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ISPs Worried About Baby Bells

A group of ISPs claims that Baby Bells compete unfairly for Internet access customers.

By Daniel Rubin, PCWorld   

"We have concerns that the upcoming order proposes to limit ISP choice for consumers," said Barbara Dooley, president of the Commercial Internet Exchange. "The proposals that are coming out could lead to a new bottleneck."

The Federal Communications Commission, which oversees telephone services in the United States, is expected to rule next week on a section of the Telecommunications Act of 1996. The expected rules, said Dooley, will make it easier for the Baby Bells to become ISPs and offer high-bandwith service, such as Asymmetrical Digital Subscriber Line (ADSL).

Currently the Baby Bells compete with more than 6000 independent ISP organizations that provide access through established telephone lines for a monthly fee.

The group, which includes associations from Florida to Oregon, said the proposed rules would give the telephone exchanges an unfair competitive advantage.

"[The rules] are not strong enough to guarantee real competition among services," said Dooley.

During the presentation, the association charged that the Baby Bells are engaging in unethical and illegal methods to steal customers, including misrepresentation of services. But representatives of the Baby Bells said they merely want the regulations to allow them to compete in the market.

"We shouldn't have to bother with forming a subsidiary," said David Beigie, a spokesman for US West. "We want regulatory parity and don't want to have 18 hoops to get through to get the job done."

Industry experts say the proposed rule changes are just an attempt to modernize the way telecommunications are regulated.

"The telephone industry and the computer business are coming together," said Shane Greenstein, a professor at the J. L. Kellogg School of Management at Northwestern University. Greenstein, who has written extensively on the subject of telecommunications reform, has talked to FCC staffers about the rule changes. "What the FCC wants to do is allow anybody to use the telephone lines."

But Greenstein said he understands the independent ISPs' fears. "If a telephone company is in the ISP business, why would they bother to connect competitors?"

Dooley said that most independent ISPs are losing money in the digital-line service but are managing to stay afloat with their lower-speed connections.

"The large low-speed customer base won't last," she said. The availability of digital service to independent ISPs are subject to the cooperation of the local telephone company, something that isn't forthcoming, Dooley said.

During a meeting with FCC officials on Wednesday, Dooley urged the Commission to delay its ruling until the issues could be explored with greater detail. But Greenstein said that approach is wrong.

"We've been putting this off for years," he said. "We can't put it off any longer."