New Networks News Analysis: June 15th, 2009
Ed Whitacre, former head of new-AT&T to take over GM... Oy Vey.
In our FCC broadband comments we discussed that America is 15th in the world
in broadband because AT&T, Verizon and Qwest failed to properly upgrade
America's public switched telephone networks but collected over $300 billion
And now AT&T is 'backing' 100% broadband by 2014? Really. Pinocchio speaks.
First, let's examine why AT&T should not be trusted when discussing
broadband projections and deployments based on the company's track record.
The headline of AT&T's FCC broadband comments, "AT&T Backs 100 Percent
Broadband by 2014", should be taken as a sign of just how bad we're about to
get screwed. Here's an article about AT&T's comments.
"AT&T, in comments directed at the Federal Communications Commission as the
agency begins movement toward a national broadband program, said
it backs "100 percent broadband" by 2014."
AT&T's press release sounds reasonable, but underneath it is just melodious
Formerly named SBC, the Texas-based company, after a series of mergers,
including purchasing the legacy-AT&T, now controls 22 states -- almost half
of the US population. This includes Pacific Telesis, Ameritech, BellSouth,
Southwestern Bell and even the Connecticut-based SNET, not to mention the
AT&T holdings. And the company, (SBC-AT&T-et-al) has lied in virtually
every annual report, FCC merger condition, or any other place that would
(Since the entities have changed names multiple times, here is a scorecard
of the mergers and name changes.)
Need some proof?
a) AT&T already promised 100% broadband in their 21 states by 2007 as
part of their AT&T-BellSouth commitments -- never happened.
b) When SBC announced U-Verse and Lightspeed in 2004 so it could merge
with AT&T, it claimed it would have 18 million homes by 2007 ---
c) SBC, when it merged with Ameritech, claimed it would compete in 30
cities outside their region and promised to spend $6 billion on
'Project Pronto', replacing the copper wiring with fiber optics
-Never spent the money, didn't do the build outs.
d) Past History -- Broadband Scandal 101. Almost every state, from CT
and CA to IL or Texas, pitched a statewide broadband plan that was
never executed but the companies collected billions per state.
e) Mergers harmed broadband. When SBC took over Pacific Telesis,
Ameritech, BellSouth, SNET and Southwestern Bell, the company closed
down all deployments, including cable networks. The merged companies
claimed it would spend $33.6 billion on 12.5 million homes. This was
supposed to include, in most states, schools, libraries,
government agencies and even hospitals.
f) ALL of the AT&T companies made commitments to deploy ISDN, the first
poster-child for broadband, and they never supported the product
even though states gave the companies funding, including "TeleKansas",
"Telefuture2000" (Missouri) or "Education First, by Pacific Bell, to
supply ISDN to all California schools by 1996. ISDN Is now referred to as "It Still Does Nothing".
In short, AT&T can't be trusted.
A) AT&T already promised 100% broadband in their 22 states by 2007; it was
part of their merger conditions to purchase BellSouth. The fact that no
regulator bothers to actually investigate whether the companies have
fulfilled their obligations, either in annual and quarterly reports or
merger conditions allows the companies to continually make stuff up, then
Here is the actual text from the AT&T-BellSouth merger --- 100% deployment
in the AT&T territories. *(In the Matter of Review of AT&T, Inc and
BellSouth Corp. Application for Consent to Transfer of Control, WC Docket
No. 06-74, December 28th, 2006.)
"Promoting Accessibility of Broadband Service
This condition was never completed. However, the merger went through.
In the same document they also promised to roll out $10.00 DSL to first time
purchasers. Our survey in California found that they lied; they didn't
advertise any service and when customers attempted to try to get the
service, most were told that there was no such offer.
Not dramatic enough?
B) When SBC announced U-Verse and Lightspeed in 2004, so it could merge with
AT&T, it claimed it would have 18 million homes by 2007 --- oops.
SBC 2004 Annual Report
"Project Lightspeed In June 2004, we announced key advances in developing a
C) When SBC merged with Ameritech, it claimed it would compete in 30 cities
outside their region and promised to spend $6 billion on 'Project Pronto'
From the 1999 Annual Report:
"Broadband Initiative in October 1999: As the first post-Ameritech merger
And on Competition:
"21.Out-of-Territory Competitive Entry (National-Local Strategy)
Nothing ever got built. SBC, once the ink was dry, simply stopped any
activities. Worse, SBC never entered any territory with any vigor--- they
lied to the FCC and put the money into other areas, like entering the long
distance market. The merger would never have been approved had they told the
truth. We asked both the FCC and Congress to investigate how the companies
failed to compete as they should have paid over $1 billion in penalties and
D) Past History -- Broadband Scandal 101. Almost every state, from CT and CA
to IL or Texas, pitched a statewide broadband plan that was never executed
but the companies collected billions per state.
The merged companies all had plans to rewire whole states with fiber optic
services to offer "information superhighway" applications like video
conferencing and hundreds of channels of video programming.
* Pacific Bell claimed it would spend $16 billion dollar to have 6
million homes rewired by 2000.
* SNET, which was to spend $4.5 billion in I-SNET, which was to have
100% completed by 2007,
* Ameritech, which was to have 6 million homes rewired by 2000, the
entire 5 state territory by 2010.
* Southwestern Bell, Texas was to commit $1.5 billion to wire schools,
libraries and government agencies with fiber optics, all by 2000.
In fact, by 2010, virtually every US household should have been rewired,
based directly on annual report statements, court and PSC filings, FCC
filings, etc. AT&T, Verizon and Qwest already got paid about $300 billion
and counting for these upgraded networks.
Read "$300 Billion Broadband Scandal", now a free ebook download.
E) In every merger, SBC, now-AT&T closed down the state broadband plans,
even though it was collecting billions per state, even though there were
legal commitments to be completed.
Here's a link to the history of the SBC mergers, the promises and
commitments they made and the harms to broadband and competition.
The SBC Hatchet of Fiber Optic Deployments
(Sources: Bell Annual Reports)
Money (billions) Households Merger Shutdown Cable
Pacific Telesis $16.0 5,500,000 1997 1997 0
Ameritech (3states) $6.6 6,000,000 1999 2000 304,000
SNET $4.5 1,000,000 1998 2000 31,000
SBC, Texas $1.5 0
Total $33.6 12,500,000
From: $300 Billion Broadband Scandal
By 2002, over $33.6 billion should have been spent by the mega-Bell for
fiber optic cable deployment in over 12.5 million households.
F) ISDN --- It Still Does Nothing.
AT&T's children, such as Southwestern Bell or Pacific Telesis, all made
grandiose statements starting in 1986 that they would start the
communications revolution by deploying ISDN, now called "It Still Does
Nothing". ISDN was never supported, never fully deployed, even though the
telcos, like Southwestern Bell, had laws changed in Kansas, known as
"TeleKansas" and Telefuture2000 in Missouri to help fund network upgrade.
Pac Bell's "Education First" program was to spend $100 million in connecting
all schools to the superhighway by 1996.
"Pacific Bell Helps Bring Schools On-line. As part of a continuing
commitment to education in California, Pacific Bell has launched Education
First, a $100 million dollar program to connect the state's schools to the
communications superhighway. By the end of 1996, all of the nearly 7,400
public K-12 schools, libraries, and community colleges in Pacific Bell
territory will have access to the company's Integrated Services Digital
Network (ISDN), which enables simultaneous transmission of voice, data and
video signal over a simple telephone line."
According to CNN in 1997, only 60% of California schools had computers and
less than half were online.
CONCLUSION: AT&T simply can't be trusted with any statement made. Even state
regulation or merger conditions are ignored, knowing that the regulators are
simply too cozy, underfunded, or asleep at the wheel.
And if AT&T doesn't build/upgrade the networks? We should be worried as a
recent article in telephony magazine shows that both AT&T and Verizon are
slowing down their deployments.
In AT&T's case, broadband has simply been a political tool to get whatever
agenda they want passed, from mergers to less regulation. While many are now
discussing bypass with government funding, shouldn't we get the billions per
state back? How many times are we going to be charged for the same networks?
We need to note one thing about AT&T's comments. Nowhere does the company
discuss "infrastructure" - i.e., the wireline, fiber-based, physical wiring,
switches, etc. They believe they own that; that is it private property.
Instead, they discuss an 'open' Internet which is carried over the wires.
This means that the customer can not choose, say, their own 'Internet
provider', or their own cable programming provider, as the company believes
that 'they own the pipes'.
Ed Whitacre, former head of new-AT&T to take over GM... Oy Vey.
Former AT&T CEO Whitacre to lead GM, 06/09/2009
And then we have Ed Whitacre, the former head of SBC/AT&T and designer of all of
these deceptive machinations.
There are those who believe that Ed Whitacre was one of the good guys.
However, most of the telecom insiders have been making jokes and statements
about this event. Here are some other thoughts from Internet News.
"They're not gonna drive my roads for free." "My first reaction when I saw
this story was that it was a joke/hoax. Now that I know it's not, I'm just
speechless. I feel like I'm watching an episode of the 'Twilight Zone',"
These comments, and lots others are based on Whitacre's claim to fame in
2007, when he stated that his company "owned the pipes" and that AT&T should
be able to raise rates or block competitors; Net Neutrality be hanged.
Public Knowledge's piece discussing Whitacre and the Verizon and AT&T
broadband comments, highlights some of points.
As we just pointed out, SBC-AT&T under Whitacre is a study in how to get
larger, but not brighter, how to slash and burn staff or companies, not to
mention dancing around state and federal commitments, and essentially work
for themselves, even though the company controls essential facilities in 22
states and harmed the economy by not deploying broadband. As many know,
U-Verse is not open to competitors, the customer can't choose their ISP, and
it is still based on using the copper wiring -- which can't deliver
competitive speeds, as compared to say, Hong Kong or Korea, where companies
offer 100Mbps speeds for the price of DSL.
And sometimes Whitacre seemed more than happy to help the government, as was
the case with illegal wiretapping.
So, GM? Based on his track record, he'll cut staff and innovation will take
a back seat. He'll cut corners, try to obfuscate any regulators'
investigations, and essentially care about himself first, especially when it
comes to salaries. In 2006, when SBC took over legacy-AT&T and changed its
name to AT&T, the executives in one year made $168 million in stock and
salaries. Ed Whitacre, the CEO, made $61 million.
If the track record of AT&T should prove anything, we're not going to become
a world power in the automotive industry. We'll stagnate more, while other
countries design cutting edge products. And unfortunately, Whitacre, who has
never worked outside of a monopoly environment where his company was the
900-pound gorilla, could do more harm than good to America's automotive
Will the man who never cared much for the information highways or roads really
help carmaker GM?