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FCC phone line fees called onerous

A large online industry group is asking the Federal Communications Commission to reject the so-called "modem tax," which could apply a monthly fee for extra phone lines.

A large online industry group is asking the Federal Communications Commission today to reject the so-called "modem tax," which could apply a monthly fee for each extra phone line in homes and business.

The FCC will release new rules for universal service by Thursday, which will include the flat monthly fee for business and residential customers with additional lines. If the four-person FCC adopts the plan, businesses could pay up to $4 and residents up to $3.50 per month for each extra line.

The Association of Online Professionals (AOP) is asking the FCC to defer its vote on the Net access parts of its universal service plan, which it is restructuring under the telecom deregulation of last year. Universal service ensures that people in rural and inner-city areas have access to affordable phone service, including Net access.

Internet service providers will be hard hit by the new charge because they buy thousands of additional lines to hook up their customers, the AOP said today. To sustain their financial numbers under such a charge, ISPs might pass the fee down to customers, who may also have to pay for their second lines at home.

However, the FCC asserts that additional phone lines are a luxury that shouldn't be subsidized by universal service.

"I can't imagine what CompuServe and America Online, which have thousands and thousands of lines, are going to be paying," David McClure, executive director of the AOP, said today.

"Under the new rules, most businesses will benefit from a reduction in their long distance bills. That is not true for ISPs and online services, which have thousands of inbound telephone lines that are used for virtually no long distance," he added.

The industry group is racing the clock to convince FCC commissioners to hold off voting on the new charge and other issues concerning the Internet until the effects can be further researched.

The vast majority of companies in the ISP industry are not profitable, McClure said, and a couple of extra bucks a month could mean some will go out of business. "This is a case where the best of intentions have gone into a proposal in which some of the unintended consequences have been overlooked."

If adopted, the FCC's new rules will also exempt ISPs from a per-minute charge heavily pushed by phone companies to hook ISP customers up the Net using their phone switch centers, according to and FCC spokesman.

"ISPs will not be imposed with the remaining per-minute charges; that is worth at least three times what the flat-rate charge will total," he said.

"In the conversion from the per-minute to the flat rate, there will be a charge that multiline residents and business will see over time, but it is not aimed at ISPs," he added. "It is a price to be paid to cover the cost of providing the local telephone connections."

The spokesman noted another version of the "modem tax" would have been targeted toward ISPs as well as any enhanced service providers, but that this plan charges all users additional lines and not just ISPs.

"There is no need to subsidize a line that someone is going to use to connect to a $2,000 computer or a fax machine," he said.