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To read a Tauzin-Dingell
summary and related materials see: It is a Corporate Welfare Relief Bill, Designed to Help 4 Very Large Bell Phone Companies Make More of Your Money.
In 1999, Congressman Billy Tauzin, (R-LA) and Congressmen John Dingell (D-MI) proposed new legislation titled "Internet Freedom and Broadband Deployment Act." According to the bill, "... the purpose of this Act to provide market incentives for the rapid delivery of advanced telecommunications services"-
Overall, what are the problems with the proposed bill? This bill is a blatant form of Corporate welfare, designed to help 4 very large Bell companies" (BellSouth, SBC, Verizon, and Qwest). It is based on a false premise --- if Congress gives the poor bells new financial incentives they will deliver advanced networks. The proposed bill would block competitors from using the networks and will raise customer Internet rates. And it doesn't fix any of the current advanced network/DSL or competitor issues. Instead, it rewards four large companies for being monopolies. The Bill is called "Internet Freedom and Broadband Deployment Act: What are the Freedoms? At every turn, this piece of legislation supplies freedoms ---all to the Bell companies and all in the name of "Broadband"
The first freedom is the Freedom from anyone examining or regulating their business.This law would block the state and federal government from protecting customer interests. . "FREEDOM FROM REGULATION.---Except to the extent that high speed data service and Internet access service are expressly referred to in this Act, neither the Commission, nor any State, shall have authority to regulate the rates, charges, terms, or conditions for, or entry into the provision of, any high speed data service or Internet access service, or to regulate the facilities used in the provision of either such service." And the second part of this freedom, is so that the Bells won't have to resell their services to competitors: As the Tech Law Journal put it.: "Section 4 of the bill also adds a new subsection to ...the Telecom Act of 1996 that provides that the FCC shall not require an ILEC to "provide unbundled access to any network elements used in the provision of any high speed data service ... or offer for resale at wholesale rates any high speed data service." And thirdly, the last freedom is to allow the Bells into long distance data services --- which they are prohibited from today. The Bells are restricted from entering the long distance markets because they have not opened their networks to competition sufficiently. "(2) by clarifying that the prohibition on Bell operating company provision of interLATA services does not extend to the provision of high speed data services and Internet access services;" Didn't the Bells already receive financial incentives for rolling out broadband? What happened to all that money? Congress seems to have forgotten that over the last decade, the Bell companies have received numerous financial incentives to roll out advanced networks, and in virtually all cases, the Bell companies pocketed the money, with little repercussions. For example, according to Annual Reports, state and federal filings and thousands of press statements, the Bells stated that half of America would be wired by 2000 with fiber-optic services, replacing the 100 year old copper wiring. These services were supposed to be VERY high speed, about 100 times faster than ADSL. Instead, the Bell companies were able to do a 'bait-and switch', not only never completing any of their plans, but they also kept the money. We estimate that over $50 billion dollars of excess charges has been paid by customers for networks they will never receive. For more information see: "How the Bells Stole America's Digital Future" http://www.netaction.org/broadband/bells/ For a compendium of promises see: The Bellls' Greatest Broadband Failures: http://www.newnetworks.com/bellbroadbandfailures.html But it gets worse. Not only did the Bells already get billions of dollars in excess charges, they were also supposed to have schools and libraries, and other government agencies wired with fiber-optics by 2000, not the old copper wiring. For example, in Ohio, (Ohio Alternate Regulation Plan, September 20, 1994) "21. INFRASTRUCTURE COMMITMENTS The Company's infrastructure commitment in this Plan shall consist of the commitment to deploy, within five years of the effective date of the Plan and within the Company's existing service territory, broadband two-way fully interactive high quality distance learning capabilities to all state chartered high schools including vocational, technical schools, colleges and universities; deploy broadband facilities to all hospitals,libraries, county jails and state, county and federal court buildings…" And now Tauzin-Dingell wants to give the Bell companies more financial incentives for an inferior product over the same 100 year old copper wiring. If the Bells are making 200% profits above most American companies, why do they still need more handouts? The failed advanced network rollout was highly profitable for the Bells and they are now some of the most profitable companies in America--- about 200% higher profits than the Business Week 500. See: Bell Profits are Outrageous, 2000 (to be released April 27th, 2001.) http://newnetworks.com/BellEarnings2000.htm In fact, according to Business Week, of the Top 10 America companies, the Bell's profits was 170% higher --- and that includes EXXON, Ford, GM, Citicorp and Wal-Mart --- all companies that have competition. Some of the profit margins are incredible. For example, according to the a study done in the Florida Commission in 1999, Call Waiting has a 48,000% profit margin, while some states still charge for Touchtone Service--- a service that So, this Bill simply makes these companies richer. Does this bill fix the current problems with DSL "Chain of Pain"? Not at all. Anyone who has been watching the rollout of ADSL knows that there are serious problems with the deployment of this technology. In fact, when a customer orders a service through a competitor, about 50% of all orders have serious problems. And there are law suits against the Bells for their own ADSL services--- everything from e-mail outages to never getting the speed that was advertised and that was paid for. We call it a "Chain-of Pain", which refers to the fact that the Customer--- the Internet Provider and the Competitive local phone company (CLEC) all are beholden to the Bell companies for installations. They are monopolies and control the entire DSL process and if they don't show for an installation, or the line has problems, ultimately, if the Bell doesn't fix it, then the service won't work. Hundreds of frustrated customers have come to the New Networks site to tell their tale of woe and become co-signers of the Broadband Bill of Rights, a document we wrote (with others) to outline just how bad the problems are, and how to fix them. To read the Broadband Bill of Rights
see: To read the hundreds of Co-signer
complaints see: To read a collection of articles about
just how bad it is across the country see: To see other information about DSL we
recommend DSL Reports. None of the details necessary to fix the current DSL problems are in the Tauzin-Dingell bill, and so it is useless as Broadband Bill, much less a future broadband solution. There are numerous reports that the Bells are harming competition. Does this fix those problems? Tauzin Dingell does absolutely nothing to fix the harm caused to competitors --- and it in fact will make it worse by releasing the Bells from various obligations. Right now the Competitive Local phone companies (CLECs) and Internet Service Providers, (ISPs) industries are on life-support. There are thousands of documents, law suits, and hundreds of bankrupt companies, many of which were caused by the Bells. As we said before, but it is worth repeating ----The Bells are monopolies. They control the wire into customer's homes and offices and therefore, they control the fate of competition. In numerous surveys of Internet Providers conducted by New Networks Institute, the conclusions were the same across America--- the Bells are delivering substandard customer services today to competitors and it is stifling competition. To read our survey of New York and Texas, --- two states that are supposed to be open to competition, see: http://www.newnetworks.com/isptexasnysruvey.html This problem is happening across
America. For a recent decision by the Kentucky Public
Service Commission against BellSouth, which found that
BellSouth services were discriminatory against a small ISP,
Iglou, see: Tauzin Dingell also removes the FCC and the states authority to fix most of the problems--- as discussed, Tauzin Dingell specifically gives the Bells Why shouldn't the Bells be allowed into Data Long Distance? The reason why the Bells have been restricted from entering the long distance markets is because they are monopolies and they are supposed to open the phone networks to competition. They have yet to do this in most states and it could be argued that instead, they have run a campaign to put competitors out of business. Allowing them into any long distance services before there is serious competition will only allow the Bells to use their monopoly powers to get long distance market share --- it will have nothing to do with whether the competition offers better services. In the current case, the Bell companies are now calling people that switch to a competitor --- illegally---- and offering them 'deals' to stay... Since they have all of the customer data, it gives them power. Tauzin and Dingell have both railed for years to allow the Bells into long distance without competition. This bill is a step in that direction and it is anti-competitive. What's Wrong with Deregulating the Bells? Deregulation is another term to give the monopoly more money. If you deregulate a monopoly and there is no other competitor to lower prices, then rate-gouging occurs, meaning customers are paying too much because the profits of a utility are supposed to be "fair and reasonable". Since they have a captive market and customers can't go anywhere--- and the Bell business can't lose money---- it's guaranteed that people will continue to use their phones. In the case of the Bells, most states have already, improperly, deregulated the companies' business and that is why the Bell's are some of the most profitable companies in America. The reader should ask-----if they are monopolies, aren't their profits supposed to be regulated, thus protecting the customers? Deregulation hasn't worked in the California Power industry, and it hasn't worked in Telecom and anyone who suggests that they deregulate the Bells further are either ignorant of the facts, or are just working to give the companies more of customers' money. If the Tauzin-Dingell Bill is bad, what should Congress do next to fix the problems with advanced networks and competition? NEXT STEPS:
See: http://www.newnetworks.com/recusetauzin.htm
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