Carole Sumler of Santa Monica, California, wants her Brand X Internet—and fears the Federal Communications Commission will take it away.

Sumler, Webmaster and online community manager for The Dream Exchange, a social networking site, is a loyal customer of Brand X Internet, a tiny Southern California DSL service provider.

In June, the U.S. Supreme Court rejected Brand X's bid to gain access to cable networks' broadband lines. Ironically, that decision could indirectly also cost Brand X and other ISPs access to phone lines, making it impossible for them to offer DSL service.

In its lawsuit against the FCC, Brand X argued unsuccessfully that cable companies, like phone companies, should be required under the Telecommunications Act of 1996 to share their lines with third-party broadband providers. The Court sided with the FCC, however, upholding the cable companies' long-standing practice of excluding most third-party broadband providers from their networks.

In the wake of this decision, the FCC has hinted that it may release phone companies from their obligation to lease their DSL lines to competitors such as EarthLink and Brand X.

"This decision provides much-needed regulatory clarity and a framework for broadband that can be applied to all providers," said FCC chairman Kevin Martin after the judgment was handed down.

The FCC is currently reviewing its regulations for DSL providers but hasn't publicly announced a timeline for making any changes. Jupiter Research senior analyst Joe Laszlo believes that the FCC will not alter its existing DSL policy before mid-2006 at the earliest. "Any substantial change takes a while," he says.

Personal Service

If small providers such as Brand X can't lease broadband lines from cable or phone companies, they'll be out of business. But Sumler doesn't relish the prospect of switching to a larger broadband ISP, which she believes would not deliver the support and personal attention she gets from Brand X, a Santa Monica-based service provider that has a mere 350 subscribers.

When service issues arise, Sumler often speaks directly with Brand X president Jim Pickrell. "If I don't talk with Jim, I talk with one of the support staff," she says. "I tell them what the problem is, and they get it done right away."

It may be a bit premature to sound the death knell for DSL mom-and-pops, however. The phone companies make a nice profit by leasing DSL lines wholesale to large ISPs. But while a deregulated phone industry would likely continue to do business with large DSL providers like EarthLink, the future is murky for smaller players such as Brand X, which don't generate much profit for the telcos. "Many smaller ISPs will get bounced out," predicts Jim Murphy, president of DSL Extreme, a Winnetka, California, broadband provider with 50,000 subscribers.

While Jupiter's Laszlo concurs that phone companies profit from wholesale DSL deals, he says they're not necessarily thrilled about them.

"Cable and phone companies are focused on selling a bundle of services that includes broadband, TV, and phone," Laszlo says. But it's hard to market a DSL, phone, and TV bundle to someone who already has DSL service.

Over the past four years, FCC officials have said that they want to allow cable and phone companies to reap the rewards of their broadband investments, which the officials say would motivate the companies to provide broadband in more areas and to develop technologies to increase high-speed bandwidth, thereby spurring the adoption of high-speed Internet service. But according to Jupiter's Laszlo, price, not lack of availability, is the primary obstacle to increased broadband adoption. "When we ask U.S. consumers why they don't have broadband, the number one answer we get is, 'It's too expensive,'" he says.

So would fewer broadband providers benefit the public? Laszlo says no. "More competition is better than some competition....Consumers would be helped by a broadband landscape with, say, five choices instead of two."