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PUC ruling hurts small ISPs

The Pennsylvania Public Utilities Commission deals a blow to small Internet service providers in the latest battle over regulation of ISP rates.

The Pennsylvania Public Utilities Commission has dealt a blow to small Internet service providers in the latest battle over regulation of ISP rates.

A decision by the state's Public Utilities Commission will soon force Bell Atlantic to raise phone rates paid by ISPs to match rates it charges to long distance carriers, at least for a while.

Smaller ISPs have lobbied hard to keep rates low. But telephone companies that are getting into the ISP business, especially long distance carriers, say those lower rates amount to unfair competition.

The Pennsylvania PUC agreed. "The evidence indicates that the wholesale access rate they [AT&T, MCI Telecommunications, and Sprint] were paying to Bell was higher than what Bell was charging its own customers for," said Labros Pilalis, manager of the telecommunications group at the commission.

But that leaves the ISPs out in the cold, as they had been relying on the lower rates to charge low dial-up access connections. Now, their rates will go up starting in December.

In addition, Pilalis says, telephone companies like Bell Atlantic may have to raise their rates even more to pay for the cost of upgrading their networks to handle the additional ISP traffic on their regular phone lines.

There is one bright spot on the horizon for ISPs, however. Once the telcos lay their broadband networks in the next two years, the systems will be able to increase their capacity.

"In the big scheme of things, it will be resolved within the near future," Pilalis said. "In the meantime, there will be some businesses that are going to get hurt."