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Telephone gridlock questioned

High-tech companies join forces to defend the current model of flat-rate pricing for access to the Internet.

A coalition of high-tech giants will release a study early next month showing that complaints about Internet congestion are being greatly exaggerated by telephone carriers and can be readily solved with existing technologies, not new pricing models.

The group will argue that the flat-rate pricing for unlimited Net access should not be replaced by a pay-per-minute price scheme, as some telephone companies propose. Computer companies and Internet service providers (ISP) contend that metered-rate pricing would dampen demand for Net access and might cut into their profits. The group concedes, however, that prices may need to rise above current rates to upgrade the network, which wouldn't help consumers much.

"We're very concerned about the future health and growth of the Internet," said Paul Misener, a lawyer for Intel, who is helping to spearhead the effort.

Telephone companies have proposed metered, rather than flat-rate pricing, because they say Net usage is tying up the telephone network. The companies claim that this is leading to the risk of dropped connections for regular calls.

As previously reported, a group of companies including Intel, Microsoft, Compaq, IBM, Netscape Communications, Apple Computer, AT&T, and America Online have joined forces as the DATA Coalition to fight efforts by telephone companies to alter the pricing structure for Net access. The industry has taken a similar stand against telephone carriers for ISDN pricing.

But there is a bigger issue at stake that is often glossed over. Telephone carriers complain that under current laws, computer companies and ISPs aren't paying their fair share for Net access by consumers. The cost of a network upgrade could total $1 billion for the seven Baby Bells over the next several years.

Both sides are petitioning the Federal Communications Commission to step in and resolve the conflict. An FCC decision is not expected anytime soon.