The FCC is considering a ruling which may threaten low-cost modem access to many on-line services, perhaps including Arpa/Milnet TACs and Usenet Unix systems. Here are the details from a copy of a file just uploaded to my Remote CP/M system. --Keith Petersen The FCC is considering reregulating the packet-switching networks like Telenet, Tymnet, Compuserve, The Source and PC Pursuit. This could result in additional costs to the user. This is excerpted from Infomat magazine which is available for downloading. COMPUTER AND SOFTWARE NEWS -- PART 1 by Tim ElmeR FREE LOCAL ACCESS TO PACKET SWITCHING NETWORKS MAY BE ELIMINATED ------------------------------------ (BPS) -- The Federal Communications Commission (FCC) will vote on a proposal to reregulate packet switching networks that, if approved, would eliminate free local telephone access to those networks. "If this occurs, it might eventually double or triple the costs to those using packet switching networks to access commercial on-line databases and information services and triple or quadruple the costs to those using Telenet's PC Pursuit," said Philip M. Walker, vice president and regulatory counsel for Telenet Communications Corp. Predictably, the initiative to reregulate packet switching networks comes primarily from the Bell Operating Companies (BOCs) and secondarily from AT&T. These companies provide local telephone service to vast majority of telephone customers throughout the U.S. and will benefit the most from FCC reregulation of the packet switching networks. Under current FCC rules formulated in 1980 in the FCC's Second Computer Inquiry, called Computer II, a distinction is made between "basic services" and "enhanced services." "Basic services" are those that don't offer protocol conversion such as local and long-distance voice telephone services. "Enhanced services" are defined in an open-ended fashion as computer-based services that are more than a "basic service," in other words, services such as packet switching networks, database and on-line type services, and remote computing services that offer protocol conversion, according to Walker. Under the 1980 Computer II Inquiry, the FCC ruled that "basic services" would continue to be regulated as they had always been. However, the FCC also ruled that "enhanced services" would be deregulated, which opened up the industry to competition. This resulted in numerous companies entering the packet switching business, including BOCs, AT&T and at least a dozen others. The competition resulted in significant price reductions for packet switching services. To prevent monopolization of the packet switching industry by the Big Boys (the BOCs and AT&T), the FCC ruled that they had to keep separate accounting figures for their "basic services" and for their "enhanced services," and that they could not use revenues from their lucrative "basic services" to cross- subsidize their "enhanced service" packet switching networks. The FCC also ruled that if the BOCs and AT&T used their "basic service" telephone lines for packet switching services, then they must let their competitors have access to those lines on the same basis, which would preserve true competition in the industry. "Now, under the FCC's Computer Inquiry III, the FCC is asking, should we redefine protocol conversion services as 'basic services' rather than enhanced services? Should we redefine all those companies as common carriers? This would, in effect, subject them not only to federal regulations but, even worse, to state regulations," Walker said. The result would eliminate comparable interconnection requirements currently imposed on BOCs and AT&T, allowing them to cèarge their packet switching competitors local dial-in fees to access packet switching long-disôance line networks. It would also allow BOCs and AT&T to offer their own packet switching services on a non-compensatory basis and, finally, allow them to cross- subsidize those services with revenues from their much more lucrative voice telephone service revenues. In short, it would allow BOCs and AT&T to monopolize the packet switching industry and probably drive out most competitors. "In terms of cost impact," Walker said, "if we had to pay local access charges, it would cost us about $3.60 an hour at the originating end, for calls made by users to on-line databases and informatiompuServe and The Source. "And with PC Pursuit, for which we have out-dial modems, we would have to pay not only 3.60 per hour access fees at the originating end but also $4.80 at the terminating end, a total of about $8 or $9. Obviously, to survive, we would have to add those additional charges to our current fees and pass them on to our consumers," Walker said. That would almost certainly spell the end of PC Pursuit, and it would likely put out of business not only many independent packet switching networks but also many on-line databases and information services. FCC approval of chaîges being considered in Computer III, Walker said, "would really have a major impact on anyonå using a packet switching service to access online bulletin boards, databases, or information services aimed at the residential user. They are just going to get creamed if this happens." Walker said that is was not clear exactly when the FCC would vote on the proposal, but that it would probably be the latter part of January or early part of February, 1987. "They are moving very fast on this," he said. For additional information, be sure to read Alan Bechtold's editorial in this issue. Copyright (C) 1986, by BBS PRESS SERVICE, INC. THE EDITOR SPEAKS "Low-Cost packet switching Service Threatened" by Alan R. Bechtold As described in our lead news story this issue, the FCC is now considering a major change in the way packet switched phone services are defined. This change is likely to lead to the demise of many of these services, and to much higher prices for the use of the few that will eventually remain in business. [BASIC DESCRIPTION OF PACKET SWITCH DELETED SO ARTICLE WOULD FIT IN MY BUFFER -elric] FCC regulations allow AT&T and Bell Operating Companies (BOCs) to engáge in packet switching netwïrk operations, but they must also maintain completely separate accounting of their voice and packet switching operations. They must also offer free local-calling access to their lines to any competitors engaged in the packet switching service industry. The above regulations have allowed Telenet and Tymnet, among others, to operate at a reasonable cost in a competitive atmosphere. This is a case of regulation of a business actually RESULTING in increased competition and lower prices to consumers. As things stand now, you can call any local Telenet or Tymnet access number and use these services to énexpensively access such onlinå services as CompuServe, The Source, Delphi, and countless others. In addition, GTE's new PC PURSUIT service now offers you access, through their Telenet packet switching service, to literally hundreds of local bulletin boards in cities all across the country--for a flat charge of $25 per month. But, the FCC is now being asked to REREGULATE this segment of the communications industry, eliminating the FCC requirements that AT&T and BOCs keep separate accounting records of their voice and packet switching services, and eliminating the stipulation that the BOCs and AT&T must offer their competitoró in the packet switching businåss free access to their local telephone connection lines. The idea is patently ridiculous. Mark Fowler, Chairman of the FCC, has been hailed by the press as a "fair- market zealot." The chances are very good that he views this proposed reregulation as the magic road to increased competition and fairer pricing for consumers. Unofficially, the word is out that the FCC advisory committee now considering this matter is indeed leaning in favor of the proposed reregulation of the packet switching industry. If the committee recommends these changes, it's likely that a majority of the five voting members on the Federal Communications Commission will vote in favor of the changes. I have talked to sources within the industry who say it is the BOCs who are pushing VERY HARD for this reregulation, because they want to get into the packet switching service business in a big way, and they would like to rid themselves of needless competition on their way to success. What's that? RID themselves of competition? But--the proposed reregulation is supposed to FOSTER competition! Why would a group of companies (BOCs) hoping to eliminate their competition PUSH for this reregulation? I hope the answer to THAT question is entirely clear.re we have an industry that is current ly populated with plenty of competition. Prices are already reasonable. Reregulation of the packet switching service industry will IMMEDIATELY give giant corporations the upper hand, and will allow them to cut off free access to their local access phone lines to their competitors, namely Telenet and Tymnet and other similar services that now offer you high-quality service, in a competitive marketplace, at reasonable prices. The proposed reregulation, however, would force all packet switching services to compete with the BOCs and AT&T, companies that would be able to use the enormous profits they earn with their voice telephone services to cross- subsidize their packet switching services and offer them on a non-compensatory basis, at least until their competitors are eliminated. When that happens, they are then sure to jack up their fees to any level they want. It would also force their packet switching competitors to pay access fees for connection to local phone lines. The access fees alone could add as much as $4.00 per hour to the fees packet switching companies would be forced to pass on to their customers. This will be added to your hourly connect-time charges for accessing ALL online databases through these services. The proposed reregulation could very well spell the death of PC PURSUIT. Because GTE also uses dial-out modems at the other end of their Telenet connections for PC PURSUIT service, the company would be forced to pay an hourly charge at BOTH ends of the phone line--totaling up to $8 or $9 per hour. These fees would have to be added to the flat $25 per month that GTE now charges for access to PC-PURSUIT. It would simply make the final cost to PC-PURSUIT customers too high for the service to remain practical and affordable. So--this is ONE TIME you MUST use your word processor to produce some letters opposing this proposed reregulation! Write to: Honorable Mark Fowler Chairman of the Federal Communications Commission Washington D.C. 20554 Refer to Computer Inquiry III in your letters. State clearly, in your own words, that competitive packet switching services should not be reregulated or subjected to carrier access charges, and then explain why. Hurry, they will be deciding this in láte Jan., earìy feb.