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FCC: Net is long-distance
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February 26, 1999: 3:36 p.m. ET
Dial-up calls subject to federal regulation; decision draws sharp criticism from CU
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WASHINGTON (CNNfn) - Dial-up calls to the Internet are interstate in nature and subject to federal jurisdiction, the Federal Communications Commission ruled Thursday.
The FCC plans to hold future hearings on how the dial-up Internet rates should be set -- a decision that many free-roaming Net users fear could set the stage for government regulation of the Internet.
Attempting to alleviate those fears, FCC Chairman William Kennard said there's no threat of that ever happening.
"Some people have been trying to scare the public into thinking this is about government regulating the Internet. Nothing could be further from the truth," he said. "We are not regulating the Internet and we will not do so as long as I am chairman."
The FCC decision is being strongly criticized by the Consumers Union, a consumer advocate group, for increasing costs for Internet access.
According the Consumers Union, publisher of Consumer Reports magazine, the issue is not about government regulation of the Internet but the increased cost to the consumer.
Gene Kimmelman, co-director of the Washington arm of Consumers Union, told CNNfn, "Ultimately, dialing up an Internet Service Provider will be treated as a long- distance phone call. Everything about the FCC's analysis indicates that this will cause a price increase for the consumer."
The FCC said Thursday's decision resolves how local telephone companies should compensate one another for delivering traffic to Internet service providers, or ISPs, such as Mindspring. The decision doesn't overturn existing contracts between carriers, but rather clarifies the role of state and federal regulators, the agency said.
"The Commission declared that Internet traffic is jurisdictionally mixed and appears to be largely interstate in nature," the FCC said.
In contrast to Kimmelman's view, the FCC stated, "This means that those consumers who continue to access the Internet by dialing a seven-digit number will not incur long-distance charges when they do."
Kennard, the FCC chief, added: "This decision only affects the way phone companies pay each other for traffic that is passed over phone lines before even reaching the Internet."
When a computer user dials up the Internet, what starts as a local telephone call, with the ISPs' help, is able to continue to its ultimate destination, often Web sites located in other states or countries.
"As a result, the Commission found that, although some Internet traffic is intrastate, a substantial portion of Internet traffic is interstate and therefore subject to federal jurisdiction," the FCC said. 
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