FCC REGULATION CHANGE MAY EFFECT COSTS
by Robert Cramer


June 11, 1987 (RFC)--The Federal Communications Commission on
June 10 voted 4-0 to revoke an exemption, beginning Jan. 1,
1988, that had allowed providers of information services to
people with computers to charge as much as $5.40 an hour less
than almost all other providers of long-distance phone service.

Individuals and church groups would be affected by what's known
as "rate shock" -- a dramatic jump in costs -- at a time when
USA information networks are at last beginning to gain public
support in line with hopes of government, business and social
institutions that public communication via com- puter could
become widespread.

The FCC appears convinced that "equity" is best served by
making all interstate users of telephone-mediated services that
use the facilities of local and regional phone lines equally
compensate the regional phone operating companies. To that
end, it has recently forced those who offer "WATS" long-
distance services to start paying so-called "access charges" to
local phone networks they include. The computer-users
networks, including Telenet, Compuserve and a host of others,
remain the major exception.

Computer users were not scheduled for a price break when the
1982 federal ruling on access charges to long-distance
carriers, by local and regional phone companies, was made. But
the fledgling and potentially significant USA information
industry prevailed upon the FCC to grant a charge-free period
during which they could establish attractive rates and services
that would permit the United States to keep pace with France,
whose government subsidizes the public's use of computer
terminals for the exchange of information. The FCC acquiesced
but warned rates would have to be boosted in the future.

This is the future, the FCC thinks. With hundreds of thousands
of Americans connected to each other, and to databases, via
computer and modem, it's only "a matter of equity" that the
networks that they belong to contribute more fully to the cost
of national and global interconnections, FCC Commissioner Mimi
Dawson said in a hearing June 10. Other commissioners agreed,
some more and some less enthusiastically, according to the
detailed reporting of Communications Daily of Washington, DC.

The information industry -- including giants like Dialog,
Xerox, Compuserve, The Source, NewsNet, AT&T, Telenet and many
others as well as hundreds of smaller firms -- reacted with
"fear" to the FCC proposal June 10 -- apprehensively pre-
dicting that it would "raise rates significantly" to the in-
dustry (and thus to its users), according to Michael Hirsch of
Telenet. A Compuserve lawyer agreed that "rate shock clearly
will be a problem," Communications Daily said.

"However, FCC staff discounted rate shock as a significant
factor," Communications Daily said. They pointed out that all
users of local/regional phone facilities are being brought into
a balance of compensatory charges in which individual resi-
dential users' costs for long distance are going higher, up to
a maximum of $3.50 per month in access charges by 1989, while
long distance carriers' access charges are going down.

Also, the FCC pointed out that national/global information
networks that don't rely upon regional telephone companies but
instead bypass the so-called "switched" facilities won't be
liable for any additional charges. Presently that's fairly
limited, and the FCC's chief of common-carrier policy, Thomas
Sugrue, said it isn't likely that such bypass operations will
become significant.

In hearings between now and the proposed implementation date at
the beginning of next year, the question of "discrimination"
among users of telephone lines is likely to arise, the FCC
admitted. But it said that those who provide the public with
so-called "enhanced" computer communication services should be
able, themselves, to decide what users need a break and to
arrange for it if necessary.

As an interesting footnote, Communications Daily said that
Joseph Markoski, attorney for Compuserve, pointed out that the
FCC had "made a mistake in changing positions again. Markoski
said legally accepted point of view is that enhanced service
providers are (technically) users, not (common) carriers (as
are voice line resellers) and should be liable for subscriber
line charges (only), which they now pay, and not for access
charges."

RFC News Service will issue updates on this story as more
information becomes available.

c/o Copyright 1987 Robert F. Cramer, Resources for
Communication.

-------------
Author's note: Robert F. Cramer, 341 Mark West Station Road,
Windsor, California 95492. 707/542-7819

Robert Cramer owns and operates Resources for Communication, a
company which provides religion-related databases and
consulting on computer communication. He is also a sysop on NWI
ECUDOC conferences and writes the new intelligence briefing for
churches and corporate researchers called CHURCHNEWS DAILY
DIGEST.