This article appeared in PC Week, November 18, 1991, on pages 173 and 179.

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Phone Companies Eyeing Higher Rates for BBSs

By Steve Higgins

The shoestring bulletin-board service could be a thing of the past if the
major telephone companies have their way.

Regional operating companies such as U. S. West Inc., Southwestern Bell Corp.
and Southern Bell Telephone & Telegraph Co. are maneuvering to raise the cost
of doing business for the more than 40,000 operators of dial-in bulletin
boards in the United States, those operators say.

The bulletin-board services (BBSs) whose oferings run the gamut from technical 
support to shareware distribution to discussions on exotic birds, could be 
crippled or killed off completely by higher installation costs and monthly 
line charges that, in some cases, would double the current rates.

"If the telephone companies were to raise the operating costs, we would have 
to pass that on to users," said Kevin Behrens, operator of Aquila BBS, a 
distributor of shareware in Auroria, Ill.

While attempts to up the ante have thus far been rebuked by overwhelming
opposition from BBS users, a proposal by Southwestern Bell that could make
it easier for the company to crack down on BBS operators who are paying
low, residential phone-line rates is up for review this month.

"We have a tariff for business customers.  Bulletin-board service operators
should be paying that rate," said David Martin, a spokesman for Southwestern
Bell in St. Louis.  "We don't now have an organized program to move bulletin-
board providers to that rate."

The company's region covers about five states in the Midwest and the southern
United States, but the proposal would only take effect in Missouri.  If
approved by Missouri regulators, it could more than double the monthly rate
for operators of bulletin-board systems.

Business data-line rates average $18 to $45 per month nationally, while
residential rates average $7 to $20 per month.

In addition, a federal judge's ruling in October that frees the telephone 
companies to operate their own bulletin-board services could make price hikes
even more tempting.  Because of the federal ruling, analysts say, the phone
companies' interest in raising costs for BBS operators extends beyond 
extracting more revenue.

"The phone companies want to put up electronic Yellow Pages ... [which] in
itself [is] not a bad thing," said Jack Rickard, editor of Boardwatch, a
monthly magazine for BBS users that is published in Lakewood, Colo.  "But
the mentality seems to be to stop anything else."

Competitors Abound

Should they unveil their own on-line services, the phone companies will find
a prodigious installed base with which to compete.  In addition to the garage
BBS operations, nearly 40 of the top 100 PC software companies are exploiting
the low expense and wide reach of bulletin boards to provide customer support,
according to Softùletter, an industry newsletter based in Watertown, Mass.

"We are just now starting to see businesses use bulletin-board services,"
said Jim Harrer, president and CEO of Mustang Software Inc., a vendor of
communications software and a bulletin-board service operator located in
Bakersfield, Calif.  "It would cripple them if [tariffs] got in the way."

If that becomes the case, observers say, some system operators might try to 
dodge the new tariff by disguising their operations as personal telephone
lines.  In fact, some operators are reportedly trying that tactic already.

"I've heard of one guy who was trying to convince the phone company that he 
has five kids" who needed separate phone lines, Mustang Software's Harrer
said.

Increased costs could also affect the large bulletin-board operators, such as
Prodigy Services Co. and CompuServe Inc., particularly if coupled with the
emergence of bulletin boards maintained by telephone companies.

"It's not going to push them out of business," said Boardwatch's Rickard, "but
[Prodigy and CompuServe] are also affected."þ

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