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from: Teletruth

TELETRUTH ALERT: December 18, 2006

The FCC Should Not Attempt a Run-Around of Congress to Pass Bell-Friendly Cable-Franchise Plan.

Teletruth files

* Comments: FCC Proposed Cable Franchise Plan & Chairman Martin's Speech.
* http://www.teletruth.org/docs/fccfranchise.doc (filed 12/13/06, 23pages)
* Complaint: FCC 200K Broadband Definition Fails Telecom Act Statutes for Video.
* http://www.newnetworks.com/fcccomplaint200k.htm
* Complaint: FCC 1995 Video Data Showed Millions of Lines - What Happened?
* http://www.newnetworks.com/fcc1995competition.htm

SUMMARY OF CONTENTS

(See full comments for details)

America is on the wrong broadband path and the FCC's analysis of the situation has been overshadowed by bad data, Bell-funded astroturf groups and a false reliance on Verizon, AT&T and the other Bell companies. History has proven that we should not trust the Bell companies with America's Digital Future.

Instead of granting a new franchise perks, the FCC should immediately start an investigation. Customers paid billions per state for fiber optic network services they never received and the FCC's data and analysis has covered over a decade of wrongdoing.

America is 15th in broadband and yet Chairman Martin in a speech at the Bell-funded Phoenix Center, claims that broadband deployment was and is his highest priority. We suggest he then get the facts straight.

Martin's Speech: http://www.teletruth.org/docs/Martinspeech.doc

What follows is a summary of the materials we filed.

Flawed Data and Analysis has Led to Bad Laws: Follow the Money.

The FCC has had a series of data problems that have led to bad laws. The FCC currently claims that video competition is America's next step and yet it has been America's next step since 1992. In fact, the definition of broadband found state laws from 1992 was a 45 Mbps service in both directions capable of high definition video.

More to the point, the FCC's definition of broadband is 200 Kbps, 1/5 of 1 Mbps. This definition does not fulfill the Telecommunications Act of 1996 statutory requirements of high-quality video in both directions.

We have filed a separate complaint for the FCC to fix its broadband definition.

http://www.newnetworks.com/fcccomplaint200k.htm

The FCC's Advanced Network Reports Have Rewritten History.

The FCC's Second Video Competition Report, 1995, outlines how each Bell company filed with the FCC claiming that they would be rewiring cities, states and even whole territories with fiber to the home --- starting in 1993. None of this information appears in the FCC's advanced network reports.

Examples include:

o"NYNEX's March 1995 authorization for two VDT systems, one in Rhode Island that will pass 63,000 homes and one in eastern Massachusetts that will pass 334,000 homes. NYNEX's applications, filed in July of 1994, proposed completion of construction in 2010.

o"PacBell's August 1995 authorization for four VDT systems in California, which will pass 490,000 homes in San Francisco; 360,000 homes in Los Angeles; 259,000 homes in San Diego; and 210,000 homes in Orange County, California. PacBell's applications, originally filed in December 1993, proposed an advanced, wire based video and telephone network that would be constructed sometime in 1996 at an expense of approximately $16 billion.

Based on this data, Teletruth has filed a second complaint:

http://www.newnetworks.com/fcc1995competition.htm

More to the point, it is documented that customers paid billions per-state ---over $200 billion dollars nationwide in excess phone charges and tax perks, and each state decision was driven by the phone companies' filed FCC documents. The FCC has never investigated the financial role of customers, even though the phone companies are still charging customers for services they never received.

Illegally charging customers today? It is now clear that Verizon and AT&T are illegally charging local phone customers for the roll out of their new products. AT&T's Lightspeed and Verizon's FiOS have been defined as "Interstate Information Service". This is cross-subsidization 101 as local phone capital expenditures, paid for by local phone customers, are funding an interstate, information product.

Customers Paid for Open, Ubiquitous Networks.

Ironically, customers paid for open networks that had "common carrier" obligations, meaning they were open to all competitors. And customers paid for ubiquitous networks, guaranteeing any new networks would be rolled out covering the entire territories, rural, urban and suburban equally.

In short, the FCC is planning on granting exclusive rights to the phone companies who have taken control of customer-funded-utilities, removing all of the customers' rights, while charging the customer for the privilege.

The FCC Has Directly Harmed All Competition.

In a series of bad rulings, the FCC stopped the requirement that competitors could get wholesale rates, known as UNE-P, which put AT&T and MCI up for sale. It closed down the right of Internet Service Providers to use DSL and the new upgraded networks, thus helping to kill off 6000 ISPs. And the FCC has essentially eliminated competition for stand-alone local service, toll call service or long distance service. In short, it has closed out competitors from using the customer-funded "PSTN" - Public Switch Telephone Network.

And now the FCC wants to give these companies even more perks with little, if any obligations?

To read more about the FCC's role in the harm to competitors see our Harvard Nieman Watchdog article: "How the Baby Bells and the government destroyed competition for DSL, long distance and local phone service," April 13, 2006

http://www.niemanwatchdog.org/index.cfm?fuseaction=Ask_this.view&askthisid=196

You Can't Trust these Guys. Hype for Hope.

While the FCC contemplates what should happen next, it is clear America is being over-hyped by the phone companies. The reality is that Verizon had about 100,000 cable/IPTV customers, AT&T had 3,000 according to 3td Q report---less than 1% of America.

Worse, these are inferior, expensive products as compared to what Asia and other countries already supply. AT&T's service is 6MBPS upstream, 1 MBPS downstream, while Verizon is charging `$179 for 30mbps, 5 upstream. (Ironically, in most states, these services would not fulfill the state definitions as they are not capable of high definition video in both directions.)

To add insult to injury - even if these services show up, Korea and Japan are already selling 100Mbps services in both directions for $40. America will never be a techno-super-power but will become a 3rd world broadband provider.

Other Issues: Raising Taxes, Bad Phone Bill Data, and FCC Plays with Astroturf Groups:

First, the FCC's plan raises the Franchise Fee to 5% which will be paid directly by customers as yet another telephone/cable tax.

Next, while the FCC keeps claiming that prices for phone services keeps dropping, Teletruth's surveys of phone bills shows that the FCC's data is totally flawed and doesn't count most charges a customer pays. And there's plenty of documentation that prices have been increasing for both local and long distance, as well as business services.

But the real kicker is that when Chairman Martin announced these new franchise issues, he did it at an event sponsored by a Bell-funded research firm, the Phoenix Center, and keeps quoting their data - which was paid for by the phone companies. As we point out, the FCC's even uses astroturf groups as 'sources' of data and the FCC Consumer Advisory Committee is riddled with both the industry as well as astroturf groups.

And the FCC even quotes other astroturf groups, including Consumers for Cable Choice, funded by Verizon and AT&T, to support the claims that local franchises harm broadband deployments. Moreover, the FCC ignored the fact that the Michigan Municipal League had 600 communities waiting to talk to AT&T for a franchise or the fact that AT&T(Ameritech) had local franchises in over 100 municipalities in 1999, when they previously rolled out fiber based services. Franchises weren't a problem then.

AT&T/Ameritech Ameritech Signs 100th Cable Television Franchise, 1999

http://www.newnetworks.com/100franchisesameritech.htm

In Conclusion: There are NO guarantees that AT&T and Verizon will ever upgrade their networks as they state they will in 2006, regardless of the new franchise perks. History shows that they can't be trusted and the potential to harm the economy by failing to deploy competitive products should be taken seriously and investigated.

Bruce Kushnick, Teletruth

bruce@teletruth.org

Tom Allibone, Teletruth

tom@teletruth.org