III. The Allegations of the Amended Complaint

Pursuant to the ALJ's ruling at the close of the January 30 TRO hearing, complainants filed their Amended Complaint on February 19, 2003. As we shall see, a comparison of the claims raised in the Amended Complaint with those litigated at the TRO hearing against SBC ASI and SBC California indicates that complainants have raised few new factual issues with respect to these defendants. With respect to the claims asserted against VADI, it appears that complainants have merely repackaged the allegations made in their original complaint, allegations they decided not to pursue at the TRO hearing.

After setting forth the circumstances of DIRECTV's decision to exit the DSL business and its preferred provider arrangements with SBC Yahoo and Verizon Online (as described in the Background section above), the Amended Complaint alleges on information and belief that the agreements with DIRECTV "contained clauses whereby SBC ASI and VADI agreed not to terminate the underlying DSL Transport services for these [DIRECTV] subscribers until February 28^th, 2003," and that the agreements "also contained confidentiality clauses whereby SBC ASI and VADI agreed not to disclose the continuing status of the DSL Transport network to any customer, except its affiliated ISP customers SBC Internet Services and Verizon Online." (Amended Complaint, ¶¶ 9-10.)

A. The Allegations Against SBC ASI and SBC California

In paragraphs 26-35 of the Amended Complaint, complainants restate their arguments at the TRO hearing about the allegedly misleading nature of the DIRECTV-SBCIS press release of December 27, 2002 and the SBC mailer sent to customers in California. The press release (Exhibit 2 to the Amended Complaint) is alleged to be "false and deceptive" and "an impediment to competition" because it wrongly suggests that if a DIRECTV subscriber wants to minimize disruption of service, the subscriber "should `transition' to SBC Internet Services rather than an independent ISP such as Complainants." When taken in context, complainants allege, readers of the press release "could not help but believe that SBC California was offering [DIRECTV] DSL subscribers less downtime if they transitioned their service to a Defendant-affiliated ISP." (¶¶ 27-28.)

With respect to the mailer (Exhibit 6 to the Amended Complaint), complainants first quote its language that if the subscriber orders SBC Yahoo service, that company "will pick up where you left off" and will "make the transition as smooth as possible." After noting the inconsistency of tenses in the ad pointed out by the ALJ at the TRO hearing (as discussed in footnote 7 above), complainants allege that the inconsistency "could, and likely did . . . fool[] customers into believing that their [DIRECTV] DSL service was already disconnected," and that as a result of the quoted language in the ad, "the average consumer could only be left with the impression that switching to SBC Yahoo! DSL would minimize downtime." (¶¶ 32-34.) Complainants also allege that they have suffered damage as a result of the press release and the mailer, "given the[ir] disparate marketing budgets and brand recognition." (¶ 35.)

Complainants also allege that the timing of the joint press release was designed to pressure DIRECTV customers into choosing SBC Yahoo as their new ISP. While DIRECTV's original announcement of December 13, 2002 stated that DIRECTV would continue to provide service for 90 days, the December 27 press release quoted DIRECTV's president as saying that DIRECTV's "network will be operational until at least January 16, 2003," so he encouraged DIRECTV customers to "quickly take advantage of this opportunity" to switch to SBC Yahoo. Complainants allege that "with [DIRECTV's] subscribers faced suddenly with this impending deadline, and probably limited energy to deal with DSL provider research [during the holidays], Defendants could be assured to acquire an even greater number of DSL customers than by relying on fair competition alone." (¶ 37.)

The Amended Complaint continues that because SBC ASI did not inform its non-affiliated ISP customers that DIRECTV planned to keep its network in operation until February 28, 2003 -- even though this information was known to SBCIS -- SBC ASI has "discriminat[ed] among its customers. Such discrimination is in violation of SBC ASI's obligations to provide non-discriminatory service as a common carrier. A common carrier can not be involved in a secret agreement designed to hide information from all but one customer, and ultimately fool end users into using the favored customer's services." (¶ 42.)

Finally, complainants allege that "SBC ASI has restricted Complainants' access to its DSL ordering system and thereby discriminated in the provision of DSL Transport against Complainants." (¶ 43.) The discrimination is alleged to have arisen out of SBC ASI's "refusal" to indicate on its Complex Product Service Order System (CPSOS), between December 13 and December 30, 2002, what the disconnection dates for DIRECTV customers would be. Complainants allege that "this disconnection information is usually available and is vital to inform new subscribers about the status of their DSL service orders. The CPSOS failure prevented Complainants from informing their new potential subscribers when they would lose their [DIRECTV] service, or allowing any reasonable estimate as to when their new DSL service would be functional." (¶ 45.)

B. The Allegations Against VADI

Some of the Amended Complaint's allegations against VADI are identical to those against SBC ASI. For example, complainants allege that "VADI fully intended to maintain DSL Transport connections for all [DIRECTV] subscribers through February 28, 2003," but that this information was known only to Verizon Online, VADI's affiliate. (¶ 53.) Because VADI refused to share the information about the February 28 cutoff date with any of its other ISP customers, it is alleged to have engaged in unlawful discrimination under § 453 of the Pub. Util. Code. (¶¶ 54, 74, 77.)

Complainants also allege that VADI violated the Pub. Util. Code's anti-discrimination provisions by withholding information about DSL transition procedures. Complainants allege that VADI had decided by December 30 to develop a procedure that would minimize DSL subscriber downtime, but did not provide any information about this procedure until January 8, despite numerous requests from complainants to do so. (¶¶ 56-57.) Even then, the January 8 information was allegedly incomplete, and complainants claim they did not receive complete information, including the critical fact that the procedure could be used for customers with static Internet protocol (IP) addresses, ¹³ until January 14, 2003, just "two days before the pending eradication of the [DIRECTV] network." (¶ 56.)

C. Summary of Statutory Provisions
Violated and Prayer for Relief

After making the above-noted allegations, the Amended Complaint enumerates the various provisions of the Pub. Util. Code that defendants have allegedly violated. With respect to § 451, which requires utilities to provide adequate, efficient, just and reasonable service, and requires that the charges for such service be just and reasonable, complainants allege that SBC California has violated the provision by participating in a marketing scheme designed to confuse DIRECTV subscribers, which has resulted in "charges being obtained by means of misleading or confusing sales." SBC ASI and VADI are both alleged to have violated § 451 "through [their] participation in the [DIRECTV] agreement[s] whereby [they] failed to alert Complainants about the fact that [they] had agreed to maintain the [DIRECTV] DSL Transport network through February 28, 2003." (¶¶ 69, 71.) The alleged failures to post essential information on SBC ASI's CPSOS ordering system are also claimed to constitute a violation of § 451. Complainants then allege that this same conduct by SBC ASI and VADI violated the anti-discrimination requirements of § 453, because these defendants thereby "granted a preference or advantage to their affiliated ISPs for DSL transport." (¶¶ 73-78.)

Defendants' conduct is also alleged to constitute a violation of Pub. Util. Code § 2896, which requires telephone corporations to provide customers with "sufficient information upon which to make informed choices among telecommunications services and providers," including information on pricing and the terms and conditions of service. SBC California is alleged to have violated these provisions through its participation in the "deceptive marketing campaign regarding downtime," and SBC ASI and VADI through their participation in the DIRECTV agreements whereby they "failed to alert Complainants about the fact that [they] had agreed to maintain the [DIRECTV] DSL Transport network through February 28, 2003." (¶¶ 81-82, 84.) SBC ASI is also alleged to have violated § 2896's requirement that telephone corporations provide "reasonable statewide quality service standards" by failing to make information available on a timely basis on CPSOS about the disconnect dates for DIRECTV customers. VADI is alleged to have violated the same provisions by failing to give DSLExtreme timely information about VADI's "hot swap" procedures. (¶¶ 83-85.)

In their prayer for relief (which appears at pages 27-29 of the Amended Complaint), complainants request many of the same things they sought at the January 30 TRO hearing. They request an order directing both SBC ASI and VADI to send notices to all DIRECTV customers who migrated to SBC Yahoo or Verizon Online informing these customers that they gained no advantage in downtime by choosing these affiliated ISPs, and further informing them that they can immediately choose a new, unaffiliated ISP without penalty or delay. Complainants also want a list of the DIRECTV customers who transitioned to SBC Yahoo or Verizon Online to be made available to all ISPs operating in California, and a complete report broken down by various time periods on the numbers of DIRECTV customers who migrated to affiliated versus non-affiliated ISPs.

Complainants also seek more general relief. They seek an order prohibiting SBC ASI and VADI from offering to their affiliated ISPs any contract, agreement, rule, facility or privilege that is not also available to unaffiliated ISPs, and they want an order directing defendants to make all of their agreements with DIRECTV available to the Commission, as well as all marketing scripts used in persuading DIRECTV customers to migrate to SBC Yahoo or Verizon Online. Finally, complainants seek penalties of $20,000 per day against SBC ASI, VADI and "Pacific Bell" for unspecified violations of Commission decisions, orders and rules, as well as the costs of this complaint case and "reasonable attorneys' fees pursuant to statute."

"Some customers use their DSL service for web hosting activities (i.e. maintaining websites). Web hosting is impossible with a dynamic IP address because a dynamic IP address changes each time the hosting subscriber turns on her service, and therefore a visitor to a server hosted on a dynamic IP service would be unable to locate the server. Because only static IP addresses are capable of supporting web hosting applications, they are generally more expensive than dynamic IP addresses." (April 25 Wolthoff Declaration, ¶ 4.)