ISPs Get a Piece of the Telecom Italia Pie

An agreement reached between the Italian Association of Internet
Providers (AIIP) and Telecom Italia will give ISPs a percentage of the
online costs currently being charged to Internet users, according to reports
by AIIP executives.

“The pact could increase the revenue of ISPs by 40-50 percent,” said a
representative of AIIP at the E-Commerce Summit, held last week in Rome. “It
requires Telecom Italia to pay providers a percentage of the telephone line
charges generated as a result of their customers’ use of the Internet.
Moreover, it will be retroactive.”

Discussions between AIIP and Telecom Italia over line charges have been
going on for nearly two years. Telecom Italia currently offers Internet
users a 50 percent reduction on standard telephone rates when they are
connected to their ISP.

Providers, however, have been pushing for similar
discounts or a percentage of the revenue generated by traffic they bring,
via their clientele, to Telecom Italia.

“After two years of legal battles, we’ve reached an agreement that we feel
satisfactory,” said Marco Barbuti, president of AIIP. “Above all else, in
light of the fact that providers which file an official request, will be
compensated for all traffic generated from January 1st, 1998 through August
30, 1999, at a rate of 11 lira ($.006) per minute.”

Beginning September 1st, according to the new agreement, ISPs capable of
generating 290,000 minutes of online time per month, will be compensated at
a rate of 14 lira ($.008) per minute for prime-time traffic and 8 lira
($.005) a minute during non-peak usage.