Supreme Court to hear AT&T appeal in DSL price fix case

Considered to be the most controversial of several cases of this kind, California ISP linkLine's antitrust case against the former SBC Communications will be heard by the US Supreme Court.

According to linkLine's original complaint first filed against Pacific Bell (which was later acquired by "Baby Bell" SBC, which itself later merged into the new AT&T), the telecommunications company and DSL service provider engaged in anticompetitive practices which violated section two of the Sherman Act (1890).

ISP linkLine bought wholesale DSL service from AT&T to sell to its local customers as a part of a programming package. LinkLine alleged in its suit that the rates AT&T was charging linkLine were higher than the retail price AT&T was charging its customers directly for the same DSL service. This tactic is referred to as "predatory pricing," where the "predator" actually offers one of its goods or services at a money-losing rate simply to destroy all competition.

The last case to officially deem a monopoly as this sort of predator was in 1993 with Brooke Group v. Brown & Williamson Tobacco. Other cases since then have contained prominent accusations of predacious behavior, though. When Microsoft premiered Internet Explorer for free, Netscape filed an antitrust suit saying Microsoft's predatory pricing schemes made it impossible for Netscape to compete.

LinkLine proposed that when AT&T lowered its retail price, it should also have lowered its wholesale price proportionately.

Despite AT&T's motions to dismiss this allegation, the US District Court for the Central District of California found that linkLine's accusations actually satisfied some of the rules of the "Brooke Group" test to determine monopolistic behavior in a defendant. The Ninth US Circuit Court of Appeals in San Francisco upheld these decisions, and will now pass it along to the Supreme Court.