long distance rates, voice or
data, than you are now! The problem was that since the local
company and the long distance company were all one big happy
family, no one could figure it out, except AT&T, and they would
manipulate it always to their advantage --- they would get your
money whether it was over long distance or wheather it was over
local bill -- it was all AT&T.

Now locals are separate, they charge for the use of their
local network, and the charges go in two directions. On the
one end, you pay local rates -- usually a fixed monthly fee,
unlike gas or electricity, which both have a fixed fee plus
usage charges. Long distance calls are charged by the minute.
The long distance charge includes an element paid by the long
distance company for their use of the local network to reach
your home or to take the call from your home. It's called an
access charge. You pay it, your grandmother pays it, the poor
pay it - but data users don't, unless they use dial-up.

Now I am with you in arguing that the the cost of local
telephone service ought to be kept down, and local companies
should be given every incentive to reduce the costs so these
fees are less. But it is an emotional response to ignore the
inequity of the current system. Moreover, I believe that it is
in the long term self interest of data users to put themselves
on a par with the voice users. There are more voice users than
data users, and right now there is a building anti-data
mentality on the federal and state level, in part fostered by
the idea that voice is subsidizing data. That mentality can
cost you a lot more money later than a limited victory now.