Independent ISPs Challenge PUC to Reject Verizon-MCI Merger as Bad for Business and the People of California

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The California ISP Association (CISPA), the largest state association of Internet service providers, spoke before the California Public Utilities Commission (CPUC) today against the Verizon / MCI hearing in Long Beach. The California ISP Association believes that the Verizon / MCI merger would remove competition, create geographical monopolies, and curtail our Freedom of Choice, our Freedom of Speech, and our Freedom of Press.

The California ISP Association (CISPA), the largest state association of Internet service providers, spoke before the California Public Utilities Commission (CPUC) today against the Verizon / MCI hearing in Long Beach. The California ISP Association believes that the Verizon / MCI merger would remove competition, create geographical monopolies, and curtail our Freedom of Choice, our Freedom of Speech, and our Freedom of Press.

Mark Esser, Vice President Board of Directors California ISP Association, in a speech before the CPUC made a number of major points on why the Verizon / MCI merger will be bad for business, and the people of the state of California.

"Duopolies or Oligopolies do not create competition in the market place. More importantly, the structure of telecommunication coverage areas in our state will create Monopolies in geographical areas. As an example, not once have I heard of Verizon or SBC attempting to service the area of the other ILEC for any telecommunication service."

"The amended Telecommunication Act was designed to bring competition, with the purpose of having the large phone companies compete with each other for customers."

"Furthermore, the structure of the Utilities Right-of-Way, paid for by the people of California, is now set up in such a way, that no other group can join in and utilize the right-of-ways. I quote the retired General Manager of Santa Clara Cable:. 'The last time there was a fairly open access to the Utilities Right of Way was during the birth of the Cable Television Industries.'”

"Only by competition in the telecommunications industry, will the people of the State of California be assured of Freedom of Choice. Freedom of Choice is a quintessential principle of both our Constitution and our economy, as stated by the preamble of the constitution."

"Freedom of Choice in Internet access has now become a cornerstone to Freedom of Speech and Freedom of the Press. Only by allowing multiple means of Internet access can we, the people, insure that these basic rights are protected. Already, within and without of the State of California, ISPs and many consumers have observed certain types of access being blocked or restricted to a speed much slower than advertised by the Phone Companies and the Cable Companies."

"An example is the blocking of Voice-Over-IP provided by Vonage by some Phone Companies and Cable Companies that has occurred in part of California. Only when a certain Phone Company was called and assured that legal action was to be implemented, did they remove the blockage. Moreover, we have seen the redirection of certain web sites to other sites, and not due to a virus or spy-ware on the customer's equipment."

Mr. Esser, further stated, "Other State PUCs and a retired FCC Chief Economist are arguing that this proposed merger of Verizon and MCI and the SBC and AT&T merger are 'bad for business.'"

"In a 78 page report, the New York PSC cited comments made by some petitioners that 'the combined post-merger scenario could provide a powerful incentive for SBC and Verizon to engage in 'tacit collusion' by not competing in each other's territories'"

"I would remind all that 'tacit collusion' is a violation of the Sherman Anti-Trust Act."

The report continues:

“In the wake of the breakup of AT&T two decades ago and the subsequent consolidation of the nation's telephone systems, consumer groups have complained that major telephone companies, including Verizon and SBC, have been re-monopolizing telecommunications.”

"On June 14, 2005, Simon J. Wilkie, the FCC's own former Chief Economist, said the proposed SBC/AT&T and Verizon/MCI mergers would produce a dramatic loss of competitive choices, fueling major price increases and stifling innovative services for business customers."

"Wilkie's economic study reveals that if AT&T and MCI are removed from the competitive telecom landscape, SBC and Verizon will dominate the business market, controlling service in at least 90 percent of the commercial buildings in their territories. The resulting domination by each phone company in its own region will fuel at least a 15 percent increase in wholesale prices for local access, which in turn will drive up retail prices to businesses by a similar amount. The elimination of primary competitors - and the continued collusion of SBC and Verizon not to compete in each other's territory - ensures that conditions for the business customer will worsen, not improve, if the mergers are approved.

"The California ISP Association believes that the political support these proposed mergers have received are not based on the public interest, but on the special interests of the very companies that the FCC and state PUCs were created to regulate. We believe it is our government's duty to promote competition, not to re-create monopolies."

"We ask that the California PUC vote to oppose the Verizon acquisition of MCI, as well as the SBC acquisition of AT&T."

The California ISP Association then presented the CPUC with documents supporting the actions of possible 'tacit collusion' by Verizon and SBC. These documents include the Secret Agenda from the secret meeting of CEOs in October 2003, and a letter from a number of CLECs requesting a congressional investigation into this secret meeting as reported by the Los Angeles Times on October 28, 2003.

About CISPA:

The California ISP Association, Inc. (http://www.cispa.org) has more than 100 independent ISP members representing more than 3 million California consumers and businesses. Advocating for the interests of ISPs and their customers since 2000, CISPA provides a unified voice to address legislative, regulatory and consumer issues as well as to support innovation within the ISP industry.

For more information Contact:

Mike Jackman

Executive Director

California ISP Association

415-388-3216

or

Mark Esser or 310-325-5610

Vice President

Board of Directors

California ISP Association

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