AT&T Accidentally Tells Truth About 4G plan, Shoots Self in Foot

Wednesday, August 17, 2011 by Save the Internet

by Amy Kroin

 

Free Press and other opponents of the AT&T–T-Mobile merger had reason to cheer last week when a damning document AT&T filed with the FCC was accidentally posted on a public site. The partially redacted letter, which appeared on the FCC website for several hours on Thursday before it was yanked down, punctures a hole in AT&T’s central pro-merger argument — namely that only purchasing T-Mobile would allow it to expand its 4G LTE wireless data network to 97 percent of the population.

Turns out AT&T had considered expanding its network on its own but balked at the $3.8 billion price tag. “AT&T senior management concluded that, unless AT&T could find a way to expand its LTE footprint on a significantly more cost-effective basis, an LTE deployment to 80 percent of the U.S. population was the most that could be justified,” AT&T counsel Richard Rosen wrote in the letter. So AT&T concluded that it made better strategic sense to pony up $39 billion to purchase T-Mobile.

The logic makes perfect sense if your ultimate aim is to effectively bludgeon wireless competition. If the deal goes through AT&T’s primary rival, Verizon, will fall a distant second to AT&T in the wireless arena, and collectively the two will control 80 percent of that market. Can AT&T still pretend it had nobler intentions?

Yes, it can.

“There is no real news here,” said AT&T spokeswoman Margaret Boles in a statement released in the wake of the leak. “The confidential information in the latest letter is fully consistent with AT&T’s prior filings. It demonstrates the significance of our commitment to build out 4G LTE mobile broadband to 97 percent of the population following our merger with T-Mobile. Without this merger, AT&T could not make this expanded commitment.”

Yes, it could, Margaret. It just doesn’t want to. AT&T has long pinched pennies when it comes to providing adequate and comprehensive wireless service but has no problem unlocking its bank account if the end result is total market domination.

As Free Press has reported since the merger’s announcement, it’s not just wireless carriers who will get squashed if the merger goes through. As many as 20,000 workers — likely drawn from T-Mobile’s workforce — stand to get the boot as a result of the deal. And let’s not forget ordinary consumers. Less choice translates into a power dynamic in which AT&T — and Verizon — can dictate whatever rates or terms it wishes for customers who don’t have other options to turn to. Unless, that is, you count hooking up two Dixie cups to string and bellowing communications to your neighbor.

The Not-So-Neutral Net

The FCC’s new rules on Net Neutrality open the Internet to corporate discrimination. But it’s not too late to preserve Internet freedom.
Tuesday, January 25, 2011 by YES! Magazine
by Jenn Ettinger

The Internet was created as an “open” or “neutral” platform, and net neutrality is the principle that ensures that Internet providers can’t interfere with a user’s ability to access any content on the Web, whether it’s a community blog, a YouTube video, or a major news site. It’s essentially the First Amendment of the Internet.

In late December, the Federal Communications Commission enacted new rules on net neutrality—rules that are supposed to protect Internet users from discrimination and to prevent Internet providers like AT&T, Comcast, and Verizon from acting as gatekeepers on the Web.

But the FCC missed the mark, and its rules not only fail to protect Internet users, but bolster the big phone and cable companies’ ability to carve up the Internet among themselves. As Net Neutrality champion Senator Al Franken said, the rules are “simply inadequate to protect consumers or preserve the free and open Internet.”

During the presidential campaign, Barack Obama came out strongly in favor of net neutrality, saying he would “take a back seat to no one” on the issue. But in the end, Obama's FCC chairman, Julius Genachowski, failed to deliver on the president’s promise, instead issuing ambiguous rules riddled with loopholes that corporate lobbyists will easily undermine.

Over the past several years, the phone and cable companies have flooded Washington with millions of dollars and hundreds of lobbyists to buy support in Congress and put pressure on the FCC. Public interest groups and a few lawmakers have tried to fight back, and more than two million people have urged the FCC to adopt strong net neutrality rules, but Chairman Genachowski ultimately caved to industry demands and turned a deaf ear to the public.

What Went Wrong: Real vs. Fake Net Neutrality

At its core, real net neutrality is a clear rule of non-discrimination that governs all Internet providers. It means that your provider can’t slow down your service in order to speed up someone else’s. It means that your provider can’t exploit legal loopholes to slow down your access to Netflix while speeding up Hulu because it happens to own Hulu. It means that there’s one Internet, whether you access it from your home computer or your mobile phone.

But the rules that the FCC passed in December are vague and weak. The limited protections that were placed on wired connections, the kind you access through your home computer, leave the door open for the phone and cable companies to develop fast and slow lanes on the Web and to favor their own content or applications.

Worse, the rules also explicitly allow wireless carriers—mobile phone companies like AT&T and Verizon—to block applications for any reason and to degrade and de-prioritize websites you access using your cell phone or a device like an iPad. That means these companies could block something like the music service Pandora, while offering unlimited access to its own preferred applications, like VCast.

We’re already seeing what a world without real Net Neutrality will look like. Just weeks after the FCC’s vote, MetroPCS, the nation’s fifth-largest wireless carrier, announced new plans that would block popular applications like Skype and Netflix while favoring YouTube. This is particularly egregious because MetroPCS serves a lower-income audience that is increasingly moving toward the mobile Web as their only way to get online.

Some companies are already marketing “deep packet inspection” technology that would allow carriers to nickel-and-dime you by charging you every time you visit Facebook or try to stream a Vimeo video. If MetroPCS gets away with its scheme—which appears to violate even the FCC’s weak rules—you can bet that AT&T and Verizon will waste no time in unveiling their own plans, which would mean higher bills and fewer choices on the mobile Web.

Lastly, the FCC’s short-sighted action failed to contend with a series of drastic deregulatory decisions made during the Bush administration that severely hamstrung the FCC’s ability to oversee the phone and cable companies. By failing to restore the agency’s authority over broadband, the FCC risks seeing even these rules tossed out in court.

The FCC rules were designed to appease the phone and cable companies—but even that didn’t work. Verizon has already filed suit against the agency, showing that these gatekeepers will settle for nothing less than total deregulation and a toothless FCC.

Undoing the Damage

The FCC’s new rules are certainly a setback in the quest to protect the Web as an open platform and an integral piece of our communications infrastructure and our democracy. In the absence of clear FCC authority and oversight of the Internet and a strong Net Neutrality framework that protects your right to go wherever you want, whenever you want online, AT&T, Comcast, and Verizon are free to interfere with your Internet experience.

The FCC still has the opportunity to put in place a solid framework that would put the public interest above the profit motive of the phone and cable companies that it is supposed to regulate. And the FCC should take immediate steps to close the loopholes it created, to strengthen its rules, and to include wireless protections. The fight is far from over. We can work to change the rules, demand better oversight and consumer protections and make sure that the big companies can’t pad their bottom lines on the backs of their customers.

How Comcast and Huge Telecom Players' Latest Gambit Could Destroy the Internet as We Know It

The telecom wars are heating up and the American Internet user is the proverbial pig on the spit.
By David Rosen, AlterNet
Posted on December 21, 2010

On December 21st, the Federal Communications Commission issued new rules governing Internet transmission. In essence, they effectively divide broadband content distribution between wireline and wireless transmission, providing nominal “net neutrality” protection over content distributed over telephone and cable lines, but deregulating such content sent through the airwaves.

As Timothy Karr of FreePress wrote in the Huffington Post:

“The rule is so riddled with loopholes that it's become clear that this FCC chairman crafted it with the sole purpose of winning the endorsement of AT&T and cable lobbyists, and not defending the interests of the tens of millions of Internet users.”

While Karr and others are focusing on the front story and the FCC’s capitulation to corporate interests, there is a more compelling back story as to how this regulatory farce came about. It is this story that maps out the underlying fictions that provide the rationale for the FCC’s actions and the likely long-term consequences for telecommunications in America.

* * *

As the telecom wars heat up, the American Internet user is the proverbial pig on the spit. A series of recent developments have drawn public attention to major challenges that are redefining the Internet. And it doesn’t look good for those championing Internet freedom, meaningful competition, improved quality of service or an end to conglomerate integration. Sadly, the fix is in.

In May, the DC Court of Appeals handed down a decision to what is popularly know as the BitTorrent case, Comcast v FCC. Originally, Comcast had blocked BitTorrent transmissions over its network and BitTorrent complained. The FCC investigated Comcast's traffic management of BitTorrent and ordered it to end its "discriminatory" practices. However, the Court ruled that Comcast has the right to limit the Internet connections of its customers who were using BitTorrent’s peer-to-peer (p2p) services on the grounds that such limiting falls under the role of network maintenance. More critical, the Court raised serious questions as to whether the FCC has the ability to regulate broadband Internet access altogether.

A few months later, Level 3 Communications drew the public’s attention to an effort by Comcast to impose a new pricing tier or “toll booth” on its transport of Netflix’s streaming video. This comes amidst deliberations by the FCC and Justice Department over Comcast’s bid to acquire NBC-Universal and a string of other questionable actions, including censorship charges, leveled against the company.

The BitTorrent and Level 3 actions were trial balloons pointing to deeper issues related to the future of broadband Internet. On one level, they reveal how key players in “content” – and especially video content – delivery are lining up against one another over, what else, money, or how the fees they charge are to be allocated.

More significantly, the battle puts into stark relief the issues of who controls the wires and wireless spectrum, the backbone of America’s communications infrastructure. Internet traffic, whether that of BitTorrent, Netflix or your email, is transmitted over the primary wires and spectrum controlled by AT&T, Comcast, Verizon and other networks and wireless services. The Internet rides over these wires and airwaves, and these companies control the access points.

The battle lines are being drawn over three key issues. First, will the current distribution model known for an open Internet, with “net neutrality” safeguards, persist – in other words, will all data continue to travel over telecom networks at the same rate and remain uncensored by Internet Service Providers (ISPs), excluding “illegal” content like child pornography?

Second, will the current consolidation of ISPs persist with giant, integrated conglomerates like Comcast and Time Warner controlling both the network and the content -- or will there be a renewed commitment to “open architecture,” to an Internet promoting meaningful competition among multiple access and content providers on the basis of services offered and prices charged?

Third, will the FCC further extend its 2002 reclassification of broadband service as an “information service,” thus further removing data transport from traditional “common carriage” obligations? Will it further collapse the difference between the Internet as a distribution network from the content or applications it supports?

FCC chairman Julius Genachowski December 21st announcement is a fictions compromise, like Obama’s plan to extend the Bush-era tax give-a-ways, and will only serve to further commercialize Internet traffic. His support for "usage-based pricing" will permit wireline ISPs to charge extra fees to heavy Internet users, like Level 3, who transport lots of video or videogames. And, in keeping with the Obama spirit of compromise, he opposes ISPs from “throttling” or slowing data traffic, thus protecting one aspect of net neutrality.

The FCC proposal is another example of how Washington politicians and their dutiful bureaucrats capitulate to big capital to the determinant of ordinary Americans and the long-term erosion of the U.S. economy. The FCC’s plan will set the stage for another round of federal give-a-ways to the giant telecoms, accompanied by an increase in customer charges and a further erosion of service.

* * *

At the heart of the FCC proposed new pricing models for the Internet is the shibboleth of network data traffic congestion. It is an alarm being raised by many within the telecommunications industry and is based on the false assumption that, as video becomes an increasing larger proportion of data traffic on the Web, the network is in jeopardy of collapse. The myth of congestion provides the rationale for a new pricing model as well as the need to end net neutrality and restrict ISP competition.

The Internet and Web consists of four interlinked components: (i) the phone or cable company that provides the “last mile” facilitating the consumer’s broadband connectivity through the residential telephone company’s digital subscriber line (DSL) or cable modem fiber line; (ii) the ISP that connects the customer to the PoP (point-of-presence) on the Internet and World Wide Web, (iii) the “middle mile” provider that links the customer to wider network; and (iv) the provider of long distance, high-speed connections to the network “backbone.”

While the middle mile and backbone utilize high-capacity fiber networks, the crunch comes at the last mile. And it is this piece of the grid that reflects the telecom trust’s failure to upgrade its networks. They have pocketed billions of dollars in subsides and tax breaks and have little to improve their networks. As with most American industrial sectors, the demands for short-term profits makes telecommunications providers unable to meet long-term market demands. No wonder the U.S. ranks 15th among developed counties in terms of broadband utilization.

According to a recent report from Cisco Systems, by the end of 2010, worldwide global online video users are projected to surpass 1 billion and video is projected to account for 40 percent of consumer Internet traffic. The traffic includes Internet video from YouTube, TV programs from Hulu, video-on-demand like Netflix movies and p2p sharing like BitTorrent. Enhanced video quality like 3D and HD only further compounds the video signal.

Online traffic grew 45 percent during 2009 to 176 exabytes per year (an exabyte consists of a million trillion bytes) and is projected to reach 767 exabytes per year by 2014. According to Cisco, this means: “The average monthly traffic in 2014 will be equivalent to 32 million people streaming Avatar in 3D, continuously for the entire month.”

Determining U.S. Internet video traffic is much trickier. Sandvine, an Ontario-based network services company, found that in the August-September 2010 period, North Americans gobbled up only one-third as much broadband video as users in the Asia-Pacific region; North Americans consumed an estimated 4 Gigabytes per month of Internet bandwidth whereas those in Asia-Pacific region used 12 Gigabytes. Sandvine also found that Netflix, with nearly 17 million subscribers, accounted for more than 20 percent of downstream Internet traffic during the primetime TV viewing hours of 8 to 10 p.m.

ComScore, a Reston, VA, market research firm, offers a different take on Internet video usage. It found, in May 2010, that 183 million U.S. Internet users watched nearly 34 billion online videos. Google sites, especially YouTube, account for 14.6 billion videos, representing 43.1 percent of all videos viewed online. Hulu, a joint venture of NBC and FOX and aggregating videos from nearly 200 content providers, came in second with 1.2 billion videos (3.5%), with other sites trailing behind.

Champions of the telecom trust rallied to the Sandvine findings as proof of network congestion and the basis to impose a new pricing model. This model goes by a variety of names, "usage-based pricing,” "paid prioritization" and “pay-as-you-go Internet access,” among others. Kyle McSlarrow, president, Nation Cable and Telecommunications Association, a trade group, recently wrote that the cable industry backs the new pricing model: "A usage-based pricing model, for instance, might help spur adoption by price-sensitive consumers at the lower end of the socioeconomic ladder," he wrote. Craig Moffett, an analyst at Bernstein Research, chimed in with an investor’s glee: "Usage-based pricing will preserve, and even enhance, the economics of cable's infrastructure . . . even if consumers eventually get some, or even all, of their video content over the Web."

Peter Burrows, of Bloomberg Businessweek, takes the argument one step further. Drawing upon research from Juniper Networks, he insists that, based on a "revenue-per-bit" model, the big telecom conglomerates like AT&T and Comcast “will see [their] Internet revenues grow by 5 percent a year through 2020,” but traffic will “surge by 27 percent annually.” “By this math,” he insists, “the carriers' business models break down in 2014.” Or does it?

* * *

Freud once famously noted, “"Sometimes a pipe is just a pipe." And sometimes it isn’t. This is the same with Internet traffic congestion.

The Internet has evolved through three phases and each has been defined by “congestion.” The first phase, during the pre-1990s when the Internet had yet become a mass-market phenomenon, congestion was experienced in email delays, limits to bulk file transfers and low bit rate interactive sessions. The second phase of the 1990s saw rapid Internet adoption with dial-up accounts offering 56.6 kb/s rates and congestion taking the form of a slow system with only intermittent connectivity. In a famous 1995 case, the phone companies attempted to block companies offering the new service, Voice-over-Internet-Protocol (VoIP), on the base of, yes, congestion; companies like Vonage would not exist today had the telecoms had their way. The third phase began around 2000 and saw the wide-scale adoption of broadband. It eliminated the dialup bottleneck with complementary advances in “upstream” capabilities (e.g., more powerful multimedia-capable PCs) and downstream content delivery (e.g., “rich” and interactive media content).

Internet traffic has grown due to four principal factors: (i) an increase in the number of online subscribers, (ii) the amount of time each subscriber spends online, (iii) the growing mix of wireline and wireless distribution options and (iv) the differences and complexity of applications (especially video-based apps) carried online.

However, as Andrew Odlyzko, a professor at the University of Minnesota and former AT&T Labs researcher, argues, “there is no evidence of wireline Internet traffic growing so fast as to require intrusive traffic interference to control it. … traffic growth rates have been declining, to levels slower than the rate of improvement of latest transmission equipment.”

Adding to this critique, three MIT scholars, Steven Bauer, David Clark and William Lehr, recently released an invaluable study on web traffic, “The Evolution of Internet Congestion,” and offer the following warning: “It is certainly possible that network operators, under the guise of managing congestion, may exploit their control over the network pipes in ways that are socially undesirable ….” Their warning should be the starting point for linking alleged congestion to changes in pricing and overall control of the Internet.

Comcast, like AT&T, Verizon or other dominant controller of distribution, has gained ever-increasing control over access by and to its subscribers. In order for a subscriber to reach the Internet, and for content providers to reach the consumer, they have to pass through an ISP's last-mile network, whether over the phone line or airwaves. The ISP is the gatekeeper. This situation gets more troubling when one recalls that in addition to being a last-mile gatekeeper serving residential, business and wholesale customers, Comcast, like the others dominant players in the telecom trust, also operates a powerful backbone network and is now moving in to content.

Comcast is seeking, like other dominant carriers, to be both “vertically” integrated, i.e., control connectivity from the last-mile to the backbone, as well as “horizontally” integrated, i.e., control available content or applications like NBC-U. Its two-dimensional system of integration pushes beyond the iPhone “walled garden” model by which Apple controls the applications available to the consumer. This two-dimensional integration suggests the real, long-term danger that the FCC and Congress refuse to recognize.

The real drama being played out in terms of Internet congestion and changing pricing models needs to be seen as part of a more profound and systemic change in the control of the nation’s telecommunications infrastructure, especially the Internet. Comcast and other conglomerates that make up the telecommunications trust, like the trusts that dominate the oil and gas sector, health care or financial services, are aggressively pushing to control all aspects of the market sector. Unless the debate over congestion and pricing is opened up, refocused to the larger question of industry consolidation, the FCC December 21st proposal will only make the problem worse.

Stay tuned – the worst is yet to come.

Phone Co.s Screwing the US with $320 Billion Broadband Rip-Off

Americans are stuck with an inferior and overpriced communications system, compared with the rest of the world, and we're being ripped off in the process.
By David Rosen and Bruce Kushnick, AlterNet
Posted on October 7, 2010

Since 1991, the telecom companies have pocketed an estimated $320 billion --- that's about $3,000 per household.

This is a conservative estimate of the wide-scale plunder that includes monies garnered from hidden rate hikes, depreciation allowances, write-offs and other schemes. Ironically, in 2009, the FCC's National Broadband plan claimed it will cost about $350 billion to fully upgrade America's infrastructure.

The principal consequence of the great broadband con is not only that Americans are stuck with an inferior and overpriced communications system, but the nation's global economic competitiveness has been undermined.

In a June 2010 report, Organization for Economic Co-operation and Development (OECD) ranked the U.S. 15th on broadband subscribers with 24.6 percent penetration; the consulting group, Strategy Analytics, is even more pessimistic, ranking the U.S. 20th with a "broadband" penetration rate of 67 percent compared to South Korea (95 percent), Netherlands (85 percent) and Canada (76 percent). Making matters worse, Strategy Analytics projects the U.S. ranking falling to 23rd by year-end 2010.

But these are just overall statistics. Today, people in Japan, Korea, Europe and other countries get broadband services that are 100-mbps services in both directions for what we pay for inferior, Asymmetric Digital Subscriber line (ADSL), while in Hong Kong companies have started to offer 1-gigabit speeds.*

Part of the reason for this is these countries have sunk more fiber optical cable into the ground and connected more homes to the next-generation grid. According to the OECD, the U.S. ranks 11th with only 5 percent fiber penetration, compared to Japan (54 percent), Korea (49 percent) and European OECD countries (11 percent).

Another reason for the woeful state of U.S. broadband is that we have one of the slowest networks in the world. According to the technology company, Akamai, the U.S. ranked 22nd globally in average connection datarate speed, averaging only 3.8-mbps in Q-4 2009. In comparison, Korea's average datarate was nearly three-times faster (11.7-mbps), Hong Kong more then double (8.6-mbps) and Japan was at 7.6-mbps. A surprise to many, Romania had an average rate of 7.2-mbps and Latvia clocked at 6.2-mbps.

Screwed

Grand cons regularly screw Americans. Millions bet the lottery that never pays off; millions go to Las Vegas and Atlantic City hoping for the big score and leave with empty pockets; and millions bet big-time on a housing run-up and lost big, big time. Hustlers offer a zillion get-rich schemes over TV and the Internet that people accepted either out of naivety, greed or desperation. But one of the greatest -- and little reported -- scams perpetuated on the American public is the broadband con.

The scam was simple. Starting in 1991, Verizon, Qwest and what became AT&T offered each state -- in true "Godfather" style -- a deal they couldn't refuse: Deregulate us and we'll give you Al Gore's future. They argued that if state Public Utility Commission (PUCs) awarded them higher rates and stopped examining their books, they would upgrade the then-current telecommunications infrastructure, the analog Public Switched Telephone Network (PSTN) of aging copper wiring, into high-speed and two-way digital optical fiber networks.

State regulators, like state politicians, are seduced by the sound of empty promises -- especially when sizable campaign contributions and other perks come their way. Hey, what are a few extra bucks charged to the customer every month for pie-in-the-sky promises? And who cares about massive tax breaks, accelerated depreciation allowances and enormous tax write-offs? The promises sound good on election day and nobody, least of all the voter, reads the fine print.

The broadband con has been played out across the country. In California, Pacific Bell (now part of AT&T) claimed it would spend $16 billion and have 5.5 million homes wired by 2000. Instead, after a merger with SBC in 1997 (renamed AT&T in 2005), it secured state deregulation and simply stopped building out the fiber-based broadband infrastructure. On the East Coast, things were pretty much the same. Bell Atlantic, which covered New Jersey to Virginia and is now part of Verizon, claimed it would spend $11 billion and have 8.7 million homes wires by 2000. And in Connecticut, SNET (now also part of AT&T) promised to spend $4.5 billion and have the entire state rewired by 2007. In the mid-West, the story was similar. Ameritech (now part of AT&T and which controlled five states, including Illinois and Ohio) claimed they would have 6 million homes wired by 2000. For Ohio, Ameritech claimed it would rewire every school, library and hospital with fiber by 2000. None of these promises have been realized.

Over the last two decades, the telcos have engaged in a lot of sleight-of-hand tricks to make Americans believe that broadband was real and their service was the world's best. In 1996 the Internet hit and everyone wanted to go online. This migration to the World Wide Web was led, not by AT&T and Verizon, but by thousands of small and larger ISPs from AOL and Prodigy to over 9,500 small ISPs.

By 1998, not only did the telephone companies mostly stop building out their networks, but instead of rolling out the next-generation "info superhighway," they pulled a bait-and-switch and rolled backward, offering customers ADSL service, a watered-down "broadband" connection that runs on good old copper wire.

Another trick used by telecoms has been to submit to federal and state regulators falsified cost models, often lying to regulators and the public. For example, the great lie was voiced in 1991 when the telecom boldly announced the new broadband age based on technologies that they claimed capable of delivering 45-mbps bi-directional services, but the technologies didn't exist and couldn't work out at the cost models submitted. When pushed, the phone companies presented self-produced, self-funded or self-serving "research" by shill think-tanks to buttress their claim for higher rates.

Now, nearly two decades after Gore announced the Info Superhighway and the telcos secured deregulation to build out the next-generation communications infrastructure, the nation's two largest phone companies, Verizon and AT&T, have begun to seriously deploy fiber services. In 2004 and with much fanfare, Verizon introduced FiOS, a fiber-to-the-home service. Today, it claims only 3.6 million subscribers and new subscriptions have stalled.

AT&T, which originally promised to launch its advances service, U-verse, in 2006 in 15 markets, got it running in 2007 but in only 11 markets -- and then not through an entire market. As of the end of Q-2, 2010, it claimed 2.5 million subscribers. Sadly, the telecoms have only 6 million full broadband fiber subscribers as of 2010. What happened to the other 94 million households they promised to sign-up?

Americans have paid and paid again billions of dollars for an imaginary upgrade to create a fiber optic future. The estimate of $320 billion has already been collected which means that every household has paid almost $3,000 to upgrade the phone networks. The question no wants to really address is simple: What have Americans gotten for the telecom broadband rip-off?

Playing the con

In order to understand how the broadband con works, it is useful to examine how it has played out in one state and extrapolate this to the other 49 states. In this case, we will examine New Jersey as representative of a nationwide policy.

New Jersey state law requires that by 2010, 100 percent of the state is to be rewired with 45-mbps, bi-directional service. To meet this goal, Verizon collected approximately $13 billion in approved rate increases, tax break and other incentives related to upgrading the Public Switched Telephone Networks. To cover its tracks, Verizon submitted false statements year after year, claiming that it was close to fulfilling its obligations. For example, in its 2000 Annual Report, it claimed that 52 percent of the state could receive "45-mbps in both directions or higher."

Based on such false claims, Verizon has benefited for significant pricing increases for essentially inexpensive computerized services. For example, Call Waiting and Call Forwarding cost less then $.01 cent to offer yet the company charges $4-$7 for such features. In addition, fees for inside wiring went up to $7.00 from $1.25.

The company also benefited from more invisible perks. It secured massive write-offs on its network even though it wasn't being replaced; it actually secured a write-off of over 105 percent above the amount of construction. These write-offs helped save it billions in taxes. These factors have helped significantly heighten the company's Return on Equity, the standard measurement of profits, jump from 12-14 percent before deregulation to 30-40 percent.

But all this gets complicated as they are no longer required to submit full New Jersey annual or quarterly reports and the FCC's filing requirements stopped in 2007. So, in 2009, Verizon, New Jersey outlined financials showed a "net income" loss of $194 million dollars, and a $160 million "tax benefit" and a series of "affiliate transactions," meaning transferring expenses to the utility but without showing monies flowing back.

Verizon's New Jersey coverage is for approximately 3.2 million households, which represents about 3 percent of total U.S. households. Extrapolating from New Jersey, we estimate that Americans have been bilked of at least $320 billion since deregulation went into effect in the mid-'90s.

Digital Houdini

Federal and state regulators ignore the great telecom rip-off -- politicians simply get too many contributions from too many lobbyists to worry about their constituents' phone bills. Telephone companies have orchestrated a massive digital Houdini act in which they present an image of an essential service that offers customers more for less.

After almost 20 years of telecom deregulation, the American communications infrastructure is in shambles. The FCC's broadband plans are now in play. While much debate has taken place over the future of net neutrality, particularly in light of the Google-Verizon proposal to maintain Internet net neutrality on wireline distribution and end it on wireless communications, little attention has been paid to the never-ending rate hikes, failure to deliver on previous promises, poor state of fiber deployment, and into who pocketed the missing $320 billion in over charges.

In 1967, James Coburn stared in a wonderful satire, The President's Analyst, about the corrupting power of a secretive TPC, the phone company. The film pits the Central Enquiries Agency (CEA) against the Federal Bureau of Regulation (FBR), an all-male agency consisting of J. Edgar Hoover look-alikes all under five-foot-six-inches tall. In the intervening four decades, but especially since the break-up of AT&T in 1984 and deregulation starting in 1993, the power of the telecommunications companies, including the cable industry, has both increasingly grown and become increasingly invisible.

A century ago, giant corporate trusts dominated America's economic landscape. A century later, they are back in full force and even greater control over the nation's economic life and political culture.

(For more detailed analyses of the great broadband rip-off, visit www.teletruth.com.)

Google & Verizon's Evil Plan Is Really Bad News for Regular Internet Users

If we wake up one day to an Internet that has a carpool lane for the upper class, it's worth thinking about the alternatives.
By Scott Thill, AlterNet
Posted on August 25, 2010

The firestorm over tech giant Google and telco titan Verizon's self-interested proposal to arbitrarily codify a pay-to-play Internet will dominate the news in the coming months, as net neutrality steps onto a mainstream media stage crowded with Muslim mosques and other distracting fodder. But now that other telcos like warrantless wiretapper AT&T have quickly endorsed Googlezon's proposal, it was left to Jon Stewart on a recent episode of the Daily Show to sum up the mammoth migraine awaiting us all: "We're fucked."

My colleague Ryan Singel at Wired had a similar take, calling the one-time staunch net neutrality defender Google a "carrier-humping net neutrality surrender monkey." Both assessments are dead-on: By giving up its previous commitment to open networks and devices in both the wireline and the wireless space, Google -- arguably the most powerful tech company in the world -- has simply cashed in its neutrality chips, nearly fully compromised "Don't Be Evil" corporate philosophy, and screwed us all. The irony is that the Internet we've become used to over the last couple decades has made Google and Verizon powerhouses in the first place.

"The Internet and communications industries are in the same category as the energy, transport and finance industries: for they are the lifeblood of commerce and speech in this nation," said Columbia Law School copyright and communications professor Tim Wu, whose 2003 paper "Network Neutrality, Broadband Discrimination" helped shape the network neutrality issue. "Just consider the power and public role of firms like Verizon or Google (especially if they work together). Sitting atop the web, they can influence what firms succeed or fail -- by making sites load faster or slower, or end up on page 10 of search results. It goes further -- in subtle ways, the information carriers have the power to influence elections and even censor speech they don't like."

The ramifications of allowing dumb-pipe telcos like AT&T, Comcast, Verizon and others to instead provide tiered services -- with the so-called "public Internet," no doubt slowed to a crawl, firmly stashed at the bottom of that traffic hierarchy -- is simply insane. It would be like your city allowing businesses, local and otherwise, to determine which blocks of your homeward commute become toll roads. Sure, one road would be spared in the interest of the public good, and it would be claustrophobically crowded with anyone and everyone who decided against paying the toll because of economic hardship, because of philosophical disagreement, because of whatever.

"The greatest danger of the fast lane is that it completely changes competition on the net," Wu explained in a New York Times roundtable on Google and Verizon's sweetheart deal. "The advantage goes not to the firm that's actually the best, but the one that makes the best deal with AT&T, Verizon, or Comcast. Had there been a two-tier Internet in 1995, likely, Barnes and Noble would have destroyed Amazon, Microsoft Search would have beaten out Google, Skype would have never gotten started -- the list goes on and on. We'd all be the losers."

Or as IO9's Annalee Newitz put it: "Googlezon has succeeded in creating a caste system in the online world, and the public is the lowest caste of all." Cue Jon Stewart's disturbing truth. No laugh track please.

But is there an option available to the public, other than pressuring Federal Communications Commission chairman Julius Genachowski to join his FCC colleagues Michael Copps and Mignon Clyburn -- as well as level-headed politicians like Al Franken, Alan Grayson and others -- in their efforts to reclassify broadband as a communications service, a political no-brainer if there ever was one? After all, the FCC has already filed a plan to do just that, but has yet to move on it, although with Copps, Clyburn and Genachowski on board it has the needed votes. It seems the easiest place to start, although Grayson has rightly complained that the whole debacle "doesn't inspire confidence that the FCC can hold the line against telecom and cable companies, when those companies have something else in mind."

Because of this collusion -- empowered by an April federal court ruling, spearheaded by Clinton-appointed judge David S. Tatel, declaring that the FCC lacks Internet regulatory authority and needs specific permission from Congress to get it -- open-spectrum and other utopian proponents and are hamstrung by cold, economic reality. Tatel's pointed barb that FCC and congressional "policy proposals" about network neutrality or regulatory authority "are just that -- statements of policy…not delegations of regulatory authority" was a not-subtle reminder that the FCC's only play is to get Congress to step up and give it the power it pretends it has. But instead of doing just that, Genachowski has wasted time diving back and forth between the boardrooms of Microsoft, AT&T and other heavyweights to forge a corporate consensus. But feel his pain: Congress couldn't pass a football in the name of the public good these days. Getting them to agree that the FCC should be able to regulate AT&T's management of its networks -- after asking the company to spy like crazy on Americans -- is beyond a non-starter.

As Google and Verizon made clear in their proposal, emboldening a publicly engineered alternative wireless Internet is going to be hard to do when indispensably well-meaning spectrum reformers like Gigi Sohn and Laurie Racine's nonprofit Public Knowledge are counting on both telco goodwill and congressional power. Public Knowledge's first principles on open spectrum demands that "bidders for half of the spectrum to make access to that spectrum available to third parties at wholesale rates" and respect consumers' "right to use any equipment, content, application or service on a non-discriminatory basis without interference." Good luck enforcing that without FCC regulatory authority.

Everything comes down to parsing the signals. At last report, more than half of current wifi hotspots are free; a 12 percent increase from the first quarter of 2010. A comparative deluge of broadband-enabled devices are on the way, a thankful development for those who are tired of having to connect their DVD players, sound systems, television, computers and phone with nearly obsolete cables. The logical pattern leads forward into a future littered with free, fast Internet connections, right? Wrong.

In the absence of neutral, enforceable legislation, who controls the spectrum controls the wireless world. And right now, the spectrum is seen as a revenue stream by the FCC: The controversial 2008 spectrum auction raised nearly $20 billion from the usual suspects like Verizon and AT&T, who carved up America's wireless empire for themselves and left crumbs for the rest. (Proceeds from the auction, according to the FCC, were transferred to the U.S. Treasury to be used for the nation's digital television transition efforts, but given Treasury's economic malfeasance, who knows where that $20 billion went?) And the throttling wasn't far behind: Earlier this year, Genachowski proposed the "Mobile Future Auction" in an effort to encourage television broadcasters to stop hoarding unused spectrum, which is what monopolies routinely do when they own it.

"The highly valuable spectrum currently allocated for broadcast television is not being used efficiently," Genachowski said. "Indeed, much is not being used at all."

Freeing up that wireless, radio, television and microwave spectrum, whether through voter initiative or anti-capitalist hacking, should be the prime objective of any net neutrality advocate or official. Even nationalization shouldn't be off the table; in fact, it should probably be at the head of it. Because it is pure folly to rely on corporations looking to carve the Internet into variously monetized thoroughfares to provide unrestricted access, although the airwaves belong to the same public it has been fleecing for decades.

As civilization as we know it fully enters the wireless 21st century, setting aside net neutrality provisions only for the wireline world, as Google and Verizon have proposed, is both like naming technocratic educational downsizing No Child Left Behind and actually expecting it to work. Without a government-sponsored open spectrum available without restriction to the public, which can also choose become a living broadcaster in its own right, net neutrality will remain but a theory in search of an application.

Even if the FCC decides to reclassify broadband, we have already learned from the evolution of the communications industry that, when left unregulated, it trends toward consolidation and complexity rather than diversification and simplicity. We are in the early stages of the 21st century with what seems like unlimited capacity, pardon the pun, for tremendous connectivity and capitalization. But instead we're watching the same corporations squeeze us dry of options and alternatives. And until advances in multi-node mesh networking and similarly minded wireless workarounds put the lie to mounting warnings of a suspicious spectrum crunch, we're left with the usual options: Crawl up Congress' lazy ass and make net neutrality more important than Muslim mosque controversies, or economically punish service and content providers like AT&T, Verizon and Google for their selfish behavior. (Killing off redundant landline and wireless accounts would be a good start.)

Google already got the message after publicly selling out its corporate slogan "Don't Be Evil," while Verizon got a pass because everyone already knows telcos are evil incarnate. But pressure must be kept on Google, telcos, the FCC and the Obama administration to make net neutrality an election issue. Otherwise, we're all going to wake up one day and find that the internet has a carpool lane for the upper class, and we're not invited unless we're willing to cough up our cash and our principles.

Your fears confirmed: "Up to" broadband speeds are bogus

By Nate Anderson | Ars Technica 

Broadband providers in the US have long hawked theirwares in "up to" terms. You know—"up to" 10Mbps, where "up to" sits like a tiny pebble beside the huge font size of the raw number.

In reality, no one gets these speeds. That's not news to the techno-literate, of course, but a new Federal Communications Commission report (PDF) shines a probing flashlight on the issue and makes a sharp conclusion: broadband users get, on average, a mere 50 percent of that "up to" speed they had hoped to achieve.

After crunching the data, FCC wonks have concluded that ISPs advertised an average (mean) "up to" download speed of 6.7Mbps in 2009. That's not what broadband users got, though.

"However, FCC analysis shows that the median actual speed consumers experienced in the first half of 2009 was roughly 3 Mbps, while the average (mean) actual speed was approximately 4 Mbps," says the report. "Therefore actual download speeds experienced by US consumers appear to lag advertised speeds by roughly 50 percent."

The agency used metrics data from Akamai and comScore to make this determination, though a more accurate direct measurement is currently taking place under FCC auspices. The more accurate measurement will put small boxes in people's homes for weeks at a time, recording actual line speeds in thousands of US homes at all times of the day and night. But, until that data set is complete, Internet traffic data from Akamai and comScore will have to suffice.



When you look at actual speeds, most Americans have fairly slow service

Data source: FCC

The gap between advertisement and reality isn't a function of technology—it applied to all kinds of broadband connections, from cable to DSL to fiber. The less-than-ideal speeds aren't necessarily the "fault" of the ISP, either; crufty computers, poky routers, misconfigured WiFi, transient line noise, and Internet congestion all play a role.

Whatever the cause, though, the FCC has concluded that advertising the "up to" speed is so inaccurate (and so confusing to consumers) that something better should be tried, sort of a "nutrition label" for Internet access. The National Broadband Plan suggested something along these lines and the new FCC report supports the idea, recommending that a standard truth-in-labeling form should be drafted by the FCC, "the National Institute of Standards and Technology, consumer groups, industry and other technical experts."

The FCC has proposed a few example labels of its own:



Example broadband labels (source: FCC)

The New America Foundation last year proposed a standardized "truth-in-labeling" box with far more detail, and it used the new FCC report as a way to pitch its idea once more.



New America Foundation's prototype Schumer Box for broadband customers

For now, broadband buyers should just expect their connections to offer about half the promised maximum speed. If that gets you down, just remember: you aren't in this alone. UK broadband users also see speeds only half as fast as advertised.

TeleCom Industry to Take Over Internet in Four Easy Steps

by Timothy Karr | July 2, 2010 by CommonDreams.org

Have you heard about the battle over the Internet?

It's a power grab that involves lawyers, lobbyists, unscrupulous legislators, phony front groups and the most powerful telecommunications companies in the world.

They've aligned themselves against the rest of us -- the millions of Americans who use the Internet every day, in increasingly inventive ways.

They've opened their wallets to Washington. It's an investment of hundreds of millions of dollars and it's being made right now by AT&T, Comcast and Verizon -- the companies that provide broadband access to the vast majority of Americans.

These companies are chasing the ultimate payout: control, not just of the Internet wires that snake into our homes, but over the information that flows across those wires..

While this fight has been brewing for years, it's come to a head at a time when more and more broadband users are taking to YouTube, Twitter, Mashable and other innovations.

Right now, the FCC and Congress are weighing a series of decisions that could determine whether this decade-long explosion of Internet creativity was a short-lived experiment in people-powered media, or the beginning of an era of more decentralized, participatory and democratic communications.

20th-century media colossi prefer a return to the old ways, where a handful of gatekeeper firms operated the turn-on valve to all popular information. It was a profitable model that worked well for one-way communications like newspapers, radio, and television. If only it can be applied in age of flash mobs and FourSquare, too.

These media giants are spending a fortune to convince lawmakers and regulators to dismantle consumer protections on the Internet and give industry absolute power over the most important communications medium of our time.

Here's how they plan to do it, in four easy steps:

ONE: Buy Congress

The New York Times reported yesterday that AT&T, Comcast and Verizon executives and political action committees are among the top campaign contributors to lawmakers responsible for communications policy on the Hill.

"Political contributions from AT&T in the current election cycle reached $2.6 million by May 16, on the way to exceeding the total in each of the last three elections," according to the Times. AT&T has been especially generous to the campaigns of every Republican (most notably, John McCain), and all but three Democrats on the subcommittee that deals with the Internet in the House Energy and Commerce Committee.

And that's just the tip of the iceberg. From 1998 through 2009, AT&T, Verizon, Comcast and Time Warner Cable contributed more than $96 million to candidates for federal office, according to data from the Center for Responsive Politics (and compiled here). In 2010 they're set to break all records for annual spending.

TWO: Mobilize an Army of Lobbyists

The phone and cable industry controls Internet access for more than 96 percent of Americans. Now, with the help of an army of lobbyists, they're planning to expand that control even further. In 2009, they spent more than $70 million on nearly 500 "K" Street lobbyists.

These agents for hire swarmed the FCC and Capitol Hill in a push to consolidate industry control over the Internet and kill Net Neutrality, the principle that preserves the free and open Internet, before the public (and public interest advocates like Free Press) gets a seat at the table.

Paul Blumenthal of the Sunlight Foundation recently revealed that cable and phone companies hired 276 former government officials to lobby for them in the first quarter of 2010. Included in this figure are 18 former members of Congress and 48 former staffers of current members of Congress on committees with jurisdiction over the Internet.

THREE: Spread Astroturf

Astroturf (or fake grassroots) groups surface wherever and whenever public policies threaten the corporate status quo. In Washington, they've spread like kudzu to envelope civic discourse over global warming, health care and financial reform in a tangle of corporate talking points.

The phone and cable lobby has been busily seeding Astroturf to kill Internet consumer protections. Notably they've funded FreedomWorks, Americans for Prosperity and Arts + Labs to paint Net Neutrality as a "government takeover of the Internet" and to dismiss as "extremists" the nearly 2 million people who have called on Washington to enact lasting Net Neutrality protections.

Their dirty little secret? Most of these fake grassroots groups routinely fail to disclose that their operations are fully funded by corporate special interests.

FOUR: Demonize the Public Interest

Behind every corporate lobbying juggernaut lies a smear campaign targeting public interest advocates.

For these smear-mongers, Net Neutrality is better known as "Internet socialism," "the Fairness Doctrine for the Internet," or simply the cornerstone of the Obama administration's frightening "vision of government ownership and control" over all communications and aspects of our lives. Net Neutrality supporters occupy the radical "fringe" of society, they say.

For Glenn Beck, Net Neutrality is a slowly creeping Maoism designed so that the FCC can "turn the Internet into a public utility, which means they have the power to control and regulate every bit of it."

If the uptick in scorn for an open Internet from the shill and talk radio echo chamber seems a little suspicious, look no further than the companies that still advertise with and support these merchants of disdain. You'll find many familiar names.

Everyone has a stake in the outcome of this fight, whether you're a YouTube "celebrity" or a chili pepper salesman, or someone in between. If you want to control your own Internet experience, you'll need to burst the industry spin, learn the facts about Net Neutrality, and get involved in the fight for open communications.

Now is one of those times that Washington needs to be reminded whom they really work for. And it's not AT&T and Glenn Beck.

White House: "Here's $795M For Broadband..."

...Congress: "Wait, We Want $602M Of That For War"

from the broadband-or-guns? dept

There's been plenty of coverage of the White House's announcement today that it's handing out $795 million in grants and loans to help establish broadband access in underserved parts of the country (mostly rural areas where it's been expensive to build infrastructure). I'm still not convinced this program is actually needed, but it's popular politically. However, as Broadband Reports notes, at the very same time the White House was talking up the importance of broadband investment, House Appropriations Chair David Obey was proposing an amendment to shift $602 million in broadband funding to paying for the wars in Afghanistan and Iraq. Obey apparently feels that broadband is an area "that no longer require[s] funding" and has "sufficient funds on hand."

The Great Telecom Rip-Off

Why Aunt Ethel Hung Up on AT&T
By DAVID ROSEN and BRUCE KUSHNICK

We all have an Aunt Ethel. She’s getting on in years but remains fiercely independent; she lives on a fixed income but in the same home she’s had for half-a-century. Sadly, most of her family has passed away and those who are alive are dispersed around the country. Making matters worse, she is having a harder time making sense of her never-ending stream of bills, especially her phone bill.

I regularly visit Aunt Ethel to keep her company and to help her pay her bills. When I arrived one recent morning she was in a state. She had attempted to place a long-distance call through her carrier, AT&T, but found that her service had been summarily stopped. If this had been the first time that this had occurred, I would have assumed it was technical screw-up and accepted it as an inconvenience. Unfortunately, this was the second time the service had been arbitrarily stopped and Ethel said, “Enough, already,” and ended service with AT&T.

The U.S.’s current economic (and, by extension, political) crisis is a tale of the return of corporate trusts. It involves not only the financial institutions deemed too-big-to-fail, but the health-insurance combine, the energy conglomerates and the telecom duopoly of telecommunications and cable-entertainment companies that dominate the American economy. Each is engaged in the systematic plunder of the American consumer, providing less service at increasingly inflated prices. And all done under the blind eyes of federal non-regulators.

American capitalism has come full-cycle from the legendary battles waged by Teddy Roosevelt and other Progressives a century ago. Then, they battled the shameless practices of industrial trusts like Standard Oil. Today, Rockefeller’s corporate descendents continue to dominate the American economy and the trust model is reemerging. This time, unfortunately, there is no TR to do battle for the public good. Instead, Democrats and Republicans, along with a vast infrastructure of lobbyists, front groups, grateful non-profits and astroturf shills, shamelessly serve the interests of not only big finance, but big health-care, big energy and big telecom-media. Political support for consolidation is rationalized as necessary to combat the challenge of globalization and to ensure American competitiveness, fictions waved before the electorate every other year to inflame patriotic zeal.

While the dominant financial, health-insurance and energy trusts have come under public scrutiny during the last year due to their individual crises, little attention has been paid to the mounting power of the telecom-media trust. The announced plans by Comcast to acquire NBC-Universal and the FCC’s attempt to maintain net neutrality provide important vantage points for critical assessment. However, nothing offers a better insight into the ongoing telecom rip-off and the complicity of the regulatory bodies that have ostensible oversight over the telecom industry then a careful consideration of a hypothetical telephone bill, Aunt Ethel’s bill. For there is no better way to conceal a theft then to make it so transparently visible that no one sees it.

* * *

Conventional telecom bills can be a “stand alone” local bill, long distance, Internet, broadband or a combination of these as a package of services. Each is a minefield of hidden fees, questionable surcharges and dubious taxes all designed to enrich the telecom’s bottom line without requiring any meaningful improvement in customer service.

Local Service used to be a “bundled” service. In 1980, before the break up of AT&T, local service (in many states) came with unlimited local phone calling, unlimited directory assistance (411), the wire in the home and even a rotary telephone – and all for $8.00 to $10.00 a month.

In New York City, in the ‘80s local service was “measured,” meaning a call was charged by the minute, but it came with a “call allowance,” including a package of free calls, 6 free directory inquiries, a $.30 credit applied if you didn’t use these calls and each call costs $.10. Local service also included a phone and the wiring in the home.

Today, for comparable local service (and the consumer has to purchase the phone), the price of local calls has skyrocketed by a whopping 591 percent. Specific charges are revealing:

• Directory assistance calls costs almost $1.50 (including taxes) each and there are no free inquiries, although many customers believe their service comes with free calls. (New Jersey is one of the few states that actually as a few free directory calls.)

• FCC Line Charge (sometimes called the “Subscriber Line Charge”) was added and now adds an additional $6.42 in New York to local service charges. Adding insult to injury, this charge is taxed over 33 percent covering both federal and state taxes.

This charge is hidden in most states in the “taxes” and “surcharges” section and it does do not go to fund the FCC but flows back directly to the local phone companies.

• Inside wiring and “inside wire maintenance” was included in the cost of local service in 1980 and has gone up 464 percent over the last three decades. While ostensibly optional, over half of those paying for this service didn’t order it and Verizon claims that the inside wiring broke only once every 16 years.

• Calling features like Call Waiting, Caller ID and Call Forwarding are popular and can cost $5.00 to $11.00 a month. However, the actual cost to offer these services is estimated to be about $.01 -$.20 cent for each service. (According to a 1999 Florida Public Service Commission report.)

Long Distance Service used to be dominated by the AT&T “trust” which was broken up because a small competitor, MCI, challenged its essential monopoly. In the 1980s and 1990s, competition between AT&T, MCI and Sprint drove down prices. Today, however, long distance companies have merged with local phone companies into vertically integrated conglomerates. Nevertheless, according to data filed with the FCC in 2005, about one-third of American telecom customers still use a standalone long distance service.

For the Aunt Ethels of the America who still use such service, they are being systematically screwed. Today, AT&T’s basic long distance rate service for a one-minute call is $.42. However, in some markets (e.g., San Diego, CA) seniors, including those on Lifeline service, are paying $.50-$1.00 a minute or more for long distance. Making matters more confusing, there are more than 30 different active plans with fees ranging from $3.00 to $30.00 per month.

Other questionable charges include:

• Cost Recovery fee is a made up charge that goes directly back to the companies.

• Minimum Usage fee is really a penalty charge if you don’t make a sufficient number of calls that can range from $7.00 to $9.99.

• Printed Bill fee are being imposed to force customers to pay with via an online service.

• “Taxes and Surcharges” from the Universal Service and other fees hidden on the bill.

The Universal Service fund is probably the most dubious charge and runs a whopping 15.2 percent, although the amount varies by quarter. It covers long distance service, wireless services and even parts of the local bill, such as the FCC Line charge, which has been declared an ”interstate service.” Designed initially to make sure that everyone in America had phone service and later to pay for schools and libraries to get services, it now is a slush fund riddled with fraud. The largest portion of this fund is called the “high-cost” fund and goes directly to telecoms offering service in rural areas; it is imposed without provisions for an audit to determine how the monies are allocated.

Telecoms are increasingly promoting “packages” that benefit heavy users, but “low volume” customers like Aunt Ethel pay a lot more.

The first problem is the basic confusion in the offering between the advertised price and the billed fee sent to customers that can be 15-40 percent higher. Second, and like the balloon mortgages made famous in the sub-prime housing debacle, many packages are based on “gimme” or “promotional” prices that can quickly jump by as much as 50 percent after the original offer expires.

* * *

Telecom regulation suffers the same fate as did the banks under the watch-less eye of the Federal Reserve and BP drilling in the Gulf of Mexico under the Minerals Management Service. No regulator has jurisdiction over the phone bill, particularly state Public Utility Commissions. No regulator has actually examined all the charges on the phone bills. Hiding behind the claim that industry deregulation has taken place over the last quarter century, regulators argue that there’s market “competition” that fixes everything.

This situation is likely to only get worse as further industry consolidation takes place and when the FCC’s introduces its new National Broadband plan. This plan is likely to raise customer telecom rates in five different ways. It will likely (i) increase the Universal Service fund tax is now 15.2 percent on all long distance calls (including wireless); (ii) increase the FCC Line Charge; (iii) increase local rates; (iv) add a new broadband tax, euphemistically dubbed the “Connect America” tax and (v) create a new “mobility” fund.

The telecom fiber optics upgrade rip-off is one of the great scams perpetrated against the American people. Much of the “deregulation” that has occurred has been done to alleged upgrade the old copper wiring with fiber optics. While Verizon and AT&T have rolled out some broadband upgrade, the estimated $320 billion collected since the 1990’s and has not been spent on upgrading their respective networks.

According to the telecom’s industry’s most aggressive estimates, in 2009 approximately 15.1 million homes were “passed” (i.e., could access fiber) but only 4.4 million actually subscribed to fiber services. [RVA for the FTTH Council] And this is in a nation of 120 million households.

The billions so far charged to American telecom customers for these upgrades were based on promises to enhance Internet connectivity at schools, libraries and hospitals. Sadly, little of this promise has taken place since Al Gore promised the “information superhighway” nearly two decades ago. All that telecom customers can count on is seeing their bills steadily rise.

While the FCC is discussing reform, it’s clear it is unlikely to actually examine the companies receiving the money. Many of these telecoms uses these taxes and surcharges to fatten their balance sheets and don’t use the monies to improve customer services.

Aunt Ethel passed away in 2001 at the age of 92, but her spirit lives on. As she often said, “Go get those bastards.” It is a call we should all embrace as we contest the tyranny of the global trusts.

FCC to Seek Net Neutrality by Regulating Internet Service Providers

FCC to Seek Net Neutrality Using New Legal Framework
by Tony Romm

Federal Communications Commission Chairman Julius Genachowski on Thursday announced his agency would seek to regain its lost grip on broadband by applying some of the rules that govern phone companies to Internet providers.

Federal Communications Commission Chairman Julius Genachowski testifies in Washington, DC, in March 2010. (AFP/Getty Images/File/Chip Somodevilla) One month to the day since a federal court stripped the FCC of that authority, setting back the agency's dual goals of expanding broadband access and instituting tough rules to ensure open Internet, Genachowski took the first steps in restoring what he described as "the shared understanding" that the FCC should protect broadband consumers.

Genachowski's announcement is sure to satisfy net neutrality proponents -- from public-interest groups to companies like Google and Skype, which have long called on the commission to enforce open Internet rules. But the move will likely put Genachowski, the FCC and the Obama administration on a collision course with broadband providers -- like Comcast, AT&T and Verizon -- which have long questioned the FCC's authority to regulate broadband using its internal, rule-making process.

Those companies and others could choose to challenge Genachowski's proposed "third way" forward in court, setting up a protracted legal fight that only Congress could end with new telecommunications legislation. Comcast, however, noted in a statement on Thursday that it is "prepared to work constructively with the Commission" over the next few months.

The best outcome, Comcast added, would be a series of "limited but effective measures to preserve an open Internet and implement critical features of the National Broadband Plan, but does not cast the kind of regulatory cloud that would chill investment and innovation by ISPs."

The FCC's new legal framework addresses a federal court ruling in April that found the FCC only had chief jurisdiction over Title II, or "telecommunications services," and did not even have "ancillary" authority over Title I, or "information services."

"The opinion therefore creates a serious problem that must be solved so that the Commission can implement important, commonsense broadband policies," Genachowski said of the ruling, which favored Comcast, noting the FCC still hopes to carry out much of the proposals it introduced as part of its National Broadband Plan.

But rather than simply taking broadband and re-designating it as a telecommunications service, as some groups thought the FCC might do, Genachowski's plan would use a procedure called "forbearance" to pick and choose aspects of long-standing phone company rules to broadband providers.

Not all of those regulations that govern telecommunications companies would apply to the Web. For example, some of the "common carrier" restrictions on rates, and others that require phone lines to be shared, would not be imposed on the broadband community. But the bulk of rules that allow the FCC to enforce competition and determine how companies can manage their networks would, ultimately, now target Internet providers too.

However, Genachowski's statement on Thursday does not immediately usher that new broadband regulatory framework. Rather, the FCC must embark on public comment periods, hold hearings, consult with stakeholders and vote on the proposals first. That latter element should prove easiest, as the FCC is comprised of three Democrats who have signaled previously they would support reclassification.

"The Comcast decision has created a serious problem," Genachowski said. "I call on all stakeholders to work with us productively to solve the problem the Comcast decision has created in order to ensure a solid legal foundation for protecting consumers, promoting innovation and job creation, and fostering a world-leading broadband infrastructure for all Americans."

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FCC will seek to regulate Internet providers
By Cecilia Kang
Washington Post Staff Writer
Thursday, May 6, 2010

The chairman of the Federal Communications Commission plans to seek clear-cut powers to regulate Internet service providers, redefining the government's role over at least parts of the fast-growing industry.

The proposal, to be announced Thursday, is expected to be opposed by broadband network operators such as AT&T, Comcast and Verizon, whose Internet access businesses are becoming their main source of revenue as consumers rely on the Web as a primary communication tool.

Internet companies such as Google and Skype and public interest groups are applauding the move because it would allow the FCC to carry out policies to expand broadband access nationwide. The groups also support the commission's efforts to create a regulation that would force broadband service providers to treat all applications equally over high-speed Internet networks, a concept known as net neutrality.

A senior FCC official said Wednesday that Chairman Julius Genachowski's move would be a "third way," between the industry's current state of deregulation and a more comprehensive regulatory approach. Broadband is now defined as an information service with weak FCC oversight. The proposal would put Internet service providers in a category with telephone service, which is more clearly under the agency's authority.

However, the move would stop short of subjecting Internet providers to the full range of requirements imposed on telecom companies, such as oversight of price and billing practices or a rule that would force network providers to share lines with competitors. It also would govern only the companies that own the networks, not the services they transmit.

Last month, a federal court cast doubt on the FCC's authority over the Internet, ruling that the agency overstepped its bounds when it sanctioned Comcast in 2008 for blocking an Internet application that the company said was slowing broadband service.


"The Chairman will seek to restore the status quo as it existed prior to the court decision in order to fulfill the previously stated agenda of extending broadband to all Americans, protecting consumers, ensuring fair competition, and preserving a free and open Internet," the FCC official said in a statement.

Sources said Genachowski appeared to have shifted from late last week, when The Washington Post reported that it looked like he was inclined to keep broadband services deregulated.

Two sources with knowledge of the discussions in the FCC this week said a letter that Sen. John D. Rockefeller IV (D-W.Va.) and Rep. Henry A. Waxman (D-Calif.) sent to Genachowski on Wednesday provided political support for the agency to shift Internet lines to a more regulatory framework. The lawmakers said they could support defining broadband as a telecommunications service if the FCC stripped Internet access providers of some of the rules that apply to phone companies.

The sources spoke on the condition of anonymity because of the sensitive nature of the topic and because Genachowski hasn't officially commented on his decision.

Corporate opposition is sure to be fierce to what some view as a strong move to regulate Internet companies.

"If the goal is maximizing broadband deployment and adoption . . . new regulations such as these will not help," said Bruce Mehlman, co-chairman of the Internet Innovation Alliance, an industry group. "This sounds more like a political solution likely to imperil investment than a policy initiative that tackles actual challenges in the marketplace."

Susan Crawford, a law professor at the University of Michigan and a former economic adviser to President Obama, said the move would be a good middle ground for the commission.

"The FCC has clearly thought through all the implications of using its regulatory authority to provide for a level playing field for innovation and job creation in America," she said. "The FCC has reached the right result."

Genachowski's office and general counsel briefed officials Wednesday on his decision. Michael Copps and Mignon Clyburn, Democratic members of the commission, have said they would support a proposal to reclassify broadband, which would give Genachowski enough votes to move forward on the plan.

The proposal must be opened to public comment and then would need three out of five FCC votes to be approved.

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New U.S. Push to Regulate Internet Access
05-06-2010

WASHINGTON—In a move that will stoke a battle over the future of the Internet, the federal government plans to propose regulating broadband lines under decades-old rules designed for traditional phone networks.

The decision, by Federal Communications Commission Chairman Julius Genachowski, is likely to trigger a vigorous lobbying battle, arraying big phone and cable companies and their allies on Capitol Hill against Silicon Valley giants and consumer advocates.

Breaking a deadlock within his agency, Mr. Genachowski is expected Thursday to outline his plan for regulating broadband lines. He wants to adopt "net neutrality" rules that require Internet providers like Comcast Corp. and AT&T Inc. to treat all traffic equally, and not to slow or block access to websites.

The decision has been eagerly awaited since a federal appeals court ruling last month cast doubt on the FCC's authority over broadband lines, throwing into question Mr. Genachowski's proposal to set new rules for how Internet traffic is managed. The court ruled the FCC had overstepped when it cited Comcast in 2008 for slowing some customers' Internet traffic.

In a nod to such concerns, the FCC said in a statement that Mr. Genachowski wouldn't apply the full brunt of existing phone regulations to Internet lines and that he would set "meaningful boundaries to guard against regulatory overreach."

Some senior Democratic lawmakers provided Mr. Genachowski with political cover for his decision Wednesday, suggesting they wouldn't be opposed to the FCC taking the re-regulation route towards net neutrality protections.

FCC Chairman Julius Genachowski, whose authority over broadband lines has been questioned by a federal court, plans to use regulation on traditional phone networks to establish rules for Internet providers.

"The Commission should consider all viable options," wrote Sen. Jay Rockefeller (D, W.V.), chairman of the Senate Commerce Committee, and Rep. Henry Waxman (D, Calif.), chairman of the House Energy and Commerce Committee, in a letter.

At stake is how far the FCC can go to dictate the way Internet providers manage traffic on their multibillion-dollar networks. For the past decade or so, the FCC has maintained a mostly hands-off approach to Internet regulation.

Internet giants like Google Inc., Amazon.com Inc. and eBay Inc., which want to offer more Web video and other high-bandwidth services, have called for stronger action by the FCC to assure free access to websites.

Cable and telecommunications executives have warned that using land-line phone rules to govern their management of Internet traffic would lead them to cut billions of capital expenditure for their networks, slash jobs and go to court to fight the rules.

Consumer groups hailed the decision Wednesday, an abrupt change from recent days, when they'd bombarded the FCC chairman with emails and phone calls imploring him to fight phone and cable companies lobbyists.

"On the surface it looks like a win for Internet companies," said Rebecca Arbogast, an analyst with Stifel Nicolaus. "A lot will depend on the details of how this gets implemented."

Mr. Genachowski's proposal will have to go through a modified inquiry and rule-making process that will likely take months of public comment. But Ms. Arbogast said the rule is likely to be passed since it has the support of the two other Democratic commissioners.

President Barack Obama vowed during his campaign to support regulation to promote so-called net neutrality, and received significant campaign contributions from Silicon Valley. Mr. Genachowski, a Harvard Law School buddy of the president, proposed new net neutrality rules as his first major action as FCC chairman.

Telecom executives say privately that limits on their ability to change pricing would make it harder to convince shareholders that the returns from spending billions of dollars on improving a network are worth the cost.

Carriers fear further regulation could handcuff their ability to cope with the growing demand put on their networks by the explosion in Internet and wireless data traffic. In particular, they worry that the FCC will require them to share their networks with rivals at government-regulated rates.

Mike McCurry, former press secretary for President Bill Clinton and co-chair of the Arts + Labs Coalition, an industry group representing technology companies, telecom companies and content providers, said the FCC needs to assert some authority to back up the general net neutrality principles it outlined in 2005.

"The question is how heavy a hand will the regulatory touch be," he said. "We don't know yet, so the devil is in the details. The network operators have to be able to treat some traffic on the Internet different than other traffic—most people agree that web video is different than an email to grandma. You have to discriminate in some fashion."

UBS analyst John Hodulik said the cable companies and carriers were likely to fight this in court "for years" and could accelerate their plans to wind down investment in their broadband networks.

"You could have regulators involved in every facet of providing Internet over time. How wholesale and prices are set, how networks are interconnected and requirements that they lease out portions of their network," he said.