IV. Discussion

This is a contested settlement that the Commission will review according to the standard set forth in Rule 51.1(e), which requires that a settlement be reasonable in light of the whole record, consistent with law, and in the public interest. Overall, we find that the Revised Settlement meets that standard as long as certain modifications are made and agreed to by the parties, in accordance with Rule 51.7, as described in below.

The Revised Settlement is reasonable in light of the whole record because it addresses several of the allegations contained in the initial complaint and provides remedies related to those alleged potentially anticompetitive and discriminatory practices of SBC/ASI. Specifically, the Revised Settlement addresses the allegations in the original complaint as follows:

· Anticompetitive marketing and sales practices-These allegations are addressed through provisions relating to enforcement of standards for marketing scripts (Section 6); protection of end user information through system security enhancements that limit SBC service representatives to DSL Transport order information from only its affiliated ISP (Section 4); creation of an ombudsperson to resolve sales practice and billing disputes with ISPs (Section 3); commitment of SBC/ASI to independent third party review of the process and procedures associated with access and use of ISP customer information (Section 6).

· Preferential treatment in providing DSL to ISPs affiliated with SBC and ASI-This allegation is addressed through improved customer migration intervals (Section 7); ordering interface improvements (Section 5); independent third party review of sales practices (Section 6); and creation of an ombudsperson (Section 3).

· Improper use of non-public customer information-This allegation is addressed through sections of the settlement regarding system security enhancements for partitioning of customer information (Section 4); independent third party review of the access to and use of ISP end user information (Section 6); and creation of an ombudsperson (Section 3).

· Service quality concerns such as service interruptions, disconnections, and "clenching" of customers-These allegations are addressed through improvements to the customer migration interval (Section 7) and order provisioning process (Section 5).

· Requiring ISPs to migrate to a new DSL Transport architecture-This allegation is addressed in a provision requiring consent of an ISP prior to network architecture changes (Section 1).

In addition, the Revised Settlement contains other provisions that are reasonable in light of the allegations in the complaint such as the grandfathering of certain service options (Section 1(b)), and the creation of a marketing fund of $725,000 for the benefit of CISPA's ISP members engaged in promoting ASI's DSL Transport service with their ISP service (Section 14(b)(2)).

The Revised Settlement is consistent with law, particularly since it has been modified to remove language contained in the initial settlement that restricted CISPA's involvement in other Commission proceedings and it has clarified and narrowed language restricting the Settling Parties' use of facts underlying this case in other actions (Section 8). Further, the Release of Claims language in the Revised Settlement applies only to the signatories of the settlement, namely CISPA, SBC and ASI. The Revised Settlement does not restrict the ability of third parties that are not signatories to this settlement from pursuing their own, independent claims. According to CISPA:

The Settlement Agreement was executed by CISPA and CISPA alone. The terms of the Settlement Agreement do not prevent any ISP (whether a CISPA member or not) or any consumer group or end use customer from raising whatever issues they want before the Commission, other regulatory venues or in civil courts. (CISPA response, 9/25/02, p. 3.)

Therefore, ISPs, consumer groups, and end-use customers are free to pursue any claims that may have been the subject of this complaint.

The Revised Settlement is in the public interest, if it is modified to address three concerns, which we describe in further detail in Section IV.A below. On the whole, we find the Revised Settlement in the public interest because it resolves the majority of the issues raised in the underlying complaint and improves upon various aspects of the provisioning of DSL Transport service to ISPs, without the need for extensive litigation.

The Settlement has been revised and improved by the Settling Parties, in response to guidance from the Assigned Commissioner and ALJ. Specifically, language limiting future claims has been narrowed. In addition, the Revised Settlement contains significant improvements in customer migration intervals over those in effect at the time the complaint was filed. In the latest revisions, SBC/ASI commit to a migration interval of one business day in all three scenarios described in the settlement by the fourth Quarter of 2003, or sooner. Finally, the Revised Settlement specifies actions that SBC and/or ASI will take in response to allegations of anticompetitive practices, preferential treatment of its affiliated ISP, and misuse of independent ISP end-use customer information. While the Revised Settlement has undoubtedly not satisfied all concerns that have been voiced surrounding SBC/ASI's DSL Transport services, it reasonably resolves the competitive concerns raised in this specific complaint in an effort to preserve choice of ISPs for end-use customers. Significantly, the Revised Settlement does not foreclose future claims by DSL Transport customers who are not signatories to this settlement.

A. Modifications to the Revised Settlement

Nevertheless, in order for the Commission to make a final finding that the Revised Settlement is in the public interest, it must be modified in three ways.¹⁶ First, we are concerned with language inserted into Section 1(a) of the latest version of the Settlement regarding "packetized voice" which states that:

ASI agrees it shall not, without first obtaining the written consent of any affected ISP: . . . (ii) implement multiple, simultaneous sessions (other than packetized voice) and bandwidth or quality of service on demand capabilities on the ISP's end user line; . . . (new language in italics)

TURN/UCAN, Brand X, and Raw Bandwidth expressed unanimous concern with this new language that allows SBC/ASI to provision packetized voice (apparently for Voice over DSL, or "VoDSL") over the same loop that the ISP has purchased for DSL Transport. With the insertion of these four words in Section 1(a) of the Revised Settlement, SBC/ASI would be able to use the loop for packetized voice without the prior written consent of the affected ISP. Essentially, SBC/ASI would reduce the DSL bandwidth provisioned to DSL Transport customers to make space for its own VoDSL services. TURN/UCAN and other parties are concerned that this provision of the settlement could create an unintended approval of such use of the loop.

SBC/ASI respond that if the ISP chooses not to purchase the full capability or speed of the line, ASI remains free to use the portion of the line not purchased for other purposes, such as packetized voice. SBC/ASI state, "Given that VoDSL has not been implemented yet, this is not the proper forum for resolution of the issue of who owns what portion of the bandwidth. When and if that dispute actually arises, the question will be addressed." (SBC/ASI Reply Comments, 3/10/03, p. 12.)

We note that the new text regarding packetized voice was not contained in the initial version of the Settlement filed in August 2002. Indeed, when this complaint was first filed, allegations concerning packetized voice and VoDSL were not included and they are not mentioned in the scoping memo. The February 2003 Revised Settlement now carves out an exception to this initial agreement and allows SBC/ASI to use a portion of the line for packetized voice without the prior approval of the ISP.

From the comments filed, this new and contested language raises substantial technical issues concerning ownership of the line and reservation of part of the line by SBC/ASI for their own purposes. It is inappropriate for SBC/ASI to insert this into the latest version of the settlement without the ability of the Commission to examine and understand the ramifications of these technical issues. It is not in the public interest for the Commission to give tacit approval through this settlement to a new technical arrangement that it has not had the opportunity to review and which was not raised as part of the initial complaint. SBC/ASI admit that issues surrounding packetized voice and VoDSL are not appropriate to be raised in this docket but should be considered elsewhere. We will not hold up resolution of this complaint and the positive aspects of the settlement-such as the improved customer migration intervals, sales practice and order provisioning improvements, and the marketing fund-so that the Commission can analyze an entirely new technical issue which is outside the scope of the original complaint. The Settling Parties should remove this newly inserted language from the Revised Settlement so that the Commission can find the Revised Settlement in the public interest.

Second, we are concerned that the portion of the Revised Settlement dealing with the release of future claims is still too broad. The initial settlement contained language restricting CISPA and SBC/ASI from any involvement in a future claim, lawsuit, complaint or administrative proceeding against the other "arising out of or based upon, any and all facts which are the basis of the Complaint or claims asserted in this litigation . . ." (Initial Settlement, 8/12/02, paragraph 9(a).) The Assigned Commissioner and ALJ expressed concern with this language in their December 2002 ruling, noting that it was unclear how such a broad restriction could be practically enforced given that the record of the case and the facts underlying it had not been developed. They suggested that this language "might unreasonably exclude any future claims of misconduct against Pacific or ASI unless the facts, time periods, and claims referred to are specified. (December 2002 ruling, p. 15, emphasis added.)

The settling parties responded with revisions to this language that narrowed the restriction on future claims to the facts contained in the scoping memo of this complaint. While this is certainly an improvement, the language still does not specify a time period for these allegations. The public interest will not be served if we approve a settlement that prohibits CISPA's involvement in complaint proceedings or lawsuits against SBC and/or ASI with regard to activities that may have been described in the scoping memo of this proceeding, but occur in the future. Instead, it is reasonable to limit the release of future claims by CISPA and Defendants to the facts described in the scoping memo that are alleged to have occurred between the date when ASI received operating authority from the Commission in Decision (D.) 00-05-021, or May 4, 2000, and the date of the Initial Settlement, or August 12, 2002.¹⁷ The Settling Parties should modify the settlement accordingly to include this narrower time frame for limitations on future claims in order for us to find the Revised Settlement is in the public interest.

Third, the Revised Settlement should be modified to incorporate the changes proposed by SBC/ASI in their March 10, 2003 comments. Most notably, these changes shorten the customer migration intervals that SBC/ASI commit to, and clarify that the grandfathering of certain services in the Revised Settlement will remain in effect even when ISPs request certain line changes.

B. Other Parties' Concerns

Before concluding, we will address other parties' criticisms of the Revised Settlement. Overall, we are not persuaded by requests to reject the settlement or hold hearings on the underlying allegations contained in the original complaint. TURN/UCAN comment that although the settlement has been revised to address their original objections, the Revised Settlement is not in the public interest because it does not adequately resolve the allegations raised by CISPA regarding the anticompetitive and service quality concerns of ISPs and their customers. They argue that the Commission must hold evidentiary hearings in order to determine whether the settlement is indeed in the public interest. Specifically, TURN/UCAN suggest that the Commission hold hearings on testimony relating to specific ISP customer complaints, such as claims that customers of independent ISPs had difficulty securing ports for DSL Transport service and that these customers had difficulty switching to independent ISPs.

Raw Bandwidth and Brand X request rejection of the Revised Settlement and hearings on the underlying allegations of the complaint. They express concern with grandfathering provisions of the settlement, customer migration intervals, and whether the settlement contains enforceable rights for ISPs to protect against future anticompetitive conduct. They contend that the Revised Settlement is not a reasonable resolution of the allegations in the initial complaint and therefore not in the public interest because it only addresses a subset of the original allegations. Raw Bandwidth claims that SBC's cancellation of the Internet Access Services Program (IASP), which provided financial and other benefits to ISPs who sell ASI's DSL Transport, and SBC's cancellation of its web page listing of independent ISPs who provide DSL services, shows continued actions by Defendants to disadvantage independent ISPs. Brand X is chiefly concerned with language regarding VoDSL and modem kits, and it finds the $725,000 marketing fund to be inadequate.

SBC/ASI respond that it is not reasonable to force the parties to litigate the entire case through evidentiary hearings in order to determine whether the settlement agreement is in the public interest. This "defeats the very essence of the policy in favor of settlements, which is to encourage parties to promote resolution of matters without hearings . . . " (SBC/ASI Reply Comments, 3/10/03, p. 3.) On the issues raised by TURN/UCAN, SBC/ASI claim these issues are moot because they are outdated concerns or the concerns have been addressed through provisions of the Revised Settlement, such as improvements to the customer migration interval. SBC/ASI maintain that Raw Bandwidth's issues have been addressed through newly proposed revisions or they are not relevant and should be ignored. Specifically, SBC/ASI indicate that the IASP is not relevant to this complaint and SBC has agreed to a website listing of its ISP customers who provide DSL service. As to the issues raised by Brand X, SBC/ASI respond that these concerns are outside the scope of the complaint because they relate to pricing and system architecture.

We have already found the Revised Settlement is in the public interest if modified. Therefore, we will not schedule hearings on the settlement as requested by these parties. First, we agree with SBC/ASI that requiring the complainant to litigate the entire case in order to determine whether the settlement is in the public interest, when that same complainant has resolved their issues through a settlement, is contrary to the Commission's customary settlement process and defeats the very essence of the policy encouraging settlements. Indeed, there would be no incentive for parties to settle a case if they did not escape the resource burdens and uncertainty of the hearing process.¹⁸

Second, we find there are no material facts requiring a hearing. We agree with SBC/ASI that, by virtue of the improved customer migration interval and order process improvements, the Revised Settlement represents a reasonable compromise of the issues raised in the complaint. Likewise, we find that the Revised Settlement, as modified in Appendix A, either adopts a reasonable compromise regarding Raw Bandwidth's and Brand X's concerns, or these concerns are outside the scope of the complaint. We are satisfied with the improvements to customer migration intervals and grandfathering of service options contained in the Revised Settlement, if modified as described in this order. The IASP and website issues are beyond the scope of the complaint, as are the bulk of the issues raised by Brand X (such as pricing of modem kits and system architecture issues). We do not find the $725,000 marketing fund inadequate because this is only one of many benefits provided by the entire Revised Settlement, as we have enumerated above. We see no reason to engage in hearings on this matter when the Complainant has found the settlement addresses its concerns and when the Revised Settlement, if modified as shown in Appendix A, commits the Defendants to service quality improvements. To the extent Raw Bandwidth or Brand X has specific complaints with aspects of SBC/ASI's DSL Transport service, they are free to file their own complaints.

C. Conclusion

In conclusion, we are pleased that CISPA, SBC and ASI were able to come to a mutually agreeable outcome to this complaint without the need for extensive litigation of the underlying dispute. We are also appreciative of the efforts of the intervening parties who have drawn attention to various public interest concerns related to aspects of DSL Transport service. The participation of these parties, and the willingness of the Settling Parties to consider these issues, has led to an improved outcome in this case. For example, the Revised Settlement agreement that we approve today, as long as it is modified, contains commitments to service quality and order processing that are improvements over the conditions when the complaint was first filed. If the Settling Parties agree to the modifications described in this order, SBC/ASI commit to a one-day customer migration interval by the end of 2003, third party review of its handling of ISP customer information, and a process for resolving billing and other disputes with ISPs. We find that these improvements that are achieved through the Revised Settlement are in the public interest because they address concerns over the ability of end-use customers to receive DSL service through the ISP of their choice without unreasonable service interruption.

We approve the Revised Settlement agreement as long as it is modified to remove language regarding packetized voice, narrow the time frame for release of claims, and incorporate the changes suggested by SBC/ASI in their March 10, 2003 filing. Accordingly, the Settling Parties are requested to indicate in their comments on the draft decision whether the proposed modifications are acceptable. If the Settling Parties accept these modifications, they should execute a modified settlement and attach it to their comments so that it can be approved when the Commission votes on this order.