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Teletruth News Alert October 27th, 2005
(CONTACT INFO BELOW) New MINI-REPORT SBC's Previous Mergers, Read the ENTIRE FTC Complaint: Teletruth today filed a Complaint with the Federal Trade Commission (FTC), claiming that the previous Bell mergers of SBC, Verizon, et al, were based on a massive, 10-year pattern of misrepresentation, as well as untruthful and outright fraudulent statements made to customers pertaining to fiber optic deployments and out of region competition.
This data clearly demonstrates that before regulators agree to the sale of AT&T to SBC and MCI to Verizon, they should first investigate the harms to customers and the economy from the previous mergers. NOTE: This complaint is to the FTC, not FCC, and deals with violating 'commercial speech laws' and 'deceptive practices', focused on misleading the public. ==================================================== THESE ARE EXCERPTS FROM THE FULL COMPLAINT: Complaint: How many misleading, deceptive or fraudulent statements does it take to become a case of fraud? Are corporations allowed to say or do anything to change state and federal laws? Is it not illegal for corporations to make commercial speech that is false, misleading or deceptive, designed to increase the companies’ sales and profits or receive beneficial mergers or relaxed regulation? The materials we present to the FTC are specific. They are statements made by Verizon and SBC to the public about the phone companies’ intentions for fiber optic deployments in multiple states, as well as their need to compete with each other as the reason for the previous mergers. As we will show, there has been a decade of miss-statements as well as probable fraud and collusion. Verizon and SBC Made False Statements to Every State It Controlled Regarding Commitments to Roll Out Fiber Optic Deployments From 1993-2005 We now know that the companies that comprise Verizon and SBC lied to over 26 states about their commitments to roll out fiber optic deployments from 1993-2005. These misleading and fraudulent statements were made to alter state laws that gave the phone companies billions of dollars per state in excess profits and tax perks. As an example, Verizon in 2004 claims it was just beginning to roll out a new fiber optic technology; however, starting in 1992, the company made claims that it was rewiring whole states with fiber-to-the-home by 2000, as told by other statements below, made a decade earlier: Verizon May, 2004
Bell Atlantic, 1993-1996
The last two quotes by Bell Atlantic (pre Verizon), are just a few of literally thousands of statements, filings, testimony, state commission orders, state legislature decisions, all to change state and federal laws to give these companies more money -- money that was supposed to be spent on fiber optic-to-the-home upgrades that did not happen.
For example, the fiber optic deployment schedule from Bell Atlantic, NJ, as told by the Order in 1993 from the state Board of Public Utilities (BPU) to change state law, called for speeds of 45mps or faster. Using simple math, by 2005, about 65% of that state should have already been wired with fiber optic services at high speed. http://www.newnetworks.com/OpportunityNewJerseyFiber.htm NYNEX-Massachusetts' FCC video dialtone application was for fiber optics and coax, 400-800 channels, and completed by 2010. NYNEX merged with Bell Atlantic and closed down any of these deployments, even though state laws were changed as a direct result of these promises. "NYNEX proposes to deploy hybrid fiber optic and coaxial (HFC) broadband networks that will provide advanced voice, data, and video services, including interactive video entertainment, multimedia education, and health care services. …The allocation plan provides for the offering of 21 analog channels, and, depending on compression rates, between 400 and 800 digital channels. …NYNEX plans to deploy this type of network to the majority of its customers by the year 2010." This is NOT DSL. DSL is a bait and switch of massive proportions since it a) goes over the old copper wiring, b) did not require changes to state laws, since DSL was considered inferior technology in 1992, and c) its speed is at least 1/50 of the 1992 commitments. This is not fiber somewhere in the ether of the network. This is directly to the customers’ premises. In our analysis of SBC et al, it is also clear that in almost every state the phone companies had made extensive commitments to build out networks, even though it could not be built at the time. We note that these commitments did vary by state. Pacific Telesis's deployment plans, as stated in their 1994 Fact Book, shows major deployments in every city, from San Diego and Los Angeles, to San Francisco and Silicon Valley: http://www.newnetworks.com/cabroadbandpacbell.htm By 2002, over $33.6 billion should have been spent by SBC's companies for fiber optic cable deployment in over 12.5 million households in 13 states. Pacific Bell promised deployment in 5.5 million households and to spend $16 billion by 2000; Ameritech promised 6 million households at over $6.6 billion by 2000 (in just 3 states); SNET promised $4.5 billion for just Connecticut. Texas was to commit $1.5 billion to wire schools, libraries and government agencies with fiber optics, all by 2000. NOTE: By year-end 2000, SBC had less only 3/4 of a million DSL lines. Verizon-Bell Atlantic-NYNEX-GTE was to spend at least $16 billion and have 17.5 million homes wired by 2000. ============================================ The FTC wrote, September 20, 2002, (FTC Staff Provides the FDA with Comments On First Amendment Commercial Speech Doctrine) "The commercial speech doctrine recognizes the importance of consumer access to truthful and accurate information. On the other hand, inaccurate or misleading claims have no protection under the First Amendment and need to be purged from the marketplace to protect and enhance the value of the free flow of truthful information. In practice, consumer protection agencies often must choose between the risk of allowing commercial speech that might prove to be false or misleading and the risk of banning commercial speech that might prove to be true." =================================================== The Harms?
=================================== Verizon FIOS and SBC Lightspeed? More of a Ruse? We hear that these companies are now, a decade later, starting to roll out new services. Verizon has FIOS and SBC has Lightspeed. They are not what were paid for by customers, and they may never materialize as anything more than a way to get the next series of mergers to come to fruition. The services are also slower and less capable than what was promised in 1993, and are closed-in systems, not open to competition. Also, the equipment still does not work as discussed. SBC claims it has just finished its trials for its service and Verizon’s IPTV, the video programming, is not yet working and available. Again, hype-ware for their current mergers. Cautionary Language vs Fraud. When SBC announced Project Lightspeed, ("SBC Communications to Detail Plans for new IP-Based Advanced Television, Data and Voice Network", November 11th, 2004), the company’s release had the following caveats. "Cautionary Language Concerning Forward-Looking Statements-----Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results may differ materially. A discussion of factors that may affect future results is contained in SBC's filings with the Securities and Exchange Commission. SBC disclaims any obligation to update or revise statements contained in this news release based on new information or otherwise." This is good because, as time progressed, the company had to rewrite their plans on delivery. IPTV was to launch late 2005, and now it looks like late 2006-2007: * November 11, 2004 "IP TV launch expected in late 2005" * October 10, 2005 "initial controlled market entry in late 2005 or early 2006". * October 18, 2005 "introducing services enabled by the IMS platform in late 2006 or early 2007."
The announced expenditures went from $5.5 billion for 2005, announced in 2004 to $4 billion for 2005, even though the company has had significant profits every quarter 2005: * November 11,2004 "2005 overall capital expenditures ---$5 billion to $5.5 billion * August 19th 2005 "SBC’s $4 billion IPTV investment" (USA Today)
SBC is still claiming 18 million households by 2007. * November 11,2004 "18 million households by 2007" * August 19t 2005 "…by 2007 to wire 18 million homes"
As we have pointed out, that comes to 6 million homes a year, at a cost of $222.22 per household. It appears to be vaporware. We know this is tied to requests to get more deregulation. The pr-release below pertains to testimony in front of an U.S. House Energy & Commerce Committee hearing about the future of new technology. The headline says it all --- a 'light-touch' to regulation. "IP-Based TV Will Revolutionize Entertainment: Company Calls for "Light-Touch" Regulatory Approach to Ensure Consumers Receive New Technology Quickly," April 20, 2005 A cautionary message should read --- 'after the AT&T merger we’ll drop all of our plans, claiming changes in the market', is what we expect. These proposed networks are also designed to change all of the cable franchise laws, block municipalities from competing with the phone companies using Wifi, wireless or fiber optics, and other anti-competitive issues, such as blocking VOIP, or other services. SBC can say --- ‘See, we’re doing our part. Now block the others.’ Cautionary changes, or even business delays, like those above, are NOT what we have here. This is a concerted effort, occurring in multiple states with multiple phone companies, all of whom promised fiber to the home and competition, and it never showed up; however these companies were able to merge, become vastly larger, and prosper with excessive profits for the utility by charging customers higher rates. Remember, these 2 companies control 7 of the 9 original Bell companies, over 70% of the population, about 200 million Americans. And that accounts for 26 states, not counting the GTE territories. We consider the deception of the Bells to overwhelm any protections a ‘cautionary statement’ may give. ====================== TO TAKE ACTION AND WRITE THE FCC, FTC and CONGRESS TO STOP THE SBC-AT&T and VERIZON-MCI MERGERS: http://www.newnetworks.com/breakupBadBellMergers.htm Teletruth is a national customer alliance focusing on telecommunications and broadband issues. Teletruth was a member of the FCC Consumer Advisory Committee, 2003-2004. Bruce Kushnick, Teletruth bruce@teletruth.org Executive Director, New Networks Institute Tom Allibone, Teletruth tom@teletruth.org President, LTC Consulting
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