In our original filing, and with this updated version, New Networks Institute, (NNI) contends that the Bell phone companies, which includes the Bell holding companies, and their state phone company subsidiaries, wrote-off almost $21 billion dollars in one time deductions of their phone networks, stating that they were upgrading their networks with fiber-optics and the deployment of new, advanced technologies. However, they failed to do the upgrades but still took the deductions.

We estimate that $7 billion in Federal taxes, not counting interest, may be refunded, the costs of all networks would be reassessed for customers, and possible refunds would be required for almost all Bell phone services.

NOTE: The original seven Baby Bells are: Ameritech, Bell Atlantic, BellSouth, NYNEX, Pacific Telesis, Southwestern Bell, and US West. We also include GTE, and all of its phone company subsidiaries, in all 50 states.

Part 1: Examination of the State Actions by Bell Atlantic, including Pennsylvania

Part 2: Summary of independent studies by Economics an Technology Inc.

Part 2.A Examination of Opportunity New Jersey

Part 2.B Examination of Opportunity Pennsylvania

Part 3: The FCC's Audits of the Bells

Part 4: NNI filed Comments with the FCC related to advanced networks.

Part 5: Case Study of Massachusetts, Advanced network Deployment: Did the Bells know they were not going to deploy Advanced networks?

Part 6: NNI filed a Petition with the FCC to investigate the Bells failed advanced network deployments in numerous states.

In our original filing, and with this updated version, NNI contends that the Bell phone companies wrote-off almost $21 billion dollars in one time deductions of their phone networks, stating that they were upgrading their networks with fiber optics and the deployment of new, advanced technologies. However, they failed to do the upgrades but still took the deductions --- and still charged customers.

The implications are straightforward

The original complaint, attached, requested the IRS to investigate our claims that the Regional Bell Operating companies, (RBOCs) sometimes called the "Baby Bells", and their subsidiaries, the local Bell phone companies, wrote off most, if not all of their copper wiring, claiming that they were replacing this copper wiring with "Fiber-optics". They also claimed that competition was imminent.

The Bells took almost $21 billion dollar in one-time written offs between the years 1993-1995... almost $3 billion a company (There were seven baby Bells at the time) and these write-offs, we believe, were taken on the state and Federal returns.

	Amount	Year
Ameritech	$3,785,000,000	1994
Bell Atlantic	$2,156,000,000	1994
BellSouth	$2,718,000,000	1995
NYNEX	$2,919,000,000	1995
Pac Bell	$3,361,000,000	1995
SBC	$2,819,000,000	1995
US West	$3,123,000,000	1993
TOTAL	$20,881,000,000

Sources: New Networks, RBOC Annual Reports, 1993-1996

In our original filing we supplied the details of these write-offs, as well as discussed that the Bells never deployed the fiber optic wiring as promised in virtually any state. In fact, all of the current high-speed services are going over the copper wiring that was supposed to be replaced.

Also, in 1993-1995 there was no threat of local competition. The Telecommunications Act of 1996 mandated that local phone competition would be allowable (it wasn't in many states). And to date, the total amount of local residential competition is less than 1%. Also, to date, only one Bell phone company, Bell Atlantic, in only one state, New York has been able to convince any regulator that their networks are opened up sufficiently. The Telecom Act set out a 'checklist' of items that need to be completed before the Bells could be allowed into long distance services... and this checklist is the basis on which the law determines if the Bells have opened up their networks sufficiently to even allow competition.

We also submitted detailed information about the specific case in New Jersey, known as Opportunity New Jersey, which clearly showed that the Bells promised to replace the copper wiring. However, the New Jersey Ratepayer (Consumer) Advocate found that the Bells never deployed these networks. The Advocate stated "...low income and residential customers have paid for the fiber optics wiring every month, but have not yet benefited".

We also supplied information that showed that these promises of fiber optics were not specific to Bell Atlantic, but happened in most states.

New Information

We now would like to focus on new, more detailed information that should show that our research has in part been corroborated by outside sources.

Part 1: Examination of the State Actions by Bell Atlantic, including Pennsylvania 

In the original filing we discussed how the Bells had taken massive deductions totaling $21 billion dollars. In this updated filing, we would like to give more specific data that the IRS can use to make its determination and corroborate our findings.

The Bells specifically talk about these deductions being made for the deployment of advanced networks. As we have said elsewhere, the Bells promises to deploy fiber networks and roll out "Broadband services" was one of the primary reasons they changed their accounting and took these deductions.

In our original filing we focused on Bell Atlantic's actions in New Jersey. However, as we found, these are almost identical to all other states, including Bell Atlantic-Pennsylvania.

Let's go through this information based on logical questions

1.A) Did The Bells Specifically State That They Were Writing-Off Their Networks Based On Promises Of Replacing The Copper Wiring And Some Switches With Fiber Optics?

Let's examine some of Bell Atlantic's other states, including Pennsylvania and the DC markets. In the case of Bell Atlantic DC, the Bell specifically states that the reasons for these write-offs were for broadband deployments and competition.

"Over the past several years, Bell Atlantic has taken a number of actions in anticipation of the increasingly competitive environment. Cost reductions have been achieved, giving greater pricing flexibility for services exposed to competition. A new line of business organization structure was adopted. Subject to regulatory approval, the Company plans to allocate capital resources to the deployment of broadband network platforms. On the regulatory front, an alternative regulation plan has been approved on a trial basis by the District of Columbia Public Service Commission (PSC).

"The Company conducts ongoing evaluations of its accounting practices, many of which have been prescribed by regulators. These evaluations include the assessment of whether costs that have been deferred as a result of actions of regulators and the cost of the Company's telephone plant will be recoverable in the future. In the event recoverability of costs becomes unlikely due to decisions by the Company to accelerate deployment of new technology in response to specific regulatory actions or increasing levels of competition, the Company may no longer apply the provisions of Statement of Financial Accounting Standards No. 71, "Accounting for the Effects of Certain Types of Regulation" (Statement No. 71). The discontinued application of Statement No. 71 would require the Company to write off its regulatory assets and liabilities and may require the Company to adjust the carrying amount of its telephone plant should it determine that such amount is not recoverable. The Company believes that it continues to meet the criteria for continued financial reporting under Statement No. 71. A determination in the future that such criteria are no longer met may result in a significant one-time, non-cash, extraordinary charge, if the Company determines that a substantial portion of the carrying value of its telephone plant may not be recoverable.

1.B) The Pennsylvania Bell Annual Report Clearly States That Their Deployment Plans Were A Major Factor In Their Changes In Regulation.

"The Company's determination that it was no longer eligible for continued application of the accounting required by Statement No. 71 was based on the belief that the convergence of competition, technological change (including the Company's technology deployment plans), actual and potential regulatory, legislative and judicial actions, and other factors are creating fully open and competitive markets. In such markets, the Company does not believe it can be assured that prices can be maintained at levels that will recover the net carrying amount of existing telephone plant and equipment, which has been depreciated over relatively long regulator-prescribed lives. In addition, changes from cost-based regulation to a form of incentive regulation contributed to the determination that the continued application of Statement No. 71 is inappropriate.

1.C) Did The Bells Know That They Weren't Going To Build These Networks Back In 1995?

Notice the subtle change in these two texts, the first from the 10-K in 1994, and the second in the 10-K 1995. The chance is the working phrase "Including the company's technology deployment plans" is missing in the later addition.

And how much was promises and how much was actually built? From Pennsylvania Bell Annual Report, 1998

In fact, nothing was rolled out, and certainly, not 20% of their lines by 1998. In Part 5, our study of Massachusetts shows that the Bells most likely knew they weren't going to fulfill their obligations even before the alternate regulation laws were finalized.

Also, let us make the point again. Universal Broadband was based on fiber optics and was at speeds over 100 times faster than the Bells current high speed networks, "ADSL" or called "Info-Products" --- It is like a skateboard compared to a Ferrari.

We also highlight the Economics and Technology report elsewhere. As the report states. (BROKEN PROMISES: A REVIEW OF BELL ATLANTIC'S, PERFORMANCE UNDER CHAPTER 30)

"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 ILECs prices and earnings had been set.

"Having made its commitment and been granted its alternative regulation reward, Pennsylvania's largest local telephone company Bell Atlantic Pennsylvania (BA-PA) has paid more attention to escaping from, rather than fulfilling, the terms of its promised upgrade. This study demonstrates that, despite strong financial performance and earnings growth in Pennsylvania, as well as a generous and flexible regulatory framework, BA-PA has failed to increase investment in the state's telecommunications network and, in fact, has actually extracted capital out of Pennsylvania for use elsewhere. At the same time, BA-PA has been extremely successful in protecting its monopoly from competitive encroachment. Without the discipline of actual, effective competition, the incumbent has been permitted to charge excessive prices and earn excessive profits, while confronting no business incentive to undertake new investment in Pennsylvania. As we approach the end of 1998 a point by which BA-PA is supposed to have broadband available throughout 20% of its rural, urban and suburban areas there is no sign of any broadband service being offered to Pennsylvania's residential customers"

1.D) How Much Was Written Off In Pennsylvania?

Our original complaint aggregates this information, finding $20.8 billion dollars in write-offs by the Baby Bells for this change in regulatory flim-flam. Below is just Bell Atlantic's Pennsylvania write-offs from this change in accounting.

A summary of the components of the after-tax charge recognized as a result of the discontinued application of Statement No. 71 follows:

Increase plant and equipment depreciation reserve $662.6

Accelerated investment tax credit amortization. (36.5)

Tax-related regulatory asset and liability elimination $ 72.2

Other regulatory asset and liability elimination $ 30.2

Total $728.5

Sources: 10-K405, year ended December 31st, 1995

For the fiscal year ended December 31, 1994

BELL ATLANTIC PENNSYLVANIA INC

IRS NUMBER: 230397860

"In February 1993, US West was the first regional Bell company committed to upgrading its network to provide two way video voice and data services. We’re testing that network this year in Omaha and we plan to build similar systems in Denver, Minneapolis St. Paul Portland, Oregon and Boise, Idaho. By the end of 1994, we intend to unveil development plans for multimedia networks in 15 more cites in our region.

"In May of this year, US West was the first regional Bell to announce plans to deliver multimedia services outside its home territory. We’ve completed the 2.5 billion dollar agreement with Time Warner and customers will start using time Warner's "Full Service Network this year in Orlando, Together our companies plan to build a full service network in many other cities served by Time Warner.

"US West’s decision to continue the application of SFAS No 71 was based on the belief that competition, market condition and the development of broadband technology, more than the prices established by regulators, will determine future revenues of US West communications.

Summary of Independent Studies by Economics an Technology Inc., 1998 and 1999. 

Economics and Technology Inc is a respected, independent research firm. Their work has been used in state public Utility Commission decisions, and their information helped to create many state and federal laws.

Because of copyright infringement, we include just a few pages. The first part is from a report released March 1999, which focuses on Opportunity New Jersey. And as you can clearly see, the findings are virtually identical to our own, even though our research was done with NO collaboration of any kind.

Part 2.A Examination of Opportunity New Jersey

"A New Opportunity: Cost Based Pricing of Bell Atlantic's Access Charges" By Economics and Technology Inc. Copyright, March 1999.

"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.

Consumers clearly have suffered under the ONJ Plan from unnecessarily inflated prices for many services, and have received few benefits in the form of new services and increased competitive choices. Since the adoption of the ONJ Plan in 1993: BA-NJ's actual investment and financial performance under the ONJ Plan indicates that the Boards expectations with respect to infusion of new investment capital have not been realized; BA-NJ's financial return on equity (ROE) jumped from 22% to almost 40%; Rather than put those profits back into its telecommunications infrastructure, BA-NJ actually disinvested some $76-million between 1993 and 1995. The New Jersey Ratepayer Advocate found that between 1993 and 1996 BA-NJ invested $545-million less than the level it had forecast in its ONJ Plan;

"In constant dollar terms, BA-NJ's capital expenditures actually decreased once the new regulatory scheme had been put in place. BA-NJ has paid increasing dividends to its parent holding company since 1993, and in fact, BA-NJ's dividend payments to Bell Atlantic Corp. are among the highest, on both a relative and an absolute basis, of any BA operating company; In 1997, BA-NJ provided a $559-million dividend to its parent equating to approximately $93.17 per access line per year (or $7.76 per line per month). By way of comparison, BA-NY's dividend was only $42.52 on a per-access line basis ($3.54 per line per month); BA-NJ continues to impose grossly excessive charges for the monopoly switched access services it furnishes to long distance carriers and correspondingly excessive charges for intrastate toll services it furnishes to its own end user customers;

Over the period 1994-97, BA-NJ's intrastate access charges exceeded the costs it actually incurs in providing access services by between $100- and $160-million annually [see Figure 7, p. 10]; In that same period, BA-NJ had collected some $500-million in excess of cost from New Jersey interexchange carriers for these essential services and received between $200- and $290-million in excessive revenues from its own toll rates annually during that same 1994- 97 period.

"It is clear than that a major source of BA-NJ's high profit levels stems from its policy of charging prices substantially in excess of cost for certain monopoly network usage services, particularly for switched access services that BA-NJ furnishes to intrastate long distance carriers for originating and terminating calls on the BA-NJ local network. These high access charges which translate directly into correspondingly excessive intrastate long distance rates for customers have traditionally been rationalized on the theory that they provide a source of subsidy to support below-cost residential dial tone line service. However, it is apparent from BA-NJ's sustained excessive profits that such subsidies or hidden taxes are no longer required and, moreover, that the excessive access and toll revenues are not even being utilized for this purpose. In a declining cost industry, there can certainly be no justification for a 100% increase in subsidy funding since 1991. In short, there is no justification for the $160-million in excessive access prices that persists in the current BA-NJ revenue structure."

After reading this, there should be little doubt that the Bells failed to deliver on the products that they promised. And this information is also virtually identical, yet totally independent of our initial claims.

(From: BROKEN PROMISES: A REVIEW OF BELL ATLANTIC'S PERFORMANCE UNDER CHAPTER 30 by Economics and Technology inc. Copyright, 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.

Having made its commitment and been granted its alternative regulation reward, Pennsylvania's largest local telephone company Bell Atlantic-Pennsylvania (BA-PA) has paid more attention to escaping from, rather than fulfilling, the terms of its promised upgrade. This study demonstrates that, despite strong financial performance and earnings growth in Pennsylvania, as well as a generous and flexible regulatory framework, BA-PA has failed to increase investment in the state's telecommunications network and, in fact, has actually extracted capital out of Pennsylvania for use elsewhere. At the same time, BA-PA has been extremely successful in protecting its monopoly from competitive encroachment. Without the discipline of actual, effective competition, the incumbent has been permitted to charge excessive prices and earn excessive profits, while confronting no business incentive to undertake new investment in Pennsylvania. As we approach the end of 1998 a point by which BA-PA is supposed to have broadband available throughout 20% of its rural, urban and suburban areas there is no sign of any broadband service being offered to Pennsylvania's residential customers.

BA-PA persuaded the Pennsylvania Public Utility Commission that the Company needed increased price and earnings flexibility to encourage its investment in a broadband-capable network.

The Public Utility Commission's (PUC) decision on the structure and the pricing and earnings aspects of the BA-PA alternative regulation plan clearly resulted from the belief that the Company would need to increase its ability to attract capital in order to comply with a network modernization plan. The PUC's decision stated that ... we expect that one anticipated byproduct of our elimination of earnings sharing would be an increased commitment to universal deployment of a broadband network in areas that might not, in the absence of the elimination of earnings sharing, initially warrant deployment due to their market contour or the need to allocate a smaller pool of investment resources such as would exist if earnings sharing were adopted.

The four years since the PUC's initiative have witnessed precisely the opposite outcome: Rather than being encouraged by the prospect of higher earnings to invest in broadband facilities, Bell Atlantic instead used its new flexible regulatory environment to amass large profits on its conventional services. Bell Atlantic has apparently extracted these profits from its Pennsylvania subsidiary, and from the state. From the outset, events moved in a direction contrary to the Chapter 30 vision. In mid-1995, BA-PA announced that it would abandon its plans to deploy a hybrid fiber coax infrastructure to upgrade its network for broadband capabilities. This action, and the lack of a commitment to any replacement technology in the years since, reduced to virtually zero the likelihood that BA-PA would honor infrastructure-related obligations that it had expressly accepted in return for alternative regulation.

Despite BA-PA's strong earnings and financial performance, the Company has failed to keep its promises for infrastructure development in Pennsylvania. BA-PA, and Bell Atlantic in general, have performed extremely well financially, particularly during the period following adoption of alternative regulation. Pennsylvania ratepayers, however, have yet to see the benefits of such strong financial performance in the form of additional investment in the state's infrastructure. In fact, the Company has extracted capital out of the state and consequently has not changed its investment patterns significantly since the adoption of the Alternative Regulation Plan in 1994. As a result, and contrary to the PUC's expectations, Bell Atlantic's shareholders have been the real beneficiaries of the Alternative Regulation Plan:

Investors willingness to pay substantial premiums over the book value of Bell Atlantic's (BA) stock demonstrates their expectations of increasing returns. Bell Atlantic's market-to-book ratio has grown substantially over the past several years, from 0.96 in 1984 to about 4.0 in 1997, suggesting that shareholders now expect total returns far in excess of the nominal authorized return on the net book value of the Company's assets. The perceived ability of the Company to consistently generate excess profits results directly from the adoption of alternative forms of regulation in Bell Atlantic states.

BA-PA's 29% return on equity (ROE) in 1997 and 31% in 1995 and 1996 reflect its strong financial performance under alternative regulation. BA-PA has seen increased levels of revenues rolling in while it ha reinvested successively less in its network. BA-PA has earned exceptionally high rates of return in the years following the adoption of alternative regulation (see Table). Since the adoption of the Alternative Regulation Plan in 1994, BA-PA's return on equity has increased dramatically.

"BA-PA's parent company has also performed well, with returns on equity of 19% in 1997, over 23% in 1996 and 28% in 1995. That BA's ROE remained an impressive 19% even after completion of its merger with NYNEX demonstrates that, despite large merger-related extraordinary charges, the company continues to prosper. Even when compared with other RBHCs, Bell Atlantic and its operating companies' returns have been quite high." 

The full text can be found at:

http://www.econtech.com/documents.htm

Part 3, Part 4, Part 5, and Part 6

Part 3: Summary of The FCC's Audits of the Bells:

On March 12, 1999, the FCC released a series of long awaited Bell audits, stating that the Bells may have "overstated" parts of their network by $5 billion and that there is an additional $12 billion in "Unverifiable Assets" (Unverifiable Assets are items that did not match the information that had been filed with the FCC.)

To put these statistics and terms in perspective, the FCC found all the Regional Bell Operating Companies (RBOCs), had massive problems with the records that were supposed to be available, based on FCC rules. In the case of BellSouth, almost one-third of the information required was missing, couldn't be found or had serious errors.

"252,700 of 859,800 records under review, or 29 percent of the reviewed records, contained serious errors."

And what is a serious error? The FCC wrote of Bell Atlantic's audit, that 24% either couldn't be matched with the FCC records, or the equipment simply wasn't there.

"Specifically, in our audit of a random sample of 1,152 line-items from Bell Atlantic's (CPR for Hard-wired) Equipment, we found that 24.1 percent of the records that we sampled contained substantive deficiencies and did not comply with the Commission's rules. Of these deficient records, 12.5 percent described equipment that could not be found by the auditors or by company representatives ("not found" equipment). The remaining 11.6 percent could not be verified with certainty because the equipment shown to the auditors could not be matched to the record in some important respect such as location or description."

What makes this situation so incredible is that in 1994 the FCC audited the Bells found almost identical problems, and that audit was never released, most likely due to political pressures.

It is our belief that these audits not only clearly show that the Bells have not been able to keep accurate book in general about their network components, and therefore, this indicates that the Bells may have also played 'fast and loose with the IRS's requirements as well. More importantly, we believe that many of the items covered by the FCC audit overlaps our own claims.

A write up of the FCC audits can be found at:
http://newnetworks.com/fccaudit.html

Part 4: NNI Filed Comments with the FCC Related to Advanced Networks.

On September 14, 1998, New Networks Institute submitted Comments to the Notice of Inquiry, CC Docket 98-146:

Our comments made three key points:

I. The RBOCs Have Repeatedly Failed To Deliver On Promises Of Network Upgrades Made In Exchange For Regulatory Benefits.

II. The Key Flaw In Incentive Regulation Plans.

III. The Commission Should Mandate ILEC-Funded Network Upgrades

As we wrote "The Commission's current inquiry is being undertaken to fulfill the requirements of Section 706(b) of the Telecommunications Act of 1996 (the "1996 Act") Section 706(b) directs the Commission to "initiate a notice of inquiry concerning the availability of advanced telecommunications capability to all Americans." If "advanced telecommunications capability" is not being deployed "in a reasonable and timely fashion," the Commission is directed to "take immediate action to accelerate deployment of such capability." Its actions in this regard are to take two forms: the "remove[al] of barriers to infrastructure investment," and the "promotion] [of] competition in the telecommunications market."

"The RBOCs have been promising the American public a new, wondrous future of broadband interactive voice and data services for more than a decade now. First the RBOCs claimed that they would bring Integrated Services Digital Network ("ISDN") to the masses. Later, the RBOCs claimed that they would link a substantial fraction, if not a majority, of American telephone consumers to the network by means of high-speed fiber optic connections. To "encourage" and "promote" such actions, however, the RBOCs had a simple, reasonable-sounding quid pro quo: remove the traditional, monopoly-oriented, cost-based regulatory obligations that blunt our incentives to deploy new (and possibly risky) technology.

Simply stated, the regulators delivered and the RBOCs did not. Indeed, from the perspective of the current inquiry, it is the fact that the RBOCs reneged on their earlier deals that made it necessary for Congress to include Section 706 in the first place. The RBOCs have been subject to price cap regulation on the federal level and various forms of non-cost-based "incentive" regulation on the state level, for nearly a decade. This relaxed regulatory environment was supposed to provide strong incentives to the RBOCs to deploy ISDN, fiber-to-the-curb, and other technical marvels. Basically, if the RBOCs had fulfilled their side of these earlier deals, there would have been no need for Section 706 at all, since by the time of the passage of the 1996 Act, and certainly by today, the country would be well on the way towards having "advanced telecommunications capabilities" available "to all Americans."

The remainder of these Comments can be found at:

http://www.newnetworks.com/NNI_FCC_9-98.txt

Part 5: Case Study of Massachusetts' New England Telephone's Advanced Network Deployment:

On August 4th, 1999, New Networks Institute testified in front of the Massachusetts Department of Telecommunications and Energy and on September 8th, 1999, NNI and others filed a formal complaint

"ON THE NEED TO INVESTIGATE BELL ATLANTIC'S FAILED DEPLOYMENT OF ADVANCED NETWORKS AND THE IMPACTS ON CUSTOMERS"

"AND DENY BELL ATLANTIC'S ENTRY INTO THE LONG DISTANCE MARKETPLACE AT THIS TIME"

This complaint accuses Bell Atlantic Massachusetts of using the promises of advanced network to mislead the public to garner the removal of Pro-consumer regulation. We also accuse the Bell of improperly taking over $800 million dollars in taxes.

The amount of deduction, was based on the NYNEX $2.9 billion dollar deduction and part of our original suit and this refile. We claimed that:

1. Bell Atlantic misled Massachusetts consumers and regulators for the purpose of removing important pro-consumer regulation.

2. Once regulatory relief was granted they abruptly discontinued plans to deploy important new technologies.

3. Bell Atlantic may have taken as much as $800 million in improper tax deductions in Massachusetts.

4. Since rate-of-return regulation was replaced by the alternate regulation, Bell Atlantic profits have been excessive and generated at an unreasonable cost to the telephone subscribers and consumers of the Commonwealth.

5. Bell Atlantic's entry into the long distance market would be an obvious violation of the intent of the Telecommunications Act of 1996 that specifically emphasized advanced network deployment and local competition prior to the incumbent being allowed to compete in the long distance marketplace.

6. Bell Atlantic has demonstrated an ongoing pattern of deception and outright misrepresentation in every state in which they are the incumbent local exchange carrier.

7. We call upon the Department to audit Bell Atlantic past execution basic and enhanced services and, in view of Bell Atlantic's demonstrable bad faith, regulate the company to the full extent of its jurisdiction.

8. We call upon the Department to use any means available to deny Bell Atlantic's entrance into the long-distance marketplace in Massachusetts at this.

The complete complaint can be found at:

http://newnetworks.com/Masscomplaint.html

Part 6: In December 1999, NNI filed a petition with the FCC to investigate the Bells Failed Advanced Network Deployments. Titled: 

"PETITION REQUESTING A REVISION OF THE FCC'S ADVANCED NETWORK REPORT FINDINGS, AND A REQUEST FOR AN INVESTIGATION INTO THE BELL OPERATING COMPANIES' ADVANCED NETWORK DEPLOYMENT FAILURES"

This Petition details the RBOC’s promised deployments and their failure to deliver on those promises and requests the FCC to initiate an investigation. The Petition can be found at:
http://www.newnetworks.com/petitionfiled.html

Another part of this filing was a compendium of Bell promises. This document Titled "The Bells’ Greatest Broadband Failures" can be found at:

http://newnetworks.com/bellbroadbandfailures.html

IN CONCLUSION:

We believe we have presented new and important information that will allow the IRS to proceed in this investigation of the Bells improper, if not illegal write-offs. 

Submitted:

_______________________________
Bruce Kushnick

New Networks Institute