Dial-up provider loses Net access amid fee dispute

http://www.boston.com/business/technology/articles/2006/04/28/dial_up_provider_loses_net_access_amid_fee_dispute?mode=PF

By Keith Reed, Globe Staff | April 28, 2006

Service to thousands of dial-up Internet users in Massachusetts was
disrupted this week after a federal court ruled against a Quincy
company in a lawsuit that could have broad impact on the cost of
dial-up service.

The US Court of Appeals in Boston ruled April 11 that Verizon
Communications Inc. can charge per-minute fees for calls to local
numbers that dial-up users need to connect to the Internet -- in much
the same way that they charge for long-distance or other calls.

The ruling came after Verizon sued Global NAPs Inc., a Quincy company
that supplies local numbers to 28 Internet service providers for use by
their dial-up customers.

Verizon claims it is owed more than $65 million by Global NAPs. The
court did not rule on damages, but Verizon cut off Global NAPs's access
to its network, effectively shutting down Internet service for
customers of dial-up providers like MegaNet of Fall River, which had to
find another company to supply emergency connections for its
approximately 7,500 dial-up subscribers.

''I'm sure it's going to have a negative impact on our business and
everybody else's business. There are some guys out there who have
customers who still have no access," said MegaNet's president, Paul
Joncas.

Global NAPs and others argue that Verizon's victory could allow phone
companies around the country to start hitting dial-up customers with
per-minute fees that amount to a de facto tax.

Dial-up, a relatively slow service, is the only online access available
to people who can't afford broadband or who live in areas where it's
not offered.

''The Court of Appeals ruling and Verizon's charges will adversely
affect low cost availability of Internet access for dial-up Internet
users," Global NAPs's attorney, Andrew Good, said in a prepared
statement.

Global NAPs had maintained that the calls should not be subject to any
Verizon fees.

A Verizon spokesman, Clifford Lee, said that any disruption in dial-up
service is the fault of Global NAPs.

''Global has been well aware for some time that termination of its
service would result if it continued to ignore its substantial
financial obligation to Verizon," Lee said in a statement. ''Verizon
regrets having to take this action, but the responsibility for its
impact rests solely with Global's management."

Usage of dial-up Internet connections has plummeted in recent years as
telephone and cable companies, Verizon included, have aggressively
priced and marketed their faster broadband lines.

About 68 percent of US internet users now connect via broadband,
according to the latest data from Neilsen//NetRatings. That still
leaves millions of users connecting the old way, in which modems in
their home call local numbers over a telephone line to access the
Internet.

Precisely how many people were affected by the court ruling is unknown.
Good said the number was in the thousands, but that Global NAPs did not
have exact numbers and could not disclose the identities of all the
companies that relied on Global NAPs for dial-up numbers.

Joncas said MegaNet was notified late Monday by Global NAPs that its
local numbers would be shut off the next day. MegaNet had an emergency
plan and was able to switch many, but not all, of its customers to new
dial-up numbers, he said.

Scott Lagos, the chief operating officer of NET1Plus, a Lunenburg
Internet service provider, said the disruption was certain to hurt
business with some of his 2,000 to 5,000 dial-up customers.

''It kicks us in the butt," he said. ''The consumer doesn't necessarily
understand the dynamics of the telecommunications industry; all they
know is my service doesn't work."

Keith Reed can be reached at reed@xxxxxxxxxx

.

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