Break Up Big Telecom: Separate Wireless from the Wireline Telecom Public Utilities.
Get Back $100+ Billion in Underpayments & Overcharges. No More Government Subsidies.
Over the last three decades, almost all of the state-based telecommunications public utility networks have been left to deteriorate even though America paid over an estimated $500 billion dollars, (in excess profits, tax perks, rate increases, and added fees). Though it varies by state, what is now AT&T, Verizon and CenturyLink (Lumen) got the states to change laws so that this money would used to upgrade the aging copper wireline networks to fiber optics. Unfortunately, the failure to do these build outs caused the Digital Divide as a) rural areas and inner cities were not upgraded and b) these companies failed to bring competition to the only other wire, controlled by the cable companies. This allowed them to continually raise rates on all services, because they control the essential infrastructure of each state, and this has made US prices ‘unaffordable’ to many.
But, there is dark subplot; AT&T et al. were able to make the entire US infrastructure appear unprofitable by manipulating the FCC cost accounting formulas, and this was used as an excuse to not upgrade the rural and low income urban areas, but also to cut staff, raise rates, as well as dismantle the state utilities, diverting billions of dollars of the utility construction budgets, per year, to build out the companies’ wireless networks. 5G, for example, requires a fiber optic wire to the cell site.
5G wireless? This has been a bait-and-switch, designed to claim everyone should use wireless, even at home — it has been used to remove the remaining state and federal consumer protections, and the rights of cities, as well as to privatize the customer-funded wires. All of this is because it makes them more money, not to better serve their states where they are the primary telecommunications public utility.
Just read our report 5G: The Wireline-Wireless Bait & Switch: Because It Makes Them More Money. It details statements of executives pertaining to the deployment of Wireless — as a money maker and highlighting what the companies tell investors, but not the public.
Our Take: Halt the Cross-Subsidies and Get the Money Back to Solve the Digital Divide. Fund Open, Symmetrical Fiber Networks to Everyone at Affordable Rates.
We do not need to give these companies that failed to deliver and overcharged America, and left the networks to deteriorate, any more government subsidies.
And we’re talking a lot of money, but this is only a fraction of the total.
NOTE “Access Fees” are the fees the wireless companies are supposed to pay to use the existing networks and other functions.
Nationwide, We Estimate:
- $23 billion annually has been diverted to fund the wireless subsidiaries’ construction expenses instead of upgrading cities and towns throughout America; this includes over $6.2 billion in access fees to use the networks.
- $216 billion was charged to the state telecommunications public wireline utilities over the last decade for wireless construction expenses.
- $1.4 billion was charged to Verizon NY annually in construction costs that were not used for local service, which includes $237 million in “access” fees and other charges competitors pay and Verizon underpaid.
- $15.2 billion, estimated, over a 10-year period was overcharged in just New York for wireline construction but instead these funds were diverted to wireless construction.
NOTE: We focus on Verizon NY, the state public telecommunications utility, because it is required by NY State to publicly publish an annual report with financial information and business information, and we have published analyses for over a decade that were used for a successful investigation and settlement of Verizon NY in 2018.
And because these companies control the underlying wired infrastructure, i.e. the wires of the state public utility, the companies have also been able to set extremely inflated prices on all services; and without competition, prices are 5–20 more expensive for our communications than other countries.
In addition to the 5G Report, we have other reports in the series, such as a report on “Harvesting”, (which is raising the price of a service continually until the person leaves or screams ‘uncle’, or is gouged), that detail there are numerous methods used to overcharge America by the Telecom companies.
Overall, we estimate that local phone customers were overcharged $1,700-$3,200 per line from 2006–2020.
We bring this up because the state laws that were changed over the last 3 decades were originally about fiber to the home and this happened multiple times. This harvesting essentially has customers getting rate increases to fund the wireless networks that are causing ‘losses’ which in turn are granted rate increases to fund the wireless networks….
But no one is using the networks? The FCC’s reports and Big Telecom have hidden the majority of lines in service. We estimate that could be over 100+ million copper lines still in service who have been hit with major rate increases. (We previously filed with the FCC on this matter.)
WHAT NEEDS TO HAPPEN NEXT? BIG TELECOM CASES
- The IRREGULATORS are calling for the United States Department of Justice and the state Attorney General offices to start antitrust cases against AT&T, Verizon, CenturyLink, and their subsidiaries.
- The outcome must be to separate the wired state telecom utilities from the holding companies’ control.
- All of the subsidiaries, including wireless, the ISP/broadband access, business data services and enterprise subsidiaries, along with all of the other media, advertising and entertainment businesses, shall be completely separated so that any business dealings with the utilities are no longer privileged and and all financial transactions shall be conducted at arms length.
- Subsidiaries shall pay market prices and shall be considered like any other unaffiliated company wishing to use the state telecommunications utilities’ infrastructure and the public rights of way.
- All network infrastructure that was paid for via the state telecom local service construction budgets, which is property of the state telecom utility, and subsidiaries must reimburse the utility for all associated costs and for the continuing use of utility services.
- All subsidiaries must also pay for the use of the public rights of way along with all access fees, including billing and collection services provided by the utility.
- All “Business Data Service”, “Special Access” and “Backhaul” networks that were funded by the telecom utility are the property of the utility, including the wires to the cell sites, the fiber to home/node, and any other backhaul service and the subsidiaries must pay the utility for their ongoing use.
- All monies charged to the phone, broadband and internet customers through these subsidiaries shall be treated as de facto investors and shall be made whole.
CLICK for PART II: The “One Fiber” Scandal
In order to hide the transfer of the wired budgets to wireless, the companies have stopped breaking out the construction budgets and other financial reporting of the wireline and wireless subsidiaries.
Read the reports for details — — start at the beginning and read the basics.