This is one of those Web rumors that refuses to die.  Here is the info I found
on my representative Henry Waxman's
home page when it last surfaced in March"

http://www.house.gov/waxman/L_I/INT/int.html

Many constituents have contacted me to express their disapproval of a
 Federal Communications Commission (FCC) plan to charge new,
 per-minute Internet access fees.

      The FCC does not plan to do this. Although Internet users have
      circulated a rumor to this effect, the FCC has published a fact
      sheet to dispel this report.

 In addition, no legislation has been introduced that would impose
 additional fees on Internet users. In fact, on October 21, 1998, President
 Clinton signed into law the "Internet Tax Freedom Act," which
 established a national policy against state and local government
 interference with interstate commerce on the Internet or interactive
 computer services and imposed a three-year moratorium on Internet
 access taxes. This moratorium will allow an Advisory Commission on
 Electronic Commerce



? composed of representatives of consumer,
 government, and business interests ? to conduct a study on Internet
 access charges and report its findings and recommendations to Congress.

FACT SHEET

                                                                December 1998



       No Consumer Per-Minute Charges to Access ISPs

       The following fact sheet provides information in response to erroneous
reports that the
       FCC is planning to impose per-minute usage charges on consumer access to
Internet
       Service Providers (ISPs). The bottom line is that the FCC has no
intention of assessing
       per-minute charges on Internet traffic or of making any changes in the
way consumers
       obtain and pay for access to the Internet.

       1. What is the source of this misunderstanding?

       The FCC has a proceeding underway concerning carrier-to-carrier payments,
 so-called
       "reciprocal compensation." These payments compensate a local telephone
company for
       completing a local call that is placed by one of its competitor's
customers.

       For example, if a customer of Phone Company A makes a local call to a
customer of
       Phone Company B, Phone Company A must compensate Phone Company B for
       handling the last leg of the call. This payment structure may have been
negotiated by the
       two phone companies, or may have been based on a decision of the state
regulatory
       authority. The reciprocal compensation payment by Company A to Company B
may be
       based on a per-minute charge for the length of the call, or some other
negotiated basis.

       Reciprocal compensation is thus paid between telephone companies for use
of the local
       phone network. Reciprocal compensation is not paid by consumers or by
Internet
       service providers. Accordingly, reciprocal compensation does not
determine consumer
       Internet charges. Typically, the companies involved are an incumbent
local telephone
       company (ILEC) currently serving a large number of subscribers, and a
competing local
       telephone company (CLEC) that has only recently entered the market and
has fewer
       subscribers.

       2. So why is this suddenly an issue?

       There is a dispute in the telephone industry over whether local calls to
ISPs are subject
       to reciprocal compensation, and that is the matter the FCC is
considering. In the
       example above, if the consumer dials up the Internet over the phone lines
 of Phone
       Company A, and the ISP is served by Company B, the question is whether
Company A
       must compensate Company B for completing the local portion of the call.
That is the
       only issue before the Commission in this matter. Thus, the manner in
which consumers
       pay for Internet access is not before the Commission and the Commission
has
       repeatedly stated that it is not preparing to change the manner in which
consumers obtain
       and pay for Internet access. Rumor to the contrary persists, however, and
 the FCC has
       received hundreds of thousands of e-mails on the subject over the last
two years.

       Where reciprocal compensation has been established between two local
phone
       companies, and the traffic between the two companies (incoming and
outgoing calls)
       balances out, only a small amount of reciprocal compensation ends up
being paid for
       whatever difference in traffic exists. However, if one of the two
companies serves an
       ISP, the traffic may be very unbalanced, because the consumer always
calls the ISP to
       initiate an Internet session, and the ISP rarely calls anyone. The
incoming traffic to the
       company serving the ISP will be heavier that the outgoing traffic. In
addition, calls to
       ISPs tend to be much longer than other types of calls. These differences
in traffic flow
       can affect the amount of compensation one company pays another
particularly if
       reciprocal compensation is paid on a per minute basis.

       3. Are phone companies paying reciprocal compensation for Internet
traffic
       now?

       All 23 state regulatory commissions that have considered the issue have
found that the
       phone company that originates a local call to an ISP must pay reciprocal
compensation
       to the competing phone company for terminating that call, but many
companies are
       withholding payment while pursuing appeals.

       4. If reciprocal compensation does have to be paid in the case of
Internet traffic,
       won't the phone companies that have to pay that compensation be forced to
       impose a surcharge on their Internet customers or on ISPs (who will pass
is
       through to consumers)?

       No. While the rates consumers pay for local telephone service are
regulated by the
       states, and not the FCC, most states require phone companies to charge a
flat rate for
       unlimited local usage. A local telephone company could not alter these
local rates to
       include an internet surcharge without approval from the state commission.
 Even today,
       however, local telephone companies are obtaining increased revenue from
internet
       traffic, because many consumers are installing second lines dedicated to
Internet traffic.
       Consumers pay for these lines just as they would pay for any second phone
 line.

       Similarly, the local phone company cannot impose any charges on the ISP,
even if it is
       forced to pay reciprocal compensation for traffic delivered by a CLEC to
that ISP,
       because the ILEC has no direct billing relationship with the ISP.

       5. Why shouldn't Internet traffic be subject to reciprocal compensation?

       Some parties argue that Internet traffic is not local, because it often
begins in one state
       and ends in another state, and therefore should not be subject to
reciprocal
       compensation. These parties say that Internet traffic is more like long
distance traffic,
       where the local phone company does not terminate the call locally, but
rather hands the
       call off to a long distance company that carries the call over its
interstate network to a
       distant location. Long distance companies pay access charges to the local
 phone
       company. If two local phone companies are involved in carrying the call
to the long
       distance provider, the two local companies share the access charges paid
by the long
       distance company and no reciprocal compensation is due.

       6. If the FCC decides that calls to ISPs should be treated as interstate
long
       distance calls won't ISPs have to pay access charges to local companies?

       No. The FCC has a special exemption for ISPs, and has dictated that ISPs
be treated
       as local phone customers. Thus, rather than paying higher access charges,
 ISPs simply
       purchase phone lines from the local phone company as any local business
would do.

       7. Why is the FCC considering this issue if 23 states have already
decided it?

       In general, the FCC has jurisdiction over calls between states, while
each state has
       jurisdiction for calls within its borders. Parties who believe Internet
calls are interstate
       argue that the states had no jurisdiction to consider the issue. A
decision by the FCC to
       treat these calls as interstate would determine whether the FCC, versus a
 state
       regulatory body, should have the ultimate authority to decide how
compensation for this
       traffic should be established. The decision might or might not have an
impact on the
       compensation that one telephone company pays to the other. As noted, the
FCC
       already has said that ISP traffic should be exempt from interstate access
 charges.
       Regardless of the outcome, the decision will only affect compensation
arrangements
       between local carriers, and will have no direct effect on the consumer
who uses ISP
       services.

               For additional information please visit the FCC Web Site at:
                                http://www.fcc.gov/