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SBC Hit with Antitrust Lawsuit

Posted by michael on from the slings-and-arrows-of-outrageous-fortune dept.

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."

8 of 209 comments (clear)

  1. How is this illegal? by mandalayx · · Score: 5, Insightful

    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..

    1. Re:How is this illegal? by banzai51 · · Score: 5, Informative

      The problem is that SBC owns the lines going to your house. SBC also sells DSL access. So they open it up to everyone like they are legally supposed to, but then start jacking up the prices so all the other DSL businesses go under. This leaves SBC as the only DSL provider in your area. Prices and restrictions on users go up. Not good for the public that has to pay more money for less service. This type of behavior crowds out good ISPs like Speakeasy.

    2. Re:How is this illegal? by Anonymous Coward · · Score: 5, Informative

      This is also known as 'bait and switch'...

      What you aren't reading is that SBC conned all these ISPs into jumping on the DSL bandwagon, and signing up thousands of DSL subscribers...

      After they did all the leg work, SBC then lowered the price they offer the public. Hence making it too expensive for the ISPs to compete with SBC (since they still are paying the old rate, they actually pay MORE for 'wholesale' DSL access then SBC is selling to the public for)

      Part of the problem with DSL is that the OWNER of the copper last mile has all the advantage. Even though you may be buying DSL Internet from any one of a half dozen ISPs, they ALL rely on SBC to get that last mile. Hence, they have a monopoly.

      The courts allowed them have this monopoly, on the understanding that access was fairly given to competitors to 'resell' those facilities at a fair price.

      Droping your retail price below your wholesale price doesn't seem very fair, and since it was the FCC that mandated this (ie, they made it a law), that is why it is ilegal.

    3. Re:How is this illegal? by jchawk · · Score: 5, Informative

      That and keep in mind that Bell was originally granted a monopoly on the phone system and it's building was subsidized by your tax dollars.

    4. Re:How is this illegal? by wulfhere · · Score: 5, Interesting

      I work at an ISP that resells SBC DSL. The problem is, we are paying $34.95 for each DSL line to a customer. SBC is turning around and selling DSL for $29.95.

      As if this weren't bad enough, we have documented cases (but not enough money for a lawyer, yet...) of our customers being contacted to switch a week after they turn up with us. You see, we have to enter customer info into SBC's database to place the order.

      And speaking of SBC's database, did you know that it returns different copper distances for SBC vs. the ISP? We have had customers whose loop was not qualified for service be contacted by SBC a couple weeks later and be able to get service.

      All the telco's abuse their power, but SBC is one of the worst.

      --
      -- Sent from a computer.
    5. Re:How is this illegal? by Krow10 · · Score: 5, Informative
      Blockquoth the poster:
      How is speakeasy a good DSL provider ?
      Speakeasy is a good provider because they offer a reasonable terms of service without charging "Business Class" prices. Most ISP's charge more for their business class, not because of the terms of service, but because of the Quality of Service requirements. Speakeasy's QoS for their SysAdmin offering is the same as BellSouth's home user, so they don't charge an arm & a leg for it.
      Those people will only sell me SDSL at 119.99$ month where as bellsouth provides ADSL for just 49.99$.
      Oddly, I had the same thing in my case. I tried to order from Speakeasy when I moved into my new house, but Verizon couldn't find a loop that would do anything but SDSL. I went with cable for a while. Then I get an offer from Verizon -- three months free ADSL. I order it, and like magic, they find my original loop can do ADSL (yes, maybe there were changes upstream. And maybe they just didn't try when I wasn't ordering from their service provider.) I get good xfer rates. I log my rates over two months and then I order Speakeasy. Since I now have proof that my loop can support ADSL, Verizon has no choice. So, I pay $15/mo more for my service, but I have a sane terms of service.
      Just because those people advt run your ownserver doesn't make them good.
      Not everyone wants that. I do. I'm willing to pay a little more for that than for standard connectivity, but there's no good reason I should have to pay Business Class prices for it. Speakeasy is the only provider who offers this in my area. When someone offers a service that you want, for a price you are willing to pay, and nobody else offers the same, that does make them good.

      -Craig
      --
      Corollary to Clarke's Third Law: Any technology distinguishable from magic is insufficiently advanced.
  2. Competition by marekk · · Score: 5, Informative
    I for one would love to see more 3rd party DSL operators/licensees in my area. A year ago, with SBC the only DSL company in town, the price was $49.95/mo.

    Just two months ago, with the addition of the first 3rd party DSL provider, SBC dropped their price to $29.95/mo (which I was able to sign up for).

    Granted, this wasn't due solely to the entrance of this 3rd party, but also high competition between Time Warner, the local cable modem supplier. The dramatic decrease in the pricing though just goes to show how good competition is for the consumer.

  3. I'm happy with it. by Creepy+Crawler · · Score: 5, Interesting

    We lived about 15000 ft from the CO, and we wanted DSL. We called them, and instead of saying "GFY", they said they'd look into it and call back.

    One day later, they said we could get it. Turns out, we were the first, i repeat, FIRST in that whole area for DSL. They installed a DSLAM and got rid of 2 load coils on the lines. All that for a piddly 30$ a month for a 1 year contract.

    I'm usually against inflation praticies, but the cost has to come from somewhere if they're going to solve the last mile problem.

    Yes, I live 8 miles away from the local city, and there's a CO near there serving OC-3 to local companies.

    --