Internet telephony offers cheap long-distance calls

Discount Long Distance Digest News reports that the average price per minute for making a long-distance or international call over the Internet is 3.3 cents, a substantial savings over the average per minute long-distance rate.This is done by using the Internet to bypass telecommunications carriers. The America’s Carriers Telecommunication Association would like to change that.
ACTA, a trade association for independent long-distance companies, filed a petition with the Federal Communications Commission March 5, 1996, asking the FCC to apply the existing telecommunications laws to Internet access, and ultimately, Internet telephony.
In the same petition, ACTA asked the FCC to restrict the sale of Internet telephone software because the providers of this software don’t comply with the rules imposed on telecommunications carriers.
Applying the existing rules would mean that the FCC would claim jurisdiction over the use of the Internet for unregulated interstate and international communications services.
Internet service providers would be regulated in much the same way long-distance companies are, and would be required to pay for local access to the telephone network. There would also have to be some mechanism for the FCC to distinguish between data transmission and voice transmission.
“As technology advances, the regulations on the books today are obsolete,´ said Robert McDowell, general counsel for ACTA. “Even though ISPs use local access, they don’t pay local access charges, so a flat rate for Internet service doesn’t reflect the true cost of providing the service.”
ACTA wants the FCC to spread the cost of local access between long-distance carriers and ISPs when it rules on access reform in November.
McDowell believes this will mean lower long-distance rates as well as the end of flat-rate Internet access. He thinks consumers will benefit from access-charge reform, even though ISPs will most likely switch to metered rates.
McDowell says that right now, “it’s a free-for-all. These (Internet) companies should take advantage of this situation now, because I believe there will be quite a shakeup.”
Not everyone agrees with McDowell’s view of the situation. Lior Haramaty, spokesperson for Vocaltec, makers of Internet Phone, said the ACTA petition gave Internet telephony a stamp of approval. “Before the petition,” he said, “people thought of Internet phones as a novelty. Now we are being taken seriously. I think it had the reverse effect that they wanted.”
The Big Three long-distance companies – AT&T, MCI, and Sprint – are not members of ACTA, nor do they agree with the petition.
“Internet telephony is a significant potential opportunity,´ said Mike Miller, spokesperson for AT&T. “It will add more competition to the market as it catches on, and long-distance rates will fall.”
Miller also notes that certain areas of long-distance service, such as the 800 and 900 number markets, are still growing and will continue, even if customers have to pay a premium for them.
“The Internet is a vibrant, fast-growing part of the economy,” Miller said. “Regulating it is a bad idea.”
MCI spokesman Allen Clark feels that Internet telephony will not significantly impact MCI’s revenues because of its size. MCI is also a major Internet player, dedicating significant resources to improving the Internet backbone.
“MCI thinks the (Internet telephony) technology is exciting not because it’s cheap,” Clark said. “It will allow us to bring value-added products and services to our customers.”
Clark believes that access reform will lower long-distance rates for consumers, making the cost difference with Internet telephony smaller.
FCC chairman Reed Hunt said in a speech delivered June 28 at the INET ’96 Conference In Montreal that “I am strongly inclined to believe that the right answer is not to place restrictions on software providers, or to subject Internet telephony to the same rules that apply to conventional circuit-switched voice carriers.”
He has not, at this point, stated whether he will recommend assessing access charges to ISPs. The FCC is expected to rule on these issues in mid-November.
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