America’s Infrastructure and the Current Proposed Bill have been Hijacked by Big Telecom — AT&T, Verizon, CenturyLink and the Cablecos.

This is a current Verizon New York broadband and phone bill — and besides the made-up fees, this customer has been RAMMED. There is a $15 a month charge on the bill that they did not order and it was put there by one of the Verizon subsidiaries. (This is like “cramming”, where a customer is charged for a service they did not order by another company, as opposed to a subsidiary/division of the same company adding an unauthorized service.) It’s been on this customer’s monthly bill for over a decade and the cost has been continually increasing; this ramming practice is way too common.

In fact, in examining current broadband customer bills, there is another bad trend — there have been large rate increases of 20–60% on the Verizon NY broadband bills, as well as increases in almost all of the additional taxes, fees and surcharges, many of which are made up and are revenues to Verizon et. al. (We will be addressing the billing issues in upcoming articles.)

With the telco disinformation campaign moving into high gear to take over the $65 billion to be allocated for solving the Digital Divide, USTelecom, the association for Verizon et al., and joined by other corporate-funded think tank analysts, claim that broadband prices have gone down.

“The U.S. broadband marketplace is working for consumers, as reflected in price declines of 22.9% from 2015–2021 and 9.1% in the past year alone.”

This broadband customer bill went from $49.99 to $79.99 for the basic fee over the last 5 years. And these increases are the norm, not some made up fiction. Of course, the telco-friendly data doesn’t use actual bills but the bogus advertised discounted prices that are offered to new customers.

And speaking of the deceptive advertising — Where does the Biden infrastructure bill clean up the deceptive advertising? The customers who need to get service are greeted with a discounted advertised price, but it is missing 20–40% of the expenses. Worse, after the promotion ends, the price can climb 100% after 1 year. This pricing practice has been used by the providers for the past 20 years. While the Biden infrastructure bill puts a label on the customer bill to identify basics — shouldn’t they finally stop the bad practices, not memorialize them. Instead, they should be telling you how you are being scammed.

The reason Verizon, AT&T et al. can get away with this slight of hand is because they have already been price deregulated and there is no regulatory oversight. Also, adding insult to injury, customers have lost the right to join a class action suit to take these companies to court, as most services are now bound by arbitration — and these companies know that no one can go after them and there are no serious penalties.

Where is the return of consumer protections in the infrastructure bills?

These are not just questions in passing — one of the largest reasons for the Digital Divide is that customers can’t afford the prices.

How many times is America going to be played? Based on independent research:

§ America’s prices for wireless are 5–20 times more expensive than in the European Union (EU). The US providers are deregulated and they control their wires, which gives them controls over the service prices and they keep the prices inflated.

§ The cable companies? There was never any serious competition to lower prices — so the current cost of the ‘triple play’ of services (cableTV, phone and broadband-internet service) in the US is $215 a month. This is absurd when the average price for a triple play is about $30-$50 a month in the EU. Where’s the investigation/audit of these billing practices? It is non-existent.

Nothing in the infrastructure bill addresses and fixes these items:

  • There is no serious competition to lower rates or keep made-up fees off our communications bills.
  • More importantly, because they control the wires — copper and fiber — they have been able to inflate all prices.
  • With the control of the wires they also control not only the speed of service but which territories will get upgraded and which will be a Digital Desert. And they control the base prices that competitors have to pay, keeping all prices, including wireless, hostage to the few companies controlling the current infrastructure.

But we also have the problem: AT&T et al. never showed up to properly upgrade and maintain the state telecommunications public utilities — and we have institutional amnesia — people don’t even know that there are telecommunications utilities in every state.

The Digital Divide Was Created by AT&T et al.

The Biden infrastructure bill is preying on those who advocate, etc. who rightfully want to solve the Digital Divide…but most are just naive and don’t know the legal and regulatory history — even in their own state, nor about the failure of AT&T et al. to upgrade their service territories. Though it varies by state, in almost every state, the telecom utilities have promised to upgrade their copper networks to fiber over the last 3 decades. Now, the companies are just playing on the knee-jerk reactions to fix a long-time problem by saying they should be given more money even though they are the ones who harmed the customers and the state.

In a recent series of letters we wrote to California Governor Newsom — to not sign two ALEC-based wireless bills — i.e., the industry actually wrote the bills and gave it to politicians who they also helped to fund. This is a national problem.

Whole areas of California were supposed to have been upgraded by now. By 2000, Pacific Bell should have had 5.5 million homes and should have spent $16 billion. It was fiber optic buildouts and over time the companies got major tax benefits and perks — but they still never built out the networks. And some cities, such as San Diego, signed deals in the 1990’s so that the entire city would be upgraded to fiber, completed by 2010. It never happened.

State after state had commitments to upgrade the copper to fiber optics, and no state ever got the incumbent state telecommunications utility to properly upgrade the state.

And the first areas to NOT get upgraded are the rural areas and the low income urban areas. Without these upgrades there was no competition for high speed broadband much less the service being available.

Promise them anything, over and over.

Take AT&T; it now controls the state utilities in 21 states, and after 30 years of claiming that the fiber optic future was coming soon, AT&T’s CEO Stankey told investors that if the Biden infrastructure bill goes through, they will upgrade 30 million locations in the 21 state territory to be covered with fiber. Today, out of the 76 million locations passed, AT&T only has 5+million lines, and they’ve been claiming they are upgrading about two million annually.

Due to the “cautionary statements” in the AT&T financial reports, it is doubtful Stankey can be held accountable for not telling the whole truth. If AT&T et al. gets the money, there must be enforceable penalties and fines. There isn’t any serious enforcement mechanism for getting billions per state in government subsidies and then not building what you tell the public you will be doing, much less investors.

How Big Telecom has played the politicians — and us.

This infrastructure bill went from having municipality competition and fiber optic deployments to a Telco bait and switch. The language was changed to not prioritize local build outs. Instead:

  • The money goes first to the state, but with the current state political environment — it won’t go to the municipalities but to wireless deployments.
  • And, since it goes to the state, it will most likely reward the very companies that created the Digital Divide.
  • Without any investigations into any previous comments or the billions already collected over 3 decades, it will all continue.
  • The illegal funding of the wireless networks for the past decade should not have been allowed; it took billions from the wireline construction budgets.
  • Worse, the FCC is paying retail prices to the carriers for low income discounts and these prices include paying for ‘cost recovery’ and other made-up fees — which have no oversight or audits.

And, to be clear, while the buzz was to have a fiber optic future, this new proposed legislation has sleazed its way to allow wireless as a substitute by claiming that deployments are “technology neutral” — i.e.; they’ll put in the fiber — but it goes to the wireless cell site (as wireless requires a fiber optic wire).

Second Punchline: The Emperor Has No Clothes: The State Public Telecom Broadband Utility, Exposed.

We suggest:

GET THE MONEY BACK: NOT A SINGLE CENT SHOULD BE GIVEN TO AT&T ET AL. UNTIL THESE COMPANIES ARE INVESTIGATED FOR MASSIVE ACCOUNTING VIOLATIONS, CROSS-SUBSIDIES

On May 28th, 2021, the Verizon NY 2020 Annual Report was published. Verizon NY is the primary state telecommunications public utility and New York is the only state we know of that requires and makes public a financial annual report for the state-based public utility.

This is not the Verizon Communications Inc. Annual Report, which is for the entire holding company. Verizon NY is just one of Verizon’s East Coast telecom utilities, from Massachusetts to Virginia. Moreover, the FCC stopped publishing information by state of the primary telecom utilities in 2007.

The Accounting Formulas Used by Verizon have been Manipulated. The Verizon NY report relies on the FCC’s accounting rules, known as “USOA”, “Uniform System of Accounting”, and over the last decade we uncovered that they have been manipulated so that by 2020, the majority of all expenses for Verizon’s services using the state infrastructure are mainly charged to one category; the wireline, local phone service (“intrastate”), while the other services using the networks are getting a free ride.

Billions of Dollars Per Year in Overcharging and Cross-Subsidies. Thus, billions of dollars of expenses, including Verizon’s “Corporate Operations” expenses, (which includes everything from the corporate jets, executive pay, lobbyists and lawyers) are mainly being charged to the local basic phone service subscribers. (See our previous analysis of Verizon NY Corporate Operations.) Moreover, it is clear that billions of dollars of the utility construction budget have been primarily charged to the Local Service line of business. — And this is happening in every state as all states we examined are still relying on the same corrupted accounting formulas.

Harvesting: Continuous Rate Increases Until the Customer Yells ‘Uncle’. Returning to the actual bills and overcharging, Harvesting is when a company continuously raises rates to drive the customer to another service or they get gouged, and this has been happening throughout the US with local phone service increases.

The California Public Utility Commission released a series of reports which detailed that prices have continued to rise since 2004, and it matches the tracking we’ve done pertaining to AT&T CA’s prices. Basic ‘Local Service’ went up 153%, and each optional service went up 94% to 525%. How can prices continually increase over a 17-year period if there was serious competition? Worse, how can AT&T charge $11.99 when it only cost a fraction of a cent for Call Waiting?

Since 2006, we estimate the customer harms from AT&T CA’s harvesting: (Read the details.)

  • Overcharging of basic service was about $16–22 a month, $195 to $270 a year.
  • Counting taxes and add-ons, overcharging can be $30 a month- $360 a year.
  • $1,700-$3,200 per line since 2006, depending on the service. We are using $2,500 for the average from 2006–2020.
  • Note: This is only a small part of customer overcharging we uncovered.
  • Nationwide we estimate a conservative $10.8- $14.5 billion annually.

No One Is Using a Wired Connection? Wrong.

At the beginning of the pandemic in 2020, according to the FCC, there were over 100+million customers using a wired connection for phone service and many were also part of their ‘broadband’ plans. As part of the manipulation of the accounting, the companies also manipulated the accounting of lines. For example, the opening bill shows a broadband and phone combination. That line, which is part of the state utility, is NOT counted as an access line — and this is because the service over the wire changes the classification. — So, the quotes of the “loss of lines” is not the entire truth.

Conclusion:

This current infrastructure bill is one of the largest, wholesale giveaways to AT&T, Verizon and CenturyLink (now Lumen) and the cable companies; it is rewarding these companies that overcharged America and never built out their networks that they have promised to do over the past three decades — and who don’t seriously compete; it is more like a cartel than robust competition.

There are plenty of funds to properly upgrade America and solve the Digital Divide, and instead of throwing money at the problem — which we believe will end up being a large boondoggle, the IRREGULATORS believe that our proposed alternative path — going after the money — is going to be necessary.