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PRESS RELEASE----SUMMARY,
BELOW
Bruce Kushnick bruce@newnetworks.com
COMPLAINT FILED WITH IRS ALLEGES BELLS' "WROTE-OFF" THE NETWORK THAT WAS NEVER REPLACED.
Complaint Against: SBC Communications, (Ameritech & Pacific Telesis), Bell Atlantic, (Nynex), BellSouth, and US West
Dateline: February 3rd, 2000 --- New Networks Institute (NNI), an independent research firm, filed a formal complaint with the Internal Revenue Service against the Bell companies asking the IRS to investigate claims that the Bell companies took $21 billion dollars of improper tax write-offs between 1993 and 1995. These massive one-time deductions were based on Bell company claims that they were replacing the existing copper network to provide a new "information super-highway" using fiber-optic technology.
Amount Year Ameritech $3,785,000,000.00 1994 Bell
Atlantic $2,156,000,000.00
1994 BellSouth $2,718,000,000.00
1995 NYNEX $2,919,000,000.00 1995 Pac Bell $3,361,000,000.00 1995 SBC $2,819,000,000.00 1995 US West $3,123,000,000.00 1993 TOTAL $20,881,000,000.00
Sources: New Networks, RBOC Annual Reports,
1993-1996
"The irony of these massive one-time write-offs is that the Bells never fulfilled any of their obligations in virtually any state to rewire America's households, yet took the deductions. This has led to undeserved higher prices for ALL phone services," stated Bruce Kushnick, executive director of New Networks Institute."In fact, the copper wiring is still in use. Even ADSL, the Bells' current advanced network, uses this same old copper wiring", added Kushnick.
According to Bell company plans that were approved by various state utility commissions, by the year 2000, more than half of the homes in the United States would have access to the benefits of fiber optic technology. For example, Bell Atlantic stated "We expect Bell Atlantic's enhanced network to serve 8.75 million homes by the end of the year 2000." Meanwhile Pac Bell stated "Using a combination of fiber optics and coaxial cable, Pacific Bell expects to provide broadband services to more than 1.5 million homes by the end of 1996, 5 million homes by the end of the decade." (source Bell Atlantic 1993 Annual Report, Pacific Telesis Annual Report 1994.)
Though some fiber-optic technology has been installed, over 70% of it is "Dark Fiber", i.e., the wiring is not connected or being used.
There are a series of important implications:
- If the networks were deducted prematurely, then these write-offs were not be allowable, and the monies, including penalties, should be recovered.
- If these deductions occurred, then the costs of the networks to ALL customers, from business and residential customers to competitors, should have been reduced dramatically on virtually every service, because network prices are supposed to be based on the actual value of the technology.
- We estimate that $250 dollars to every residential
customer may have been overcharged because the customers
paid retail for services that were based on 'written-off"
networks.
"The situation is compounded by the fact that a recent audit by the FCC of the Bells showed that over $5-19 billion dollars worth of network equipment could not be found. We believe that our claims overlap these findings and just adds more evidence of the Bell's accounting irregularities," added Kushnick.
An earlier, informal complaint was filed with the IRS in May 1998. The current complaint lists each Bell company singularly and collectively.
For more Info:
ORIGINAL
IRS COMPLAINT, 5/11/98