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Coda: How I Came to Write
this Book
I never believed any of the hype of the last
seven years, but then again, the story for me
started on a cold day in 1992. At the time I was a
telecom insider - a respected, high-paid
telecommunications analyst, having started as a
Senior Analyst for Link Resources, in 1985, and
then served as President of Strategic Telemedia
since 1987. I was traveling around the world
discussing the wonderous new interactive telephone
technologies, from Interactive 800 and 900
Services, Caller ID and voicemail, to interactive
fax and online services. My clients were all of the
Baby Bells, including BellSouth and Pacific
Telesis, and the long distance companies, including
AT&T, MCI, and Sprint, as well as numerous
other non-phone companies, from American Express to
The Weather Channel.
Then on a cold day in January 1992, I had a small
epiphany over a 37¢ call, of all things. I was
examining my company's telephone bills and found a
one minute call for 37¢, a call from New York
City to Montauk NY, approximately 75 miles away. We
had just completed a large study for a long
distance company and I knew that a call across
America only cost 21¢, and this was almost 75%
higher. And when long distance company prices were
applied to the same calls, nationally, there was a
whopping $6 billion dollars of overcharging,
annually.
But it was a few weeks later, when I examined the
telephone bills of my Aunt Ethel, an elderly,
legally blind 87 year old woman who walks,
painfully, using a walker, that I realized that one
of the largest scams in history had been
perpetrated on the American public. And it had
effected the elderly, and those who can least
afford it, the hardest. And it was continuing
unabated.
For example, from 1982-1996 my aunt paid over
$1,100 for rental of one rotary telephone (she has
two), including $360 to the local telephone company
per phone, and she had paid over $625 for two "wire
maintenance" charges, a service she stated
emphatically she never ordered. For the record, in
1993, 25% of the elderly still rented telephones,
and almost half of all US households that are
paying wire maintenance fees never ordered it.
(2)
"Isn't phone service regulated?" She asked. "I
thought they were protecting me!" my Aunt
exclaimed, while shaking her cane.
So, in 1992, feeling deceived by my former clients,
and guilty that I had helped them make billions of
excess pennies, nickels, dimes and quarters, I left
Strategic Telemedia and created New Networks
Institute (NNI) to reveal what I had found. Over
the next seven years we published the most
comprehensive series of reports ever compiled about
how the break-up of AT&T and the creation of
the Baby Bells impacted subscribers. It is 14
volumes, over 1,900 pages, 910 exhibits, 2,100
consumer interviews, 6,000+ documents examined, two
computer databases - and seven years of my life.
(3)
And I was summarily ignored by most of the state
and federal regulators, Senators, Congressman, and
even the press. The first report, "Telephone
Charges in America", was published by Probe
Research, a respected telecommunications
research/publishing firm. It documented that local
telephone prices had climbed 275% since 1982, and
that information pertaining to telephone prices or
revenues provided by government agencies, including
the Federal Communications Commission (FCC), was
not only inaccurate, but off by billions of
dollars.
Probe's own published findings indicated that there
had been at least $35 billion in overcharging from
1984 through 1991. Other groups, including Consumer
Federation of America, estimated that there had
been $50 billion in overcharging, including taxes,
since 1984.
And overcharging claims continue today. For
example, in April 1997, MCI stated that the Bells
and other local phone companies were overcharging
$14 billion dollars just for Access fees, fees paid
to the Bells to connect your long distance
calls.
After sending out hundreds of our research
summaries to government officials, state and local
advocates, and a host of other groups, the only
surprising outcome was that Vice President Gore's
Office arranged a meeting for me with the FCC.
There, I found that they were totally underfunded
to do any accurate information collection.
My information was, in fact, more accurate than the
government agency because I had used actual
collections of telephone bills from across America,
instead of telephone company supplied information.
An example: The FCC's information showed that a New
York City business Installation fee was $138.50.
When I called NYNEX to order a line, requiring no
visit or installation, it cost $598, tax not
included. According to Washington Telecom Week.
"Sources at the FCC conceded that the methodology
used by NNI was more accurate than their
own".(4)
Then in 1993, in conjunction with Probe Research,
we published "Consumer Attitudes Toward Telephone
and Cable Companies". It is based on a nationwide
telephone survey of 1,000 consumer households,
conducted by Fairfield Research. Another similar
survey of an additional 1,000 consumers was
conducted at the end of 1994.
We found that 0% of the population could read and
understand their telephone bills, or could
accurately state the price of any service,
including directory assistance. Sprint used this
research for their Candice Bergen campaign. Our
survey question, like their ad campaign, asked: "Do
you know how much you pay for long distance per
minute?". Virtually no one has a clue.
Also, we found that most people, 71%, couldn't care
less about new technology. They just want cheaper
prices today, not the Info Bahn tomorrow.
The findings from the first two reports, and
comments at our press conference in May 1993, so
infuriated Southwestern Bell that they called all
of the other telephone companies and told them to
stop buying research from Probe. Probe filed a
complaint with the Department of Justice, since it
is illegal for the Bells to conspire to ruin
someone. But it was never acted upon, and Probe
decided that NNI's material would cost them more
business than it brought in, so they stopped
actively publishing the reports. I couldn't blame
them.
Around the same time, my phone service was
disconnected. I later received a letter from NYNEX
stating that it was not their fault. No, a
mysterious unidentified third party wanted me
disconnected.
"According to our records, the disconnection was
arranged by someone that identified herself as your
"wife". As you have informed us, you are not
married.... The party who placed the call to our
office wanted your phone disconnected... The
disconnection of your service was not a result of
negligence on the part of NYNEX...The disconnection
was an act of third party mystery motivation. "
(SIC)
I had to take the case to the New York Public
Service Commission (PSC), and then I had to appeal
the decision because the first time the PSC just
sided with the telephone company without even
contacting me. At the appeal, a year and half
later, I learned that NYNEX was in error. But the
PSC refused to give me any compensation, stating
"We're just a judge, not a consumer advocate
per-se." The person who ran the appeal also
informed me later, when confronted, that he had
"worked for the telephone company".
Then in 1994, "Regional Bell Revenues, Expenditures
and Profits" was published, this time by Phillips
Business Information. It received a cool reception
even though it documented over $75 billion dollars
in overcharging during the Bells' first decade,
1984-1993. This doesn't include the $30 billion for
the I-Way. It also uncovered the fact that the
Regional Bell Operating Companies, (RBOCs), which
are holding companies that control the local Bell
companies, were draining the local Bell phone
companies of staff and all profits.
In fact, an article in the Washington Times even
called me a "Phone Bill Fanatic" (5) because I had
recommended that the Regional Bells be separated
from the local companies to protect subscribers.
While most considered the idea "outrageous", over
the last few years US West separated their local
phone company from other businesses, and Ameritech
filed in Wisconsin to create a separate local phone
company subsidiary. Unfortunately, none of these
companies are doing it in the public interest.
But history and the excitement of the almost
imminent Info Highway, with $90 billion dollars of
mergers and over $30 billion in new promised Info
Bahn spending, was upon us and no one cared too
much about research.
I also wrote, "The Information Superhighway: Get A
Grip" in 1994, which demonstrated that the I-Way
plans were seriously flawed and it would never be
implemented. There wasn't real consumer interest,
the technology costs were much higher than
announced, and the filings by the phone companies,
written by well-paid consulting firms, including
Deloitte & Touche, were biased toward the
telephone companies' need to remove regulation and
thereby increase profits.
This report was also ignored. However, as fate
would have it, some other twists of destiny were
upon me. First, being paranoid that the telephone
companies had disconnected me on purpose, I wrote a
novel "Touchtone", and through a strange
connection, my 10th grade English teacher, it is
now under development at Warner Brothers as a
Made-For-TV movie. The novel is about a
telecommunications analyst who finds $75 billion
dollars of overcharging, which results in the phone
companies trying to kill him.
Similarly surprising, in 1995 I chanced to see an
advertisement by Jacoby & Meyers, which asked
"Are you being hit by hidden telephone charges?"
After some brief meetings, we helped to instigate
approximately $5 billion in Class Action suits,
hopefully reclaiming some money for my Aunt
Ethel.
We are proposing an additional $30 billion in Class
Action suits. Unfortunately, as you will see,
regulations, laws and the public utility
commissions now favor the Bells, and they work as
shields against law suits and reclaiming money.
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