My hair hurts

Radio personality Don Imus dismisses tedious topics such as O.J. or Whitewater by stating, "It makes my hair hurt!" I never understood what this meant until I read the latest salvos from local exchange carriers and Internet service providers about access charges.

LECs claim the Internet is causing network meltdown because people are using their phone lines too much. They say that the archaic rules exempting the public data communications networking industry from paying carriers' access charges should be rescinded. The ISPs-and here's a news scoop-say, "Hogwash!" My hair has been hurting for weeks.

The FCC has taken the unprecedented step of creating an electronic suggestion box for fixing the existing access regime. I thought I'd save myself an e-mail.

The problems start with not recognizing that the value of access has changed radically. Hence, the arbitrarily determined payments between segments of the industry, and between customers and providers, are fatally flawed.

Traditionally, the value of access was in me being connected to everyone else. It was the proof of Metcalfe's Law that the value of networks grows exponentially by the number of connections. In the early 1980s, the FCC established the access charge regime, which stipulated that for non-usage sensitive costs incurred in connecting me to everyone else, I should pay a monthly fee along with my usage fees. Non-LEC carriers wishing to connect to me over LEC facilities were hit with a similar obligation.

In the world of new media, the economic value of access has shifted from me being connected to the world to the world being connected to me. Everyone wants to reach me-IXCs, LECs with their own value-added services, ISPs and, increasingly, advertisers.

A company in Seattle is reportedly launching a service in which customers who listen to 30-second commercials from selected advertisers will get paid 15¢ for every commercial they listen to. Taken to the extreme, listening to commercials 24 hours a day, 365 days a year could generate $157,680 in rebate checks.

In a world where value is shifted from me reaching everyone to everyone reaching me, those who wish to reach me should be paying something for the privilege and mitigating some, if not all, of my costs. This does not mean the LECs can be held blameless.

Telcos are the victims of their own pricing plans. It is not my fault that 75% of access lines that constitute residential loops were built on the assumption that people would talk less than four minutes per call and make only a few calls. It is not my fault that "we" use the phone more and longer. Change the plans, change the networks and change the prices, don't just complain that people are taking advantage. The ISPs are simply highlighting and taking advantage of poor LEC planning and pricing.

The problem the LECs are going to have is that if they can't agree with everyone involved as to what true access costs are, and then rebalance charges to reflect both costs and the changed nature of value, they will be bypassed. This will only add to the regulators' quandary as to what to do about supporting universal service.

I recently visited Siemens in Munich for an international press event. What struck me most was its view of the converging world of public and IP networks. It and other companies are rapidly planning to effectuate a world, in the not-too-distant future, where seamless end-to-end delivery of applications will use the best means available. I call this vision "best performance routing.

A regime operating under current notions of access, with charging mechanisms that bear no relation to either costs or value, won't enable us to get from here to there. Reed Hundt should stop complaining about competition not developing under the Telecom Act and start lobbying for the necessary resources to create a factual basis on which to make cost judgments so he won't get overturned in court. Maybe then my hair will stop hurting.

Peter Bernstein is President of infonautics Consulting Inc., Ramsey, N.J. His e-mail address is 714-9256@mcimail.com.