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February 11, 2006

Guest Blogger: Bruce Kushnick - Net Neutrality is Hogwash...

Note from Jeff:

"While I believe in the viability of properly implemented Net Neutrality and User Empowerment rules, below is another view on the battle for broadband deployment and the communications future.

A Message to the Bells and their advocates -- Please feel free to respond.

I would love for there to be as full an airing of this issue within this blog. My Blog, itself, is intended to be as open a channel for critical discourse as possible. Let's dig beneath the surface, beyond the rhetoric, beyond the platitudes, beyond the soundbytes. Bruce has put forth his first argument in a manner that takes advantages of all that Web 1.0 has to offer - with hyperlinked annotations and support. Someday, when we do have 100 Mbps capacity ubiquitously available at a reasonable price point, perhaps this debate will continue at another level with all that Web 2.0 could offer."

_____

Guest Blogger: Bruce Kushnick - Net Neutrality is Hogwash. Investigate How the Bells Charged Customers for Fiber Optic Networks They Never Received.

First, I'd like to thank Jeff and Jonathan for the opportunity to make this wake up call.

Will VOIP be killed off as a stand alone service? The trends are all there to make it happen. From the fake astroturf consumer groups trying to add Universal Service and taxes and surcharges, or the Bell companies being able to bundle their services through massive 'cross-subsidization', i.e., customer funding of the Bell companies' own DSL and long distance businesses, how will VOIP survive?

But it's a lot worse than that. -- "We own the pipes" Ed Whitacre of SBC exclaims. BellSouth now claims that they can give themselves better treatment or charge companies for the privilege, while Verizon is calling for an end to Google's 'free lunch'.

Even Senator Ensign quoted herein, "We don't have the financial incentives for networks being built."

This is all hogwash. America is 16th in broadband and falling. Our current services are inferior to Korea and Japan who are delivering bi-directional 100 Mbps services for $40 bucks. (FIOS is 30 mbps top speed at $199.)

But worse --- You were lied to. That's right. You see, customers funded fiber optic networks they never received, to the tune of $2000 per household -- about $200 billion. By 2006, 86 million households should have had a fiber optic based service capable of 45 Mbps in bi-directions, that could handle over 500 channels of programming.

Let's put some facts out there for all to see:

SBC, Verizon, BellSouth and Qwest, starting in the early 1990's, went state to state, promising to rewire the state if only regulations were changed to give them massive financial incentives. (it varies by state.) For example, by 2010, the entire state of New Jersey was to be rewired. Don't believe me? Here's a link to a page from the original Order. http://www.newnetworks.com/OpportunityNewJerseyFiber.htm

This is not DSL, an inferior service over the old copper wiring that was considered inferior by the Bells in 1991. This is not FIOS or Lightspeed, which are crippled networks. These are not bi-directional, they can't handle 45 Mbps and the IPTV video still doesn't work --- and they are closed to competitors.

New Jersey wasn't the only state scammed. Virtually every state in America was to be fiberized. California was to have 5.5 million homes by 2000. Here's the information directly from Pac Bell about its wiring plans. http://www.newnetworks.com/cabroadbandpacbell.htm

Bell Atlantic promised to have Philadelphia and Pittsburgh Pennsylvania by 1997 with fiber to the curb, 12 million homes by the end of the decade. Here's a 1996 Bell Atlantic press release.

No wonder Philadelphia has been fighting to do Wifi--- Verizon didn't deliver.

In fact, the phone companies filed with the FCC to do video dialtone, --- cable competition using the phone lines. ---- in 43 different cities/states by 1997. 9.7 million homes were to be wired.

http://www.newnetworks.com/videodialtonedeployment.htm

And most importantly -- these networks, directly subsidized by customers, were OPEN to competition. In fact, state laws all required that the wiring be ubiquitous in rural, urban and suburban areas, rich and poor equally. Customers gave money to a contractor to build a highway, and they didn't do it. More to the point, now the contractor wants to decide who gets the highway and put up their own toll roads.

Here's what happened to California -- SBC pulled the plug, even though laws were changed based on the state commitments.

Ironically, the phone companies were also supposed to compete with each other in the other regions. It was the basis for the SBC-Ameritech and Bell Atlantic GTE mergers. Here's the 30 cities SBC said it would compete in by 2001. http://newnetworks.com/SBCfailedcities.html

What happened was collective Amnesia. Virtually no one seems to remember that they have been paying SBC, Verizon BellSouth an Qwest for over a decade for fiber optic networks they never received.

But the documentation is clear. We decided to put the data in a new ebook: (shameless plug.) Check out the story in detail or read the chapters on New Jersey of how SBC and Verizon killed off the fiber optic networks in 26 states. We estimate that $200 billion in excessive phone rates and tax perks were paid, with nothing to show for it. http://www.newnetworks.com/broadbandscandals.htm

There's also a blogging community to talk about the issues: http://200billionscandal.typepad.com/

The dark secret? They couldn't build the networks in 1992, much less 2006, not at the costs they had quoted. We in fact filed with the FTC over this issue of fraud. http://www.newnetworks.com/FTCcomplaintSBCVerizon.htm

But let me address a few more issues.

Fake Consumer Groups controlling VOIP's destiny.

First, fake consumer groups, biased research firms, paid off politicians and lots of lobbying dollars are going into killing off VOIP. We've filed complaints with the FCC

http://www.teletruth.org/USF.html

"Keep Universal Service Fair Coalition" is another Bell (SBC, Verizon and BellSouth?) skunkworks campaign. The group is mainly comprised of astroturf and co-opted groups funded by the Bell companies and are being coordinated by Issue Dynamics and Sam Simon, to push the Bell monopoly agenda. In this case, this group is pushing an anti-customer position on the Universal Service Fund -- Raise this tax and put it on new services, including VOIP. This group includes TRAC, Alliance For Public Technology, American Association of People with Disabilities, World Institute on Disability, League of United Latin American Citizens, and the Gray Panther, among others.

See: http://www.newnetworks.com/skunkworks101.html

Using co-opted and astro-turf groups, over the last decade they have taken away your voice at the FCC, in Congress, and in the media, harming everything from broadband and the Internet, the wiring of municipalities, the offering of innovative services, such as VOIP, to increasing the charges on your phone bill and harming competition. Instead of adding Universal Service to VOIP, the real question should be why are we subsidizing very wealthy phone companies at the expense of low income, seniors etc, and these consumer's are backing policies harmful to their own constituents.

Do you think it was a coincidence that there is also a group called the "VOIP coalition", with almost same members, who supported putting E911 on VOIP?, and funded directly by the Bell companies? http://www.apt.org/voip/

(And don't get me started about how direct revenue to the phone companies is hidden in the taxes and surcharges section of the phone bills. Teletruth's auditing services have help to create two class action suits for overcharging in New Jersey, and we've only scratched the surface of phone bill taxation.) http://www.teletruth.org/phonebillindependencereport.html

This astroturf issue is way more insidious than K Street lobbying and needs to be exposed. Wifi-Networking News has also done some investigations and found that these groups are working in concert to help close down municipalities from offering services.
http://wifinetnews.com/archives/cat_sock_puppets.html>

Massive cross-subsidization and bundling is another serious problem. -- (i.e, illegally subsidizing the Bells' DSL, wireless and Long distance business through rates.) When Verizon gives its DSL price of $14.95, it comes with a catch -- the customer also has to buy their long distance and local service package. This, and a lack of audits and bad FCC decisions,have help to kill off AT&T and MCI. Now the target is VOIP.

Our findings shows that instead of rewiring America, the companies pulled a bait and switch. The companies not only could use the local services advertising budget, such as phone bill inserts or major media buys, and not have to pay what other competitors are forced to pay, but also have the fiber deployed to help their own products, and not the fiber to the home deployments. And through bundling, they can move around the money, giving them unfair advantages from the word 'go'. This cross-subsidization is also the reason that their DSL retail price is cheaper than the wholesale price.

What should happen next?

Net neutrality is a made up fiction and only has validity on the planet Uranus. Instead Congress, the FCC, FTC, and the states should be investigating how customers were defacto investors who funded "open" networks they never received. Once everyone starts calling for an investigation, this nonsense will be put to rest. Instead of charging us more money, they should be investigated for the harms to America.

We estimate that $5 trillion dollars was lost in the economy because the Bells failed to deliver. America would not be number 16 in the world in broadband had we had 45 mbps services a decade ago as promised.

More to the point --- Who's kidding who? The phone companies should not be trusted with our digital future. They screwed up more than once (Remember ISDN -- It Still Does Nothing?) Get the money and give it to the municipalities would be one alternative. Regulate the pipe and allow VOIP and ALL other services that the customer, not the phone companies, want is another.

This is more than net neutrality. This is -- Infrastructure that is being held hostage needs to be freed on all levels. The Bells claim they need incentives. They already got incentives. The Bells claim that they will only build in only areas they want --- Fuggedaboudit. It's time to take back the PSTN -- that's Public Switched Telephone Networks. Customers have rights that have been taken, a "customer takings", and the pendulum has swung too far to the right. It's now our turn.

###

Bruce Kushnick is the chairman and a founder of Teletruth, a national customer alliance. Teletruth was a member of FCC Consumer Advisory Committee 2003-2004.

Read: $200 Billion Broadband Scandal

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(c) 2006 Jeff Pulver. All Rights Reserved.
(This blog posting is copyright protected by Jeff Pulver. Portions of this blog posting may be quoted or abstracted if attributed.)

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Posted by jeff on February 11, 2006 02:33 PM | Permalink

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Posted by: 升降机 at July 14, 2008 06:12 AM

It doesn't help the public to say that Net Neutrality is hogwash. Ridiculous. Like trying to complain about the insurance companies by saying national health is hogwash because you know they would do it through the insurance companies. The public has been successfully confused by the corporatists both about government and its ties to big business, and the public's own understanding of personal and social "freedom".

It's better to stick to your issues and not try to damage your creds this way.

Posted by: BZ at November 8, 2007 10:24 AM

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Posted by: Nancy Barkley at October 18, 2006 04:21 PM

Posted by: Villi at April 16, 2006 10:46 AM

Vijay, I don't know if you saw the story in the LA Times last week, but the Bells were exposed for their "phone-y baloney" tactics. In fact, this website documents their shenanigans and also has the ads running in Indiana --

http://phoneybaloney.net/


Posted by: Edward at February 20, 2006 03:50 PM

Everyone knows that Bruce Kushnick is funded by the cablecos. Classic case of pot calling the kettle black. Jeff, please do not degrade your wonderful blog by posting such "rants".

Posted by: Vijay at February 15, 2006 06:20 AM

Dana,

It seems to me you and Bruce are the "Fox News" types -- I would suggest closer to "Mcarthy types".

My "money" comes from my company, and my company gets its money from its clients. They are listed on our web site.

I see you have a consulting company that does not list the clients. So, once again, I am more transparent on that issue that the critics.

I did NOT attack Bruce. I attempted to move the disucssion to the issues. As well as correct the record. You and Bruce want to call names.

Sam

Posted by: Sam Simon at February 12, 2006 11:14 PM

It's easy to attack the messenger and then claim you'd "engage in discussion" if the other guy weren't so mean.

It eliminates the need to engage in the issue.

But in many cases it also proves the point of the complainent.

Where does your money come from, Sam? What are your links with the various Astroturf groups Bruce has identified, through meticulous research?

More important, what about the results? Is a duopoly competition? Is the fact we're paying more for less than our economic rivals, that we have less broadband available for use on the Internet than other countries, really a success for consumers?

Answer the charges, please. Don't go all Fox News on us.

Posted by: Dana Blankenhorn at February 12, 2006 03:23 PM

Jeff,

It would be nice to have a discussion on the issues as you suggest that you want on this blog. Yet Bruce's continued obsession with IDI and what I do and his continued personal attacks makes that impossible.

I have chosen in the past to ignore Bruce's "rants" (as the NYT so nicely put it), and this isn't a full response. I do want to put the record straight on a couple of quick things. First, the 15 year old Alliance for Publice Technology is a great organization and I would hope that Vonage and others would become affiliates. It provides a great forum for engagement with real public groups, including, for example, its board members who come from CWA,(Communications Workers of America), NEA (National Education Association), ALA (American Library Association, NAACP, among other organizations. Http://www.apt.org.

The real truth is that APT and the groups that Bruce attacks are far more transparent than Bruce and his affiliated organizations have ever been.

Finally, and for the record, the Keep USF Coalition that Bruce rants about is NOT a project of my firm. Its main agenda is to fight the FCC proposal to shift the collection of USF from the current interstate revenue system to a per-number system. Verizon, ATT, et. al. strongly disagree with KUSFF. Where does Vonage stand on collection methodology?

The issue of why should functional equivalent services be treated differently for purposes of USF is a fair and real question. How should USF be handled? The great divide on the Hill is between Senator Stevens and Congressman Upton and they provide the basis for a reasoned discuswsion of the issue. Stevens wants a robust Universal Service Fund. Upton has said we should get rid of it.

I would be glad to discuss these issues. I will not engage in name calling or rants nor engage Bruce on the "legitimacy" of my work.

Sam

Posted by: Sam Simon at February 12, 2006 08:52 AM

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