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by Jan Harold Brunvand
December 20, 1998
It must be the holiday spirit in the air, causing Internet users to grow wary of the Next Big Scam on the horizon. Sure enough, we are again hearing the recurrent rumor that the Federal Communications Commission (FCC) is preparing to approve per-call charges direct to consumers on dial-up access to Internet service providers (ISPs).
On this occasion, the rumor grew so prevalent that the FCC's chairman, William Kennard, mentioned it in a speech to the National Association of Regulatory Commissioners, 11/11/98:
Readers of this column sent me two versions of the new rumor. Each cited a CNN report:
I've found only one report on CNN's web sites that might match this rumor. The page contains only a cursory description of a video report by San Francisco correspondent Don Knapp:
Knapp's video report isn't very enlightening. He interviewed Michael O'Donnell of Salon Magazine, Claudia Graziano from Wired Online, and Mark Malpiede of M. Gould Advertising. They all discussed the unfortunate circumstances that might result if consumers had to pay additional charges for dial-up access to the Internet. It could hurt online advertising, it could hurt e-commerce. People might spend less time online at home, and at work. Well, duh.
Unfortunately, Knapp made no explicit reference to the alleged "FCC decision," other than to say:
Not very reassuring, is it? A Reuters article on TechWeb makes it only slightly more clear.
Kennard confirmed that an impending decision about "reciprocal compensation" between local telephone companies "has NOTHING to do with consumer Internet charges." The FCC proceeding relates to carrier-to-carrier payments for exchanging traffic. Some parties feel that since ISPs carry interstate traffic (data), ISPs should also be regulated by the FCC. This would make little or no difference; the FCC already classifies ISPs as special, local "end users" that are exempt from carrier access charges.
Are you confused yet? Apparently, our man on the beat Knapp just couldn't see through the haze of news-tasty hysteria. Let me try to explain for you what CNN couldn't.
"The Commission made no specific proposals, but tentatively concluded that providers of information services (including Internet service providers) should not be subject to the interstate access charges that local telephone companies currently assess on long-distance carriers."
FCC Access Charge Reform Homepage: http://www.fcc.gov/isp.html
As I recall, the initial 1996 Notice of Inquiry (simply an open request for comments, not a Notice of Proposed Rulemaking, or NPRM) was misinterpreted as a warning that the whole arrangement was about to change.
This has never been the case, but it continues to be the touchstone for repeated rumors of an FCC-approved "Internet toll charge." In early 1998, there was a resurgence of online hysteria that the FCC was going to change the status of ISPs. In this case, the FCC was about to make a routine report to Congress about universal service, including the legal status of Internet services under the Telecommunications Act of 1996. Once again, no change was considered.
On this most recent occasion, a completely unrelated proposal was pending. Various un-named consumer groups made the same mistake as others have in the past -- confused an unrelated FCC proceeding with the misunderstood December, 1996, NOI regarding enhanced service providers. Unfortunately, the latest rumors now carry the sterling silver "False Authority Syndrome" of a CNN reporter. Knapp apparently went forth into the wilderness, and conducted interviews to support a unsubstantiated rumor. Knapp's report is now an incontestable source of the latest round of "FCC Internet Access Charge" alerts distributed by e-mail.
Rest assured that the FCC has no interest in imposing fees to use the Internet. As William Kennard stated on November 6, "This is one of the great enduring urban myths."
On the other hand, the FCC has been more than happy to intercede in the case of interstate telecommunications fraud. Last December, I wrote a piece about "phone slamming". This sneaky marketing tactic is far from new, but despite clear Federal regulations, it has continued unabated.
According to the December 1998 FCC Telephone Consumer Complaint Scorecard (a 40KB Adobe PDF file), "slamming" complaints topped the list with 9,597 complaints during the first six months of 1998, nearly 7,000 more than the second most common complaint.
According to an Associated Press report, there have been nearly 20,000 total complaints of slamming so far in 1998. Yikes.
In answer to this continuing problem, the FCC enacted new regulations that make it even less profitable for long-distance carriers to hijack customers business. The new rules also make it easier for consumers to recover fees, and eliminated a sneaky marketing tactic (in which the consumer had to return a post card to decline a switch in long-distance carriers). The rules also now apply to local phone companies as well as long-distance carriers.
The decision comes in the recent wake of nearly $6.6 million in fines against three slamming companies: Long Distance Direct, Business Discount Plan and Minimum Rate Pricing, Inc.
I think Bill Kennard deserves an extra-special "Thank you!" in his Christmas stocking.
January 3, 1999
Recently, a new e-mail alert has been making the rounds, this time alluding to an "Internet Tax." This rumor asserts, again, that the Fed is considering some sort of "per-call" charge on access to the Internet:
Subj: VOTE NOW AGAINST INTERNET TAX!!! IMPORTANT!!!
The rumor alludes to H.R. 4328, The Internet Tax Freedom Bill. As far as I can understand, the bill actually prevents undue taxation on ISP services and e-commerce (and does not advocate per-call access charges).
The opportunity to "vote" on the House Majority Leader's page has passed, alas. Though Rep. Dick Armey's page has yet to be updated, H.R. 4328 was signed into law on October 21, 1998.
Updated: 03 January 1999
(A grateful tilt of the trilby to David Emery (About.com), Matt Flannery, Lyn Gottschalk, Hollis Matise, Noel McInnis, Sandra Smith, and Doug Weller.)