A gathering of local phone giants and equipment manufacturers is drawing fire from smaller telecommunications companies, which allege that the meeting may have violated antitrust laws.
On Oct. 20, the United States Telecommunications Association (USTA), an industry lobbying group that represents Baby Bells such as SBC Communications and Verizon Communications, hosted a dinner with telecom equipment manufacturers including Intel, Nortel Networks and Lucent Technologies.
In the meeting, the companies discussed a lobbying strategy to overturn federal telecommunications regulations, which require the Baby Bells to open their copper wire lines to outside companies.
A group of small telecommunications companies and Internet service providers, which all benefit from the regulations, has begun a letter-writing campaign urging federal lawmakers to investigate the meeting. The members allege that the USTA attempted to mobilize a unified lobbying campaign that could overstep the lines of fair competition.
The meeting "proposed a cartel-type collective action where, according to press accounts, the Bells are trying to coerce major network equipment manufacturers to ascribe to their anticompetitive agenda," said Jason Oxman, assistant general counsel for Covad Communications, which offers digital subscriber line (DSL) service using lines leased from the Baby Bells.
The USTA denied allegations that the meeting was improper.
"The meeting concerned a potential campaign to petition the government to eliminate excessive regulations that are suppressing competition and investment and, ultimately, harming consumers," Walter B. McCormick Jr., CEO of USTA, said in a statement. "The authors of the letter are beneficiaries of those regulations and obviously want to perpetuate them."
The regulations in question stem from the Telecommunications Act of 1996, which requires the Baby Bells to open their copper wire lines to competitors. The regulations have helped create start-ups such as Covad, which leases "last mile" copper wire lines from the Baby Bells to offer DSL service.
However, the Baby Bells have lobbied aggressively to overturn these regulations. Central to their argument is that competition is alive and well, especially from cable companies that sell video, high-speed Internet and voice calling, without any government regulation. The Baby Bells say regulations are putting their businesses in competitive jeopardy.
The letter calls for an investigation over whether the Bells are "using the secret process to engage in conduct prohibited by the antitrust laws." In response, McCormick called the letter's allegations "baseless and slanderous."
The meeting was first reported in the Los Angeles Times.