In a surprise move, the Pennsylvania Public Utility Commission has struck a deal with Internet service providers and agreed not to raise Bell Atlantic's phone rates.
The decision not only benefits Pennsylvania residents, but it also paints a brighter future for local ISPs. Price increases would have driven smaller services out of business or forced them to pass along the added costs to consumers.
But all sides agreed to protect the small providers yesterday in deciding to lower rates on the Bell Atlantic service used by ISPs called Centrex Extend. That service, which essentially provides wholesale Internet connections to ISPs, will be guaranteed low rates until October 1997.
The settlement came as a surprise because the PUC last month indicated that it was planning to force Bell Atlantic to raise phone rates paid by ISPs to match charges imposed on long distance carriers.
Telephone companies such as AT&T, MCI, and Sprint argued that the lower rates for smaller ISPs amounted to unfair competition. But the ISPs fought hard to keep rates low because their business is based on inexpensive dial-up access for customers.
The settlement "gives the Internet service providers time to make some reasonable decisions...and figure out the best way to continue providing Internet service in all parts of Pennsylvania," Scott J. Rubin, a lawyer who represented 16 ISPs, told the Philadelphia Inquirer.
Ron Weigel, director of government relations for Bell Atlantic added, "I think all the parties are pretty happy with it."