USTelecom Attempts to Kill Off Competition Using Access Line Accounting Deception.

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See our filed comments for the complete story; See USTelecom Petition, and Comments

How many total access lines does AT&T, Verizon and CenturyLink have in use today and how many are part of and are funded via the existing state utilities?

USTelecom, formerly the United States Telephone Association, USTA, represents AT&T, Verizon and CenturyLink, among others, and they control the telecommunications wires in America’s utilities, commonly known as “ILECs”, incumbent local exchange carriers. This includes both the copper and fiber lines of the state utilities. For example, Verizon’s fiber-to-the-premises, “FTTP” wires, used for FiOS or even for Verizon Wireless, are part of the state utility and they were mostly installed and paid for by the utility construction budgets — and customers.

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But the companies, using their trade association, have filed a Petition to remove any remaining specific obligations for ‘interconnection’ that give the remaining competitors access to the state utility network infrastructure — and it includes the removal of whatever remaining regulations and obligations that the FCC hasn’t already attacked; anything else they could think of getting rid of.

And they do this by pleading poverty. I paraphrase: Oh, we’re losing all these lines and it is such a burden to keep accurate books, and it is costing everyone money if we let these pesky competitors keep using our private property. And there’s plenty of competition today… really.

In fact, the opening chart (without the commentary) is from the Petition, and they sure make it look and sound dire, with ‘staggering’ declines of access lines.

“Since the adoption of these mandates, there has been a staggering decline in ILEC switched access voice subscriptions, from 186 million in 2000 to a projected 35 million this year. In residential markets, only 11 percent of U.S. households are projected to have an ILEC switched voice line by the end of this year.”

And while this sounds like ‘common wisdom’, in reality, this quote leaves out the majority of access lines in use and has manipulated the accounting to make it appear like the networks are old and unprofitable.

Unfortunately, this has been a shell game to hide basic facts. When a non-profit trade association that represents the AT&T, Verizon and CenturyLink doesn’t mention that they are still state utilities — and then presents basic data to confuse, twist and obfuscate basic facts — then this forbearance petition fails the primary test; it does not represent the ‘public interest’ — as, by definition, it is not in the public interest.

“Commission is required to forbear from any statutory provision or regulation if it determines that…(3) forbearance is consistent with the public interest.”

(NOTE: “Forbearance” means — no longer enforce or require the companies to follow the existing regulations.)

We request that USTelecom withdraw its Petition for Forbearance and then fixes the data provided. Then, the FCC needs to start investigations for the deceptive and unethical presentation of basic facts about America’s utilities and infrastructure; we should at least know the actual number of lines in service.

And, we argue that the networks should be reopened to direct competition and we should all have multiple choices as to who offers us service over these state utility networks.

And while it may appear that the USTelecom Petition is focused on voice services and wholesale services for something called “UNE”, the Petition hides that there is a subplot, which is to shut off and get forbearance for ALL services using the wires. They write: “for the sake of clarity, this Petition also seeks relief from all unbundling obligations…”

  • Deceptive Accounting of Access Lines: Dishonesty and a Lack of Ethical Behavior.

To repeat the first USTelecom quote:

“Since the adoption of these mandates, there has been a staggering decline in ILEC switched access voice subscriptions, from 186 million in 2000 to a projected 35 million this year. In residential markets, only 11 percent of U.S. households are projected to have an ILEC switched voice line by the end of this year.”

This statement erroneously claims that all of these lines are “voice” subscriptions; wrong. The chart leaves out ALL of the different data lines, which all grew 196% since 2003, (based on Verizon NY) such as the “Business Data Services” used by banks or competitors, or all AT&T U-Verse lines, which use the legacy copper networks. Worse, this quote only focuses only on ‘residential’ lines. Why?

Even choosing the year 2000 as the starting point is just another way to rig their numbers. USTelecom failed to explain that before 2000, there was “hypergrowth”, a massive surge of new access lines caused by competitors bringing America to the Internet — a data service.

The irony of this moment should not be lost on the reader. Let’s go through basic facts to just shred the Petition’s findings.

  • NOT VOICE SUBSCRIPTIONS: The “Peak” of Access Lines in 2000 was Caused by Dial-Up Internet Service — Over the Telephone Networks, Offered by Independent ISPS.

Compare the quote which starts at the year 2000 with a full accounting of access lines that were controlled by AT&T, Verizon and CenturyLink (“Bell Companies”) since 1984, as well as compared to the growth in America’s households, as told by the US Census.

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  • The ramp-up to the year 2000 peak was caused by “hypergrowth” of phone lines due independent ISPs offering dial-up Internet over the telephone networks.

Starting in the early 1990’s, with the emergence of online services, like the original AOL and Prodigy, there was a massive surge, a “hypergrowth” of access lines. And all of this new activity was created by thousands of small ISPs helping America get online via an existing copper telephone line. The customer used a modem attached to their home computer and with it connected to the existing ‘landline’, it would actually call, ‘dial-up’, the ISP, who would connect them to the Internet and World Wide Web.

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The ramp up to the year 2000 shows 91%-654% increases in lines as compared to household growth, (using Census data). Historically, these two trend lines were tied together.

  • The GAO claimed that 88% of Internet subscribers used a basic telephone access line in 2000.

According to the US Government Accounting Office, “GAO”, report in 2000:

“According to our random survey of Internet users, the conventional telephone line is the most common method of transport to the Internet, with about 88 percent of respondents using conventional narrowband telephone transport. Twelve percent of the respondents have a broadband method of transport to the Internet — 9 percent using cable modem service, and 3 percent using DSL telephone service.”

And it wasn’t the big telcos or the cable companies driving this. It was the independent Internet Service Providers, “ISPs” — with 88% of the population using a basic TELEPHONE LINE.

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  • US Census: In 2000, 44 million households used the Internet at home.

According to a US Census Report, “Home Computers and Internet Use in the United States: August 2000”, 44 million households had at least one person in the house that used the Internet at home, but the number had been steadily increasing from 18% in 1997 and 26% in 1998, (there was no 1999 report).

“More than 2 in 5 households have Internet access.

“Forty-four million households, or 42 percent, had at least one member who used the Internet at home in 2000. This proportion was up from 26 percent in 1998, and more than double the proportion of households with Internet Access in 1997 (18 percent), the first year in which the Census Bureau Collected data on Internet use.”

Therefore;

§ The year 2000 did not have 186 million ‘voice’ subscriptions; the access line growth included data lines.

§ The accounting of lines is NOT residential but also business lines.

But the true irony: The very ‘competitors’ that brought America the Internet and competition, as we will discuss, have been persecuted by the continued bombardment of ridiculous forbearance requests and atrocious, deceptive data.

  • USTelecom is Hiding the Data and Interstate Lines; The Majority of Access Lines in America

This next chart is the access line accounting from the FCC through 2006, starting in 1984, and it shows that while there has been a drop in one class of service, the basic, copper wire POTS phone line, (“Bell Lines”) the actual lines in use have been growing.

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Thus, from 1984 there was a steady increase in access lines, but a shifting in the business so that the copper-based wires were reclassified by the traffic over the wire.

AT&T’s U-Verse, for example, is a copper-to-the-home service with a fiber wire connected to some ‘node’. These legacy copper state utility wires magically got transferred to another subsidiary and are no longer counted as an access line, even if it is used for ‘voice’ calling.

This has allowed the companies to directly manipulate public opinion as to the ‘loss’ of lines, as this only counts the intrastate, basic, copper wire-based utility phone line, but excludes counting all of the access lines in service.

  • The FCC’s Last Data Was 2007; Local Access Lines Were just 15% of Total Lines.

In fact, the last data published by the FCC shows just how large this shell game has grown. This is the Verizon New York 2007 Access Line accounting from the FCC and it supplies ALL of the access lines; switched and non-switched, and “Special Access”, now called “Business Data Services”, “BDS”.

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There were 47 million total Verizon New York access lines and only 7.2 million ‘POTS’ lines. (NOTE: There are caveats and unresolved issues on how to count special access service lines.)

  • The FCC Found $40 Billion in “Special Access Services” in 2013–60% Were Still “Usually Copper” — Yet, ZERO LINES Supplied.

The FCC examined the “Special Access” (Business Data Services) of Verizon, AT&T, and CenturyLink as incumbent phone companies. According to the FCC, 60% of this $40 billion area of business was mostly copper-based services that rely on the existing technology, commonly called “TDM”.

“TDM-based business data services… DS1 & DS3 transport are the dedicated (usually copper) circuits that many business and other institutional users continue to rely on for their data and other communications needs… Despite the growth of newer technologies, preliminary analysis of the Commission’s special access data collection shows that revenues from such TDM services continue to make up in the range of sixty percent of the roughly $40 billion annual special access market.”

  • Misrepresentation– How Many Business Data Service Lines are there in Service?

USTelecom just continues to be a slap in the face of a factual presentation with actual data. In this next quote, where, exactly, are the number of business data service lines? There are no access lines supplied, at all. This is just hand waiving. This is not in the Public Interest to hide basic data.

Here, USTelecom provides a ‘discussion’ to get ‘relief’ from the obligation to rent basic network lines and even provides a similar list of special access lines — but ZERO actual lines in service. (“Unbundling” means opening the networks for competitors to use.)

“Although the discussion herein focuses on DSO, DS1, and DS3 loops and DS1/DS3 transport offerings, for the sake of clarity, this Petition also seeks relief from all unbundling obligations, including those associated with hybrid loops and subloops, and with elements that facilitate unbundling of core transmission elements, such as network interface devices.”

Tied to the previous FCC quote, 60% of $40 billion is being discussed here with ZERO Lines.

  • Zero Lines Supplied by Verizon NY for $3.5 Billion in Revenue, 2017

On May 31, 2018, the Verizon New York 2017 Annual Report was published. Actual fresh data from a state utility; how refreshing.

Using the previous Verizon NY annual reports, Verizon NY’s financial books for 2003–2017 shows a massive increase of 103% of revenues for Business Data Services and a staggering 604% increase for Nonregulated services, which includes FiOS and VoIP services.

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The combined revenues from these two lines of business, special access revenues and nonregulated, was $3.5 billion for just the year 2017, yet Verizon NY show ZERO LINES.

The 2017 report does claim that there are only 1.9 million access lines left, but these are part of Local Service, which would be ‘intrastate’ lines based on intrastate revenues.

Thus, using the last FCC data from 2007 for access lines, adding the findings of the FCC pertaining to the amount of revenue and copper in use for special access lines, and adding the data we just presented from Verizon NY’s annual reports from 2003–2017 — access lines went up dramatically, not down. Yet, there is no accounting provided by USTelecom or the FCC.

  • GAO Study: ‘Competition’ from 7,000 ISPs Using Phone Lines in 2000.

Insult on top of injury: The GAO study previously quoted discussed ‘competition’ using phone lines in the year 2000. They wrote that in 2000 there were 7,000 ISPs in the US and that consumers had a choice of 7 or more ISPs because they were able to use the state-based utility telephone networks. However, the study pointed out that the cable networks were closed to ISP competition and it brought up concerns about the future, though it did not predict that the FCC would step in and erase the rights of the ISPs to use the networks, especially line-sharing, or later, use of the fiber optic networks.

“Consumers’ choice of companies providing transport to the Internet over the telephone network has been facilitated by the design of the telephone infrastructure as well as by the common carrier regulation of these companies. For the same reasons, consumers using the telephone network for transport to the Internet have many ISPs from which to choose. On the cable network, consumers generally purchase both the transport and ISP functions from the cable provider and must subscribe to a second ISP if they want to obtain particular content or applications from an ISP not affiliated with their cable company”

“Although consumers’ choice of companies providing transport to the Internet is expected to increase, consumers’ choice of ISPs could simultaneously diminish in the next few years. At present, there are approximately 7,000 ISPs in the United States.”

“One study issued in 1998 found that 92 percent of American consumers had seven or more ISPs to choose from in their local areas.”

“In large degree, the considerable consumer choice in the ISP market is related to the fact that most consumers obtain physical transport to the Internet over the telephone network.”

By 2001, there were 9,335 ISPs in America according to Census, and by 2007, the phone and cable companies were able to kill off 7,000 wired ISPs; AT&T et al. took over the business that these entrepreneurs had created.

And killing off the independent wired ISPs also created Net Neutrality concerns because it was clear that with no serious direct competition, rules were needed so that the vertically-integrated companies that controlled the wires, the ISP service, the broadband service, the wireless service, and the now the content — would play nice and not give their own services advantages over the other companies.

CONCLUSION

Today, we call AT&T, Verizon and CenturyLink, “ISPs”; they are not. They are state telecommunications utilities that have been able to fool America. (NOTE: Comcast and Charter are cable TV companies with franchises, not ISPs.)

Thus, the USTelecom Petition for Forbearance doesn’t even bother to give fundamental information about the actual total lines in service and yet wants to get rid of any and all competitors.

USTelecom never mentioned that there is a state utility and yet it quotes the ‘intrastate’ POTS lines to claim a loss of lines with no acknowledgement that these are wires from a state-based utility. And, because it doesn’t want the public to know that the majority of lines are interstate or data or an information service line and has not been accounted for anywhere, this Petition never told the truth — that the small ISPs helped to drive new phone lines that were not for voice calling. Thus, this fails any public interest standard.

Moreover, it brings up some very ugly questions — Why did the FCC ever kill off the previous crop of competitors and innovators? Why shouldn’t these networks be reopened to direct competition, and why did USTelecom present a Petition that may violate basic standards — and the Communications Act of 1934?

See our filed comments for the complete story.

New Networks Institute,Executive Director, & Founding Member, IRREGULATORS; Telecom analyst for 38 years, and I have been playing the piano for 63 years.

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