Supreme Court to hear AT&T DSL anti-trust case

More than two decades ago, a federal judge ordered the breakup of AT&T after concluding Ma Bell's monopolistic control of local and long distance voice telephone service violated federal anti-trust law.

Now AT&T as the successor to SBC Communications faces another anti-trust suit that the U.S. Supreme Court decided to take up this week. The high court will review a Sept. 11, 2007 decision by the 9th U.S. Circuit Court of Appeal in which the appellate court affirmed a U.S. district court ruling allowing an anti-trust action brought against SBC/AT&T by several Internet service providers to proceed.

The ISPs allege SBC/AT&T maintained unreasonably high wholesale access charges to ISPs to deliberately thwart them from competing with SBC/AT&T for Digital Subscriber Line (DSL) customers as permitted under the line sharing provisions of the federal Telecommunications Reform Act of 1996. Ma Bell then lowballed prices on her own DSL offerings, making it impossible for the ISPs to compete on price, the ISP plaintiffs complain.

The case, Linkline Communications et. al. v. SBC California, et. al. represents an important test of federal policy under the 1996 law intended to foster robust market competition and speed timely deployment of high speed Internet access to all Americans.

However the suit suggests SBC/AT&T's actions in response to the law have had just the opposite effect. By cutting its DSL prices to the bone in order to deter competing ISPs -- SBC/AT&T was promoting residential DSL for as little as $13 a month in late 2006-- it lacked adequate revenue to finance the expansion of DSL within its service territory. That led to the formation of monstrous broadband black holes filled with frustrated customers unable to order wireline broadband from AT&T at any price.

Federal appeals court rejects telco's bid to dismiss anti-trust action brought by competing ISPs

The Ninth U.S. Circuit Court of Appeals has rejected a bid by SBC Communications (now AT&T) to toss out a federal anti-trust action brought by four California Internet Service Providers (ISPs). The ISPs sued the telco claiming it jacked up wholesale prices charged competing ISPs for access to its lines in order to subject the ISPs to a "pricing squeeze" as part of a scheme to drive consumers to SBC's proprietary retail DSL services.

The federal appellate court decision affirms a U.S. district ruling that the suit could proceed as an anti-trust action under the Sherman Antitrust Act. SBC unsuccessfully argued that the action was barred by the U.S. Supreme Court's ruling in Verizon Communications, Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004). In Trinko, the Supreme Court held that the Sherman Act doesn't apply to Verizon's failure to deal fairly with a competing ISP. A customer of one of Verizon's competitors alleged Verizon engaged in anticompetitive practices by discriminatorily delaying orders placed by customers of Verizon’s competitors that Verizon was required to fill by the federal Telecommunications Act of 1996.

The Sept. 11 ruling comes as AT&T and other telcos have requested the Federal Communications Commission to relieve them from the requirement that they continue making their lines available to competing ISPs under the 1996 Act, according to this recent post at Broadband Reports.com. The FCC is expected to act on the requests this week.

The full ruling by the Ninth Circuit in Linkline Communications et. al. v. SBC California, et. al. can be read here.