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Baby Bells argue for IP phone charges

Exploiting loophole

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The Baby Bells are flexing their muscles to compete with nifty competitors that do not enjoy the Babies' semi-regulated monopoly.

Among the recent moves are US West's intention, recently confirmed, to levy long-distance telephone charges on Internet telephony. US West's defence is that its rivals are exploiting a regulatory loophole. The Internet telephony providers should be subject to the same FCC control as the Baby Bells, it argues.

Bell South put its toe in the water a couple of weeks ago with a similar decision, which has evidently encouraged US West to follow suit. Other operators will doubtless follow suit.

The FCC has yet to make a decision, although chairman William Kennard remarked that the two types of service were "virtually indistinguishable". Clearly he hasn't tried Internet telephony very much, or he'd notice a significant difference in quality. Here's a case where tariffs for data and voice are so different that market forces could provide a most effective mechanism for rationalising the market, and reduce long-distance charges. If the FCC supports the Babies on this one, the next development by the Babies could well be to charge for local calls where these are free at present. This would stop so many Americans remaining online virtually all day.

Bell Atlantic has done a different kind of deal with IP telephony wholesaler ITXC Corp by agreeing to accept IP traffic from ITXC's international Internet calls and terminate them with its own network, for a fee. This is likely to result in better quality calls. ITXC was founded by Tom Evslin, former head of AT&T's WorldNet, who, with VocalTec, funded his start-up. Today, Bell Atlantic starts selling its direct-broadcast satellite service in the Washington DC region. This will compete with cable operators and offer hundreds of channels of programmes. ®

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