Supreme Court sides with AT&T in broadband case

by Marguerite Reardon

The U.S. Supreme Court has sided with an AT&T subsidiary in an antitrust lawsuit that accused the phone company of anticompetitive practices over pricing for its broadband Internet services.

The justices ruled unanimously in favor of AT&T's Pacific Bell Telephone subsidiary, which had been accused of a "price squeeze" aimed at eliminating competition for DSL broadband service, Reuters reported Wednesday.

The plaintiffs in the case were competing Internet service providers, including LinkLine Communications and Notelog, which buy high-speed Internet service from AT&T at wholesale prices and resell the service to consumers. The ISPs involved in the case compete directly with AT&T in offering DSL service.

Under federal law, AT&T's Pacific Bell (now doing business as AT&T California) is required to sell service providers wholesale access to its telephone network. But the plaintiffs argued in their lawsuit, which was filed in 2003 in federal court in California, that AT&T's prices were too high. They claimed that AT&T had inflated the price it charged them while it reduced the price of the retail service to consumers, which effectively undercut the competition. The plaintiffs argued this was a "price squeeze."

But Chief Justice John Roberts disagreed. He wrote in the ruling that the "price-squeeze" claim did not apply in this case.

"We decline the invitation to recognize such claims. Two wrong claims do not make one that is right," he wrote.

The Supreme Court reversed a decision by a U.S. appeals court in San Francisco. The ruling was the latest in a series of recent decisions by the Supreme Court that have generally made it harder to bring antitrust lawsuits, Reuters reported.

Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie.

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