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FCC Favors Bells in DSL Vote

By Yuki Noguchi
Washington Post Staff Writer
Saturday, March 26, 2005; Page D12

The Federal Communications Commission announced yesterday that states cannot require regional phone companies to sell high-speed Internet service as a stand-alone product.

The 3 to 2 decision along party lines, voted on last week and released yesterday, was a victory for BellSouth Corp., which had asked the commission for a ruling in 2003.

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The ruling effectively gives BellSouth and other regional giants an advantage over competitors trying to sell alternative phone service.

About 11 million consumers get digital subscriber line, or DSL, high-speed Internet service from their regional phone provider. Florida, Kentucky, Louisiana and Georgia allowed customers to chose a different provider for phone service and continue to subscribe to DSL as a stand-alone service. About 8,000 of BellSouth's 1.9 million DSL subscribers opt to buy phone service from a different provider.

Federal rules do not require the regional companies to sell their high-speed service as a stand-alone product, and Qwest Communications International Inc. is the only regional phone provider to sell DSL as a stand-alone, or "naked," service.

The decision was the last issue that outgoing Chairman Michael K. Powell voted on before his resignation took effect. He was joined by Republican members Kevin J. Martin, his successor, and Kathleen Q. Abernathy.

Democratic Commissioners Jonathan S. Adelstein and Michael J. Copps dissented, calling the practice of "tying" phone service to high-speed Internet service anti-competitive.

In doing so, Copps and Adelstein echoed the concerns of smaller carriers and Internet phone providers such as Vonage Holdings Corp., which have argued that allowing companies to require customers to buy DSL Internet access and phone service from a single provider limits consumers' choices.

"If it is permissible to deny consumers DSL if they do not also order . . . voice service, what stops a carrier from denying broadband service to an end-user who has cut the cord and uses only a wireless phone?" the Democrats wrote in a joint statement.

BellSouth, which is based in Atlanta and is the primary phone company in the four states with restrictions, hailed the decision. "The ruling helps provide the regulatory assurance necessary to justify the levels of investment required to support the high-speed networks and services of tomorrow," Jonathan Banks, the company's vice president for federal executive and regulatory affairs, said in a statement.

In recent years, regional phone companies have been losing millions of traditional phone customers, who are opting to unplug their land-line phones and use cellular phones or Internet-based phone services instead. The regional phone companies are trying to shore up some of those losses by offering the traditional phone service bundled together with other products.

In its decision, the FCC unanimously agreed that phone providers of all kinds should not discriminate against customers trying to keep their phone numbers when switching service. It also said it would examine the broader issue of bundling services and whether it limits consumers' ability to buy only the services they want.


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