Full text freely available at http://www.sjmercury.com/business/dial1023.htm (they do one or two net-related stories "free" per day) Pac Bell says Net use may collapse phone system ISPs rebut dire, 'trumped-up' prediction Published: Oct. 24, 1996 BY HOWARD BRYANT Mercury News Staff Writer As many as one of every six telephone calls in Silicon Valley now doesn't go through on the first try because Internet denizens are tying up the lines, Pacific Bell reported Wednesday. Under normal circumstances, less than 1 percent of calls go uncompleted, the company said. The situation is so dire that California's entire phone system is in danger of breakdown, a company executive said, with Silicon Valley especially on red alert. [...] But rather than being a sign of imminent collapse, critics called Pac Bell's startling statistic a trumped-up charge designed to scare the public and pressure federal regulators into ending a price break Internet service providers enjoy when tying into Pac Bell's network. ''The Internet is a baby and Pac Bell has been in this game since Alexander Graham Bell's bar mitzvah. Now they're saying that in the last three weeks, we broke the phone system? Come on,'' said the head of a service provider who asked not to be named for fear of reprisal by Pac Bell. [...] At the heart of the issue is a pricing conflict between Pac Bell and the ISPs. In 1983, the Federal Communications Commission gave companies that offered Internet services, and other ''enhanced service providers,'' an exemption from the per-minute fees that other companies, such as long-distance telephone companies, pay to use Pac Bell's network. [...] Wiping out the subsidy would force Internet companies to find new, more efficient ways of pricing that better reflect actual usage, Parker said. In all likelihood, Net service prices would increase for consumers. [...] ''This is clearly a ruse,'' said Dick Severy, director of public policy for MCI. ''They've added 691,000 access lines this year. Business lines are up. It's curious.''