ISPs Also Keeping Tabs on Bell Access

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Washington -- The cable industry shouldn't feel picked
on, as Internet players say they're watching the business practices of the big
telephone companies with equal suspicion.

In Florida, Internet service providers are trying to block
BellSouth Corp. from bundling regulated phone service and Internet access at discounted
rates.

And in Washington, D.C., many ISPs are protesting as
discriminatory the digital subscriber line rates that Bell Atlantic Corp. filed with the
Federal Communications Commission in May.

"The most important thing happening to the independent
ISPs today is the anti-competitive practices of the Bell operating companies," said
Barbara Dooley, head of the U.S. Internet Service Providers Alliance. She also heads the
Commercial Internet eXchange (CIX), which has 100 commercial ISP members, including
AT&T Corp.

USISPA, a group of commercial ISPs and state ISP
associations, is dedicated to ensuring that regulated phone companies treat their smaller
competitors fairly on an array of matters -- many of which stem from the telcos'
power to use their clout in local phone markets to advance interests in Internet access.

Earlier in the year, CIX (pronounced Kicks) joined with
several groups that represent new local phone entrants to stop BellSouth from packaging
residential and business phone services with the Baby Bell's ISP, BellSouth.Net.

Under a promotion that ran between April 1 and June 30 of
this year, BellSouth reduced its ISP service charge from $19.95 to $12.95 a month for
customers who signed up for some high-end local phone options.

In a complaint filed with the Florida Public Service
Commission, the companies alleged that BellSouth's marketing plan was illegal under
state and federal laws designed to prevent monopolies from undermining competitive
markets.

"You're not allowed to bundle tariffed and
non-tariffed services," Dooley said.

BellSouth spokesman John Schneidawind said the
company's offering was legal, noting that BellSouth has high-speed Internet access
agreements with 20 unaffiliated ISPs, including MindSpring Enterprises Inc.

"They just buy our ADSL service wholesale and
advertise it," he said.

CIX and USISPA are also monitoring Bell Atlantic's
pricing plan for the sale of DSL lines to competing ISPs. The lowest rates go to those
providers who purchase the largest amount of lines under a volume purchase plan approved
by the FCC in June. As a result, CIX and USISPA say the ISPs with the deepest pockets --
Bell Atlantic itself and America Online Inc. -- will have a competitive advantage.

"It is a tiered approach but there are discounts all
along the way," said Susanne Guyer, a Bell Atlantic assistant vice president for
federal regulatory matters.

When small ISPs raised concerns about a lack of access to
the deepest discounts, Guyer said, Bell Atlantic offered a solution: "We suggested
that they band together for their purchases."

The FCC is investigating whether Bell Atlantic's
tiered rate sheet conforms to the Telecommunications Act of 1996. Some ISPs claim that
they are entitled to resell the DSL lines at a discount to the listed prices. If the FCC
fails to decide by Nov. 3, Bell Atlantic's pricing plan would stand.

The imposition of resale obligations on Bell Atlantic could
prompt the telco to withdraw DSL from the market, because resale would allow an ISP
competitor to offer lower prices than the Baby Bell itself.

"Obviously, it would be a major concern," said
Guyer. "It would be a significant issue."

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