They are completely whacked, this is not what is going to happen. How do
they expect us not to pass the cost off to our customers if it did
happen. The FCC can't institute a ruling that the LEC's don't have to
follow as well. Say for example, this brain dead thing actually happened
and we had to pay $0.03/min when a customer CALLS US (this is why it
won't happen). The LEC's would have to charge the same thing. If
everybody is being charged the same thing its a tax on the consumer and
the consumer picks up the bill.
> The analysis was conducted by Bern Communications, a New Jersey-based firm
> dedicated to helping independent LECs profit from the Internet. Bern founded
> its study on the premise that the Federal Communications Commission, in an
> upcoming access charge reform proceeding, will eliminate the access charge
> exemption which Internet service providers have historically enjoyed.
We don't have an access charge exemption anyway. We pay the standard
telco rates for phone lines and data circuits. If anything, they will
convert all unmeasured residential lines into measured service and charge
the consumer directly.
> "The ISPs won't have to do the same thing as long distance carriers at the
> beginning. [The FCC] will give them time to get ready for it," the industry
> observer said. "The introduction will be delayed. It may start at half a
> cent and go up incrementally. It will probably be volume sensitive and
> related to size [of the company]."
How do they intend to bill us? Will they charge us for all incoming
phone lines (like an 800 number?) If they do that then they better make
the phone line toll free to my customers. Are they going to charge us
per bit sent out the T1? That is up to our NSP to decide and fair market
value will level the playing field. This report is suggesting that the
FCC/LEC will pick a number out of the air. Will they charge us more per
phone line that comes into our business? I don't think that is going to
happen either.
> Bern's analysis concludes that almost 85% of the Internet service firms are
> not adequately capitalized to absorb the estimated access charges. Internet
> subscribers, who are accustomed to paying a flat, monthly rate which many
> say is below cost, will not tolerate an additional $56 fee. Bern predicts
> that the "prognosis for those firms is extinction."
Not true. First, the charges will not be realised. Even if they do we
will pass them on to the customer, If *everybody* is doing it because it
is some sort of 'Internet Tax' we have to charge our customers we will be
fine. It doesn't matter what it cost to provide the service as long as
your competition has to meet the same costs.
> For telephone companies, however, the situation provides an opportunity, a
> source with the company said. As the smaller ISPs go out of business and the
> larger providers shift to traffic-sensitive and subscription-based pricing
> to cover the cost of access, the telcos will have the chance to get into the
> Internet business.
Telco have the chance to get into the Internet business NOW. Nothing is
stopping them. They can't raise our rates just to get us out of the way.
> Industry observers say this will also offer an opportunity for alternative
> local exchange providers to enter the local market through the back door. By
> offering Internet service, IXCs or other new entrants will be able to gather
> information on customer needs and usage patterns.
>
> "The cost of customer acquisition is large," one source said. "The Internet
> is the way to play into the local market. It's a cheap date for [new
> entrants] to play into local markets and acquire local customers."
>
> Other predictions would have on-line service providers building their own
> wireline networks or turning to wireless technologies to avoid LEC access
> charges. There could be major ISP mergers that will invest in independent
> infrastructure.
>
> "The basic law of economics is coming in," the industry observer said.
> "Regulation is starting to leave the industry, and the gates are being
> lifted so predators are being let out. Small entrepreneur who arbitraged a
> regulatory situation will no longer be able to."
Ok, now, I believe the Internet is being waaaay under billed and ISP's
should be charging more money. We have already screwed ourselve by
thinking consumers will only shop on price. We all have very expensive
equipment and it is very hard to make any money at $19.95 unless you cut
corners in other areas (depsite what boardwatch says). Consumers *should*
be paying on a per usage level. Eventually, the ISP that charges a flat
rate will go out of business. You can't keep up with the growth/expansion
curve if you charge a flat rate. Yes, you can lease that new equipment,
but when you have to lease MORE equipment 9 months later and you still
have 2.5 years on the original lease you are losing ground.
-Matt