New Networks Institute


Info-Scandal Introductions, Overview and Links


On October 6th, 1999, New Networks Institute and telecom expert Peter Brennan filed a complaint against Bell Atlantic Massachusetts for over $1 billion dollars. Our claim is that Bell Atlantic used promises of deploying new fiber-optic advanced network services to remove pro-consumer regulation, convincing regulators to change the older 'rate-of return' regulation with "incentive" or "alternate regulations".

The Boston Globe featured our Complaint on October 6th, 1999.

In short, the Bell pulled a classic bait-and-switch: make promises to roll out fiber optics (replacing the older copper wiring) that you do not intend to keep, then charge customers through added and padded charges on phonebills. We estimate it has cost Massachusetts customers over 1 billion dollars and it continues today. For example, New England Telephone's dividends to Bell Atlantic went up over 100%, while expenses, including new construction, grew only 6% since alternate regulation were applied. Bell Atlantic's overall return was 200% higher than other utilities. And there are no fiber-optic wired homes.

To add insult to injury, we believe that the Bell. also wrote-off their older copper wiring, claiming that it was being replaced. In Massachusetts we estimated that the write-off was $800 million dollars.

(NOTE: "ADSL", the Bell's current high speed offering, is based on the old, still in use, copper wiring and it is 100-700 times slower than the fiber-optics promised.)

Click to read the Complaint, Summary, of printable PDF file,

We have already pointed out that this scam happened in virtually every Bell company in virtually every state.

For a compendium of failed promises just read out collection "The Bells Greatest Broadband Failures, Volume I"

In our FCC filings on advanced networks (CC 98-146, CC 98-147), we clearly show that the Bell already received massive state incentives and never fulfilled their obligations.

To read what we found in New Jersey click here.

And we are not alone in making these claims. The respected research firm, Economics and Technology, has shown that this problem has happened in other Bell Atlantic states.

To read Economic and Technology's report on New Jersey and Pennsylvania click here.

Also, the New Jersey Consumer Advocate's Opportunity New Jersey report clearly highlights the Bell's failure to deliver, while garnering excess profits.

The Impacts:

* Congress is being asked to give the Bells even more financial incentives for networks they already got paid for.

*The FCC has added charges including the e-rate, for the wiring of schools and libraries, which in many states was already paid for.

* Customers are being overcharged hundreds of dollars. We estimate that customers are paying almost $8 billion dollars annually for a network they will never receive. And this includes the low income and seniors.

*Widening the Digital Divide: Because these networks were supposed to be delivered to both poor and rich neighborhoods, the digital divide is now the San Andreas fault.

*Bells failed to deliver on cable competition. While the Bells have been using their well funded groups, including IAdvance and the Opennet coalition, have been able to convince regulators and the press that they are the good guys, they are simply using these as a diversion to hid their own failed deployments.

*This has been going on for over a decade -- Remember ISDN --- ISDN was supposed to be rolled out in the mid-1980's and the Bell also received state and federal incentives ---- which were never questioned, even though these networks never showed up in a timely and reasonable manner either.

*Blocking competitors and Internet providers- Our complaint highlights how the Bells are stifling competition of both advanced networks and competition, delivering sub-standard customer services.

*Leaving America with a dirt road: Customers were promised a Ferrari and know are still relegated to a skateboard. The future will remain a fuzzy, low-resolution jerky picture as we enter the next millennium, instead of a clear, sharp very-high resolution vision of the Information Age.

We believe that the plethora of Bell promises adversely impacted the writing of the Telecom Act of 96 and that further customer and competitor safeguards would have been added BEFORE the bells should be allowed into any new services. We also believe that ALL Bell mergers (GTE-Bell Atlantic, SBC Comm. & Ameritech, US Wrest & Qwest) as well as their entry into long distance is just giving the Bells more money, while increasing their monopoly power. We contend that instead of giving the Bells new financial freedoms, regulators should be focusing on making customers whole and holding the Bells accountable for their past actions first.

This is the first of numerous complaints we will be making this year. This research is also highlighted in "The Unauthorized Bio of the Baby Bells & Info-scandal"

Anyone who would like to help out, including lawyers, please get in touch with us.

Bruce Kushnick

Executive Director, New Networks Institute

[email protected]