A headline in yesterday's Washington Business incorrectly identified the federal agency that sets fees for connecting data transmission services to local telphone networks. The agency is the Federal Communications Commission (Published 6/16/87)
Blending a smidgeon of foolishness with a dash of hypocrisy, the folks at the Federal Communications Commission have cooked up a way to dramatically increase your cost of using a personal computer.
Be warned: What these regulatory short-order cooks have on the table is a half-baked idea that may be the law of the land beginning next year.
Essentially, the FCC is proposing that companies that offer on-line data transmission services through local telephone loops -- for example, CompuServe, The Source, QuantumLink, Telenet and Tymnet -- should have to pay a special "access fee" to hook up to the phone network. These access charges could easily run as high as $5 an hour per user.
In other words, if you are a CompuServe or Dow Jones subscriber, you may end up paying an extra $5 an hour -- or more -- to access the service. That could boost your phone bill by hundreds of dollars over a year if you are an avid electronic mailer or information retriever.
Now there is a certain logic to what the FCC proposes. The commission makes voice communications companies such as MCI and Sprint pay an access fee to hook up to the local phone lines. The data communications companies had thus far been exempt from such a charge. "The FCC believes that everybody who uses a local exchange for interstate service should help pay for it with an access charge," asserts Ruth Milkman, the FCC attorney handling the notification of the rule changes. "Everybody who uses the network should have to pay."
Indeed, FCC Chairman Dennis Patrick is quoted in The Wall Street Journal as saying that the access charge exemption was nothing less than a subsidy, asserting, "We don't want the network to evolve in response to various subsidies and anomolies."
That sounds like a noble thought. Alas, it does not ring true. Even in the wake of the Bell System breakup, the phone system is rife with subsidies and "anomolies" of pricing, as Patrick well knows. For the FCC to single out the data communications companies for this access fee is a classic case of having the expedience of one's conviction rather than the courage of one's conviction.
Where's the proof? Here it is: While the FCC is going after public access data networks -- that is, data networks that you and I can link to -- this ruling exempts the largest private data networks. These are networks run by companies like Ford Motor Co. and Boeing Aerospace.
Though these networks are ostensibly private, they are often linked to local telephone loops through the company's PBX machine (that is, the switchboard). In other words, even though the big companies make the same demand on the local telephone companies, they remain exempt from the access charge fee.
There is no technical reason for this. Let me give you a nontechnical reason. If the FCC proposed a rule that would double the data communications costs of the Fortune 500 companies with private networks, it would face so much political heat that it'd break its legs backpeddling.
But wait, there's more. Technically speaking, data transmission takes up far less bandwidth (space) on a telephone line than voice does. One can multiplex a dozen data transmissions on a line that can only carry one voice conversation. So why should the FCC charge the data communications companies on a per-user or per-time basis? Why not charge on a per-line basis or a per-bit basis as telecommunications entrepreneur Bill von Meister proposes.
Von Meister, who founded The Source and Quantum Link, argues that since data consumes less bandwidth than voice, it is unfair to make data communications companies pay full fare for access.
It should be clear that this whole area isn't clear. The FCC has already begun to hedge, saying that the new access charges may be "phased in" rather than implemented in one fell swoop.
But there's no question that this proposal has scared the entire industry and threatens the immediate future of on-line services and the network nation. "Of course we're concerned," says Carl Valenti of Dow Jones, which runs one of the largest on-line service in the United States. "What happens is that we may end up forcing the customers to bear more cost. We don't want that."
Von Meister adds, "This could well price on-line services beyond the reach of a good segment of the public."
What we have here is a basic policy question: Should "economic efficiency" be the sole guiding phrase for public concern, or should we also be concerned about new services and the quality of those services?