LA County Rewards ‘The Company We Will Not Name’ that Created the Digital Divide.

No audits or investigations or explanations of how ‘The Company We Will Not Name’ — (AT&T et al.) red-lined, cross-subsidized, overcharged, and failed to upgrade America’s critical wired, public utility infrastructure over the last 30 years — including LA County.

On Nov. 15th, 2022 the Los Angeles Board of Supervisors voted to modify obscure parts of the law, (Title 16 and Title 22) — with the claims that this relaxation of regulation will help to give low income families in rural America and inner cities a potential for wireless, with the hopes of solving the Digital Divide.

(NOTE: The picture above is focused on ALL of America’s broadband proceedings where there is no mention of “XXXXXX” or of the history of the fiber optic no-shows, or any due diligence, or any audits of the financial shell game we exposed, much less exposing the embedded conflicts of interest of the organizations, companies and people — vs the public’s interests.)

As we pointed out in our comments, “AT&T California” is never seriously mentioned throughout the LA County Digital Divide information. We dubbed this omission ‘The Company we will not name’, (like the character in the Harry Potter tales). So did this decision and the omissions of basic material facts violate basic laws to protect the public interest?

Talk about a failure to present basic material facts. AT&T California, formerly Pacific Bell, is still the state-based telecommunications public utility that covers 80% of the entire state, including most of Los Angeles County, and it had obligations to upgrade the state’s critical infrastructure with fiber optics, starting in the 1990’s. In fact, what is now AT&T, Verizon and Centurylink all had plans and all made thousands of statements about these plans. And even though they all got paid billions to do this work, instead, they left most of their copper-based territories to deteriorate and thus did not bring broadband competition to the cable companies that would lower prices and give options.

Thus, is there a requirement for the Board of Supervisors to mention in the proceeding, that there is a company called “AT&T California” (dubbed ‘The Company that shall not be named’) and to make it clear that it is the primary public telecommunications utility for the state of California, (and LA County), etc.?

We believe that before billions of dollars are given out, especially for plans that are not building ‘critical infrastructure’ but are a bait-and-switch using wireless vs fiber optic wires, (which has occurred over and over since the 1990’s with bad results )— basic material facts must be presented to the public to understand the whole truth of how we ended up in this mess.

Moreover, the changes in the regulation that passed have the fingerprints of AT&T et al. and it appears to be an industry put-on job, created with the help of the American Legislative Exchange Council, ALEC, that blocks the municipalities’ ability to have control over wireless being placed on the cities’ streets. We believe that if this is an ALEC and Big Telecom modification, it would be deceptive to leave out this basic material fact of the origins of these regulations.

In sum, does LA County’s failure to mention “The Company that will not be named”, and all of the other material facts, require investigation in and of itself? This isn’t a stand alone incident, it is a nationwide trend; a nationwide pandemic as those who are getting government subsidies or are trying to, are not going to rock the boat, and we can not find a state where there was full disclosure of that mentioned the incumbent in the proceedings.

And just to stress this point, what is your answer to this question: The fiber optic wires that are being put in are not part of this legacy telecom public utility, right….?

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The rest of this post is what we filed, with some modifications based on the outcome.

We filed comments in this proceeding with LA County outlining a request for investigations and audits, not more government subsidies, rewarding the very companies that created the Digital Divide

We submitted 3 open letters that request the County does not go forward on these wireless plans as history shows it will be just another failed attempt to close the Digital Divide. Instead, the IRREGULATORS (a consortium of senior telecom analysts, forensic auditors and lawyers) requested that the County immediately start investigations into AT&T California, (as well as GTE-Verizon-Frontier and the cable companies) — for not only creating this Digital desert, but overcharging customers billions of dollars, literally, as well as halting the massive financial cross-subsidy scheme, and redirecting the funds to build out the wired networks to fiber optics.

The open letters were posted to Medium:

§ Dear LA County: Time to Investigate How AT&T (Pac Bell) Helped to Create the Digital Divide.

§ Dear LA County: Investigate the Real Shockeroo; America’s Egregious Broadband Rates vs the EU 27 Prices.

§ Treasure Chest of Billions to Solve the Digital Divide for Cities, Counties and States: Dear LA County….

Moreover, the real question is — how can the County make any meaningful public polices when it has decided to throw government subsidies at the very companies that have kept prices inflated? Worse, how can the County and State let the entire California wired public telecommunication utility to deteriorate?

As we discuss, we believe that AT&T California is overcharging customers $1.5–2.4 billion annually, and at least $20 billion has been charged to customers for fiber optic network upgrades that never showed up since 1994.

The Fix Was In: With over 90 agenda items to be covered it is clear that most of this was simply a rubber stamped shopping list of predetermined decisions. And virtually everyone we spoke to believes that the cable companies are to blame and they need to be taken to task — — but, they didn’t know the subplot of this tale. Had AT&T et al. showed up, California would have been a fiber optic info highway… serving the entire state.

One other point — AT&T, the holding company, controls 21 state telecom utilities, and the failure for the states to do proper audits and oversight, much less make sure that material facts are presented, is a different form of pandemic.

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The first letter focuses on AT&T California, formerly Pacific Bell. The County never mentions that AT&T California is the state telecommunications public utility that covers over 80% of the state and most of Los Angeles County, or the fact that this utility’s aging copper networks were supposed to be replaced with fiber optics, starting in 1994. By 2000, 5.5 million homes should have been upgraded to fiber optics and $16 billion spent, and this includes Los Angeles. In fact, state laws and regulations were changed to give then-Pacific Bell more profits to be used for the construction.

And this ‘promise them new networks’ and then pocket the money, happened multiple times, from U-verse, which was actually copper-to-the-home, or Gigapower or… and AT&T always came back with an inferior wireless service, or nothing.

Even stranger, by 2007, according to Pac Bell’s filing with the FCC, AT&T California had actually put in 4.8 million Km of fiber but a whopping 81% was not put into use, known as ‘dark fiber’.

Letter 2 requests that the County investigate how America is being gouged with inflated prices; there is no competition and there has been continuous rate increases, known as “harvesting”. And this is happening on all services. In 2004 and 2008 our group, working under grants from the California Consumer Protection Fund, collected hundreds of communications bills and found major issues — which included made up fees that added to the continuous increases.

Using findings from Rewheel Research we found that in France, Italy and even Slovakia, the average 5G wireless service overseas comes with 100GB and is less than $10 dollars. Meanwhile, Spectrum Cable wireless service (which is reselling Verizon wireless) is $14. per GB. — that’s $14 dollars per GB vs $.10 cents. And the US prices have other made up taxes, fees and surcharges that can add 10–20% more.

And the high speed broadband services average price of a triple play is only $35 — phone, cable and broadband vs the US average of $220 a month — and in some countries, the price is under $22 dollars; and only $10-$15 for broadband with speeds of over 100 Mbps for the double play.

But probably the most egregious is the Sports and Broadcast fee, which can add $20–25 extra a month. It is not mandated, it is not audited, there is no cost justification and it is not included in the advertised price. If the County is serious about fixing the Divide, it needs to put a halt to all of these made up fees but get at the core of why America is paying outrageous amounts.

If the price of services were equal to overseas prices, then even low income families could afford the services. We consider these acts overcharging — because if they control the wires, thus, they control the prices.

In Letter 3 we expose one of the largest accounting scandals in American history. It is underway and no government agency understands what is going on much less will fix it. The entire wired utility has been under siege for the last 2 decades as AT&T and Verizon were able to manipulate the accounting so that it made the entire US infrastructure appear unprofitable. Moreover, AT&T et al. have been dismantling the networks and moving the construction bidets to wireless and dumping the corporate operations expenses of billions, creating losses and tax benefits.

With some of the leading experts in telco accounting in the US, it took our team almost a decade to figure out that the companies diverted billions to build out the wireless networks and they keep the underlying backhaul, Business Data Service, prices inflated, even when it was just the copper wires in use. Using the Verizon New York 2021 Annual Report, published in June 2022, you can see that the cross-subsidies of the other lines of business are out of control — and we know from historical models that AT&T California has done identical things; it moved the budgets that should have been used to upgrade the state to their wireless business, and figured out how to fool the regulators. Ironically, the fiber optic wires were always part of the state utility… the utility was never just the copper-basic phone service.

We filed a full report with the California Broadband Counsel and filed previously with the CPUC about these issues. We believe they are negligent in their duty to not only protect the public but also have left out material facts in their decisions; meanwhile AT&T et al. punked the American public over a 30 year period.

The Digital Divide is not new and we have institutional amnesia of the past. Not one state which focuses on the Digital Divide or digital equity can explain just how we ended up in this mess. And we can blame them when they don’t even know that AT&T California is a state utility, that the copper wires were supposed to have been replaced and that the company collected over $20 billion (estimated) over a series of bait and switch actions.

The IRREGULATORS stand ready to help the County and the State clean up this mess and close the Digital Divide, bring in competition to lower rates and most importantly, hold those companies and persons accountable.

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Bruce Kushnick

New Networks Institute,Executive Director, & Founding Member, IRREGULATORS; Telecom analyst for 40 years, and I have been playing the piano for 65 years.