States Continue Backing DLECs
By Evan Blackwell
from the June 4, 2001 issue of Broadband Week
Competitive service providers might not be seeing much relief from Wall Street yet, but some continue to get good news from state regulators who have been pulling rank on ILECs.
DSL.net, a New Haven, Conn.-based carrier offering digital subscriber line services to small and medium-sized businesses recently got the backing of its home state's Department of Public Utility Control in a dispute with incumbent telco Southern New England Telecom (SNET).
The DPUC last month issued a ruling that ordered SNET, the Connecticut ILEC owned by SBC Communications, to provide wholesale advanced services like DSL to CLECs at discounted prices, a 25.4 percent wholesale discount in the case of DSL.net.
The decision followed months of legal wrangling. DSL.net had filed its petition in Connecticut after the January decision of the U.S. Court of Appeals for the District of Columbia that required SBC's local phone companies to resell advanced services as required by the 1996 Telecommunications Act.
The DLEC argued successfully that although SBC had separated its advanced services business in Connecticut into a separate affiliate from its local telco, pursuant to the deal SBC cut to get Federal Communications Commission approval of its SNET acquisition, the separation didn't relieve SNET of its obligations under federal law to sell unbundled wholesale advanced services.
Both AT&T Corp. and Sprint Corp. filed comments with the DPUC backing DSL.net's position.
SNET argued that the legal points of contention remained subject to further appeals on the federal level, and maintained that advanced services competition existed via other providers in Connecticut that were not getting discounted broadband lines from SNET.
"It's the law of the land. Our feeling is that anytime a judge passes an order that says there's something that should be done, then it ought to be done," says Keith Markley, president and COO of DSL.net. "As soon as the ILEC is required to provide a component of the network with a specific discount, it puts them on notice that they have to set prices and tariffs appropriately. If they take their prices and tariffs to a point just to undercut competition, they create a problem for themselves."
Does all this mean that momentum is building behind competitive broadband service providers in the state capitals? The Connecticut decision comes months after small ISP IgLou Internet Services successfully charged BellSouth with unfair marketing practices and unreasonable wholesale tariffs in Kentucky.
And more competitive carriers are weighing in with their gripes about ILEC behavior. Although not a DSL retail player, Time Warner Telecom says it still counts the RBOCs as its chief competition in the metro area networks space given that it eventually has to buy access from its clients to the PSTN.
Mike Rouleau, Time Warner Telecom's senior vice president of business development, says the company is as disturbed as other CLECs about the current regulatory environment and what they consider anti-competitive practices by the incumbents.
"It's pretty clear that the RBOCs have done everything they can to interfere with competition," Rouleau says. "It's clearly monopolistic behavior. Now they're coming back, and they're asking for relief."
In some situations, the ILEC cries for relief are drawing attention. After the Illinois Commerce Commission ruled in March that SBC would be forced to lease portions of its advanced technology to competitors, SBC's CEO Ed Whitacre responded by halting the company's Project Pronto DSL initiative in the state, angering competitors and some consumer groups.
Jonathan Askin, the general counsel for the Association of Local Telecommunications Services (ALTS), says competitive carriers and ISPs should continue looking to the state commissions for answers. With each pro-competitive ruling, states are becoming more willing to assert their authority.
"A lot of states are finally starting to get fed up with the incumbents. Some of them were timid at first, because the competitors were new companies and the states didn't want to rock the boat," Askin says. "Now, we'll have to be concerned that a bona fide digital divide will result between states with commissions that are pro-competition and those that feel beholden to the incumbents."
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