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FCC plays referee

The Federal Communications Commission's chairman convenes the first-ever bandwidth meeting, amid an increasingly heated debate on the effect of Internet traffic on the nation's local phone network.

WASHINGTON--Communications carriers, members of the computer industry, and public interest groups took the first steps on a long road to consensus at a Federal Communications Commission summit.

The FCC gathered representatives here at the first-of-its-kind Bandwidth Forum to try to understand the effects the Internet explosion has had on the public switched-telephone network. But attendees could not come to a consensus on what impact Internet users have on the telephone network.

In the midst of various controversies surrounding the Internet, the FCC is attempting to come to grips with just how it might fit in--or whether it fits in at all.

"We have been increasingly concerned at the FCC about what we call the problem of access and bandwidth," said Reed Hundt, FCC chairman. "We are not 100 percent sure exactly how to state the problem, and we are not sure what the dimensions of the issues are here."

The most contentious moments of the day came during a panel discussion on Internet performance on the phone network. On the heels of well-publicized reports of Internet congestion, telecommunications companies floated the controversial concept of charging a per-minute fee for Internet access. The telcos say that the money raised would go toward the existing telephone network infrastructure so that it could handle the congestion.

Lee Bauman, vice president of local competition for Pacific Bell, charged that ISPs were taking advantage of a federal exemption for "enhanced service providers", which minimizes ISP costs for leasing lines and clogs the telephone network with Internet traffic.

Matt Corn, vice president of network operations for America Online, disputed the notion that the Internet is causing congestion at all. On Tuesday, AOL and a consortium of companies known as the Internet Access Coalition came out with a study that says claims by the communications carriers are greatly exaggerated. (see related story)

Charges of hypocrisy also tinged the debate. James Love, director of the Consumer Project on Technology, and others pointed out that while Pacific Bell complains about Internet traffic on its network, it continues to offer steep discounts on second phones lines and Internet access into the home in California.

"One has to be suspicious of what a monopoly can get away with in this world," Love said of the phone companies.

It comes down to this: Carriers want some financial help upgrading the current phone network so that it can be segmented for data and voice traffic; various clogged "hot spots" sprinkled throughout the country could then handle the increased load.

But many in the industry say those costs should be paid by the carriers themselves, since the carriers will reap significant economic benefit once the infrastructure has been upgraded.

Internet congestion has been highlighted by the recent travails of AOL. Users have had a difficult time dialing into AOL's services due to overwhelming demand. But the problems stem from a lack of adequate infrastructure equipment, not network congestion. AOL plans to spend more than $300 million over the next few months on modems and infrastructure technology.

Industry proponents say that while telephone carriers decide where to invest in high-speed infrastructure, the short-term answer should be technologies such as Integrated Services Digital Network (ISDN) and digital subscriber lines (DSL) to the home. But, carriers have been slow to offer the technologies and, when they have, prices make the increased bandwidth an unaffordable luxury. Pacific Bell released numbers to the FCC following the forum that showed that out of 108,765 ISDN customers in California, only a little more than ten percent --or 13,000--are residential customers as of the end of 1996.

Officials from the computer industry have grown increasingly frustrated as hardware and applications that can take advantage of network bandwidth are hamstrung by the PSTN's sluggishness.

"I see the business opportunity [for telephone carriers] to be enormous," Les Vadasz, Intel's senior vice president and director of corporate business development, said before the day's sessions. "At a basic level, I don't understand [the carriers' position]."

All of the companies involved in the Bandwidth Forum have an interest in a bandwidth increase. Companies such as Cisco Systems could sell more networking gear to the carriers, the carriers and ISPs could harvest the profits to be found in millions of residential communities wanting quality Internet access, and the computer industry could sell more PCs as it becomes clear that more processing power is necessary for true enjoyment of multimedia on the Internet. This market reality may create a minefield for the FCC to tiptoe through as it attempts to address possible policies governing infrastructure and Internet reliability.

After the session, a random poll of panel members unearthed two predictable responses: the discussion was a good start, they said, but there is a long way to go.

"It's exciting that the FCC is interested in a much broader dialogue," concluded David LaPier, a consultant for Cisco Systems.

"It's just the beginning," said Glee Harrah Cady, public policy manager for NetCom, a San Jose, California-based ISP. "I think the basic issues were appropriately outlined and we're right where we always are."

But she said, "There's no magic potion."

Officials from the FCC's Office of Plans and Policy seemed enthusiastic following the day-long summit. Topics broached during the sessions gave the commission a more solid foundation from which to move forward and review broadband access needs, they said.

"It's a time of tremendous flux," said Elliot Maxwell, deputy chief of the FCC's Office of Plans and Policy. "What we're trying to do is get as much insight as we can into how we get over these short-term problems and then how we provide access [to everyone]."

"At this point, we're trying to focus in and define the questions," added Robert Pepper, the FCC's chief of the Office of Plans and Policy.

Maxwell said the FCC is trying to raise the level of understanding within its own organization. From there, the commission will start to set some parameters, throwing out "what if" scenarios to the various players that could be affected by policy decisions. Then the FCC will decide where a policy role fits, he said. Pepper said the Commission would continue to hold similar forums in the future.