FCC Reviews 'Naked DSL'

In a 3-2 vote, the FCC approved a request by BellSouth and several other carriers to suspend the requirement that they offer naked DSL in Florida, Georgia, Kentucky and Louisiana, leaving thousands of users without any DSL services.

The four states had originally called for regulations to limit a practice known as "tying," which occurs when a seller conditions the availability of one product on the buyer’s purchase of a second product, like voice services, limiting consumer choice and reducing competition.

Prior to the suspension, BellSouth would have been required to sell naked DSL lines from its local voice lines that are resold to competitors. Qwest Communications is currently the only carrier that allows for naked DSL and Verizon has said it plans to offer naked DSL, but no dates have been set.

While the FCC felt that the increased availability of naked DSL services would contribute to an upsurge in subscribers, The Bells argued that the regulation would slow broadband growth and "undermine BellSouth's incentive to invest in the service and the underlying network."

FCC Commissioners Jonathan Adelstein and Michael Copps disagreed with the decision, stating that the Commission should proceed with caution.

"In this decision, the Commission unwisely flashes the green light for broadband tying arrangements," the two commissioners said in a statement. "We cannot support the outcome."

Calling the decision a "slap to federal-state relations" the two commissioners argued against denying consumers DSL if they do not also order analog voice service.

"What stops a carrier from denying broadband service to an end-user who has cut the cord and uses only a wireless phone?" their joint statement continued. "What prevents a carrier from refusing to provide DSL service to a savvy consumer who wants stand-alone broadband only for VoIP? Regrettably, these broader issues go virtually unexamined. They are relegated to a single paragraph Notice of Inquiry, appended to the back of this decision apparently as an afterthought. Because we believe that this situation requires more analysis and greater consideration of the impact on consumers, we dissent."

The decision in favor of BellSouth and other carriers is what the FCC is calling the first step in a controversial review process.