10/29/1999

The Industry Standard -- ISPs Make Themselves Heard in Washington

Some say the Baby Bells want to stamp out smaller providers so they can take over. Now Congress and the FCC are starting to pay attention.

By: Keith Perine

When Alexis Rosen needed a few dozen more phone lines for his Internet service provider company, he knew he would have to pay for them. He just didn't expect to pay so much.

It was spring 1994, and Rosen's firm, Panix, had crammed 150 phone lines into a $350-a-month Manhattan office. As more customers signed up, the company needed 30 additional lines.

But Rosen says Nynex, the local Bell, told him that Panix's office couldn't handle the extra lines. So he rented a bigger space – at a much-heftier rate of $4,000 per month – and waited for the installation. And waited.

Nynex took six months to install the new lines. In the meantime, Rosen says, he had to pay $600 per month for a data line to his old office, where he had to keep paying rent. A simple $2,500 upgrade had turned into an $8,000 nightmare.

"It was unbearable doing business with these guys," says Rosen, who now uses a competitor. Bell Atlantic, which has since merged with Nynex, didn't respond to calls for comment.

Rosen's tale is one of many told two weeks ago by a newly formed trade group, United States Internet Service Providers Alliance. The group brought a panel of executives to Washington to call for stricter oversight of the Bells and GTE. Their claim: The Bells deliberately stymie competition as they try to get their own ISPs off the ground.

The complaint hinges on the Telecommunications Act of 1996, which requires local phone companies to open their networks to competition – including other phone companies and independent ISPs – as a prerequisite for entering the long-distance market. The ISP group is now vigorously lobbying the FCC and Congress to make sure the Bells don't neglect their duties.

But while small ISPs like Panix are the group's preferred public face, it has some strong brothers in arms. The alliance's acting director, Barbara Dooley, is also the president of the Commercial Internet Exchange Association, a trade group whose members include AT&T, MCI WorldCom, PSINet and ExciteAtHome. The group provided the initial funding for USISPA.

That close relationship has critics charging that the alliance is a stalking-horse for the long-distance companies. But alliance members insist that they're not doing anyone's bidding.

Last week, the alliance was bolstered by FCC Chairman William Kennard, who used strong words in a speech to the United States Telecom Association, a trade group. "You have to embrace competition," he said. "Lip service and foot-dragging are simply not good enough. Competition is here to stay."

But ISP executives say the Bells are doing more than dragging their feet. The Bells, they say, are trying to stamp out competition in Internet service. Among their complaints are shoddy service, frequent and unexplained line outages, and unfair competition from the Bell companies and GTE.

A spokesman for the Bell companies dismisses the alliance's charges. The local phone monopolies "are under the microscopic lens of the FCC and state agencies," says the USTA's David Bolger. "They're bending over backwards to comply with the FCC's mandates."

But the alliance isn't backing down; it's getting angrier. The latest burr in its flesh: a recent newspaper ad campaign by GTE that calls for legislation to allow local telephone companies to build high-speed Internet connections across state lines.

Three bills have been introduced in Congress, but little action is expected on them before next year. The alliance says GTE's ads are a thinly veiled attempt to storm the long-distance market, and that such legislation would imperil the future for Internet service providers.