CFOG's PIP, December 1986, Volume 5 No. 2, Whole No. 50, page 1

FCC Considers Reregulating Packet-Switching Networks

[The following information comes from Infomat magazine and was downloaded from the Lillipute Z-Node. The article by Tim Elmer and an accompanying editorial by Allan Bechtold are copyright, and I have extracted the basic information. -- bhc]

Packet-switching networks include Telenet, Tymnet, CompuServe, The Source, and PC Pursuit. The FCC is now considering reregulating these networks. Reregulation could double or triple the charges to users, according to a vice president of Telenet.

The impetus to reregulate comes from the so-called "Bell Operating Companies" (BOCs), the local telephone operating companies that were spun off from AT&T. Current FCC rules, issued in 1980 as a result of the FCC's Second Computer Inquiry (Computer II) distinguish between "basic services", which offer no protocol conversion, e.g., local and long distance voice telephone service. "Enhanced services" is an open-ended term that includes packet switching networks, databases and on-line type services, and remote computing services that offer protocol conversion.

Computer II left basic services regulated, but opened enhanced service to competition. The result has been a lot of enhanced services. Separate accounting for basic an enhanced services offered by regulated companies is required so that profits from regulated monopoly basic services which are always profitable can't be used to subsidize cut-throat competition in the pricing of enhanced services.

Computer II also provides that when BOCs and AT&T use the same telephone lines for "basic service" and for packet switching services, they must allow competitors to have access on the same basis, thus preserving competition in the industry.

If the FCC decides on reregulation, packet switching networks and other services could be charged for access to the local networks, resulting in higher costs, while the BOCs could enter the market using the profits from basic services to subsidize the price of other services.

The key is that the BOCs have to allow free local-calling access to their lines to any competitors engaged in the packet switching service industry.

Now you can call any local Telenet or Tymnet access number and use these services to inexpensively access such online 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.

If the FCC adopts reregulation, and eliminates 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 competitors in the packet switching business free access to their local telephone connection lines.

Use your word processor to produce some letters opposing this proposed reregulation! Write to:

Honorable Mark Fowler
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 not. Tell Mr. Fowler that reregulation of packet switching services will completely destroy the existing fair market for these services, and eventually increase costs, not decrease them.

Time's short. The FCC could rule in this as early as late January or early February.