The Bells' Greatest Broadband Failures
By the year 2013, almost every household and business, school and library should have been rewired with fiber optics, delivering an incredible array of new very high speed advanced services. Using these promises, the now AT&T and Verizon were able to change state and federal laws, which gave them more profits to be used for new construction. The construction never happened. By the end of 2013, we estimate that customers have already paid over $380 billion in extra charges on America' telephone bills and tax incentives and it continues today unabated.
But don't take our word for it.
Here is a collection of some of the Bells promises, and some of the critics giving some reality.
Verizon 2003, Pennslyvania Public Service Commission
"In view of Bell's commitment to providing 45 Mbps for digital video transmission both upstream and downstream, we look forward to Bell's providing this two-way digital video transmission at 45 Mbps."
New Jersey Public Advocate about NJ Bell Atlantic, (4/97)
"...low income and residential customers have paid for the fiber-optic lines every month but have not yet benefited."
New Jersey Bell plan, the state should have had 60 megabit services by now and the entire state was supposed to be completed by 2010 with fiber-optic broadband. ("Opportunity New Jersey", filed 3/92)
· Wideband 95% by 1999
Here's the timeline for Verizon New Jersey's fiber optic promises:
Bell Atlantic, Pennsylvania Bell Annual Report 1998
"The Pennsylvania Plan requires deployment of a universal broadband network, which must be completed in phases: 20% by 1998... Deployment must be reasonably balanced among urban, suburban and rural areas."
Fber to the home was to be completed by 2010 as well, and all copper wiring between the offices should have been upgraded by 1994.
· ISDN 100% by 1995
Bell Atlantic Press Release, July, 1996.
"Later this year, Bell Atlantic will begin installing fiber-optic facilities and electronics to replace the predominantly copper cables between its telephone switching offices and customers. Fiber-optics provide higher quality and more reliable telephone services at lower operating and maintenance costs. The company plans to add digital video broadcast capabilities to this "fiber-to-the-curb," switched broadband network by the third quarter of 1997, and broadband Internet access, data communications and interactive multimedia capabilities in late 1997 or early 1998."
NYNEX, 1993 Annual Report
"We're prepared to install between 1.5 and 2 million fiber-optic lines through 1996 to begin building our portion of the Information Superhighway."
NYNEX, 1993 Annual Report
"Fi-ber to the curb. Fiber to the curb, (FTTC) sysyems bring fiber =-optic cable into the 'local' loop,' the final link between customers and our network. in 1993, NYNEX's progress in deplkoying fiber technology continued when we signed an agreement with Raynet Corporqation to pruchase FTTC hardwarde and software for 130,000 subscriber lines through next year. "
Bell Atlantic 1993 Annual Report
"First, we announced our intention to lead the country in the deployment of the information highway...We will spend $11 billion over the next five years to rapidly build full-service networks capable of providing these (interactive, multi-media communications, entertainment and information) .services within the Bell Atlantic Region.
Pacific Telesis 1993 Annual Report:
"In November 1993, Pacific Bell announced a capital investment plan totaling $16 billion over the next seven years to upgrade core network infrastructure and to begin building California's "Communications superhighway". This will be an integrated telecommunications, information and entertainment network providing advanced voice, data and video services. Using a combination of fiber optics and coaxial cable, Pacific Bell expects to provide broadband services to more than 1.5 million homes by the end of 1996, 5 million homes by the end of the decade."
Pacific Telesis 1994 Fact Book
Consumer Broadband Speeds
Pacific Telesis Deployment Schedule:
Here's the actual page for the promised
1994-1996 Cupertino, San Jose, Santa Clara
Sunnyvale, Anaheim Parts of Los Angeles, Central San Diego, La
Jolla Deployment by 2000 San Francisco, Greater Los Angeles, Central San
Diego, Orange County.
Cupertino, San Jose, Santa Clara Sunnyvale, Anaheim
Parts of Los Angeles, Central San Diego, La Jolla
Deployment by 2000
San Francisco, Greater Los Angeles, Central San Diego, Orange County.
U S West 1993 Annual Report
"In 1993 the company announced its intentions to build a 'broadband', interactive telecommunications network... US West anticipates converting 100,000 access lines to this technology by the end of 1994, and 500,000 access lines annually beginning in 1995.
Ameritech Investor Fact Book, March 1994
"We're building a video network that will extend to six million customers within six years."
Ohio Alternate Regulation Plan, September 20, 1994
"21. INFRASTRUCTURE COMMITMENTS The Company's infrastructure commitment in this Plan shall consist of the commitment to deploy, within five years of the effective date of the Plan and within the Company's existing service territory, broadband two-way fully interactive high quality distance learning capabilities to all state chartered high schools including vocational, technical schools, colleges and universities; deploy broadband facilities to all hospitals, libraries, county jails and state, county and federal court buildings "
(Testimony from Alternate Regulation 94-50)
"In Massachusetts, NYNEX will) deploy a fiber-based broadband network, with initial deployment to approximately 330,000 access lines, by year-end 1995."
"NYNEX plans to spend nearly half a billion dollars for 330,000 lines in Massachusetts." (Source: NYNEX/New England Chair Paul C. O'Brien speech; Transcript, 7/15/94)
NYNEX 800 Channels (FCC 95-50 ORDER 3/6/ 95)
"NYNEX proposes to deploy hybrid fiber optic and coaxial (HFC) broadband networks that will provide advanced voice, data, and video services, including interactive video entertainment, multimedia education, and health care services."
NYNEX Cable Rollout Patriot Ledger, December 13, 1994
"HEADLINE: NYNEX to offer cable TV in Boston suburbs"
SNET 1993 Annual Report,
On January 13, 1994, the Telephone Company announced its intention to invest $4.5 billion over the next 15 years to build a statewide information superhighway ("I-SNET"). I-SNET will be an interactive multimedia network capable of delivering voice, video and a full range of information and interactive services. The Telephone Company expects I-SNET will reach approximately 500,000 residences and businesses thru 1997. In addition, the Telephone Company has reduced its intrastate toll rates beginning in July 1993 [see Item 1., "Intrastate Rates"], is committed to reducing its cost structure, remains focused on providing quality customer service and has introduced several new services as mentioned below.
GTE Video Services: Past And Future, GTE press Release, January, 1996
In 1991, GTE Telephone Operations became the first telephone company in the United States to offer interactive video services. The company's Cerritos Project, in Cerritos, Calif., was the world's first comprehensive test of interactive video technology and services. Offerings included video on demand, videophone, enhanced video-education applications, and a CD-Interactive test by GTE Interactive Media (formerly GTE ImagiTrek). Center Screen, a 30-channel pay-per-view system, and GTE mainStreet, an interactive cable television service, are still available and in use by customers.
FCC< No. CC-95-14, February 7, 1995
"The Common Carrier Bureau has granted the application of BellSouth Telecommunications, Inc. (BST) to conduct an 18-month technical and market trial of video dialtone service that will pass 12,000 homes outside Atlanta. BST proposed to construct a broadband fiber optic-coaxial cable network for video and telephony, initially offering each subscriber 70 analog channels and approximately 240 digital video channels. According to BST, this network will be capable of providing a variety of programming services, including traditional television programming, enhanced pay-per-view, video-on-demand, and interactive educational, home shopping, and health care services."
Outcome of Pac Bell, SNET, Ameritech and SBC (FCCCS Docket No. 98-102, 12/98)
SBC trashed all of the various plans when it bought the other phone companies.
115. Prior to the 1997 Report, SBC acquired Pacific Telesis, and its Pacific Bell Video Services subsidiary. Subsequently, SBC ended its own in-region video efforts, sold its out-of-region systems, scaled back the video plans of Pacific Bell Video Services, and, later, sold most of its interest in Pacific Bell Video Services. SBC later acquired SNET, and proposed to acquire Ameritech. In front of the Senate's Antitrust Subcommittee, SBC Chairman Edward Whitacre would not commit to maintaining Ameritech's cable overbuild operation. SBC, however, as a condition of approval of the SBC-SNET merger, promised the Connecticut Department of Public Utility to continue cable operations for two years. The Connecticut Department of Public Utility gave SBC the right to petition for modification of the state- wide franchise agreement once SBC studies SNET's cable operations. Some have observed that since Ameritech has a well-established cable operation, one that has continued to expand even as the merger is pending, it is less likely that it will be sold or abandoned. Some analysts also have pointed out that the Ameritech cable operation could become more important, in terms of offering a complete package of telecommunications services, in light of the pending AT&T-TCI merger.
GTE to join Disney, Ameritech, Bellsouth and SBC in Home Entertainment partnership. Increases venture reach to 68 million access lines, 32 states. Press releaseJuly 7, 1996
SBC is building a traditional cable network in Richardson, Texas that will be in service in the fourth quarter of this year. It also is constructing a broadband network that will allow the company to offer cable and interactive services to up to 47,000 Dallas area households in 1996. SBC may provide video-on-demand -- as well as a host of other interactive services such as home shopping, education programs, and interactive games -- to those 47,000 households. SBC, which recently won court approval to provide video programming in its telephone subsidiary's five-state territory, is working with Microsoft, Lockheed and others to develop the delivery system.
"The trial network will reach 12,000 homes and will give customers a choice of cable TV and new interactive services, including movies on demand, interactive games, home shopping and access to on-line computer services."
"Ameritech is building a two-way video communications network to bring a new generation of interactive television services to consumers across the Midwest....Ameritech is in discussion with many Midwestern communities and plans to reach about 1 million customers by the end of 1996 and 6 million by the year 2001."
The promises of advanced services and new technologies is nothing new. Integrated Service Digital Networks, ISDN, was another technology that never showed up as advertised.
Pac Bell's "Education First" program First Quarter report, 3/31/94
"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 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 signals over a signals telephone line.
Southwestern Bell 1986 Annual Report
"At the forefront of new technology is ISDN. Scheduled for commercial availability in 1988, ISDN will revolutionize day-to-day communications by allowing simultaneous transmission of voice, data and images over a single telephone line. With ISDN customers will have the potential to access videotex, (online services) telemetry, alarm services, sophisticated calling features, teleconferencing much more economically than they can today."
Ameritech's 1991 Annual Report
"ISDN Speeds Information. 'The ISDN link multiplies, by more than 40, the speed with which information can be transmitted', says Illinois Bell's Bill Kallmyer, senior marketing operations manager. 'This results in higher productivity and lower on-line charges for consumers'. Kallmyer says ISDN is available to single-line customers as well as larger firms."
ISDN: Truth In Advertising?
The following example clearly outlines how the Bells advertised ISDN, and how they could never deliver on the product. . The first quote is taken directly from the NYNEX 1993 Annual Report. Here, NYNEX is discussing their wonderful new telecommunications services. This is followed by the user perspective, highlighted by an article in The New York Times titled "The Information Future Out of Control: Hello, Anybody Home?" written by a NYNEX user, James Gleick, who helped start the online service called Pipeline.
As you will see, the reality vs. the company's myth collides when customers actually try getting the advertised technology.
NYNEX 1993 Annual Report:
Was Advanced Network Promises one of the Largest Bait-and -Switch Cons of All Time?
Based on the overwhelming evidence, New Networks Institute believes that the Bells used the promises of deploying advanced networks to change state and federal regulation in their favor--- primarily to make a great deal more profits.
And there are others who agree. Economics and Technology, a respected research firm, published "A New Opportunity: Cost Based Pricing of Bell Atlantic's Access Charges" Copyright, March 1999, clearly show how Bell Atlantic, New Jersey promised the customers of that state that they would build the info-bahn if new laws were enacted.
"The state's current regulation system, which was authorized by the New Jersey legislature in its 1992 Telecommunications Act, offers Bell Atlantic-New Jersey, Inc. ( BA-NJ") expanded pricing flexibility and the opportunity for significantly increased earnings in exchange for a commitment by BA-NJ to substantially increase its level of investment in New Jersey's telecommunications infrastructure under the so-called Opportunity New Jersey (ONJ) Plan. In the five years following the Board of Public Utilities adoption of the ONJ Plan, BA-NJ has enjoyed major financial benefits even though it has not increased its investment as promised and has opposed competition at every turn. The increased pricing and earnings flexibility coupled with reduced investment and continued monopoly pricing practices has enabled BA-NJ's profits to soar under alternative regulation.
According to another Economics and Technology report, Pennsylvania Bell, who promised to have 20% of the state would be wired with broadband by 1998, just took the money. (From Broken Promises: A Review Of Bell Atlantic's Performance Under Chapter 30, 1998)
"In 1993, the Pennsylvania legislature added Chapter 30 to the Public Utility Code with the specific goal of assuring that all areas of the state will be provided with a modern, state-of-the-art broadband telecommunications infrastructure. Basically, Chapter 30 offered Pennsylvania's incumbent local exchange carriers (ILECs) a quid pro quo: In exchange for a firm commitment to provide broadband service capability throughout its entire network by the year 2015, each participating ILEC would become subject to an alternative form of regulation providing substantially greater pricing and earnings flexibility than the traditional rate of return form of regulation under which the ILEC's prices and earnings had been set.
Did the Bells know in advance that they wouldn't deploy advanced networks?
NNI believes that in many states, the Bell knew that they were never going to really build anything. We also believe that the bells used these promises to create sections of the Telecom Act of 1996, the Congressional bill designed to bring competition and 'the rapid deployment of Advanced networks" to America in a reasonable and timely fashion.
LJ Davis, In his book "The Billionaire Shell Game", Doubleday, October 1998, clearly laid out that the Bells' bait and switch was made on the state and federal level as a way to enter long distance. Based on interviews, this award winning, former New York Times reporter, independently came to the same conclusions as NNI.
"Like the other six regional telephone companies that had come into independent existence with the break up of AT&T in 1984, Bell Atlantic had a single great goal in the autumn of 1993. Bell Atlantic and the other six baby bells were determined to enter the lucrative long distance business before the march of science rendered their existing equipment vulnerable, obsolete, or both, but getting there was no simple task. Before Bell Atlantic could offer a long distance service- even within its own part of the country, using its own lines and switches- sixty years of federal law and judicial decisions had to be overthrown, and there was only one certain, reliable, and simple way to do it: persuade Congress to pass bold new legislation that would remake Bell Atlantic's world".