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State bill punishes ISP outages

Consumers who are hit with Net outages in Illinois could demand refunds from nationwide ISPs, if a proposed state law is passed.

Consumers who are hit with Net outages in Illinois could demand refunds from nationwide Internet service providers if a proposed state law is passed.

Addressing some Net users' frustrations about Congress shapes high-tech, Net
policy unreliable service, a state bill has been introduced that would let customers request a refund if their online access is unexpectedly interrupted for more than four hours. The law would not apply if consumers had software or hardware problems or trouble connecting due to their local phone company.

State Rep. Jack McGuire of Joliet, Illinois, is the official sponsor of the bill, although he admitted today that it is not high on his agenda and is not likely to pass this year.

Still, it clearly is aimed at touching a raw nerve among Netizens. It might even appear that the staff person who introduced the bill on February 17 had a premonition. One week later, America Online--which is estimated by its competition to have about 250,000 customers in the state--suffered a systemwide blackout for more than two hours. (See related story)

The bill, McGuire said, "comes out of some of the problems they've had here in the Chicago area with Net outages. But in this session we're only supposed to take up emergency matters or budget issues. I don't think this will even get out of House Rules Committee this year."

Illinois already is a hotbed for online consumer protection. It is known for leading a pack of attorneys general in a legal battle against AOL last year when the country's largest online service was accused of overselling its access and consequently locking out many of its subscribers. AOL agreed to give out refunds soon after the legal fight started.

It is no surprise that McGuire's bill caught quick notice at AOL, and at ISP industry groups. Net access providers are constantly trying to stave off legislation that holds them accountable for customers' activity or other issues over which they say they have no control. If the Illinois bill moves or inspires other legislation, the industry no doubt will mobilize against the efforts.

ISPs worry that any legislation requiring service guarantees would tie their hands, making them pay refunds for outages even though most don't control their networks from end to end. Rather, they buy access to bandwidth from a small number of companies that are the true owners of the Net's pipes, such as Worldcom.

"This is a well-intentioned effort to protect consumers, but they need to differentiate between outages caused by the service provider vs. those caused by another party. We don't control the Internet, so it would be extremely difficult to differentiate where the problem lies," said Stephen Schmidt, vice president of the access division for American Information Systems (AIS) in Chicago, which has about 30,000 dial-up customers and maintains dedicated access for 120 corporate clients.

Similar to major national providers, AIS offers service guarantees to its business clients--a full day's refund for each 15 minutes the service is down. Consumer refunds are done on a case-by-case basis.

"We purchase service from MCI and Worldcom's UUNet to give us physical diversity. So if there is an impairment in UUNet, we still have access with our MCI facilities, for example," Schmidt added.

Even if legislation were passed, Schmidt said that wouldn't guarantee service with so few players controlling the pipes. "With the merger of Worldcom and MCI, it's going to remove more of that diversity. If Worldcom's fiber is sliced it's going to become a major problem," he said.

Some ISPs offer their own guarantees.

"Nobody was doing a good enough job, so we did it ourselves," said Jeff Shaffer of Sprint, which recently took a 30 percent stake in EarthLink Network. "If tour service goes out and we can't get you connected, we'll refund you a week of access time, which is about $5."

Mark Brailov, a spokesman for MCI, agrees. "We believe that this would be best handled in ISPs' terms and conditions, rather than have legislation," he said.

But legal experts say if the state were to pass such a law, Net access providers would be liable within Illinois.

"It would apply to ISPs out of the state if they have customers in Illinois, a point of presence there, and have advertised in the state. If it was AOL, clearly they have customers in Illinois and could be hauled in to court," said Jim Butler, an Internet and telecommunications attorney with Arnall, Golden and Gregory in Georgia.

The commerce clause of the Constitution prohibits state laws from governing other territories, which could be the basis for challenging such a law.

AOL couldn't be immediately reached for comment on the legislation. However, Bill Myers, chief executive officer of the U.S. Internet Council, of which AOL is a member, criticized the bill.

"This is shooting mosquitoes with cannons," he said. "This isn't needed. Net service providers are becoming more reliable, and many already give refunds. There is no clamoring for this legislation."