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SBC record dump draws Feds' probe

Congressional investigators are looking at whether SBC Communications destroyed documents relating to the deployment of its high-speed Internet service to keep that information from competitors.

Congressional investigators are looking into evidence that SBC Communications destroyed documents relating to the deployment of its high-speed Internet service, saving the company from sharing that information with competitors.

The House Commerce Committee, led by chairman Tom Bliley (R-Virginia), is in the early stages of a wide-ranging investigation into whether the big local phone companies are allowing competitors into their territory--now required by law. Competitors in the high-speed Internet and traditional phone markets have complained that the former monopolies are illegally dragging their heels, prompting criticism from some lawmakers and federal regulators.

Bliley staffers have obtained an internal SBC memo that ordered employees to destroy information relating to the deployment of its high-speed Internet services. The destruction of the records kept information from reaching several competitors who had asked for it in the course of an ongoing regulatory battle.

"This raises some concerns," a spokesperson for Bliley's group said. "This issue in particular speaks to efforts from SBC to limit access to their wires."

SBC has been aggressive in introducing high-speed Net access to its customers. Recently, the local provider announced its plans to spend $6 billion over the next three years to increase digital subscriber line (DSL) offerings in its region. Last week, it announced it had reached 100,000 DSL subscribers, the highest number reached thus far among the large telephone companies.

The memo, a brief email, was sent by an SBC attorney last January to a long list of SBC employees, three weeks after a lawsuit was filed in Texas by competitors Covad Communications and Rhythms NetConnections. In that suit, the two companies were seeking information about SBC's ADSL services.

ADSL, or asynchronous digital subscriber line, is technology that allows conventional telephone calls and high-speed Internet traffic to be sent simultaneously over traditional telephone wires.

"This is an attorney/client privileged communication," read the brief email, titled "Midwest Retail ADSL." "Ensure that all documents, including 'Word,' email, and attachments, that do not represent SBC's current retail plans are destroyed and/or deleted from the hard drive of your computers."

The smaller high-speed Internet companies had contended that SBC was not giving them information they needed to market their own services, and ultimately the case was sent to arbitration.

There, an arbitration panel ruled that the email--which was entered as evidence in the case--was not in fact protected by attorney-client privileges. The state Public Utilities Commission subsequently released it to the public.

Covad and Rhythms won a total of $846,000 in sanctions and legal fees, partly as a result of SBC's refusal to give up documents and provide appropriate witnesses, according to the Texas commission.

"We don't know specifically what the documents said," said Bernard Chao, Covad's vice president for legal strategy. "We wanted documents on how they provision their own services for DSL. We know that the memo says [the records] dealt with their DSL plans."

Enter the Feds
Bliley's committee joined the fray more recently, as a part of its wider investigation of whether the Baby Bell phone companies are in fact opening their former monopolies to competitors. Committee staffers asked SBC for a copy of the memo on the document destruction but were rebuffed, a spokesperson said.

"This is an ongoing effort, but just became focused out of the fact that they refused to turn over this information," the committee's spokesperson said. "We plan on looking for more information on SBC destroying marketing documents."

In a statement, the SBC said it originally tried to protect the document to preserve attorney-client privilege, and "because one document, standing outside the full context of the proceeding, can be unjustly interpreted."

SBC is cooperating with Bliley's investigation, and will continue to do so, added spokesman Matt Miller.

The Commerce investigation will continue this winter after Congress departs for the holidays, and will keep its focus on the entire industry, rather than just on SBC, the committee's spokesperson said.