AT&T California’s Failure to Upgrade California with Fiber optic Services; the Bait-and-Switch Resources.
Huffington Post: Summary
Expose: AT&T California Fiber Optic Scandal: Billions Charged for Broadband that Never Showed Up
- Read the Full story of Part 1: The History of Fiber Optic Broadband in California, 1993-2005
Pacific Telesis (now AT&T California), 1994 Investor Fact Book.
In 1993, Pac Bell California announced it would be spending $16 billion on fiber optic upgrades to 5.5 million homes by the year 2000; 1.5 million by 1996. This was 24 years ago. This page is from the Pacific Telesis 1994 Investor Fact Book.
Virtually no one knows the history of fiber optic broadband in America, much less what happened in their state, even though they were charged thousands of dollars per household. Instead, in 2017, we get embarrassing proposed laws, such as SB-649 in California, which claims that if the State just frees the companies from regulations, they will deliver new, ‘fabulous’, broadband wireless services. These are tied to other bills and new proposed regulations, including current FCC proceedings to ‘shut off the copper’ and replace it with wireless. It is time for investigations, not new gifts to AT&T et al.
I’ll get back to this in a moment
In Part 1 we detailed:
- The price of the basic AT&T California state utility phone service went up 138% from 2008-2016. And this was just the basic service; other parts of the service like ‘nonlisted numbers’ or directory assistance calling went up 525% to 1891%, since 2004. Calling features, like Call Waiting, which went up 240%, are just pure profit and cost less than a penny to offer.
- The companies manipulated the accounting of access “landlines”. While there have been declines in basic wired phone service, it turns out that the exact same wires – the copper wires, are also used for U-verse, which is a copper-to-the-home service that is based on the existing utility wires. And there are other services, from DSL, an older copper-based broadband service, as well as Business Data Services (also known as ‘special access’ services), which are the wires to ATM machines or are the fiber wires that go to the cell sites, and none of these other wires are never mentioned or even counted by the phone companies, the FCC or the State.
- The State admits that it doesn’t collect or examine basic data about the companies’ financials anymore. The California PUC is simply allowing the companies to be ‘deregulated’, which is now just the punchline to a bad joke as it always means – give more money to AT&T, smile, then do it again.
- This new proposed bill is just a put-on job: Worse, like talking to someone with Alzheimers who can’t remember yesterday, much less the last few hours, there is a proposed piece of legislation, SB-649, in the California State Assembly that is based on wireless ‘vaporware’, and the same false claims—if only we get rid of pesky regulations and preempt any zoning or customer challenges, we will get a fabulous broadband wireless future, “5G”. It doesn’t exist yet and whatever shows up will require a fiber optic wire and will have a range of a ‘small cell’, a city block or so.
- Moreover, the state senators that are proposing the bill have not only gotten campaign contributions from AT&T, but also get AT&T Foundation grant monies for their districts.
Part 1 concluded that what is really needed are investigations and audits of AT&T’s financial books, now. There is an investigation of Verizon New York by the NY State Public Service Commission that corroborated our findings; that there are massive financial cross-subsidies between and among the wireline state utility and all of the other Verizon affiliates, including the wireless company. AT&T California appears to be doing the same financial chicanery.
The Fiber Optic Future that Never Came. The First Wave.
California was supposed to be a fiber optic state, starting in 1996, as was pointed out in the Pacific Telesis (now AT&T California) 1994 Investor Fact Book. Instead, customers paid billions upon billions extra, including low income families, seniors, small businesses and everyone else, as these promises of a broadband-internet–cable competition future were used over and over to raise rates and get tax perks – and then never showed up.
There have been three major waves of false claims to get rate increases and deregulation, and a host of other plays including merger conditions, the “IP Transition”, and rural government broadband funding, among others, and these happened on both the state and federal level.
- The Information Superhighway and Competition, 1993-2004
- The U-verse Bait and Switch, 2005-
- The latest: The current wireless small cell, 5G, vaporware.
The Information Superhighway and Competition, 1993-2004
Pacific Telesis 1994 Fact Sheet, Excerpt 2:
This is a page from the same financial report and it details what parts of California were supposed to be upgraded by the year 2000. This pretty much covers most of the state.
Backdrop: America was to become a Fiber Optic Powerhouse, 1991
In 1991, soon-to-be Vice President Al Gore proposed the Information Superhighway, which was to replace the aging copper wires with fiber optics – and ALL of America was to be completed around 2010. And while there were proposals to have the government build it, every phone company in America screamed that they would be glad to do this for the good of America.
And they all went state-to-state to get changes in the laws to raise rates or not have the profits of the ‘calling features’ and ancillary services examined, and they all got major tax breaks as well.
And in California, as the excerpt discussed, now-AT&T-California had the laws changed to fund this upgrade.
Pacific Bell also took a $3.6 billion dollar tax deduction, which was directly tied to this ‘communications info-highway’, and the company received what would be billions extra in profits that were supposed to be used for this new construction.
And this and previous announcements, such as upgrading schools – started the process of ‘price caps’ – i.e., not examining the profits but keeping the basic service ‘fair and reasonable’, while everything else was allowed to have obscene returns.
FACT SHEET 1: The History of Fiber Optic Broadband in Pennsylvania
- Verizon PA overcharged customers about $18 billion for a fiber optic future they never got; this doesn’t include the monies from the cross-subsidies of the wireless networks and other lines of business which we recently uncovered
FACT SHEET 2: Verizon PA Broadband Coverage Estimates
- By the end of 2015, we estimate that Verizon PA only had 40% or less of their FiOS, fiber optic deployments covered; and that
- they claimed that they fulfilled their requirements for 100% of the state with wireless at a speed of 1.5 Mbps, not 45 Mbps.
Liberty Bell, Stolen: The History of Fiber Optic Broadband in Pennsylvania, is a chapter of $200 Billion Broadband Scandal, and covers the details of what happened from 1991 through 2004
- In 1991, the Clinton-Gore presidential ticket put forward a plan called the “Information Superhighway”, to replace the existing copper wires in the state utilities, (that could be 20-70 years old), with a fiber optic wire that could offer new services and compete directly with cable TV.
The hype for these networks made the 5G Wireless noise look like a whisper.
- “PA Senate OKs Fiber Optics Bill” June 24, 1993, Philadelphia Daily News.
- “PA Legislature Compromises on Fiber-Optics Bill. The Measure Calls for the State to Be Wired By 2015”. June 25, 1993, Philadelphia
- “Phone Bill Goes To House. The Measure Would Limit Rate Increases and Require A Fiber-Optic Network by 2015”. May 24, 1993, Philly Inquirer
- In 1992, a plan was put forward called “Opportunity Pennsylvania” that would have 100% of what is now Verizon PA upgrade their state-based, copper-based utility to fiber optics. It would have a speed of 45 Mbps in both directions and cover rural, urban and suburban areas equally.
- “Opportunity Pennsylvania” was a cookie-cut plan created by Deloitte & Touche that was used in NJ, PA, IA, OH and IL,
- Instead of having the government build this networks, the incumbent phone companies-including Bell Atlantic, which controlled Bell of PA claimed they would do the work if there were changes in the state laws; Verizon PA was granted “alternative regulations” (also called “Price caps” or “incentive regulations”.)
- 1993, the PA state legislature created Chapter 30 which modified the State utility code. Then the PA Public Utility Commission (PAPUC) put together an agreement to Verizon PA would upgrade their entire territory,100%, rural, urban and suburban areas equally, by the year 2015, with speeds of 45 mbps in both directions.
Bell Atlantic Press Release, 1996
“The fiber-to-the-curb architecture that Bell Atlantic will build is the next step in the company’s ongoing, aggressive network modernization program…. Bell Atlantic plans to begin its network upgrade in Philadelphia and southeastern Pennsylvania later this year. The company plans to expand this Full Service Network deployment to other key markets over the next three years. Ultimately, Bell Atlantic expects to serve most of the 12 million homes and small businesses across the mid-Atlantic region with switched broadband networks.”
- At the same time, Bell Atlantic filed “video dialtone” applications with the FCC to upgrade the copper wires to fiber, which included PA. In fact, almost every phone company submitted similar proposals, and these were approved.
- By 2003, nothing had been deployed. New Networks Institute (and Teletruth) filed a complaint, claiming that $1135.00 had been collected per household through the changes in state laws by then almost $4 billion dollars.
- Press Release
- Read the Updated Complaint
- Read the Updated Complaint (Word)
- Read the Original Complaint (Word)
- Are You Owed $1,135.00 for a Fiber Optic Network You Never Received?
- Teletruth Files Complaint with the Penn PUC to Investigate $3.9 Billion in Missing Fiber-Optic Networks.
- In 1994, Verizon committed to a fiber-optic network to customers homes with speeds of 45 Mbps, in both directions— and never delivered. This is 40 times faster than ADSL
- By 2004, Verizon was supposed to have rewired 50% of the state in both rural, suburban and Urban areas equally with a fiber-optic to the home wire. Instead, DSL goes over the 100-year-old-copper wiring.
- Fraud — At the end of 2003, we estimate customers paid $1135 per household — A total of $3.9 billion.
- It’s 2004 and they still can’t build the networks.- It’s now clear they couldn’t build the networks in 1994 when they made these commitments
- State laws were changed to give the phone company more money. This change went from a “Rate-of-Return” that examined profits to an “Alternate Regulation” (Deregulation) that only examined the price of Service.
- From 2000-2003, there was a 62% drop in Capital Expenditures, and since the Alternate Regulation went into effect in 1993, there has been a 43% drop in employees — 6,510 employees were let go.
- Instead, the money is going to increase Verizon PA Dividends, which went up 131% from 2000-2003.
- Excessive Tax Savings — Verizon wrote-off over $1.2 billion stating they were replacing the old copper with new fiber — they never did it
- Illegal Cross-Subsidies — Customers are illegally being charged for Verizon’s rollout of DSL.
- Where’s ALL the Money? The Top 6 Verizon Executives got $400 million –$1 billion in stock options in 2001, while the company lost over $10 billion in bad overseas investments!
- Collusion? This same exact scam happened in multiple Verizon states, from New Jersey and Maryland to Massachusetts and D.C.
- 2003, the PA PUC also found that Verizon PA had not fulfilled its obligations. Unfortunately, there was a wrinkle; the original legislation only required 1.5 Mbps in one direction. There was some pushback from the state Advocate, (who believed that the Verizon documents filed could keep the 45 Mbps), but the slower speed remained
| 1 | Liberty Bell Stolen . Here’s a decision by the Public Utility Commission to NOT hold Verizon accountable for a fiber-optic Future. |
| 2. | Chairman Fitzpatrick Stands Up for Customers. The PUC Chairman points out that a 45MPS service was promised, and paid for by Customers, not DSL. |
| 3 | Letter by the Pennsylvania Advocate about Rate Increases of HB30. This proposed bill will raise your phone rates and not deliver Broadband. |
| 4 | Consumer Advocate discusses the record of Verizon 45mps commitments.After reading this, it should be clear that Verizon made commitments that their lawyers and lobbyists want ignored. |
| 6 | Independent Analysis Shows $4 billion of Excess. (Economics & Tech. Testimony)(PDF)“Verizon Pennsylvania has realized financial gains in excess of $4-billion as a direct result of Chapter 30 ‘alternate regulation’.” |