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SBC, Verizon May Need To Offer 'Naked' DSL

As a pre-condition for merger approval, telcos may be forced to offer broadband DSL that is not tied to a voice service.

LAS VEGAS, Nev. -- As their twin megamergers head for what looks like a certain approval, SBC and Verizon may be forced into offering broadband access that is free of an attached telephone voice service, according to a leading Congressional staffer.

"Naked DSL is certainly on the table as a condition [for merger approval]," said Michael Sullivan, a lead staffer for Sen. John Ensign, R-Nev., during a Monday morning panel here at the USTA Telecom '05 show. The proposed SBC/AT&T and Verizon/MCI mergers are scheduled to be discussed at this Friday's open meeting of the Federal Communications Commission.

The idea of requiring the carriers to provide an broadband DSL offering that is not tied to a voice service has also been raised by state public utility boards in New York and California. While both Verizon and SBC have made initial steps toward offering such services, neither currently offers "naked" or unbundled DSL on a widespread basis.

Another panelist, however, said that any naked DSL order would also need an accompanying pricing regulation to make it stick. "If naked DSL does not include a price regulation, the ILECs will simply re-price the bundle [of DSL and phone service]," said Blair Levin, a former FCC chief of staff who is now a telecom analyst for Legg Mason.

On another regulatory front, Sullivan said the chances are "pretty good" that Congress will put a unified bill outlining the transition to digital television on President Bush's desk before the end of 2005. A Senate committee has already approved a draft version of such legislation, and the House is currently working on its own plan, Sullivan said. The Senate's plan calls for broadcasters to give up their analog signal spectrum by April 7, 2009; the spectrum is then scheduled to be auctioned off for wireless communications uses.

Sullivan also said that pending telecom reform legislation from Congress will likely include some wording that embraces the so-called "Network Neutrality" principles, though it wouldn't be as powerful as some advocates might like.

"It [network neutrality] will be a part of what comes out of both the House and the Senate," Sullivan predicted. "But it will be written in a 'thoughtful' way that gives carriers the ability to manage their networks and protect their resources."

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