ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, November 9, 1996 TAG: 9611110018
SECTION: BUSINESS PAGE: A-5 EDITION: METRO
DATELINE: NEW YORK
SOURCE: Associated Press
Back when the Internet was a sedate research tool for schools and scientists, the U.S. government eliminated on-line phone fees for companies providing access to the national network of computers.
Today, the Internet has exploded beyond those 1983 salad days into a global communication phenomenon. Yet the phone-rate exemption remains intact - sparking a collision between Internet access providers and local phone companies that want to charge for using their lines.
In recent weeks, more than two dozen high-technology companies - including Apple Computer, Netscape and America Online - formed a group to fight an attempt by regional phone companies to charge for Internet access on a per-minute basis, just like for phone calls.
The group of computer, software and on-line service companies contends that the phone charges almost certainly would be passed along to cyberspacers, potentially stifling future growth of a medium that has been fueled by unlimited exchange of ideas and information.
Currently, most Internet users pay a flat monthly rate to an Internet service provider for unlimited Internet access over regular phone lines.
But local telephone companies assert that the extra usage is clogging their lines. The access fees are needed, they say, to pay for upgrades to their networks or build new ones to handle the millions of Americans going on line each day for everything from movie reviews to stock trading.
Indeed, Internet usage in the Silicon Valley and other computer-rife regions is clogging phone lines so much that thousands of local calls are not going through, Pacific Bell gripes. East Coast regional phone companies, including Nynex and Bell Atlantic, also have complained about the strain the Internet is placing on lines that once carried mostly voice phone calls.
Besides, the Internet has grown into a money-making enterprise, where advertisers peddle information and goods in ``electronic storefronts'' - and such users shouldn't be getting a free ride from local phone companies.
``The Internet is not destitute,'' James Young, general counsel at Bell Atlantic Corp., said Thursday.
Bell Atlantic and other regional phone companies are urging the Federal Communications Commission to eliminate the Internet service providers' exemption from regular phone rates.
The FCC has started work on the issue and has said it expects a decision by the middle of next year.
The phone companies favor a fee of about one-third of a penny per minute. But critics complain that the costs could add up to hundreds of dollars a month for subscribers used to paying just $20 a month, who tend keep their lines open for many hours at a time.
``We in the coalition are sure that it's going to have a chilling effect'' on use of the Internet, said Grace Hinchman, a spokeswoman for Digital Equipment Corp., which is a member of the DATA Coalition industry group.
``There's a lot of rhetoric that [Internet service providers] want a free ride. That's not it at all,'' Hinchman said Friday. She said that the group is trying to convince the FCC to create incentives for phone-company rivals to build alternate networks for Internet access.
However, some industry observers say the situation is far from clear-cut.
``It's really hard to know who is right in this situation. The phone companies had no idea that the Internet was going to go through this big phase change in demand,'' said Stephen Arnold, an Internet software developer and author of ``Publishing on the Internet: A New Medium for a New Millennium.''
LENGTH: Medium: 68 linesby CNB