It always seemed that no matter how little residential competition existed in the cities, the nation's rural senators would protect the little townships, but soon there may be zero competition in some small towns, as a database change goes into effect on March 5, 2006.

by Alex Goldman ISP-Planet Managing Editor [February 28, 2006]

Update: Joe Rasmussen has been cut off from intraLATA 800 number service as of June 12, 2006.

It's not a good year for competition. The Bells are asking Congress to allow them to charge websites for access to users (see, for example, our editorial on the subject or the humor piece, Dad, What Was Internet? or the white paper Good Fences Make Bad Broadband: Preserving an Open Internet through Net Neutrality).

As Pip Coburn reminded ISP-Planet readers last week (see Coburn Ventures Conference Call: "The Free World and Its Implications"), "[the telco's] core asset is the ability to lobby. The top three spent over $2 billion in the last election cycle. I would not write off their ability to write favorable legislation."

And now we hear that a rule change, or maybe the enforcement of a rule that wasn't enforced before, or a legal wrangle of the type we complained about in A Game Played Every Year could prevent independent ISPs from serving small towns.

Meet Joe and Bev
JOBE Internet Services is based in St. Robert, Mo. and gets its name from the two co-founders, Joe and Beverly Rasmussen. The company has over 1,000 subscribers in a ranching part of the country.

Joe Rasmussen contacted ISP-Planet to warn us about this issue, which is especially important to his area. He says towns are shrinking as ranches buy each other out. "For towns with a population of fifty, or one hundred, or twenty people, it doesn't make sense to put a PRI into the town and build a POP," he explains.

Instead, his company uses an IntraLATA 800 number to serve several small towns from one POP.

At least he did, until this month.

Now, he says, his most rural customers may be disconnected on March 5, 2006, as the LECs turn off all IntraLATA 800 numbers.

How did this happen? To find out more, we contact Curt Crowley, co-owner (and co-founder) of VIAPops.

It's just a database change
Crowley explains that the 800 number tariff that rural dialup ISPs have been using was originally created for Bell internal use. Where 800 number traffic is usually coded to go to a long distance carrier, messages coded 0110 went back to Bell. "It was for information exchange between one Ma Bell area and another area, but after 1996, ILECs and CLECs started using it, and today Verizon, SBC, and Qwest still sell and use 0110 traffic for their own customers.

The elimination of the 0110 IntraLATA 800 numbers is accomplished through a software change. 800 numbers are allocated by the 800 Service Management System (SMS/800). Unfortunately for competition, the system is run by the Bells. Specifically, it is run by the SMS/800 Management Team (SMT). And guess who's represented on the team?

The SMS/800 site glossary explains:

SMS/800 Management Team (SMT): A team, consisting of one representative from each of the BOCs, which is responsible for all aspects of SMS/800 services.

According to Crowley, the SMT decided to implement a "database change" that will alter the rules for these 800 numbers. Although the rule change is couched in bureaucratic language, the effect is that hundreds or even thousands of dialup customers will be cut off.

The change was announced on February 5, 2006. It goes into effect on March 5, 2006. "They must comply with the guidelines," says Crowley (not that rules ever stopped an RBOC). "We're supposed to be given 60 days notice. We weren't even given 30 days."

Companies like ViaPOPs are petitioning the FCC. Consultants like Fred Goldstein and others are trying to build agreements.

But no solution will be viable by March 5, 2006, when the latest blow will be struck against competition, and those towns with the least resources will be cut off.

Solutions would be obvious in a free market
James Brazier, president of All Digital and of local ISP, Batesville, Ar.-based GoNowPC, is one of those trying to solve the problem.

"We're not looking to get something gratis," he says. "We just want to pay a reasonable flat rate fee."

Collectively, the ISPs represent significant demand for ports, tens of thousands of them. Remember, the database change merely "allows" the LECs to cut this service off, so any LEC or backbone provider willing to provide the 0110 service could acquire new customers worth several hundred thousand dollars per month.

But as long as the Bells set the rules, they don't have to share. If these were companies in a free market, they would be trying to serve their customers, but these are monopolies, and they want to exploit their monopoly over local service to own as much of the internet and the new economy as they can.

Nevertheless, any infrastructure owner who is not an RBOC has an opportunity to acquire a significant number of paying customers on or before March 5, 2006.

The alternative is per-minute pricing of the kind that held back internet adoption in Europe a decade ago. People who are now paying $30 per month for dialup could pay an additonal fee of as much as 8 cents per minute, or could pay long distance charges to connect to a reasonably priced independent ISP. And so the communities in America least able to afford it, from farming towns to native American reservations to former mining boom towns, may soon be paying more to get less than anyone else.

— End