Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554


=======================================
In the Matter of   )

ADVANCED TELECOMMUNICATIONS NOTICE OF )
PROPOSED RULEMAKING, FCC 98-188   )
                                        CC DOCKET NO. 98-147

=======================================






COMMENTS OF NEW NETWORKS INSTITUTE


Bruce A. Kushnick
Executive Director
New Networks Institute
826 Broadway, suite 900
New York, New York, 10003

212-777-5418


Dated: September 25, 1998




STATEMENT:


THE FCC SHOULD NOT GRANT THE BELLS ANY NEW FINANCIAL
INCENTIVES AND SHOULD INVESTIGATE THE BELLS FAILURE TO
DELIVER ON  PROMISED ADVANCED NETWORKS DESPITE PREVIOUS
INCENTIVES. .


The Baby Bells have requested that that the FCC give the
companies new financial incentives to facilitate the rollout
of new, advanced telephone network services. And the FCC is
proposing granting parts of the Bell's wishes, by allowing
them to offer these new services as a separate subsidiary.

New Networks Institute believes that allowing the Bells into
any new services or giving them any new incentives is
tantamount to rewarding  the Bell monopolies for fraudulent
behavior. . History clearly shows that the new incentives
will in no way bring advanced networks sooner or cheaper.

In our related New Networks Institute filing for the FCC's
Notice of Inquiry, we clearly show that:

I    The RBOCs have repeatedly failed to deliver on promises
of network upgrades made in exchange for regulatory
benefits. By the next of next year, the Bells had
collectively promised to rewire over HALF of their
residential customers with fiber-optic, 500 channel, full
motion video interactive broadband services.

For example, Bell Atlantic, one of the petitioners, stated
that by the year 2000, the company would have almost 9
million households wired. Meanwhile while NYNEX (the Bell
company that Bell Atlantic purchased) would have wired an
additional 2 million customers to the Fiber-optic highway by
1996!

And each Bell made similar promises though none of the
Bells' promised services were ever deployed. Moreover, the
Bells' promises extend back to the 1980's when the
companies, such as Southwestern Bell and Pacific Telesis,
promised the deployment of ISDN (Integrated Service Digital
Networks). Even today these services are not being
adequately deployed at reasonable prices.

In some cases, such as in Ohio, Ameritech actually did roll
out some of the promised fiber optics, but not as part of an
advanced telecommunications network. Instead, Ameritech/Ohio
deployed its fiber simply to offer "plain old cable
service." In other words, Ameritech took the money that was
supposed to reward consumers of regulated telephone service
with a superior, advanced network and used it to subsidize
Ameritech's efforts to offer "I Love Lucy" reruns.

II) Secondly, the Bells already received major financial
incentives to build these new undelivered networks and most
likely pocketed the excess monies, estimated at $50+ billion
dollars, and growing. An estimated $30 billion dollars in
direct incentives was borne by customers paying higher rates
and an additional $21 billion dollars extracted from
improper copper-plant write-offs.

In exchange for the deployment of these wondrous advanced
networks, regulators gave the Bells major financial
incentives in the form of higher rates for customers. We
estimate approximately that over $30 billion dollars in
extra charges on customer's telephone bills has been
overcharged, and it continues today, unabated.

Blossom Peretz, New Jerseys' Consumer Advocate, discussing
Bell Atlantic's Advanced network rollout stated:

"...low-income and residential customers have paid for the
fiber-optic wire lines every month but had not yet
benefited." In a complaint against New Jersey Bell/Bell
Atlantic filed with the New Jersey Department of Public
Utilities, April, 1997 the Advocate stated:

"Bell Atlantic-New Jersey (BA-NJ) has over-earned,
underspent and inequitably deployed advanced
telecommunications technology to business customers, while
largely neglecting schools and libraries, low-income and
residential ratepayers and consumers in Urban Enterprise
Zones as well as urban and rural areas."

The conclusion: approximately $1.5 billion additional
dollars was supposed to have been spent, but the Advocate
found that they had spent only $79 million dollars. At the
same time, New Jersey/Bell Atlantic dividends to the parent
company was an additional $1 billion dollars.

Opportunity New Jersey, the state incentive regulation plan
created with Deloitte & Touche, was so successful that the
same plan was also used in numerous other states. There was
an Opportunity Pennsylvania, Opportunity Indiana, Advantage
Ohio, and Advantage Illinois.

An additional $21 billion dollars in improper copper-plant
write-offs should be Investigated. Besides the estimated $30
billion dollars garnered from the Bells failure to deploy
advanced networks, New Networks Institute filed a request
with the Criminal Justice Division of the Internal Revenue
Service to investigate an additional $21 billion dollars of
Bell network write-offs. From 1993-1995, each Bell took
massive multiple billion dollar deductions, write-offs of
the copper installed network claiming that is was going to
be replaced with Fiber optics. Unfortunately, the copper
wiring is still in use today as the standard way to deliver
telephone services, and will continue to be so for the near
future. (We will be glad to supply the FCC with additional
information.)

If the costs for the wires that go into everyone's' home and
offices has already been written-off as part of their
advanced network deployments, then the costs of all services
going over those wires should have dropped, including all
FCC subscriber charges or even basic service charges.


III ) Competitors are not receiving fair and equal access to
advanced networks. Based on extensive interviews, NNI has
found that the ILECs  are stifling competition and delaying
the deployment of advanced network services. Our preliminary
findings support the complaints outlined in the NOI comments
submitted by the ISP/C (CC 98-146). Enforce the unbundling
of the local loop as directed by section 271 and CLECs and
ISPs would deploy advanced services immediately, without any
other regulatory incentives.


CONCLUSIONS

Therefore, We are requesting, before the FCC grants any new
financial incentives for advanced networks:

*    The FCC, working with the States and Congress should
immediately investigate the failure of the Bells to deliver
on advanced network services, including ISDN and the fiber-
optic deployment.

 The FCC should investigate if telephone companies  (i.e.
Ameritech/Ohio)  used advanced network deployments as an
excuse to have telephone customers  finance cable services.

*    The FCC, working with the States and Congress should
investigate the issue of Bell overcharging, using the
promises of advanced networks as a new form of consumer
fraud.

*    If $30+ billion has been overcharged then the FCC
should mandate Refunds and Rebates where the Bells have
failed to deploy advanced networks as promised, and they
should be required to fulfill their advanced network
obligations.

*    The FCC's department of Audits should immediately
investigate  the Bell's improper write-offs of the copper
telephone networks of $21 billion dollars.

*    The FCC and the states should enforce the local loop
unbundling obligations and rely on fair competition, rather
than additional Bell promises, as the quickest path to
advanced service delivery.

*    Finally,  the FCC should not grant any new incentives
to the Bells until prior  obligations are met. Forbearance
of regulation should not let the mistakes of the past be
applied to the advanced networks of the future.


Respectfully submitted,

Bruce A. Kushnick
NEW NETWORKS INSTITUTE
Comments Of New Networks Institute/ Cc Docket No. 98-
147/September 25, 1999   page 4