|
Liberty, Bell (Verizon),
Stolen
Other
Materials on the Bells' Broadband
Failures
Other
Materials Related to the Pennsylvania Broadband
Scandal
You
would think that in the Commonwealth where the Declaration
of
Independence was signed, the state regulators/fathers would
be against
tyranny of a monopoly trying to snooker, unfairly tax and
harm its citizens.
Instead of the Liberty Bell ringing in the Keystone state,
we now hear the
sound of the Liberty-Bell-disconnect and the Bell, in this
case, is
Verizon.
In a recent decision by the Pennsylvania Public Utility
Commission, the
agency that is supposed to be protecting the public
interest, freedom from
Verizon's corporate greed has taken a back seat to fraud,
unlawful
cross-subsidies, tax evasion and a Digital Future that's
closer to tin-cans
and a string.
Instead of rewiring the state for a fiber-optic future,
Teletruth estimates
that by the end of 2002, every residential customer had paid
$785 per
household in excessive phone costs for services they will
never receive. By
the end of 2003, we estimate that an additional $175, or a
total of $960
has been charged to customers--- $2.7 billion.
On top of this, in a proposed new bill in the House
Assembly, House Bill
30, a group of Verizo-inspired legislators would add new
laws that allow
large corporations to bring to new heights corporate
gluttony and
lawlessness ----adding billions of your money to Verizon to
offer you
inferior services at high costs.
The Hype: Almost a decade ago, Verizon promised to rewire
Pennsylvania with
a new fiber-optic service, replacing the 100 year old copper
networks. By
2004, 50% of the state, including ALL rural, urban and
suburban territories
equally, would be upgraded with a service capable of 45mps
in both
directions.
This was NOT DSL, which goes over 100 year old copper wire,
is about 40
times slower than the service promised, and is only fast in
one direction.
It's like comparing a skateboard to a Ferrari.
A contract with the state was created that gave Verizon
billions of extra
dollars to build these services, disguised as extra costs on
every
phonebill. Based on the phone company's promises, the law
was changed so
that instead of examining profits, known as
"Rate-of-Return", the state
agreed to give Verizon an "Alternate Regulation" that
examined the price of
service, (not the profits). Also known as "Deregulation",
ironically, the
less the company spent on customers, the more profits they
got.
We are not the only ones who found a massive increase in
Bell profits. The
Pennsylvania Consumer Advocate "determined that Verizon PA's
return on
equity...was 24.26% in 2001, 26.19% in 2000, and 29.40% in
1999. We compared
those returns to an estimated fair rate of return of 12% on
equity, and
concluded that Verizon PA had earned approximately $1.7
billion in
cumulative excess profits since 1994. (from 1994-2001)"
Besides the fact that none of these 45mps services exist and
no homes have
been rewired, and customers paid an additional $960, Verizon
also took over
$1 billion dollars in write-offs, saving on state, local and
federal taxes,
as well as an additional $300 million in 2003.
To add insult to irony, Verizon has been allowed to charge
customers for the
development and roll out of DSL --- a "Broadband tax" on
every customer.
Taxation with bad representation is tyranny.
To read the Teletruth Pennsylvania Complaint see:
http://www.newnetworks.com/prpenncomplaint.htm
How This Decision Disconnected the Public Interest. --
The Bell Toll.
Teletruth believes that every customer should request an
investigation and
refund, demand an appeal of this decision, and block any
state legislature
vote on HB 30.
1) This is a Case of Fraud -- a Classic Bait and
Switch. The company
made promises to replace the old copper wiring with new
fiber-optics. They
didn't do it and pocketed the money. They also lied to the
public,
violating "Commercial speech" laws. It is now obvious that
they couldn't
build the promised network at the prices they were quoting
or in the
timeframes required. This is fraud. And the bait-and-switch?
Verizon got a
large sum of money for a fiber-optic-based, two-way service
and instead
replaced it with an inferior, cheaper to offer DSL service
over 100
year-old copper wiring.
Imagine if another industry did this. Example -- A man goes
into a car
dealership and sees a new 2008 Cadillac car. He starts
paying a monthly fee
for the car to be picked up in five years. After five years
he goes to the
company and they say "Oh, that car? We couldn't build it so
we dropped it.
No, you can't get your money back. Why don't you buy this
year's Yugo?".
In the case of Verizon, you don't even
have a choice of which brand car you can get, much less a
choice of another, better, offer from another
company.
2) Customers Deserve an Immediate Refund. The only
reason the alternate
regulation was applied in Pennsylvania was because Verizon
made commitments
to build these new FIBER networks. There was no need for
alternate
regulation if the company was using the existing copper
networks. Since they
never built these new networks, then every customer deserves
their money
back.
Unfortunately, not one place in the Public Utility
Commission ruling
mentions or examines the primary fact -- State Alternate
Regulation plans
gave the phone companies a great deal more money through
higher prices on
phone services for services never rendered.
3) Tax Savings Verizon was able to take a
massive deduction of over $1
billion dollars with the claim that they were replacing the
old copper
wiring with new fiber optics. This replacement never
happened. They also
took a $300 million dollar tax write-off in 2003. This
affected both state
and local taxes as well as federal taxes.
4) Why Aren't Prices Going Down? When the
expenses for offering local phone
service continues to drop, one would expect that the prices
would follow
suit. Not in PA. For example, the two major expenses, staff
and
construction, have continued to be slashed. From 2000-2002,
there was a 71%
drop in Capital Expenditures, and since the Alternate
Regulation went into
effect in 1993, there has been a 42% drop in employees ---
6,340 employees
were let go. Also, under the older rate-of-return, which
examined the
equipment in the networks to set prices, all the tax
write-offs would have
lowered the cost of service.
Instead, the money is going to increase Verizon PA
Dividends, which went up
32% from 2000-2002.
5) Why are Customers Funding the Rollout of Bell
DSL? ---In its original
testimony, the company stated that DSL over copper was an
inferior product.
Yet the Public Utility Commission has added a "Broadband
Tax" to every
customer. Customers are paying for services they never
ordered, or may never want.--- This is fraud. Remember,
Verizon is a private company selling a competitive product,
DSL, which has been designated by the FCC as a non-regulated
Interstate Information service!
Therefore, DSL is supposed to be funded by shareholders, yet
customers have
been funding this product through higher rates. (By 1998,
Verizon
transferred $60 million dollars to a separate Verizon
subsidiary from Bell of PA. This
money came directly from local phone service
profits.)
6) Holding the Bell
Accountable? Only Chairman Terrance Fitzpatrick of
the
Commission had enough sense of conscience to defend the
public interests. He
noted that while the state was allowing Verizon to not be
held accountable
for a fiber-to-the-home rollout as promised, Verizon is now
making public
statements about how they were preparing to roll out FTTP
"fiber to the
premises" services. He also noted that a DSL service over
copper at a top
speed of 1.5 mps, was not what was promised. It was a 45mps
service over
fiber -- 40 times faster.
7) The Proposed House Bill 30
--- The Sound of One Hand (Verizon)
Clapping.
Instead of holding the Bells accountable for a
decade of deceit, a number of
Verizon-inspired state assemblymen want to continue to harm
you and your
family. This proposed law drops all serious commitments to
deliver a
fiber-optic based future and instead just costs you more
money for things
you didn't order. According to the Advocate's office, "House
Bill 30 could
result in increased rates of nearly $3.2 billion for Verizon
PA alone - and
a total of $4.5 billion for the five largest local
incumbents (ILEC) - during the years 2004
through 2015. The rate increases allowed in House Bill 30
are cumulative and
compounding, and the extra money doesn't go to broadband
deployment, but
rather it goes straight to those companies' bottom lines."
Teletruth agrees
with this analysis.
Worse, like a slap in the face of the truth, this proposed
bill is cloaked
in phrases such as "Ensure that customers pay only
reasonable charges for
protected services" and "Ensure that rates for protected
services do not
subsidize the competitive ventures of telecom carriers",
both of which are
patently untrue. The illegal funding of DSL by customers is
both an
unreasonable act and cross-subsidizing a competitive
venture.
8) This Same Scam Happened in Most Verizon
States. While we had hoped that the
Pennsylvania Commission would stem the tide of large
corporations allowed to
lie to customers about future broadband services, this same
scam happened in
numerous Verizon states as well as other Bell companies.
From Massachusetts
and New Jersey, to Ohio or California, the Bells have never
been held
accountable for gaming the regulatory system, even when
there were hard
facts and strong commitments laid out. The promising of a
broadband future,
then collecting money for services never rendered, is broken
record,
repeating state-by-state. To see Verizon's lack of broadband
track record
and gaming the state regulatory agencies:
http://www.newnetworks.com/tellthetruthverizon.htm
To see other Bell Companies' failed broadband deployments
see:
http://www.newnetworks.com/Bellsfailedfiberopticdeployments.html
What Should Happen Next? Get Back Your Digital
Future Teletruth believes
that in the spirit of history, the 4 Commissioners who voted
for this
travesty, the State legislature proponents of House Bill 30,
and the senior
staff at Verizon should be put in leg irons and pillory'd,
where customers
get to throw rotten fruit and slow modems at them. Either
that or there
should also be immediate refunds, an investigation into
DSL
cross-subsidization and hold Verizon accountable for their
promises. If
nothing else, the fiber networks should be put up for bid
and let someone
else have the chance, since Verizon blew it and harmed you,
your family and
anyone who uses local phone service or DSL. One proposal of
merit by Rep.
Brett Feese, HB 1669, would set up a broadband fund. It's
the best of other evils, but it
still doesn't make customers whole.
I recall some lines from the state song "Pennsylvania" ---
It's a shame
there's no honor in Pennsylvania today.
The state song
Tyranny decried,
'Til the bell of independence
filled the countryside.
Chorus
Pennsylvania, Pennsylvania,
May your future be,
filled with honor everlasting
as your history.
For more links to the materials quoted in the article
see:
http://www.teletruth.org/PennBroadbandScam.html
Bruce Kushnick, Chairman,
Teletruth
The Kushnick family, for the last 25 years, has enjoyed a
house and paid
phonebills in the Poconos, PA.
|