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AT&T loophole angers rivals - Times

February 29, 1996, 2:23 AM EST

NEW YORK (Reuters) - A loophole in U.S. telephone accounting rules will force the seven regional Bell telephone companies to provide AT&T's Internet customers free local connections for its upcoming Internet network, the New York Times reported Thursday.

Bell companies contend that the exemption for data communications subsidizes their competitor in a business that they plan to enter, the paper said.

Pacific Bell president and chief executive Dave Dorman told the paper that the ``exemption is no longer justified.''

AT&T pays the Bell companies billions in access charges for local customers to be connected to AT&T's long distance network, but computer connections over the same phone lines are exempt from the charges, the paper said.

AT&T announced Tuesday that it is starting a new residential Internet service that would offer five hours of free service to its long distance customers and a low fee for unlimited usage.

The Federal Communications Commission made this ruling in 1983, before modems and the Internet were commonly used, the paper said.

Local telephone companies tried to have the exemption repealed in 1987 and once more in 1989, the paper said.

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