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ISPs Also Keeping Tabs on Bell Access

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

In Florida, Internet service providers are trying to blockBellSouth Corp. from bundling regulated phone service and Internet access at discountedrates.

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

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

USISPA, a group of commercial ISPs and state ISPassociations, is dedicated to ensuring that regulated phone companies treat their smallercompetitors 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 withseveral groups that represent new local phone entrants to stop BellSouth from packagingresidential and business phone services with the Baby Bell's ISP, BellSouth.Net.

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

In a complaint filed with the Florida Public ServiceCommission, the companies alleged that BellSouth's marketing plan was illegal understate and federal laws designed to prevent monopolies from undermining competitivemarkets.

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

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

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

CIX and USISPA are also monitoring Bell Atlantic'spricing plan for the sale of DSL lines to competing ISPs. The lowest rates go to thoseproviders who purchase the largest amount of lines under a volume purchase plan approvedby 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 allalong the way," said Susanne Guyer, a Bell Atlantic assistant vice president forfederal regulatory matters.

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

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

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

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