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Date: Thu, 10 Oct 1996 00:48:00 -0400
From: Fred R. Goldstein <>
Newsgroups: comp.dcom.telecom
Subject: Re: Inter@ctive Magazine Article: FCC Contemplates ISP Access

At 05:43 PM 10/9/96 -0400, TELECOM Digest Editor wrote:

> [TELECOM Digest Editor's Note: I think most people have heard stories
> so often by now about the 'modem tax' or variations thereon that no
> one pays much attention any longer. I guess when we live under the
> sword of Damocoles long enough, we eventually just begin ignoring it.
> So when a story like this comes along in the print media, it may be
> true or it may be false or the truth may lay somewhere in between. I
> know in the past Fred Goldstein has written in this Digest a few times
> completely debunking all those stories, so perhaps I can call on him 
> to respond once again. 

While the sky is not falling, I think it's safe to say that there are
major efforts underway to topple its pillars.  The "modem tax" chain
letter was based on a 1987-era proposal by the then-chairman of the
FCC to reclassify a broad range of services as "interstate carriers"
rather than as "local subscribers".  This met with strong opposition,
from both the public and Congress, and the FCC backed off with tail
between legs, promising, essentially, never to raise the subject

But it's back.  I've read the actual "white papers" submitted to the
FCC by both Pacific Bell and Bell Atlantic on this subject.  Under FCC
rules, anyone can "petition" and the petition is then assigned an RM
number, and anyone can comment on it.  A "white paper" has no legal
standing, so in effect it is a way to petition the FCC without
invoking the open-government rules around RMs.  You and I can't do
this (well, we'd be ignored), but well-heeled RBOCs can and do try
stunts like this.

The thrust of both white papers is that Internet service providers and
similar on-line services are no longer in need of "exemption" from IXC
treatment, and they cause the local networks to incur extra costs
which aren't being recovered adequately via current tariffs.  If
implemented, IXCs would be charged cents per minute for INCOMING
calls, so when you call them up, they pay, and you pay too if it's not
a free call.  This is how the US handles the local-long distance
interface.  It's not a "peer" relationship; the local carriers call
the shots and charge the IXCs at both ends.  (Contrast this with the
UK where a carrier's a carrier, and each side pays the other to carry
their fraction of the calls they hand off.)

The RBOCs justification for this is based on any number of falsehoods
and twists of pretzel logic.  Yes, data calls are longer, but so what?
Any multi-line hunt group that generates incoming traffic has similar
impacts on the network, except long data calls use fewer switch CPU
resources.  The tradition in America is that the CALLER is responsible
for the WHOLE cost of the call, unless it's collect (including 800).
So when you make a local call to your ISP, YOU are paying for the
usage-sensitive portion of the cost of the entire call.  Receive a
call or not, you should pay the same.  Flat rate local service does
NOT necessarily change this; the monthly charge for flat rate lines is
higher than for measured lines, and the delta is the averaged cost of
outgoing local usage.  (Incoming is always free.)  So even where there
are no per-call charges, the caller IS PAYING!

Where the Bells have gotten into trouble is in poor planning.  They
simply didn't predict the growth in network demand, Internet or voice
or anything else!  They work on multi-year (5-10) planning cycles.  In
the early 1990s, many of them chose to request "alternative"
regulation, in which they freeze their politically-sensitive analog
local residential line rates in exchange for the right to keep
additional profits brought about by "efficiency".  So they've laid off
thousands of crafts people, cut back growth, and gotten blindsided by
increasing demand!  Naturally, with residential flat rates frozen as
their part of the deal, they can't go back and ask for rate hikes to
cover the *slight* increase in the average usage per line!  So
instead, they're trying to get the money via the back door, by
imposing new, rather massive (around 2c/minute is typical) charges on
the INCOMING side of those subscribers who are deemed to be generating
this new demand.  That's the ISPs.

"Uncle Charlie" hasn't come out with any rulemaking proceedings
(NPRMs) on this.  They're being pushed one way by the RBOCs and
another way by the rest of us.  Whichever one pushes harder probably
wins.  It might get wrapped up in a generalized revisitation of their
"access charge" structures.  Certainly FCC chair Reed Hundt's speech
of a few weeks ago, which somebody else delivered for him, was not
reassuring.  He squarely took both sides of the issue!

So yes, there IS a real threat.  It's NOT the old "modem tax" but it's
very, very similar, and it's driven by greedy Bells who use deceit and
mendacity to pursue their claims. Users should pay attention whenever
real info gets out, but shoudn't lower their credibility by spreading
chain letters, etc., that have only fifth-hand summaries, etc.  The BA
paper might be on the web somewhere.

Fred R. Goldstein     k1io   +1 617 873 3850
Opinions are mine alone.  Sharing requires permission.

Date: Wed, 08 Apr 1998 20:49:57 GMT
From: fgoldstein@bbn.NO$ (Fred R. Goldstein)
Newsgroups: comp.dcom.telecom
Subject: IDT's Lying Spam About FCC Tariffs

IDT, the callback/reseller low-end LD company, is now spamming
abUsenet as part of their campaign against the FCC.  They have a
"service" called Net2phone which makes ordinary telephone calls using
IP, terminating on LEC access lines.  Under long-standing (since 1979)
FCC rules, long distance telephone carriers pay "access" charges to
local telcos.  IDT is claiming, rather lamely, that because they're
using IP instead of ordinary TDM or (historical interest only) FDM on
their muxes, they are somehow exempt from this, and can hook up to
ordinary business lines.

As many press articles recently have noted, the FCC is not
particularly wowed by this argument.  ISPs are entitled to
business-line rates for their dial-in servers, because they're
providing "enhanced services", which are not the same as ordinary
telephony.  Just claiming that you're an ISP doesn't make you one,
however; a plain old phone-to-phone call is a phone call!  "Access"
tariffs, which pay high subsidies above their cost, go back to the
Execunet decision (1979).  Legit LD companies pay them, grudigingly;
they average 5c/minute.  IDT wants to undercut other LD companies by
not paying up.

Here's their spam:

> The Federal Communications Commission is planning to regulate the Internet
> by imposing new universal service fees which are likely to be passed on to
> you in the form of higher Internet-service charges.

> If these taxes are imposed, you will have to pay more every time you use
> the Internet.

This is a TOTAL falsehood.  The fees already exist; the FCC merely
wishes to start enforcing them on companies who carry PHONE calls
"across" the Internet.  Calls TO your ISP will not be affected.  While
several voice carriers (SBC, BellSouth, LCI in particular) are pushing
to have ISPs reclassified as long distance carriers (which would put
most out of business), the FCC strongy opposes that so-called "modem
tax".  IDT is complaining about a voice tax, not a modem tax, and
they're simply evading it!

> ...We have always viewed the Internet as a fantastic medium to communicate
> with anyone worldwide at little or no cost. Please do not let the FCC take
> this right away from you.

And they won't.  The FCC's current thinking doesn't affect
computer-to-computer connections at all, even if they have sound cards
doing IP telephony.  It's only the voice connections from local
carrier voice networks to LD telephony gateways that are being

BTW, this is important to IP users because the telephone network
depends on these subsidies (until the whole cost-recovery mechanism
gets fixed!).  And if IDT were "exempt", AT&T, MCI and Sprint could
become "exempt" too quite easily.  At which point the ISP "exemption"
would be in deep trouble!  You can't have exempt data and exempt LD

Fred R. Goldstein k1io fgoldstein"at" GTE
Internetworking - BBN Technologies, Cambridge MA USA +1 617 873 3850
Opinions are mine alone; sharing requires permission.

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