IP: FCC MAY CHANGE THE RULES ON INTERNET CALLS from Edupage

[Dave Farber <farber () cis upenn edu>]

The Federal Communications Commission is leaning toward a decision that 
would make telephone connections between PCs and Internet service providers 
more like long distance calls, and therefore subject to the agency's 
jurisdiction. If a majority of the commission's five members opt for this 
approach, the "reciprocal compensation" agreements between the regional Bell 
companies and new local carriers serving ISPs will expire or be greatly 
reduced. Under the current arrangement, companies must pay each other a 
small fee for completing the local calls of each other's customers, but not 
for long distance calls. New carriers have turned these arrangements to 
their advantage by serving the modem banks of ISPs, which receive thousands 
of calls but never make any. "The current reciprocal compensation gravy 
train is running out of track," says an industry analyst with Legg Mason 
Precursor Group. "This may come as a surprise to some people, but they were 
in denial." (Reuters 29 Oct 98)