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FCC Disconnects Stand-Alone DSL Service

March 26, 2005
The Federal Communications Commission has ruled that states cannot require phone companies to sell high-speed DSL Internet service as a stand-alone product. The ruling is a victory for the regional Bell companies.

The regional Bell companies have been losing millions of subscribers per year as customers abandon land lines for cell phones. They fear that Internet phone service could cause an even greater exodus of basic customers.

Qwest Communications is presently the only large regional telephone company that sells its DSL service as a "naked" stand-alone. Verizon, SBC and BellSouth all require that customers subscribe to basic telephone service before they can buy DSL.

The 3-2 FCC decision, which followed party lines, involved a BellSouth case that has been pending since 2003. Republicans, led by outgoing Chairman Michael E. Powell, voted to pre-empt state regulations requiring telephone companies to sell stand-alone DSL service.

Democrats Jonathan S. Adelstein and Michael J. Copps dissented, calling the decision anti-competitive.

Florida, Kentucky, Louisiana and Georgia have state rules that allow customers to subscribe to DSL as a stand-alone service. Of BellSouth's 1.9 million DSL subscribers, about 8,000 do not buy their phone service from BellSouth.

BellSouth contended the state rules were unfair and asked the FCC to decree that since federal regulations do not require regional phone companies to provide stand-alone service, the states should bow to the federal standard.

In their dissent, Adelstein and Copps said the commission used the "heavy hammer of preemption" without considering consumers' interests.

"If it is permissible to deny consumers DSL if they do not also order analog 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?" they asked. "What prevents a carrier from refusing to provide DSL service to a savvy consumer who wants stand-alone broadband only for VoIP?"

Copps and Adelstein echoed the concerns of smaller carriers and Internet phone providers like Vonage. They have argued that allowing companies to require customers to buy DSL Internet access and phone service from a single provider limits consumers' choices.

BellSouth applauded the decision, which it said would "provide the regulatory assurance necessary to justify the levels of investment required to support the high-speed networks and services of tomorrow."

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