FCC To Approve 'Caller Pays' Wireless Charges 

After being alerted by a Wall Street Journal article on Tuesday, February 15, 2000 and confirming with the FCC, I arrived at the FCC on Thursday, February 17, 2000 only to learn the en bank hearing has been canceled. In a call to Mr. Brian Fontes of the Cellular Telephone Industry Association (202-785-0081), he advised me that approval by the commission 'in circulation' was likely.. While I have no objection to consenting adults making informed decisions related to whether to pay for a call to a wireless phone, or not, I have significant objection to the way the FCC does business. Matthew Flanigan, writing in "A Call for FCC Reform", Telecommunications Magazine (www.telecommagazine.com) February, p30., suggests "Only noncontroversial matters would be approved in circulation (commissioners individually approve an item as opposed to voting on it at a public commission meeting), with all substantive changes approved separately. The commission would have some reasonably strict guidelines for completing each rulemaking proceeding." Could it be that the Commission decided to approve this matter in circulation, because they remain firmly opposed to addressing the issue of how to collect the money without taking some action on casual billing and the RBOC telopolies hold over billing name and address - an issue they have been ignoring since 1997.(OTE 1/1/2000) Go to www.fcc.gov, search on electronic filing RM-9108

Copyright ã 2000 Hattrick Group

The Empire State Strikes Back!

The state of New York landed 800 jobs in the Buffalo area and added to its tax base by exempting certain online vendors from sales taxes. (iMarketing News, 1/31/2000, p.23) A 1997 New York law allows exemption from sales taxes for firms that store and distribute through New York-based fulfillment centers. This official policy matches what has been an unofficial policy in some western states for years - look the other way when merchants in sales tax states bordering tax free states need to omit taxes in order to compete. Skulogix, a Toronto-based firm plans to open the center in May, distributing goods for more than 500 online vendors.

Copyright ã 2000 Hattrick Group

Trends In Wireless

Dynamics And Trends In The Wireless Marketplace, developed by Peter D. Hart Research Associates, Inc., for the Cellular Telecommunications Industry Association (CTIA) may be downloaded from www.ctia.org. The document is an extremely useful supplement to Trends in Telephone Service (OTE:5/99,What Is 500 Hours Worth) Here are some of the highlights:
In describing value received from their carriers, consumers rate long distance first (46%), wireless second (45%), and local telephone service last (42%). Wireless penetration is up, usage is up, but spending per wireless phone is down. (Some spending decrease is due to "one rate" plans which allow long distance calling at the same rate as local calls.) Twice as many users prefer a provider who concentrates on lower prices, as opposed to more features; and the heavier the user, the less they are influenced to choose a familiar brand.

Copyright ã 2000 Hattrick Group

Beware The E-VAT

The European Union is developing plans to impose the Value Added Tax (VAT), averaging 20% across Europe, on internet transactions from foreign suppliers. They just haven't figured out how to do it. A white paper is expected soon at www.europa.eu.int. Although not available at press time, a 32 page report entitled "Strategies For Jobs in the Information Society" was available. Maybe the EU Commissioners should look west to Buffalo for an example of how to create jobs. For a conservative view of the American answer to internet taxation, click on www.nonettax.net to find a complete list of who's for and who's against 'net taxation. 

Copyright ã 2000 Hattrick Group

Payphone Compensation

Not content with the 24 cents compensation rate for '800' and other dial-around services decided by the FCC, the American Public Communications Council (APCC) the RBOC Payphone Service Providers, MCI WorldCom and Sprint have all appealed the order. (www.fcc.gov Docket 97-207.) The Colorado Payphone Association (CPA) filed a petition for partial reconsideration of the FCC order, asserting that Payphone Service Providers (PSPs) are being underpaid 6.1 cents per call, which translates to "more than $210,000,000 per year in lost revenue." (On The Line, Jan/Feb, 2000, p.14) Aside from the rate, payphone operators see non-payers of the fees as their biggest problem. Recent lawsuits and pre-litigation negotiations have resulted in $4 Million in new compensation for PSPs. Not content with pursuing high profile carriers, the PSPs are also targeting pre-paid phone card operators. If you know how these cards are marketed - and to whom - you know this will be a long and drawn out guerrilla war. Many of the card users are foreign nationals, hoping to stay 'under the radar', and the multilevel marketing organizations used to distribute the cards have the same attitude.

Copyright ã 2000 Hattrick Group

Bandwidth Redux

One of our early issues (predating the web-archived editions beginning in 1997) featured a front page illustration describing the bandwidth choices available to telephony users. Since then, the desire to receive both data and video has driven the quest for bandwidth farther and faster than most of us could have imagined. And just about everyone understands the meaning of the word - save the obsequious underling featured in the Williams Communications commercials describing the 'waving fields of bandwidth'. While both wireless and fiber optic services deliver a variety of bandwidth choices, they have the least availability for consumer and small business applications. And ISDN BRI, a European import, has failed to flourish because it remains overpriced by the telcos with respect to other offerings. Today's leading contenders shake out as follows:

DSL (528 Kb/sec.) - Formerly known as ADSL (Asynchronous Digital Subscriber Line), Symmetric DSL, and others; the term now encompasses a broad product category. (See the ADSL forum www.adsl.com.) And vendors have conquered the issue of splitting voice traffic and high speed DSL traffic on a single telephone subscriber line. While a majority of users prefer to purchase high speed connections from the telcos (52% versus 16% from cable companies - (Interactive Week 1/24/00 p.I-1) DSL is only available to 44% of residential incumbent telco customers because of distances from central offices and incompatible electronics. However, 60% of small businesses are within the reach of DSL. Service costs between $40 and $60 per month (Infoworld, 1/24/00 p.66A.) The DSL Forum has established a site (www.dsllife.com) to draw prospective customers and refer them to vendors.

T-1 (1.54 Mb/sec.) - As with DSL, there are distinct advantages related to T-1 access for city dwellers. Property and telecom managers have discovered that 'smart' or 'wired' buildings demand higher rents and create better tenant satisfaction. In the Washington, DC area, a company called eLink Communications (www.elinkisp.com) won the franchise to be a provider in our building. Their sales brochure offers unlimited internet access, at T-1 speed, for just $95 per month.

Cable Modems (Up to 10Mb/sec)- Fifty percent of the cable network passing homes has been upgraded to support broadband services. With not nearly as many homes passed, (as by telco service) cable operators possess a significant lead with 85% of total market sales according to Broadband!, a report by Sanford Bernstein (www.bernstein.com) and McKinsey (www.mckinsey.com). The cable providers have the added advantage of allowing access through TV set top boxes for non-PC households. While cable connections allow very high speed downloads, enabling full motion video and more, the return path (used to control and/or request the data received) operates at slower speeds and degrades easily as users are added. Contact your cable operator for pricing and availability.

And the Winner Is... everybody. Prices will continue to drop, productivity will continue to increase. (In western Europe, where telecom competition has just begun, prices are much higher.) Currently at 900,000 lines, the DSL market was predicted to reach 2.4 Million by 2002. (Americas Network, 1/1/2000, p24) As a result of the FCC line sharing decision, giving CLECs lower cost access to customers, growth will likely be larger. But don't count out fiber optics or wireless. Photonic switches and increased wireless bandwidth are coming.

Copyright ã 2000 Hattrick Group

A Balanced Budget and a 'Level Playing Field'

Oh, how the conservative right has been co-opted. Back in the bad old days, when this country was spending well beyond its means, a balanced budget was a call for spending cuts. In our new economy, driven to new heights in productivity through the ease of information transfer, it has come to mean sopping up every additional dollar brought in taxes by this wonderful information revolution, and spending it on more government programs. A 'level playing field' is the new rallying cry of the tax and spend crowd. Thwarted by the courts and the Quill decision, they have been unable to levy taxes on goods and services for which they provide no infrastructure or support. Congress, always possessing a firm grasp of the obvious, passed an 'internet tax moratorium' intended to allow the new medium to flourish. We are living in a time when the relationship between a tax, that which is taxed, and any benefit to the populace from that tax, is completely coincidental. The current administration botched any hope of a tobacco settlement, because they insisted the money go into general revenue accounts, rather than be earmarked for health benefits for those with smoking related illnesses. And now the same ideologues are suggesting that a 'level playing field' is needed to protect retailers from e-commerce. The National Retail Federation announced support for a "channel neutral" tax policy. In other words, overturn the Quill decision, protecting brick and mortar stores from the e-tailers. Thank goodness that when Henry Ford introduced mass production of automobiles, our government didn't require that each model T be towed about by a horse - to protect the livery stables. (The horse dung in the streets of London was already causing a significant health problem.) Where you sit usually determines where you stand. Who could have expected anything else from the National Retail Federation? But I expected more from the Electronic Commerce Association, who supports the "e-Fairness Coalition" and their call for a 'level playing field'. Transactions (www.ecassociation.org) reports that The Advisory Commission on Electronic Commerce may reach a compromise which includes:

elimination of the 3% telecommunications excise tax, 

a permanent moratorium on taxing internet access, 

and allowing the states to impose taxes on remote sales after the current federal ban expires in October, 2001. 

Of course I want to see the 3% gross excise tax abolished. But where has the level playing field crowd been since the end of the Spanish-American War (OTE 2/1/00: Taxes,Taxes). And to exempt internet access fees (which do require a local infrastructure and presence) while taxing telephone access by state, local, and federal jurisdictions and compounding the burden with ever-increasing Universal Service Fees, is anything but level headed. To add insult to injury, the billions in USF collected have gone to benefit internet users and suppliers, while not a penny more has gone to provide universal telephone access in rural areas - as mandated by the 1996 Telecommunications Reform Act.(OTE: 12/99 Interview with Commissioner Furchtgott-Roth)

W. E. Miller, Jr.
Editor

Copyright ã 2000 Hattrick Group