More than 2.3 million California households are dialing into the Internet, and those connections account for 27% of all residential phone use in California, according to a study released Tuesday by Pacific Telesis Group in support of its request to charge fees for access to the global computer network.
The report was submitted late Monday to the Federal Communications Commission, which is seeking ways to relieve congestion on telephone networks that have been overwhelmed by surging demand for Internet access. The FCC is expected to issue a proposal later this year.
The study by San Francisco-based Pacific Telesis, parent of Pacific Bell, suggests that Internet service providers be required to pay a 1-cent-per-minute fee for connecting customers to the voice network. Under current rules, long-distance companies must pay 1.4 cents per minute for those connections, but public policy considerations have kept the fee for Internet use at a paltry 0.07 cents per minute, said Steven Hubbard, Pacific Telesis vice president for Internet strategy.
Revenue from a penny-per-minute fee would help the Baby Bell pay for network upgrades made necessary by the increase in Internet traffic. Pacific Telesis estimates it will spend $100 million on network upgrades this year, Hubbard said.
The Internet Access Coalition, a Washington-based group of high-tech companies, opposes new fees. Paul Misener, chairman of the coalition's steering committee, said the phone companies can encourage Internet service providers to use networks designed to carry data--which handle Internet traffic more efficiently than networks for voice calling--by making them cheaper to access. Advanced technology will also help reduce congestion, he said.
Companies such as America Online Inc. are hopeful that products that can separate data from voice traffic will allow for a more efficient use of the phone network.
"The telephone companies are saying that extra money will solve this problem, but, in fact, new technology will solve this problem," said Jill Lesser, deputy director of law and public policy for America Online.
Public comments submitted to the FCC indicate that consumers are overwhelmingly opposed to new fees for Internet access.
"The phone companies . . . are certainly capable of finding ways to accommodate the continuing growth of the Internet rather than forcing users to fork over more and more money, only to put up with outmoded technology the phone companies are too lazy to update," said customer Kristin Dempsey.
But PacTel officials insist that as long as access to the voice network is cheap, Internet service providers will continue to use it.
"When people are paying you seven one-hundredths of a cent per minute of access, it's very difficult to come down low enough to be competitive with that and still cover our actual costs," said Robert Deward, a PacTel spokesman in San Francisco.