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ISDN rate plans draw fire

BellSouth alters its ISDN rates in five states but faces unexpected opposition in Alabama.

3 min read
BellSouth (BLS) has already altered its ISDN rates in five states, but when it started pushing the same plan in Alabama, it faced unexpected opposition.

A new BellSouth tariff, which could take effect in Alabama by summer, added a usage threshold that would charge a penny per minute after the first 200 hours a month for residential customers and 320 hours for businesses.

Phone companies have been changing their ISDN rates all over the country to cover costs and meet customer demand. In March, Pac Bell raised its monthly rates to $29.50 for home users and $33.55 for business, still significantly lower than BellSouth's fees.

Starting in December, BellSouth reduced its ISDN rates by about $10 a month for residents and businesses in South Carolina, Georgia, Florida, Kentucky, and Mississippi. Now, residents pay about $55 a month, while businesses pay about $77.

But the threshold charges could mean higher costs for ISPs offering dedicated ISDN service, said Mark Derrick, who has launched a campaign against the new pricing model.

Derrick is general manager of Hiwaay Information Services, an ISP in Huntsville, that has about 8,000 subscribers, 1,000 of which use ISDN.

He said the new plan will also cost customers more money if they use their ISDN every day to work from home, for example. "What is bad for my customers is bad for me. Many customers do not use over 200 hours per month, but the businesses will go over the cap easily."

BellSouth says current ISDN users will not be affected by the pricing change. In the five states already operating under the change, BellSouth has billed a total of $1,238 to customers who went over their monthly thresholds.

"Our goal was for people to hang up the ISDN line when they weren't using it. I mean, nobody leaves a water faucet running 24 hours a day so that when they feel like a drink of water they can put a glass under the tap," said Dwight Rice, business development manager for ISDN at BellSouth.

"We had people leaving their ISDN online all the time," he added. "This cost us money because we had to add more trunks. It also caused congestion for our customers because some users were holding up a line all day."

Another reason BellSouth may have added threshold rates is to encourage customers to use its more expensive services. For instance, it's heavily marketing its frame-relay service to heavy ISDN users. Frame relay allows a Net connection at 128 kbps and costs about $196 per month.

Rice acknowledged that the new rates could affect dedicated ISDN line services. "It is a typical pricing plans for ISPs, and they're afraid it will suppress demand," he said.

Derrick isn't the only ISP manager who objects to any price increase for ISDN lines. In California the Internet technology industry put up a heated fight against a proposed rate increase by Pacific Bell because they said it would stifle usage of the high-speed lines.

However, in March, the California Public Utilities Commission let Pacific Bell raise rates by $5 for home ISDN users. For business users, rates will go up by $7.50. Customers will get 200 free offpeak usage hours between 5 p.m. and 8 a.m., as well as weekends. The cost is 1 to 3 cents per minute outside those hours.

The case percolated for nearly a year. Consumer organizations and computer companies led by Intel fought Pac Bell, which argued that it needed to raise rates to make the service profitable. But the PUC said it also would impose penalties if Pac Bell doesn't meet minimum service guidelines. For example, each time the phone carrier misses an ISDN installation appointment, the company must credit the customer $25.

BellSouth doesn't face such penalties regarding its customer service.