The FCC has decided that it should give $9 billion for the deployment of wireless 5G, but the FCC has never examined that there has been a massive cross-subsidies of the wireless networks, where Local phone customers have ended up being charged for the fiber optic networks used by Verizon and AT&T wireless. We filed for the FCC to investigate these cross-subsidies, which include 5G wireless. Click to Read the Filing
Verizon Massachusetts Fiber Optic Failure, 1994-2020
1994: Verizon Massachusetts files with the Mass Department of Public Utilities to have fiber optic services, to replace the existing copper wires. The included colleges and universities, hospitals, as well as 330,000 residence and businesses.
1994: This same plan was also filed with the FCC known as “Video Dialtone”, and claimed the majority of the entire state would be finished by 2010.
“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 plans to deploy this type of network to the majority of its customers by the year 2010.”
1995: Verizon filed and was granted “alternative regulations”, which gave the company
1999: In New Networks institute filed a complaint in Massachusetts outlining how Verizon (then New England Telephone) convinced regulators that they would rewire the state starting in 1995 if the company got massive financial incentives – Deregulation — the removal of regulation that examined and limited their profits. The Massachusetts Department of Telecommunications and Energy, never acted on our complaint.
2005: Verizon announces FiOS and gets some municipality franchises for cable TV
2007: We presented testimony in front of the Massachusetts Joint Committee on Telecommunications Utilities and Energy.
2010: Verizon announces it is halting the fiber optic deployments in all states.
2016: Bait and Switch: Verizon announced it would be upgrading 100% of Boston and spend $300 million dollars. Instead, most of this has been a bait and switch to use the fiber optic wires that should go to homes to instead roll out wireless, and 5G Wireless.
We documented the story in articles in Huff Post and Medium.
- Verizon’s FiOS Deployment in Boston Is Fiber-To-The-B.S.
- Billions in Cross-Subsidies Could Bring Fiber Optic Broadband to Massachusetts Cities—But Remain Unchallenged, 2017
- Verizon’s Boston FiOS Fiber to the Home Plan Needs Investigating—Now.
- Verizon’s Boston FiOS Fiber-Wireless Bait-N-Switch
- Verizon, Fiber, Boston, Wireless: History Repeats Itself, Yet Again., 2016
- Verizon’s Boston Faux-FiOS, “One Fiber” Strategy Exposed
- More Exposed: Verizon’s FiOS-Wireless Bait & Switch in Boston
- Verizon’s $300 Million Shell Game in Boston and Cross-Subsidizing Wireless
- Verizon, Boston, Bernie, Fiber and the Facts
- Verizon Wireless’s 5G Deployment is a 1 Gig Fairy Tale.
- Verizon’s Massive East Coast FiOS Scandal: 41 Percent Coverage Using ‘Weasel Room’ Math 2015
Bruce Kushnick, Managing Director bruce at New Networks dot com
Scott McCollough, Esq. Counsel wsmc at dotlaw dot biz
FOR IMMEDIATE RELEASE
IRREGULATORS BIG WIN: We Freed the States to Get the Money Back from AT&T, Verizon & CenturyLink
(This is similar to the DC Circuit decision that freed Net Neutrality from the FCC’s control to become a state issue.)
- We got the decision that we wanted—billions of dollars per state can now be freed to solve the Digital Divide, lower prices and bring in competition.
- All wireless cross-subsidies can be stopped — 5G is no longer profitable.
IRREGULATORS v FCC: DC Court of Appeals Opinion, March 13th, 2020
WE CAN NOW TAKE THE NEXT STEPS
WHAT WE NEEDED TO FIX: Unknown to most, AT&T, Verizon and CenturyLink control America’s telecommunications utilities, and over the last decade they have used the FCC’s accounting rules and formulas to charge the majority of all company-wide expenses to the local wired state-based telecommunications utilities, while the other services that are also using the same wired copper and fiber utility facilities, like broadband, internet and wireless, do not pay their fair share.
This financial shell game has made the entire state-based utility infrastructure appear unprofitable and they have relied on these distorted financial results to argue that they cannot upgrade rural areas or even inner cities, and it has been used to justify local rate increases multiple times, as well as save billions in taxes. More importantly, it is also the excuse to “shut off” the wired networks and go wireless with 5G.
Over the last five years we filed more than 18 separate pleadings and reports to stop the continuing use of these obsolete and now deformed rules. The FCC refused to take action, claiming that the rules didn’t apply, even though the companies still use them and the state commissions still accept them to the detriment of utility customers.
We brought this case to expose one of the largest accounting scandals in American history and to get a decision by the U.S. Court of Appeals – D.C. Circuit—and we won. The Court made clear that the FCC does not have control over the state accounting and the states are free to adopt new regulations. This also allows the states to go after the billions in cross-subsidies and overcharging that has been costing America an estimated $50-60 billion annually.
This is one of the largest victories for consumers in recent years. The states now clearly have the authority to pick up the mantle and act to narrow the Digital Divide, promote Digital Inclusion, lower prices, bring in competition and end the cross subsidization of 5G by the public utility. And it provides a national broadband plan which is not funded by government subsidies but by dismantling this financial shell game.
This is a partial list of what this decision means going forward:
- IRREGULATOR Treasure Map: Billions for Broadband in Your State and Refunds on Your Communications Bills.
- We help to take down the billions in Corporate Operations overcharging: In NY, Verizon Local Service was overcharged an estimated $1.5 billion dollars a year for the corporate jets, the executive pay, and the lawyers and lobbyists pushing anti-customer agendas. Now a state can now stop the billions of dollars in unrelated expenses that has been put into local service and caused rate increases.
- We help to take down billions in tax losses: Today, the state utility pays the majority of expenses, even if it has nothing to do with Local Service. In NY, Verizon has been showing artificial losses of $2 billion annually. The states can stop the cross-subsidies and let these companies pay their fair share of taxes.
- All subsidies to wireless can now be stopped by the states: The states are free to stop the cross subsidies where the fiber optic networks are being built for the benefit of the wireless company, instead of properly upgrading cities and towns, especially in more rural areas.
- 5G Is Not Profitable Once We Do This.
- We take down the 75-25% rule with this decision: Today, 75% of the costs of the wired network expenses (even for wireless, broadband and internet) are dumped into ‘local service’; wireless and these other services got a free ride — Not anymore. The states can come up with their own allocation factors.
- We just lowered prices billions of dollars if the state decides to go after the money: After all of this shell game is exposed and removed, a state can make the price be ‘incremental’ — and it can decide that local service and the wired networks should only be based on the actual costs, and not made up expenses.
- We now present billions in new found cash to solve the Digital Divide: Removing this long standing shell game means billions can now be properly allocated to build out the wired state-utility infrastructure for broadband to EVERYONE in the state.
- Cities can now build out their networks. NYC’s Master Internet Plan to solve the Digital Divide requires government funds and never held Verizon NY accountable. The City of New York, like all cities across America trying to get a digital future for every citizen, should have examined the financial cross-subsidies that were exposed in this case and the bait-and-switch funding for wireless. Now, NYC can go after the money and provide a fiber optic future to everyone.
NOTE: We lost this DC Court decision on standing: Since the rules don’t apply, we can’t be harmed. We now have clarity about these cost accounting rules. The states are free to do what they want. Our strategy in bringing this case was to secure a definitive answer about the rights of states vs the control by the FCC over the financial accounting. The Court made it clear that the states are independent from the FCC and from the application of the federal accounting formulas known as “Part 36”.
“This means that any injuries the petitioners suffer through the application of outmoded Part 36 rules to price-cap carriers are traceable not to the Commission’s freeze order but to the states’ voluntary and independent decisions to use the rules of Part 36 for their own purposes.” (PAGE 9)
“Price Caps” Need Investigation and Repair: AT&T et al. and the states may say: “We are under price caps and the utility expenses are no longer examined.”
ANSWER: The States can now go back, do the audits, and stop the financial shell game. “Price caps” is a form of regulation that was supposed to keep prices capped and reasonable, which never worked. This was to increase the companies’ profits, which were supposed to be used to replace the existing copper wires with fiber optics—and that never happened. Instead, using the FCC’s corrupted formulas, it allowed for this massive overcharging. Prices are no longer ‘just and reasonable’ when you can charge local phone customers to build the wireless networks or pay for the corporate jets.
DEEP DIVE ARCHIVE:
Huffington Post/Medium articles about AT&T and California
- The Trump-FCC-AT&T-Et Al. Plan: The Insidious “Wheel of Mis-Fortune”.
- The Corporate Takeover of the Trump-FCC Is in Full Attack Mode.
- Open Letter to California about SB-649: You’re being Played by ALEC & AT&T Et Al.
- The Copper-Wire World of AT&T: The Reason to Investigate AT&T, Now
- Solve Net Neutrality, Privacy, & Bring Back Competition: Break Up AT&T and Verizon… Again.
- Expose: AT&T California Fiber Optic Scandal: Billions Charged for Broadband that Never Showed Up.
- Californians Paid Billions Extra: The State Assembly Should Investigate AT&T’s Cross-Subsidies.
- IRREGULATORS: Stop the FCC and Investigate AT&T, Verizon, Et Al.
- Brendan Carr Omitted Critical Facts in His Testimony to Congress: He Worked for AT&T, Verizon, Et Al.
- Regulatory Capture of the FCC: Stacking the Deck with the New Proposed Republican Commissioner
- Verizon and AT&T Should be Required to Deliver FTTP, Fiber to the Home – Finally.
- California Wireless Legislation: Paid for by AT&T Et Al.
- AT&T, ALEC, FCC. The FCC’s plans are based on AT&T’s Petition, which is from ALEC Model Legislation.
- AT&T’s IP Transition Trials Lost 32% of “Legacy” Customers, yet the Overhyped Con Continues.
- AT&T’s 1000 Foot Violation of AT&T-DirecTV Merger Conditions?
- AT&T and Verizon’s Wireline and Wireless Cross-Subsidies Harm Competition and Every Communications Service You Use
- Corporate Greed vs Critical Infrastructure: Greed Won. America Lost.
- R.”I.P.” Rest in Peace, AT&T IP Transition Trials.
- Will the FCC Stop Verizon & AT&T’s Manipulation of Financial Accounting & Special Access (BDS) Overcharges?
- AT&T & Verizon, With the FCC, Blocked My Access to Critical Broadband Data
- Have You Received a Disconnect Notice From Verizon or AT&T Yet?
- AT&T’s IP Transition Trials Are a Superhyped, Yet Unsuccessful, Con
- The Age of Noise, Clutter and Spying on Us
- AT&T Slams AT&T. AT&T & Verizon File to Block Kushnick from the FCC’s “Special Access” Data… Again.
- AT&T’s Fiber Optic Construction Last Six Years — $140 Billion, or One Slice of Pizza and “FiberHype”?
- AT&T to FCC: Stop Kushnick From Examining the Special Access Data
- AT&T’s ‘IP Transition’ Trials Appear to Be a Total Bomb
- The FCC and AT&T Don’t Care About Rural Areas and They Can Just Make Crap Up
- Are the FCC and AT&T Harming the Children of Rural Communities?
- MobTel: Some of America’s Most Hated ISPs, Cable TV and Wireless Companies Have Their Associations Suing the FCC Over Net Neutrality
- I Do It For My Aunt Ethel
- Verizon & AT&T’s Wireless Broadband: $1,125.00 for One Month of Cable TV; $375.00 to Watch Netflix — and that’s Not Even ‘HD’.
- Stop the AT&T-DirecTV Merger or History Will Slap Us in the Face
- Will the FCC Ignore Our Complaint? Did AT&T Commit Perjury, Claiming it had Covered 100 Percent of 21 States With Broadband?
- Did AT&T Commit Perjury? Does AT&T have 100 Percent Broadband Coverage in 21 States?
- Did AT&T, Verizon, Et al., Garner Over $17 Billion in ‘Very Small Business’ Spectrum Licenses?
- Telecom Sleaze: ALEC and Its Communication’s Funders — AT&T, Verizon, Centurylink, Comcast and Time Warner Cable
BACK IN THE STACKS: 2002-2010
- FREE REPORT on Telecom Charges. Phone, Broadband, Wireless, Internet & Cable Charges in San Diego, California.
- With the removal of AT&T as a competitor, the prices of service increased and there was a clear harm to customers in terms of choice of service, Also, it is clear that this impacted previous AT&T customers adversely, especially low volume or low income families. — Based on survey of actual phone bills in San Diego CA working with UCAN, on a grant from the CA Consumer Protection Fund, done originally in 2004 then repeated in 2008.
- Teletruth Files Two Comments about AT&T-BellSouth Merger:
- Competition: FCC Can’t Create Enforceable Merger Conditions.FCC/Bells Harmed Competition — 43% Drop in Wholesale Lines. The Mergers Eliminated Competitors.
- Teletruth Sends Letter to Judge Sullivan Regarding the Bell-AT&T-MCI Merger Review.
- The Bell Mergers Harmed Broadband Deployment, Competition and the Economy.
- The AT&T and MCI Deals Added New Harms to the Public Interest – New Neutrality Concerns
- Wireless Spectrum Fraud by AT&T, Verizon, Cingular — Are they Very Small Businesses?
- Very Large Phone Companies have been able to create ‘fake fronts’ to bid on wireless spectrum as Very Small Businesses? Is this fraud?
- FTC Complaint for Commercial Speech, Deceptive Practices in Mergers,
- Teletruth files this Complaint with the FTC, claiming that the previous Bell mergers were based on a massive, 10-year pattern of misrepresentation, untruthful and outright fraudulent statements made to customers. How many misleading, deceptive or fraudulent statements does it take to become a case of fraud?
- TO READ THE RELEASE
- To Read this Complaint
- To Read the MINI-REPORT on SBC’s Mergers (PDF)
- TO TAKE ACTION AND READ MORE
- Break Up SBC, Break Up Verizon
- Teletruth Requests Congress Start Immediate Investigations into the Previous Bell Mergers.
- Do Not Let 2 Companies Control America’s Digital Future! — More Materials.26 States Lost Fiber Optic Broadband After each merger, SBC and Verizon cut fiber optic deployments. It impacted 26 states, over 200 million people.
- The AT&T-SBC, Verizon-MCI Mergers. Death to Competition. Investigate and Break Up SBC, Break Up Verizon.
- Comments: FCC in WC Docket 05-65, May 10th, 2005 TeleTruth Asks Senator Hollings for Hearings to Break Up SBC-Ameritech and Pay $1.2 Billion in Penalties. By April 2002 SBC was supposed to be competing in 30 cities outside their region. The commitments were set because SBC merged with Ameritech, another Bell company. According to the agreement, the FCC can “Divest” SBC of Ameritech and it is required to pay $1.2 billion in penalties. Therefore, TeleTruth (with New Networks Institute) is calling on Congressional hearings. This failure has raised the rates of every local subscriber because competition did not come into the markets to lower prices.
- For more information about the SBC Ameritech Merger
- To read the letter to Senator Hollings
- For a list of the cities SBC was supposed to compete
- To Take Action
IRREGULATORS Take the FCC to Court Based on Verizon New York 2017 Annual Report. Billions Revealed in Cross-Subsidies Caused by the FCC’s Manipulated Accounting Rules. This is Happening Nationwide.
On June 3rd, 2019, the IRREGULATORS won Round 1, the right to take the FCC to court over their cost accounting rules. However, the case relies on the Verizon New York financial annual reports, the latest published May 30th, 2019. It is one of the largest accounting scandals in American history and it impacts all telecommunications in the United States – and all FCC decisions and proceedings, and almost all state decisions that relied on the FCC’s work.
PRESS: We created a by-the-numbers walk-through of the official Verizon New York 2017 Annual Report to spotlight some of the specific harms.
The FCC’s rules were supposed to divide up the expenses that are to be paid by the different lines of business, such as Verizon Wireless or Verizon Online, for the use of the infrastructure and services of the state telecommunications utility – Verizon New York.
Unfortunately, the rules became corrupted and the expenses to be paid are set, “frozen”, to reflect the year 2000, 19 years ago. Using the Verizon New York annual reports, we prove that the rules are still in use and they now divert the majority of all expenses into Local Service, the basic POTS, phone service category. This has caused billions of dollars annually to be misallocated by charging phone customers excessive Corporate Operations expenses, everything from the corporate jets and golf tournaments to executive pay. It also diverted the construction budgets to pay for the wireless deployments. And Verizon was able to create losses that were used not only for rate increases, but to avoid paying billions in taxes. Ultimately, Verizon claims it is not profitable to upgrade rural or low income areas and is now planning a bait-and-switch, claiming 5G wireless will fix everything.
How crazy does it get?
- Verizon NY 2017 Local Service was charged $1.8 billion, 61%, of Corporate Operations expense, making it unprofitable. Local Service had revenues of $1.1 billion. (“61%” is based entirely on the FCC’s FREEZE and it has been this way for 2 decades.)
- Taxes: The Verizon NY 2017 Annual Report showed losses of $2.6 billion and a tax benefit of over $900 million. Verizon NY has shown losses of over $2 billion a year for almost the last decade, (with caveats).
- Construction: Local Service paid the majority, $1.2 billion, in construction and maintenance, but only an estimated hundred million was attributed to the copper wires.
- The NY Attorney General’s Office in 2012 found 75% of the utility construction budgets were being diverted to wireless or FiOS video services. This is instead of upgrading the NYC and NY State infrastructure.
- Rates Increases of Over 100%: Since 2005, every wireline customer paid over $3,000 a line based on increases granted using artificial losses, through 2018.
- It Created the Digital Divide by claiming areas of the state utility were unprofitable, when, in reality, there was enough money to have been doing continuous upgrades. In fact, rates should have been in steep decline.
- This happened in every state because the FCC rules are federal. The last available data in 2007 matched in every state-based utility.
- Customer overcharging, nationwide, is estimated to be $50-60 billion annually, based on what is happening in New York.
IRREGULATORS v FCC — In December, 2018, the FCC decided to extend the FREEZE rules for 6 more years. We could not let this stand and get worse. We have the actual financial books as well as the expertise to figure out what happened, but it has taken almost a decade of investigation to understand this accounting puzzle. No other state we know of still publishes financial reports; the FCC stopped publishing the financials in 2007. We filed 18 separate reports and comments in this proceeding (Docket 80-286) to document our claims since 2015, which the FCC has mostly ignored. http://irregulators.org/our-work-reports-filings/
Settlement with Verizon NY and the NY Public Service Commission, July 2018: Our analysis and methodology was used in an investigation of Verizon New York that started in 2015 and was settled in July 2018. Estimated at $300-$500 million, 32,000 lines of fiber optics will be deployed in unserved areas and the existing networks will be maintained. But this settlement did not go far enough to fix the existing problems or deal with the FCC’s corrupted accounting. https://bit.ly/2O25OqQ
The Bottom Line: No one knows or understands that the FCC’s rules have become corrupted over the last 2 decades, that they actually control the state-utility accounting and that they are still in use, nationwide. Stopping the Corporate Operations expenses, the cross-subsidies of the other Verizon lines of business with the state telecommunications utility, especially wireless, and making them pay market prices, will immediately lower rates on all services – not just basic phone service, and could bring billions back to do full upgrades of the telecommunication wired infrastructure. Cleaning up this long standing financial shell game also solves some of the Digital Divide concerns and could even create financial support as part of any settlement.
5G is not profitable once the cross-subsidies for wireless are removed. 5G is nothing more than another technology promise-them-anything bait-and-switch to get rid of state and federal regulations at the FCC and in state legislatures. (This is on top of the health concerns of putting a microwave antenna, always on, on a lamppost directly outside someone’s bedroom window.)
Nationwide Problem: These are federal rules that have been manipulated by the FCC, either by negligence or design. Thus, all states, not only in the Verizon service area, but in the AT&T and CenturyLink territories, have the same financial issues that need to be fixed immediately. Taking the FCC to court is the first step in this direction.
IRREGULATORS is an independent consortium of retired and semi-retired senior telecom experts, analysts, forensic auditors, and lawyers who are former staffers from the FCC, state advocate and Attorneys General Office, as well as telecom auditors and consultants.
Click for the FCC Numbers-Only Version of this Exhibit.
As I stare at the various pie charts and exhibits in the FCC’s latest report on broadband in America, “Internet Access Services: Status as of June 30, 2017”, published November 2018, only one thing comes to mind: Congress needs to investigate how this smoke and mirrors data is being used to create harmful public policies.
Back in March, 2011, I wrote about the FCC’s highly inaccurate National Broadband Map Database, where the companies listed did not offer service at my address or at the speeds listed.
Seven years later, and trying to reverse-engineer the number of broadband services, especially the accounting of the “Fiber to the Premises”, FTTP, here are a few startling long-term issues and new discoveries. In the industry, these are some of the dirty, little secrets.
Quoting the FCC, there are various caveats.
· “All facilities-based broadband providers are required to file data with the FCC twice a year (Form 477) on where they offer Internet access service at speeds exceeding 200 kbps in at least one direction.
· “Fixed providers file lists of census blocks in which they can or do offer service to at least one location, with additional information about the service.
Please notice the words and phrases: “census blocks”, “200Kbps in at least one direction”, “they can” and “at least one location”. We will address them in a moment.
How Big Is One Census Block?
A census block is sort of like the area of a postal zip code. And it is directly tied to a specific geography with people living and working at specific locations. Sounds obvious until you examine how they count these locations.
According to Current 360
“Block groups generally contain between 600 and 3,000 people, with an optimum size of 1,500 people… Each census tract contains at least one block group, and block groups are uniquely numbered within the census tract. A block group is the smallest geographical unit for which the census publishes sample data.”
Smoke & Mirror Competition
The FCC and phone companies claim that there is competition and yet, this next FCC caveat about this data tells us that while the database may show a competitor, you, the customer, may never be able to get service from them.
The FCC writes: