Book of Broken Promises: $400 Billion Broadband Scandal & Free the
Net, September, 2014
$200 Billion Broadband Scandal
(Published in 2005)
This book documents the largest fraud case in American history
The case is simple: Do you have a 45 Mbps, bi-directional service
to your home, paying around $40? Do you have 500+ channels and can choose
any competitive service? You paid an estimated $2000 for this product
even though you did not receive it and it may never be available. Do
you want your money back and the companies held accountable?
Background: Starting in the early 1990's, the Clinton-Gore Administration
had aggressive plans to create the "National Infrastructure Initiative"
to rewire ALL of America with fiber optic wiring, replacing the 100
year old copper wire. The Bell companies SBC,
Verizon, BellSouth and Qwest, claimed that they would step up to the
plate and rewire homes, schools, libraries, government agencies, businesses
and hospitals, etc. if they received financial incentives.
- By 2006, 86 million households should have already
been wired with a fiber (and coax), wire, capable of at least 45 Mbps
in both directions, and could handle 500+ channels.
- Universal Broadband: This wiring was to be done
in rich and poor neighborhoods, in rural, urban and suburban areas
- Open to ALL Competition: These networks were to
be open to ALL competitors, not a closed-in network or deployed only
where the phone company desired.
- Each State: By 2006, 75% of the state of New Jersey
was to be wired, Pennsylvania was to have 50% of households by 2004,
California to have 5 million households by 2000, Texas claimed all
schools, libraries, hospitals.
Virtually every state had commitments.
- Massive Financial Incentives: In exchange for building
these networks, the Bell companies ALL received changes in state laws
that gave these them excessive profits, tax savings, and other perks
to be used in building these networks.
- This was not DSL, which travels over the old copper
wiring and did not require new regulations.
- This is not Verizon's FIOS or SBCs Lightspeed
fiber optics, which are slower, can't handle
500 channels, are not open to competition, and are not being deployed
- This was NOT fiber somewhere in the network ether,
but directly to homes.
The Harms and Outcome
- Costs to Customers We estimate that $206
billion dollars in excess profits and tax deductions were collected
over $2000 per household. (This is the low
- Cost to the Country About $5 trillion dollars to
the economy. America lost a decade of technological innovation
and economic growth, about $500 billion annually.
- Cost to the Country America is now 16th in the world
in broadband. While Korea and Japan have 40-100 Mbps at cheap
prices, America is still at kilobyte speeds.
- The New Digital Divide The
phone companies current plans are to pick and choose where and when
they want to deploy fiber services, if at all.
- Competitor Close Out
SBC, BellSouth and Verizon now claim that they can control who
uses the networks and at what price, impacting everything from VOIP
and municipality roll outs to new services from Ebay and Google.
The Truth: This is a Fraud Case
- Fraud: There is a dark secret the networks
couldn't be built at the time the commitments were made and are still
not available. If someone pays thousands of dollars for a service
and doesn't get it, isn't that fraud?
- Collusion and Cover-up: TELE-TV and Americast,
the Bell companies' fiber optic front groups, spent about $1 billion
and were designed to make America believe these deployments were real
in order to pass the Telecom Act of 1996 and enter long distance.
How did every major phone company in America not know that these fiber-based
services couldn't be built and were able to defraud over 40 states?
- The mergers killed fiber optic deployments in over 26 states
and harmed competition. With every merger, the phone companies
simply dropped all state commitments and harmed every state they merged
with. Case in point: Verizon cut deployments to 13 states during the
NYNEX-Bell Atlantic merger, not to mention GTE's 28 state deployments.
SBC did the same in all 13 of its states, from California to Illinois.
Worse, the mergers were based on the companies competing with each
other and there is NO evidence they ever did any serious wireline
- The Regulators Killed Competition and Broadband.
Over the last 4 years, instead of continuing competition as ordered
by the Telecom Act of 1996, the FCC has rewritten the laws close down
Internet Service Providers (ISPs) that brought America to the Internet,
as well as virtually all local competition. AT&T and MCI couldn't
compete because they were regulated out of business and thus were
- Distortion of the Truth by the FCC. Virtually every
piece of documentation presented in this work is missing from the
FCC's Advanced Network Reports. The FCC defines broadband as 200 kilobytes
per second in one direction 225 times slower than what was
promised in 1992.
- Cross-Subsidization Instead of spending
the money on these networks, the Bell companies used the money to
enter long distance, rollout wireless and the inferior DSL services.
The Bells also lost over $20 billion overseas and paid executives
over a billion in stock options during the mergers.
- Bait and Switch Customers paid for a fiber
optic wire and got DSL over the old copper wiring it's like
ordering a Ferrari and getting a bicycle.
20 Year Analysis of Revenues, Profits, Expenditures: This
book is based on a 20 year analysis of Bell-supplied data, Census Data
and Business Week. Since 1984::
- Revenues are up 128%.
- Employees are down 65%, Construction is down 60%.
- $92.5 billion is missing in network upgrades.
- Profits based on failed fiber plans up 188% as compared to other
Teletruth has filed a complaint with the Federal Trade Commission,
(FTC) to investigate the claims presented; the book is the data for