IP: Re: Here we go re internet telephones

[Dave Farber <farber@central.cis.upenn.edu>]

Date: Sun, 11 Aug 1996 18:44:30 -0700 (PDT)
From: Hal Varian <hal@alfred.sims.berkeley.edu>
To: Dave Farber <farber@central.cis.upenn.edu>


On Sun, 11 Aug 1996, Dave Farber wrote:


>    "Phone Service Via the Internet May Slash Rates." 
>  
>       ...Customers would merely call a 
>       central number, then dial their long-distance numbers. 
>       The call is carried on the Internet, then put back onto 
>       the local phone system at its destination. The company 
>       plans to charge 5 to 8 cents per minute for all domestic 
>       U.S. calls, which represents a 50 to 75 percent discount 
>       off most domestic long-distance rates. 


Long distance carriers currently pay the local carriers a local
access fee which is about 40% of the price of a long-distance call.
Internet service providers do not pay this local accesss charge
since they are classified as a "value added service".  It appears that
these guys hope to make money off of this differential treatment of 
Internet providers and long-distance carriers.  My guess is that
this kind of thing will hasten the moves to impost local access charges
on Internet providers.  (See 
http://www.cedmagazine.com/feb96/currents.html for a reasonably
accurate review of the issues involved.)


Hal Varian, Dean           voice: 510-642-9980
SIMS, 102 South Hall       fax:   510-642-5814
University of California   hal@sims.berkeley.edu
Berkeley, CA 94720-4600    http://www.sims.berkeley.edu/~hal