Coalition of California ISPs Breaks off Settlement Talks with SBC Communications, Pursues Complaint Before State PUC.

Business Editors and High-Tech/Legal Writers

SAN FRANCISCO--(BUSINESS WIRE)--Oct. 5, 2001

ISP Coalition Alleges SBC is "Anti-Competitive and Anti-Consumer"

The California ISP Association (CISPA) announced today it has broken off settlement talks with Pacific Bell and its parent SBC Communications about the company's alleged unfair business practices in the high-speed Internet access market. Based on a Federal Communications Commission (FCC) filing Wednesday by the Texas-based telephone company, CISPA said it will refocus its efforts on pursuing the original complaint against SBC, filed on July 26, before the California Public Utilities Commission. The CISPA complaint seeks to ensure a truly competitive market in providing high-speed Internet services to California consumers and small businesses.

CISPA, which represents more than 100 Internet service providers in California, said SBC's filing makes it clear that the monopoly telephone company has no intention of modifying its anti-competitive practices in California. According to Jon Washburn, president of CISPA, SBC wants to deny CISPA members and other independent ISPs the right to wholesale DSL services. CISPA members utilize DSL to serve consumers and small businesses, many of whom would lose service if the FCC were to approve the SBC request.

In its filing Wednesday, SBC -- which has captured more than 80 percent of the residential DSL market in California -- claimed it is not the dominant carrier in its market.

"This is another attempt by the nation's largest phone company to extend its telephone monopoly into a monopoly over Internet access," said Jon Washburn, president of CISPA. "If SBC succeeds in its grand plan to force independent ISPs out of the DSL business, consumers and small businesses will end up paying millions of dollars more due to a lack of competition. SBC's filing with the FCC is anti-competitive and anti-consumer."

CISPA says that SBC's most recent filing comes at a time when SBC is also asking the California PUC to allow it to enter the state's $15 billion long distance market, which requires proof that SBC's control over California's telephone facilities properly supports competition among service providers, including Pacific Bell's Internet subsidiary and independent ISPs. CISPA's complaint claims that the opposite is true.

"SBC's suggestion that it is acting faithfully to ensure fair competition is outrageous. Its filing Wednesday shows that SBC has no intention of supporting competition. Instead, SBC remains intent on extending its existing monopoly into DSL and the long distance market," said Washburn. "This is a time for consumers, small businesses, and the legislators and regulators who protect the public interest to prevent SBC from re-monopolizing the phone network."

For several years, independent ISPs in California and other states where SBC owns the local phone network have complained that SBC has deliberately provided slower DSL service to independent ISPs in order to capture the DSL market for SBC. SBC is now the leading provider of DSL service in the U.S. and has more than 80 percent of the residential DSL customers in California.

On July 26, CISPA filed a formal complaint with the California PUC outlining policies, anti-competitive conduct and contract terms that give an unfair advantage to Pacific Bell Internet and related companies owned by its parent, SBC Communications Inc.

CISPA asked regulators to prohibit SBC Advanced Solutions Inc., a Pacific Bell sister company, from unilaterally imposing new contracts for high-speed access on Aug. 1. CISPA said the new contracts are one-sided and force ISPs to accept terms that put them at a competitive disadvantage. CISPA also seeks a PUC injunction to prohibit Pacific Bell and SBC Advanced Solutions from disconnecting high-speed customers when they change Internet service providers. This practice discourages customers from discontinuing service with Pacific Bell's own ISP, Pacific Bell Internet.

About CISPA

The California Internet Service Providers Association, Inc. (CISPA) provides California's ISPs with a unified voice to address legislative and regulatory issues as well as to promote the ISP industry in general. CISPA's fundamental purpose is to ensure that all of California's ISPs receive reasonably priced non-discriminatory access to the networks of incumbent telephone companies and other carriers of Internet traffic, including cable systems. This includes reasonably priced and non-discriminatory access to DSL connectivity.