9. Stand-Alone DSL

Verizon bundles DSL with its wireline service and is not currently obligated to offer a stand-alone DSL product. Stand-alone DSL refers to the offering of DSL, for high speed Internet access, to a customer without also requiring the customer to buy additional services, such as traditional local phone service or VoIP service, from the same provider.

ORA, Qwest, and Level 3 propose that as a condition of approving the merger, stand-alone DSL be provided by the merging entities, and that DSL be based on industry standards to be compatible with competing providers' VoIP and other advanced services. By tying together DSL service with its voice services, Verizon discourages consumers from using VoIP competitors. Verizon has not had a mass market VoIP product, but in the past has used this required DSL bundling as means to discourage Verizon broadband customer migration to primary line VoIP service, by requiring a circuit-switched voice line purchase as a condition of getting and keeping Verizon broadband.

Some consumers prefer to buy packages of multiple services, while others prefer to buy individual services from different providers. Competitively priced individual offerings from different providers, however, allow competitors to compete on a service-by-service basis and, as a result, consumers benefit from more choices and better prices.

Verizon currently provides DSL service to subscribers in California only where the customer also subscribes to Verizon voice service. Both the DSL and voice service is provided over a single cooper loop. Applicants claim that requiring Verizon California to offer stand-alone DSL would be in violation of federal authority that a loop constitutes a single network element that is not subject to further unbundling.

Applicants claim there are numerous competitive alternatives to DSL, including ubiquitous cable modems, wireless broadband and other technologies, such that DSL unbundling is not necessary. Applicants argue that mandatory unbundling of DSL would actually impair competition by producing disparate regulatory treatment of the various modes of broadband connections.

We agree that in order to mitigate Verizon's market power in this area, Verizon should be required to offer DSL on a stand-alone basis, without tying DSL to a requirement also to take Verizon voice service. We disagree with Applicants' claim that the requirement for Verizon to offer DSL on a stand-alone basis constitutes a violation of federal authority that the low frequency portion of the local loop is not subject to further unbundling.

We conclude that Verizon's practice of refusing to offer stand-alone DSL harms competition by making it more difficult for competitors to provide voice service to customers subscribing to broadband Internet access over Verizon's DSL facilities. The potential for this practice to harm competition will be amplified with the merger. We therefore adopt as a condition of the merger that Verizon must offer DSL to consumers on a stand-alone basis without being tied to Verizon voice service. Customers will then have the option of purchasing local voice service, including VoIP, from a competing carrier.