2014: The End Game in Telecommunications: The Perfect, Man-Made Storm

  • “Since deregulation, landline costs skyrocket. The monthly cost of measured AT&T phone service (in California) has soared more than 260% since 2008.” Los Angeles Times, Dec 6th, 2013
  • “Internet Service Providers Are Now the Most Hated Companies in U.S…” “ISPs received the lowest customer satisfaction ranking of any industry in America. And that’s saying something, considering ACSI (American Customer Satisfaction Index) typically surveys nearly 50 industries per year.” Huffington Post, May 22, 2013
  • “Fire Island Erupts Over Verizon’s Wireless Voice Link. Forget about not being upgraded to fiber optic services. Customers are ‘extremely disappointed,’ ‘horrified,’ ‘very frustrated,’ with ‘grave distress and dissatisfaction’ about Verizon’s plan to stop fixing their phone lines and giving them an inferior wireless replacement, Voice Link, which can’t handle basic services like fax, DSL or even reliable e911 service.” Huffington Post, July 3rd, 2013
  • “Killing Copper? Customers Say They Felt Pressured into FiOS.” “‘Consumers are filing complaints with us alleging that Verizon is engaged in deceptive marketing practices,’ said Eric Friedman, Director of Maryland’s Montgomery County Office of Consumer Protection.” NBC Washington, December 10th, 2013
  • America Is 32nd in the World in Broadband Download Speeds and 42nd in Upload Speeds, Net Index by Ookla, January 1st, 2014

As the above quotes demonstrate, America is not a happy camper with their phone companies, AT&T and Verizon (not to mention their cable companies). But, truth is, the year 2013 will be remembered as the year that, for the first time in telecommunications history, an incumbent utility phone company, Verizon, decided to not repair the customers’ wires after a major storm.

Unfortunately, all of this has just been a prelude to a reduction of business or residential customers’ rights and services throughout the US, regardless of whether the customer is using a wired or wireless phone or who wants broadband or cable competition in 2014.

And this is not about market forces or even technology driving change. This is a man-made storm to make more money and get rid of regulations. The major incumbent phone companies, which also own the largest wireless companies, and who also, with the cable companies, control most of broadband, Internet and cable services, are working together — a ‘cabal,’ a ‘trust,’ or some might call it — Mob Bell.

We are all for capitalism and making hefty profits in a free market. This ain’t that. The incumbent companies are utilities that control essential infrastructure and instead of competition they are now colluding in multiple ways and have figured out how to have the government protect them — as a group. It harms the U.S. economy and it harms every customer in multiple ways.

The Perfect, Man-Made Storm: The End Game in Telecommunications

The 2013 scorecard shows that America has been under attack by the companies, who are taking more and more control by erasing oversight, regulation and obligations.

  • Buying the Takeover of Telecom. In just three years, 2011-2013, five companies — AT&T, Verizon, Centurylink, Comcast and Time Warner, and the cable association, NCTA, spent an estimated $227 million dollars in federal lobbying and campaign financing. This is separate from the state lobbying, foundation grants or sponsorships. (Source of the basic data: Opensecrets.org)
  • 30 States have Stripped Away Some, if Not Almost All Basic Telecommunications Regulations, Obligations and Oversight. In Florida, the state commission was defunded in many areas and they can’t even ask the phone companies how many lines are in service. And the state law removed most of the obligations including ‘carrier of last resort’ — the obligation to make sure that customers have access to wireline phone service or that the company repairs the lines after a storm. It also allows the company to force customers onto their own wireless company-supplied service — or just dump the customer.
  • The Rise of ALEC, the American Legislative Exchange Council in Telecommunications. ALEC is a group designed to facilitate their corporate members, such as AT&T and Verizon, in creating ‘model legislation’ that is used by ALEC-member state legislators, many of whom are funded by these same corporations with campaign financing or ‘foundation grants’ for their districts.
  • 2014 Goal: The changes in the 30 states were based on ALEC’s model legislation and the 2014 goal is to finish the job in the remaining states.
  • NOTE: In December, 2013, FCC Commissioner Ajit Pai congratulated ALEC on its ‘model legislation’ that pushed the strip-mining of the regulations.
  • The AT&T-FCC IP Transition is in Full Swing at the FCC. This federal campaign is based on essentially the same AT&T conjured state-based model legislation. The FCC has created a Technology Transition Task Force to force this transition, even though it has little to do with technology and everything to do with AT&T’s plan to make more money and get rid of regulatory oversight.
  • The Telco Congressional Campaign has Started. With 30 states now swallowed by AT&T, Verizon and Centurylink’s strip-mining of regulations, there’s a new cry from telco-friendly Congressional politicians to start erasing the entire Telecommunications Act of 1934, updated in 1996.
  • 19 States Restricted Municipalities from offering Competitive Broadband. At last count, this other telco-cable-ALEC based model legislation and campaign helped to restrict, if not completely stop municipalities from offering competitive broadband services, even when the incumbents were never going to do it.
  • Hyped and Manipulated Data Are Now the Standard. From the ‘wireless only’ statistics, which only represent residential voice service and no data or business services, to the ‘access line accounting’ that doesn’t include the majority of data lines in service, such as DSL to U-Verse TV, the companies have skillfully been able to bring in reasonable sounding, but ‘distorted’ statistics to make their case.
  • No More Serious High Speed Wired Deployments or Cable Competition. Verizon announced that it is no longer going to expand its FiOS deployment outside of the current ‘footprint’. Meanwhile, AT&T has stated it will be building out some more of U-Verse, its ‘copper-to-the-home’ service, but in the end, AT&T will service less than 50% of their territory with TV capable services — in 22 states.
  • As noted, America is 32nd in broadband download speeds and it is going to get worse due to this slowdown in upgrading the wired networks.
  • The Wireline-Wireless-Cable Collusion. Verizon’s wireless company isn’t competing with the wireline company and Verizon has a deal with the cable companies to bundle their cable services with wireless in areas they aren’t upgrading. Moreover, customers can’t get competitive broadband, Internet or cable services over the wires coming into their homes

And the Implications Are Pretty Horrific. The Apparent AT&T and Verizon Plan:

  • Let the copper wiring degrade — which appears to have been the plan for the last decade. Then they can claim it has ‘chronic problems.’
  • Close down the copper wiring in areas they don’t want to serve and push these customers onto wireless — which they also own.
  • Close down the copper wiring in areas that are considered the ‘upgraded’ networks — Verizon’s FiOS or AT&T’s U-Verse — and force customers to migrate to ‘upsell them’.
  • ‘Harvest’ all customers who don’t want to switch with continuous rate increases — or until they scream uncle.
  • Get the state and federal regulators to allow them to do these actions without any regulations or push-back.
  • Keep competitors and business segments that depend on copper off the networks and take over their clients. This includes the remaining competitors, companies offering cloud services, and the alarm industry.
  • ‘Vertically integrate,’ meaning allow only the companies’ broadband, Internet, phone or cable affiliates to use the wires and give them advantages to harm competition of any sort.

How Many People are Impacted by All of these Maneuvers?

Regardless of what the companies say, using their own data, closing whole areas of the U.S. will impact everyone including small businesses, residential customers, schools, libraries, municipalities, among others. And this won’t be only in rural areas. We found:

  • AT&T’s U-Verse is probably 99 percent copper-to-the-home. Out of 76 million locations, AT&T only has 5 million U-Verse TV locations–less than 7 percent.
  • AT&T could be abandoning 57 percent of customers,
  • Verizon also only 5 million households have FiOS TV out of 27 million households in its territories–only 18 percent of households. 82 percent of the wires are still copper.
  • Verizon could be abandoning 47 percent of customers.

Not a Fair Fight: There’s No Level Playing Field.

With a cabal of companies and their associations spending $227 million on federal lobbying in just three years — that over $70 million a year, (and as mentioned, this doesn’t including state lobbying and campaign financing, foundation grants or sponsorships) and our side spending… well, squat, there is no even playing field.

The Creation of Mob Bell: The Return of Humpty Dumpty.

In 1984, the original AT&T was broken up because it blocked competition. Seven ‘Baby Bells’ were created, each controlling specific states. And there were also independent local companies, such as GTE.

AT&T became a ‘long distance’ company, and there was also the maverick MCI. In 1996, the Telecom Act was created to open up the wires to all forms of competition –phone or broadband or Internet or even video service. AT&T and MCI entered the local phone markets, as did thousands of independent Internet Service Providers and CLECs (Competitive Local Exchange Companies).

(NOTE: Every ‘triple play’ still has a ‘long distance’ charge for ‘interstate’ calls, i.e., calls made across state lines, and there are separate related taxes, fees and surcharges.)

During the 1980’s and 1990’s, AT&T, MCI and the other competitors acted as a ‘balance’ to the force. By 2007, the Baby Bells married each other, the FCC removed requirements to let competitors use the networks and AT&T and MCI were bought. Three mega-Bells were formed– AT&T, Verizon and Centurylink — that don’t compete for wireline services, even though every merger was predicated on them going at it.

Today, there aren’t any deep-pocket companies who currently act as a balancing force. Google, Microsoft and Apple and many other Tech companies have deals with the network providers so they aren’t going to stand up for the public. And with the recent rash of the telco-ALEC bills defunding the state commissions, severely limiting their oversight, and a dysfunctional FCC, there is no balance for the public interest.

How can AT&T in California raise rates 260% over the last few years, with similar rate increases happening throughout the US, for example, if there was real competition?

Conclusion: The Squeeze Play Is On.

The public is totally unaware of these issues and much of the press appears to simply parrot the corporate press releases. However, as the opening quotes detail, customers may have started to notice the problems when it impacts them.

The question is: Will the telcos be able to buy the changes they want and fool the public and politicians and thus have carte blanche to simply raise rates, shut off customers, force-migrate them to their own affiliate wireless companies or onto their other services they don’t want, with no force to compel them to upgrade ALL of the utility customers?

Don’t Get Mad: Get Even.

Over the next few weeks, we will be offering our own plan for the future.

AT&T, ALEC, FCC, Part 2: The AT&T FCC Petition is ALEC Model Legislation.

Connect the Dots: AT&T Petition and ALEC State Model Legislation
In the previous post we examined the state-based ALEC model legislation that was created by AT&T et al and how it was used in some states, including Florida.

However, the ALEC model legislation was created by AT&T; the fact that AT&T filed a petition with the FCC to finish the ALEC state-based campaign at the federal level should come as no surprise.

Brief History

In December 2009, AT&T filed comments with the FCC as part of National Broadband Plan titled “The Transition from the Legacy Circuit-Switched Network to Broadband” which laid out, in detail, the AT&T-ALEC model of the future — remove as much regulations and obligations as possible.

In 2009, AT&T et al got the FCC to create a group within the FCC’s Technological Advisory Council (TAC) to start the process of “sunsetting” — i.e., closing down America’s utility networks — the Public Switched Telephone Networks (PSTN). As we discussed, TAC is as model of regulatory capture. AT&T and Verizon, (two of the largest incumbent phone companies who control the PSTN in their states) are not only on the committee but the majority of the TAC members have direct financial ties to either AT&T or Verizon or both.

Moreover, the TAC has been headed by Tom Wheeler, who is the Obama nominee for the new chairman of the FCC, replacing Julius Genachowski — and was former head of the cable association, the NCTA, and the wireless association, CTIA.

In August 2012, AT&T set the stage with a letter to FCC Commissioner Ajit Pai, outlining the ALEC principles.

Read More

ALEC & Your Communications: Part 1: How AT&T, ALEC and the Other Communications Companies Created Model State Legislation to Harm You

  • Part 1: AT&T et al and ALEC created state-based model communications legislation which was used in many states to remove regulation and oversight.
  • Part 2: ALEC state-based laws end up as principles in AT&T’s petition to the FCC to close down America’s utility networks.

NRRI Report, May 2013

“Twenty-five states had passed legislation eliminating or reducing state commission authority over telecommunications by the end of the 2012 legislative sessions. By the end of 2013, this number could increase significantly, given the legislation pending in states across the country. Legislation reducing regulatory oversight (or clarifying the deregulation initiatives passed earlier) was proposed in 20 states during the 2013 legislative session… Should the majority of the legislation pending in the 2013 sessions be enacted, nearly 70% of the states will have significantly reduced or eliminated commission jurisdiction over retail telecommunications services.”


Let’s connect the dots.

Starting in 2007, AT&T, Verizon, Centurylink and the cable companies, working with a group called the American Legislative Exchange Council (ALEC), created state-based model legislation and principles designed by the companies to accomplish one thing — the removal of all regulations, obligations and oversight on the companies’ businesses. As the NRRI report outlines, 25 states have removed some, if not all regulations and oversight, and there are more to come in 2013.

ALEC Communications & Information Technology Members
The ALEC corporate communications cabal includes the three largest incumbent wireline phone companies, AT&T, Verizon, Centurylink, as well as three of the largest wireless companies, AT&T, Verizon and T-Mobile, and three of the largest cable companies, Time Warner, Comcast and COX.

We note that Sprint/Nextel left ALEC in 2012.

Read More


Regulatory Capture of the FCC — Time to Clean House

AT&T, with the help of Verizon and the cable companies have ‘captured’ the FCC — and have been able to get the federal agency to create and shape a working group designed specifically to remove all regulations and obligations, close down the Public Switched Telephone Networks (PSTN) and create new digital dead zones.

Think of this as — Imagine taking a company to court and you find out that the judge, most of the jury, and even your lawyer has a direct financial tie to the company you are suing… Think you’ll win?

Moreover, AT&T’s FCC play is part of a massive, well choreographed, multi-year state and federal campaign being orchestrated with ALEC, the American Legislative Exchange Council, to remove all regulations and obligations and harm America’s communications users — i.e., you, dear reader…

With the Wall Street Journal reporting a changing of the guard at the FCC, with FCC Chairman Julius Genachowski and the Republican Commissioner Robert McDowell leaving in the next few months, we need new people who are going to fix, expose and stand up to the corporations, not kowtow to them.

Regulatory Capture & Financial Conflicts of Interest vs Open Government.

Read more

Comments From the Front — Friends of AT&T Want New Digital Dead Zones

What do Free State Foundation, TechNet, Tech America, the National Grange, the U.S. Cattlemen’s Association, Women Involved in Farm Economics, the Urban League and Al Sharpton have in common?

They are all backing AT&T’s FCC Petition, which has the goal to close down telecommunications networks and create digital dead zones in about 50 percent of the country. Most disturbing, many of the endorsements of AT&T contradict the needs of their own constituents.

Read More:

Community-Owned Internet, Long Targeted by ALEC and Big Telecom, Under Fire in Georgia

Members of the American Legislative Exchange Council (ALEC) in the Georgia Legislature are pushing a bill to thwart locally-owned internet in underserved communities, an industry-sponsored effort that effectively reinforces the digital divide. A vote in the Georgia Assembly is scheduled for Thursday, March 7; if Georgia passes the bill it would be the twentieth state to eliminate community control over internet access.

Rural and Poor Communities Take Control of Internet

As many as one in ten Americans cannot get internet connections that are fast enough for basic activities like streaming video or file sharing, largely because big internet providers like AT&T and Time Warner Cable have refused to provide adequate service to communities where the population is too dispersed or too poor. As local economies become ever more dependent on internet access, though, this digital divide is leaving rural and low-income communities in the dust.

read more…

EDITORS NOTE: There are two primary campaigns being run by ALEC et al. The first is to block municipalities from upgrading their networks and offering services— 19 states already have changed their laws to block munis.

The second — close down all regulations on the wires — 23 states have already passed laws to do some if not remove all regulations.


Kentuckians Once Again Fighting to Keep Landlines

Last year, we reported on the failed SB 135, which would have eliminated the “carrier of last resort” requirement in the state. The bill, sponsored by Republican Senator Paul Hornback would have let AT&T decide who could receive basic telephone service and would have limited consumer protections.

Last year’s bill did not become law, but a progeny, SB 88, has already passed in the Kentucky Senate and was received in the House on February 15th. (We’d like to report what committee will hear it first but the Kentucky Legislative web has not yet published that information.) Senator Hornback is again the chief author of the bill, crafted by AT&T and its ALEC pals.

Read More


Reverse ALEC-AT&T Legal Hackathon at Brooklyn Law BLIP

Watch live streaming video from internetsocietychapters at livestream.com
  • Susan Lerner, Executive Director, Common Cause, New York & Brendan Fischer, PRWatch,– Who is the American Legislative Exchange  Council  (ALEC) and how do they impact public policy making?
  • Bruce Kushnick, New Networks — Reversing ALEC-based communications laws and  regulations. A brief history of Telecommunications, broadband and competition in the US and the current communications landscape.
  • Earl Comstock — With talk of a rewrite of the Telecom Act, what needs to be  done to reverse the current policies and restore competition.
  • Jonathan Askin, Brooklyn Law, BLIP –  VOIP and AT&T’s FCC Petition. Why access to  the networks is critical to competition in information services.
  • David Rosen – Content is King — From Net Neutrality to the ISP as  policeman,  content, including user-generated content is an issue that won’t go away.Esq.

Afternoon:  (to be sent)

  • Joe Plotkin, ASA networks –Competition  on all levels is an imperative.
  • Joly Mac Fie, ISOC-NY — Net Neutrality principles should reflect competition of Internet, broadband and phone service as well as
  • Bill Skye,  Esq. — New Jersey’s rural customer are not being served. Verizon, New Jersey was to be completed by 2010 with 100% of the state’s utility being upgraded. to fiber optics, with speeds capable of 45 Mbps. in both directions.
  • Edyael Casaperalta,  Center for Rural Strategies, Broadband in rural areas is not happening causing economic harms to cities and customers.
  • Art Brodsky,How the game is played.
  • Dana Spiegel, NYC Wireless.