BRIEFS

Cable World, July 28, 2003

FOUR ISPs SUE SBC

Four Internet service providers filed suit against SBC and its subsidiaries in California last week, alleging that the phone giant is using its monopoly of the state's telecommunications market to squeeze out independent providers of high-speed data services. SBC is required to lease its telephone lines to these independent providers of digital subscriber lines. The suit charges that the phone giant charges these ISPs an excessive wholesale lease rate for DSL lines while it charges consumers a lower rate for its own DSL service, effectively violating antitrust statutes. As a result, the four ISPs - linkLine Communications, InReach Internet, Om Networks and Nitelog - lost customers and profits worth about $40 million, the suit alleges. Maxwell Blecher, the plaintiffs' lawyer, says that cable operators probably won't be threatened with a similar suit: Cable modems had a smaller broadband market share in the state (39%) compared to DSL (45%), according to the latest report by the California Public Utilities Commission. Separately, SBC and the city of San Diego are at loggerheads over the city's decision to move its power lines underground. Cox and Time Warner Cable have all agreed to pony up the costs to transfer their conduit to San Diego Gas & Electric trenches. But SBC has so far resisted, causing friction with city fathers.

ARRIS ROLLING TOWARD THE BLACK

Although Arris remains in the red, things are looking up for the Atlanta-based vendor, which announced it had narrowed its losses in the second quarter. The company posted a net loss of $27.8 million on $101.7 million in sales for the quarter, compared with a net loss of $40.7 million on $176.5 million in sales in the same period year-over-year. "I continue to be optimistic about improvements in overall industry spending as our customers extend or resume their cable telephony rollouts," said Arris chairman, president and CEO Bob Stanzione. And while Arris's Comcast sales were up nearly $13 million since Q1, Stanzione cautioned that the vendor awaited the time when "spending visibility improves." Loss per share was 31 cents through two quarters, compared with a loss per share of 29 cents through two quarters of 2002. "We are pleased that the turnaround in revenues from the first quarter and the actions taken during the quarter to reduce ongoing expenses will accelerate our return to profitability," said CFO Larry Margolis.