Cavalier Telephone (www.cavtel.com) joined a growing list of competitive telecom providers that have filed antitrust lawsuits against the regional Bell companies. Cavalier yesterday filed a $635 million suit against Verizon Communications Inc. (www.verizon.com) charging that the telco’s conduct toward consumers and competitors is “illegal and predatory.”
In its suit, filed in federal court in Richmond, Va., Cavalier is seeking $135 in compensatory damages and $500 million in punitive damages. The suit also calls for widespread changes in the way Verizon does business.
“Over the past three years, Verizon has done everything in its power to keep out lower prices and innovative services by keeping companies like Cavalier out of the markets in Richmond, Hampton Roads and Northern Virginia. While most competitive telephone companies are rapidly becoming extinct, Cavalier is one of the few that has persevered through Verizon's deadly gauntlet of overcharges, delays, technical snafus, and illegal practices,” Cavalier oresident Brad Evans said in a statement.
Cavalier alleges that Verizon has overcharged it by millions of dollars and that Verizon’s ordering system has flaws in it that cause delays and errors in processing competitors’ orders. Other charges include illegal marketing practices by Verizon and technical restrictions that limit Cavalier’s ability to provide DSL and Internet services.
Cavalier claims that Verizon's conduct violates section 2 of the Sherman Act, and several other federal and state laws. The Sherman Act was designed to protect consumers from discriminatory practices of monopoly suppliers and was the legal foundation the U.S. Department of Justice (www.usdoj.gov) used against Microsoft Corp. (www.microsoft.com).
With its antitrust case against Verizon, Cavalier follows in the footsteps of other disgruntled competitive providers. Verizon is already faced with suits from Ntegrity Telecontent Services Inc. (www.ntegrity.com) and Covad Communications Co. (www.covad.com). Covad has another suit against BellSouth Corp. (www.bellsouth.com), as does Intermedia Communications Inc. (www.intermedia.com), which was acquired by WorldCom Inc. (www.worldcom.com). See XCHANGE’s July issue for more details. (www.xchangemag.com/articles/171front.html)
The U.S Justice Department has not taken any specific action on possible antitrust violations by the Bell companies, as it did against Microsoft, 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 Justice Department antitrust chief Joel Klein from 1996 to 1998, told XCHANGE in July. “Part of that uncertainty and discomfort accounts for lack of DoJ action.”
