RealTime IT News

BellSouth Monopoly Case Moves Forward

Overturning a lower court decision, the U.S. Court of Appeals in Texas ruled Friday afternoon that digital subscriber line (DSL) provider Covad Communications has the right to file an antitrust suit against incumbent telephone company BellSouth.

The District Court of Northern Georgia earlier threw out Covad's case, agreeing with BellSouth's contention that Covad couldn't file a lawsuit on the grounds of Sherman Antitrust Act violations. The court found the Sherman Act didn't have precedence over the Telecommunications Act of 1996, which is the legislation covering the telecom industry and enforced by the Federal Communications Commission (FCC).

Judge Rosemary Barkett, one of three district judges presiding over the case, stated in her opinion:

"The initial question before us in this case is whether Congress intended in the 1996 Act to provide immunity from antitrust violation claims for conduct covered in that Act. Congress specifically and directly stated that the two Acts were intended to be used in tandem to accomplish the congressional goals served by both Acts -- namely, the stimulation of competition."

Martha Sessums, Covad spokesperson, said her company is happy with the ruling and they can finally press forward with similar antitrust suits against the other three incumbent local exchange carriers -- Verizon Communications , SBC Communications and Qwest Communications .

"We believe this ruling tips the scales favorably in our pending lawsuits against the other ILECs, she said, "in particular, the Verizon suit, which is scheduled to begin at the end of the year."

Verizon is appealing the Covad suit on the same grounds as BellSouth; now that a federal court has ruled in their favor, Sessums believes other courts will follow suit.

BellSouth officials were unavailable for comment.

Covad is suing the telephone company on 24 counts, claiming BellSouth violated the Sherman Antitrust Act, the Telecom Act, state anti-monopoly statutes and unfair competition laws, and state laws of breach of contract.

In its appeals filing, Covad stated the ILEC delayed and hindered DSL provisioning, because "Covad's market entry and service offerings pose a real threat to BellSouth's monopoly power," and engaging in "a wide variety of unlawful, exclusionary and anticompetitive acts with the intent and inevitable effect of injuring, thwarting or eliminating Covad as an actual or potential customer."

These acts, Covad maintains, were party responsible for its stock value to plummet, which resulted in Chapter 11 bankruptcy last year. They re-emerged from bankruptcy that December.