[comp.dcom.modems] Telenet legal Q & A on FCC modem access fees proposal

W8SDZ@SIMTEL20.ARPA (Keith Petersen) (10/19/87)

Here is more information on the modem fees issue, from a file called
LEGALQ&A.TXT which was uploaded to my BBS.  It was written by someone
at Telenet and is presented here "as-is" for informational purposes.

--Keith Petersen
Arpa: W8SDZ@SIMTEL20.ARPA
Uucp: {bellcore,decwrl,harvard,lll-crg,ucbvax,uw-beaver}!simtel20.arpa!w8sdz
GEnie: W8SDZ
RCP/M Royal Oak: 313-759-6569 - 300, 1200, 2400 (V.22bis) or 9600 (USR HST)

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                      QUESTIONS AND ANSWERS
                            regarding

                THE FCC'S ACCESS CHARGE PROPOSAL
                          DOCKET 87-215

                         September 1987


Personal computer hobbyists and users of on-line information
services and BBS have posted questions on various bulletin
boards regarding the FCC's current access charge proceeding.
What follows are some answers developed by Telenet's Regulatory
Department.

Question:  Why don't access charges apply to "private" systems?

Answer:    The FCC's NPRM identifies "enhanced service
           providers" as targets for the imposition of access
           charges.  Private systems do not appear to fall
           under the Commission's definition of enhanced
           service providers.


Question:  How will the access charge proposal hurt local BBS?

Answer:    Since the FCC only has jurisdiction over interstate
           communications, calls to a BBS located in the same
           state as the calling party would be unaffected by
           the FCC's proposal.  Callers who reach a BBS located
           in a distant state via a Value-added network, however, would
           pay access charges.  Thus, BBS systems which serve a "community
           of interest" which extends beyond the BBS' home
           state would be particularly impacted.


Question:  What is the $4.47 supposed to pay for that is not
           covered currently?

Answer:    The $4.47 per hour cost of access results from a
           POLITICAL determination regarding the price of local
           versus long distance telephone services.  It has no
           real ECONOMIC justification.  Under the formula
           developed for interexchange voice services, more
           than half of the $4.47 per hour access charge
           represents a subsidy payment from long distance
           telephone users to help defray certain costs
           incurred in providing local exchange telephone
           service, and part of the remainder of the charge
           covers costs incurred in providing specialized
           interconnections which are used only by long
           distance carriers.  The FCC's NPRM simply proposes
           to take the formula structured for interexchange
           carriers and apply it to enhanced service providers.


Question:  How many jobs will be lost if access charges go into
           effect?

Answer:    There is no way of knowing this.  Individuals who
           use data communications to support a "cottage"
           industry, e.g., free lance programmers, could find
           that the costs of access render them unable to
           continue their businesses.  Although it could be
           argued that access charges would create jobs (if for
           example libraries return to card catalogs for
           bibliographic research rather than electronic
           database retrieval), such inefficiencies should
           perhaps not be promoted as a matter of public
           policy.


Question:  What will access fees cost taxpayers if access
           charges go into effect?  Don't school districts,
           public libraries, and government agencies all use
           dial-up data services?

Answer:    Again, there is no way to predict what the
           imposition of access charges will cost taxpayers in
           terms of on-line services that are currently used by
           schools, libraries, and other public agencies.
           Hourly costs of such services would certainly
           increase substantially, forcing either higher total
           payments by public agencies which use them, or a
           commensurate reduction in usage (and thus poorer
           service to the taxpayer).


Question:  Isn't "value-added network" a vague term?  How can
           access charges be applied fairly when we don't even
           know what a value-added network is?

Answer:    What constitutes a value-added network is indeed
           vague, yet the FCC proposal would apply not only to
           such networks but to all "enhanced service
           providers" -- a broader but equally vague term.  The
           point, at any rate, is a good one.  Not only would
           it be virtually impossible for a local exchange
           carrier to identify an enhanced service provider in
           order to assess access charges on his traffic, it
           would also be quite difficult to determine what
           portion of any customer's traffic is "enhanced," and
           what portion of that is interstate.


Question:  What exactly is "stored and forwarded" data?  If a
           BBS operator physically transports a CD ROM full of
           recent messages and data from San Fancisco to her
           Chicago BBS, is that any less "long distance" than
           if the data is downloaded from San Francisco to
           Chicago?

Answer:    Clearly, the end result is the same.  The BBS
           operator, however, would pay access charges in the
           latter case under the FCC's current proposal, if
           local exchange dial access is used.


Question:  Could not certain users such as colleges and
           universities, including dormitories, avoid all
           access charges when communicating via Telenet to The
           Source if there were private leased lines from the
           colleges to Telenet and dedicated lines between
           Telenet and The Source?

Answer:    If there were no use of the local exchange, as
           indicated by this example, access charges could be
           avoided.  However, relatively few terminal users
           have sufficient traffic volume to justify the cost
           of a leased-line connection to Telenet.


Question:  I reside in the same state as the telecommunications
           services I use.  How will my rates be affected?

Answer:    Rates for INTRASTATE data communications are not
           affected by the FCC's NPRM in Docket 87-215.  FCC
           action on this issue, however, sets a precedent for
           possible state action pertaining to intrastate
           access charges.


Question:  What's the status on the access charge proposal?  I
           heard that Telenet was exempt.  Any truth to this?
           If not, who do I write to and when -- or have I
           missed the deadline?

Answer:    Telenet is not exempt from the FCC's access charge
           proposal, but rather is a prime target since there
           is no doubt that, as the largest value-added network
           in the U.S., Telenet is a highly-visible enhanced
           service provider.

           There is still plenty of time to register your
           concerns with the Federal Communications
           Commission;  letters on the subject will be timely
           if received by October 26th.

           Send copies of your letter to each of the four FCC
           commissioners (Chairman Dennis Patrick, Commissioner
           James Quello, Commissioner Mimi Dawson, and
           Commissioner Patricia Dennis); William Tricarico,
           FCC Secretary; Gerald Brock, Chief, FCC Common
           Carrier Bureau; and your Congressional
           representatives.  Letters to the FCC can be sent to
           1919 M Street NW, Washington, D.C. 20554; letters to
           Congress simply require the zip code 20515 for the
           House and 20510 for the Senate.


Question:  Hey, I heard that the FCC doesn't read your letters
           unless they arrive on the right form with the right
           number of copies!  What do I need to know to comply?

Answer:    Formal legal briefs need to follow a set format, but
           informal letters simply need to include the header
           "Regarding: FCC Docket 87-215" in order to be filed
           with the appropriate proceeding.


Question:  If enhanced service providers pay access charges,
           long distance rates will come down so use of the voice
           network will go up and rates will come down
           further.  Why don't we support lifting this
           exemption?

Answer:    Long distance rates MIGHT be reduced by less than
           one-half of one percent, or by 1 cent for every $2.00
           spent on long distance services.  This will have
           virtually no impact on the use of the network for
           voice services.  At the same time, the imposition of
           access charges on enhanced service providers (at the
           rate of approximately $4.50 per hour) would result
           in diminished use of the network for data
           communications and the loss of some services.
           Residential, small business, library, and
           educational users of enhanced services would suffer
           the greatest hit.


Question:  The Telenet analysis paper states that "originating
           rates are only available for traffic that also
           terminates using dial access which ordinary long
           distance (MTS) calls do, but most ESP traffic does
           not."  Please explain.  Why does ESP traffic not so
           terminate?  Also, is it true that MTS companies
           already pay full freight?

Answer:    ESP traffic originates but typically does not
           terminate through the local dial network.  Instead,
           calls typically terminate at a host computer that is
           linked to Telenet's network by a dedicated line.
           That is, almost all of Telenet's dial traffic is
           "originating" in nature; however, the FCC determined
           in an earlier proceeding that where a call
           originates but does not also terminate through the
           dial network it will be charged the higher
           "terminating" rate at the originating end.

           MTS (that is, ordinary long distance voice service)
           does indeed pay full freight -- and then some.
           MTS/WATS traffic subsidizes local exchange service.
           It is payment of this subsidy that the FCC now
           proposes to extend to enhanced service providers.


Question:  If the proposal is discriminatory because it
           earmarks only one class of local exchange users --
           ESPs and their users -- who are the local exchange
           users that still have an exemption?

Answer:    Under the FCC's NPRM, private corporate networks
           with interstate leased lines and local dial access
           links -- functionally identical to the networks
           operated by Telenet and other ESPs -- would be
           exempt from paying access charges.


Question:  According to FCC Attorney Ruth Milkman, the charges
           currently paid by ESPs do not contribute
           sufficiently to the cost of the enhanced access
           facilities they use in offering services to the
           public?  Does anyone have any figures to rebutt this
           statement?

Answer:    The nationwide average cost of a dial access line
           has been quoted by Bell officials as $28.00 per
           month.  Telenet pays an average price of $33.00 per
           month for its dial lines (leased under the local
           telephone companies' business line tariffs).  In
           addition, business users often are charged local
           message unit rates when they place calls to
           Telenet's dial access lines.  Thus, we feel we --
           and other ESPs -- are currently paying the full cost
           of the dial service we use.


Question:  Would access charges apply on a local call from
           McLean, Virginia to The Source on its local phone
           number (not using Telenet)?  Would it depend if the
           caller accessed out-of-state computers like the
           Official Airline Guide?

Answer:    The FCC's access charge proposal does not apply to
           INTRASTATE traffic, regardless of whether the caller
           uses Telenet.  That is, a call which originates in
           Virginia and terminates on a computer located in
           Virginia, such as The Source, would not be subject
           to the FCC charge.  If the call terminates on a
           computer located out-of-state, access charges would
           apply.


Question:  Would access charges apply on a call to The Source
           originating from Thief River Falls, MN?  The call
           would use AT&T to Fargo, ND (125 miles away, but the
           closest Telenet node).  Since AT&T already charges
           an access fee on this call, would Telenet charge it
           again?  If Telenet would levy an additional access
           fee, would the lower "originating" rate apply (after
           all, it's not a one-ended call)?

Answer:    Such a call, using AT&T's long distance (MTS)
           service to reach Telenet's North Dakota node from
           the user's location in Minnesota, would pay access
           charges three times.  First, it would pay access
           charges on both ends of the AT&T connection
           ("originating" rate in MN and "terminating" rate in
           ND).  Then when it arrived on Telenet's dial access
           line in North Dakota, it would be assessed an access
           charge again (at the "terminating" rate, since
           Telenet's connection to The Source in Virginia does
           not use the dial network).  Total access payments on
           such a call would be approximately $11.50 per hour!
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