Posted 3/01/2002
BELLS COULD FACE NEW ANTITRUST CHALLENGE
By Kim Sunderland
The remaining CLECs still are fighting for their lives -- and now for the end of the lives of the Bells.
Competitors claim the Bells are too big and powerful and collectively are out to crush the CLECs' businesses. What's new is these competitors are pushing for dissolution of the Bells as we know them through antitrust actions. And they've been getting a big booster through separate involvement by some states attorneys general.
Several attorneys general attended in January the first networking meeting in Washington including representatives from the five companies with active antitrust complaints, all of which aim to reprise the antitrust battles that led to the breakup of AT&T Corp. The five are CoreComm, Covad Communications Co., Cavalier Telephone, NowCommunications and Ntegrity Telecontent Services Inc.
Cavalier Telephone is the most recent to join the growing list of competitive telecom providers that have filed antitrust lawsuits against the BOCs. Its $635 million suit against Verizon Communications Inc. charges the telco's conduct toward consumers and competitors is "illegal and predatory."
In its suit, filed in federal court in Richmond, Va., Cavalier seeks $135 million in compensatory damages and $500 million in punitive damages. The suit also calls for broad changes in the way Verizon does business.
Cavalier alleges Verizon has overcharged it by millions of dollars and that Verizon's ordering system has flaws in it, which cause delays and errors in processing competitors' orders. Other allegations include illegal marketing practices by Verizon and technical restrictions that limit Cavalier's ability to provide DSL and Internet services.
Cavalier says Verizon's conduct violates section 2 of the Sherman Act and several other federal and state laws. The Sherman Act is supposed to protect consumers from discriminatory practices of monopoly suppliers and was the legal foundation the U.S. Department of Justice used against Microsoft Corp.
The DOJ, however, has taken no specific action on possible antitrust violations by the Bell companies because of complications and ambiguities related to the opening of the local telephone market.
"This is a tricky and developing area of the law, when we have an incumbent monopolist in deregulation," Phil Weiser, an associate professor of law at the University of Colorado and senior counsel to DOJ antitrust chief Joel Klein from 1996 to 1998, told xchange last year.
"Part of that uncertainty and discomfort accounts for lack of DOJ action," Weiser said.
The attorneys general involvement could change all of that, though, because the federal government would have to get more involved in the situation.
"When the feds get involved, there will be massive changes," said one source.
