We Solved Net Neutrality: “$400 Billion Broadband Scandal” Is the Evidence.

We Uncovered a Fatal, Structural Flaw in Every FCC Proceeding.

We have found a fatal structural flaw in every FCC proceeding and ironically, “The Book of Broken Promises: $400 Billion Broadband Scandal & Free the Net” (3rd book in a trilogy that started in 1998), supplies a large part of the evidence.

The Structural Flaw: Hidden in Plain Sight.

When you ask someone about something called Net Neutrality, about half of America has heard the term and the majority believe that Net Neutrality guarantees that companies cannot block, degrade or prioritize their own service or charge you more.

The FCC, however, doesn’t talk about it that way. At the core of the FCC’s Net Neutrality, Restoring Internet Freedom decision are two primary issues:

  • The FCC claims that the Net Neutrality rules have slowed down broadband investment and it can ‘preempt’ the states from having their own plan. The FCC claims that it is given this power under something called “Section 706”.
  • The FCC also claims that something called “Title II” harms investment, and so the FCC has combined the “ISP”, the Internet service, and the “broadband” service, into a glob and classified this as an “Information” service.
  • What is Title II?
  • What is Section 706?

How does the FCC’s decision harm America? The FCC gives just a few companies control over the basic infrastructure; wired, wireless, and cable as ‘private property’, even though the phone wires are part of a state-based utility. Moreover, this gives one company control over the ISP, broadband, Internet, phone, and cable TV service over the wires or the airwaves. This is known as “vertical integration”. And the control of this infrastructure also controls wireless, as your wireless call or video goes to a cell site and this is also attached to a wire, which can also be part of the same state utility.

Worse, the FCC has been removing any remaining obligations to let other competitors use these networks. They are not ‘open’ to direct competition; i.e.; you can’t choose your own ISP or broadband provider over the wires coming into your home or office.

And shutting down the rights of the state regulators to do anything on their own centralizes the FCC’s power — and since they are working to benefit the ISPs (phone and cable companies) it makes it so much easier to control the policies and agenda — that is, the policies of AT&T et al. As we pointed, out, the FCC has been ‘captured’ by a few very large phone and cable companies that have grown through mergers.

The Structural Flaw: Hidden in Plain Sight.

But, to be frank, it was only in December 2017 that the pattern emerged, and once we realized how it worked, it became obvious what to look for.

Simply Put: Keep Repeating “Interstate-Intrastate”. Every FCC current and past proceeding leaves out all state-based, utility-based “intrastate” — everything, from the broadband commitments made to upgrade the copper networks to fiber optics, the funding of these networks via rate increases, the cross-subsidies of the other lines of business using the utility construction budgets, or most surprising, that in Verizon’s territories, this funding is based on using Title II — Yeah, that Title II.

In fact, the FCC never acknowledges that there even is a telecommunications, state-based utility, commonly called the “PSTN”, the Public Switched Telephone Network. Verizon New York, AT&T California or AT&T Kansas are all state-based utilities that control some or most of their state’s wireline infrastructure, and thus in-region wireless infrastructure.

Moreover, the FCC improperly co-mingles all data, financials, etc. to be ‘interstate’ (and under the FCC federal jurisdiction) as opposed to ‘intrastate’ (state-based) to make helpful policy decisions for AT&T et al. that are harmful to the public interest.

And it is all hidden in plain sight. America’s communications landscape is supposed to be a handshake of state and federal laws, regulations and oversight. The FCC has made this the sound of one hand clapping.

It is that blatant, it is that stupid, and it is that deceptive. And ironically, “The Book of Broken Promises” documents this.

In short, the FCC can’t block the states’ broadband laws. It does not have the evidence of what happened in the states.

And it can’t rely on using Section 706 of The Telecom Act of 1996. Section 706 requires the FCC to give Congress an annual broadband progress report answering whether broadband is being deployed in a timely fashion to ALL Americans and if not, the FCC can remove the barriers to investment. The FCC has never, ever, addressed AT&T, Verizon and CenturyLink’s state-based broadband commitments — ever, in any 706 report.

And it can’t talk about Title II harms because it has no state-data on how it is used. In fact, the state-data directly contradicts everything the FCC claims about harms to investment. And worth repeating, it is the way Verizon got to charge customers for fiber build outs.

As documented in “The Book of Broken Promises” since the 1990’s, America paid over an estimated $400 billion dollars for fiber optic wires to replace the existing copper wires of the state utility networks. Though it varies by state, what are now AT&T, Verizon and CenturyLink went state-to-state and got changes in regulations to charge customers for these upgrades of the state utility. But, the FCC never included any of the state’s removal of barriers to investment — and the billions of dollars, per state, charged to local phone customers — ever.

Why did the FCC not address all of the state-based data? It would be highly embarrassing. It would have shown the broken promises of AT&T et al.; the billions paid by defacto investors, (customers) and that this pattern occurred multiple times over the last two decades. In fact, the history of broadband in America was rewritten due to this exclusion of basic state-based broadband commitments and customer funding.

Here Are Some Basic Highlights from the New Report and Book.

Verizon Used Title II to Roll out FiOS, its Fiber-to-the-Premises, FTTP Service.

These next quotes are BLACK AND WHITE (we added the red). These excerpts are from the Verizon D.C. franchise agreement of 2007. At the top, Verizon claimed that in 2007 it had 12 states with Fiber-to-the-Premises, FTTP, covering 835 jurisdictions. Then, notice that Verizon actually calls the construction “Title II FTTP”. And it states that it is an extension of the existing utility networks, and that it is a common carrier network and part of the Communications Act of 1934, the original law guaranteeing phone service. And I repeat; these wires are part of the existing state utility; I repeat again: These fiber optic wires are Title II and part of the existing the state-based, (intrastate) utility.

And none of this state-based fiber optic deployment was ever mentioned, ever, in any FCC broadband progress report. And this is not just history. In 2017, New York City sued Verizon because it had an agreement to do 100% of the city and it left an estimated 1 million households (about 1/3), that can not get the service. And it was never mentioned by the FCC, ever.

Title II Did Not Harm Investment; It Is Used to Make Local Utility Customers ‘Defacto’ Investors.

Title II is the way that Verizon was able to put the construction expenses into the state utilities and have local phone customers pay for it via rate increases.

In June 2009, the NY Public Service Commission (NYPSC) granted Verizon NY the third rate increase for residential POTS, plain old telephone service, since 2005. The NYPSC press release explained that the rate increase was due to “massive deployment of fiber optics” — FiOS.

This 2009 increase was the 3rd, adding 84% to the basic rates of all phone customers, including low income families, rural areas, small businesses — everyone. This was on top of the increases on all other ancillary services, which started in 1995, from inside wire maintenance to non-listed numbers.

Again, these are basic “intrastate” utility phone customers being charged for this “massive deployment of fiber optics”. In 2010, Verizon stopped FiOS deployments in New York State and most other states. There have been no ‘refunds’, no lowering of rates, and worse, since no one is tracking. NY State’s Gov. Cuomo gave Verizon more money in 2018, as did the FCC’s Connect America Fund, for the same areas it never upgraded. And there are billions that were supposed to be used for upgrading the cities, but were transferred to the build out the wireless networks. And none of this is in the recently released FCC Section 706 broadband progress report.

Contradiction after Contradiction

It’s time to turn over the rock and watch the vermin squirm and flee. Leaving out all basic state data has rewritten history. And it is said that the winners get to write the history. We can’t let this stand. Here’s part of the outline of the new report:

Solving Net Neutrality:

There is a Fatal Structural Flaw in All FCC Proceedings

Outline & Findings of the Report

The Flaw: State-based Broadband Commitments and Financing Using Title II Were Ignored

  • The FCC has Failed to Incorporate State Data in All Proceedings
  • The FCC Wants to Preempt State Laws But has Collected No Evidence about ‘State-Based’ Infrastructure Investments.
  • The FCC Never Examined that All ‘Intrastate’ Fiber Plans are Based on Using Title II.
  • Customers Paid “Financial Incentives” and are ‘Infrastructure Investors’ for Decades.

Massive Cross-Subsidies Due to FCC’s Cost Accounting Malfeasance

  • The FCC Never Examined how the Local Network, Intrastate, Capital Expenditures are Diverted through Title II and Used for Other Lines of Business.
  • FCC’s Malformed Accounting Rules Overcharges Customers & Harms Broadband.

Corrupted Accounting Co-Mingling: A Failure to Collect Basic Data or Use State-Data.

  • The Use of the Actual, Not ‘Suggestive’, State-Based Financials Shows that the FCC and the Telco-Paid Consultants Are Manipulating the Accounting.

Report 2 Excerpt: Manipulating Access Line Accounting: Where are the Interstate Lines?

  • The FCC Is Manipulating the Accounting of Access Lines in Every Proceeding.
  • How Many Interstate Special Access Lines are there? “Zero”? The FCC Provides No Data About “Interstate” Lines; Only Quotes “Intrastate” POTS Lines.

Finally, we suggest that the reader see our report series “Fixing Telecom” and our FCC filings and comments over the last 20 years on Section 706.