[IP] SBC to raise INternet fees
SBC Seeks to Levy Higher Fees
On Internet Phone Companies
Plan Aims to Raise Charges
On Local-Network Calls;
Bell to Tap Web Market, Too
By ANNE MARIE SQUEO
Staff Reporter of THE WALL STREET JOURNAL
November 17, 2004; Page B10
Even as SBC Communications Inc. announced the broad rollout of its
Internet-based phone service, the telecom giant appears to be
attempting a regulatory maneuver that would let it levy higher fees on
rival Internet phone companies.
SBC plans to file a new tariff with the Federal Communications
Commission that potentially increases the fees paid by Internet service
providers for calls completed on the company's local-phone network.
While Internet calls largely avoid the traditional public-telephone
network, they do connect to it when the recipient of the call isn't an
Internet phone user. The tariff would go into effect immediately, and
according to an earlier SBC filing, the company plans to have it in
place as soon as tomorrow.
The move could mark the first time a regional Bell phone giant has
tried to assess higher fees -- traditionally levied on long-distance
phone calls -- on Internet phone technologies.
The situation has caught the attention of FCC Chairman Michael Powell,
a staunch proponent of keeping the emerging Internet phone market free
from heavy regulation. Senior FCC officials said Mr. Powell is
concerned about the impact of SBC's plans and believes the proposal
"may need substantial modifications."
Just last week, the five-member FCC voted unanimously to shield
Internet phone services from state regulations, taxes and fees as part
of a broader effort to keep this emerging market free from the
requirements historically applied to the traditional phone companies.
The FCC also is in the midst of redefining the complex system phone
companies use to compensate one another for completing calls. At the
urging of an industry group that includes SBC, the agency is
considering phasing out the fees altogether.
SBC officials defended the new tariff, saying that FCC and industry
officials are misinterpreting it. A spokesman for SBC, based in San
Antonio, said Internet phone providers wouldn't be required to
subscribe to the new service, dubbed Tiptop.
"SBC recognizes that there is disagreement in the communications
industry over the appropriate rates that [Internet phone] providers
should pay when connecting to the circuit-switched network," said James
Smith, SBC's senior vice president. "Contrary to the mistaken
impressions of some parties who are trying to sow regulatory confusion,
Tiptop is not a mandatory service."
News of the filing came as SBC said it would make Internet phone
service available by early next year to about five million residential
subscribers of its high-speed Internet connections.
Currently, most providers of Internet phone service connect to
local-phone networks through arrangements with companies that lease
access to the Bell networks. Because these calls travel over the
Internet until they must connect locally to a customer using a
traditional phone, the Internet phone service companies have been
paying fees associated with local calls, not long-distance calls. These
fees for local connections are substantially lower, and SBC plans to
designate its tariff for Tiptop somewhere between the two amounts.
An earlier SBC filing said the plan would be implemented in nearly all
of the company's 13-state territory by tomorrow, leading industry and
FCC observers to expect the company will provide just one day's notice.
That would limit any ability by the FCC to suspend it from going into
effect, though the agency could open an investigation afterward.
FCC officials asked SBC to put the "voluntary" promise into writing to
ensure the company wouldn't in the future cut off alternative ways to
connect. The company hasn't done so yet, though both sides are working
on draft language that would resolve this issue.
Internet phone service is emerging as a revolutionary technology that
will bring new entrants to the phone industry because they won't need a
phone network to compete, just a software package. With behemoths like
SBC entering the new market while trying to protect their old
territory, rivals expressed concern about where the new tariff could
lead. "What happens when it's not just voice and it is voice and
video," asked Bob Quinn, vice president of regulatory affairs for AT&T
Corp., which markets a rival Internet phone service.
Separately, SBC and Microsoft Corp. are set to announce as soon as
today a $400 million, 10-year agreement that calls for the Redmond,
Wash., company to provide the software SBC will use to provide
television services to U.S. consumers. The technology will let the
company deliver 1,000 or more new TV channels, far more than cable-TV
providers currently offer.
--Almar Latour contributed to this article.
Write to Anne Marie Squeo at annemarie.squeo@xxxxxxxx
URL for this article:
http://online.wsj.com/article/0,,SB110065122384576170,00.html
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