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Talks deadlocked on Pac Bell ISDN

No settlement was reached in a closed meeting on proposed ISDN rates.

No settlement was reached in closed negotiations on Pacific Bell's proposed rate increase for ISDN high-speed Internet connections at the California Public Utilities Commission today, according to parties involved in the session.

To avoid the possible acrimony of public hearings, the Baby Bell had earlier responded favorably to a compromise proposal for a flat fee of $29.50 and 200 free hours of off-peak usage, but an agreement of all the parties could not be reached. As it stands, Pac Bell wants to raise the monthly flat fee by $8 to about $33 and cap free off-peak usage at 20 hours a month for Integrated Services Digital Network lines.

Any rate change must be approved by the California PUC, which will begin formal hearings July 29.

"Negotiations broke off with a clear impasse," said Michael Shames, executive director for the Utility Consumer Action Network. "It's not going to be a friendly hearing."

Pacific Bell is not the only regional phone company proposing ISDN rate changes to state regulatory agencies. Bell Atlantic--with service in Maryland, Delaware, New Jersey, Pennsylvania, Virginia, and Washington, D.C.--is facing opposition in more than one state to proposed changes now on the table.

Bell Atlantic is proposing a sliding scale, with ten free hours of full-speed, 128-kbps access for $31 a month--that's in fact a reduction of existing tariffs, but not as much of a reduction as some consumer groups want. The utility commission of each state in the region must sign off on proposed tariff changes, and the first came from the Delaware Public Service Commission, which approved an unlimited-use flat fee of $28.02 a month instead of Bell Atlantic's proposal.

ISDN tariffs around the country can vary wildly, but advocates of the high-speed lines generally believe that a $20 to $30 flat monthly fee is fair.

The alternative plan that Pacific Bell is considering would also eliminate the installation fee waiver that the phone company currently grants to customers who commit to two years of ISDN service. The proposal was floated by David Frankel, president of San Jose start-up Jetstream Communications, one of about 30 parties to testify in the case.

"Pac Bell's response has been favorable," Frankel said. "My position is that the most important thing at this stage is to get the service with a reasonable level of quality, with pricing that is attractive to the largest number of early adopters."

In addition to Jetstream, several others are apparently ready to sign off on the plan. But a coalition of detractors, led by UCAN and California ISDN Users' Group on the consumer side and Intel and the Information Technology Industry Council in the industry sector, is ready to fight the proposal at the hearings. They don't like the Frankel proposal because it would allow Pac Bell to alter rates again in several months' time.

"It's a short-term fix," said UCAN's Shames. "It doesn't create the stability of rates needed to promote this market."

To go into the hearings with the strongest hand possible, Pac Bell will need the backing of all parties involved. A partial settlement will only prolong the process--something that Pac Bell certainly does not want--but other parties in the case aren't ready to settle by a long shot.

"I don't see it would be to Pacific Bell's advantage to settle with some groups but not others, but that seems to be what they're trying to do," said Barry Fraser, staff attorney for the UCAN, which has crunched Pac Bell's financial numbers and concluded that the existing flat rate of about $25 is enough to ensure the company a profit. "We're opposed to any permanent charges on the off-peak time, and the $29.50 flat fee is too high."

Pac Bell officials did not return phone calls Thursday and today.

The PUC has received more than 1,000 letters from the public protesting the rate hikes and none in favor, commission public affairs officer Rob Ferraro said. But Jetstream's Frankel doesn't see it as a big consumer issue: "This is a service that affects a tiny, tiny percentage of users in California," he said. "It's most important to get some rate on the table. Let's get the show on the road."

Although many users argue that the phone companies should be promoting the use of ISDN as the fastest Net access technology currently available, other solutions with significantly more bandwidth than ISDN loom on the horizon.

Where ISDN hits its limit at 128 kbps, ADSL (asynchronous digital subscriber line) technology delivers 1.5 mbps to the home. Several phone companies are in the middle of ADSL trials right now, and the hardware needed to use the technology could be available by the end of the year.

In addition, cable modems--devices that hook up the home to the Internet via the cable TV infrastructure--are also being tested, delivering speeds of up 10 mpbs.

Related stories:
ADSL makes a name for itself in speed
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Bell Atlantic to cut ISDN prices
Users stay stuck in Net traffic
Pac Bell wants flat-fee hike for ISDN
Vendors introduced kinder, gentler ISDN
MS opens online ISDN boutique
ISDN nightmare, the final chapter
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