Pending Federal Legislation May Help Verizon in Valley By JACQUELINE FOX Staff Reporter Bring it on. That’s the sentiment of one DSL Internet service provider in the San Fernando Valley regarding a bill making its way through the U.S. Congress that could give Verizon Communications and three other regional Bell telephone companies clearance to build up their broadband infrastructures. The bill also would allow the companies to reclaim telephone lines they now are federally mandated to lease to competitors. Verizon and supporters of the measure, including the Valley Industry and Commerce Association, say the bill would spur competition and boost quality of service within the broadband market, particularly in rural areas like Lancaster and Acton. Representatives from Rochester, N.Y.-based PaeTec Communications, which has roughly 2,000 Valley-based customers and leases lines from Verizon, say they would likely not be threatened by the legislation because they have other markets that can be exploited. “Don’t worry about Paetec,” said J.T. Ambrosi, the firm’s senior vice president of carrier and government relations. “Our core customer base is the small to mid-sized company, but we could always adjust our business policies to focus on bigger corporations. But, he said, the bill would force smaller DSL and phone service providers in the Valley out of business, and those left standing would have to pass higher prices on to their customers. “It’s the consumers and the smaller DSL carriers that are going to be impacted and, if the bill wins, it threatens to create a renewed monopoly by the Bells,” Ambrosi said. The so-called “broadband bill,” which won sweeping approval in the House of Representatives last month, would lift the requirement under the 1996 Telecommunications Act that forced Verizon and the three other regional Bell telephone giants to open up their networks to competitors. Verizon already provides DSL service in parts of the Northeast Valley, alongside SBC Communications (parent company of PacBell). But Verizon would like to expand its broadband services into rural areas, like Lancaster, Acton and Palmdale, where DSL is still a relatively untapped market, particularly for the home consumer. DSL is nearly 2,000 times faster than regular dial-up service and offers additional perks, such as high-definition video. PaeTec leases access to Verizon’s lines in the area at reduced or “unbundled” prices, but has also invested its own capital in transforming them from traditional telephone to digital subscriber lines. Successful passage of the bill would give Verizon the option of reclaiming those lines and switching rents back to “street price” levels. “Competitive carriers, like Paetec, are the ones who brought the innovative digital technology in,” said Ambrosi. “We groomed the networks and brought in the competition, and taking the power away from companies smaller than ours is a fundamental mistake, because it means the customers will have fewer choices. But don’t worry, we aren’t going anywhere.” Verizon representatives say mandates forcing it to provide access to others were in place long before DSL service was even an option. They maintain the bill would level the playing field by giving the Bells an opportunity to compete more fairly with big cable companies that, it’s estimated, now claim roughly two-thirds of the DSL customer base nationwide. In addition, cable companies like Adelphia Communications, which operates in the Lancaster area, aren’t subjected to the same mandates because they did not use taxpayer money to build their lines. “In 1996, the Internet was not on the minds of the Congress,” said Francisco Uribe, director of government affairs for Verizon. “The mandates originally had to do with telephone networks, not DSL networks, and we think there’s a definite economic advantage to lifting these requirements.” Verizon claims the bill would bring a $500 billion benefit to the U.S. economy and create roughly 1.2 million jobs in the high-tech sector. Uribe said Verizon has had to accept such low rents from competitors that there’s been little incentive to make capital expenditures in its broadband network, particularly in areas where it already has to share it with so many other companies. However, Verizon reported record growth in the DSL market for the fourth quarter of 2001 with an additional 225,000 lines of service nationwide, doubling the number of its high-speed subscribers to 1.2 million.
