Best of the ISP-Lists

DSL Price War?

Members of the ISP-DSL list discuss DSL prices. One says that some incumbents' DSL subsidiaries do not pay phone bills, and that the parent companies in turn get a tax writeoff for this unfair business practice.

[September 15, 2000]

On the ISP-DSL list in August, BH asked,

"Verizon is offering DSL for residential users at $39.95/month ($32.50 loop charge, $7.45 for the ISP). How can DSL ISPs compete with that price? I contacted the FCC, and they said this certainly 'seems' like predatory pricing, but that it's hard to prove."

A number of respondents agreed that it's unfair:

[BT asked] "How is this any different than if I were to open my own soda plant, and then Coke were to sell all of their sodas in my town for $.05? It seems very plain to me that that's what Verizon is doing."

[NT added] "From what I hear, Ameritech.net is able to ask $39.95/month for their lines even though they are supposedly 'treated like the rest of the ISP partners' because while they get a bill for their loops, they never pay it. And since they are owned by SBC/Ameritech, no one ever attempts to collect the charges, and it gets written off at the end of each year as a loss to boot! If that doesn't fit the definition of predatory behavior, I don't know what does."

[JN noted] "Let's face it: the Bells are a monopoly. There are only three Bells controlling it all: SBC, Verizon, and Qwest. There needs to be a look into price fixing on DSL and ISDN, but the government will not do anything, because they have well-paid lobbyists. We just have to hope the new v.92 is actually going to work, and we can sell 300Kb phone connections for regular dialup prices."

[KG suggested] "Instead of trying to destroy the ISPs, they should have come to us and said hey, we want to work together with you guys and we will give a little if you will. Now, instead of working with their natural partners, they're setting themselves up for major lawsuits. And there is a case here: when company sells wholesale, and then sells to the wholesaler's customer base at a lower rate, that just can't be legal."

VB argued that becoming a DLEC might be the best option:

"Ultimately, the only way to get into this game and compete is the CLEC/DLEC route. I've just done it myself, without any attorneys or consultants. If you don't want to make the effort, go ahead and screw around reselling the ILEC's DSL and scratching for pennies here and there. The DLEC route takes a bit more effort, but you actually CAN compete with the ILEC."

Others urged actions of a different sort:

[RD pleaded] "I propose we draft a letter, have as many independent ISPs in Verizon's market sign it, and submit the letter as a formal complaint to the FCC. Let's face it, folks, we should not sit by and allow a huge portion of the market go to one or two large players who appear to be writing their own rules."

[TR responded] "Forcing them to divest is the best solution, but it would be in court for years. I doubt it would be the short-term solution we need. We should all get together in a co-op so we can meet the volume requirements. I can't think of an ISP in his right mind that wouldn't buy from the co-op rather than from Verizon. I think we could win hands-down on a level playing field."

Related article
$39.95 DSL Means Death

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