Teletruth & New Networks Institute Filed, June 8th, 2009.

Comments to the FCC on a National Broadband Strategy.

(GN Docket No. 09-51)

Summary: America's Broadband Strategy Should Be:

  • Get $300 billion dollars back from AT&T, Verizon and Qwest; monies charged to customers for fiber-optic upgrades of the Public Switched Telephone Networks (PSTN) that never occurred. (It comes to billions per state.) Use these funds to create America's new fiber-based infrastructure that is capable of 1 gigabit speeds, is ubiquitous -- rural, urban and suburban, rich and poor neighborhoods and communities -- and open to all competitors. Do not charge customers more by using government funding.
  • The FCC needs to redo its entire data collection and process as it rewrote the history of broadband to suit political purposes, including lowering the speed of broadband to 200Kpbs in one direction. In 1992, broadband was 45mbps in both directions.
  • Create a second divestiture to open all networks. Separate the wireless companies from the incumbents.
  • Make customers whole: Are phone customers owed approximately $3,000.00 per household from AT&T, Verizon or Qwest for a fiber optic service paid for but never received?
  • New Networks Institute has submitted an ebook, "$300 Billion Broadband Scandal", into Comments to substantiate our claims.

Don't take our word for anything. Read the ebooks, go to the actual documents listed, then if you agree (or not) file comments at the FCC -- the deadline is July 7th, 2009.

Comments:

Think of America's broadband information highway like other highways.-- A state and its citizens make a deal with a contractor to create a 21st century, upgraded, statewide highway system, removing the old roads with brand new infrastructure. The company takes the money and then delivers nothing more than a refurbished old road. Then the company is able to set up tolls, block cars from specific companies, and even hold municipalities hostage, all the while being paid monthly fees for upgrades that were never completed. Instead, the companies embark on upgrades that they will control, claiming these new highways are private property for personal use. Worse, the regulators are too cozy with the contractors; they fail to monitor or collect accurate data or enforce basic laws.

1) America is 15th in the world in broadband, according to numerous international sources. The reason we are 15th is that AT&T, Verizon and Qwest failed to upgrade the Public Switched Telephone Networks, the state telecommunications and broadband utilities, and the regulators, both state and federal, failed to collect accurate data or hold the caretakers of America's critical infrastructure, AT&T, Verizon and Qwest, accountable.

2) As of 2009, America has paid over $300 billion since the 1990's for fiber optic upgrades of the Public Switched Telephone Networks that were never done. This is about $3000.00 per home and counting, though it varies by state. This money has been paid to the phone companies in the form of phone rate hikes and tax perks, as the companies promised to rewire America state by state, and each state created 'deregulation' to give the phone companies more profits to use for network upgrades. (Note: We calculate that overcharging for the missing networks is approximately $20 billion a year.)

3) By 2010, virtually ALL of America, 117 million homes, should have already been rewired by AT&T, Verizon and Qwest to be capable of 45mbps speeds in both directions; the definition of broadband in state laws in 1992. This was to be ubiquitous; rural, urban and suburban areas alike, rich and poor, and open to all competitors. In many states, schools, libraries, government agencies and even hospitals should have been upgraded.

4) DSL was a 'Bait and Switch'. DSL travels over the old copper wiring and was considered inferior in 1992. DSL was only deployed after it became obvious the Internet required more speed than dial up.

5) What does this mean to the average customer? In Hong Kong and other countries, customers can get 100Mbps, bi-directional services for the price of DSL in America, which is about 30-50 times slower. And these countries are now pursuing 1 gigabit speeds. It also harmed the economy. According to the phone companies own analysis, over $7 trillion dollars ($500 billion annually) was supposed to have been gained had the phone companies built out the networks as promised.

6) What about AT&T's U-Verse and Verizon's FIOS? Combined, these companies have only 3+ million upgraded broadband-TV customers. But more importantly, these networks are "closed networks", controlled by the phone companies. Customers paid for "open" networks, so customers could have choices.

7) Massive Cost Shifting --- Over the last decade, AT&T and Verizon have been able to take monies that were supposed to be used for upgrading the networks to pay for other services, from DSL to wireless.

8) The mergers were harmful. The various mergers allowed for total consolidation of multiple revenue streams - Local, long distance, DSL, broadband, Internet service, cable and even wireless, and removed 13 different major, potential competitors, including AT&T and MCI.

9) There is no serious competition. Broadband is a duopoly and phone service is still a telco-monopoly as cable companies only have 15% of the market, and competition using the wireline networks is down 60% since 2004. In fact, every state is now having major price increases, 80% in New Jersey, for example. Prices shouldn't rise if there is true competition.

10) Examining a 25 year synopsis of broadband, including ISDN, we estimate that Verizon, AT&T and Qwest underspent $58-$161 billion dollars on capital expenditures, took from $100 billion to $371 billion in excess tax write offs (deprecation), and cut staff over 70% when compared with revenues. Revenues increased 220%.

11) The FCC's "Advanced Network" (Broadband) reports (for Section 706 of the Telecom Act) have distorted the history of broadband in America, even changing the speed of broadband to 200Kbps for political reasons. The FCC also left out or removed thousands of critical documents in their previous analysis. This problem permeates all FCC data as the Agency has been influenced by telco-funded astroturf or co-opted groups, and pundits who are paid spokespeople for AT&T and Verizon.

12) The FCC's previous decisions killed competition. Instead of bringing lower prices and broadband through competition, the FCC's decisions have been biased towards the incumbents, causing regulatory harms to small and large competitors. The FCC helped to put over 7000 independent Internet Providers out of business by removing line sharing and failing to enforce competitive laws, and the FCC removed wholesale rates (UNE-p) closing AT&T and MCI's ability to compete for local service, which put them up for sale.

13) The problem America faces is not "Internet access". The problem is the wire and wireless plant; the infrastructure. All other issues are surface issues. Competition would solve any 'net neutrality' issues as a customer would have choices if their provider was blocking, degrading or slowing down the customer's connection.

Next Steps:

We believe that Congress will not act to open any networks or fix the problems we just discussed as there are too many politicians with too many corporate-financial ties. Will the FCC actually 'done the right thing' to protect America's interests, or even the interests of the United States?

 

  • The FCC needs to re-educate itself on how America became 15th in broadband by collecting accurate, objective data, removing corporate influences in the Advisory committees, and redoing the processes by which it creates laws. It needs to get an accurate history in order to take the next step.
  • The FCC, working with the states, should attempt to get the $300 billion back for failure to deploy fiber optic broadband to the Public Switched Telephone Networks as committed and use the money to upgrade the networks to high speed, competitive ubiquitous services - or refund it to customers. (NOTE: The total amount is a summary of the billions per state that have been collected.)
  • The FCC and the Department of Justice should step in and examine anti-trust violations, then work to create the second divestiture. Break up the companies and separate them from network controls so that ALL networks become competitive as envisioned by the Telecom Act of 1996 and restore 'common carriage' over broadband. Wireless services should become separate companies that compete with wireline services, not owned by the same companies.

Take our track record into account. In 1998 we published a list of issues that we felt would lead to harming broadband if they were not addressed -- and we were correct in almost every item. In short, we told you so.

FILE YOUR OWN COMMENTS AT THE FCC: http://www.teletruth.org/FileCommentsFCC.htm

Bruce Kushnick, New Networks INstitute

bruce@newnetworks.com