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Covad wins round against BellSouth

The company will be able to continue its antitrust claim against BellSouth, a federal appeals court rules.

Covad Communications will be able to continue its antitrust claim against BellSouth, a federal appeals court has ruled.

In a decision handed down on Friday, the 11th Circuit Court of Appeals ruled that a lower court erred last year in dismissing Covad's case. Covad has charged BellSouth with intentionally delaying its ability to offer DSL (digital subscriber line) service to BellSouth customers.

The ruling is the second against an incumbent local exchange carrier (ILEC) such as BellSouth in recent months, noted Margaret Robbins, an associate general counsel with Covad.

"Now we have two circuit court decisions (going for) us," Robbins said.

BellSouth is reviewing the decision, but will probably ask for a rehearing by the circuit court, company spokesman Joe Chandler said.

"We're evaluating our options right now. We're trying to determine what our next step will be," Chandler said.

Struggling to compete against the entrenched local telephone companies, Covad filed for chapter 11 bankruptcy last year. Although Covad emerged from bankruptcy, unlike competitors such as NorthPoint Communications and Rhythms NetConnections, the DSL provider continues to face challenges.

In May, for instance, another federal appeals court overturned a Federal Communications Commission rule that forced local carriers such as BellSouth to share their lines for high-speed Internet service with competitors.

Covad sued Bell Atlantic, now Verizon, on antitrust grounds in April 1999, and followed that with a similar suit against BellSouth in the first quarter of 2000. The courts hearing the cases dismissed both of them, ruling that the 1996 Telecommunications Act essentially protects telecommunications companies from antitrust claims by competitors.

Covad is appealing the decision in the Verizon case.

In June, the 2nd Circuit Court of Appeals reinstated an antitrust lawsuit against Verizon filed by one of its customers. As with the Covad suits, that lawsuit had been dismissed at that district court level based on an earlier appeals court decision that said the Telecommunications Act barred such suits.