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FCC delays ISP regulation ruling

The agency will put off for at least another week a controversial decision over how local calls to ISPs should be regulated.

The Federal Communications Commission will put off for at least another week a controversial decision over how local calls to Internet service providers should be regulated, officials said today.

The decision, which has pitted the Baby Bells and GTE against a new breed of local phone companies, was originally promised by the end of this week.

But commission officials, who asked to remain anonymous, said today that commissioners wanted to consult with state regulators next week at a national convention in Florida before making a final decision.

Under the current system, local telephone companies pay each other for calls that begin on one network and finish on another company's system. Thus, if a Sprint subscriber calls a Bell Atlantic subscriber, Sprint must pay Bell Atlantic by the minute for completing the call.

Traditional local phone companies negotiated this kind of contract with new local phone companies on the assumption that the back-and-forth flow would be roughly even, or that the established companies, which control more phone lines, would come out ahead.

But some new phone companies have been targeting Internet service providers, which draw a large number of calls from people who stay online much longer than ordinary telephone users. This has sparked a huge imbalance in these companies' favor, with hundreds of millions of dollars flowing out of Baby Bell coffers towards their new competitors.

Now the Baby Bells want the FCC to designate Internet calls as interstate, which would relieve the companies from paying reciprocal compensation fees. The companies say that the actual destination points of users' Internet calls are beyond the ISPs, and should be treated as such.

"All the FCC has to do is declare that this traffic is interstate in nature, and let the states decide how to handle the contracts," said Susan Butta, a Bell Atlantic spokeswoman. "Based on what the Commission said in the GTE hearing [last week], we do expect them to say it is interstate in nature."

In a decision on a related issue last week, the FCC ruled that GTE's new high-bandwidth digital subscriber lines (ADSL) should be treated as long-distance service for regulatory purposes.

Twenty-three states already have ruled that calls to ISPs should be regulated as local calls. The FCC commissioners are putting off their decision in part to ensure that they don't undermine the state actions, officials said.

But at least 15 of these states have said they would revisit the issue if the FCC rules that the Internet calls should be treated as long distance.

No new date has been set for the decision, but commission officials said it would be unlikely to come next week.