California ISPs Break Off Settlement Talks With SBC

Is this another attempt by the nation's largest phone company to extend its telephone monopoly into a monopoly over Internet access? SBC says CISPA misunderstands its motives.

by Michael Singer of siliconvalley.internet.com [October 8, 2001]

The battle between a coalition of California's Internet service providers and Pacific Bell and its parent company SBC Communications (NYSE:SBC) came to a head last week with tens of thousands of Californian DSL home and business users caught in the crossfire.

The two sides have been negotiating a settlement since July 26, 2001. That's when members of the California ISP Association (CISPA) filed a complaint with the California Public Utilities Commission (PUC) alleging that SBC is participating in unfair business practices in the high-speed Internet access market.

At the time, CISPA asked regulators to prohibit SBC Advanced Solutions, a Pacific Bell sister company, from unilaterally imposing new contracts for high-speed access on Aug. 1st. CISPA claimed the new contracts were one-sided and force ISPs to accept terms that put them at a competitive disadvantage. CISPA also sought a PUC injunction to prohibit Pacific Bell and SBC Advanced Solutions from disconnecting high-speed customers when they change Internet service providers.

But when SBC filed a non-dominant carrier petition with the Federal Communication's Commission Wednesday, a hornets nest exploded in CISPA's camp and settlement talks broke off.

"This is another attempt by the nation's largest phone company to extend its telephone monopoly into a monopoly over Internet access," says CISPA president Jon Washburn. "If SBC succeeds in its grand plan to force independent ISPs out of the DSL business, consumers and small businesses will end up paying millions of dollars more due to a lack of competition. SBC's filing with the FCC is anti-competitive and anti-consumer."

Lingering doubts
SBC and Pac Bell were left sitting alone at the bargaining table and scratching their heads.

In a statement issued by SBC Friday, the company says, "CISPA has misunderstood SBC's intentions to reaffirm its status as a non-dominant carrier. The FCC previously found SBC to be a non-dominant carrier of advanced services, including high-speed DSL transport service, and the petition SBC filed this week simply asks the FCC to re-affirm the company's status as a non-dominant carrier."

But the coalition of about 100 independent ISPs and a handful of consumer groups are not convinced with SBC's maneuvering and say they plan to take the issue before the PUC as soon as possible. The group fired off a letter to PUC president Loretta Lynch requesting that the commission "take a number of concrete steps before approving SBC/Pacific Bell's application to enter California's long distance market."

"This is a time for consumers, small businesses, and the legislators and regulators who protect the public interest to prevent SBC from re-monopolizing the phone network," says Washburn.

Meantime, SBC says it remains committed to providing wholesale DSL service to ISPs, and says it's not them but the cable companies that are squeezing the competition out of the market.

"California consumers benefit from choice, and today, SBC is working with hundreds of ISPs to provide customers with a choice of broadband providers, whereas the cable industry - which controls 70 percent of the broadband market - has locked out ISPs," SBC said in a statement.

It remains to be seen whether the two sides can come back to the table without some intervention by the PUC.

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