AT&T’s Track Record for Broadband in Mississippi: A String of Broken Promises.
There has been a long string of hype and holler about bringing high-speed broadband to Mississippi and all of the other states where BellSouth, now AT&T, is the primary telecommunications utility. This flyer from 1994 promises an “On-ramp to the Information Superhighway” and 30,000 new jobs in Mississippi based on a proposed BellSouth-backed Senate bill. I’ll get back to this in a moment.
Note: AT&T merged with BellSouth in 2006.
Fast forward. Ars Technica’s headline from October, 1st, 2020 says it all:
“AT&T took $283 million but didn’t deploy required broadband, Mississippi says. Mississippi asks FCC to investigate AT&T’s ‘pattern of submitting false data’.”
According to a press release by Commissioner Presley of Mississippi Public Service Commission, Northern District, issued September 29th, 2020:
“AT&T Mississippi has submitted information regarding internet service to Mississippians that was funded by the Connect America Fund that they know is false. Our investigation has revealed a wide-array of inconsistencies in what AT&T advertises as available and what actually exists when consumers try to get internet service. All the while, AT&T has submitted data saying that they have used federal funds to bring internet service to these specific homes,”
Why are we not surprised?
The opening picture is an advertisement that appeared in the Clarion-Ledger, Jackson Mississippi, in August 1994, for a piece of legislation, S.2111, claiming that this US Senate bill would bring 30,000 new jobs to Mississippi — and the Information Superhighway.
In 1991, the Clinton-Gore presidential ticket had created a national broadband plan, dubbed the “Information Superhighway”, that would replace the existing copper wires of the state utilities with a fiber optic wire, which would not only compete with the existing cable company but would bring next generation services — like Tele-learning and Tele-medicine.
So, in 1994, BellSouth, the holding company that controlled many of the southern states, and was the largest telecommunications utility in Mississippi, backed this legislation, presented by Senators Breaux and Packwood, to deliver a fiber optic future.
In fact, BellSouth filed to set up a ‘video-dialtone’ trial that would be a “broadband fiber optic-coaxial cable network for video and telephone”, offering traditional cable as well as “interactive educational and health care services” (Tele-learning and Tele-health).
Using this hyped-up vision of ‘technology will save us’ future, alongside this federal push, BellSouth went to all of its states to get ‘deregulation’ that would give the company more money — read higher rates on all services, that was supposed to pay for these new advanced tech dream applications.
In November 1995, the Mississippi Public Service Commission approved a five-year ‘price regulation’ plan that would give ‘financial incentives’ that were supposed to be used to have BellSouth bring fiber optics and advanced services to Mississippi in ‘rural and urban areas’.
This was from a later proceeding in 2001 to keep the plan, known as PREP, going:
This happened in almost every BellSouth state, and, in the end, as far as we can tell, virtually nothing was ever built.
And I note that while many think that 5G and the broadband wireless noise around it is real, the call for fiber optics throughout America made 5G appear to be a corporate whisper in the night.
Free Download: “The Book of Broken Promises: $400 Billion Broadband Scandal & Free the Net” details this era,
But the Companies Made Out Like Bandits via Deregulated Calling Features
Unknown to most, one aspect of this deregulation was to allow as much profit as possible on the non-basic service, which included Calling Features, such as Call Waiting, Call Forwarding and Caller ID.
The next exhibit highlights findings from a Florida Public Service Commission report from 1999, comparing the actual cost to offer various calling features to the price paid by subscribers. The Florida Commission found the profit margin on BellSouth’s Call Waiting feature to be 48,680% — costing less than 1 cent to offer. Caller ID, which cost the customer $7.50 per month, had a 3,264% profit margin. (Source: $200 Billion Broadband Scandal) Today, these services are commonplace, but they were a new addition in the 1990’s.
Here are 2 reports about what are now AT&T, Centurylink and Verizon , discussing the fact that these companies, known as “Baby Bells”, had become very fat babies. November, 2002
- BellSouth SBC (AT&T) Qwest (CenturyLink), and Verizon’s Revenues, Expenditures and Profits. “Executive Summary Report”
- Bell Write-offs and Foreign Investment Losses. ”SPECIAL REPORT” — $31 billion since 1999.
And to say that they didn’t build out their networks but instead squandered the money, would be an understatement.
- BellSouth created a series of Latin American business enterprises in 11 countries.
- BellSouth lost $2.6 billion from Brazilian and Argentinean debt, currency devaluation and investments from 1999 to 2nd quarter 2002, alone.
- Verizon, BellSouth and SBC (AT&T) had 122% higher return on equity than the Business Week Corporate Scoreboard for 2001.
And does anyone think that the investments in AOL, Time Warner, and all of the entertainment and media purchases aren’t coming from billions that should have been used to upgrade America’s deteriorating infrastructure?
The Current Landscape for Fiber Is Barren
This map, using Broadbandnow data, is of the fiber optic deployments in Mississippi, in October, 2020, showing that the state was never really upgraded (and these are inflated because they rely on the FCC’s inaccurate data).
But, if these changes in the state regulations weren’t enough, when BellSouth and AT&T finally merged on December 29, 2006, the joined companies claimed that they would cover 100% of their service area territories with broadband, albeit slow, and the construction would be completed by 2007. And this included Mississippi.
In fact, according to testimony at the Mississippi Public Service Commission to approve the merger, AT&T claimed it had covered all of BellSouth Mississippi already. (BST is BellSouth Telecommunications)
This Was All a Deceptive Act
Unfortunately, we knew that AT&T had not fulfilled their obligations in the merger and there were gaping holes, having gotten emails from customers and interviews of those living in rural areas where they and their neighbors were left holding the bag. We, New Network Institute, in fact, filed a petition in 2015 with the FCC detailing how AT&T had committed perjury because other statements made by AT&T from 2007–2015, claimed that 15–25% of their 22 state territory did not have broadband. (Of course, it was denied.)
Ars Technica wrote:
“The petition is being filed this week by telecom analyst Bruce Kushnick of New Networks Institute and audit director Tom Allibone of the telecom customer advocacy group Teletruth. They pointed to the AT&T/BellSouth merger commitment, in which AT&T promised that by December 31, 2007 it would “offer broadband Internet access service (i.e., Internet access service at speeds in excess of 200kbps in at least one direction) to 100 percent of the residential living units in the AT&T/BellSouth in-region territory,” with at least 85 percent of them getting access to wireline broadband. The rest would get alternative technology such as satellite or Wi-Max fixed wireless.
“‘AT&T falsely said it met this obligation’, Kushnick and Allibone claimed.
‘In February 2008, AT&T filed with the FCC, signing a document (under penalty of perjury) that it had fulfilled this obligation and all other obligations that were part of the merger agreement,’ they wrote.
“Various statements by AT&T make it clear that it is not offering broadband throughout the territory today, they noted. ‘Subsequent statements by AT&T to the Commission, including in [the DirecTV merger] proceeding, directly contradict its February 2008 representation that it had complied with the 2007 broadband deployment condition.”
In fact, part of our suspicions started in 2012. Huffington Post, with our assistance, covered this story focusing on rural customers in Mississippi, among other states, who did not get broadband service from AT&T.
“Many Rural AT&T Customers Still Lack High-Speed Internet Despite Merger Promise
“HAZLEHURST, Miss. — Cedric Wiggins thought high-speed Internet would have long since arrived in this corner of rural Mississippi. He figured this based on promises AT&T made publicly to win regulatory approval for its 2006 purchase of his local telephone company, BellSouth.
“The $86 billion deal created a telecommunications colossus with customers in 22 states. Consumer advocates opposed the merger as a threat to competition. But AT&T’s then-chief executive Edward Whitacre assured Congress that allowing his company to expand would help consumers, supplying “greater access and more choices for broadband, no matter where they live or work.”
The story continues — and remember, this is 2012.
“Today, Mississippi ranks 48th nationally in availability of high-speed Internet, according to a recent report by the Center for Social Inclusion, a social justice think tank. The report found that ‘Mississippi residents as a whole must choose among older, slower and less reliable technologies compared to the rest of the country’.”
And in 2012, AT&T’s CEO, Q4 2011, Earnings Call for Investors admitted it had no plan for upgrading rural areas.
“The other is rural access lines; we have been apprehensive on moving, doing anything on rural access lines because the issue here is, do you have a broadband product for rural America?
“We’ve all been trying to find a broadband solution that was economically viable to get out to rural America, and we’re not finding one to be quite candid. The best opportunity we have is LTE.
“[W]e’re looking at rural America and asking, what’s the broadband solution? We don’t have one right now.”
And there was a continuous flood of other statements clearly showing that AT&T never finished the BellSouth-AT&T merger conditions.
In 2012, AT&T stated during its VIP announcement that the company didn’t upgrade 25% with broadband.
“In the 25 percent of AT&T’s wireline customer locations where it is currently not economically feasible to build a competitive IP wireline network, the company said it will utilize its expanding 4G LTE wireless network — as it becomes available — to offer voice and high-speed IP Internet services.”
During the filing to merge with DirecTV, in 2015, AT&T stated it did not provide high-speed broadband service to 15 million.
“AT&T intends to expand its plans to build and enhance high-speed broadband service to 15 million customer locations, mostly in rural areas where AT&T does not provide high-speed broadband service today.”
But wait, in Mississippi, didn’t AT&T claim it had upgraded all of the state’s wire centers to offer DSL as part of the filing for the AT&T-BellSouth merger?
Doesn’t matter what the facts are. In an FCC filing during the DirecTV merger proceedings, on October 16, 2014 when AT&T was questioned about the AT&T-BellSouth merger, AT&T claimed it fulfilled its obligation.
“AT&T met its commitment and will likewise meet the commitments it has made in this transaction.”
The Mississippi Challenge
All of the above brings this back to the current situation. As the back-story, Commissioner Presley had requested that AT&T hand over the information about their CAF funding and about the 133,000 locations that AT&T claimed would be covered in Mississippi. The Connect America Fund was established and run through the FCC to give funding to cover unserved and underserved areas.
When AT&T didn’t comply, Mississippi filed a subpoena as well as wrote the FCC. The Mississippi Commission writes:
“We are writing to request a complete compliance audit of AT&T Mississippi regarding their claims of providing service to over 133,000 locations in Mississippi as part of their obligation under the Connect America Fund II.”
And the press release continues:
“Presley says the PSC has clear and convincing evidence that data submitted by the AT&T Mississippi to federal entities is invalid and that the company has factual knowledge that the information is incorrect.”
Of course, AT&T denied any wrongdoing. On October 7th, 2020, pertaining to the current Mississippi Commission call for an investigation, Mayo Flynt, the president of AT&T Mississippi, stated:
“In fact, we met all previous milestones in this federal program and are ahead of schedule on our remaining build requirements in Mississippi.”
Let us sum up why AT&T should be investigated.
- In the 1990’s the company got changes in state laws, claiming it was going to build the information superhighway, then didn’t show up.
- In 2006, the AT&T-BellSouth merger claimed it would have broadband to 100% of their territories by 2007 — and yet large sections of Mississippi and the rest of the 22 states were never upgraded, leaving ‘unserved’ areas.
- In 2006, AT&T’s filing in Mississippi for the AT&T-BellSouth merger, claimed it had already upgraded all of the state’s wire centers to DSL
- In 2012, the Huff Post analysis of the AT&T-BellSouth merger found whole communities in Mississippi where AT&T never showed up.
- In 2012, AT&T told investors that it didn’t have a plan for upgrading rural areas.
- In 2012, statements made by AT&T for the VIP program claimed 25% still was not covered in rural areas.
- In 2015, AT&T’s the statement made during the DirecTV merger claimed that 15 million customers were unserved.
We applaud the Mississippi Commission and Commissioner Presley for calling AT&T’s bluff.
All of this begs the question — Why is AT&T entitled to any government subsidies in areas that should have already been upgraded multiple times over the last 25 years?
And how much money did Mississippi residents get charged for networks they never got and will probably never get as AT&T is not running out to bring fiber to the homes?
Is AT&T cross-subsidizing their CAF buildouts by having the wireless ‘backhaul’ (the wires to the cell sites) built and paid for by the wireline utility networks and ultimately charged to wired customers?
Only a complete audit by the state of AT&T’s Mississippi financial records, as well as an audit of the wireline infrastructure — what was actually paid for and what was built, can answer these questions.