Report: Powell OK With Telco Bundle

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Washington— Federal Communications Commission chairman Michael Powell reportedly supports voiding state rules that would require the Baby Bells to unbundle local telephone and DSL service, according to a Legg Mason Wood Walker Inc. report released last 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 Inc. and BellSouth Corp. won’t sell digital subscriber line service to a consumer unless that subscriber also buys local phone service. Both companies also require local phone customers who want to drop that service to terminate DSL at the same time.

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

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 that subscriber has to drop both DSL and local-phone service.

While some state regulators have called such bundling 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’re opposing the a la carte sale of cable networks in Congress and at the FCC.

Instead, Comcast and Time Warner told the FCC that the bundling practice violates federal number-portability rules, as 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 that Time Warner’s number portability complaints lacked merit and “there is no evidence from Time Warner’s summary filings that a controversy requiring [FCC] intervention even exists.”

BellSouth also clarified that its request for relief from the FCC centered on whether state regulators had the authority to force the company to provide DSL over phone lines that are leased by voice-service competitors.

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

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