Will Pac Bell Deliver California's DSL Dreams?

The best way for Pac Bell to lower its payments for reciprocal compensation is to clean up its act on DSL.
— Lisa Bickford, General Manager of an Oakland-based ISP

by Jayson Matthews [November 7, 2000]

Late last week a judge for the California Public Utilities Commission rejected a proposal from SBC Communications and its subsidiary, Pacific Bell, that would have created per-minute tolls for computer calls to access the Internet.

SBC brought the case to the CPUC in an effort to discontinue Pac Bell's reciprocal compensation payments, which it has defaulted on making to rival phone companies for terminating call traffic bound for the Internet.

Early results
Documents about the details of the CPUC ruling were made available this week. Initially, an advocacy group representing California ISPs celebrated the decision, even though the organization knows that the case is far from over.

"The decision helps keep Internet rates low," said David Simpson, counsel for the California Internet Service Providers Association. "Pacific Bell's proposal would lead to higher prices and fewer choices just so it can cut its costs."

But Simpson worries that the full CPUC could reverse the decision when it meets in December. Members of the California commission accused the Federal Communications Commission of having a "protectionism" policy toward the Internet in the past.

Potential price increases
Simpson is concerned that the CPUC could overturn the judge's order and pave the way for Pac Bell to charge local phone companies per-minute tolls. ISPs in the area would have no choice but to bill customers for each minute of Internet access they use.

CISPA wants the CPUC to continue treating Internet calls as local traffic, because without reciprocal compensation payments for dial-up termination, CLECs would have to pass additional fees on to ISPs. Naturally, the price increases for Internet access would land in consumer's laps, in the end.

Some analysts project that rate increases for Internet access could go as high as 35 percent — or $30 a month with taxes.

"Internet traffic meets the criteria for treatment as local calls," the court document read. "Reciprocal compensation is warranted, as subscribers of ISPs would face the prospect of potentially higher ISP subscription fees, or per-minute charges without it."

Dollars for DSL
Pac Bell's snail-paced DSL rollout has been a veritable thorn in its hide, with an estimated 100,000-order backlog for services in Northern California alone.

According to the court, DSL is an alternative to dial-up, so reciprocal compensation payments would not be required, which would give the carrier even more reason to expand and deploy DSL access.

Some analysts contend that the reciprocal compensation obligation provides an incentive for SBC-Pacific Bell to seek to win over ISP customers and aggressively market alternatives for dial-up access to ISPs. Local ISPs agree. An Oakland-based ISP manager said DSL would cure Pac Bel's reciprocal compensation woes.

"The best way for Pac Bell to lower its reciprocal compensation payments is to clean up its act on DSL," said Lisa Bickford, InReach general manager.

Earlier this year, SBC sponsored an unsuccessful bid to press reciprocal compensation killing legislation through Congress. The Consumer Federation of America said the bill was "disastrous for consumers" and worked to stop the legislation from becoming law.

Representatives at SBC and Pac Bell have not offered comments on the CPUC ruling at this time.

—End    

Related articles:
	[May 27, 2000]	Reports of Recip Comp's Demise are Greatly Exaggerated
	[May 24, 1999]	Who Killed Reciprocal Compensation in Massachusetts?