How I Came to Write “The Unauthorized Bio of the Baby Bells & Info Scandal”
Written in 1998, the first book “The Unauthorized Bio of the Baby Bells & Info Scandal” was a paperback, And this describes the landscape at the time and author Bruce Kushnick’s telecom background. New Networks Institute started in 1992 and at the time of the Telecom Act of 1996 we had a joint venture with Probe Research and Fairfield Research to do a massive report service and surveys, some of which was used to help push through this new act of congress. However, by 1998 it was obvious that there were serious flaws in the process and the Telecom Act, while a good road map, required documented ‘accurate research as well as enforcement of the basic law– and that was not happening.
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I never believed any of the hype of the last seven years, but then again, the story for me started on a cold day in 1992. At the time I was a telecom insider – a respected, high-paid telecommunications analyst, having started as a Senior Analyst for Link Resources, in 1985, and then served as President of Strategic Telemedia since 1987. I was traveling around the world discussing the wonderous new interactive telephone technologies, from Interactive 800 and 900 Services, Caller ID and voicemail, to interactive fax and online services. My clients were all of the Baby Bells, including BellSouth and Pacific Telesis, and the long distance companies, including AT&T, MCI, and Sprint, as well as numerous other non-phone companies, from American Express to The Weather Channel.
Then on a cold day in January 1992, I had a small epiphany over a 37¢ call, of all things. I was examining my company’s telephone bills and found a one minute call for 37¢, a call from New York City to Montauk NY, approximately 75 miles away. We had just completed a large study for a long distance company and I knew that a call across America only cost 21¢, and this was almost 75% higher. And when long distance company prices were applied to the same calls, nationally, there was a whopping $6 billion dollars of overcharging, annually.
But it was a few weeks later, when I examined the telephone bills of my Aunt Ethel, an elderly, legally blind 87 year old woman who walks, painfully, using a walker, that I realized that one of the largest scams in history had been perpetrated on the American public. And it had effected the elderly, and those who can least afford it, the hardest. And it was continuing unabated.
For example, from 1982-1996 my aunt paid over $1,100 for rental of one rotary telephone (she has two), including $360 to the local telephone company per phone, and she had paid over $625 for two “wire maintenance” charges, a service she stated emphatically she never ordered. For the record, in 1993, 25% of the elderly still rented telephones, and almost half of all US households that are paying wire maintenance fees never ordered it. (2)
“Isn’t phone service regulated?” She asked. “I thought they were protecting me!” my Aunt exclaimed, while shaking her cane.
So, in 1992, feeling deceived by my former clients, and guilty that I had helped them make billions of excess pennies, nickels, dimes and quarters, I left Strategic Telemedia and created New Networks Institute (NNI) to reveal what I had found. Over the next seven years, working with Probe Research, we published “10 Years Since Divestiture: The Future of the Information Age” the most comprehensive series of reports ever compiled about how the break-up of AT&T and the creation of the Baby Bells impacted subscribers. It is 14 volumes, over 1,900 pages, 910 exhibits, 2,100 consumer interviews, 6,000+ documents examined, two computer databases – and seven years of my life. (3)
And I was summarily ignored by most of the state and federal regulators, Senators, Congressman, and even the press. The first report, “Telephone Charges in America”, was published by Probe Research, a respected telecommunications research/publishing firm. It documented that local telephone prices had climbed 275% since 1982, and that information pertaining to telephone prices or revenues provided by government agencies, including the Federal Communications Commission (FCC), was not only inaccurate, but off by billions of dollars.
Probe’s own published findings indicated that there had been at least $35 billion in overcharging from 1984 through 1991. Other groups, including Consumer Federation of America, estimated that there had been $50 billion in overcharging, including taxes, since 1984.
And overcharging claims continue today. For example, in April 1997, MCI stated that the Bells and other local phone companies were overcharging $14 billion dollars just for Access fees, fees paid to the Bells to connect your long distance calls.
After sending out hundreds of our research summaries to government officials, state and local advocates, and a host of other groups, the only surprising outcome was that Vice President Gore’s Office arranged a meeting for me with the FCC. There, I found that they were totally underfunded to do any accurate information collection.
My information was, in fact, more accurate than the government agency because I had used actual collections of telephone bills from across America, instead of telephone company supplied information. An example: The FCC’s information showed that a New York City business Installation fee was $138.50. When I called NYNEX to order a line, requiring no visit or installation, it cost $598, tax not included. According to Washington Telecom Week. “Sources at the FCC conceded that the methodology used by NNI was more accurate than their own”.(4)
Then in 1993, in conjunction with Probe Research, we published “Consumer Attitudes Toward Telephone and Cable Companies”. It is based on a nationwide telephone survey of 1,000 consumer households, conducted by Fairfield Research. Another similar survey of an additional 1,000 consumers was conducted at the end of 1994.
We found that 0% of the population could read and understand their telephone bills, or could accurately state the price of any service, including directory assistance. Sprint used this research for their Candice Bergen campaign. Our survey question, like their ad campaign, asked: “Do you know how much you pay for long distance per minute?”. Virtually no one has a clue.
Also, we found that most people, 71%, couldn’t care less about new technology. They just want cheaper prices today, not the Info Bahn tomorrow.
The findings from the first two reports, and comments at our press conference in May 1993, so infuriated Southwestern Bell that they called all of the other telephone companies and told them to stop buying research from Probe. Probe filed a complaint with the Department of Justice, since it is illegal for the Bells to conspire to ruin someone. But it was never acted upon, and Probe decided that NNI’s material would cost them more business than it brought in, so they stopped actively publishing the reports. I couldn’t blame them.
Around the same time, my phone service was disconnected. I later received a letter from NYNEX stating that it was not their fault. No, a mysterious unidentified third party wanted me disconnected.
“According to our records, the disconnection was arranged by someone that identified herself as your “wife”. As you have informed us, you are not married…. The party who placed the call to our office wanted your phone disconnected… The disconnection of your service was not a result of negligence on the part of NYNEX…The disconnection was an act of third party mystery motivation. ” (SIC)
I had to take the case to the New York Public Service Commission (PSC), and then I had to appeal the decision because the first time the PSC just sided with the telephone company without even contacting me. At the appeal, a year and half later, I learned that NYNEX was in error. But the PSC refused to give me any compensation, stating “We’re just a judge, not a consumer advocate per-se.” The person who ran the appeal also informed me later, when confronted, that he had “worked for the telephone company”.
Then in 1994, “Regional Bell Revenues, Expenditures and Profits” was published, this time by Phillips Business Information. It received a cool reception even though it documented over $75 billion dollars in overcharging during the Bells’ first decade, 1984-1993. This doesn’t include the $30 billion for the I-Way. It also uncovered the fact that the Regional Bell Operating Companies, (RBOCs), which are holding companies that control the local Bell companies, were draining the local Bell phone companies of staff and all profits.
In fact, an article in the Washington Times even called me a “Phone Bill Fanatic” (5) because I had recommended that the Regional Bells be separated from the local companies to protect subscribers. While most considered the idea “outrageous”, over the last few years US West separated their local phone company from other businesses, and Ameritech filed in Wisconsin to create a separate local phone company subsidiary. Unfortunately, none of these companies are doing it in the public interest.
But history and the excitement of the almost imminent Info Highway, with $90 billion dollars of mergers and over $30 billion in new promised Info Bahn spending, was upon us and no one cared too much about research.
I also wrote, “The Information Superhighway: Get A Grip” in 1994, which demonstrated that the I-Way plans were seriously flawed and it would never be implemented. There wasn’t real consumer interest, the technology costs were much higher than announced, and the filings by the phone companies, written by well-paid consulting firms, including Deloitte & Touche, were biased toward the telephone companies’ need to remove regulation and thereby increase profits.
This report was also ignored. However, as fate would have it, some other twists of destiny were upon me. First, being paranoid that the telephone companies had disconnected me on purpose, I wrote a novel “Touchtone”, and through a strange connection, my 10th grade English teacher, it is now under development at Warner Brothers as a Made-For-TV movie. The novel is about a telecommunications analyst who finds $75 billion dollars of overcharging, which results in the phone companies trying to kill him.
Similarly surprising, in 1995 I chanced to see an advertisement by Jacoby & Meyers, which asked “Are you being hit by hidden telephone charges?” After some brief meetings, we helped to instigate approximately $5 billion in Class Action suits, hopefully reclaiming some money for my Aunt Ethel.
We are proposing an additional $30 billion in Class Action suits. Unfortunately, as you will see, regulations, laws and the public utility commissions now favor the Bells, and they work as shields against law suits and reclaiming money.