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 New Networks Institute, Broadband Stimulus Package Reading Room, January 15th, 2009 Broadband Opportunity - Job Creation, Healthcare, Education - Report from Deloitte & Touche Broadband is: • "essential for the State to achieve the level of employment and job creation in that state, REPORT: http://www.teletruth.org/docs/ONJDeloitte.pdf Sound familiar? Here is a link to Deloitte & Touche's "New Jersey Telecommunications Infrastructure Study, 1991", dubbed "Opportunity New Jersey" (a Verizon state). The Deloitte Report details how rewiring the state of New Jersey with fiber optics would be an economic boom and help healthcare, employment and education. In fact, by 2010, 100% of New Jersey is supposed to have 45mbps bi-directional broadband, open to all competitors. The rest of this article reflects on the current broadband stimulus package proposals and gives links to what happened in New Jersey, including the state law, the commitments, and a discussion of the failure to deploy, including potentially fraudulent documents submitted to the state commission by Verizon. --- This same plan happened in almost every state in America. Story. According to Business Week, the Obama Administration is planning on giving $20 to $30 billion in financial incentives, most likely aiding the incumbent phone companies, including AT&T, Verizon and Qwest. http://www.businessweek.com/magazine/content/09_03/b4116027365196.htm?campaign_id=rss_daily In fact, Qwest has just asked for a chunk of the financial incentives as well. http://www.bizjournals.com/denver/stories/2009/01/05/daily47.html Some other plans, such as the Free Press proposal, want to deploy 'open broadband', but would add $30 billion in taxes by raising the Universal Service Fund, now a corporate slush fund of billions of dollars hard-wired to the phone companies. Information Technology and Innovation Foundation's (ITIF) plan is incumbent-friendly. They want to simply throw money/perks and let's not worry about competition. Our belief is one of those inconvenient truths --- America is 15th in the world in broadband because AT&T, Verizon and Qwest have already received massive financial incentives state by state-- billions per state --- using the promise of broadband. And the money is still being collected today in the form of cost of service increases and other perks, yet services were never delivered. Think of it as --- We hired a contractor to upgrade the roads. We paid them billions based on the specifications and instead they simply dressed up the place, pocketing billions. We estimate the total to be over $280 billion and growing. By 2009, 113 million homes should have been rewired in the US. Combined, AT&T and Verizon have only 2.2 million upgraded fiber-optic TV customers. Should we now give more money to these companies? Most of the current stimulus proposals are simply naïve to the history and continued problem of allowing the deregulated wireline monopolies, AT&T, Verizon and Qwest, (and the cablecos) to control the future of broadband. History reveals that we’ll just be throwing money at the problem instead of fixing what’s broken and answering the fundamental question – How does America create and pay for ubiquitous, competitive, very fast networks, and what should be done about the companies who were the caretakers of America's essential infrastructure? It is not fashionable now to talk about history, the failure of deregulation or lack of enforcement. Those who talk about 'accountability' are now saying 'that's in the past'. And while everyone wants a ‘positive’, 'forward-looking' spin, in the rush to bring broadband someone has to keep America honest about why we’re 15th in the world, why tech jobs went overseas, and why our economy has tanked so we don’t make the same mistakes. Without examining the entire landscape, we leave the most egregious problems to continue to stymie economic growth. Read the study, read the materials and links below, and when déjà vu sets in consider how different America would have been had the phone companies actually built out the networks as committed. Some of the basic outcomes from the Deloitte Report: 1) The State of New Jersey is supposed to be upgraded 100% by 2010 with 45mbps bi-directional speeds. Here is the deployment plan in the state regulation. http://www.newnetworks.com/OpportunityNewJerseyFiber.htm 2) The plan: Upgrade of the Public Switched telephone networks, (PSTN). “D. NJ BELL'S PLAN FOR AN ALTERNATIVE FORM OF REGULATION MAY 21, 1992 --- NJ Bell's plan declares that its approval by the Board would provide the foundation for NJ Bell's acceleration of an information age network in Now Jersey… and referred to by NJ Bell as "Opportunity New Jersey" (See the Deloitte Report). Opportunity New Jersey would accelerate the deployment of key network technologies to make available advanced intelligent network, narrowband digital, wideband digital, and broadband digital service capabilities in the public switched network, and thereby accelerate the transformation of NJ Bell's public switched network, which today transports voiceband services (voice, facsimile and low speed data), to a public switched network, which transports video and high speed data services in addition to voiceband services." 3) The plan was predicated on the company fulfilling obligations through 2010. "Furthermore, the Board recognizes that NJ Bell's acceleration of the deployment of full broadband capability extends beyond the term of the plan.The Board's approval of the plan as modified herein is conditioned upon a commitment by NJ Bell to achieve ONJ in its entirety, including full broadband capability by the year 2010. The Board MODIFIES the plan to expressly include ONJ in its entirety. In this way, the Board can ensure that NJ Bell will provide the advanced network promised under ONJ and that the positive implications will be realized by the citizens of the State of New Jersey." 4) DSL Was a Bait and Switch. Here is the Pennsylvania Commission’s discussion of Deloitte & Touche’s statements about copper and ADSL. They called ADSL an “interim solution” and defined it as “the most bandwidth-limited section of the network” in 1994. The plan was never to roll out DSL. We note that Deloitte & Touche did studies for NJ, PA, IL, OH, and IA, all with the same outcomes. "The evidence the Company (*Verizon, PA) introduced in support of its NMP (plan) in 1994 established clearly that modernizing the network meant, among other things, replacing the existing copper distribution system with fiber.The Company’s direct testimony asserted that its NMP was consistent with the “moderate infrastructure acceleration scenario” described in the Commission’s Pennsylvania Telecommunications Infrastructure Study released by Deloitte and Touche and DRI/McGraw Hill in 1993. Verizon PA placed the study into evidence in its rebuttal testimony. The study makes clear that one of the assumptions underlying all of the acceleration scenarios was deployment of a fiber distribution system. In fact, the study indicated that of all the technology changes needed for a broadband capable network, deployment of fiber in the feeder and distribution systems was the change that would lag behind the others if the Commonwealth did not adopt a strategy to accelerate deployment. The study described the copper distribution system as ‘the most bandwidth-limited section of the network.Finally, it described ADSL technology as a ‘potential interim solution’ to allow higher bandwidth services pending construction of a fiber distribution system." 5) Here is the press release from 1996 by Bell Atlantic (now Verizon) explaining how it would be finishing up the fiber optic deployments by 2000 and that 12 million homes would be completed. This was going to start in1996 with Philadelphia, etc. (NOTE: The failure of following through on this plan caused financial problems for all of the fiber-optic manufacturers, including Lucent, which was the first step of the telecom collapse post-2000.) http://newscenter.verizon.com/press-releases/bell-atlantic/1996/page.jsp?itemID=29607541 6) Fraud committed by Verizon with the help of the Board of Public Utilities? Verizon, in its 2000 annual report claimed that they could deliver 45 mbps services to over 52% of the entire state. The service, including FiOS, did not exist at the time. Here is section of a page from the report claiming that 52% of the state could get 45mbps bi-directionalservice. http://www.newnetworks.com/njsmokinggun.htm 7) Here is our case study on the outcome of Opportunity New Jersey. http://www.teletruth.org/docs/casestudyNJVerizon.pdf 8) Here is a review by the New Jersey Ratepayer Advocate of what was promised and failed to be deployed in 1997. http://www.rpa.state.nj.us/onj.htm 9) Here are reports by Economic & Technology about the failed deployments and Bell company profits of New Jersey and Pennsylvania. (NOTE: The previous-AT&T was the sponsor of some of this work.) • New Jersey “A review of Bell Atlantic's performance under the Opportunity New Jersey regulatory plan shows that the RBOC has reaped significant benefits that it has not shared with ratepayers.” http://www.econtech.com/library/eti_nj.pdf 10) Teletruth's Analysis and Complaint Against Verizon Pennsylvania pertaining to a failure to deploy broadband and overcharge customers over $1000 per household. http://www.teletruth.org/PennBroadbandfraud.html 11) And FIOS? (And U-verse -- We uncovered that Verizon, New Jersey claims that there is massive competition causing a loss of phone lines and that they should be able to increase prices and not have to pay property taxes. Verizon's largest competitor seems to be --- Verizon as the company doe not count FiOS (or U-verse) in the number of phone lines. Sound confusing? – Read our analysis of how Verizon and AT&T count their lines and competitors. http://www.newnetworks.com/Accesslines.htm Also, FiOS, Verizon's current fiber optic deployment, is a closed network; the customer can't choose their ISP. It is not ubiquitous and it still doesn't deliver the speeds as set forth in 1992. AT&T's U-verse is an inferior service as it relies on the old copper wiring to complete the connection and has relatively slow speeds. And currently all broadband plans fail to mention these companies by name or examine how the companies were able to have the utility part of the phone networks "switched access", become private property for personal use. Every plan so far is about circumventing the problems caused by the incumbents failure to properly upgrade the networks.
12) Major price increases in New Jersey in 2008. Claiming competition, Verizon used this loss of lines to increase local rates. Teletruth testified about the increases that went through in 2008; increases of 79% for local residential service, 70% for small businesses, 800% for directory assistance, and 40%-70% per line-item. That money is being used to fund FiOS in the state. http://www.newnetworks.com/verizonincreases.htm To sum: New Networks Institute has been on record since 1992 that universal, ubiquitous, very fast broadband should be a national priority; thus the name "new networks". However, this is not what's in front of us. If we give money to these companies, at the end of the day they still control the networks, they control the deployment schedules, they control the speed of service, they control the price of service and they can still block competition. Even after they take federal funds, and even if they sign documents claiming that they would open their networks in exchange for financing or even if they claim they will keep prices reasonable on the higher speeds, based on history, there will be no serious oversight of the money, there will be no benefit to the public and they might even take legal actions after they get what they want. All of the phone companies sued once the Telecom Act of 1996 became law, even though they all lobbied to get it passed. Click on the links before you finalize your opinion about whether we should give more money to AT&T, Verizon and Qwest. Teletruth's Failed Fiber Optic Deployments by State http://www.teletruth.org/fiberopticstates.htm Bruce Kushnick, New Networks Institute. Teletruth |