A coalition including Microsoft (MSFT), Intel (INTC), and America Online (AOL) has released a study showing that complaints of Internet congestion are greatly exaggerated by telephone carriers and can be readily solved with existing technologies, not higher Net access fees.
"The [telco] studies misstate the nature and severity of the 'congestion' that is allegedly caused by data traffic on the [phone network]," said the study, prepared by Economics and Technology, a Boston consulting firm. "They rely entirely upon anecdotal evidence gleaned from a few isolated, worst-case central offices that were specifically selected because of their unusual traffic conditions."
It added: "The growth of ISPs has created a huge increase in demand for telephone service, creating significant revenue streams for the BOCs directly attributable to data traffic on the phone network."
"To suggest that there is no real problem here is mind boggling," Bell Atlantic Corp. spokesman Harry Mitchell said. As Internet companies add huge numbers of phone lines to meet growing demand, "it does impact the capacity of the public telephone network."
As previously reported by CNET, the 65-page report will be used as fodder for the computer companies as they square off against telcos in the escalating debate over Net access fees, although the claims likely will be hotly challenged by the Baby Bells. The issue will take center stage on Thursday during a forum sponsored by the Federal Communications Commission to help set future regulatory policy on the Net. (See related story)
The highlights of the coalition's report include:
Phone companies maintain that they aren't ignoring the technology solution. Last week, SBC Communications said it had introduced a technology called Internet/Intranet Transport Service (IITS) that could take some of the burden off the phone network. It will redirect all Net traffic onto a special packet network to deliver the data more efficiently. Issues of who will pay for the new service and how much it will cost remain unresolved.
Telcos also blame Net traffic for clogging their lines. Last fall, Pacific Bell alleged that as many as one of every six telephone calls in Silicon Valley doesn't go through the first time, because Net surfers are tying up the phones.
Misener countered that the case was an isolated one, from a single switching center, and not representative of a "broad network problem" throughout the country. There are 24,000 central office switches in the country, and this is only one, Misener said.
Last month the FCC tentatively decided not to impose access fees similar to those paid by long-distance carriers to Baby Bells, on ISPs. But it asked for comments about the effect of the Net on the phone system.
The crux of the computer vs. telco Net battle centers on an effort by the telcos to levy a permanent charge on Internet service providers at the federal level. Possible rates have ranged from sixth-tenths of a cent per minute to 1 cent per minute, according to Misener. Those extra fees may be passed onto the consumer, raising the rates for surfing the Net.
While the charges don't currently exist, telcos have argued that they need the money to help pay for network upgrades. The cost of a network upgrade could total $1 billion for the seven Baby Bells over the next several years, according to a study funded by the phone companies.
Without the upgrade, network congestion will get worse, raising the risk of dropped connections on voice calls, Baby Bells such as Pacific Bell have argued.
Computer companies led by Intel have taken a similar position against the telcos on ISDN pricing. They have fought efforts by Pac Bell and others to raise ISDN rates.
Reuters contributed to this report