Tech Insider: David Wolfgang-Kimball

Ever since Congress passed the Telecommunications Act of 1996 deregulating the industry, the shape of the telecommunications world has been in a state of flux. Large long distance companies have been snapping up smaller telephone companies, and more recently, have started purchasing other communication carriers--AT&T's recent $48 billion bid for cable operator TCI stands out as a prominent example.

At the same time, more and more companies are offering telephone service over the Internet as an inexpensive replacement for traditional phone carriers. Clearly, there is a growing confluence of communications modalities; indeed, the holy grail for large telecom companies is the possibility of providing a completely integrated communications package--telephone, Internet access, Cable TV, and cellular--all on one bill, supplied by one company.

WHAT DOES THIS MEAN FOR YOUR INTERNET ACCESS?
One likely possibility is a change in the way your access is billed. Currently, most people pay a flat fee for connection time when they purchase Internet access; whether you spend two hours online reading your mail, a relatively low-bandwidth application, or spend two hours viewing streaming video, which uses much more bandwidth, you pay the same amount of money.

ISPs are not very fond of this arrangement, because it does not charge based on actual usage; the person watching streaming video rather than just reading mail uses much more of their network resources, but provides no more compensation. Their costs get shifted to the entire consumer base of the ISP. Nor are the phone companies very happy with this system, of course, because their phone circuits can be tied up for long periods of time on zero-profit local calls (especially since most ISPs offer unlimited access).

ALTERNATE FEE MODELS
 One solution that has been talked about by Internet and telecommunications providers has been the concept of bit-rate charging. This would change the fee structure from one that is based on connection time to one based on the amount of data going into or out of a home--whether that data is voice, Internet, or video.

One company that has recently taken the lead in this field is Sprint. In a much-ballyhooed announcement, Sprint revealed plans to integrate their voice and data networks, providing voice, data, and video services over a single digital line to the consumer, while providing a single bill for all such services. Billing would be done much the same way as natural gas is billed--the pipe would always be open, and you would get billed only for what you use. Sprint claims that this would drive down their costs for providing phone service by as much as 70 percent, while giving consumers the ability to make multiple phone calls at once, all while accessing the Internet at speeds much higher than we are currently accustomed to.

More columns by David Wolfgang-Kimball