Rim Semiconductor Company (fka RSMI)

[iOwnSomeNVEI]

SBC has long trail of broken broadband promises
Jim Pickrell

If SBC only had NVEI!!!

SBC Communications Inc., with its announcement of 3,000 Pacific Bell layoffs, has once again aroused California's regulators and consumer advocates worried about declining service.

As an Internet service provider, I am particularly concerned that SBC is not serious about making high-speed Internet access (or DSL) affordable and widely available. It's but the latest episode in a series of SBC Pacific Bell broken promises relating to broadband.



In 1993, Pac Bell boldly announced it would be investing $16 billion in wiring California for the future. The new statewide fiber network would provide voice, video and high-speed Internet access. California was going to be granted a new network that was to be "unmatched anywhere in the world."



In 1997, SBC, which had since bought Pacific Bell, came up with an innovative excuse to avoid following through. It announced that partly due to the high costs associated with merger-related layoffs, it was pulling the plug on its promise of an "unmatched" video-capable network.



In 1999, SBC announced a $6 billion upgrade of its high-speed Internet network it dubbed "Project Pronto." Making no mention of the previously promised $16 billion upgrade, it envisioned cost-savings that would drive the cost of DSL down to $30 per month for consumers.




During 2000 and 2001, more than 100,000 consumers waited weeks to get DSL from Pacific Bell. At the time, SBC executives blamed state regulators for not approving their entry into the long distance market for Project Pronto's premature demise.



As this was happening Pacific Bell quietly bankrupted competing ISPs by denying them access to the Bell-owned and ratepayer-subsidized copper wire network.



First, SBC Pac Bell charged other companies exorbitant prices to access the local phone network. It's no accident that the state's competitive DSL market collapsed during a time that Pacific Bell's wholesale prices made it impossible for an ISP to make a profit. Then, SBC transferred its broadband operations to an out-of-state unregulated subsidiary so it could simply cut competing ISPs off the California network.



As a result, SBC Pacific Bell controls 97 percent of the California DSL market. In 2000, it charged $39.95 per month for speeds of up to 1.5 Mbps. Today, DSL service with downstream speeds of 768 Kbps-1.5 Mbps costs $69.95. Compare this to the dial-up market, where prices fell precipitously and competition has flourished.



The Communication Workers of America says the Pac Bell layoffs could slow DSL expansion even more. In addition, SBC announced that due to its "dire" financial circumstances it was postponing another $2 billion in infrastructure investments.



SBC, however, appears to be the picture of financial health, making more than $1.8 billion in the last quarter alone. But California DSL customers have yet to see the benefit.



State government is starting to take notice. The California Public Utilities Commission fined SBC Pacific Bell $27 million for customer service violations. In September, the PUC gave SBC failing marks on its DSL performance.



This month, the PUC, blasting SBC for pleading poverty while raking in billions, announced an investigation of SBC's layoffs and the impact they may have on customer service.



There is no reason DSL shouldn't be widely available at a reasonable price. SBC and Pacific Bell owe California's consumers and regulators not just promises, but real results.


Jim Pickrell is president of Brand X Internet, an Internet Service Provider based in Santa Monica. He is past president of the California ISP Association.