URL, Interrupted

Suzi Pilat clutched a glossy Verizon Communications Inc. advertisement. The vice president of a small Internet service provider in Clearwater, Pilat eyed Verizon's latest pitch to dial-up customers to upgrade to faster digital subscriber lines.

The Verizon ad promised to put new customers on a free DSL modem without activation fees for $29.95 a month. That happens to be the same price that Pilat said Verizon charges her to connect DSL customers.

DSL technology relies on copper wires wrapped inside local telephone lines. If Pilat or anybody else wants to sell DSL in the Tampa Bay area, they must deal with Verizon.

Since Verizon got into DSL, competing against Ma Bell's regional offspring (Baby Bells) for high-speed Internet customers has unnerved upstart companies.

'Let's say you want DSL from me. You don't want Verizon Internet," said Pilat, who works for Intelligence Network Online Inc., IntNet for short. 'So you call up (Verizon) and say: 'Look, all I want is a DSL line. I'm getting my Internet from IntNet.' It's $29.95, same price. What they're doing is giving away the Internet."

An exasperated look crossed Pilat's tanned face. 'So how am I supposed to make money on it?" she asked. 'They're giving you the modem for free, but they're making our customers pay for it."

At Verizon's wholesale cost to her, Pilat has to charge $10 or $20 more to connect IntNet's DSL customers to the Web, on top of up to $200 for the modem.

Independent Internet service providers are voicing similar complaints about Verizon and other Baby Bells. Such anti-competitive practices were supposed to be outlawed by the federal Telecommunications Act of 1996. But ISP complaints haven't moved politicians or telecom regulators in Washington, much less in Tallahassee.

'I've had a lesson in politics that I've cared not to know," said Dustin Jurman, who found out the hard way that elected officials seldom heed any interest group that didn't give large to their last election campaign.

Jurman runs Rapid Systems Inc., a Tampa ISP, with his sister Denise Jurman. She traveled to Capitol Hill recently to try to defeat a House bill that ISPs fear could wipe them out. She was unsuccessful.

'She went up there and spoke with representatives, stuff like that," said her brother. 'Interesting enough, everybody she spoke with had a Verizon or a BellSouth mug on their desk."

The Bells are even better at spreading around campaign cash. For the 2000 election cycle, according to the nonpartisan Center for Responsive Politics, Verizon gave $3.4-million while BellSouth Corp. chipped in $2.1-million. And that was only for federal candidates.

'We didn't have the money to work that," said Jurman. 'As ISPs, we could take that money and put it into our network to compete."

Ah, free enterprise.

The DSL entrepreneurs who put their faith in that quaint American delusion have been lining up in bankruptcy courts across the nation since teleco behemoths finally started pushing wired broadband in the late 1990s.

Rhythms NetConnections Inc., Covad Communications Group Inc., Northpoint Communications Inc. Household names only to your office IT geek, maybe.

But these were not dot-com dreamers trying to sell groceries over the Web.

They had viable business plans with sufficient capital to begin to serve a huge potential audience for affordable broadband. Instead, the Baby Bells, the cable companies and others swooped in to corral an ISP segment that hasn't grown nearly as fast as predicted.

The dot-com bust didn't help. But some analysts believe the next phase of the Internet Revolution has been delayed by monopolistic conglomerates driving out entrepreneurial rivals in order to inflate prices artificially.

'If cyber-geeks selling their BMWs were the most visible sign of the dot-com crash, then the failure of companies like Rhythms signals a much more important collapse in high tech," Karen Kornbluh wrote recently in The Washington Monthly. 'Scores of such companies have closed up shop, and DSL prices have risen substantially."

Kornbluh, who directed the Federal Communications Commission's lobbying office during the Clinton administration, noted that DSL sales slowed during 2001 after several years of explosive growth. 'As broadband services failed to take off, companies stopped buying new computers and software, which hurt suppliers and left massive inventory on the shelf."

Some of the tiny ISP pioneers have hung on. And now they are rolling out a new form of high-speed Internet. These survivors of the first broadband shakeout think — perhaps too optimistically — that their bigger brethren won't be able to mess with them this time.

Even in our Bay area, a high-tech backwater in the eyes of much of America, independent holdouts such as Suzi Pilat and Dustin Jurman gird for another battle for market share in the wild, wild world of Web access.

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