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r o c k f o r e v e r . c o m   Press Release -- Thursday, June 12, 2000 For Immediate Release: Web Phone Suppliers Decry Bill By KALPANA SRINIVASAN Associated Press Writer WASHINGTON (AP) ? Lawmakers declared they were preserving the free-flowing nature of the Internet when they passed a bill to ensure people would never pay per-minute fees to get online. Companies that offer cheap telephone calls over the Web, however, say a provision in the legislation could open the door to Internet regulation. "You just cannot take the old school old economic rules and apply it to the new world order," said Jeff Pulver, a leading industry spokesman and chief executive officer of pulver.com, an Internet-based research firm. Pulver and others have launched a spirited campaign to protest the bill, taking on the nation's powerful local phone lobby. The companies planned to hold an "Internet Freedom Rally" Sunday on Capitol Hill. The movement has received strong backing from the head of the Federal Communications Commission, who fears that imposing old regulations on new services will stifle growth. "If the Internet can deliver a telephone conversation, or a movie or a rock concert less expensively than through traditional means, than so be it," said FCC Chairman William Kennard, in remarks prepared to kick off Sunday's rally. "It's good for our ingenuity and our pocketbook, and it's good for competition. At issue is a House bill passed in May that forbids the FCC from imposing per-minute charges on companies that provide Internet service, which ultimately would be passed on to customers. A provision in the measure said the FCC still could require companies providing telephone service over the Web to pay the access charges. Currently, long-distance companies pay so-called access fees to local phone companies to connect calls. The carriers pass on these costs, a portion of which goes toward underwriting phone service in high-cost and low-income areas, to their customers. The relatively nascent Internet telephone industry enables people to use personal computers to make calls. Much like a typical dial-up connection to the Internet, these calls are made by dialing a local access number to the companies, which then use the Internet to bypass regular phone carriers. The Bell local phone companies argue that a voice call is still a voice call, whether placed over a home computer or over a telephone. "If you are making voice call, there should be some compensation for the use of the network," said David Bolger of the U.S. Telecom Association, which represents phone companies. He added that Internet phone companies should also help to support federal subsidies for affordable phone service. Matt Miller of SBC Communications, the Bell company serving the Southwest, dismissed the notion that such charges would amount to a "taxing" of the Internet. "To call it a tax is misleading and a bit disingenuous," Miller said. "They use that because it's a loaded word." Internet companies have dire warnings about the practical implications of such regulation. Because traffic travels across the Internet in packets, each packet would have to be opened to see whether its contents are voice or data, industry executives say. To put in such monitoring equipment not only would be burdensome, it also would raise serious privacy problems, said Stacey Reineccius, president of Quicknet Technologies Inc., which manufactures products for Internet telephone use. "By starting to identify specific kinds of traffic, you upon up a real Pandora's box," he said. It's not an imminent threat. Although the bill gives the commission the authority to impose such charges, Kennard has repeatedly asserted that it won't happen on his watch. The fear is that future regulators may not share that view. "It's using a good cause as an excuse," said Noam Bardin, chief executive officer of deltathree.com, which has 2.3 million customers worldwide. Bardin and others say they already are helping to make phone service more affordable for all Americans, by allowing them to avoid charges from local and long-distance carriers and place cheap calls, even internationally, over the Web. Bart Bartolozzi, director of strategic development for Net2Phone, a pioneer in offering such services, adds that other countries ? where it still costs $3 or $4 a minute to make calls ? have looked to the United States as a technology leader. Allowing for regulation of the medium could encourage others abroad to do so as well, he said.

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