New Networks Institute

=================NEWS RELEASE==================

Bruce Kushnick [email protected]

Phone: 212-777-5418

LJ Davis [email protected]

Phone 718-625-3365

To Read the Complaint

To Read a Summary

 

DOES US WEST OWE ITS CUSTOMERS $15 BILLION?

Dateline: November 4th, 1999 --- Today, New Networks Institute and author and reporter LJ Davis filed a formal complaint with the Idaho Public Service Commission and the Attorneys General Office, asking them to investigate claims that US West should refund billions of dollars to its customers. The complainants question the company's alleged manipulation of its stock, the transfer of certain properties during the creation of MediaOne, and certain events pertaining to the company's proposed merger with Qwest Communications.

The complaint also requests an investigation into US West's failure to deploy promised advanced networks, its declining customer services, its excess profits, and the massive, questionable tax deductions taken by its telephone networks.

"With all the talk about MediaOne, a spin-off of US West, or with US West's proposed merger with Qwest Communications, it is surprising that few regulators have questioned certain of US West's other recent maneuvers," stated Bruce Kushnick, executive director of New Networks Institute

"In hopes of breaking this silence, we are calling on the State Public Service Commissions and the Attorneys General in the 14 states where US West operates to immediately investigate the possibility that certain of US West's actions materially benefited the company's shareholders while illegally costing the company's customers a sum of money that is potentially very large", added LJ Davis, author of The Billionaire Shell Game, Doubleday, 1998.

This complaint holds AT&T blameless in any and all violations discussed regarding MediaOne. As the authors have addressed in other writings, AT&T's purchase of MediaOne may, in fact, be aiding MediaOne's cable users and the future deployment of broadband services.

The complaint focuses on $15 billion dollars of questionable business activities:

  • Wireless business transfer--- Shareholders received $5.9 billion in payments when the US West Cellular businesses were sold to AirTouch. We contend that customers should have been entitled to payments for their participation in the development of this business.
  • Directory Football --- $850 million were paid to shareholders during the transfer of "DEX", US West's directory business from the media side of the company to the telephone side. We question this back-and-forth transaction, because the rate-payers did not benefit from this monopoly product being used as a football to increase shareholders profits.

More:

  • US West's Failed to Deploy Advanced Networks --- US West stated that it was building a fiber-optic network and received large financial incentives to do so from state and federal regulators. This network was never built.
  • US West's profits, in part because of the failed advanced network deployment, are 200% higher than a regulated monopoly is supposed to be earning.
  • US West took $3.1 billion in network write-offs, claiming it was replacing old copper wiring with fiber-optic lightpaths. Most of this wiring was never replaced. (The current high-speed service, ADSL, (Asymmetric Digital Subscriber Line travels over the older copper wiring.) NOTE: NNI has filed a complaint about this matter against US West and the other Bells with the Criminal Justice Division of the Internal Revenue Service.
  • Bell audits showed massive quantities of missing equipment. The FCC audits of US West and the other Bells clearly showed that over $5 billion dollars of equipment was missing or improperly accounted for.
  • Numerous local competitors, including CLECs (Competitive Local Exchange companies) and Internet Service Providers (ISPs) are receiving sub-standard customer services. This is stifling robust competition and growth of advanced networks.
  • US West paid company executives and its shareholders huge amounts of money while customer service issues began to rise. The major shareholders, including senior members of management, received massive compensation while the customers have experienced declining service, according to the Public Service Commissions.

    "These issues are very serious and appear to be a clear indication that US West has not been working for the benefit of their customers, but has focused instead on rewarding its shareholders. The public interest has suffered. This should be investigated immediately and refunds paid", stated LJ Davis, an Idaho landowner.

For more information, please contact Bruce Kushnick at [email protected]etworks.com or LJ Davis at [email protected] A copy of the summary or the original complaint can be found at http://www.newnetworks.com