Connecticut’s Fiber Optic Bait and Switch
In 2009, we filed a Complaint to the Connecticut Attorney General’s Office then updated it in 2015.
Simply put, in Connecticut, Southern New England Telephone, SNET, in their 1996 Annual Report, laid out a plan called “I-SNET” –a statewide upgrade, REPLACING the existing copper wire with fiber optic wires for broadband and video—ALL SERVICES over a fiber optic wire. And it would spent $4.5 billion and be completed in 2007.
“I-SNET According to the 1996 Annual Report:
“I-SNET(sm) is… a statewide telephony and information superhighway. Since 1994, the wireline business has been replacing its existing network of twisted copper wire with low maintenance fiber-optic and coaxial cable. The buildout of I-SNET, a $4.5 billion investment, is expected to be completed by 2007. This advanced network is capable of delivering voice, video and a full range of information and interactive multimedia services. I-SNET passed approximately 234,000 households as of December 1996, and is expected to pass approximately 334,000 households by December 1997. The support of this investment will be primarily through increased productivity from the new technology deployed and customer demand for the new services offered.”
And, as the next paragraph continues, this deregulation established “price caps”, where basic services, defined as “Non-competitive”, were not increased for a few years, but the “Non-competitive” allowed the profits to increase. This included calling features, like Call Waiting or Caller ID, which were separate charges, from $4.00-$9.00 per service per month. And again, this was based on a commitment to do fiber optics as part of the state utility replacing the existing copper wires — and the prices on calling features, etc were allowed to be raised – and the profits kept.
Call Waiting cost less than 1 penny to offer, and had a fee of over $4.00 or more depending on the state; Caller ID cost $.22 cents and the customers would pay $7.00-$9.00 a month
“In March 1996, the DPUC (State Public Utility Commission) issued a final decision that replaces traditional rate of return regulation with alternative (price based) regulation to be employed, effective April 1, 1996, during the transition to full competition. The decision contains the following major items: price cap regulation for non-competitive services; a five year monitoring period on financial results; and a price cap formula on services categorized as non-competitive (utilizing an inflation factor, a 5% productivity offset, a narrowly defined exogenous factor, a potential service quality adjustment and various pricing bands). In addition, basic local service rates for residence, business and coin may not be raised above current levels until January 1, 1998, at which time the price cap formula becomes effective for these services, unless they have been reclassified into the emerging competitive or competitive categories..”
Almost every state had changes in their state regulations to grant deregulation, i.e., price caps, to the companies for this fiber optic future. In CT, the profits went from 12% to about 30% in 2 years; dividend payments doubled, after a decade, there was a drop of 60% in staff cuts.
For details read the Complaint:
We request the State to:
Dissolve the SBC (AT&T)-SNET merger or create structural separation, require billions in refunds, which should be used to rewire the entire state with fiber optics as committed to in 1992, and reopening the networks to all competitors.
The reasons are many:
1) SNET made commitments to rewire the entire state with fiber coax to homes, providing cable competition and 200+ channels and other services.
2) Completed by 2007 and called “I-SNET”, the company claimed it would spend $4.5 billion.
3) SNET received major changes in state regulation— more profits, as well as took major tax deductions.
4) SNET also filed an identical plan on the federal level, with the FCC known as “Video Dialtone,” SNET was granted permission for 1,000,000 homes.
5) SNET was part of Americast which included SBC, Disney, BellSouth and
Ameritech. Another group, Tele-TV, included Pacific Bell, NYNEX and Bell
6) In 1996, SNET was granted the first statewide cable franchise in the United States. By 2007, ALL subscribers were to have cable service competition via fiber-coax.
7) AT&T rolls out U-Verse in Connecticut, 2008
8) Over the last 15 years, SNET has failed to properly upgrade the Public Switched Telephone Networks, even though it made claims it would be creating a new fiber optic based network. The company did not spend $4.5 billion nor upgrade 1 million homes.
9) SNET never completed any part of the fiber optic coax video dialtone plan. Instead it pulled a fast one and only rolled out vanilla cable services, which were later closed down.
10) The changes to state law were never repealed and SNET collected billions in extra profits and tax perks for networks that were never deployed.
11) The video dialtone services, nor I-SNET couldn’t be built. The equipment that was supposed to be used didn’t work as advertised, costing much more money than presented in the original cost models.
12) SBC, during its merger with Ameritech in 1999 announced “Project Pronto” a six billion dollar upgrade of their entire region, including Connecticut — It was never completed.
13) SNET had 31,000 cable customers by 1999. SBC (now AT&T) started the
proceedings to closed all of the SNET video projects, as it had done to California, Ameritech’s 5 states, and Southwestern Bell, including Texas.
14) SNET’s cable networks, estimated at 4,000 miles, were required to pay $40 per subscriber to those 30,000 customers.
15) As far as we can tell, no money was ever paid to the rate-payers who had been funding these cable networks.
16) SNET never sold the cable plant, and blocked all attempts to use it for
competitive offerings, even though SNET did not use the cable networks for
broadband or even cable service.
17) In 2007, SBC applied again for statewide service to offer u-Verse, and deployed in 2008 to some communities, after a legal action. AT&T claimed U-verse was not a cable service. There are no plans to rewire most of the state, yet money is still being collected under previous changes to state law.
18) AT&T is using local rates to fund new construction through massive cross- subsidization. I.e., AT&T claims there are 2 networks, the broadband networks u- verse) and the ‘utilities’, the PSTN, and now has asked the FCC to transition the PSTN out of service.
19) U-verse travels over the original copper wiring, with some fiber-to the
neighborhood upgrades and uses VOIP for voice service, which they claim is
therefore not a utility service.
20) The company is manipulating the data they supply to the FCC and others
pertaining to competition, number of lines, number of users of the PSTN.