Wednesday, January 23, 2008

U.S. Supreme Court asks for government brief in anti-trust suit against AT&T

The Associated Press reports the U.S. Supreme Court has asked Solicitor General Paul Clement for his opinion on whether the high court should review a Sept. 11 ruling by Ninth Circuit U.S. Court of Appeals allowing an anti-trust suit against AT&T by four California Internet Service Providers (ISPs) to go forward.

The ISPs contend AT&T jacked up wholesale prices it charged 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.

According to the AP, the court's request for Clement's opinion shows at least some of the justices are interested in taking up the case, Linkline Communications et. al. v. SBC California, et. al.

From a market perspective, the suit spotlights a major roadblock in the implementation of federal law enacted in 1996 designed to speed the deployment of advanced telecommunications services including broadband Internet access. If the allegations of the ISPs are correct, they explain to a large extent why AT&T has not fully built out its broadband infrastructure because it set its DSL prices too low to cover the cost of doing so in much of its service area, leaving sprawling broadband black holes.

Watch for AT&T to continue to mount a scorched earth legal strategy to prevent this lawsuit from proceeding on the merits since it could effectively turn the clock back to 1984 when the break up of AT&T was ordered by a federal court. Tellingly, another big telco that could also find itself facing anti-trust litigation, Verizon, has filed in brief in the case in support of AT&T.

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