90-Year-Old Spent $10 Grand on WSJ Ads; Got AT&T to Bring Fiber — What about the 70+ Million Locations in AT&T’s 21 States?

The real question is — How many Wall Street Journal ads will it take to get fiber optic to the home service from AT&T for California, much less AT&T’s 21 states?

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First, we’d like to congratulate senior citizen Aaron Epstein, a North Hollywood resident who placed ads in the Wall Street Journal costing $10,000— and through tenacity, (and being pissed off ) — — here is a true David vs Goliath tale — Old guy vs $170 billion dollar AT&T — Old guy wins. Click for Mr. Epstein’s advertisement. See Ars Technica stories for some of the details; picture by Mrs. Epstein.

The Subplot that Is Hidden in Plain Sight

Based on the flurry of articles that followed, it is clear that no one knows that AT&T was supposed to upgrade Los Angeles and CA to fiber, replacing the existing copper wires –starting in the 1990’s, that Epstein and everyone else have been overcharged tens of thousands of dollars over the last 3 decades, that AT&T has no intention of upgrading California with fiber to the home — and worse, AT&T owns/controls the state telecommunications utilities in 21 states — about ½ of America based on population. No one even knows or mentions that AT&T California is public utility — which takes billions per year from California customers and instead of properly upgrading this network, diverts the money to fund its wireless network. This has been going on for decades. In CA, there have been no audits or investigations. AT&T’s grand strategy is to ‘shut off the copper’, — ‘harvest’, meaning continuous rate increases until customers scream uncle or get gouged, then migrate customers to wireless-only services. At the same time they get rid of the unions, and red-line areas to put in fiber only where it is good for show or the company can use it as part of the cover up to get government funding for rural areas — or wireless.

Summing up: Epstein embarrassed AT&T, and they have reacted, but at the same time stuck their 900-pound gorilla foot in its mouth — exposing a massive financial accounting scandal that took the money to be used to upgrade their promised fiber infrastructure for California and spent it on wireless or overseas acquisitions or the purchase of Time Warner, Inc. and DirecTV.

Coincidentally and ironically, the IRREGULATORS filed Comments with the California Broadband Council and the California Public Utilities Commission in December, 2020 — a direct hit, showing AT&T’s dereliction and explaining why Mr. Epstein never got fiber optic services from AT&T over the last 3 decades.

We created the IRREGULATORS, former senior telecom lawyers, experts and auditors from the FCC, attorney general and consumer advocate offices, and independent auditors to take on AT&T et al. as they have overcharged America hundreds of billions of dollars and not only captured the FCC but left a legacy that includes the creation of the Digital Divide.

• We created this video: “Aunt Ethel (another senior) Explains the Telco Accounting Scandal that Caused the Digital Divide”
• Here is a history of fiber optic broadband in California from 1991–2005.
• A timeline of how California has been continuously been shortchanged by AT&T.
• Our filings in California and related documents, articles, etc.
• Free Download: “The Book of Broken Promises: $400 Billion Broadband Scandal and Free the Net” is the 3rd book in a trilogy that started in 1998.

Before we give 5 shocking facts, let’s get back to the story.

Aaron Epstein has been a very long-time customer of AT&T, since 1960, and lives in North Hollywood, a town filled with technical and creative people who work at Warner Brothers, Universal, and Disney studios.

It was reported that he was paying $110 for 2 copper phone lines, one with DSL, at speeds of 3Mbps, even though other areas have 100 Mbps advertised.

As reported by Ars Technica, after getting national recognition, AT&T, within days, gave him a fiber optic connection at the promotional rate $45.00, eventually going to $65 after one year; this price also leaves out the made up taxes, fees, surcharges and other equipment and additional charges.

In fact, AT&T claims that coincidentally, fiber was already being rolled out in North Hollywood and that AT&T is adding 2 million additional access locations nationwide.

“Earlier this week we completed our planned expansion of AT&T Fiber in this customer’s neighborhood, and we were pleased to provide him the upgrade he wanted. This neighborhood was already planned to receive fiber and is part of our ongoing fiber expansion in the larger Los Angeles area. Nationally, we recently announced that we will bring AT&T Fiber to an additional 2 million residential locations this year.”

We note, as did Ars Technica, that AT&T’s statements to Ars Technica are “completely” made up; AT&T’s CEO said it would take a year, while another quote says that the fiber to the neighborhood was “completed”.

AT&T also told Epstein that this costs them thousands and thousands of dollars. According to Ars Technica.

“The AT&T people I talked to tell me that they had to install extra wiring, and it’s costing them thousands and thousands of dollars to put this wiring just for my house because my neighbors still do not have it, and they still have to go to considerable expense to hook up my neighbors,”

But the real question is — How many Wall Street Journal ads will it take to get fiber optic to the home service from AT&T for California, much less AT&T’s 21 states?

In short, the numbered sections that follow document the history in CA. The main point — — the public, via the CA government and the media, must hold AT&T accountable for its obligations and demand that it provide a clear and complete plan, including timetables for rolling out FTTP throughout CA.

Is AT&T going to make good on its obligation for which it took tens of billions of dollars from CA customers? Again, the happy ending to Epstein’s story is that he got his fiber-based high speed broadband for a hefty $10K. Aside from quieting this squeaky wheel, when is AT&T going to deliver on its promise to bring fiber to the rest of the state?

Again, how many WSJ ads will it take?

And will the State and the media ‘follow the money’ to stop the current cross-subsidies that are diverting billions to wireless that should have been used to have California a fiber optic, world class state, or will they just accept some deteriorating copper wires with crap and expensive wireless as a substitute? AT&T not showing up also created massive price overcharging — without competition there is only a too-high priced cable-broadband service in many areas, while the rural and low income areas have been totally neglected and receive inferior services, even though they, too, paid for a fiber optic future.

Throw in the fact that AT&T et al. also control the infrastructure for the wireless networks — again paid for via cross-subsidies — which has made America’s wireless some of the most expensive in the world…

Unfortunately, while we focus on California and AT&T, thanks to Mr. Epstein — every one needs to start to use this as a roadmap to answer the question — should we place an add in the Wall Street Journal if we want to fix the Digital Divide and bring fiber to your home?

1) California AT&T, and even Los Angeles, were supposed to be upgraded to fiber, starting in 1995.

AT&T California, (formerly Pacific Bell) was supposed to upgrade most of state territory with fiber optic wires, replacing the existing copper wires, by the year 2000. This was based on a national plan called the “Information Superhighway” that had been proposed by the Clinton-Gore presidential ticket in 1991.

All of the telcos went back to the state commissions and got deregulation, sometimes called “price caps”, which would give them more profits to be used on the networks.

In 1993, Pacific Bell (now AT&T California) announced it would spend $16 billion to have 5.5 million households (about ½ the Pac Bell total) for fiber optic upgrades — and it included Los Angeles and it most likely included Hollywood.

• Here’s the actual timeline from Pacific Telesis 1994 Fact Book.

As told by multiple stories in the LA Times, May 9, 1995 (may require sign-in).

“They bolted in a piece of the information superhighway …in Reseda (a neighborhood in the San Fernando Valley in Los Angeles California) last week.”

“The phone company must place one box — colloquially known as a ‘neighborhood node’ — for every 480 homes to make its new interactive video, voice and data network operate right. It’s a year behind schedule, but the plan now is for 120,000 Los Angeles homes to be hooked up by December (1995).”

LA Times, September 28, 1995 wrote about the first slow down — even though the company took $3 billion+ in tax deductions this year for network upgrades.

“In a major retreat from its grandiose plan to wire California with a state-of-the-art interactive communications network, Pacific Telesis Group announced Wednesday that it will cut $1 billion over five years from its much-vaunted information superhighway program.”

“PacBell’s original plan had been to provide “video dial tone” to 1.5 million homes in California by 1997, with about a quarter of that in the Los Angeles area. Now… the number by late 1997 will be just over a million, with a far smaller proportion in Los Angeles.”

Yes, AT&T (then Pacific Bell) had a plan to replace the existing copper wires — that are still in place — with a fiber optic wire, starting in 1994. And the quotes above show that in 1995, in Los Angeles, which includes North Hollywood, they had started to actually build fiber networks. — -What, did they get lost along the way?

2) AT&T’s fiber deployments over 30 years — Fiber to the press release.

In 2021, AT&T claims it has about 5 million fiber optic lines in service — and this would be for the 21 states it covers.

According to an AT&T California filing, AT&T covers only 2.6 million locations in California — AT&T’s accounting is about as filling as the map below. The map of AT&T fiber optic Internet availability by Broadbandnow shows an empty landscape of fiber optic services in California.

Smudges on a map. And ‘cover’s means that a house or business can be 1000 feet away.

AT&T told Ars: “Nationally, we recently announced that we will bring AT&T Fiber to an additional 2 million residential locations this year.”

This is to AT&T’s 21 states, not California, and the quote was used to confuse anyone who didn’t notice the word ‘nationally’ or to look for the slight-of-speech.

Here are some of the different versions of the truth

• FACT: AT&T covers 76 million locations, residential and business, in 21 states — This does not mean AT&T offers fiber to these locations, and this was from an AT&T filing during one of the mergers.
• FACT: AT&T only has around 5 million fiber to the premises, including businesses, by the end of 2020 — that is just 7%.
• According to Fierce Telecom, in June 2019, AT&T claimed it had built out 14.5 million customer locations — even though the DirecTV merger had obligations for 12.5 million, and this includes counting locations that are within 1000 feet of a wire–This is only 19% of the AT&T’s ‘customer locations’.

Another report, written with Communications Workers of America, CWA, and the NDIA, was covered by Ars Technica for Wired magazine:

“There are 52.97 million households in AT&T’s home-internet service area, and 14.93 million of them have fiber-to-the-home access, the CWA told Ars. The fiber percentages were particularly bad in some states, with rates of 14 to 16 percent in Michigan, Illinois, Mississippi, and Arkansas, the CWA/NDIA report said.”

These numbers are all skewed with different factors — CWA doesn’t include business and there’s no audits of these numbers, but these numbers show just how little AT&T cares about the states where it is the primary state telecommunications utility and has been for almost a century.

Finally, this is what AT&T told the California PUC; out of approximately 10 million households, AT&T’s fiber covers 2.6 million ‘estimated’ housing units — 26%.

AT&T’s credibility now needs to be challenged with facts as it is clear that AT&T has presented multiple stories, such as “we completed our planned expansion of AT&T Fiber in this customer’s neighborhood”.

3) Say Anything: You simply can not trust AT&T to deliver factual answers.

This ‘say anything’ has been a continuous problem that, as you can see, stretches decades.

• A panel of the National Advertising Review Board has recommended that AT&T Services, Inc., modify advertising to clarify for consumers the availability of AT&T Fiber, the company’s fiber-to-the-home product. i.e.; AT&T should not say that they are in ‘cities’, until they have a threshold of at least 20%.
• The group also recommended AT&T stop slapping on a 5G logo on the phone and declare that 5G service exists.

But this ‘say anything’ has been around for decades. DSL Reports’ Karl Bode nailed AT&T when they discussed their fiber optic based Gigapower fiasco:

“AT&T’s ‘Expansion’ of 1 Gbps to 100 Cities is a Big, Fat Bluff

“AT&T today announced that the company is “eyeing” 100 potential target cities as locations they may deploy faster 1 Gbps “Gigapower” service. According to the company’s press release, this “major initiative” will target 100 “candidate cities and municipalities” across 21 metropolitan areas nationwide. Those users could then get AT&T’s $70-$100 per month 1 Gbps service, currently only available in a very small portion of Austin, Texas.”

“Before you get too excited, you need to understand that this is a bluff of immense proportion. It’s what I affectionately refer to as ‘fiber to the press release’.”

4) Massive Rate Increases have been Subsidizing the Other Lines of Business.

Aaron Epstein was overcharged, like the rest of AT&T wired customers, tens of thousands of dollars. From state and federal tax benefits to rate increases for broadband, or government subsidies, inflated prices based on no competition, inflated prices based on cross-subsidies, and other manipulations — we all paid in multiple ways.

The price of the basic AT&T California state utility phone service went up 143% from 2004–2016. The price of every ancillary service went up, from Call Waiting, which went up 240%, to unlisted numbers, which went up 525% (a fact that was also uncovered by the LA Times in 2016.) — Note: Call Waiting cost a fraction of a cent to offer; the rest is pure profit.

The original copper wires were written off by the 1990’s, even though they stayed in use. And there has been no major push to fix them. The union staffers that maintain and upgrade the networks were seriously cut. Worse, according to the FCC, it only costs $45–50 per home passed, per year, to maintain and keep the copper networks — that’s $4 to $5 a month in expenses.

If there was competition, the cost of the service would have gone down.

Compared to Europe, America’s broadband and wireless prices are 5–20 times more expensive. The ‘lowest’ price for a broadband connection that can do 100 mbps is under 10 Euros — about $12 bucks — not $65 plus made up fees and charges.

But, think about it:

• AT&T’s fiber is somehow priced at a fraction of DSL costs and the copper lines — How is that possible?
• Is AT&T fiber part of the state telecommunications utility, like the Verizon’s FiOS fiber to the home?
• Has it been charged to local phone customers?
• Why does the price of Mr. Epstein’s new service go up $20 bucks — a 44% rate increase, after 1 year, and why does the advertised price not include all taxes, fees and surcharges?
• And out of the $110 for 2 copper lines and DSL… with no maintenance or construction (see below), with the networks written off, this probably cost $10–$20 bucks to offer at best.

5) New Financial Information Shows AT&T Shortchanged California’s Wired Utility Networks.

This recent analysis by the California Commission of AT&T’s network spending in California shows massive problems. It says that AT&T spent less that $50 million over 8 years on fixing and maintaining the copper networks.

This means there was no construction expenditures, which is one of the largest expenses.

• “Over the full 2010–2017 period, less than 1% of all AT&T capital spending on network plant additions, just under $47-million, was for outside plant rehabilitation projects.
• “Extraordinarily small portions of AT&T California’s Plant Additions and Maintenance expenditures have been directed at legacy POTS (Plain Old Telephone Service) services over the 2013–2017 period.

CONCLUSION

AT&T told Mr. Epstein that it was costing the companies thousands and thousands of dollars to give him service.

Mr. Epstein, and California are owed a great deal more money.

• Mr. Epstein and California have paid tens of thousands of dollars extra per line because AT&T subsidized the other lines of business and manipulated the accounting to charge Mr. Epstein for these subsidies.
• It cost Mr. Epstein thousands of dollars extra in rate increases, in the failure of AT&T to bring competition to lower rates, to offer slow inferior services to Mr. Epstein.
• This caused economic harms to cities and communities were many simply can’t get services because AT&T never showed up — but charged them.
• This lack of payments caused lower tax assessments, and multiple tax benefits.
• Finally, AT&T et al. caused the Digital Divide by keeping prices in America inflated and not properly upgrading most of these state utilities as exposed by the Pandemic.

What we filed is now significant. ‘Follow the Money’ and You’ll find why AT&T Never Upgraded America.

• The IRREGULATORS filed with the CA Broadband Council, and we call for major financial investigations and a full audit of the actual lines in service, among other financial deep dives into the cross-subsidies — i.e., where did all the construction budgets go?

We believe there is massive cross-subsidizing leading to overcharging of the wired networks by AT&T, costing consumers $1.7–2.4 billion annually and that this money can be redirected to fund fiber optic broadband to all, not at 100 Mbps speed for downloads but 1 Gbps in both directions, as well lower dramatically lower rates on all communications.

Our analysis, described in our filings, is based on the Verizon New York 2019 Annual Report and previous reports. Both California and New York use the same FCC accounting rules and thus the same formulas for allocating expenses.

Knee-jerk Reactions: There are those, without examining any of the financial reports, have a knee jerk reaction — give more government subsidies to get America wired. And there are those who claim that “local service” is dwindling and that local service is under deregulation so you can’t even examine the books.

And this is why we ended up in this place; throwing money at the companies that failed to deliver has never worked.

Finally, if nothing else, shouldn’t AT&T pay Mr. Epstein for the cost of his ads and the time spent and the monies that were overcharged — not to mention provide full maps of the ‘completed’ North Hollywood deployments?