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SBC Hit with Antitrust Lawsuit
mrtaco01 writes "Four Internet service providers have filed an antitrust suit against SBC Communications, alleging that the Baby Bell unfairly inflated wholesale prices for high-speed Internet access."
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The suit, filed Thursday in the U.S. District Court for Central California, claims that the rate SBC charged the companies for digital subscriber line (DSL) service was too expensive for them to resell profitably. Linkline Communications, Inreach Internet, Om Networks and Red Shift Internet Services are seeking $40 million in damages and a discontinuation of alleged "price squeezing" from SBC, according to the court filing.
Attorneys for the California ISPs say San Antonio-based SBC must discontinue its pricing system in order to give smaller companies a chance to compete for DSL subscribers.
Looking at the way the article was written, I get the impression that some ISPs are suing SBC for providing a service which was hard to resell at a higher price.
In other industries, this is known as not having a good business plan. I'm unaware of how this is illegal and wanting clarity on this issue..
SBC and the other incumbent telephone companies grew up with protected monopolies. They grumbled when the FCC's Carterfone ruling in 1969 forced them to allow "foreign" attachments of customer-owned equipment like telephone sets, PBXs, answering machines and modems. (Before that, you could only rent equipment from them. A 300-baud modem was $25/month.) They grumbled when long distance competition was authorized.
They would have grumbled when local telephone service competition was authorized in 1996, but they got, in return, permission to offer long distance service and "advanced" services such as Internet. So having gotten much in return, they're trying to weasel out of their half of the bargain. Powell's FCC has rolled back competition. They're making it next to impossible for CLECs to lease the high-frequency part of copper that's needed to offer consumer DSL service, and even cutting off some access to plain old full-price copper wire. So the CLECs like Covad won't be able to offer the ISPs a substitute for ILEC (SBC, VZ, etc.) DSL. Game! Powell also has a pending proposal that removes common carrier status from ILEC DSL, which is what this case is about -- SBC won't be required by federal regulation to offer raw DSL bit-pipe service to competitors of its Prodigy ISP service. Set! And even dial-up is coming under increased attack; many dial-up ISPs are becoming reclassified as toll calls, as the ILECs try to worm in a back-door "modem tax". It's happening -- I'm involved in some of these cases. Match!
So the independent ISPs are being squeezed hard. Under the old pre-1996 regulations, the ILECs were not subject to much antitrust review, because regulation controlled them. Now, they're being unshackled, but they still have their inherited monopolies on essential facilities -- that's a term of art in the antitrust business. They're blatantly using these monopolies (the copper loop) to leverage sales of what should be fully-competitive businesses (ISPs like Prodigy and VZ Online). That is certainly a red flag in antitrust.
Since the regulators (FCC) have stepped aside, relief will have to happen in the courts. A number of cases are pending now; this one looks to be particularly important. Its fate will help determine if the American public will have free access to the Internet, or whether we'll be stuck behind a corporate-administered Great Firewall of Bell, paying top dollar for limited choice.
And with an Internet in monopoly hands, the FCC's excuse for broadcast ownership deregulation (extreme concentration of ownership of the media) is proven a lie. But Powell hopes we don't notice.
Endless summer of DSL discounts July 7, 2003
FCC loosens broadband rules February 20, 2003
SBC unfair on high-speed Net, ISPs charge July 26, 2001
ISPs fight for more than DSL scraps June 26, 2001
ISPs allege Bell abuse in high-speed services October 27, 1999
Seems like ISP's have been fighting SBC's anti-competitive practices for years. IMHO, the biggest mistake the FCC made was in allowing the Bells to compete as ISP's. They should be barred from being ISP's so that the motivation for them to compete with their own customers (independent ISPs) is removed.
blue
If you want genuine competition among suppliers of a service, you can't have one of the suppliers running the infrastructure that the service is supplied over. Public infrastructure should be owned by and run for the benefit of the public, not for the profit of one particular user of it.
Welcome to the Illinois State Toll Highway Authority, Now A Wholly Owned Subsiduary of Ford Motor Co. Inc. $2 Surcharge Per Axle for Non Ford Vehicles.
Would we tolerate that? Well, the Bell network is little different, it's just less blatant.
If you were blocking sigs, you wouldn't have to read this.
I work for an ISP. We provide dialup, webhosting, colocation and things along with wireless DSL.
SBC isn't as big of a problem as is RoadRunner. Giving all these things away free (i.e. installation) and undercutting us (and other ISPs in town). They've got thier own network that we can't buy into. They're also classified as a different type of "communications" company (with the cable t.v. aspect) and therefore don't have the same heap of taxes, regulations, and codes to follow.
Now, it's one thing to be able to offer your services for less than your competition, if you can do it, well, you've got the better business model. However, Time Warner can't seem to do it either, as they are writing off about 14 BILLION dollars in losses each year.
I'm not even going to get into the other uncouth things they do (as in sabotaging our wireless networks, etc).
bastards.
(phaeton sez)