June 15, 2000

The Honorable (Members of the house Commerce Committee)
US House of Representatives
Washington DC 20515

Re: HR 4445

Dear Representative:

On behalf of the Information Technology Association of America (ITAA) I want to express my concern about the potential impact of H.R. 4455 on Internet consumers. We oppose changes to the Telecommunications Act of 1996 that would discriminate against Internet Service Providers and their customers.

The Information Technology Association of America (ITAA) provides global public policy, business networking, and national leadership to promote the continued rapid growth of the IT industry. ITAA consists of 400 direct and 26,000 affiliate corporate members throughout the U.S. ITAA members range from the smallest IT start-ups to industry leaders in the Internet, software, IT services, Application Service Provider (ASP), digital content, systems integration, telecommunications, and enterprise solution fields.

Having finally lost their battle to impose on Internet consumers the subsidy-laden, per minute carrier access charges that have long been assessed on long distance calls, the Regional Bell Operating Companies (RBOCs) have a new strategy for making Internet consumers pay more.

Under the Telecommunications Act, when traffic originates on the networks of an incumbent local exchange carrier ("ILEC"), and the ILEC hands off traffic to a competitive local exchange carrier ("CLEC") for delivery to a CLEC customer located in the local calling area, the ILEC must compensate the CLEC for the cost of transporting and terminating the traffic. The RBOCs, however, ask Congress to carve out a special exemption that would allow them to refuse to compensate CLECs for the costs of delivering ILEC-originated traffic to an ISP. The end-result would be to increase the prices that ISPs - and, ultimately, their customers - would pay for services.

Such discrimination is unjustifiable. ISPs are customers of telecommunications services and should be treated in the same manner as other business customers. Therefore - just as ISPs are not singled out from other business customers and required to pay carrier access charges - ISPs should not be singled out and required to assume the costs of transporting and terminating traffic that originates on the ILECs' networks.

Ironically, during the debate surrounding implementation of the Telecommunications Act of 1996, the Regional Bell Operating Companies ("RBOCs") fought for imposition of a compensation system to cover the costs of termination. They believed that, since they controlled most of the local telephone market (even now they still control 95 percent), they would terminate more calls than their competitors and thus receive more compensation. The RBOCs fought for the very reciprocal compensation system that they now seek legislation to 'protect' themselves against.

The reciprocal compensation issue is best addressed through the existing statutory and regulatory framework in the Act. The Federal Communications Commission (FCC) already has an open rulemaking and a case on remand from the U.S. Court of Appeals for the D.C. Circuit before it, considering intercarrier compensation methods. Congress has given the FCC until September 30, 2000, to act, and should not move legislation before then. Thirty-eight state commissions have decided the issue, 33 of which have correctly held that dialing a local number to reach an ISP should be treated like any other call to a business customer located within the local calling area. Federal and State courts have considered and are continuing to consider the issue. Three Federal Appellate Courts have ruled for the Competitive Local Exchange Carriers: the 5th, 7th, and 9th.

If CLECs serving ISPs are not compensated for their costs, at least some of these expenses will be passed along to ISPs and their residential and business customers in the form of higher retail rates. Higher Internet access costs and the reduced ability for ISPs to contract with a variety of competitive carriers will cause the Internet to develop more slowly. Fewer competitive alternatives will reduce the rollout rate for broadband technologies. The growth on the Internet is best served by a vibrant competitive local exchange carrier industry.

Thank you for your careful consideration of these important issues. Your Committee, Congress and the FCC deserves great credit for pursuing Internet policies that resist what may sometimes be the natural impulse of government to intervene. If you have any questions about the matters raised above, please feel free to contact me (703 -284-5340; hmiller@itaa.org) or Mark Uncapher (703-284-5344; muncapher@itaa.org) of my staff.

Sincerely,

Harris N. Miller
President
ITAA

Barbara Dooley
President
Commercial Internet eXchange Association