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Dial-up provider loses Net access amid fee dispute

Fri, 04/28/2006 - 7:26am

Copyright 2006 Globe Newspaper Company
The Boston Globe
April 28, 2006 Friday
THIRD EDITION
By Keith Reed, Globe Staff
From Lexis Nexis

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 U.S. 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' 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' 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 U.S. Internet users now connect via broadband, according to the latest data from Nielsen//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@globe.com.

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