Universal access plan approved
The FCC enacts a universal Net access plan, approving huge discounts for schools and higher fees for extra phone lines in homes and businesses.
Under "universal access" provisions mandated by last year's federal telecommunications reform, the FCC is required to provide schools and low-income and rural areas with advanced phone and Net services. Today's much-anticipated decision could slash online access charges by up to 90 percent in some schools.
The plan will pay for itself in part by levying new charges for businesses and residences with second phone lines, a move drawing fire by some in the online community.
By next year, businesses will pay $2 a month more for each additional phone line. The first increase of 40 cents per additional line will take effect in July.
The cost could be as high, however, as $4.21 per additional line by the beginning of next year because long distance providers will now be charged $2.20 for each added line, a fee they could pass on to customers. On top of that, the direct fees to businesses could increase by an average of $1.50 annually until the year 2000, according to the plan.
Smaller Internet access providers will be hard hit by the new fees because they use hundreds to thousands of extra phone lines to run their dial-up services, according to David McClure, executive director of the Association of Online Professionals. His group had asked the FCC on Monday to delay its decision pending further research.
"The FCC continues to characterize this as a simple little increase that rich people can afford, but most ISPs are not even making a profit," he said. "Also, Internet services that utilize cable modems or wireless technology will not be subject to these fees, and therefore they will have a competitive advantage."
The FCC argues that access providers have fared relatively well. The agency said it had rejected a proposal by telephone companies that had sought a per-minute access charge for every ISP customer they connected to the Net via their phone switch centers.
"This is not picking on ISPs. It's the same for all businesses," an FCC spokesman said today. "If we had done what the phone companies wanted, ISPs would have paid up to a penny for every minute a customer was online."
Some large online service providers reacted more favorably toward the FCC's decision, agreeing that per-line access charges easier to stomach than per-minute charges.
"On balance, we're prepared to accept these additional costs because the FCC has taken off the table the possibility of additional access charges targeted at Internet use," America Online chairman and CEO Steve Case said in a statement today.
The Internet Access Coalition, whose members include AOL, Microsoft, and CompuServe, also applauded the FCC's rejection of the access charges.
"The commission's decision reflects that no evidence was found to justify such charges, which could have doubled the price of consumer connections to the Internet," said Paul Misener of Intel, who is chairman of the coalition's steering committee.
"Because the FCC seems poised to slam the door forever more on the carrier access charges on ISPs, these small charges are not nearly as egregious," he added.
Even McClure said his association was happy to see the per-minute charges left out. "Is this an absolute disaster? No, because we dodged the bullet on the access fees."
Homes with more than one phone line will pay $1.50 for each addition, and could be charged another $1 by long distance providers. The residential rate will be increased by $1 each year until 2001.
The FCC adopted today's plan based on recommendations from a bipartisan group of state and federal policymakers. In addition to the higher fees for second phone lines, existing subsidies for universal telephone access and other sources will make the discounted school access possible.
The FCC allocated up to $2.25 billion a year to subsidize discounted Net access for disadvantaged schools and libraries. The nation's rural health care providers will have access to as much as $400 million a year to help pay for Net connections with speeds equivalent to that of a T1 line.