Dangling Broadband From the Phone Stick

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SAN FRANCISCO, March 18 - To gauge the potential consumer impact of the consolidation sweeping the telephone industry, look no further than the silver-toned plastic phone gathering dust on the desk in Justin Martikovic's studio apartment.

Mr. Martikovic, 30, a junior architect who relies on a cellphone for his normal calling, says he never uses the desk phone -- but he pays $360 a year to keep it hooked up.

"I have to pay for a service I'm never using," he said.

He has no choice. His telephone company, SBC Communications, will not sell him high-speed Internet access unless he buys the phone service, too. That puts him in the same bind as many people around the country who want high-speed, or broadband, Internet access but no longer need a conventional telephone. Right now, their phone companies tend to have a "take it or leave it" attitude.

Consumers "are not forced to go with SBC," said Michael Coe, a company spokesman. "If they just want a broadband connection, I'd recommend they look around for people who can provide just a broadband connection."

The nation's other two largest phone companies, Verizon Communications and BellSouth, have similar policies: broadband service is available only as a bundle with phone service.

That means, even as high-speed Internet service has become one of the most quickly adopted technologies of the computer era, there are few options for the tens of millions of Americans trying to upgrade their dial-up connections.

Some lawmakers and consumer advocates say the issue should be on the agenda as the government considers the market impact of two proposed big telecommunications deals: SBC's planned $16 billion acquisition of AT&T, and Verizon's $6.75 billion offer for MCI, which is being challenged by a rival offer from Qwest Communications.

For many consumers, the main alternative to broadband from the phone company is the local cable company. But cable broadband prices tend to be higher - as much as $60 a month for access, compared typically with $40 or less for phone company broadband. And the cable companies prefer to sell the service as a package with television that can easily exceed $100 a month.

That is assuming cable is even available, which it is not in Mr. Martikovic's apartment in the Nob Hill section of San Francisco - or in 10 percent of the nation's households, for that matter. [.....] Consumer advocacy groups, including Consumers Union, say they plan to ask the F.C.C. to address the lack of "à la carte" broadband when the agency reviews the proposed takeovers. [.....] Verizon has said it is working to develop a stand-alone broadband offering that could be available as soon as the end of the year. [.....] But the smallest of the Bells, Qwest, which operates primarily in the Rocky Mountain states and is struggling to grow, has been willing to offer à la carte broadband for more than a year.

[Comment: As those of you who have been on this list for a while know, it has long been my position that a customer should never be forced to buy a service he doesn't want in order to get a service he does want. My usual example would be a gas station that would not sell you gas unless you also bought a case of pop, or vise versa. Gas stations can't get away with that, not only because it's probably illegal in most areas, but also because in most places there's another gas station just down the street. Since phone companies don't have that kind of competitive pressure, they tend to try to screw their customers in ways that a normal business could never get away with.

I will always remember a time when I lived in a city in Michigan's Upper Peninsula and my car stalled in the downtown area. I knew I needed to pour some gasoline directly into the carburetor to get it started, but fortunately (or so I thought) there was a gas station a block away. The first problem was I didn't have a container to put any gasoline in, but I only needed a little gas, and when I got to the station I happened to look in the trash container and found where someone had discarded a clean but empty plastic container of gas line antifreeze. So, I thought, no problem, I'll get a dime's worth of gas in this. Only problem then was, how to get the gas into the container, which had a much smaller neck than the pump nozzle. I went inside, explained my situation to the man inside, and asked if he might have a funnel or even a piece of stiff paper I could make into a cone.

And his reply was, "I won't sell you the gas unless you put it directly into that container." I could not believe my ears. It was obvious he wanted to sell more gas than just 10 or 20 cents worth, but in doing so I would have wound up spilling a considerable amount of gasoline on the ground deliberately (which, the last I heard, is considered an environmental hazard) AND since I would have had to hold the bottle while filling it, I would have very likely got gasoline all over my hand as well. Bear in mind, this bottle wasn't an "approved" container to begin with (it was not painted red or anything) so if his concern has been about legalities he would have refused to sell me the gas at all, but that wasn't his issue -- he just didn't want to be bothered with selling such a small amount of gas, but would have sold it to me had I been willing to spill enough on the pavement to make it worth his while.

After some discussion with the man, who refused to budge on his position, I told him I would never buy another drop of gasoline or anything else at his station as long as I lived (and I never did!), and walked six more blocks in below-freezing temperatures to the next nearest station, which had no problem with offering me a funnel to get the small amount of gas I needed to get the car started.

(The funny part about is was that the first gas station was in the same block as, and almost next door to an insurance agency that I had the misfortune of having some dealings with, and the guy who ran that was in my opinion also a nutcase - now that I think back on it I wonder if the gas station guy and the insurance agent were using the same drugs, since they both shared the same customer-be-damned attitude. I have to say, the Upper Peninsula has some of the friendliest people in Michigan, but when they go into business there is a small percentage of them that seem to turn into morons with bad attitudes. I suppose that happens in lower Michigan also, but up there people talk and compare notes more, I think, so when a person in business is a real jerk, word tends to get around. But I digress.)

It seems to me that the phone companies are just like that gas station owner when they refuse to sell unbundled DSL. They know there are situations where the customer doesn't need their service, where the traditional phone service will never be used, yet they require the customer to take it anyway. It's just pure greed, just as it was with that gas station owner. But since the phone companies are monopolies, you don't have the option of walking six blocks down the road to the next nearest DSL provider. That's why I've been in favor of any and all alternative broadband technologies, including wireless and even BPL if they can work out the interference problems.

At the same time, I think these proposed mergers do represent a golden opportunity to get the SBC and Verizon to drop the forced bundling requirement. That won't help the people served by companies like CenturyTel, Alltel, BellSouth, etc. but it would make a big difference here in Michigan where the vast majority of lines are owned by SBC or Verizon. So, I hope Consumers Union is successful in their efforts in that regard.]

Full story at:

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TELECOM Digest Editor's Note: Also see

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Jack Decker
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