FCC Imposes Naked DSL on SBC, Verizon

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SBC Communications Inc. and Verizon Communications Inc. are required to provide “naked” digital-subscriber-line service for two years under merger conditions adopted by the Federal Communications Commission Monday.

SBC agreed to the naked-DSL condition in order to gain FCC approval of its merger with AT&T Corp., and Verizon did so due to its merger with MCI Inc. The companies have one year from closing to comply with terms of the naked-DSL conditions, the FCC said in a statement.

FCC chairman Kevin Martin and commissioner Kathleen Abernathy voted to approve the mergers. The agency’s two Democrats, Michael Copps and Jonathan Adelstein, voted to concur, allowing the mergers to go through.

With the FCC evenly divided politically, Copps and Adelstein used their ability to delay the deal to extract several conditions from SBC and Verizon, all lasting from 24 to 30 months.

According to an FCC statement, SBC and Verizon promised to make naked DSL available to all DSL customers, not just new ones. Although Verizon has been offering DSL on an a la carte basis, SBC has not been doing so.

The purpose of the condition is to ensure that DSL customers of SBC or Verizon do not have to buy local phone service, as well. Cable companies, including Bright House Networks, have complained that the bundling of DSL and local phone service has impeded competition because customers won’t experiment with new voice providers if they are forced to drop their DSL service.

According to an FCC official, the agency declined to regulate the price of naked DSL in order to ensure that it represented a realistic alternative to the price of voice-data bundle.

“Clearly, we would have wanted stronger pricing provisions,” said Mark Cooper, research director of the Consumer Federation of America.

When the FCC deregulated DSL in August, it promulgated nonbinding behavioral principles on providers of high-speed Internet-access providers, such as allowing consumers to access any lawful Internet content of their choice.

In approving the mergers, the FCC mandated SBC’s and Verizon’s compliance with the principles for two years.

Last Thursday, the Justice Department cleared both deals, subject only to consent decrees that require the firms to divest local fiber-optic-network facilities serving business customers in hundreds of buildings in 19 cities.

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