New bill to level DSL playing field
By Corey Grice
Staff Writer, CNET NEWS.COM
April 5, 1999, 6:15 p.m. PT
Pacific Bell and other local phone companies in California could be forced to share their wires
with upstart data firms that want to offer high-speed data services under a new proposed state
law.
The law, if passed, would require the California Public Utilities Commission to set pricing and other guidelines
for how competing local phone providers can offer DSL, or digital subscriber line services, over the same
wire the local phone company uses to deliver voice service.
The market for DSL has heated up as providers make new marketing deals and cut prices on the high-speed
data transmission technology. Local phone companies, like Pacific Bell in California, offer the service over a
single twisted pair of copper wires.
Data-focused competitive local exchange carriers (CLECs) such as Covad Communications and NorthPoint
Communications want to get into this lucrative market, but argue that local companies have an unfair cost
advantage when it comes to existing networks.
The CLECs currently must lease a separate line from local firms to provide DSL services. If a customer wants
to order the high-speed service from a provider other than their local phone company, they need to pay for
the added line. This inflates the cost of the service, and leaves the CLECs at a competitive disadvantage,
they say.
"In the absence of line-sharing, customers who want to choose a competitive DSL service must pay for a
second line to their homes," Michael Olsen, NorthPoint's deputy general counsel, wrote in a letter supporting
the bill.
"The cost of the second line exceeds $20 per month, artificially inflates the cost of competitive offerings, and
effectively excludes competitors from the residential DSL marketplace," he added.
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The California bill, AB 991, sponsored by Assemblyman Lou Papan (D-Millbrae), faces a vote next week
before the state Assembly's Utilities & Commerce committee, a 12-member panel that oversees business,
telecommunications, and international trade issues.
Under the bill, California state telecommunications regulators would be required to set guidelines for
delivering DSL over existing copper wires, also known as "local loops." The process is known as "line
sharing," or "sub-loop unbundling."
The bill is sponsored by the High-Speed Access Coalition (HiSAC), a group of ISPs and other Internet
companies including Infoseek and PDO Communications. That company failed in its attempt to get the state
commission to require line sharing in January.
Covad and NorthPoint also officially support the bill. The data CLECs, which are currently concentrating on
serving small and mid-sized business customers, argue they cannot compete on price with the local phone
companies' residential DSL service.
Baby Bells lately have slashed prices even further for the high-speed services. Pacific Bell parent company
SBC Communications trimmed the price for its residential DSL service to $39 earlier this year--one of the
lowest prices in the industry, and on par with competing high-speed cable modem services.
Pacific Bell executives said line sharing raises many technical questions about quality of service, equipment
maintenance, and whether the local phone company can ensure phone service if a competitor's DSL
equipment were to malfunction.
"This makes very complex issues out of what today are routine customer service issues," said Michael
Heenan, a legislative spokesman for Pacific Bell.
David Schlosser, a regulatory spokesman for SBC, said the company should not be saddled with regulations
on data services because it is not the dominant, or incumbent, player--the way it is in the local voice market.
FCC on same path
Separately, the Federal Communications Commission, in a regulatory notice issued last month, said it would
examine whether it should require local phone companies to allow competitors to offer advanced services
over a single voice line. Public comments are due June 15 with reply comments due July 15.
Heenan said California lawmakers would be unwise to adopt a new law before the FCC weighs in on the
issue. "We feel it'd be inappropriate for the state, right now, to involve itself in something the FCC is looking
at," he said.
Others say that the Baby Bells would like nothing better than to stall until the DSL market takes shape.
"PacBell is trying to slow it down so that they can get enough market share before the competitors get in,"
said Ed Randolph, Papan's chief of staff. "What we want to do is speed up the process so some of the
smaller guys can get an opportunity to get into the market."
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