MCI today said recent warnings from several Bell operating companies about telephone network congestion created by the Internet are nothing more than "scare tactics" intended to pressure regulators into imposing the same inflated and unfair access charges on Internet service providers that are currently assessed against long distance carriers.

"Once again the Bells are searching in vain for justification to maintain monopoly control and raise prices to consumers," says Jonathan Sallet, MCI's Chief Policy Counsel. "The fact that the Bells are spending millions of dollars marketing second phone lines and millions more marketing their own Internet services, suggests network congestion is not really an issue. Inflated access charges, which already provide $14 billion in pure subsidy to the regional Bell operating companies (RBOC) should be abolished, not extended."

From an engineering perspective, MCI's Chief Engineering Officer Fred Briggs dismisses the regional Bell's complaints about network congestion as "much ado about nothing." Should network congestion ever become a problem, Briggs said, there are several products including Nortel, DSC and Lucent, offer products that can easily resolve switch congestion -- at a relatively low cost. MCI estimates the net cost of this network equipment to be as low as $500,000 per switching facility, adding just 1% to 2% to the overall cost.

"This is a minor investment, a nominal cost to an RBOC," Briggs said. "The technology is available and it isn't terribly expensive. It's ridiculous for the regional Bells to say they have to raise prices to consumers to pay for these upgrades."

MCI executives point out that in 1996, the regional Bells reported nearly $90 billion in revenue, yet spent only a small fraction of their money on network upgrades. As the Consumer Federation of America (CFA) noted in a recent study, "The Bells have taken money from local ratepayers and channeled it into high-risk, unregulated businesses such as video, credit cards, interactive television, and even railroads." ("Excess Profits and The Impact Of Competition on The Baby Bells," 1996). According to the CFA, "Per-line investment in the local network" by the RBOCs has "decreased by 20 percent, meaning that excess profits have not been used to improve service."

Currently, the Bells are aggressively marketing second phone lines to consumers, lines that are used primarily for modems, and then trying to blame the Internet for network congestion. In an October news release, PacTel reported that the number of additional phone lines sold in 1996 increased by 105 percent over the previous year, bringing millions of dollars in new revenue to the company.

"The intent of Congress in passing the Telecommunications Act was to pave the way for new local service providers to offer more choices, lower prices and higher quality to local consumers," Sallet noted. "The best way to deal with concerns about network congestion is to encourage more facilities-based competition. That's what competitive companies, like MCI do, design their networks for the convenience of their customers. RBOC complaints about the dynamic growth of the Internet and the new possibilities that Internet access offers businesses, consumers and students, suggest that they retain the view that networks should be operated for the convenience of monopolists, not consumers."

The FCC's Network Reliability and Interoperability Council recently told FCC Chairman Reed Hundt that no carrier has reported an event associated with Internet use that meets the threshold for reportable outages, and that the telephone network congestion appears to be primarily a network "management" issue for local phone companies.

Other groups are questioning the RBOC's congestion claims. In recent testimony before the Maryland Public Services Commission, James Love of the Consumer Project on Technology said that not enough people are using the Internet for long enough periods of time to impact the phone network.

"People who use the Internet as dial-in users don't dial in all at once," Love noted. "They eat, sleep, go to school, go to the movies, play with their children, and do other things which don't involve the Internet. There (is not) much evidence that personal computers are causing network congestion."

MCI operates the world's largest and fastest Internet backbone offering businesses and consumers a wide array of products and services, including dial and dedicated Internet access, desktop software, web site hosting and creation, turnkey security and management, secure electronic commerce, and intranet services. Traffic on MCI's Internet backbone is growing at a rate of 30 percent per month, and each month, more than 320 terabytes, or 320 trillion bytes of data run over MCI's network.

MCI, headquartered in Washington, D.C., provides a full range of integrated communication services to more than 20 million customers. Credited with opening up the U.S. long distance market for competition, MCI is now leading the charge to bring competition to the $100 billion local market, offering American consumers for the first time the freedom to choose their local carrier. With quarterly annualized revenue of more than $18 billion, MCI is one of the largest and fastest growing telecommunication companies in the world.