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.

FCC needs to get it right with wireless broadband

The Federal Communications Commission has to get the wireless "third pipe" of broadband Internet access right in order to inject meaningful market competition and consumer choice into the moribund, duopolistic market it has fostered with its wireline broadband policies, writes columnist Keith Girard of AllBusiness.com in The New York Times:

The FCC has made a mess of telecommunications policy. As FCC Commissioner Michael J. Copps noted recently, the nation is getting "too little broadband at too high a price."

Thanks to the FCC, Cable TV and telephone companies dominate the broadband market. They've basically skimmed the cream off the top by focusing on densely populated, easy-to-service areas. As a result, large parts of the country are underserviced. Only 31 percent of rural households and 41 percent of African American households have broadband service compared with 70 percent of households overall that have a computer, according to a new study by the Pew Internet Project, a nonprofit group. The same holds true for small rural businesses. They are less likely to use broadband services, in part, because of cost and lack of availability, according to several government studies.

America's growing broadband gap with Japan

In the 1980s, the United States fretted about a management gap with Japan. Japanese business management techniques such as kaizen -- continuous, systematic improvement -- and a focus on quality control fostered an inferiority complex on the part of American business leaders.

Now the U.S. is about to develop a new inferiority complex with the Japanese: it's fallen far behind Japan when it comes to broadband Internet, The Washington Post reports. "America may have invented the Internet but the Japanese are running away with it," the newspaper reports, noting that Japanese broadband service is eight to 30 times faster than in the U.S. Japan boasts the world's fastest Internet connections, delivering more data at a lower cost than anywhere else, The Post adds, citing recent studies.

Japan's speedy Internet access is helping the nation fulfill its goals of allowing more people to telecommute -- work from home -- and increasing the use of telemedicine, which allows doctors to remotely diagnose and evaluate a person's medical condition without the need for the patient to travel long distances to see a specialist.

California Gov. Arnold Schwarzenegger is interested in telemedicine and recently announced $25 million in grant funding for "expanding broadband capabilities to support telemedicine, tele-health and e-health programs."

Schwarzenegger has also formed a Broadband Task Force that is due to issue a report next month on the state of broadband access in California. What it will likely find is California, which likes to view itself as a leader in information technology and innovative public policies, is like the rest of the U.S., falling far behind Japan when it comes to broadband access, making it difficult for the governor to fulfill his goal of expanding telemedicine in the Golden State.

California PUC proposes broadband build out rules, wireless broadband reporting requirement

The California Public Utilities Commission has issued draft rules implementing the state's Digital Infrastructure and Video Competition Act's build out requirements for telcos and cable companies wishing to obtain a state franchise to offer broadband-based video services.

The draft rules require franchisees to include "clearly stated build-out milestones " that "demonstrate a serious and realistic planning effort." In addition, franchisees must "clearly state the constraints affecting the build-out" and "clearly delineate and explain" areas within the franchisee's service area that pose "substantially higher" costs.

The CPUC declined requests by consumer groups to require franchisees to provide data on the broadband transmission technologies they use and throughput speeds. However, under the proposed rules, it would require franchisees to provide data on the extent it is utilizing wireless broadband technology.

"The State and the Commission have a strong interest in making sure that unserved or underserved areas gain access to broadband services," the proposed decision states. "We believe areas currently unserved or underserved by broadband at this point will likely
be rural areas, or other areas that are high cost due to distance, terrain, demographics and density issues. It is thus important that the Commission gather data that will help us understand the extent to which wireless broadband is reaching these difficult-to-serve areas, and the degree to which consumers view these services as a means to satisfy their on-line needs. Accordingly, we will require subscriber data relating to wireless broadband to indicate whether the subscription is for a data-enabled wireless phone, PDA or other wireless hand-held device, or whether the subscription is for the use of a wireless data card. Wireless data cards are capable of providing either mobile or fixed broadband access to the internet from a customer’s personal computer, and may effectively substitute for wireline broadband access. Data about the adoption by customers of wireless broadband access for use with their personal computers will help guide our policies aimed at increasing investment in broadband infrastructure and closing the digital divide in our State."

White Spaces Coalition poised to move ahead with wireless broadband -- with or without FCC OK

The White Spaces Coalition, which seemed to be gearing up to take the Federal Communications Commission to court after the FCC recently panned prototype devices developed by the coalition to broadcast broadband signals in the "white spaces" between digital TV frequencies, appears to be shifting the burden back to the FCC.

There had been reports that the coalition, which is comprised of Microsoft, Google, Dell, HP, Intel, Earthlink and Phillips, had been mulling suing the FCC because it wasn't allowed to replace what it claims was a malfunctioning prototype that didn't assure government testers it wouldn't interfere with TV broadcasts.

Now it appears the coalition is preparing to move forward with or without FCC approval, according to this Broadcasting & Cable article. In short it looks like the coalition is telling the FCC if it has a problem with the devices, then the ball rests in its court to intervene.

Some commentators believe the coalition can't get a fair testing of its prototypes by the FCC because they say it's reluctant to approve a so-called "disruptive technology" that could threaten the existing duopoly of the telcos and cable companies and bring broadband where they aren't willing to go.

Well too bad. The telco/cable duopoly can no longer have it both ways, wanting to maintain territorial hegemony while at the same time leaving much of the U.S. mired in broadband black holes. The nation badly needs a "third pipe" to rapidly bring broadband to those who lack access.

Cable company in regulatory no man's land, SoCal city charges in lawsuit

This type of situation may begin to crop up frequently in California, where cable companies can opt to remain under local government franchise agreements or get a statewide franchise from the California Public Utilities Commission under new legislation that took effect this year, the Digital Infrastructure and Video Competition Act.

According to the San Diego Union-Tribune, the city of Carlsbad believes Time Warner is operating outside the law because it doesn't have a franchise from the city nor has it received a statewide franchise. Nor has it even applied for one according to the CPUC's Web site.

Holding up a city franchise with Time Warner is Carlsbad's insistence on higher fees to fund broadcasts of city council and other government events.

It's probable there will be other such lawsuits brought by local governments over this and, more likely, when negotiations stall over buildout requirements in which the locals insist cable companies serve their entire communities instead of leaving parts in the dark on the wrong side of the digital divide. The likely targets include telcos and other cable players -- like Comcast for example -- that have so far not applied for or received statewide franchises.