TO READ THE PRESS RELEASE


TO READ A COPY IN "WORD"

 

 

 

The Bell Companies Are Harming America's

Internet & Broadband Future:
National Survey of Internet Service Providers (ISP)

Shows Millions of Customers at Risk.

 

 

 

Conducted by

New Networks Institute

Bruce Kushnick

826 Broadway, Suite 900,

New York, NY 10003

212-777-5418

www.newnetworks.com

 

December 14th, 2001

 

 

 

Table of Contents

 

Summary Findings And Conclusions

3

Introduction And Understanding The Issues

5

1) Rate The Bells For Overall Service

10

2) Do You Offer DSL Or ADSL?

10

3) If You Provision DSL With A Competitor Rate The Bells' Role

12

3A) If You Provision DSL Through Bell, Rate The Bell

13

4) Which Of These Statements Best Describes Your View About Service

15

5) If You Could Say Something To A Regulator Or The Press About The Bells Impact On Competition And Your Business, What Would It Be?

16

6) Rate The FCC

19

7) Rate The State Regulators (Public Service Commissions)

19

8) Are The Phone Networks 'Open To Competition'?

21

9) What 3 Issues Are Critical To Your Business?

22

Appendix One: The Survey

26

Appendix Two: Survey Results, Methodology And Sanity Checks

28

 

SUMMARY:

Survey of Internet Service Providers (ISPs)

 

FINDINGS

Approximately 43% of all ISPs do not offer or have stopped offering DSL, primarily because of the Bell's treatment. ---- And millions of customers are the losers.

The FCC and the States are not defending the rights of the 3000 Independent ISPs across America --- Expect job losses, slowed innovation, slowed investments, and Tech purchase declines.

  • 4.1 (out of a possible 10=excellent) is the average score ISPs rated their local phone companies for overall performance --- a failing grade.
  • 3.5 (out of a possible 10=excellent) is the average score ISPs rated their local Bell companies for their DSL provisioning--- a failing grade.
  • 80% Believe that service is "Not OK" or "Terrible" ----there are continuous problems and this cost their company money and time.
  • 77% Believe that the FCC or Public Service Commissions are "Not Helpful, Not Effective" (or worse)
  • 84% Believe that the phone networks are essentially closed. The Bells should not have been allowed into long distance.

CONCLUSIONS:

  • The Bells are freezing out competitors, both CLECs and ISPs, from competing in DSL/Broadband and Internet Services. This directly harms America's Digital Future.
  • There is a "Chain-of-Pain" for customers. Every time an ISP can't get an order through or offer a competitive service, the Customer is directly harmed.
  • These anticompetitive issues have been long standing over the last five years. They have been continuous and effect the entire Bell controlled networks across the country.
  • We estimate that approximately half of All ISPs have gone out of business, many from the Bell caused problems. We estimate that there are 3,000 independent ISPs in the US, and with their CLEC partners handle some 40% of all Internet Services.
  • If the FCC and states do not step in and enforce the laws, the entire competitive ISP and CLEC markets are at risk and customers are the losers.
  • The Bell networks are NOT OPEN TO COMPETITION, even in the states that have already been authorized by the FCC to offer long distance phone services are supposed to be open.

Solutions:

1) The FCC and States must stop talking and start investigating these valid claims of illegal and anti-competitive acts.

2) The Broadband Bill of Rights: New Networks Institute, with the help of other industry members, has created "The Broadband Bill of Rights" to address many of the issues. Over 700 customers have co-signed this important proposed piece of legislation. See: http://www.newnetworks.com/broadbandbill.htm

3) Congress should not pass any new law, including the proposed Bell funded "Tauzin-Dingell" bill until there has been an investigation and solution to the Bells' harmful treatment of ISPs and CLECs. The current Bell actions are harming America's Digital Future.

4) No Bell Long Distance application should be considered by the FCC before there is a full investigation and restitution made to competitors and ISPs who have documented Bell illegal acts. (The Bells are supposedly restricted from entering long distance until the networks are "open" to competition. The data clearly shows that the networks are not open today, even in the states where the Bells have already been allowed into long distance in NY, TX, MA, PA, OK, KS to date, and are filing in NJ, CA, and GA among others.)

Introduction and Understanding the Issues

This report is intended to supply the results of a nationwide survey of ISPs. It is also intended as a Call-to-Arms for customers who care that their own ISP is now entering the ''endangered species list." And it is a Call for ALL regulators to stop talking and start enforcing the basic laws.

To put the industry in perspective, from a high of some 7500 companies, today, there are an estimated 3000 remaining independent ISPs ---- like Bway.net, Panix, STIC, Opcenter, Wyoming.com or Iglou.

It is also estimated (by ISPWorld, 2nd quarter) that these 3000 ISPs represent approximately 43% of all online accounts---some 30 million customers nationwide.

Internet Service Providers (ISPs) are mostly comprised of a rare breed of entrepreneurs who, at their own expense, clearly saw the need to supply customers with the foundations of the Digital Age -- Internet and web service provision and everything from e-mail to the creation of web sites. And it has been this group of entrepreneurs that has been the real innovators of our Digital Future, not the monopolies who supply local phone service, such as the Bell companies.

Most independent ISPs are also local businesses that provide jobs and contribute to the community in meaningful ways. Rural ISPs are especially important to their hometown economy and to their users, who are often friends and neighbors.

ISPs have the right to use the telephone network. The Telecommunications Act of 1996, and even the original Telecommunications Act of 1934, gave these companies the legal right to exist, with the intention that they flourish and provide innovative services throughout America.

Unfortunately, these companies are also beholden to the Bell companies to use the phone networks -- the public phone networks that all customers use. And it is clear from this survey that the ISP and CLECs are being harmed by the Bell monopolies --- the very companies that they must purchase services from.

 

How it Works: The Customer--- ISP --- (CLEC) --- Bell Connection.

  • Dial-Up Connections: When a phone customer (Dial-up user) goes online, they first dial up their ISP over their local phone lines, and then the ISP connects them to the "Internet" and Web. Both the ISP and the customer purchase services from the Bell, but they are both beholden to the local phone monopoly to supply services.
  • DSL Connection: In the case of DSL, another piece of technology, commonly known as a "DSLAM" is required for the high-speed connection, as well as some equipment on the customer's site. The ISP offering DSL can either go to a CLEC, a (Competitive Local Exchange Company) to provide the DSLAM and other necessary equipment, or they can attempt to use the Bell supplied DSLAM. In almost all cases however, the phonelines and connections go over the local public phone networks --- which are controlled by the Bell companies.

In all of these situations, the problems ISPs encounter are endless, and this effects ALL of their customers. Take the case of one California ISP who explains that many individual orders can have numerous problems --- from the ordering process to installation delays and major mistakes in billing. Imagine yourself being overbilled, or your order doesn't go through and you wait weeks/months for your service.

  • "Orders sometimes don't get processed at all, or are processed incorrectly" or "Cancellations are commonly not processed, so the customer's line is not released for them to order other service, plus they are overbilled."
  • (Ironically, SBC/Pac Bell, the local phone company, has applied to enter Long Distance in California. They state that their networks are properly open. This ISP has clearly shown that the California markets are NOT open to ISPs. Imagine running a company where your only supplier can treat you as it sees fit---and not get penalized for any of the myriad of problems that occur on every order. )

    In many states, the Bell companies' DSL services are not profitable for ISPs to resell, and it is harming the entire customer roll out of DSL.

    For those offering DSL in the SBC territories, there is a new wrinkle. (SBC control ALL of Pac Bell, Ameritech and Southwestern Bell.) SBC has decided mandate use of a new contract, which would harm ISPs even more and close them out of the DSL market.

    As one Texas ISP put it.

  • "We are no longer able to add new DSL services in the SWB area as SWB is trying to force us to sign a new, unreasonable contract. SWB is threatening to turn off our existing SWB based DSL customers after 1/1/02 if we do not sign the new contract."
  • Today, CISPA, the California ISP Association has an ongoing Complaint with the California Public Service Commission, while the Texas ISP Association has an ongoing Complaint with the FCC. To read the CISPA overview filing with the FCC

    http://www.cispa.org/fl008.html

    To read the TISPA Complaint with the FCC. http://www.tispa.org

    The unfair Bell DSL pricing to ISPs is not new. In fact, the issue of Bell's pricing being discriminatory and predatory has been an issue ever since Verizon and the Bells started to roll out their own DSL. NNI filed a complaint with the New York regulators in 1998 which clearly showed that the Bell pricing made sure that only the Bell company would offer the product. http://newnetworks.com/baadslscrewisp.htm

    Using a Competitor only helps a little. Harm to CLECs has also harmed ISPs and Customers. Over the last two years, there has been a collapse of a related group of entrepreneurial telephone companies --- the Competitive Local Exchange Companies (CLECs) and anyone who has been reading the business section knows that many of the companies that have gone bankrupt, such as Northpoint, and Rhythms, have also complained about the Bells. To read our report on the Bells' treatment of CLECs see: http://www.newnetworks.com/clecharm.htm

    There are a few competitive companies such as New Edge Networks or Covad that are still offering competitive DSL services. However, the ISPs and the CLECs still have to use the Bell controlled networks.

    The Role of the Regulators-- FCC and States Fiddle while ISPs, CLECs and Customers Burn. It is clear from the last four years of ISP and CLEC surveys that these companies almost unanimously feel that the FCC and the states have not stepped up to the plate to fix the myriad of documented problems.

    Dave Robertson, the head of the Texas ISP Association, recounted his recent meeting with Chairman Powell and senior staffers at the FCC Enforcement Bureau.

  • "The meeting was Tuesday May 8th. In a nutshell, all the "bad acts" submitted to them to date have resulted in exactly "ZERO" dollars in fines, and little delay in their 271 approvals for the Bells to jump into the long distance market. We asked for something blatant as handwriting on a wall as to the future of the complaint process as we are approaching it. We got it. WE SHOULD EXPECT NOTHING FROM THE INFORMAL COMPLAINT PROCESS. We should expect nothing from any complaints we have submitted to date.

    "A couple of weeks ago we met with a senior person in the ENFORCEMENT BUREAU. After a one-hour meeting and receiving some heartfelt empathy for the plight of ISPs and the consumers who are being victimized by the illegal, anti-competitive behavior, I suggested that our best move might be to just jump out a window. He suggested we might want to consider throwing a chair out of the window first, so we wouldn't get cut on the glass as we jumped."

  • In fact, The Texas ISP Association presented an entire book of material showing violation after violation. To read this 113 page series of violations see:

    http://www.newnetworks.com/SWBCOMPLAINTS0420.pdf

    This observation of state public service commission and FCC's lack of enforcement and 'laizze-faire' attitude has been echoed in thousands of other documents, especially in the filings by CLECs and ISPs pertaining to Bells' entry into Long Distance state by state. Appendix Two gives one CLEC's analysis of the lack of 'openness" in Massachusetts. However, though the analysis showed the networks were essentially closed, the FCC granted Verizon's MA Long Distance application, even though the networks are supposed to be fully open before the Bells can offer long distance.

    Another recent article "Disconnect How Bush and Michael Powell are killing the New Economy. And how to turn it around" by Karen Kornbluh that appeared in Washington Monthly, Oct. 2001, lays out how Rhythms, a bankrupt CLEC who provided DSL with their affiliate ISPs, was harmed by this lack of enforcement. http://www.washingtonmonthly.com/features/2001/0110.kornbluh.html

    What Customers Lose?

    The ISPs are smaller local firms that have not lost sight of customer needs, and as a result, will usually deliver a higher-quality product. If this segment of the industry does not survive, then the entire telecom and tech sector is hurt, and the American public is left with no choice but a monopoly product with little innovation, cost savings, or quality customer service.

    Additionally, a recent survey conducted by NetAction of customer satisfaction of DSL, (released 7/25/01) clearly showed that competitors have a smaller percentage of complaints as compared to the Bell company services. See:

    http://www.netaction.org/broadband/dsl/

  • "Broadband users who get service from competitive DSL providers or cable companies have a smaller percentage of complaints than DSL users served by the incumbent regional Bell monopolies, according to a NetAction report on consumer satisfaction."

    "In general, the Bells' customers had to wait longer to have service installed, were more likely to have been billed before service commenced, and are less satisfied with technical support and customer service,"

  • Once again it is clear that customers will lose choice and quality services if the Bell companies succeed in harming competition.

    Industry Next Steps:

    The Bells Should Not Be Allowed Into Long Distance The Telecommunications Act of 1996 allows the Bell companies to enter the long distance services market only after they have been able to satisfactorily prove that their networks are fully open to competition. Since 2000 numerous states, including New York, Texas, Massachusetts, Kansas, Missouri, Oklahoma and Pennsylvania have allowed their respective Bell company (RBOC) into long distance. The Bell companies have now applied to enter California, Louisiana, Georgia, and New Jersey, among others. These networks are not open to ISPs, however. States that have already allowed RBOC Long Distance must reevaluate. No new RBOC Long Distance should be allowed until there is a complete investigation of ISP harm, and retribution for illegal acts.

    The Broadband Bill of Rights. In 2000, New Networks Institute, with the collaboration of ISPs, CLECs and customers, drafted a new proposed piece of legislation that lays out many of the ongoing problems and proposes some solutions, with the most obvious to enforce the laws and pay compensation to those ISPs, CLECs and Customers who are harmed. To read this important document, see: http://www.newnetworks.com/broadbandbill.htm

    Enforce the Current Laws: The top issues for ISPs are simply to get what the laws presently grants them--- protection from monopoly abuses and anti-competitive behavior. The FCC and States must stop talking and start investigating these valid claims of illegal and anti-competitive acts.

    Congress should not pass any new law, including the proposed Bell funded "Tauzin-Dingell" bill until there has been an investigation and solution to the Bells' harmful treatment of ISPs and CLECs. The current Bell actions are harming America's Digital Future.

    Opening Cable Networks? Today, ISPs have been restricted from using the cable networks to offer high-speed cable modem services. AOL-Time Warner has started to allow ISPs access, and with the current bankruptcy of Excite@Home, which has led to the stranding of thousands of customers, the question of opening the cable networks becomes more germane. However, this report focuses on what we consider to be most critical --- helping the current ISPs remedy their immediate problems.

    In Conclusion: The survey results speak for themselves. They reveal an industry under siege from the local monopolies. The ultimate outcome will effect virtually every American Internet and broadband customer. We ask anyone reading this to send a strong message to their state regulators, Congressmen and the FCC --- Protect America's Independent ISPs. (For Scope and Methodology see Appendix Two)

     

    The Survey Results


    1) On A Scale Of 1 To Ten, Where 10 Is Excellent, How Would You Rate:

    • Overall Services from the Bell (or GTE)
    • The Overall Ordering Process?
    • The Installation Process?
    • The Post "Up and Running" Process?

    As you can see from the exhibit below, the Bell companies are receiving failing grades in virtually all areas of Customer services --- Overall, the Bells received a grade of 4.1 on a scale of 1-10, where 10 is excellent, and Ordering and Installations received even lower scores --- only a 3.5


    Rating the Bell Companies Overall Services by ISPs

    (10= Excellent)

    Overall Service

    4.1

    Ordering

    3.5

    Installation

    3.5

    Post-installation

    4.2

    In fact, only 14% of ISPs gave the Bells a passing grade (a 6.5 or above)

    2) Do you offer DSL or ADSL?
    Yes _______
    No ________We tried but stopped because:

    No _______ The Bell wholesale pricing for DSL is not profitable.
    No _______ There are no Competitors to use in our area.
    No _______ The Bell doesn't offer services in our area.
    No_______ The Bell's networks can not support DSL in our area. (rural areas)

    ISPs Who Offer DSL, 2001
  • 57% Offer DSL
  • 71% of those who offer DSL do it through a CLEC
  • 43% do not offer DSL,
  • A little over half (57%) of the responding US ISPs offer DSL. However, it is clear from this survey that many ISPs are being blocked from offering DSL, or have stopped all together for a number of reasons. As the exhibit below shows, of those that do not offer DSL, the primary reasons are: 59% of ISPs said that the Bell's pricing to ISPs does not allow the ISP to earn a profit, while 35% who do not offer DSL said that there was no competitive phone company alternative, that the phone companies' overall treatment of their services was "sub-standard" in terms of getting installations or that there were serious problems with the phonelines.

    Primary Reasons the ISPs do Not Offer DSL
    • 59% state that they do not offer because it is unprofitable
    • 35% did not have a viable alternative, or the CLEC went out of business
    • 35% had line problems or problems with an uncooperative local company.

    Service problems caused by the Bells can be so bad that the ISP can not offer a quality product. As one Texas ISP states:

  • "We tried but stopped because of installation delays, circuits wired wrong and circuits that did work but were constantly going down. Bell was killing our business and giving us a bad reputation by saying the problem was ours. We had to pull the plug and asked all customers to find an alternative."
  • The harm caused by the Bell companies means that many ISP customers will not have the ability to use their ISP for DSL.

  • "The complexities created and the poor level of cooperation from our phone company makes this a losing business proposition. We are not expanding the business until we see changes that will allow us to compete fairly."
  • This dramatically limits the supposed Broadband future and customers options.

    3) If You Provision DSL With A Competitor, On A Scale Of 1 To 10,

    Where Ten Is Excellent, How Would You Rate The Bells' Part In:

    • The DSL Ordering Process?
    • DSL Installation Process?
    • The Post DSL "Up and Running" Process?

    There are two ways an ISP provisions DSL. The ISP either goes through a competitor, or it resells the Bell companies' services.

    Rating the Bell's Influence on the DSL Ordering Process

    Competitor

    Bell Resell

    4.0

    3.4

    The DSL Ordering Process?

    3.4

    3.5

    DSL Installation Process?

    4.3

    3.6

    The Post DSL "Up and Running" Process?

    In all cases the Bell's control of the network causes serious problems for DSL deployment. The higher scores for competitors indicates that service is better for the ISPs, but the Bells' control of the network extends to all service provisioning.

    One ISP in Texas explains that even when using a CLEC, the Bell companies’ behavior causes serious problems. There is an obstruction of the competitors ability to fairly compete for DSL or other services.

  • "Horrible. We consistently have trouble getting lines installed through CLECs if SBC is involved. It is not exceptional to have a customer install completely fail on a CLEC because of "Bell problems" and then to subsequently find out the customer installed directly with SBC without any trouble. I have seven years experience as an ISP ordering lines through SBC and CLECs and there is absolutely no doubt in my mind that SBC actively obstructs competition by failing to provide the services they are required to provide under the 96 Act. This becomes more clear when I compare the effort needed to install a line only using a CLEC (i.e. the entire circuit is on the CLEC's network and requires no work from Bell). In this case, almost without exception, the lines are installed on time (usually before time) and without trouble."
  • This CLEC trouble with the Bells is also historical and one of the reasons why many CLECs went out of business--- thus closing down a number of ISPs who were offering DSL. This Texas ISP states:

  • "Before Rhythms filed for Bankruptcy, we provided SDSL service through their network. Approximately 95% or more of the orders that were fouled up, held up, or rejected were because of issues with Bell. A lot of these were rejected because they had problems with the address on the order. Sometimes this address would be the same one SWB was sending bills to for local phone service."
  • And it is clear that harm to competition is closing down the DSL market options.

    One Massachusetts ISP states:

     

    "RBOCs have stymied DSL until there is no competition. Most DSL providers are dead and now they (Verizon) will begin to roll it out. They do roll out where cable is available."
  •   
  • 3A) If You Provision DSL Through Bell/GTE, On A Scale Of 1 To 10, Where Ten Is Excellent, How Would You Rate The Bells:

    • The DSL Ordering Process?
    • DSL Installation Process?
    • The Post DSL "Up and Running" Process?
    Rating the Bell's DSL Resale to ISPs’ Ordering Process
    • 3.4 The DSL Ordering Process?
    • 3.5 DSL Installation Process?
    • 3.6 The Post DSL "Up and Running" Process?

    The problems with ordering DSL using the Bells' services seems to be endless.

    One Texas ISP states that the Bells' customer services are:

  • "Slow, unresponsive, and unapologetic".
  • Another Texas ISP finds that the Bell caused problems for post-DSL support resolution is a painful ordeal for the ISP and the Customer and believes it is a result of "strategic incompetence" to drive all DSL business to the monopoly.

  • "Ordering is a pain, Installs take constant monitoring, There is zero post-DSL support and any problem resolution is a long and painful ordeal for SBC, ASI, ISP and Customer. Bell uses their "Strategic Incompetence" to influence any and all DSL business to SBIS/Prodigy."
  • One Oregon ISP states that service installations makes no sense and many times problems are not fixed the first time.

  • "Time to install is wildly variable, errors are randomly approached and often not fixed on the first or second try. Finding someone who knows something is hard."
  • One New Mexico ISP also complains about the installation, and believes that the process hurts his customers.

  • "The order entry process is extremely difficult to use, requires re-entry of data over and over again, orders are lost, prequalifications come in differently for me (always NO) vs SWBell (always YES). Installations are rarely if ever on time, and most of the time don't work without a trouble call, and after the installation date if it is not working the call has to go to repair vs installation. When the user has a problem now the repair call has to go through us vs the user, so we are constantly caught in the middle. Bell did this just to piss off our users."
  • One point needs to be stressed ---- The problems ISPs face are not simply occurring in one state or one phone company but seems to be a long-standing and consistent pattern by the entire remaining Bell system. The same problems are happening across the US. For example, a New York ISP has experienced "line-stealing", "No Availability" or "slamming" in New York.

  • "It's hard to tell who is really doing what thanks to finger pointing, but "line-stealing" seems to be the Bells specialty, along with "no availability" and "slamming".
  • Or take the case of this California ISP who took the time to explain the problems with SBC/Pac Bell California services. For example, "Orders sometimes don't get processed at all, or are processed incorrectly" or "Cancellations are commonly not processed, so the customer's line is not released for them to order other service, plus they are overbilled."

  • "The SBC DSL ordering system is very complex and doesn't interface properly with other internal systems between PacBell and ASI.

    Orders sometimes don't get processed at all, or are processed incorrectly. An order will sit in the "automated" ordering system beyond the due date and never be processed. You only find out when you go online and read side notes for the order that the ordering center didn't process it for some stupid excuse of a reason, or no reason at all. SBC departments don't communicate.

    Personnel within each department handle each situation differently. Cancellations are commonly not processed, so the customer's line is not released for them to order other service, plus they are overbilled.

    Installation runs only slightly more smoothly. Most of the time the technician will test only a portion of the line and not confirm that the line is actually working with either the customer or the ISP. More often than not, a second technician will need to be dispatched to properly complete the process.

    Trouble tickets are worse because the typical turnaround time is 48 hours, and technicians don't coordinate with the ISP or customer to gain access to a facility. Often times when calling ASI to report trouble we are mistakenly transferred to SBC/Prodigy tech support reps - the supposedly separate ISP company - our competition, who has nothing to do with the process and doesn't even understand what we are talking about. Typically we have to hang up and redial the ASI tech support number and hope we get a different person who at least knows how to take our trouble report rather than pass us off to the wrong department. The tech support rep can take 20 minutes to answer the call and then can only take information and assign a ticket number. From there, the ticket is given to a different department who will either test or call. Generally you will not receive the first call back on a ticket for close to 24 hours."

  • We bring this up in detail because SBC has applied to enter Long Distance in California, and they state that their networks are properly open. This ISP has clearly shown that the California markets are NOT Open to ISPs.

    And for those offering DSL there is a new wrinkle. SBC has decided to introduce a new tariff, which would harm ISPs even more and close them out of the DSL market.

    As one Texas ISP put it:

  • "We are no longer able to add new DSL services in the SWB area as SWB is trying to force us to sign a new, unreasonable contract. SWB is threatening to turn off our existing SWB based DSL customers after 1/1/02 if we do not sign the new contract."
  • To examine some of the details go to http://www.tispa.org and examine the issues.

    4) Which Of These Statements Best Describes Your View?

    • Service Is Great. I'm Happy.
    • Service Is OK --- Some Problems, But They Get Fixed Quickly.
    • Service Isn't OK: Lots Of Problems That Do Not Get Resolved Quickly Or Easily.
    • Service Is Terrible ----Continuous Problems And They Cost Our Company Money And Time.
    ISP Rating Their Overall Services From the Bell Companies, 2001
    • 0% Service is great. I'm happy.
    • 18% Service is OK --- some problems, but they get fixed quickly
    • 34% Service isn't OK, --- lots of problems
    • 36% Service is terrible --- continuous problems

    The overwhelming majority of ISPs believe that service isn't even OK --- It's downright terrible. 70% stated they are having lots or continuous problems costing them money and time, while only 18% stated that services as "OK". Not one ISP is happy with their service.

     

    5) If You Could Say Something To A Regulator Or The Press About The Bells

    Impact On Competition And Your Business, What Would It Be?

    New York

    "They have destroyed the competition by pricing, failure to cooperate (obey existing laws and regulations) and have solidified their advantages with advertising that should not be subsidized by my phone bill, and by legal efforts (including lobbying) that telephone users also pay for".

    California

    "Take the blinders off. SBC/ Pac Bell is a monopoly and the citizens of California are the losers."

    Texas

    "The FCC is allowing the Bells to become an UNREGULATED MONOPOLY."

    New Mexico--- rural provider

    "We're dealing with a monopoly mentality. If we desperately need lines in an outlying town, we can wait for months. Once, we identified phone problems in Los Alamos. Qwest denied the problems until it became apparent that 911 was unavailable during peak periods."

    Texas

    "I believe Southwestern Bell (SBC) regularly and deliberately engages in business practices which are anti-competitive by nature and give an unfair advantage to their own company."

    California

    "Our phone company is getting in the way of progress and innovation for two reasons: 1) They are choking the internet and innovation created by new companies to simply protect their old revenue monopolies. 2) They have set up systems and procedures to insure that the majority of the market share and captured is controlled by their own newly created divisions."

    Kansas

    "The Bell's billing and sales practices are predatory and unfair, even to their own agents. They will promise one thing and then do another, including trying to take your clients. And when they have a technical problem, they are always first to blame you and your equipment. They never admit to there being a problem even though it some times just "mysteriously" goes away."

    Kentucky

    "The lack of options results in their essentially controlling the growth and scope of our ability to exercise inherent benefits of the free enterprise system resulting in a much limited scope of offerings we are able to present to our customers."

    Missouri

    "Southwestern Bell does not compete fairly. When customers call SWB to complain about their phone service, they are told they should be using SWB Internet or Prodigy, which I believe is against the law. This happened to me at my home and when I told the operator she was breaking the law, she quickly changed her tune."

    CLEC--- Nationwide

    "They control the competition no matter what the regulators do. The Bells deny new services can be provisioned. When they can no longer support that argument, they delay it in the regulatory process by forcing the competition, which clearly has less resources, to do legal battle in that arena. If the Bells lose in the regulatory arena, they then degrade the probability of any loss of market share by degrading the implementation of the new service claiming it is ’new’ and their technicians ’need time to become familiar with it.’ The same does not happen when they introduce new products of their own. They do not use that excuse with their large retail customers. They wouldn't get away with it."

    California

    "Pac Bell has used "Strategic Incompetence" and carefully constructed interconnection hurdles to flatten its competition. Microsoft's monopoly was achieved fair and square compared to the Bell monopoly. Pac Bell had their monopoly handed to them by a well intentioned government in the interest of creating a country wide communication infrastructure. Pac Bell should be embarrassed. I guess they just can't get customers when there is a level playing field."

    Texas

    "SWB (SBC) is using their monopolistic powers in the telecom industry to remove competition in the Internet industry. They are using heavy handed tactics to force ISP's to sign one-sided contracts. They are forcing us out of the DSL market."

    CLEC Multiple States.

    "We write our largest checks to monopolists that give us poor service and want to put us out of business. We have no choice!"

    Texas

    "The action of the Bell company in their dealings with us as a ’partner’ and a vendor, are so blatant that I find it impossible that anyone can perceive these actions in any other way than that they are purposely sabotaging the businesses of these ’partners and customers’ who are also their competition."

    Oregon---Rural

    "Access to copper circuits from the ILECs which are capable of running XDSL services prohibits ISPs / Customers from gaining xDSL services, especially in rural areas where ILEC's do not provide DSL services and the only options are to access broadband services through an ISP. Until recently in Oregon, Qwest had an affordable circuit called a Local Area Data Service LADS, which our company is using all across Eastern and Central Oregon for xDSL deployment. We have made substantial investments in architecture and have taken huge risks to provide xDSL services at affordable rates. Recently Qwest applied for a tariff increase on the LADS circuits which will put the cost for broadband services out of reach for most rural Oregonians. The Oregon PUC approved their request and new rates will be effective January 1, 2002. This will have an adverse effect on our company’s broadband deployment as the demand will decrease due to the price increase of the LADS circuit. I have sent letters to the PUC, FCC, legislatures, etc, to no avail. The price increase is a done deal and our company and rural Oregonians will have to deal with the impacts of their decision. It is apparent to me that Qwest is trying to create a monopoly, as are the other ILECs, and the Oregon PUC is allowing it to happen. "

    California

    "They are trying to ensure that they continue to have a monopolistic stranglehold on the market and want to see NO competition at all."

    Texas

    "We are no longer able to add new DSL services in the SWB area as SWB is trying to force us to sign a new, unreasonable contract. SWB is threatening to turn off our existing SWB based DSL customers after 1/1/02 if we do not sign the new contract."

    CLEC--Multiple, Rural States

    "The RBOCs (Regional Bell Operating Company) have succeeded in crushing competition through:

    1. strategic incompetence in prequalifying and provisioning

    2. costly legal and regulatory battles

    3. charging CLEC charges more than they charge themselves for prequalifying, provisioning and loops

    4. reframing the battlefield as RBOC against cable - total BS. They no longer can say they are "open" to competition as they have succeeded in stifling it. Now they have shifted competition discussion to the cable and wireless world. Cable is also struggling so I wonder what their story will be now? "we need monopoly to invest, trust us we will get it done". Wasn't this the argument for the Bell System? What did that do to pricing and innovation?

    "The key is whether communications choice is fundamentally good. They are systematically eliminating choice for communications in their regions. Without competition we are back to the slow roll of innovations and the monopoly pricing and service levels of the Bell System again. "

    Texas

    "Dear Sir, I watched the Patriot last night and it brought to mind my local telephone company. We are in a war with SBC right now and they have been burning our women and children alive. It's time to put a stop to this madness and stand up and fight before they drive this entire country to its knees!"

    Massachusetts

    "Take away their monopoly on copper lines!!"

     

    6) The FCC has been (pick one)
    ________ Very Helpful, Very Effective
    ________ Very Helpful, Not that Effective
    ________ Not Helpful, Not Effective
    ________ Terrible and Useless


    7) The state regulators (Public Service Commissions) have been (pick one)
    ________ Very Helpful, Very Effective
    ________ Very Helpful, Not that Effective
    ________ Not Helpful, Not Effective
    ________ Terrible and Useless

    There are a number of government regulators that control telecommunications. First, there are the state regulators that are in charge of the local phone operations. The Federal Communications Commission (FCC) is supposedly in charge of DSL, since it has been declared an "interstate" product. However, there are a number of other government agencies dealing with telecom related subjects, from the local municipalities, including cities and towns, to the Department of Justice (DOJ) and Congress, who wrote the primary legislation governing telecom, the Telecommunications Act of 1996.

    Grades for the Public Service Commission and FCC's Ability to Enforce the Laws.

    FCC

    State Commission

    0%

    0%

    Very Helpful, Very Effective

    16%

    30%

    Very Helpful, Not that Effective

    46%

    36%

    Not Helpful, Not Effective

    38%

    34%

    Terrible and Useless

    No ISP feels that the State Commissions or the FCC adequately handle the severe problems caused by the Bell companies. The FCC leads in the discontent with 84% stating that the FCC was "Not helpful, Not effective", or could be downright terrible, while 70% felt the state Public Service Commissions are not enforcing the laws.

    In the beginning of this report we quote the President of the Texas ISP Association, TISPA about his meeting with FCC Commissioner Powell, and a high level staffer at the FCC Enforcement bureau. From these meetings, as well as the filings, complaints, meetings, etc of many other ISPs and CLECs, it is clear that the FCC does not have either an interest or ability to enforce the laws.

    One Oregon ISP who offers rural services puts the problems they have encountered on both the FCC and the Public Service Commission. This ISP is discussing the price for circuits to provide broadband:

  • "The Oregon PUC should have decreased the price of the LADS circuit to promote broadband deployment especially where there are ISPs already utilizing the product to provide the services. In a world of digital haves and have nots, this decision will widen the digital divide. The FCC who wants broadband deployment is to blame, right along side of the State Public Utility Commissions, for not having a nationwide tariff for a LADS type circuit."

     

  • 8) Pick one (NOTE: The phone networks are supposed to be 'open to
    competition' as a prerequisite to enter long distance.)

    _____ The phone networks are open.
    _____ The phone networks are almost open,
    _____ The phone networks are not quite open, but workable.
    _____ The phone networks are essentially closed. --- The Bell should not be (or have been) allowed into Long Distance.

  • The exhibit below summarizes the Internet Providers' assessment of the Bells' local networks. The overwhelming majority, 84%, believes that the phone networks are "essentially closed" and an additional 14% believe that the phone networks are "not quite open".

    Are the Phone Networks Open, According to Competitive ISPs?
    • 0% The phone networks are open.
    • 2% The phone networks are almost open,
    • 14% The phone networks are not quite open, but workable.
    • 84% The phone networks are essentially closed.

    Most importantly, No ISP believed that the phone networks are open today! And the majority believes that the Bells should not have been allowed into long distance.

    This is in direct contradiction to the FCC's basic finding that the phone networks are open, and therefore the Bell should be allowed into long distance in that state.

    Considering that Texas, New York, Massachusetts, and Kansas ISPs all believe that their local phone networks are not open to competitors, even though these states have been allowed into long distance, the findings truly brings into question the FCC's decisions to authorize the Bells in these states to offer long distance.

    It is also clear from comparing these results to our previous surveys of New York, Texas, Massachusetts and Kansas ISPs that these problems have continued to make these claims before and AFTER the Bells were allowed to offer long distance.

    Notice the consistency of the current results with our the survey results from September 2000 for Texas and New York --- In that survey, the overwhelming majority, 77%, believed that the phone networks are a mess and that they are almost closed, while an additional 20% believe that the phone networks are "not quite open".

     

    Are the Phone Networks Open, According to Competitive ISPs?
    • 77% The phone networks are a mess, they are almost closed. --- The Bell should never have been allowed into long distance
    • 20% The phone networks are not quite open, but workable.
    • 3% The phone networks are almost open,
    • 0% The phone networks are open.
  • 9) What 3 issues are critical to your business?
    A(__________________________________
    b)__________________________________
    c)__________________________________
  • A Sample of the Three Major Issues of ISPs.
    • WYOMING
    • Calls get through
    • Costs Are Reasonable
    • Billing is Accurate
    • MISSOURI
    • Reliable phone service
    • DSL that is profitable to us and not just SWB
    • Protection from the FCC
    • TEXAS
    • Competitive Access to ILEC and Cable networks
    • Level playing field
    • Good, fair, access and rapport with our PUC
    • UTAH
    • Quick & easy connectivity access
    • survival of the CLECs
    • fair representation and competition
    • MASSACHUSETTS
    • Ability to compete
    • Enforcement and upholding of the telecom act
    • Verizon's unfair (though tactfully planned) business practices
    • NEW YORK
    • Price
    • Availability of Services
    • Reliability


    The aggregated answers to this open ended question leads to one clear conclusion --- The ISPs’ major issues relate to the same thing all telecom and broadband users need--- reliable service, fair prices, installations on a timely basis, enforcement of the laws. As competitors, ISPs obviously also need and deserve protection from the monopoly so it cannot use its market power to put these dependent companies out of business.

    As one California ISP put it:

    • "Reasonable, competitive pricing, with correct billing for services from the Bells."
    • "Requiring certain levels of performance from the Bells, which today provide very poor service, while they control the infrastructure upon which the ISPs rely."
    • "True equality with the Bells in the marketplace and/or removing them as
      possible competitors in the ISP marketplace due to their built-in unfair
      advantage of owning the infrastructure."

    And it is also clear from the responses to this survey that the ISPs are not getting even their basic rights properly enforced. In order of priorities, (based on counting the number of times an ISP mentioned them.) Literally 93% of important issues for the ISPs is to protect their current industry. --- With the discounts and problems caused by the Bell companies being the largest concern for continuing business. Only 7% of the ISP responses (based on calculating the total as 100%) made the cable entry a top issue.

     

    TOP ISSUES TO ISPs

    22%

    the price of service to competitors

    13%

    the monopoly control of the networks

    10%

    anticompetitive behavior/compliance

    13%

    Having access to services

    9%

    Reliability

    9%

    Timely installs

    7%

    Access to cable networks

    6%

    fair laws and representation

    6%

    Billing issues

    5%

    Survival of the CLECs

    The concerns of the ISPs were not geographically defined, and there was no state or Bell company that was, overall, found to be better or worse.

    Here are some of the Issues in detail:

    The Price of service

    California

    "Even playing field. Verizon Retail and SBC Online both offer DSL at
    $29.99. Wholesale says that this is OK because these retail companies have
    signed volume contracts that give them lower prices. We signed a volume
    contract and WE ARE CHARGED $35.00 to $37.00. How is that fair?"

    Texas

    "Excessive local access loop charges for broadband services. Excessive charges for copper pairs."

    Kansas

    "Be able to compete (based on price) with others in the market Be able to make money at the fair-market rate"

    The Monopoly Control of the Network

    California

    "We do not own phone lines. We depend on open access to telephone and DSL lines to be able to be in business. If SBC is allowed to continue to use its monopoly control of the last mile of wire to shut us out, then they will be able to shut us down, as they have closed most other competitors in California."

    Kentucky

    "A fair playing field to compete - in the ISP world I'm now competing with
    the monopolies in their own space that give them special leverage to coerce
    customers into signing up."

    Anticompetitive behavior/compliance

    Texas:

    "SBC is poaching our customers as they call to inform them of important billing changes on the DSL portion of the customers bill."

    Having access to services

    Texas:

    "Access to copper loops that are served by fiber fed remote terminals"

    Reliability

    Texas:

    "Reliable POTS service. We still don't have it here."


    Timely installations

    Oregon:

    "Response times to installations and to repairs is unpredictable and often longer than needed."

    Florida:

    "Meeting FOC dates, ordering process with Bell, anything done on a timely basis."

    Texas:

    "Delaying our deployment of service. Failure to work our orders in a timely manner."

    Access to cable networks and the last mile

    Texas:

    "A fair and open last mile market, Compliance of the 96 Telecom act by the phone company, fair access to the cable companies' network."

    Fair laws and representation

    California:

    "If the regulators do not want to see the phone company monopoly expanded from local service, to an overall monopoly on long distance and Internet, then they must agressively enforce the Telecommunications Act."

    Washington:

    "A fair playing field for ISPs and non-predatory pricing schemes, monopolistic behavior. Oversight to make sure that these are assured."

    Billing issues

    Kentucky:

    "Accurate billing and timely resolution of disputes"

    Survival of the CLECs

    Texas:

    "The continued success of CLEC's for DSL provisioning in SBC land."

     

    Appendix One:

    ALL REPONSES WILL BE KEPT CONFIDENTIAL
    ================================================================
    ALL INFORMATION IS PROPRIETARY AND WILL ONLY BE USED IN AGGREGATE.

    Company _________________________
    Contact _________________________
    Contact e-mail _____________________
    Check one: ISP ________ or CLEC __________ Both ______________
    State (s): __________
    NAME OF LOCAL PHONE COMPANY (s)___________________
    NAME OF CLEC (s) IF ANY ______________________________

    1) On a scale of 1 to ten, where 10 is excellent, how would you rate your
    local Bell phone company.
    ______ Overall Services from the Bell?
    ______ The Overall Ordering Process?
    ______ The Installation Process?
    ______ The Post "Up and Running" Process?
    2) Do you offer DSL or ADSL?
    Yes _______
    No ________We tried but stopped because ----- Fill in the Blank____________
    No _______ The Bell wholesale pricing for DSL is not profitable.
    No _______ There are no Competitors to use in our area.
    No _______ The Bell doesn't offer services in our area.
    No_______ The Bell's networks can not support DSL in our area. (rural areas)
    Other_________________________________
    3) IF YOU PROVISION DSL with a Competitive CLEC or DLEC on a scale of 1 to 10, where ten is excellent, how would you rate the Bells' part in:
    ______ The DSL Ordering Process?
    ______ DSL Installation Process?
    ______ The Post DSL "Up and Running" Process?
    Please explain:_________________________
    3A) IF YOU PROVISION DSL through Bell on a scale of 1 to 10, where ten is excellent, how would you rate the Bells:
    ______ The DSL Ordering Process?
    ______ DSL Installation Process?
    ______ The Post DSL "Up and Running" Process?
    Please explain:_________________________
    4) Which of these statements best describes your view of the local phone service.
    ______Service is great. I'm happy.
    ______Service is OK --- some problems, but they get fixed quickly
    ______Service isn't OK, ---- lots of problems that do not get resolved quickly or easily.
    ______Service is terrible--continuous problems and they cost our company money and

    time. Please explain_________________________

    5) If you could say something to a regulator or the press about the Bells impact on competition and your business, what would it be? Please explain………
    6) The FCC has been (pick one)
    ________ Very Helpful, Very Effective
    ________ Very Helpful, Not that Effective
    ________ Not Helpful, Not Effective
    ________ Terrible and Useless
    7) The state regulators (Public Service Commissions) have been (pick one)
    ________ Very Helpful, Very Effective
    ________ Very Helpful, Not that Effective
    ________ Not Helpful, Not Effective
    ________ Terrible and Useless
    8) Pick one (NOTE: The phone networks are supposed to be 'open to
    competition' as a prerequisite to enter long distance.)
    _____ The phone networks are open.
    _____ The phone networks are almost open,
    _____ The phone networks are not quite open, but workable.
    _____ The phone networks are essentially closed. --- The Bell should not be(or have been) allowed into Long Distance. (The Bells have already been allowed into long distance in NY, TX, MA, PA, OK, KS to date, and are filing in NJ, CA, and GA.)
    9) What 3 issues are critical to your business.
    a______________________________________________
    b)______________________________________________
    c)______________________________________________

    10) NEXT STEPS
    Yes _____ NO____ We would entertain the idea of becoming part of a Class Action

  • lawsuit on these issues.
  • Yes _____ NO_____ We would be interested in joining a coalition to take legal actions,

  • including filing complaints with state and federal officials.

  • DOCUMENTATION: If your firm has filed a law suit, filed a complaint with the FCC or state commission, or has other document(s) that are important for other ISPs to examine, please list the links
    ==================================================================

    APPENDIX Two Survey Results, Methodology and Sanity Checks.

    This survey was independently funded and was not paid for by any phone company, ISP, CLEC, association, or any other group.

    We believe that this sample is valid for comparisons with the general ISP population.

    Methodology:

    This survey was posted during November 2001 via email state ISP associations, numerous ISP listserves, and other public lists including 'Cybertelecom'.

    Results:

    This is our third annual ISP and CLEC Survey. We had 76 respondents, with 20 of them coming from Texas, 13 from California, 12 from New York, and the rest from around the country with less than 6 for any other state. We estimate that the total represents 3% of the total ISPs, while the Texas, California and New York samples represents 5-10% of total ISPs in those states. This large sample in these states is a good indicator that the results of this survey can be extrapolated throughout the ISP community because it not only matches identically to the rest of the country, but it also matches numerous other data points--- the most important of which are 4 participating CLECs who currently handle hundreds of ISPs collectively.

    Sanity Checks:

    More to the point, our databases for the previous surveying of New York, Texas, Massachusetts, Kansas and Missouri over the last year shows a continuous match. These responses also matched the testimony of the various CLECs who testified in these states for their 271 applications and therefore gives us a continuous picture of the marketplace.

    And there has been no other survey to contradict our findings over the last three years.

    Texas and New York Survey, September 2001
    This survey had 49 respondents, 26 for Texas and 23 for New York. Counting the original NNI ISP survey, a total of 47 ISPs were represented from Texas alone. Therefore, this survey has representation of approximately 10% of Texas ISPs and approx. 8-10% of New York ISPs. NNI also interviewed DSL customers and CLECs, as well as relied on government information supplied by the FCC and the Department of Justice. See:

    http://newnetworks.com/Putting%20the%20Survey%20into%20Perspective.htm

    Massachusetts Survey, October 2000

    Covad Communications, which has 26 ISPs listed on their website for Massachusetts alone, discusses problems that are identical to the ISP responses in the Massachusetts (and NY and TX) survey. This material was filed as testimony before the Department of Telecommunications and Energy (DTE), July, 2000.

    http://www.magnet.state.ma.us/dpu/telecom/99-271/CLEC_comments_0700/index.htm

    Here is just a sample of Covad's testimony. It should be obvious, then, that if an ISP is using a CLEC, the problems the CLEC encounters will also translate into identical problems for the ISP --- if the Bell doesn't complete an install, it is the ISP's customer who isn't receiving their service.

    "SUMMARY OF TESTIMONY

    (DTE 99-271, Testimony Of John Berard, Michael Clancy, And Minda Cutcher On Behalf Of Covad Communications Company)

    • Bell Atlantic fails to complete office wiring on time;
    • Bell Atlantic fails to complete loop installation work (activities in the field) on time. A significant number of loop orders require multiple dispatches
    • On average, it takes nearly 40 days for Covad to provide DSL service to its end users. The primary reason for this long interval is BA-MA’s failure to complete loop installations on time. This interval starkly contrasts with the interval BA-MA promises its DSL customers. BA-MA has promised its DSL customers service in 7-10 days.

    "Summary of BA’s On-Time Provisioning. In summary, BA-MA:

    • Fails to provide due dates or firm order commitments ("FOCs") on time
    • Fails to complete cross connections in the central office that connects Covad’s equipment to the main distribution frame where Covad has access to unbundled loops;
    • Fails to complete installation work on the loop after it has left the central office
    • Fails to address certain facilities problems. has not properly planned and constructed the facilities as needed, thus causing CLECs to deny service to their customers."