Report: Powell OK with DSL/Phone Bundle


Federal Communications Commission chairman Michael Powell reportedly supports voiding state rules that would require the Baby Bell phone companies to unbundle local-phone and digital-subscriber-line service, according to a Legg Mason Wood Walker Inc. report released Wednesday.

“We understand that chairman Powell has instructed staff to draft an order favoring the Bell position,” Legg Mason analyst Blair Levin wrote.

FCC spokesman Mark Wigfield said he could not discuss Powell’s position.

Verizon Communications and BellSouth Corp. won’t sell DSL service to a consumer unless the consumer also buys local phone service. They also require local-phone customers who want to drop that service to terminate DSL service at the same time.

However, Qwest Communications International Inc. offers a stand-alone, or “naked,” DSL product, and Verizon officials have spoken about doing the same thing at some point in the future.

Time Warner Inc., Comcast Corp. and Bright House Networks have complained to federal and state regulators that consumers won’t switch to a new phone provider if the consumer has to drop both DSL and local-phone service.

While some state regulators have called the bundling of DSL and local-phone service an illegal tying arrangement, cable companies have pursued a different regulatory angle, perhaps because they don’t want to be viewed as favoring the a la carte sale of DSL at the same time that they are opposing the a la carte sale of cable networks in Congress and at the FCC.

Instead, Comcast and Time Warner told the FCC the bundling practice violates federal number-portability rules when the phone company refuses to transfer a customer’s number to a new carrier if the customer won’t drop DSL at the same time.

In a Nov. 10 filing, BellSouth told the FCC Time Warner’s number-portability complaints lacked merit, adding, “There is no evidence from Time Warner’s summary filings that a controversy requiring [FCC] intervention even exists.”

The regional Bell operating company also clarified that its request for relief from the FCC centered on whether state regulators, rather than the commission, had the authority to force the company to provide DSL over phone lines that are leased by voice-service competitors.

BellSouth also denied that it rejects “number-porting requests simply because the customer is taking DSL from BellSouth.”

However, the telco acknowledged that after a number is ported, the company terminates all services, including DSL, associated with “that end-user’s account.” BellSouth phrased it that way to demonstrate that Time Warner was incorrect in telling the FCC that a phone customer who changed voice providers had to “specifically cancel [BellSouth’s] DSL service before the number is ported.”

AT&T Corp. has told the FCC that cable and phone companies may bundle phone and high-speed-data access provided that the data portion is retailed a la carte. AT&T also said the agency had to ensure that the a la carte price was an economically realistic alternative to the bundle.