The Bells' Greatest Broadband Failures

More about 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."

"Verizon PA has committed to making 20% of its access lines in each of rural, suburban, and urban rate centers broadband capable within five days from the customer request date by end of year 1998; 50% by 2004; and 100% by 2015."

"In order to meet this commitment, Bell plans to deploy a broadband network using fiber optic or other comparable technology that is capable of supporting services requiring bandwidth of at least 45 megabits per second or its equivalent."

"It is apparent that DSL, as it currently exists today, (March 2002), is unable to provide the broadband availability of 45 Mbps both upstream and downstream that the Company voluntarily committed to and the Commission approved in 1995."

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."

"Bell Atlantic-New Jersey (BA-NJ) has over-earned, underspent and inequitably deployed advanced telecommunications technology to business customers, while largely neglecting schools and libraries, low-income and residential ratepayers and consumers in Urban Enterprise Zones as well as urban and rural areas."

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

· Broadband 100% by 2010

· Fiber to the feeder 45% by 2000

· Fiber to the curb 30% by 2000

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."

Maryland, C&P

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

· Fiber to the feeder 100% by 2008

· Fiber to the home 100% by 2010

· Fiber-interoffice (all copper retired) 100% by 1994 

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."

"Bell Atlantic plans to begin its network upgrade in Philadelphia and southeastern Pennsylvania later this year. The company plans to expand this Full Service Network deployment to other key markets over the next three years. Ultimately, Bell Atlantic expects to serve most of the 12 million homes and small businesses across the mid-Atlantic region with switched broadband networks." (Emphasis added)

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.

"We expect Bell Atlantic's enhanced network will be ready to serve 8.75 million homes by the end of the year 2000. By the end of 1998, we plan to wire the top 20 markets... These investments will help establish Bell Atlantic as a world leader in what is clearly the high growth opportunity for the 1990's and beyond."

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

50-750 MHz Forward Direction

40-50 MHz Crossover Area

5-40 MHz Reverse Direction

NOTE: These speeds are 50-750 times faster than the current Bell roll out of ADSL. Forward is to the customer, reverse is leaving the customer's premises.

Pacific Telesis Deployment Schedule:

Here's the actual page for the promised deployments:


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."

"We will deliver interactive services to homes and business through our new video network. We've stated out position in interactive services for health care administration, education, government, libraries, travel and commerce, as well as entertainment, games and home shopping." Ameritech Annual Report 1993


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…"

NYNEX Massachusetts

(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 Massachusetts

"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's proposed video dialtone systems make available three types of service arrangements: analog broadcast, digital broadcast, and digital interactive service. Video programmers may deliver an "analog, digital, or other agreed upon signal" that NYNEX plans to modulate and/or encode as necessary. The allocation plan provides for the offering of 21 analog channels, all but one of which will be for over-the-air broadcast programming services, and, depending on compression rates, between 400 and 800 digital channels.

NYNEX Cable Rollout Patriot Ledger, December 13, 1994

"HEADLINE: NYNEX to offer cable TV in Boston suburbs"

"Telephone customers in Boston and its western and northern suburbs will be the first to be offered cable television services by their local phone company, a NYNEX Corp. spokesman said yesterday."

"Federal officials yesterday approved Nynex Corp. plans to offer cable television to customers in Rhode Island and Massachusetts - starting with Somerville.

"The long-expected Federal Communications Commission decision, roundly opposed by the cable industry, could propel Nynex into television in 13 communities, some by early 1996, according to company officials.

"We will begin construction almost immediately. A good bit of it is going to be aerial, on poles. There will also be some underground," Johnson said. The Boston Herald, February 8, 1995 SECTION: FINANCE; Pg. 25)

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.

As discussed previously, the Telephone Company plans to invest $4.5 billion over the next 15 years to build I-SNET. The Telephone Company plans to support this investment primarily through increased productivity from the new technology deployed, ongoing cost containment initiatives and customer demand for the new services offered. The Telephone Company does not plan to request a rate increase for this investment.

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.

Expanding on this success, the company in 1994 announced plans to build video networks in 66 key markets in the next 10 years. When completed, the new network will pass 7 million homes and will provide broadcast, cable and interactive television programming.

GTE Telephone Operations will invest about $250 million to build broadband video networks in four markets during 1995. GTE's pending applications seek authority to build hybrid fiber-optic and coaxial-cable video networks in Ventura County, Calif.; St. Petersburg and Clearwater, Fla.; Honolulu, Hawaii; and northern Virginia.

The 1995 video investments are in addition to the approximately $2.7 billion GTE spends each year to upgrade and maintain its national telecommunications network.


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."

"The new services will include broadcast entertainment, interactive video services, such as video games, enhanced personal computer and communications services, including electronic mail, transactional services, such as home shopping and banking, and customer-choice video services, such as movies on demand."

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."


ISDN Promises:

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:

"Private-line service as quick as a click: bandwidth where a business wants it, when a business wants it, as much as it wants, for as long as it wants. That's the value of NYNEX Enterprise Services, a set of new networking tools that bring unprecedented flexibility to private-line voice data and video systems"

From: The New York Times article by James Gleick

"I have visited the advanced telecommunication research laboratories and have seen what technology can bring, ISDN, which promises to turn ordinary phone lines into high-bandwidth carriers of pictures and videos. I've also visited the local telephone company and seen what technology can't bring. I've tried to order this very service. I have a 14-page, four-color brochure! "NYNEX ISDN Primary Service. For more efficient voice, data, image and video... " The Pipeline's [author's company] order has been floating about for months. Our sales representative says he wrote it up three times, and each time the system bounced it back. I have a phone number for an ISDN specialist inside NYNEX, but he doesn't seem to have voice mail. The Pipeline is not alone. The large, private on-line services, too, rely on more or less the same graying telephone technology, not ISDN. "


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.

"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.

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.

"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":


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".

"Unfortunately, there was no great public outcry for such a new law. There was, in fact, not a peep from the public, whose indifference on the subject of telecommunications law was a large as the public's very considerable ignorance of it, and it was extremely difficult to explain why Bell Atlantic, a company with annual profits of over a billion dollars, felt a compelling need to overturn more than half a century of lawmaking in order to make more money. The easy part had already been done; influential congressman had been provided with large sums of money and more would be forthcoming, but encouraging the legislators to think correct thoughts was only part of the task. It was also essential to provide Congress with a plausible-and, above all, a popular and easily understood-reason for writing the new law. The secret of the trick, Bell Atlantic and other regional television companies had correctly come to believe, was cable television".

"Taken as a whole, cable companies.... were roughly as popular as oil companies, law firms and reporters..To Bell Atlantic opportunity beckoned". ...

"With great fanfare, the telephone companies announced that, if only one small condition was met, they would provide cheap, friendly, and reliable cable television service, using their existing networks. The cable companies would no longer hold the country in the iron grip of monopoly, and the viewing public would soon be happy. All it took was a small change in the existing laws-and, while the legislators were at it, they might as well make a few additional and long- overdue modifications of the statutes in the interest of tidiness and for the benefit of all Bio the regional telephone companies, God-long distance service-would be found in the modifications. Television was the cover story".

"The regional telephone companies had never been interested in television, and most of them weren't interested now. The goal had always been the long distance business, and the goal never changed. Once the new telecommunications bill was passed and signed, the telephone companies could run a few inexpensive tests in places like Omaha, El Cerrito and Richardson, Texas. If the tests succeeded, well and good, the telephone companies could make some extra money. If the test failed, no great harm was done; the telephone companies could claim technical difficulties and public indifference and quietly abandon the undertaking. In the meantime, it was important to feign enthusiasm until the law changed..."

(Copyright, New Networks Institute, 2000. All rights reserved)