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"The $200 Billion Broadband Scandal."   AKA Where's the 45MB/s I Already Paid for!
By Kelly Deegan
Muniwireless.com
Monday, January 30, 2006

I was lucky enough to be able to look over an advance copy of Bruce Kushnick’s new book, “The $200 Billion Broadband Scandal” — it’s a powerful critique documenting the trail of broken promises and misinformation perpetrated by many broadband service providers in order to get favorable treatment, special dispensation, and competition-free access to residents across the United States.  One of the most damning indictments, that United States residents have already paid for upgrades to our existing broadband infrastructure — being charged for services never delivered — and not a small amount either, but actually to the tune of $200,000,000,000.  When you break it down, that’s roughly a $2,000 refund for every household that’s due for contractual obligations never fulfilled.

Here’s more from today’s official release:

New investigative ebook offers micro-history of Verizon, SBC, Qwest, and BellSouth’s (the Bell companies) fiber optic broadband promises and the consequence harms to America’s economic growth because they never delivered and kept most of the money, about $200 billion.

New York:  This is one of the largest scandals in American history.  America is 16th in the world in broadband and the US DSL current offerings are 100 times slower than other countries such has Japan and Korea.  How did we go from Number 1 in the web to 16th in broadband and falling?

But more importantly, are customers owed $2,000 for a fiber optic service they paid for but never received?  Did towns and cities, libraries and schools, government agencies, and every residential and business customer subsidize new networks that never showed up?

And did America lose $5 trillion in economic growth, $500 billion annually, because of these missing networks?

Broadband Scandals is a well-documented expose, 406 pages and 528 footnotes.  Using the phone companies’ own words (and well as other sources), the book outlines a massive nationwide scandal that affects every aspect of state of the Internet.  Not only the web but broadband, municipalities laying fiber or building wifi networks, not to mention related issues such as such as VOIP, cable services, the cost of local phone service, net neutrality, the new digital divide, and even America’s economic growth.

The fiber optic infrastructure you paid for was never delivered.

Starting in the early 1990’s, with a push from the Clinton-Gore Administration’s “Information Superhighway”, every Bell company — SBC, Verizon, BellSouth and Qwest — made commitments to rewire America, state by state.  Fiber optic wires would replace the 100-year old copper wiring.  The push caused techno-frenzy of major proportions.  By 2006, 86 million households should have had a service capable of 45 Mbps in both directions, (to and from the customer) could handle over 500 channels of high quality video and be deployed in rural, urban and suburban areas equally.  And these networks were open to ALL competition.

In order to pay for these upgrades, in state after state, the public service commissions and state legislatures acquiesced to the Bells’ promises by removing the constraints on the Bells’ profits as well as gave other financial perks.  They were able to print money — billions of dollars per state — all collected in the form of higher phone rates and tax perks.  (Note:  each state is different.)

-  ADSL is not what was promised and paid for.  It goes over the old copper wiring, can’t achieve the speed, has problems in rural areas and is mostly one-way.

-   0% of the Bell companies’ customers have 45 Mbps residential services.

Harms and Outcomes

This investigative book isn’t just a history, but a warning — the Bell companies can not be trusted with our digital future.  Worse, what they have done has resulted in serious repercussions to local, state and national economy.

-  The public subsidies for infrastructure were pocketed.  The phone companies collected over $200 billion in higher phone rates and tax perks, about $2,000 per household.

-  The World is Laughing at US.  Korea and Japan have 100 Mbps services as standard, and America could have been Number One had the phone companies actually delivered. Instead, we are 16th in broadband and falling in technology dominance.

-  Harm to the economy.  Five trillion dollars was lost because new technologies and services that America would have developed, happened in Korea.

-  Municipalities around America are waking up to the fact that the phone companies failed to deliver and are now doing Wifi and fiber-based work-arounds.

Broadband Scandals delivers serious revelations.  In fact, the book has been designed as the data source for Teletruth’s complaint to the FTC against SBC and Verizon.

-  The promised networks couldn’t be built in 1993 and state laws were changed based on “deceptive speech”.  The technology today still has problems delivering 500 channels.

-  The phone companies pulled a bait and switch.  In order to offer DSL over copper, it was not necessary to have state regulation changed.  Their plan was to get rid of regulations and enter long distance.

-  The Bell mergers resulted in the death of the state plans for fiber optic broadband.  Over 26 states had fiber optic projects closed when the mergers of SBC and Verizon were completed.  That affected almost 80% of all phone customers in the US.

Broadband Scandal contains some additional special chapters.

-  20th Anniversary Summary of the Bells’ Financials.  The core of the book is a 20-year analysis of revenues, profits, construction, etc..  Starting in1984, their own data shows revenues up 128%, and concludes profits shot through the roof on the promise of broadband.  Meanwhile, compared to revenues, employees are down 65%, construction down 60%.  Why did prices increase?

-  Case Studies:  New Jersey, California, Massachusetts, and Pennsylvania. — State-by-state the book outlines the same pattern of deception.  By 2010, 100% of New Jersey is supposed to have 45 Mbps service;  by 2000, California should have had 5.5 million homes completed, and each state paid billions for services they never received.

-  Verizon’s “FIASCO” and SBC’s’ “Dim-Speed” — Verizon and SBC are rolling out new fiber optic services but want the laws changed again.  These services are crippled, closed networks that do not fulfill the state obligations, like New Jersey and can’t compete globally.  FIOS’s top speed is only 35% of the Asian standard, and yet it cost $199 vs Korea, $40 for 100 Mbps.

-  Fake and co-opted consumer groups, biased non-profit think tanks are now the major force in broadband regulation and policy.  The book goes into groups like Consumers for Cable Choice, TRAC, APT, Issue Dynamics and New Millennium Council and how these groups are attempting to block municipalities from offering new services to harming new services, like VOIP.  These groups are sending out deceptive messages that make the formulation of the policy that is in the public interest impossible.

Broadband Scandal’s conclusion:  Publicly paid for infrastructure is being held hostage and needs to be freed.  Customers funded the fiber optic networks and the Public Switched Telephone Networks (PSTN) should be opened to ALL competition with strict rules of Net Neutrality.  The Bells have harmed America’s economic growth and our global competitiveness.  Investigations into all of the monies collected in the name of fiber optic broadband in America should start immediately.  These investigations should include how the Bells improperly funded their DSL and long distance rollouts.  The Bells should be forced into refunds or giving the money to municipalities.  This would be a better solution than allowing the companies who have harmed our digital future to control America’s digital destiny.

Author.  According to Broadband Reports: “Bruce Kushnick has been dubbed everything from the ‘Leading Visionary in the Telecom Industry’ to a ‘Phone Bill Fanatic’;  but what’s certain is that nobody in the industry is ignoring him.”  Kushnick has been a telecom analyst for 24 years, and is one of the founders of Teletruth, an independent customer advocacy group focusing on broadband and telecom issues, as well as executive director of New Networks Institute, a market research firm.

Teletruth was a member of the FCC Consumer Advisory Committee in 2003-2004 and has active cases with the IRS, FCC and FTC pertaining to broadband and the cost of the networks.  Research through Teletruth’s phone bill auditing services has led to class action suits and major refunds for phone bill overcharging, Reporters and reviewers, email us for a complimentary copy.  For a Table of Contents, roadmap, a chapter, the introduction, and more… http://www.newnetworks.com/broadbandscandals.htm

Read what the pundits and experts are saying, “talented, persistent, honest”… “brilliantly documented this fraud” … “stunning in its implications.”  “Anyone who wants the U.S. to thrive in this connected future should read Kushnick’s book.”

Ebook only: $20  -  406 pages, 528 Footnotes, 72 Exhibits.

Contact:  Kelly Deegan, kelly@teletruth.org Bruce Kushnick, bruce@teletruth.org , 718-238-7191

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