 Bruce Kushnick, Teletruth 212-777-5418 brucekushnick@teletruth.org FOR IMMEDIATE RELEASE— February 19th, 2003 New York —Teletruth has filed a Complaint with the Pennsylvania Public Utilities Commission and the Attorney General’s Offices accusing Verizon of possible fraudulent acts over their deployment of broadband in the state of Pennsylvania — Teletruth estimates that Customers paid approximately $785 per household for fiber-optic services they never received. According to the current Verizon PA commitments, as stated by the Pennsylvania Commission: “Verizon PA has committed to making 20% of its access lines in each of rural, suburban, and urban rate centers broadband capable within five days from the customer request date by end of year 1998; 50% by 2004; and 100% by 2015.” “In order to meet this commitment, Bell plans to deploy a broadband network using fiber optic or other comparable technology that is capable of supporting services requiring bandwidth of at least 45 megabits per second or its equivalent (in both directions).” And it is important to note that this is NOT DSL. According to the Commission: “It is apparent that DSL, as it currently exists today, (March 2002), is unable to provide the broadband availability of 45 Mbps both upstream and downstream that the Company voluntarily committed to and the Commission approved in 1995.” Teletruth has also filed a complaint against the FCC, claiming that their Broadband analyses are seriously flawed, because they have not included any analysis of state broadband plans, including Pennsylvania. The FCC has also neglected a critical point — Customers funded the Bells’ broadband networks, not the shareholders, and blocking competitors from using these customer-funded networks is a “Customer Takings”. “This is one of the largest scandals in history. In many states, the Bell companies promised to upgrade their 100-year-old copper wiring with fiber-based services and the company received massive financial incentives — read higher phone rates, tax write-offs, and other perks” states Bruce Kushnick, Chairman of Teletruth. “In Pennsylvania, the state commission is actually holding them accountable for their commitments and we applaud their efforts. We estimate that each household paid $785 extra in phone charges and other fees, and there are no fiber-based services available today, even though the company had pledged to equally upgrade rural, suburban and urban areas alike. In fact, we believe that Verizon also improperly charged customers for the development of their own DSL service, which has been declared as an interstate, non-regulated Information service by the FCC” adds Kushnick. What’s even more amazing is that: * The FCC has failed to include any of the commitments made on the statel evel in their broadband (advanced network, Section 706) reports or any other analysis. * The FCC has failed to analyze any of issues related to the customer funding of fiber-optic networks that were never delivered. * The FCC has failed to examine the funding of DSL deployment and implementation by customers through higher phonerates. — Some states, including Oregon and Louisiana are allowing the phone companies to charge customers for the development of these services as part of their local phone charges —Even though DSL is defined as a non-regulated Interstate Information service. * The FCC has failed to incorporate any of the state fiber-optic funding issues in regards to increased charges added to Competitor-based prices (TELRIC).— Some states now have “100% fiber-optic” upgrades as part of their current prices, even though the networks were never fully upgraded. “The FCC has totally ignored any of the state broadband plans or the issue of customer-funding of these new networks. However, in the next few days the FCC may rule that competitors will be blocked from using customer-funded networks. If the FCC goes through with this, it will be “customer takings”, because the FCC will be giving a private company, the local Bell monopoly, sole rights to networks being funded through excess rates, where the Customer has been a defacto investor.” adds Kushnick. Teletruth also called to the FCC’s attention the Commercial Speech violations of the Bell companies. In hundreds of thousands of documents, including Bell company annual reports, press releases, speeches, articles and quotes, the Bell companies made promises to the public that they would be delivering on a fiber-optic future. In many states, this led to ‘deregulation’ of the Bells — who made more profits. Fraudulent statements? “The Bells are monopolies that should be held accountable for their statements made to the public, especially when laws are changed to give these companies more profits. However, it is a little known fact that when these statements were being made to upgrade to fiber-optics, the companies could not build these new networks at the prices being presented. The FCC has never examined this issue, even though the majority of states we tracked gave the Bell companies deregulations that led to higher profits.” state Kushnick. Conduct a Broadband “True-Up”: We are requesting that the FCC and the state of Pennsylvania conduct a complete audit of the Bell’s books to determine exactly what happened to the monies collected through deregulation. * How much money was collected because of the changes in regulations, including taxes and write-offs? * How much extra charges on phonebills does this equate to? * How much of this excess profit is being charged through higher rates to competitors trying to offer their own services over the Bell networks? * How much of this money was spent to roll out ADSL products? * What fiber-optic services are being offered to residential customers— Was anything wired? Please note that this topic has already been presented by the author and others to the FCC in our 1998 Comments and 1999 Petition. * Petition to the FCC to Investigate The Bell’s Failed Broadband Deployment, 1999 http://www.newnetworks.com/petitionfiled.html * NNI Comments to the FCC on Advanced Networks reporting (known as “706”) 1998 http://www.newnetworks.com/NNI_FCC_9-98.txt For more information visit http://www.teletruth.org Teletruth is an independent volunteer customer alliance and is not funded by any phone company, or any other political or corporate entity. Back Up Documentation We call your attention to work of Economics and Technology that has documented, independent of New Networks Institute, the Pennsylvania failed deployment and subsequent customer overcharging. http://www.econtech.com (registration is required) We have documented this same failed deployment throughout the US: See:
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