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Kentucky may be better known for its horse racing, mint juleps and fried chicken than for progressive telecom policymaking. But a recent decision by the Kentucky Public Service Commission could play a pivotal role in helping competitive local exchange carriers and Internet service providers nationwide compete in the burgeoning DSL market.
BellSouth Corp. is appealing a decision by the Kentucky PSC that ordered by the Baby Bell to address disparities between the rates it charges its own ISP for DSL lines and those it charges other ISPs. In its Nov. 30 order, the PSC said "it appears that the wholesale tariff of BellSouth unreasonably discriminates against most Kentucky independent ISPs and will not advance DSL service in Kentucky."
According to Ellen Jones, BellSouth's Louisville-based regional manager, the company doesn't believe the PSC has jurisdiction over the issue. "We are concerned about the conflict with areas regulated by the FCC," Jones says. The Kentucky PSC used a state law and an interpretation of FCC regulations to claim jurisdiction of the case. But BellSouth in its Dec. 22 appeal says that according to the FCC, access to the Internet is an interstate service -- and the FCC already had approved BellSouth's pricing scheme.
While this isn't the first time ISPs have claimed that an incumbent carrier was playing dirty, industry insiders believe this is the first time regulators have ruled in favor of an ISP. "To our knowledge this is the first ruling like this," says Pam Small, spokesperson for CompTel, the competitive telecommunications association.
The Kentucky ruling stems from a complaint filed in November 1999 by ISP IgLou Internet Services, which said BellSouth provided preferential access and rates to its own ISP, BellSouth.net, and used its position to unfairly market BellSouth.net ISP services to its phone customers.
The complaint specifically addressed BellSouth's wholesale DSL rates. According to Dannie Gregoire, co-founder of IgLou, the least expensive rate that BellSouth charges competitors for DSL lines is $29 per month per line, but to get that rate an ISP has to commit to selling 40,000 DSL lines, an amount unattainable for a small ISP like IgLou, which has a total customer base of about 10,000.
"BellSouth created a tariff for DSL that was not geared to be used by anyone except themselves," Gregoire says. That 40,000 minimum was particularly absurd because many cities where BellSouth offers services have fewer than 60,000 lines that even qualify for DSL service.
Instead, IgLou was charged $49.95 per line per month, which Gregoire says prohibited his company from cost-effectively offering DSL in BellSouth's territory. IgLou does offer DSL to customers in some markets through GTE.
But perhaps the biggest impact of this ruling is that it may fuel other CLECs and ISPs to seek similar responses from their state regulators. "I think ISPs ought to be able to take this ruling to their PSC," says Sue Ashdown, executive director of the American ISP Association. "Obviously Kentucky found this discriminatory and contrary to competition and effective broadband deployment."
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