Pulver.com, an analyst and consulting firm specializing in IP telephony, has recently established a forum for the pursuit of comprehensive antitrust suits against the RBOCs.

The past association of Jeff Pulver with rather abortive lobbying efforts on behalf of the stillborn IP telephony industry might give us pause, but a glance at the participants in the latest meeting organized by the firm on Jan. 23 seems to indicate that we should take this effort seriously.

Troubled DSL service provider Covad is spearheading the legal efforts and is joined by the once formidable NorthPoint, as well as a number of smaller competitive local exchange carriers (CLECs), including CoreCom, Ntegrity, Cavalier Telephone, Allegiance Telecom, and NOWCommunications. Also contemplating legal actions are several state governments, including those of Alabama, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, New York, Nevada and Pennsylvania.

"It’s building up to a class action," said pulver.com’s managing director Daniel Berninger. "We think it will be the most significant antitrust action against the incumbents since the 1984 break up."

Although the incumbents count powerful friends in Congress, Berninger professed optimism that the plaintiffs will ultimately prevail. "Even if the Telecommunications Act is revised, there are still the antitrust laws on the books, and frankly I don’t think Tauzin and his supporters can abolish that body of laws -- not in this political climate, not in the wake of Enron."

The gist of the CLECs’ case, according to Berninger, is that the incumbents systematically sabotaged competitors’ attempt to operate DSL services out of incumbent central offices. Such a pattern, he said, becomes clear when one examines the incumbents’ support for their own DSL services. "In some cases you have 70% of orders from the competitor being mishandled by the incumbent," Berninger said. "We think their tactics are pretty transparent."

Berninger cited several other successful antitrust actions against the RBOCs, namely, the dissolution of the Bell empire in the early 1980s, as well actions by Sprint in the long-distance arena, and earlier by independent manufacturers of PBX equipment, the so-called interconnect companies, in the early 1970s. "Local voice and data services are the last bastion of the Bells," Berninger said. "They’ve been forced to compete everywhere else. We predict they’ll lose here as well."

Berninger, presumably expressing the organizational position of pulver.com, said that the failure of the CLECs has resulted in a net investment loss of approximately $3 trillion, adversely affecting capital markets and severely depressing the overall telecommunications economy as well as saddling subscribers with artificially high rates. All this, of course, is vigorously disputed by the incumbents who maintain that POTS is a low-margin business, and is contested by many industry and financial analysts who contend that CLEC failures were principally due to flawed business plans and unrealistic expectations on the part of their investors.

We shall explore these issues in much greater depth in the print edition of America’s Network. – Dan Sweeney

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