FARNET's Washington Update 6/2/98

[Jeff Ogden]

FYI
  -Jeff

>From: "Casey Lide" <casey@farnet.org>
>To: <legup@farnet.org>
>Subject: FARNET's Washington Update 6/2/98
>Date: Tue, 2 Jun 1998 09:16:19 -0400
>
>FARNET'S WASHINGTON UPDATE --- JUNE 2, 1998
>
>FARNET (http://www.farnet.org) is a non-profit public interest
>Internetworking organization with a primary focus on the education, research
>and related communities.
>
>
>IN THIS ISSUE:
>
>VBNS TO REMAIN WITH MCI, DESPITE SALE OF COMPANY'S INTERNET BACKBONE
>SERVICES TO CABLE & WIRELESS
>
>RBOCS FORM CONTROVERSIAL MARKETING AGREEMENTS WITH QWEST
>
>AT&T AND MCI PLAN TO CHARGE RESIDENTIAL CUSTOMERS UNIVERSAL SERVICE FEE
>BEGINNING IN JULY
>
>____________________________________________________________________________
>____
>
>VBNS NETWORK TO REMAIN WITH MCI, DESPITE SALE OF COMPANY'S INTERNET BACKBONE
>SERVICES TO CABLE & WIRELESS
>
>In an effort to win speedy approval of its merger with WorldCom by European
>Union regulators, MCI announced last week it is selling its Internet
>facilities to Cable & Wireless PLC of Great Britain for a reported $625
>million.
>
>The sale is intended to appease critics and regulators who are concerned
>that the combined Internet facilities of MCI and WorldCom would give the new
>company control of (by one estimate) 40 to 60% of the Internet backbone.
>MCI's Internet backbone service includes 22 domestic nodes, 15,000
>interconnection ports, and 40 ongoing peering agreements. Estimates of the
>actual size of MCI's Internet business range from $100 to $400 million in
>revenues.
>
>WorldCom has no intention of selling its Internet services. It currently
>owns UUNET Technologies, one of the world's largest ISP's, operating
>national networks in the United States and five other nations.
>
>MCI's recent announcement will not affect the cooperative agreement between
>MCI and the National Science Foundation (NSF) for maintaining the vBNS (very
>high performance Backbone Network Service).  The vBNS is a nationwide
>Internet backbone testbed network that currently connects 17 universities
>and 5 supercomputing centers for high-performance, high-bandwidth research
>applications.  (The National Science Foundation reports that an additional
>47 universities have received grants to connect to the vBNS.)  According to
>MCI, the vBNS engineering and account teams will remain with the company.
>
>The European Union and the Department of Justice may issue a ruling on the
>MCI-WorldCom merger as early as July 15.
>
>
>RBOCS FORM CONTROVERSIAL MARKETING AGREEMENTS WITH QWEST
>
>Earlier this month regional Bell Operating Company US West announced a
>marketing agreement with Qwest Communications that would give US West
>customers in 14 states a very easy option for choosing Qwest as their
>long-distance carrier. According to the agreement, the local company would
>be awarded a sort of finder's fee for new Qwest customers.   US West also
>plans to offer direct connections to Qwest customer service representatives
>from its own service department, and customers would receive one bill for
>both their local and long-distance service.
>
>One week after the US West announcement, Ameritech announced a similar
>marketing arrangement with Qwest.
>
>Not surprisingly, the agreements have aroused consternation with other
>inter-exchange carriers.  AT&T & MCI, along with five other parties, have
>contested the Qwest-US West/ Ameritech deals, and have filed suits in
>Seattle and Chicago federal district courts respectively.
>
>The suits claim that the marketing agreements run counter to provisions in
>the Act that prohibit the RBOCs from favoring one long-distance company over
>another. According to Sec. 271 of the Telecom Act of 1996, a local
>telecommunications carrier that serves more than five percent of the
>Nation's access lines may not jointly market local and long-distance
>services offered by another telecommunications carrier unless they have been
>authorized by the state commissions and FCC "to provide interLATA services
>in an in-region state, or 36 months have passed since the date of enactment
>of the Telecommunications Act of 1996."
>
> The FCC has issued a statement that it will review such arrangements to
>clarify "whether they are consistent with the Telecommunications Act and
>Commission precedent."
>
>AT&T, in the meantime, is playing both sides of the fence.   Shortly after
>it filed its court challenge to the Qwest agreements,  AT&T began soliciting
>the  RBOCs  to enter into joint-marketing agreements similar to those formed
>by Qwest.
>
>
>AT&T AND MCI PLAN TO CHARGE RESIDENTIAL CUSTOMERS UNIVERSAL SERVICE FEE
>BEGINNING IN JULY
>
>Starting this July, residential customers using AT&T and MCI for their
>long-distance service will probably see a new universal service fee added on
>their monthly telephone bills.  The imposition of the new fee is a reaction
>to the collection of telco contributions to the schools, libraries, and
>rural health care USF program. The announcement comes at a crucial time:
>the FCC is considering whether to fully fund the program's estimated $2.02
>billion demand..  A tradeoff for fully funding the program is the
>possibility of increased long-distance rates for residential customers; AT&T
>and MCI's carefully timed announcements do not bode well for full funding of
>the program.
>
>The FCC has expressed frustration with AT&T and MCI's tactics.  The
>interexchange carrier contribution to the schools, libraries, and rural
>health care USF program was to be fully compensated by reductions in access
>charges. (Access charges are the fees IXCs such as AT&T and MCI pay to local
>network facilities owners -- the RBOCS, generally speaking.)   The FCC has
>reduced access charges several times recently, and is concerned that, rather
>than pass on the savings to the consumer or allocate the saving for USF
>contributions, IXC giants such as AT&T and MCI might have simply pocketed
>the profits.   The FCC has demanded an accounting, and is supporting "truth
>in billing" efforts to ensure that federal access charge reductions are
>reflected on consumer telephone bills alongside any listing of new USF fees.
>
>The additional fees will be based on 5% of a residential customer's total
>monthly charges for interstate long-distance and international calls, 1.8%
>for intra-state long-distance calls.
>
>____________________________________________________________________________
>____
>
>Written from FARNET's Washington office, "FARNET's Washington Update" is a
>service to FARNET members and other interested subscribers. We gratefully
>acknowledge EDUCOM's NTTF and the Coalition for Networked Information (CNI)
>for additional support. If you would like more information about the Update
>or would like to offer comments or suggestions, please contact Garret Sern
>at garret@farnet.org.
>