DSL

DSL Prime News: The Inside Source — continued

Telcos under fire
DSL Prime is calling BellSouth "U.S. Company of the Year" on April 20th, honoring their wide DSL deployment. I'd much rather write about achievements like that. But in the U.S., fines are now in the hundreds of millions, becoming so frequent they don't even make a news story. Companies and executives continue to earn extravagantly, enormous incentive to continue breaking the law.

California: Pac Bell not above the law
SBC is very close to eliminating any oversight by the national government, but for the moment has not eliminated all limits. "The Commission has the authority to enforce California public utility law. We reject SBC's assertions that the Commission does not have jurisdiction to pursue claims of fraudulent or misleading conduct, or poor service quality. " The California ISP Association brought the case, but Michael Shames of the Utility Consumers Action Network told the WSJ's Julia Angwin consumer issues will come up next.

Florida: BellSouth investigated for "racketeering"
"Racketeering" is a strong charge for a state prosecutor to mention, although the legal definition is very broad, and covers most individuals or companies who are repeat offenders. The issues in the cases were special rebates BellSouth apparently offered to business customers considering switching service. Such "win-back" programs make life especially tough for competitors, making preferential offers to their customers. "I shudder to think what kinds of promotions we'll see after the regulatory leverage goes away," Rodney Page of Access told the Miami Herald. Beatrice Garcia broke the story from court documents resulting from BellSouth tried to suppress information.

Verizon: Pennsylvania thinks a contract is binding
Nearly a decade ago, the telcos thought they'd be running fiber or high speed DSL, and in many public forums made clear commitments. The telco act passed, most states allowed rate increases (Verizon just got another $400M in New York), and early trials left execs too scared to even look at the evidence the problems are mostly solved.

DSL Prime believes the technology and economics are ready, and the smartest way for an incumbent telco to beat cable and other competition is to begin the fiber or VDSL build. Much of the investment has already been collected from customers; the balance would be easily covered simply by maintaining current investment levels. Simply not reducing capex is enough to finance the entire build. Most CEOs will sleep better, knowing their success comes from delivering great service and not just buying politicians to allow monopoly pricing.

Ed Whitacre, Mike Powell, Ivan Seidenberg—wouldn't that be a great legacy?

Qwest: SEC test case on misleading financials
"My accountants OK'd everything," Joe Nacchio can presumably claim, but blaming Arthur Andersen is not enough to get Qwest off the hook. Part of the problem is material—Qwest swapped with Global Crossing and others in large numbers, inflating sales—but the interesting issue is the news releases and financial briefings. Qwest may be the poster boy as the SEC looks for greater honesty, but they absolutely are not the worst offender.

Ed Whitacre of SBC just promised full and transparent accounting results, and GE has totally revised their policies as well.

Verizon: Cheated consumers can't sue us
Verizon has found an ingenious loophole they claim gives the DSL division practical immunity from legal action. By burying in the fine print that Virginia law applies, they claim immunity from suit throughout the country because of a Virginia prohibition on consumer class actions. It's of course impractical for a consumer to sue if, for example, they were charged twice for the same $39.95 of service. (Verizon says they refunded every customer affected by that computer error.) Only a class action could recover enough to justify the time spent, much less the legal fees. Fortunately, the California precedent may give the states at least some ability to protect consumers.

Editorial: End stupid regulations, not good ones
When you pay telco CEOs as much as $92M (Ed Whitacre, 2000) to maximize profit, they sometimes need to be held in check. By temperament, I may be more an anarchist than Ivan Seidenberg or Ed Whitacre, but it seems they have far less respect for American government than I do. Democracy is the worst form of government, except all others.

Copyright 2001 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

"The power of the printing press belongs solely to those who own the presses"
—A.J. Leibling

The Internet is the cheapest printing press ever invented.

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