The FCC is expected to make a ruling on the surcharges Wednesday morning. Even so, lobbyists said, it seems likely Internet service providers, or ISPs, will have to absorb a dollar or more per month in additional fees for each customer, further complicating business for an industry that most observers say is still solidly in the red. We're not very happy about it, but it's better than having it metered. Under a plan pushed by FCC Chairman Reed Hundt, long-distance companies would pay local phone companies less for each minute they are connected to local networks. Local phone companies, meanwhile, would make up part of the difference through increases in flat monthly charges they now collect from business customers to maintain the wires that run from their businesses to telephone company equipment.
Supporters push the plan as a more rational way of allocating costs across the network.
Sources close to the negotiations said America Online Inc. is leading the charge for lower monthly fees. AOL officials could not be reached for comment. Internet service companies oppose the plan because they must maintain a business line for every modem they have in place to handle customers' calls to their services. Glee Cady, a government affairs manager at Netcom On-line Communications Services Inc., said most ISPs would be hard pressed to come up with an extra dollar every month for every customer. The Association of Online Professionals, meanwhile, urged its members to press the FCC for lower rates, saying the industry's lack of profitability makes the increases questionable at best.