New Networks News Analysis: June 15th, 2009


"AT&T Backs 100 percent broadband by 2014" -- Liar, Liar, Pants on Fire.

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 counting.


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

window dressing.


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

benefit them.


(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

not deliver.


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

By December 31, 2007, AT&T/BellSouth will offer broadband Internet access

service (i.e., Internet access service at speeds in excess of 200 kbps in at

least one direction) to 100 percent of the residential living units in the

AT&T/BellSouth in-region territory. To meet this commitment, AT&T/BellSouth

will offer broadband Internet access services to at least 85 percent of such

living units using wireline technologies (the "Wireline Buildout Area").

AT&T/BellSouth will make available broadband Internet access service to the

remaining living units using alternative technologies and operating

arrangements, including but not limited to satellite and Wi-Max fixed

wireless technologies. AT&T/BellSouth further commits that at least 30

percent of the incremental deployment after the Merger Closing Date

necessary to achieve the Wireline Buildout Area commitment will be to rural

areas or low income living units."


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

network capable of delivering a new generation of integrated IP video,

super-high-speed broadband and VoIP services to our residential and

small-business customers, referred to as Project Lightspeed.... We

anticipate that we will deploy approximately 38,800 miles of fiber, reaching

approximately 18 million households by year-end 2007, and expect to spend

approximately $4 billion over the next three years in deployment costs and

$1 billion in customer-activation capital expenditures spread over 2006 and



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

initiative, SBC announced plans to offer broadband services to approximately

80 percent of SBC's United States wireline customers over the next three

years (Project Pronto). SBC will invest an estimated $6 billion in fiber,

electronics and other technology for this broadband initiative. The

build-out will include moving many customers from the existing copper

network to a new fiber network."

And on Competition:

"21.Out-of-Territory Competitive Entry (National-Local Strategy)

Within 30 months from the merger closing, SBC/Ameritech will enter

at least 30 major markets outside of its region as a facilities-based competitive

provider of local services to business and residential customers."


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

Pronto $6.0

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?