Even as Pacific Bell prepares its latest salvo in a longtime battle with competing Internet service providers, it’s also taking the offensive against high-speed cable companies and Orange County is one of the battlegrounds.
Over the last six months, Pacific Bell, a subsidiary of San Antonio-based SBC Communications Inc., has installed nearly 52 new facilities, called remote terminals, to bring high speed digital subscriber line service to previously unserved OC neighborhoods. That more than doubled the number of Pacific Bell terminals in the county.
As it builds these terminals, SBC is slated to respond this month to a complaint filed with the Public Utilities Commission by the California Internet Service Provider Association. The association accuses SBC of forcing competing ISPs to sign a new service contract for use of its lines that they say will put them out of business.
SBC, which owns nearly all of California’s local telephone networks, is required by federal law to lease its lines to competing DSL service providers.
Earlier this year, Pacific Bell mailed a letter to competing ISPs saying that if their customers did not sign the new service agreement, service to those customers would be cut off. And that puts Pacific Bell’s competitors between a rock and a hard place, they say.
“If I sign the service agreement, it would put me out of the DSL business,” said April Josephson, president of Rancho Santa Margarita-based Ariel Communications Inc. “The contract basically makes us their foot soldiers.”
Josephson says the Pacific Bell contract would preclude her from selling premium services like video on demand, permanent Internet address and music subscriptions,the types of services analysts say will garner the lion’s portion of future sales. Those services would be sold by Pacific Bell, she says. ISPs like Josephson’s would sell their own basic Internet service and Pacific Bell’s premium services. The ISPs would handle billing and technical support.
Josephson, whose company is a member of the ISP association, has refused to sign the service agreement. She expects her company to be removed from Pacific Bell’s dwindling list of preferred providers.
Pacific Bell has not commented on the ISPs’ charges, pending its formal reply to the PUC.
Meanwhile, Pacific Bell is moving to address one of the principal issues facing DSL providers in competing with ubiquitous cable networks to provide high-speed Internet access. That is getting DSL lines, which are essentially a dedicated line from the Internet service provider to the subscriber, out to customers that are far away from the central offices that house the DSL gadgetry.
SBC’s solution is to bring the central office to the subscriber. Over the past two years, SBC has invested nearly $6 billion to build small buildings and underground vaults that house DSL gear next to communities it can’t serve. Part of an effort called “Project Pronto,” the new buildings can then be connected to subscribers in that community. Pacific Bell, through SBC, has added 125,000 DSL lines to private residences and businesses in communities such as Orange, Garden Grove, Placentia and Yorba Linda among others.
“There is a known limitation in DSL and that is how far you live from a central office. This buildout should help,” said Mike Slattery, the OC director for Project Pronto. The new lines also have the potential to bring a new slate of services from Pacific Bell, including home networking, in the future. This puts the terminals in the middle of Pacific Bell’s fight with competing ISPs over their service contracts, as well.
For now, Pacific Bell is focusing on simply getting the lines out to subscribers.
The new terminals would greatly expand DSL capabilities to neighborhoods where the only high-speed Internet access previously available was through cable.
“They’re helping us in our battle against the cable companies,” said Pacific Bell spokesman John Britton.
But that’s empty potential, says Josephson. “In theory it’s great. Through a central office we have a path of service to remote customers,” said Josephson. But her company, like other ISPs, must pay set up fees to get lines to a central office and then more fees to get out to the remote terminal, Josephson says. “I’d have to serve 22 customers to make it profitable. Not one or two.”
Issues similar to Ariel’s have made Pacific Bell competitors elsewhere file for bankruptcy or go out of business altogether, leaving many customers to go with Pacific Bell DSL, critics say. And prices are changing. A year ago Pacific Bell charged $39.95 for basic DSL service. Now it charges $49.95. n
