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Current issue : #37 | Release date : 1992-03-01 | Editor : Dispater
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Title : PWN/Part 3
Author : Spirit Walker
                 Volume Four, Issue Thirty-Seven, File 13 of 14

              PWN                                             PWN
              PWN              Phrack World News              PWN
              PWN                                             PWN
              PWN      Issue XXXVII / Part Three of Four      PWN
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              PWN     Compiled by Dispater & Spirit Walker    PWN
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 Computer Users See Threat In Costs                            November 5, 1991
 By Martin Rosenberg (Kansas City Star)

              "Southwestern Bell Plan Portends Changes, They Fear"

Some computer bulletin board operators in Missouri say they might have to shut
down the increasingly popular computer networks if Southwestern Bell Telephone
Company, succeeds in raising their rates.

Southwestern Bell says its only trying to fairly price its services by charging
the bulletin board operators business rates instead of residential rates.  The
company is seeking approval for the changes from Missouri regulators.

Industry experts say the issue could be the opening volley in a broad campaign
by telephone companies to change the way consumers and businesses pay for
electronic communications.

Residential customers might one day have to pay more to use their personal
computers and modems than they pay for voice communications, experts say.  And
businesses might have to pay more to use fax machines.

Southwestern Bell denied that it is attempting to change any rates other than
those affecting a small number of data communications customers who should be
switched to a flat business rate, more expensive than the residential rate.

The bulletin boards, frequently operated out of homes, allow users to exchange
messages, advice and software programs.  Many are free to use, and operators
often get no revenue from them.  Hundreds have formed across the state in the
last few years.

Southwestern Bell's proposal is meant for only those who have set up a bulletin
board through his or her personal computer.  Not affected are computer users
who merely access the bulletin board computer over telephone lines.

The proposal comes at a time when telephone companies' plans for information
services have moved to center stage.

The U.S. Supreme Court (as already) cleared the way for seven regional
telephone companies, including Southwestern Bell, to start providing
information services.  Those services could eventually compete with electronic
bulletin boards, newspapers and data base operations such as CompuServe Inc.
and Prodigy Services Co. (CompuServe is owned by H&R Block Inc. of Kansas

Revenues for telephone-delivered information in the United States amounted to
an estimated $750 million last year and are projected to grow to $2 billion in
1992, according to industry sources.

Southwestern Bell's proposal, if approved, would take effect by mid-November.

Bulletin board operators are operating like businesses, said William Bailey,
company district manager of rate administration for Missouri in St. Louis.

"Some customers on residential lines would more appropriately be on business
lines," Bailey said.

Bailey said current business customers also would be affected.  They would be
allowed to switch to the flat business rate ($33.55 a month in metropolitan
Kansas City) and avoid paying a higher "information terminal service" rate
(currently $43.60 a month), he said.

Southwestern Bell mounted a similar effort to get bulletin boards under
business rates in Texas. It later decided to allow free bulletin board services
using three or fewer lines to continue to enjoy residential rates.

That was "an enormous mistake," Bailey said. Phone companies are unable to
monitor whether a bulletin board is collecting money from users, he added.

Many Kansas City bulletin board operators are upset with Southwestern Bell's

"If they start charging business rates, some bulletin boards will shut down,"
said Lanny Conn, who operates a free bulletin board called SOLO-Quest.

Bill Hirt, who operates the Amiga Central bulletin board for Amiga computer
users, said he would close down if he is charged the business rate.  His
bulletin board also is free to use.

Currently, about 200 personal computer users -- some as far off as Australia
and Sweden - call his bulletin board, he said.

Conn and Hirt serve as spokesmen for the Greater Kansas City SysOps
Association, made up of about 22 bulletin boards. (SysOps stands for system
operators).  Hirt estimates there are 100 bulletin boards in the city; most
have been set up as hobbies.

Attorney Robin Martinez, who is representing the association, said that
Southwestern Bell's proposal would hurt information-age pioneers.

"People running bulletin boards and people using them are on the cutting edge
of the information age," he said.

Southwestern Bell wants to thin the ranks of bulletin board providers so there
will be fewer competitors to its own offerings, he said.

"To a certain extent, they are trying to get a stranglehold on information
services," Martinez said.

Bailey denied there is a link between his company's proposals and its own plans
for information services.

"I'm not getting any direction from on high to do what I am doing," he said.
"I'm really not aware what my company intends to do in terms of information

But William Degnan, a telecommunications consultant in Austin, Texas, said,
"The majority of these folks (bulletin boards) are underpricing these services
that Southwestern Bell would like to provide at a grander scale."

Degnan had advised the group of Texas bulletin board operators who had opposed
Southwestern Bell's efforts to charge business rates there.

"I think Southwestern Bell is concerned that (it) won't be able to sell what
other people are giving away," Degnan said.

Martha Hogerty, public council representing consumers in Missouri, said after
reviewing Southwestern Bell's filing, "This looks like anybody with a modem
would have to be on a business rate."

Most regional Bell telephone companies are now developing strategies for
offering information services.

Phone companies may soon try to get customers to pay a measured rate for data
communications, said Howard Anderson, president of the Yankee Group of Boston.
Under such a system, the monthly cost of data communications would increase the
longer you are connected during the month -- like a running taxi meter.

A change to metered rates would be reasonable and enable telephone companies to
increase revenues as usage and expenses mount, he said.

The average residential customer uses the phone 21 minutes a day, while a
customer with a personal computer and modem uses a phone line an average of 62
minutes a day, Anderson said.

Anderson predicted that telephone companies may decide to offer customers high-
speed data communications for a rate higher than voice communications.  Usage
above a fixed number of hours would increase the size of the monthly phone
bill, he said.

To encourage use of the new line, phone companies may take steps to lower the
quality of standard lines so that they will not cleanly carry electronic
information, Anderson said.

Bailey disagreed, saying Southwestern Bell has no plans to introduce measured
service for voice or data communications.

And, he said, "I know of no plans to degrade our service to migrate customers
>from one service to another."

 SW Bell Tariff Called Threat to Computer Bulletin Boards     November 18, 1991
 By Robert Sanford (St. Louis Post-Dispatch)

A proposal by Southwestern Bell Telephone Co. to revise a tariff for telephone
use has brought protests from owners of personal computers who use phone lines
to operate bulletin board services for other computer owners.

The bulletin board operators contend that their members - by and large -
operate bulletin boards as a hobby and not a business.  And they contend that
the change suggested by Bell is part of an effort by the phone company to make
them pay business phone line rates rather than residential rates.

Bulletin boards are computers with modems that can be accessed by other
computers with modems.  The "bulletin boards" contain information that can be
passed to other computers - information of any sort, from cooking recipes to
games to automobile tips to computer programming.

Hobby bulletin board users have common interests, said Jim Harre, coordinator
of a bulletin board network called Network 100.  "You could say that bulletin
board users are somewhat similar to amateur radio operators.  They are people
using computers to communicate.  They serve a function like a bulletin board at
a supermarket.  They pass on information.

The operators see the Bell proposal as a threat to all bulletin boards.
Increased costs would simply force some hobby boards out of existence."

A list of several networks in the St. Louis area shows there are about 250
bulletin boards in the area, said Bob Schmedake, a system operator, or "sysop",
as they call themselves.  It is estimated that there may be that many in the
Kansas City area.  So there are several hundred across the state.  There are
16,000 bulletin boards listed worldwide.

Although the tariff proposal has brought the issue of residential vs. business
rates to the forefront in discussions among Missouri sysops, the proposal does
not suggest any sort of residential rate change.  The proposal suggests that
some users of a different sort of service called Information Terminal Service
should be allowed to change to flat business rate.

Generally, the ITS rate is $43.65, the flat business rate is $33.55 and the
residential rate is $11.35.

A definition in the phone company's existing tariffs says in part that a line
used "more as a business than of a residence nature" should be billed at a
business rate, said William Bailey, Southwestern Bell's district manager for
rate administration in Missouri.

A "business nature" could be said to be present if the line is advertised in
any way, he said.

But the nature of the growth of bulletin boards has been that computer owners
added modems to personal computers in the home and began communicating with
others by computer, using residential line, the sysops say.  Most always have
thought of bulletin boards as a hobby, they say.  Though there may be some
charges for access to bulletin boards, nobody makes any money at it, they said.

Bailey said that the phone company does not know how many sysops there are
using residential lines and the company has no formal plan to try to determine
how lines are being used.

Bailey attended a meeting in Kansas City that also was attended by John Van
Eschen, assistant manager for telecommunications for the Missouri Public
Service Commission, and about 150 sysops.

The meeting was described later as being "testy" at times and the outcome was
that the sysops and the phone company agreed to disagree.  Users contended that
bulletin boards are a public service offering information and that rate
increases could force some to shut down.

"The users want to be billed as residential", Van Eschen said.  "An avenue
toward getting that would be to file a formal complaint against Bell.  That
could lead to written testimony and a hearing."

He said there is a complaint on file now charging that Bell wanted to change
user's rate from residential to business and there was talk at the meeting
about some sort of legal action.

Van Eschen said the PSC is continuing to study the question and has made no
recommendation.  The effective date for application of a ruling would be
December. 15.

Some sysops, Harre among them, suggest that the phone company might be
interested in reducing the number of bulletin boards because the company has
plans to enter the information services business itself and may see bulletin
boards as potential competitors.  The Supreme Court recently upheld a ruling
that allowed the Baby Bell companies to enter information services.

Bailey said he was not aware of what the company plans to do in the information
services business.

 Phone Companies Eyeing Higher Rates for BBSes                November 18, 1991
 By Steve Higgins (PC Week)(Page 173)

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 offerings run the gamut from
technical support 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 Beherens, operator of Aquilla BBS, a
distributor of shareware in Aurora, 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 companies region covers five states in the Midwest and the southern United
States, but the proposal would take effect only 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, Colorado.  "But the
mentality seems to be to stop anything else."


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 Soft*letter, an industry newsletter based in Watertown,

"We are just now starting to see business 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 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 is not going to push them out of business," said Boardwatch's Rickard, "but
[Prodigy and CompuServe] are also affected."

 Southwestern Bell's Scorched Earth Policy For Bulletin Boards    December 1991
 Taken from BOARDWATCH Magazine

Throughout the debate on whether to allow the Regional Bell Operating Companies
(RBOC) into the information business, opponents warned that the RBOC would use
their monopoly position to unfairly eliminate competition.  And throughout this
debate, the RBOC piously denied they would ever do anything anti-competitive.
Judge Greene warned in clear and ringing terms that their history indicated
they would and denied them repeatedly the freedom to compete in information
services over the course of the seven years since divestiture.

Using millions in rate-payers funds, the RBOC lobbied and appealed through
every venue in government and finally found an appeals court who directed Judge
Greene to reconsider his stand.

Forced to lift the ban on information content, Greene issued a stay on his
ruling pending appeals by the opposition.  In an October 7 decision by the
appeals court, even the stay was overturned freeing the bells over night to
operate their own online services.

The ink had not completely dried on the document when they levied their opening
shot.  Southwestern Bell Telephone, with a history of BBS harassment going back
to the mid-80s already under their belt, was the first out of the gate.  In
October, they filed a tariff revision asking that ALL electronic bulletin
boards, whether operated for profit or as a hobby, be classified as Information
Terminal Services and not only forced to pay higher business rates, but
specifically prevented from using existing business measured service tariffs to
reduce their telephone bills.  The tariff was filed October 7, 1991 as a
proposed revision to Missouri Local Exchange Tariff, P.S.C. Mo. No. 24 and
P.S.C. Mo. No. 35, General Exchange Tariff, Section 17, Rules and Regulations
Applying to all Customer's Contracts.

Currently, the basic line charge for businesses in the Kansas City area is
$33.55 monthly--about twice the residential rate.  And the Information Terminal
Rate is actually higher yet at $43.60 monthly.  While the tariff modification
is specifically aimed at BBS operators, the wording of the tariff would seem to
include anyone who uses a modem or fax machine on a telephone line.

Southwestern Bell has a history of animosity with regards to bulletin board
operations.  The company announced their own SOURCELINE gateway data service in
Houston in 1988 and delivered letters to hundreds of Houston bulletin boards in
October of that year demanding they pay business rates for their residential
telephone lines.  A group of local system operators operating under the banner
of COSUARD took their case to the Texas Public Utilities Commission, charging
predatory practices, anti-competitive actions, and discrimination against the
hobby BBS community.

Southwestern Bell, concurrent with the grandiose failure of their own
SOURCELINE gateway service, settled with the group in January 1991.  All BBS in
the Houston area operating on three or fewer lines and not seeking subscriber
support are classified as hobby BBS and continue to qualify for residential
telephone service.

Hobby bulletin boards are really the issue.  Most commercial or subscription
bulletin board systems already pay business telephone rates for their systems.
However, most opt for a type of business classification referred to as "totally
measured service."   Virtually all RBOC offer a reduced basic rate in exchange
for the right to meter local calls -- usually at two or three cents per minute.
Since most bulletin boards make few outbound calls -- most of the activity is
incoming--the totally measured service, even in a business classification, is
only a few dollars more than residential telephone service.  SWB in their
filing, if approved, would effectively double the telephone charges for any BBS
in the state of Missouri overnight.

Kansas City system operators have banded together to form a non-profit
organization titled the Greater Kansas City Sysops Association (GKCSA) to fight
the proposed change.  At a November 14th public hearing in Kansas City, nearly
150 operators and callers showed up to protest the action and the MPSC agreed
to delay implementation of the new rate until December 15th.  SWB had
originally sought to apply the rates effective November 15.

According to GKCSA attorney Robin Martinez, the group will be filing a legal
petition asking the MPSC to rule that all hobby BBS operating on residential
premises be allowed the lower residential rate classification.  The GKCSA
contends in its petition that Southwestern Bell Telephone is acting in a
predatory and anti-competitive manner in seeking to eliminate any perceived
competition to their own planned information services in Missouri.

GKCSA president Scott Lent predicts that if Southwestern Bell gets their way,
it will be the end of the free hobby BBS in the state -- which is just what the
telephone company wants.  And he predicts that if SWB wins in Missouri, the
other RBOC won't be far behind with tariffs of their own to eliminate the
competition of underpriced information services represented by the free BBSs.

William Bailey, company district manager of rate administration for Missouri,
makes no apologies for the company's approach.  At the Kansas City meeting he
admitted that the charge will have no significant impact on company revenues,
but denied that it was in any way connected to their entry into information
services and avowed that he wasn't informed what the company's plans were in
information services.  He claimed their only goal was "fairness" in that modem
users tied up the system longer than voice callers and should pay more.  He
could not comment on the coincidence of SWB filing for the tariff within a week
of the appeals court decision.

 Computer Phone-Fee Plan Angers Many                           December 8, 1991
 By Christine Bertelson (St. Louis Post-Dispatch)

               "Costs May Triple For Electronic Bulletin Boards"

For Barbara Clements, the electronic bulletin board she operates on her home
computer in south St. Louis County is far more than a hobby.  It is her only
window on the world.

Clements, 43, has severe cerebral palsy, which prevents her from walking or
using her hands.  Her garbled speech is difficult for many people to understand
in public and impossible to comprehend on the telephone, she says.

But by sitting at the keyboard and using a head wand, Clements is able to use
her modem and computer to communicate with a growing network of other computer

The computer network has given her a freedom and social life she is loath to

"Six years ago, before I got my modem, I was a total hermit," Clements said in
an interview at her home.

"My privately run bulletin board system is strictly social for my sanity.  I am
an equal human being on any bulletin board system because people cannot see my
disability and they cannot hear my garbled speech.  This makes it easier to
make friends."

Clements is one of hundreds of computer hobbyists statewide who would be
affected by a proposal by Southwestern Bell Corp. to charge bulletin board
operators business rates instead of residential rates for telephone hookups to
their terminals.

The proposal would affect not only disabled people such as Clements who see the
network as a lifeline to the outside world.

The bulletin boards have become increasingly popular with computer hobbyists in
the general population as well - as a way to exchanging information about
computers and various other interests.

Those involved from teen-age "computer hackers" to adults trading recipes to
singles looking for dates.

Hundreds of electronic bulletin boards have been added to the network across
Missouri the past few years.  In the St. Louis area, more than 200 are in
place.  Only operators of the boards would be affected by the proposed rate
boost; hundreds of others who phone into them would not be covered.

The company announced the plan several weeks ago.  The issue is expected to
soon be before the Missouri Public Service Commission, which regulates utility
rates in the state.

The telephone company says it is only trying to price its services fairly,
noting that computer chitchat often lasts longer than telephone calls.  Tying
up telephone lines increases Bell's operating costs, a spokesman said.

Robin Martinez, a lawyer from Kansas City representing computer hobbyists
there, said he plans to file a complaint this week, calling for a public
hearing on the issue.

William Bailey, Southwestern Bell's district manager of rate administration for
Missouri, said the company considers electronic bulletin boards operated by
people such as Clements as businesses.

"If a customer acts as a business, by advertising and other things, we could
charge a business rate," Bailey said.  "We charge business rates to clubs and
fraternities.  One reason we price businesses higher is to keep residential
rates lower."

Electronic bulletin boards, frequently operated from homes, function as a
meeting place, their operators say.

Many are free to use, and operators often get no income from them.

Each has its on name, reflecting the personality of its "sysop" or system
operators.  Clements dubbed hers, appropriately, "Barb's Outlook Window."

One of Clements' electronic acquaintances is John Brawley Jr. of Eureka, known
by his computer handle "The Wanderer."

The two met three months ago on her bulletin board and now regularly talk by
computer about subjects from the weather to Clement's cerebral palsy to
Brawley's ideas on the impact of quantum mechanics on religious concepts.

Brawley is concerned that Bell's proposal would effectively gag Clements.  But,
he said, there is a broader issue involved also.  Charging the higher rates
would restrict the free flow of information, he said.

Bailey said the principle at stake is not freedom of speech, but merely the
definition of what is a business and what is not.

The U.S. Supreme Court recently cleared the way for regional telephone
companies, including Southwestern Bell, to provide information services that
could eventually compete with electronic bulletin boards, newspapers and data
base operators.

Revenue for telephone-delivered information in the nation was estimated at $750
million last year and projected at $2 billion next year, industry sources said.

Martinez, the lawyer for the Kansas City bulletin users, estimated that
Southwestern Bell could take in $8 million more a year by charging the business
rates in question.  Bailey would not confirm that figure.

Once computer hobbyists file a formal complaint with the state commission, Bell
would have 30 days to respond.  If the issue is not resolved privately, the
commission may hold a public hearing, said agency spokesman Kevin Kelly.

In the meantime, Clements said she has written to the company and is eager to
testify at a hearing.

 Agreement Nears For Phone Company And Missouri BBS Sysops    February 14, 1992
 Taken from Newsbytes

The report from Kansas City is that Southwestern Bell phone company is nearing
an agreement with local operators of computer bulletin board systems in dispute
over the company's charging BBSes business rates.  The pact seems to center on
language in a new tariff plan.

Communications Daily newsletter this week quoted attorney Robin Martinez,
representing the sysops, as saying the proposed agreement calls for BBSes to be
exempt from business rates if they meet certain conditions.

One of the conditions is that the boards must be located in residences.
Exempted BBSes also must not charge for access, must not advertise and must
have fewer than five phone lines.

Martinez says the last stumbling block in the agreement is coming up with a
workable definition for "BBS" for the tariff language.

 Final Notes
There are still some problems to be worked out in the Missouri/Southwestern
Bell situation, but meanwhile, there are other similar problems going on
with C&P (Bell Atlantic) Telephone in Virginia and US West Telephone in

Our electronic rights and freedoms that we have enjoyed for oh so many years
are in jeopardy because of the greed of the Regional Bell Operating Companies.

Support our Congress by supporting S 2112 and HR 3515!

More details in Phrack 38.
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