Tennessee: One State’s Creation of the Digital Divide by Now-AT&T-Tennessee

(AKA —South Central Bell, BellSouth)

Exposing the Digital Divide and the State, Wired, Telecommunications, Public Utility. This chart is a map of the western part of Tennessee, created by the Tennessee Department of Economic & Community Development, showing the ‘unserved’ and ‘underserved’ areas, represented by the color blue, commonly known as the Digital Divide. The black lines are an overlay from the FCC’s data that highlights the western part of AT&T-Tennessee’s state-based telecommunications public utility coverage. And notice that these territories are filled with Digital Divide holes — i.e., a lack of broadband in unserved and underserved areas. Meanwhile, the ‘red’ areas received previous government subsidies, which may or may not have gone to AT&T or an affiliate. We’ll go through all of this in a moment.

Introduction: Over 30 years ago…

• In 1990, the state of Tennessee had a “Master Plan” to upgrade the State’s telecommunications networks to fiber optic broadband, and the State changed regulations to give what is now AT&T-Tennessee excess profits to do this new construction.
• 30+ years later, and it is clear that AT&T-Tennessee let most of the telecom infrastructure deteriorate; it never properly maintained or upgraded the networks to high-speed broadband.
• In September 2022, the Tennessee Governor and other State officials announced $447 million dollars of government subsidies to ‘solve the digital divide’.

No Mention of AT&T in Tennessee or in Any State Broadband Agency.

• There is no mention in these new government subsidies about the cause of the Digital Divide, or AT&T’s failure that let their entire state territories deteriorate, as is the case in Tennessee, but also throughout the 21 states that AT&T controls.
• There is no mention that the government will be paying out to do upgrades in the AT&T controlled state utility areas, such as AT&T-Tennessee, and there is no call for audits of all of the billions of dollars already collected.
• In fact, in Tennessee, there is no mention of AT&T, even though it is the largest wireline network and covers the majority of the state.
• Worse, there is no mention or recognition that because of this control, AT&T also controls and has inflated the prices of all services, including wireline and wireless, or even cable TV or tbe ‘triple play’.

Unfortunately, what we are describing happened throughout America in every state, in one form or another.

The opening chart, then, is a snapshot of 2022, (using the latest data) of the massive holes in the deployment of broadband infrastructure in the western part of the AT&T-Tennessee franchise area. But, as we will discuss, over the last 30 years there was a plan to upgrade this state telecommunications public utility. One would think that the state broadband authorities, not to mention the elected officials, would want to know the facts. And shouldn’t Tennesseeans know how much they were charged in higher rates to build networks that were never built?

The new book: “Violations & Egregious Acts”, calls for every state to investigate how the Digital Divide was created by AT&T, Verizon and Centurylink (Lumen), the holding companies that control the wired networks and thus wireless in the U.S. We believe that the government should not give government subsidies to the companies that harmed America, but investigate them.

And this is not just about history. As discussed in the book and our research for the last decade, every state must stop the current flow of cross-subsidies and other financial violations currently underway — but never discussed — and use this money to upgrade the state without government funds. I.e.; the utilities have been illegally funding the companies’ other lines of business, including wireless deployment, and halting this practice would yield enough funds to upgrade the state, as well as lower prices.

While we applaud the states and federal government for finally recognizing that there are those who are underserved or unserved, and can’t get or can’t afford high-speed broadband — throwing money at the problem without addressing the fundamentals will not solve the decades-old Digital Divide.

Summary of the Basics:

• In 1990, Tennessee had a 10-year Master Plan to upgrade the State’s infrastructure to fiber optics and broadband.

According to a Tennessee Public Service Commission statement, July 31, 1990, there was a plan created in 1990 to upgrade the state telecommunications infrastructure which was for broadband, dubbed “FYI Tennessee”.

“‘FYI Tennessee’ is designed to further Tennessee’s participation in the Information Age and enhance the state’s competitive position for future economic development.’ … ‘We believe that ‘FYI Tennessee’ will give our businesses the edge in national and international competition, help us attract new high-quality jobs, help improve our educational and medical programs and give residential customers access to services they never dreamed possible’.”

The master plan called for accelerated technology deployment, including broadband service based on fiber optics, throughout the state, starting in 1995 in urban areas. We’ll come back to this in a moment.

• Fast Forward: In 2022, we can see that there has been a massive failure to do upgrades. creating serious gaps in the ability to get affordable high-speed broadband, especially in rural areas.

In 2020, Tennessee, relying on an FCC report, claimed that one in six in rural Tennessee lack broadband access.

“According to the 2020 Broadband Deployment Report published by the Federal Communications Commission (FCC), one in six rural Tennesseans lacks access to broadband.”

Meanwhile, the Tennessee Chamber of Commerce supplied other data from different reports, where almost ½ million do not have access to speeds of at least 25 Mbps download speeds.

• 274,000 Tennesseeans have NO wired Internet providers available where they live.
• 492,000 Tennesseeans do not have wired Internet access capable of 25 Mbps download speeds, a minimum requirement for most online learning.

The 2022 Tennessee Plan

• Like Every State in America, Tennessee Is Throwing Money at ‘Solving the Digital Divide’.

Press Release: Governor Lee, Commissioner McWhorter Announce $447 Million in Broadband Infrastructure Investments, September 12, 2022

“NASHVILLE, Tenn. — Tennessee Governor Bill Lee and Tennessee Department of Economic and Community Development (TNECD) Commissioner Stuart McWhorter announced today that the state will award $446,770,282 in grants for the expansion of internet access across the state of Tennessee.”

“In total, the broadband infrastructure grants will provide broadband access to more than 150,000 unserved homes and businesses across 58 counties.”

“Our strategic investments in broadband infrastructure will ensure our rural communities are connected and have every opportunity to thrive, and I thank the Financial Stimulus Accountability Group for managing dollars effectively to serve Tennesseans.”

“Since 2018, TNECD has awarded nearly $120 million in broadband grants through state and federal funding to serve more than 140,000 Tennessee households.”

• An Important Caveat: Changes in the Speed Requirements Over the Last Decade, and Definitions.

The opening chart shows the FCC’s Digital Divide holes and was based on the original slow speeds of 10 Mbps download, 1 Mbps upload, then 25 Mbps download and 3 Mbps.

“The U.S. Department of the Treasury previously defined “unserved areas” as lacking access to a wireless connection capable of minimum speeds of 25 megabits per second (Mbps) download and 3 Mbps upload.”

But the FCC notes that the standard is being raised to 100 Mbps download, 20 Mbps upload.

“However, due to the increasing demands of the digital age, any connection that provides lower than 100 Mbps download speed and 20 Mbps upload speed is now deemed ‘unserved.’ In consideration of this new definition, application priority was still given to those with the lowest internet speeds, but all applications under this new definition of ‘unserved’ were considered’.”

This means that the chart we provide here is already out of date and the situation is worse than the numbers quoted because the new standard would show more of the population who don’t have access or can afford these more robust broadband-internet speeds.

Details of a Fiber Optic Future that Never Came

• The Master Plan Was Extensive and Promised to Upgrade the State to Fiber Optic Networks

A summary of the Master Plan appeared in a court case where the cable association took legal action against the Tennessee Public Service Commission, Tennessee Cable TV v. Public Service Commission. Essentially, a “master plan” was created that would allow the state utility to get financial incentives — i.e., excess profits — that would be used to upgrade the networks to fiber optics to offer high speed broadband.

“The task force issued its “Tennessee Regulatory Reform Plan” on July 10, 1990. The plan, embodying a compromise between the telecommunications industry and the Commission’s staff, recommended that the Commission relax the regulation of non-basic monopoly services and provide telephone companies with financial incentives to operate more efficiently. It required Tennessee’s two large local exchange companies, (including now AT&T-Tennessee) to commit to a ‘ten-year blueprint for deploying technology to enhance the telecommunications infrastructure in Tennessee’ and, in return, permitted them to distribute their projected excess earnings to their customers ‘in the form of accelerated technology deployment or rate reductions’.”

The plan had phases where, over time, specific upgrades would be done so that by the year 2000 the companies would offer “broadband” (fiber optic) capability in some urban areas beginning in 1995, suburban areas by 1997, and rural areas by 1999.

“The consultant presented its final report on July 30, 1990. The report, entitled “Telecommunications Technology Deployment Analysis and Master Plan Development,” recommended the adoption of a ten-year master plan for the deployment of digital switching and fiber optic transmission technologies in Tennessee’s telephone network. It envisioned that the telephone companies would (1) deploy “intelligent network services” in the five urban counties by 1991 and in the rest of the state by 1993; (2) deploy “integrated services or digital networks” in urban areas by 1998 and in the rest of the state by 2000; and (3) offer ‘broadband’ (fiber optic) capability in urban areas beginning in 1995, in suburban areas in 1997, and in rural areas in 1999. The technology master plan anticipated that these improvements would be paid for with the excess earnings generated under the regulatory reform plan.”

“In addition to improving the telephone companies’ ability to provide traditional telecommunications services, the improvements envisioned in the technology master plan would also enable the telephone companies to enter into new service delivery areas. Among the advanced services available through fiber optics technology would be the ability to transmit video signals over the telephone lines to consumers’ homes.”

• What happened was simple: Nothing of any substance.

Some points of interest:

• The plans were, of course, challenged by all of the different companies and businesses that felt threatened; the cable association of TN claimed that the state utilities would be getting customers to subsidize their build out.
• In 1993, after one of the telcos filed with the FCC about various aspects of the network upgrades and tax write offs, the FCC made comments that this plan was important in bringing broadband (advanced telecommunications network) to the state. (Petition for Waiver of the Commission’s Rules to Recover Network Depreciation Costs) ORDER Adopted: November 29, 1993; FCC 93–522)

“We are cognizant of the importance of the Tennessee Regulatory Reform Plan and Technology Deployment Master Plan to the State of Tennessee. We acknowledge the efforts of the TPSC in attempting to bring the benefits of an advanced telecommunications network to the citizens of the state, and to incorporate these network developments into its regulatory reform plan. Individual state initiatives such as this lie at the heart of our federal system.”

• In 1997, Bellsouth Telecommunications, Inc. (D/B/A South Central Bell Telephone Company) took the Tennessee Public Service Commission to court, as well as the commissioners, claiming they were biased and that essentially they should be able to keep the profits and do what they want with them.

What happened after 1997? Where did the construction budgets that are built into the telecommunications utility expenses go? What have they been used for if not network upgrades? Was anything every rolled out, like fiber optic broadband?

• Getting Fiber Optic Upgrades Through Regulatory Changes Was Happening Throughout America.

In many states, from New Jersey, controlled by Bell Atlantic, to Utah, controlled by then-US West (with the name changed to CenturyLink, now Lumen), state commissions were attempting to get the state incumbent telecommunications utility to do upgrades of their networks to fiber optics.

According to the Georgia State’s Policy Research Center report, this trend was happening throughout America — even in more rural states like Utah, December 1994

“The Utah Public Service Commission has recently joined the growing list of state commissions explicitly recognizing economic development-related modernization programs and its role in ‘encouraging timely, socially beneficial investments’, US West Communications was required by the PSC to implement a modernization plan involving the conversion of rural central offices to digital facilities and the deployment of fiber optic facilities in various locations, and in particular at educational facilities throughout the state. Similar to Tennessee, the Utah PSC in announcing its plan justified the modernization program on the basis of corollary benefits in other sectors of the state’s economy, including education, government, research needs, and health care. Unlike Tennessee, the Utah PSC specifically rejected proposals for incentive regulation. Thus, while regulators in the past have followed what can be characterized as a ‘hands-off’ approach to plant modernization decisions, recent history reveals a much different story, namely, an affirmative interest by regulators in exerting a direct influence on decisions and outcomes relating to modernization-related investment.”

The report continues:

“Infrastructure deployment commitments were mentioned in 22 state alternative plans. These infrastructure commitments are diverse, although they all move toward a digital fiber, broadband network.”

To translate: As of December 1994, when the report was published, almost ½ of America had a plan to do upgrades of their state wired telecom public utilities for fiber-based broadband networks, and state laws and regulations were changed to help fund, i.e.; — give financial incentives and subsidies to build these networks.

Conclusion

What happened over the last 3 decades, since 1990 in Tennessee, needs investigation. There should not be a Digital Divide in 2022. The areas on the map that are blue should be white — in that everyone is served. What we present here is just the tip of a very dark iceberg.

What is clearly bizarre is that no one appears to remember that there were state-based fiber optic broadband plans, or obligations, or that these were upgrades of the state telecommunications public utilities. On top of this, no one has connected the dots to realize that telephone subscribers ended up being the cash machines of the companies’ other lines of business, such as wireless, or that these utilities are controlled by one of the holding companies — AT&T, Verizon, or Centurylink.

The new book: Violations & Egregious Acts, lays out the 30 years of bait-and-switch tactics and actions that have harmed America. And it is clear that throwing billions to solve the Digital Divide — i.e.; government subsidies and financial incentives — did not work.

Also, as we point out, there are billions of dollars in cross-subsidies that have been and are still in place where Verizon and AT&T charged the wireline customers for the upgrade of the wireless networks instead of delivering on their original commitments for fiber optic services to the home and business.

Halting all of these cross-subsidies and redirecting the monies would upgrade the state’s infrastructure, once and for all — without government subsidies.

Therefore, we call for every state to investigate how the Digital Divide was created by AT&T et al., the holding companies that control the state telecom utilities which, in turn, gives them control over the wired networks and thus wireless in America.